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HomeMy WebLinkAbout10-16-1989 Reg. Meeting SHAUNA CLARK CITY "LERK (2 I 'IES)' v AGENDA REGULAR MEETING COMMUNITY DEVELOPMENT COMMISSION/REDEVELOPMENT AGENCY October 16, 1989 - 11:00 a.m. CALL TO ORDER: ROLL CALL: PRESENT: ABSENT: PUBLIC COMMENTS ON ITEMS NOT ON AGENDA: 1. Community Development Commission Minutes. Motion: That the minutes of the following meetings of the Community Development Commission of the City of San Bernardino, be approved as submitted in typewritten form: a) September 18, 1989 b) September 25, 1989 c) October 2, 1989 d) October 6, 1989 PUBLIC HEARINGS 2. San Bernardino Community Hospital authorizing the issuance and sale of San Bernardino Community Hospital Revenue Refunding Bonds; TEFRA Public Hearing. (See Attached) Mayor to open the hearing Motion: (A) That the hearing be closed; that further reading of the resolution be waived. Motion: (B) Mayor and Common Council Adopt a RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO COMMUNITY HOSPITAL), SERIES 1989, THE EXECUTION AND DELIVERY OF AN INDENTURE, LOAN AGREEMENT, ESCROW AGREEMENT, BOND PURCHASE CONTRACT, OFFICIAL STATEMENT AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 1 October 16, 1989 185lR PUBLIC HEARINGS 3. Court & "E" Open Joint Public Hearing . .--~.} ~.. Mayor and Common Council Community Development Commission That the Joint Public Hearing be closed; that further reading of the following resolutions be waived. ~) Mayor and Common Council Adopt a RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT., LTD. _~ Community Development Commission ~ion: ) Adopt a RESOWTION OF THE COMMUNITY DEVELOPMENT ~ COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT, LTD. ~t~) Authorize the execution of a Disposition and Development ~ Agreement with One Sunset Court, Ltd. for the sale of Agency owned property in the Central City Project Area with such non-substantive changes as are approved by Agency Counsel. 2 October 16, 1989 1851R Motion: RES OLUTIONS That further reading of the following resolutions be waived and that said resolutions be adopted. 4. Authorizing the Issuance of certain Collateralized Mortgage Bonds. (See Attached) Mayor and Common Council Motion: Adopt a RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY (A) OF SAN BERNARDINO, CALIFORNIA, APPROVING THE ISSUANCE OF CERTAIN COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO. Motion: (B) Motion: (C) aff /f? Community Development Commission Adopt a RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE ISSUANCE OF CERTAIN COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B, AND THE TERMS OF CERTAIN FINANCING DOCUMENTS TO BE EXECUTED AND DELIVERED IN CONNECTION THEREWITH. 1/ Joint Powers Financing Authority Adopt a RESOLUTION OF THE SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY AUTHORIZING THE PURCHASE BY THE AUTHORITY OF A PRINCIPAL AMOUNT APPROXIMATELY EQUAL TO $3,080,000 OF COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B, AUTHORIZING AND DIRECTING EXECUTION OF AUTHORITY PURCHASE AGREEMENT AND THE SALE THEREOF PURSUANT TO AN UNDERWRITERS PURCHASE AGREEMENT AND AUTHORIZING OFFICIAL ACTION ON CONNECTION THEREWITH. /, 3 October 16, 1989 1851R 5. Closed Session to discuss whether to initiate litigation. Motion: That the Community Development Commission recess to Closed Session to confer with its attorney regarding pending litigation pursuant to Government Code Section 54956.9(c), so that that the Commission may decide whether to initiate litigation. 6. Adjournment Motion: That the meeting be adjourned to Monday, November 6, 1989, in the Council Chambers of the City Hall, 300 North "D" Street, San Bernardino, California. 4 October 16, 1989 1851R ( /,~ COMMUNITY DEVELOPMENT COMMISSION/REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO M I NUT E S REGULAR MEETING September 18, 1989 11:00 a.m. The Community Development Commission/Redevelopment Agency meeting was called to order at 11:00 a.m., on Wednesday, September 18, 1989, in the Council Chambers of City Hall, 300 North "D" Street, San Bernardino, California, by Commissioner Tom Minor. Absent: Mayor W. R. Holcomb. ROLL CALL Roll Call was taken with the following being present: Members Esther Estrada, Jack Reilly, Jess Flores, Michael Maudsley, Tom Minor, Valerie Pope-Ludlam, Norine Miller. STAFF PRESENT Steven H. Dukett, Executive Director; John Hoeger, Redevelopment Agency; Dennis A. Barlow, Senior Assistant City Attorney; Marshall Julian, City Administrator; Shauna Clark, City Clerk; Margie Vance, Recording Secretary. Public Comments on Items not on Agenda. There were no public comments. 1. Community Developaent Commission/Redevelopment Agency of the City of San Bernardino Minutes of September 6, 1989. Commissioner Minor made a motion, seconded by Commissioner Estrada, to approve the minutes of the meeting of the Community Development Commission/Redevelopment Agency of the City of San Bernardino held on September 6, 1989, as submitted in typewritten form. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 2. Hallmark Building Contract Commissioner Miller made a motion, seconded by Commissioner Estrada, to approve Innovative Partners Inc., as the selected firm to develop a long-term use, management and implementation plan for the Hallmark Building at a cost of $26,550. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 1 September 18, 1989 l845R 3. Rockwell International Commissioner Miller made a motion, seconded by Commissioner Estrada, to approve the following motions: (A) That the Mayor and Common Council set a joint public hearing for 11:00 a.m. on October 2, 1989 to approve and ratify the Disposition and Development Agreement with Rockwell International Corporation. and (B) That the Community Development Commission set a joint public hearing for 11:00 a.m. on october 2, 1989 to approve the vi .J'- Disposition and Developmen~ Agreement with Rockwell International Corporation. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 4. Waterman Offramp The City Clerk read the title of all of the Resolutions. Mayor and Common Council RESOLUTION NO. 89-382 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING A LOAN AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO. Commissioner Flores made a motion, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Mayor and Common Council RESOLUTION NO. 89-383 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT WITH THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO. Commissioner Flores made a motion, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt. 2 September 18, 1989 l845R The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Commissioner Flores made a motion, seconded by Commissioner Estrada, to authorize the Mayor to extend from year to year the term of the loan from the City to the Tri-City Project Area. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Community Development Commission RESOLUTION NO. 5202 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING A LOAN AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO. Commissioner Flores made a motion, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. RESOLUTION NO. 5203 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT WITH THE CITY OF SAN BERNARDINO. Commissioner Flores made a motion, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Commissioner Flores made a motion, seconded by Commissioner Estrada, to authorize the Agency's Executive Director to extend from year to year the term of the loan from the Southeast Industrial Park Project Area to the City. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 3 September 18, 1989 l845R 5. Use of Facsimile Signature RESOLUTION NO. 5204 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE PURCHASE AND USE OF A FACSIMILE SIGNATURE ON CHECKS DRAWN UPON ALL ACCOUNTS OF THE REDEVELOPMENT AGENCY. Commissioner Flores made a motions, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 6. Approval of final form of financing documents Commissioner Estrada made a motion, seconded by Commissioner Miller, to continue this item to Monday, September 25, 1989 at 1:00 p.m. in the Council Chamber s. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None: Abstain: None. Absent: None. 7. Adjournment Commissioner Estrada made a motion, seconded by Commissioner Miller, to adjourn to Monday, September 25, 1989, in the Council Chambers of the City Hall, 300 North "D" Street, San Bernardino, California. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None: Abstain: None. Absent: None. 4 September 18, 1989 1845 R ( /6 COMMUNITY DEVELOPMENT COMMISSION/REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO M I NUT E S ADJOURNED REGULAR MEETING September 25, 1989 1:05 P.M. The Community Development Commission/Redevelopment Agency meeting was called to order at 1:05 P.M., on Monday, September 25, 1989, in the Council Chambers of City Hall, 300 North "D" Street, San Bernardino, California, by Commissioner Michael Mauds1ey. ROLL CALL Roll Call was taken with the following being present: Members Jack Reilly, Jess Flores, Michael Mauds1ey, Tom Minor, Norine Miller. Absent: Chairman W. R. "Bob" Holcomb, Members Esther Estrada and Valerie Pope-Ludlam. STAFF PRESENT Steven H. Dukett, Executive Director; Dennis A. Barlow, Senior Assistant City Attorney; Marshall Julian, City Administrator; Phil Arvizo, Executive Assistant to Council; James F. Penman, City Attorney; Denice Brue, Assistant City Attorney; John Cole, Administrative Assistant to Council; J. Lorraine Velarde, Mayor's Executive Assistant; Doris Reese, Deputy City Clerk; Katharine Peake, Recording Secretary. OTHERS PRESENT Michael Toy, Hawkins, De1afie1d & Wood; Vickie Michael, Hawkins, De1afie1d & Wood; Jim Iverson, Miller & Schroeder Financial, Inc. Public Comments on Items not on Agenda. There were no public comments. COMMISSIONERS ESTRADA AND POPE-LUDLAM ARRIVED AT 1:10 P.M. 1. Approval of Final form of Financing Documents. Mayor and Common Council The Deputy City Clerk read the titles of the Resolutions. A. RESOLUTION NO. 89-386 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING THE FINAL FORM OF DOCUMENTS IN CONNECTION WITH CERTAIN FINANCINGS. 1 September 25, 1989 1856R Commissioner Estrada made a motion, seconded by Commissioner Reilly, to waive further reading of the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Community Development Commission B. RESOLUTION NO. 5205 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE FINAL FORM OF DOCUMENTS IN CONNECTION WITH CERTAIN FINANCINGS. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to waive further reading of the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Joint Powers Financing Authority C. RESOLUTION NO. JPFA-4 RESOLUTION OF THE SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY APPROVING THE FINAL FORM OF DOCUMENTS IN CONNECTION WITH CERTAIN FINANCINGS. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to waive further reading of the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Mayor and Common Council D. RESOLUTION NO. 89-387 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA APPROVING THE FINAL FORM OF DOCUMENTS IN CONNECTION WITH CERTAIN FINANCINGS. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to waive further reading of the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 2 September 25, 1989 1856R Community Development Commission E. RESOLUTION NO. 5206 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA APPROVING THE FINAL FORM OF DOCUMENTS IN CONNECTION WITH CERTAIN FINANCINGS. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to waive further reading of the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. A lengthy discussion ensued. Michael Toy addressed the Commission. He explained the documents presented. Jim Iverson addressed the Commission. He explained that the tax attorneys were concerned about the possible tax implications of the golf course transaction. He requested that the Commission approve the documents but continue the meeting until Wednesday, September 27, 1989, for possible approval of changes in the documents pertaining to the golf course transaction. Commissioner Miller made a motion, seconded by Commissioner Estrada, to approve resolutions A, Band C, subject to final approval by the City Attorney's Office. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Commissioner Minor made a motion, seconded by Commissioner Pope-Ludlam, to approve resolutions D and E. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Commissioner Flores made a motion, seconded by Commissioner Minor, to continue the meeting to Wednesday, September 27, 1989, at 1:00 P.M. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 3 September 25, 1989 1856R CHAIRMAN W. R. HOLCOMB ARRIVED AT 1:30 P.M. 2. Request for Closed Session to discuss pending litigation. Mayor and Common Council That the Common Council recess to closed session to confer with its attorney regarding pending litigation pursuant to Government Code Section 54956.9(b)(1), as there is significant exposure to litigation. Commissioner Flores made a motion, seconded by Commissioner Miller, to recess to closed session. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 3. Request for Closed Session to discuss pending litigation. Mayor and Common Council That the Common Council recess to Closed Session pursuant to Government Code Section 54956.9(a) to confer with its attorney regarding pending litigation which has been initiated formally to which the City is a party as follows: Hobbs vs. City of San Bernardino - San Bernardino Superior Court Case No. 250971. Commissioner Flores made a motion, seconded by Commissioner Miller, to recess to closed session. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. RECESSED MEETING At 1:30 p.m. the Community Development Commission/Redevelopment Agency recessed to closed session. MEETING RECONVENED At 1:55 p.m. the Community Development Commission/Redevelopment Agency meeting was called to order by Chairman W. R. Holcomb. ROLL CALL Roll Call was taken with the following being present: Members Esther Estrada, Jack Reilly, Jess Flores, Michael Mauds1ey, Tom Minor, Valerie Pope-Ludlam, Norine Miller. 4 September 25, 1989 1856R STAFF PRE SENT Dennis A. Barlow, Senior Assistant City Attorney; Marshall Julian, City Administrator; Phil Arvizo, Executive Assistant to Council; James F. Penman, City Attorney; Denise Brue, Assistant City Attorney; John Cole, Administrative Assistant to Council; J. Lorraine Velarde, Mayor's Executive Assistant; Doris Reese, Deputy City Clerk; Katharine Peake, Recording Secretary. 4. Adjournment Commissioner Flores made a motion, seconded by Commissioner Miller, to adjourn to Wednesday, September 27, 1989 at 1:00 p.m., in the Council Chambers of the City Hall, 300 North "D" Street, San Bernardino, California. The motion carried by the following vote: Ayes: Member Reilly, Flores, Minor, Miller. Noes: None. Abstain: None. Absent: Estrada, Mauds1ey, Pope-Ludlam. 5 September 25, 1989 1856R j.t, COMMUNITY DEVELOPMENT COMMISSION/REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO MINUTES REGULAR MEETING October 2, 1989 8:45 a.m. The Community Development CommiSSion/Redevelopment Agency meeting was called to order at 8:45 a.m., on Monday, October 2, 1989, in the Council Chambers of City Hall, 300 North "0" Street, San Bernardino, California, by Chairman W. R. Holcomb. ROLL CALL Roll Call was taken with the following being present: Members Jess Flores, Jack Reilly, Michael Mauds1ey, Tom Minor, Valerie Pope-Ludlam, Norine Miller. Absent: Esther Estrada. STAFF PRESENT Steven H. Dukett, Executive Director; Dennis A. Barlow, Senior Assistant City Attorney; Marshall Julian, City Administrator; Shauna Clark, City Clerk; Margie Vance, Recording Secretary. Public Comments on Items not on Agenda. There were no public comments. CONTINUED FROM SEPTEMBER 27, 1989 RS-1 Approve Final Financing Plan in Connection with Certain Tax Allocation Refunding Bonds. A lengthy discussion ensued. Mr. Jim Iverson, Senior Vice President of Miller & Schroeder, Financial Consultant addressed the Commission and stated that on September 25, 1989 the meeting was continued for final approval on September 27, 1989 but that due to a lack of chorum the item was continued to today's meeting. He explained that as a result of the refunding of a series of outstanding bonds issues the City will have a total of $7,163,000.00 to spend. He said that as soon as the Commission approves the two resolutions before them the financial transaction would close within one half hour. He also said that he has already spoken with Mr. Tim Sabo, Bond Counsel and that he had stated that the bonds have been executed and that the bonds and the money were available. He said that the actual cash dollars will not arrive until the last part of the financial transaction has closed which will take place on October 28, 1989, and that it was a 30 day delay that was dictated by the changes of the 1986 tax bill and stated that as of the first of November the City will have approximately $11 million dollars in cash rebate. He spoke briefly regarding the Collateralized Mortgage Obligations (CMO) and said that his office was still gathering information from Redevelopment Agency staff regarding the Agency's outstanding obligations. 1 October 2, 1989 1861R Commissioner Flores asked if the $7 million previously mentioned was part of the $11 million. Mr. Iverson said yes. Commissioner Minor asked if the City was going to have $11 million to spend. Mr. Iverson said yes. Community Development Commission The City Clerk read the titles of the resolutions. RESOLUTION NO. 5208 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE FINAL FINANCING PLAN IN CONNECTION WITH CERTAIN TAX ALLOCATION REFUNDING BONDS. Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: Estrada. Joint Powers Financing Authority RESOLUTION NO. JPFA-5 RESOLUTION OF THE CITY OF SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY APPROVING THE FINAL FINANCING PLAN IN CONNECTION WITH CERTAIN TAX ALLOCATION REFUNDING BONDS. Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: Estrada. RECESSED MEETING At 9:00 a.m. the Community Development Commission/Redevelopment Agency recessed to 11:00 a.m. MEETING RECONVENED At 11:20., the Community Development Commission/Redevelopment Agency of meeting was called to order by Chairman W. R. Holcomb. 2 October 2, 1989 1861R ROLL CALL Roll Call was taken with the following being present: Members Esther Estrada, Jess Flores, Jack Reilly, Michael Maudsley, Tom Minor, Valerie Pope-Ludlam, Norine Miller. STAFF PRE SENT Steven H. Dukett, Executive Director; Arlene S. Berman, Administrative Deputy; John Hoeger, Development Manager; Dennis A. Barlow, Senior Assistant City Attorney; Marshall Julian, City Administrator; Shauna Clark, City Clerk; Margie Vance, Recording Secretary. Public Comments on Items not on Agenda. There were no public comments. 1. Redevelopment Committee Meeting/Redevelopment Agency of the City of San Bernardino Minutes of August 24, 1989. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to receive and file the minutes of the meeting of the Redevelopment Committee/Redevelopment Agency of the City of San Bernardino held on August 24, 1989 as submitted in typewritten form. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 2. Redevelopment Committee Meeting/Redevelopment Agency of the City of San Bernardino Minutes of September 7, 1989. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to receive and file the minutes of the meeting of the Redevelopment Committee/Redevelopment Agency of the City of San Bernardino held on September 7, 1989 as submitted in typewritten form. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 3. Uptown Citizens Advisory Committee Appointments. Commissioner Estrada made a motion, seconded by Commissioner Reilly to appoint Mr. James J. Filarski and Mr. Frederick Curlin, M.D., to serve on the Uptown Citizens Advisory Committee to represent Sub Area "A". The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 3 October 2, 1989 l86lR 4. Setting of Public Hearing - Court & "E" Street. Mayor and Common Council Commissioner Estrada made a motion, seconded by Commissioner Reilly, that a Joint Public Hearing of the Mayor and Common Council with the Community Development Commission be set at 11:00 a.m. on October 16, 1989 to consider the sale of certain real property owned by the Redevelopment Agency within the Central City Project Area to One Sunset Court Ltd., subject to the conditions described in the staff report. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Community Development Commission Commissioner Estrada made a motion, seconded by Commissioner Reilly, that the Community Development Commission set a Joint Public Hearing of the Mayor and Common Council at 11:00 a.m. on October 16, 1989 to consider the sale of certain real property owned by the Redevelopment Agency within the Central City Project Area to One Sunset Court Ltd., subject to the conditions described in the staff report. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 5. Quarterly Current Activity Status Report. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to receive and file the Current Activity Status Report. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 6. Arrowhead Health Care System - Amended DDA. Commissioner Estrada made a motion, seconded by Commissioner Reilly, to continue this item to Monday, October 16, 1989. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. COMMISSIONER FLORES AND COMMISSIONER MILLER LEFT THE COUNCIL TABLE. Mayor Holcomb addressed the Commission and stated that he had to disqualify himself from items 7 and 8 due to a possible conflict of interest. Commissioner Pope-Ludlam acting as Mayor Pro-Tempore continued with the Meeting. 4 October 2, 1989 l861R Commissioner Pope-Ludlam asked that item 8 be taken out of order. 8. Closed Session to discuss whether to initiate litigation. Pursuant to Government Code Section 54956.9(c) the Commission met in closed session to decide whether to initiate litigation. Commissioner Pope-Ludlam made a motion, seconded by Commissioner Reilly, to recess to closed session. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Mauds1ey, Minor, Pope-Ludlam. Noes: None. Abstain: None. Absent: Flores, Miller. RECESSED MEETING At 11:25 a.m., the Community Development Commission/Redevelopment Agency recessed to closed session. MEETING RECONVENED At 11:40 a.m., the Community Development Commission/Redevelopment Agency meeting was called to order by Commissioner Pope-Ludlam. ROLL CALL Roll Call was taken with the following being present: Members Esther Estrada, Jack Reilly, Michael Mauds1ey, Tom Minor, Valerie Pope-Ludlam. Absent: Jess Flores, Norine Miller. STAFF PRESENT Steven H. Dukett, Executive Director; Arlene S. Berman, Administrative Deputy; John Hoeger, Development Manager; Dennis A. Barlow, Senior Assistant City Attorney; Marshall Julian, City Administrator; Shauna Clark, City Clerk; Margie Vance, Recording Secretary. COMMISSIONER FLORES AND COMMISSIONER MILLER RETURNED TO THE COUNCIL TABLE. 7. Rockwell International Mayor and Common Council The City Clerk read the titles of the resolutions. RESOLUTION NO. 89-396 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ROCKWELL INTERNATIONAL CORPORATION. 5 October 2, 1989 1861R Commissioner Minor made a motion, seconded by Commissioner Reilly, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Community Development Commission RESOLUTION NO. 5206 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ROCKWELL INTERNATIONAL CORPORATION. Commissioner Minor made a motion, seconded by Commissioner Reilly, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. MAYOR HOLCOMB RETURNED TO THE COUNCIL TABLE. RS-2 The Mt. Vernon Business Corridor and Adjacent Areas. Mayor and Common Council RESOLUTION NO. 89-397 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DESIGNATING A REDEVELOPMENT SURVEY AREA. Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. RESOLUTION NO. 89-398 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING A LOAN AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO. 6 October 2, 1989 l861R Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. RESOLUTION NO. 89-399 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT WITH THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO. Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Community Development Commission RESOLUTION NO. 5209 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING A LOAN AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO. Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. RESOLUTION NO. 5210 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT WITH THE CITY OF SAN BERNARDINO. Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absen t: None. 7 October 2, 1989 1861R Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to authorize the execution of an Agreement with Urban Futures, Inc. for Redevelopment plan adoption and related environmental consulting services. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absen t: None. Commissioner Miller made a motion, seconded by Commissioner Pope-Ludlam, to authorize the formation of a Citizen Advisory Committee composed of appointees from Mayor Holcomb and Counci1persons Estrada, Flores and Pope-Ludlam representing business owners, business tenants, residential owners and residential tenants; as well as representatives to be appointed by community based organizations in the proposed area. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. RS-3 EXPANSION JOINTS REPAIR - CENTRAL CITY MALL A discussion ensued. Dennis A. Barlow, Senior Assistant City Attorney, addressed the Commission and stated that before the Commission can approve the item before them they needed to have the back-up for the staff report and recommended that the item be continued to 2:00 p.m., in the afternoon. Commissioner Estrada made a motion, seconded by Commissioner Minor to continue the item to 2:00 p.m, in the afternoon or as soon thereafter as the matter can be heard. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Mauds1ey, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. RECESSED MEETING At 11:45 a.m., the Community Development Commission/Redevelopment Agency recessed to 2:00 p.m., in the afternoon or soon thereafter so the matter can be heard. MEETING RECONVENED At 2:45 a.m., the Community Development CommisSion/Redevelopment Agency meeting was called to order by Chairman W. R. Holcomb. ROLL CALL Roll Call was taken with the following being present: Members Esther Estrada, Jack Reilly, Jess Flores, Michael Mauds1ey, Tom Minor, Valerie Pope-Ludlam, Norine Miller. 8 October 2, 1989 1861R STAFF PRESENT James F. Penman, City Attorney; Marshall Julian, City Administrator; Shauna Clark, City Clerk; Margie Vance, Recording Secretary. RS-3 EXPANSION JOINTS REPAIR - CENTRAL CITY MALL A discussion ensued. Commissioner Flores asked Wayne Overstreet if there was justification for sole source on the joint expansion item. Wayne Overstreet answered that his office went out for bids and that he received 3 bids out of which the recommended company in his staff report was the most qualified. City Attorney, Jim Penman stated that Mr. Overstreet followed the proper procedure and that his finding was sufficient to make a final recommendation. Mayor and Common Council RESOLUTION NO. 89-403 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXPENDITURE OF CENTRAL CITY PROJECT AREA FUNDS FOR PUBLIC IMPROVEMENTS (EXPANSION JOINTS - 3 LEVEL PARKING STRUCTURE). Commissioner Reilly made a motion, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. Community Development Commission RESOLUTION NO. 5211 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXPENDITURE OF CENTRAL CITY PROJECT AREA FUNDS FOR PUBLIC IMPROVEMENTS (EXPANSION JOINTS - 3 LEVEL PARKING STRUCTURE) . Commissioner Reilly made a motion, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absen t: None. 9 October 2, 1989 l861R COMMISSIONER POPE-LUDLAM LEFT THE COUNCIL TABLE. 6. Arrowhead Health Care System - Amended DDA. Commissioner Reilly made a motion, seconded by Commissioner Flores, to reconsider item 6. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Miller. Noes: None. Abstain: None. Absent: Pope-Ludlam. A lengthy discussion ensued. COUNCILWOMAN POPE-LUDLAM RETURNED TO THE COUNCIL TABLE. Commissioner Estrada made a motion, seconded by Commissioner Minor, to set a Special Meeting in order to further review item 6 and that the meeting be set for Thursday, October 5, 1989 at 4:00 p.m. in the Redevelopment Agency Conference Room, Fourth Floor, City Hall, 300 North "D" Street, San Bernardino, California. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 9. Adjournment Commissioner Pope-Ludlam made a motion, seconded by Commissioner Miller, to adjourn the meeting to Monday, October 16, 1989 at 11:00 a.m., in the Council Chambers of the City Hall, 300 North "D" Street, San Bernardino, California. The motion carried by the following vote: Ayes: Member Estrada, Reilly, Flores, Maudsley, Minor, Pope-Ludlam, Miller. Noes: None. Abstain: None. Absent: None. 10 October 2, 1989 l86lR j,eI COMMUNITY DEVELOPMENT COMMISSION/REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO M I NUT E S SPECIAL MEETING October 6, 1989 9:03 a.m. The Community Development Commission/Redevelopment Agency meeting was called to order at 9:03 a.m., on Friday, October 6, 1989, in the Redevelopment Agency Conference Room, City Hall, 300 North "D" Street, San Bernardino, California, by Chairman W. R. Holcomb. ROLL CALL Roll Call was taken with the following being present: Members Esther Estrada, Jack Reilly, Jess Flores, Michael Maudsley, Tom Minor. Absent: Valerie Pope-Ludlam, Norine Miller. (Written Waivers of Notice were received and are on file) STAFF PRESENT James E. Robbins, Acting Executive Director; Arlene S. Berman, Administrative Deputy; John Hoeger, Redevelopment Agency; J. Lorraine Velarde, Executive Assistant to Mayor; Phil Arvizo, Council Office; Dennis A. Barlow, Senior Assistant City Attorney; Doris Reese, Deputy City Clerk; Margie Vance, Recording Secretary. Public Comments on Items not on Agenda. There were no public comments. CONTINUED FROM OCTOBER 2, 1989 1. Arrowhead Health Care System Mayor and Common Council The Deputy City Clerk read the title of the resolution. RESOLUTION NO. 89-404 RESOLUTION OF THE MAYOR. AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A COOPERATIVE AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO. Commissioner Minor made a motion, seconded by Commissioner Estrada, to waive further reading of the resolution and to adopt the resolution. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor. Noes: None. Abstain: None. Absent: Pope-Ludlam, Miller. Commissioner Minor made a motion, seconded by Commissioner Estrada, to set a joint public hearing at 9:00 a.m. on October 16, 1989 for the purpose of considering a TEFRA Resolution. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor. Noes: None. Abstain: None. Absent: Pope-Ludlam, Miller. Community Development Commission Commissioner Minor made a motion, seconded by Commissioner Estrada, to approve execution of a Second Amendment to the Disposition and Development Agreement with Arrowhead Health Care System, Inc. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor. Noes: None. Abstain: None. Absent: Pope-Ludlam, Miller. Commissioner Minor made a motion, seconded by Commissioner Estrada, to authorize the execution of a Cooperative Agreement between the City of San Bernardino and the Community Development Commission of the City of San Bernardino. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor. Noes: None. Abstain: None. Absent: Pope-Ludlam, Miller. Commissioner Minor made a motion, seconded by Commissioner Estrada, to set a joint public hearing at 9:00 a.m. on October 16, 1989 for the purpose of considering a TEFRA Resolution. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor. Noes: None. Abstain: None. Absent: Pope-Ludlam, Miller. 2 . Adjournment Commissioner Minor made a motion, seconded by Commissioner Estrada, to adjourn to Monday, October 16, 1989, in the Council Chambers of the City Hall, 300 North "D" Street, San Bernardino, California. The motion carried by the following vote: Ayes: Members Estrada, Reilly, Flores, Maudsley, Minor. Noes: None. Abstain: None. Absent: Pope-Ludlam, Miller. 2 October 6, 1989 l862R AGENDA ITEM INFORMATION SUMMARY GENERAL INFORMATION: Subject.J.... &M'U~ /1~~Gf 11'/..n'I~, 4. h. 1:) fEFf.+ t~u;.. fI-'~ Author ~,~ Ext. Ward (p Project Area AI W Committee CommissionlCouncil Filing Dates Funding Requirements J 0- / ~ - J r I ~ Meeting Dates Budget Authority !1---eYut.- RDA MANAGEMENT REVIEW: CLEARANCES: Date Date "2:~~ /~I/~ Yes N/A 0 ~~ /0/1 /0///-3'7 ~ ~ , I D III ID-II-J''l IZL D . Counsel ~ I q City Attorney , Ma 'sor . CITY DEPARTMENTAL REVIEW: 0 0 City Administrator Date RDA Committee recommendation Dept. By Dept. By INFORMATIONAL DATA FORWARDED TO CITY DEPARTMENTS/COUNCIL OFFICES: Sent to By Date Mayor's Office Council Ward Council Ward Council Ward Council Ward Department Department COMMENTS/CONCERNS: Include pertinent comments and concerns of offices and persons clearing the summary, such as controversial Issues, time constraints and funding complications. Indicate dates when action must be taken. ~t RDA -174 REV. 6-29-89 Redevelopment Agency · City of San Bernardino 300 North "0" Street, Fourth Hoor . San Bernardino, California 92418 (714) 384-5081 FAX (714) 888-9413 Pride -I e~ Steven H. Dukett Executive Director OCTOBER 11, 1989 SAN BERNARDINO COMMUNITY HOSPITAL AUTHORIZING THE ISSUANCE AND SALE OF SAN BERNARDINO COMMUNITY HOSPITAL REVENUE REFUNDING BONDS; TEFRA PUBLIC HEARING Synopsis of Previous Commission/Council/Committee Action: 09/21/89 Committee reviewed the item and recommended approval. 10/06/89 Council adopted a Resolution No. 89-404. 10/06/89 Council approved setting a joint public hearing. 10/06/89 Commission approved execution of a Second Amendment to the DDA. 10/06/89 Commission authorized execution of a Cooperative Agreement. 10/06/89 Commission approved setting a joint public hearing for TEFRA Resolution. (MAYOR AND COMMON COUNCIL) Recommended Motion: OPEN PUBLIC HEARING Motion: (A) That the Public Hearing be closed; that further reading of the following resolution be waived. (continued on Page 2) Respectfully Submitted, Director Supporting data attached: YES FUNDING REQUIREMENTS: None Ward: Project: 6 NW Commission Notes: JR:EJ:sm:2399H Agenda of: October 16. 1989 Item No. Redevelopment Agency (continued from Page 1) (MAYOR AND COMMON COUNCIL) Motion: Adopt a RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF (B) SAN BERNARDINO, AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO COMMUNITY HOSPITAL), SERIES 1989, THE EXECUTION AND DELIVERY OF AN INDENTURE, LOAN AGREEMENT, ESCROW AGREEMENT, BOND PURCHASE CONTRACT, OFFICIAL STATEMENT AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. JR:EJ:sm:2399H 2 Redevelopment Agency S T A F F R E P 0 R T This is to request that the Mayor and Common Council approve a TEFRA resolution which would authorize the issuance and sale of the Refunding Bonds and the execution and delivery of certain documents. BACKGROUND In 1985, the City of San Bernardino issued limited obligation revenue bonds (the "1985 Bonds"), the proceeds of which were loaned to San Bernardino Community Hospital (the "Hospital"). The proceeds of 1985 bond issue were used, in part, to modernize the Hospital's then existing acute care facility as well as to construct a new five story patient care tower. The Hospital, and not the City, is liable to repay these 1985 Bonds. The Hospital has requested the assistance of the City to issue refunding bonds ("Refunding Bonds") in order to refund the 1985 Bonds and thereby realize a present value debt service payment savings of $2.0 - 2.5 million (depending on the interest rate to be obtained for the Refunding Bonds). As was the case with respect to the 1985 Bonds, the Refunding Bonds will be payable solely from moneys received from the Hospital. Today you are being asked (1) to hold a TEFRA public hearing (which has been appropriate noticed in The San Bernardino Sun) during which the public is to be given the opportunity to express their views with respect to the proposed issuance of the Refunding Bonds and then (2) to consider the resolution which would authorize the issuance and sale of the Refunding Bonds and the execution and delivery of certain bond documents. These documents include: (a) Indenture between the City and the Trustee (b) Loan Agreement between the City and the Hospital (c) Escrow Agreement with the Hospital, the City and the Escrow Agent (d) Bond Purchase Contract between the city and Rauscher Pierce Refsnes, Inc. (e) Official Statement The proposed issuance of Refunding Bonds will be in a principal amount not in excess of $40,000,000. RECOMMENDA nON Both Special Counsel and Agency Counsel have reviewed the documents and both will be present during the hearing to answer questions. It is, therefore, recommended that the Mayor and Common Council adopt the resolution which would authorize the issuance and sale of the refunding Bonds. JR:EJ:sm:2399H ') 1 RESOLUTION NO. 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN 3 BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO COMMUNITY HOSPITAL), SERIES 1989, THE EXECUTION AND DELIVERY OF 4 AN INDENTURE, LOAN AGREEMENT, ESCROW AGREEMENT, BOND PURCHASE CONTRACT AND OFFICIAL STATEMENT, AND AUTHORIZING CERTAIN OTHER 5 ACTIONS IN CONNECTION THEREWITH. 6 WHEREAS, the City of San Bernardino (the "City") is a 7 municipal corporation and charter city, duly organized and 8 existing under a freeholders' charter, pursuant to which the City 9 has the right and power to make and enforce all 1 aws and 10 regulations in respect to municipal affairs and certain other 11 matters in accordance with, and as more particularly provided in, 12 Sections 3, 5 and 7 of Article XI of the Constitution of the 13 State of California and Section 40 of the Charter of the City 14 (the "Charter"); 15 WHEREAS, the Common Council of the City (the "Council"), 16 acting under and pursuant to the powers reserved to the City 17 under Sections 3, 5 and 7 of Article XI of the Constitution of 18 the State of California and Section 40 of the Charter,- has 19 established by the adoption of Ordinance No. 3815 of the City, as 20 amended (the "Law") and its resolution No. 85-260, a procedure 21 for the authorization, issuance and sale of revenue bonds by the 22 City, for the purpose, inter alia, of providing financing for 23 health facilities as specified therein; 24 WHEREAS, the Council, in 1985 pursuant to the Law, 25 authorized the issuance of City of San Bernardino Insured 26 Hospital Revenue Bonds (San Bernardino Community Hospital), 27 Series 1985A (the "1985 Bonds"); 28 DAB/ses October 11, 1989 1 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 RESOLUTION...AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO 2 COMMUNITY HOSPITAL), SERIES 1989...AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 3 WHEREAS, San Bernardino Community Hospital, a California 4 5 6 nonprofit public benefit corporation (the "Corporation"), has requested the assistance of the City to allow for the refunding of the 1985 Bonds; 7 WHEREAS, the Law allows the City to issue revenue bonds for 8 the purpose of refunding the 1985 Bonds, and the Council desires 9 10 that the City issue revenue refunding bonds, designated as "City of San Bernardino Hospital Revenue Refunding Bonds (San Bernardino Community Hospital) Series 1989" (the "Bonds"), in an aggregate principal amount not to exceed forty million dollars ($40,000,000), for the purpose of refunding the 1985 Bonds; WHEREAS, assisting in the refunding of the 1985 Bonds, the proceeds of which were used to finance health facilities of the Corporation all located solely within the City, promotes the purposes of the Law, is in the public interest, serves a public purpose, promotes the health, welfare and safety of the Citizens of the City, and constitutes a municipal affair; WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the "Code"), the Bonds are required to be approved, following a public hearing, by an elected representative of the issuer of the Bonds and an elected representative of the governmental unit having jurisdiction over the area in which the facilities relating to the refunding project are located; WHEREAS, the facilities relating to the refunding project are located wholly within the City; DAB/ses October 11, 1989 2 17 18 19 20 21 22 23 24 25 26 27 28 1 RESOLUTION...AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO 2 COMMUNITY HOSPITAL), SERIES 1989...AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 3 4 WHEREAS, the Council is the elected legislative body of the 5 City and is the applicable elected representative required to 6 approve the issuance of the Bonds within the meaning of Section 147(f) of the Code; 7 8 9 WHEREAS, pursuant to Section 147(f) of the Code, the Council has, fOllowing notice duly given, held a public hearing 10 regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds; 11 12 WHEREAS, all acts, conditions and things required by the 13 Law, and by all other laws of the State of California, to exist, 14 have happened and have been performed pursuant to and in 15 connection with the issuance of the Bonds, exist, have happened, 16 and have been performed in regular and due time, form and manner, as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to issue the Bonds for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of San Bernardino, as follows: SECTION 1. The Council does hereby find and declare that the above recitals are true and correct and that the issuance of the Bonds is a municipal affair and a proper public purpose. SECTION 2. Pursuant to the Law, the Bonds shall be issued in an aggregate principal amount not to exceed forty DAB/ses October 11, 1989 3 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 RESOLUTION...AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO 2 COMMUNITY HOSPITAL), SERIES 1989...AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 3 million dollars ($40,000,000). 4 SECTION 3. The proposed form of indenture, dated as of 5 November 1, 1989, between the City and Security Pacific National 6 Bank, as trustee (the "Indenture"), presented at this meeting, is 7 hereby approved. The Mayor, City Administrator or the authorized 8 9 representative of either of them and City Clerk or Deputy City Clerk are hereby authorized and directed, for and in the name of 10 and on behalf of the City, to execute, acknowledge and deliver to 11 Security Pacific National Bank, as trustee selected by the Corporation, which institution shall be reasonably acceptable to the City) (the "Trustee"), an Indenture in substantially said form, with such changes therein as the officers executing the same, with the advice of the City Attorney, may approve, such approval to be conclusively evidenced by the execution and delivery thereof. The date, maturity dates, interest rate or rates, interest payment dates, denominations, forms, registration privileges, manner of execution, place or places of payment, terms of redemption and other terms of the Bonds shall be as provided in said Indenture as finally executed. SECTION 4. The proposed form of loan agreement, dated as of November 1, 1989, between the City and the Corporation (the "Loan Agreement"), presented at this meeting, is hereby approved. The Mayor, City Administrator or the authorized representative of either of them and the City Clerk or Deputy City Clerk are hereby authorized and directed to execute and deliver such Loan DAB/ses October 11, 1989 4 18 19 20 21 22 23 24 25 26 27 28 1 RESOLUTION...AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO 2 COMMUNITY HOSPITAL), SERIES 1989...AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 3 4 Agreement, for and in the name of and on behalf of the City, with 5 such changes therein as the officers executing the same, with the 6 advice of the City Attorney, may approve, such approval to be 7 conclusively evidenced by the execution and delivery thereof. SECTION 5. The proposed form of escrow agreement, dated 8 9 as of November 1, 1989, among the City, the Corporation and 10 Security Pacific National Bank (the "Escrow Agreement"), presented at this meeting, is hereby approved. The Mayor, City 11 Administrator or the authorized representative of either of them 12 13 and the City Clerk or Deputy City Clerk are hereby authorized and 14 directed to execute and deliver such Escrow Agreement, for and in 15 the name of and on behalf of the City, with such changes therein 16 as the officers executing the same, with the advice of the City 17 Attorney, may approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 6. The proposed form of bond purchase contract, to be dated as of the date of the sale of the Bonds, between the City and Rauscher Pierce Refsnes, Inc. (the "Bond Purchase Contract"), presented at this meeting, is hereby approved. The Mayor, City Administrator or the authorized represent~tive of either of them is hereby authorized and directed to approve the final terms of the sale of the Bonds, provided that the net interest cost of the Bonds shall not exceed twelve percent (12%), and to evidence the City's acceptance of the offer made thereby by executing and delivering the Bond Purchase Contract, in DAB/ses October 11, 1989 5 16 17 18 19 20 21 22 23 24 25 26 27 28 1 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO 2 COMMUNITY HOSPITAL), SERIES 1989...AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 3 4 substantially said form, with such changes therein as the officer 5 executing the same, with the advice of the City Attorney, may 6 require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. 7 SECTION 7. The proposed form of official statement to 8 9 be used in connection with the offer and sale of the Bonds (the 10 "Official Statement"), presented at this meeting, is hereby adopted and approved. The Mayor, City Administrator or the 11 12 authorized representative of either of them is hereby authorized 13 and directed to execute and deliver the same, with such changes 14 therein as the officer executing the same, with the advice of the 15 City Attorney, may require or approve, such approval being conclusively evidenced by the execution and delivery thereof. Rauscher Pierce Refsnes, Inc. is hereby authorized to distribute copies of the Official Statement in preliminary form and to distribute copies of the Official Statement in preliminary. form and to distribute copies of the Official Statement as finally executed, to persons who may be interested in the purchase of the Bonds, and is directed to deliver such copies to all actual purchasers of the Bonds. SECTION 8. Forms of the proposed Indenture, Loan Agreement, Escrow Agreement, Bond Purchase Contract and Official Statement are on file in the Office of the City Clerk. SECTION 9. The Bonds in an aggregate principal amount not to exceed forty million dollars ($40,000,000) shall be DAB/ses October 11, 1989 6 15 18 19 20 21 22 23 24 25 26 27 28 1 RESOLUTION...AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO 2 COMMUNITY HOSPITAL), SERIES 1989...AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 3 4 executed by the facsimile signature of the Mayor or City Administrator. The facsimile signature of the City Clerk or 5 6 Deputy City Clerk, in forms set forth in and otherwise in accordance with the Indenture. 7 SECTION 10. The Bonds, as executed, shall be delivered 8 to the Trustee for authentication. The Trustee is hereby 9 10 requested and directed to authenticate the Bonds by executing the 11 Trustee's certificate of authentication appearing thereon, and to 12 deliver the Bonds, when duly executed and authenticated, to the 13 purchasers thereof, in accordance with written instructions 14 executed on behalf of the City by the Mayor, City Administrator or the authorized representative of either of them, which 16 instructions said officer is hereby authorized and directed, in 17 the name of and on behalf of the City, to execute and deliver to the Trustee. Said instructions shall provide for the delivery of the Bonds to Rauscher Pierce Refsnes, Inc. upon payment of the purchase price thereof. SECTION 11. Pursuant to Section 147(f) of the Code, the Council hereby approves the issuance of the Bonds. It is the purpose and intent of the Council that this resolution constitute approval of the issuance of the Bonds by the applicable elected representative of the issuer and the applicable elected representative of the governmental unit having jurisdiction over the area in which the facilities relating to the refunding project are located, in accordance with said Section 147(f). DAB/ses October 11, 1989 7 17 18 19 20 21 22 23 1 RESOLUTION...AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO 2 COMMUNITY HOSPITAL), SERIES 1989...AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. 3 SECTION 12. The officers of the City are hereby 4 5 authorized and directed, jointly and severally, to do any and all 6 things to execute and deliver all documents which they may deem 7 necessary or advisable in order to consummate the issuance, sale and delivery of the Bonds, and otherwise to effectuate the 8 purposes of this Resolution. 9 SECTION 13. This Resolution shall take effect 10 immediately upon its passage. 11 12 I HEREBY CERTIFY that the foregoing resolution was duly 13 adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the 14 day of , 1989, by the following vote, to wit: 15 AYES: Council Members 16 NAYS: ABSENT: City Clerk The foregoing resolution is hereby approved this day of , 1989. W.R. Holcomb, Mayor 24 City of San Bernardino Approved as to form 25 and legal content: 26 27 28 JAMES F. PENMAN, City Attorney B~) DAB/ses October 11, 1989 8 ESCROW AGREEMENT This ESCROW AGREEMENT, dated as of November 1, 1989, by and among the CITY OF SAN BERNARDINO, a charter city and municipal corporation duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"), SAN BERNARDINO COMMUNITY HOSPITAL, a nonprofit corporation duly organized and existing under the laws of the State of California (the "Corporation"), and SECURITY PACIFIC NATIONAL BANK, a national banking association duly organized and existing under the laws of the United States of America, and being qualified to accept and administer the trusts hereby created (the "Bank"); WITNESSETH: WHEREAS, the City has heretofore duly issued its City of San Bernardino Insured Hospital Revenue Bonds (San Bernardino Community Hospital) Series 1985A, dated December 1, 1985, in the aggregate principal amount of $35,000,000 (the "1985 Bonds") pursuant to an indenture between the City and the Bank, dated as of December 1, 1985 (the "1985 Indenture"); WHEREAS, substantial savings and other benefits can be obtained by providing for the refunding of the outstanding principal installments of the 1985 Bonds; WHEREAS, the Corporation has requested the City, and the City has agreed, to issue its City of San Bernardino Community Hospital Revenue Refunding Bonds (San Bernardino Community Hospital) Series 1989 (the "1989 Bonds") in an aggregate principal amount of $ ,000,000 for the purpose, among others, of providing moneys which will be sufficient to provide for the retirement of the outstanding principal installments of the 1985 Bonds together with accrued interest- thereon; WHEREAS, to provide for the issuance of the 1989 Bonds, the City shall enter into an indenture with the Bank, as trustee, dated as of November 1, 1989 (the "1989 Indenture"); WHEREAS, the 1989 Indenture contemplates the setting aside of a portion of the proceeds of the 1984 Bonds and of moneys held under the 1985 Indenture in order to provide for the payment of the 1985 Bonds and such proceeds and moneys shall be deposited in a special trust fund to be created hereunder to be known as the Escrow Fund to be maintained by the Bank (the "Escrow Fund") on , 1989 or such later date as directed by the City; 22l9m5 ....; '., /) '-(' WHEREAS, the Corporation and the City have taken action to cause to be issued or delivered to the Bank for deposit in or credit to the Escrow Fund [cash and certain securities and investments (the "Escrow Securities") consisting of certain united States Treasury Certificates of Indebtedness and Notes - State and Local Government Series (the "State and Local Government Series Securities"),] all as listed on Schedule I attached hereto and made a part hereof, in an amount which, together with income or increment to accrue on such securities, will be sufficient to pay the principal installments of the 1985 Bonds together with accrued interest thereon as the same respectively become due in accordance with their stated maturity dates or are redeemed upon the first possible date of redemption of the 1985 Bonds, namely, December 1, 1995. NOW, THEREFORE, the City, the Corporation and the Bank hereby agree as follows: Section 1. Establishment and Maintenance of Escrow Fund. The Bank shall establish and maintain until all principal installments of and interest and redemption premiums, as applicable, on the 1985 Bonds have been paid in full a fund designated as the "Escrow Fund," and to hold the securities, investments and moneys therein at all times as a special fund and separate trust account wholly segregated from all other securities, investments or moneys on deposit with the Bank. All securities, investments and moneys in the Escrow Fund are hereby irrevocably pledged, subject to the provisions of Section 2 hereof, to secure the payment of the principal installments of and interest and redemption premiums, as applicable, on the 1985 Bonds. Section 2. Investment of the Escrow Fund. (a) The Corporation, the City and the Bank each shall take all remaining necessary action to have issued and registered in the name of the Bank, for the account of the Escrow Fund, [the State and Local Government Series Securities.] The Bank shall use the portion of the proceeds of the 1989 Bond and the moneys held under the 1985 Indenture deposited into the Escrow Fund to purchase the [State and Local Government Series Securities as specified in Schedule I.] (b) The Bank shall not reinvest any cash portion of the Escrow Fund; provided, however, that after obtaining an unqualified opinion of nationally recognized bond counsel that such reinvestment will not cause the 1989 Bonds to be ["arbitrage bonds"] as defined in Section 103(c) of the Internal Revenue Code of 1986, and the regulations of the United States Department of the Treasury issued thereunder, and will not result in the breach of any covenant of the City contained in the 1989 Indenture, the Bank may reinvest any cash portion of the Escrow Fund in direct obligations of the United States of America or obligations the payment of the principal and interest of which is guaranteed by a pledge of the full faith and credit of the United States of America. Any such reinvestment shall be made in securities the principal of and interest on which is payable at such times and in such amounts as will be sufficient (together with the other securities, investments and moneys in the Escrow Fund) to pay when due the principal installment of and interest on the 1985 Bonds in accordance with Section 3. The Bank shall not be liable or responsible for any loss resulting from any reinvestment made pursuant to this Agreement and in full compliance with the provisions hereof. Section 3. Payment of the 1985 Bonds. (a) The Bank shall collect and deposit in the Escrow Fund the principal of and interest on all Escrow Securities held for the account of the Escrow Fund promptly as such principal and interest become due, and to apply, subject to the provisions of Section 2, such principal and interest, together with any other moneys and the principal of and interest on any other securities deposited in the Escrow Fund, to the payment of the principal installments of and interest and redemption premiums, as applicable, on the 1985 Bonds at the times and places and in the manner stipulated in the 1985 Bonds and in the 1985 Indenture and in subsection (b) of this Section. Upon retirement in full of all principal installments of and interest on the 1985 Bonds, the Bank shall transfer any moneys or securities remaining in the Escrow Fund to the Corporation. (b) In accordance with Section 10.03 of the 1985 Indenture, the Bank is irrevocably instructed and shall apply the moneys and securities on deposit in the Escrow Fund to the payment upon maturity or upon the first possible date of redemption (namely December 1, 1995), as the case may be, to the payment or redemption of the 1985 Bonds. The Bank is further irrevocably instructed and shall cause all appropriate notices of such redemption to be given as provided in Article IV of the 1985 Indenture and as otherwise required by the 1985 Indenture. Section 4. Possible Deficiencies. (a) If at any time it shall appear to the Bank that the moneys in the Escrow Fund, including the anticipated proceeds of the Escrow Securities, will not be sufficient to make all payments required by Section 3 hereof, the Bank shall notify the Corporation in writing as soon as reasonably practicable of such fact, the amount of such deficiency and the reason therefor. (b) Thereupon the Corporation shall deposit in the Escrow Fund, from any legally available moneys, such additional moneys as may be required to meet fully the aggregate amounts to become due and payable for the principal installments of and interest and redemption premiums, as applicable, on the 1985 Bonds as the same become due. (c) The Bank shall in no manner be responsible for the Corporation's failure to make such deposit if the Bank shall have notified the Corporation as soon as is reasonably practicable of the need for such additional moneys. Section 5. Request of the Corporation and the City. The Corporation and the City hereby irrevocably request and instruct the Bank to apply the moneys in the Escrow Fund established herein to the payment of the principal or Redemption Price (as that term is defined in the 1985 Indenture), as the case may be, of the 1985 Bonds, all in accordance with the terms of the 1985 Indenture, particularly Sections 10.01 to 10.04 thereof. The person signing this Escrow Agreement on behalf of the Corporation is an Authorized Representative (as that term is defined in the 1985 Indenture) of the Corporation, and, pursuant to and only to the extent permitted by Section 10.04 of the 1985 Indenture, hereby requests that any unclaimed moneys held in the Escrow Fund for the payment of the principal or Redemption Price of, or interest on, the 1985 Bonds shall be repaid to the City, for the account of the Corporation, free from the trust created by the 1985 Indenture and this Escrow Agreement, all in accordance with and subject to the terms and conditions specified in said Section 10.04. Section 6. Fees and Costs. (a) The Bank's total fees and costs for an in carrying out the provisions of this Agreement are as set forth in a letter from the Bank to the Corporation dated as of , 1989, which amount shall be paid by the Corporation at the time of delivery of the 1989 Bonds. (b) The Bank shall also be entitled to additional fees and reimbursements from the Corporation for reasonable costs incurred, including but not limited to legal and accountants' services, in connection with any litigation which may at any time be instituted involving this Agreement. (c) The fees of and the costs incurred by the Bank shall in no event be deducted from the Escrow Fund. Section 7. Severability. If any section, paragraph, sentence, clause or provision of this Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provision shall not affect any of the remaining provisions of this Agreement. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed each on its behalf as of the day and year first above written. CITY OF SAN BERNARDINO By Attest: City Clerk SAN BERNARDINO COMMUNITY HOSPITAL By President Attest: Secretary SECURITY PACIFIC NATIONAL BANK By SCHEDULE I A. Cash B. Escrow Securities United States Treasury Certificates of Indebtedness - State and Local Government Series, as follows: Principal Amount Interest Rate Issue Date Maturity Date United States Treasury Notes - State and Local Government Series, as follows: Principal Amount Interest Rate Issue Date Maturity Date First Interest Payment Date 22l9m5 OH&S DRAFT 10/11/89 CITY OF SAN BERNARDINO and SECURITY PACIFIC NATIONAL BANK, as Trustee INDENTURE Dated as of November I, 1989 CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO COMMUNITY HOSPITAL) SERIES 1989 Section TABLE OF CONTENTS Page Parties Preambles . . Form of Bond 1. 01 1. 02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 3.01 3.02 3.03 3.04 3.05 4.01 4.02 4.03 4.04 4.05 1 1 ARTICLE I DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS Definitions . . . . .. .... Content of Certificates and Opinions 1 ARTICLE II THE BONDS Authorization of Bonds Terms of Bonds . Execution of Bonds Transfer of Bonds Exchange of Bonds Bond Register Temporary Bonds Bonds Mutilated, Lost, Use of Depository Destroyed or Stolen ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Issuance of Bonds . . . . . . . Application of Proceeds of Bonds Establishment and Application of Establishment and Application of Issuance Fund Validity of Bonds . . . . Escrow Fund Costs of ARTICLE IV REDEMPTION OF BONDS Terms of Redemption Selection of Bonds for Redemption Notice of Redemption . Partial Redemption of Bond Effect of Redemption . . . 2206m5/2l66m5 1 Section 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08 5.09 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 ARTICLE V REVENUES Pledge and Assignment; Revenue Fund Allocation of Revenues . . . . Application of Interest Account Application of Principal Account Application of Bond Reserve Account Application of Redemption Fund . Rebate Fund . . . . Investment of Moneys in Funds and Accounts Establishment and Application of Depreciation Reserve Fund ARTICLE VI PARTICULAR COVENANTS Punctual Payment . Extension of Payment of Bonds Against Encumbrances Power to Issue Bonds and Make Pledge and Assignment . . Accounting Records and Financial Statements Tax Covenants Other Covenants Waiver of Laws . Further Assurances ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS Events of Default . . . . Acceleration of Maturities . . . Application of Revenues and Other Funds After Default Trustee to Represent Bondholders . Bondholders' Direction of Proceedings Limitation on Bondholders' Right to Sue Absolute Obligation of City Termination of Proceedings Remedies Not Exclusive No Waiver of Default . 2206m5/2166m5 ii Page Section 8.01 8.02 8.03 8.04 8.05 9.01 9.02 9.03 9.04 10.01 10.02 10.03 10.04 11.01 11. 02 11. 03 11. 04 11. 05 11. 06 11.07 11.08 11. 09 11. 10 11. 11 11. 12 11.13 11.14 11.15 11.16 Page ARTICLE VIII THE TRUSTEE Duties, Immunities and Liabilities of Trustee Merger or Consolidation . . . . . Liability of Trustee . . . . . . . Right of Trustee to Rely on Documents Preservation and Inspection of Documents ARTICLE IX MODIFICATION OR AMENDMENT OF THE INDENTURE Amendments Permitted . . . . . . Effect of Supplemental Indenture Endorsement of Bonds; Preparation of New Bonds Amendment of Particular Bonds . . . ARTICLE X DEFEASANCE Discharge of Indenture . . . . . . . . . . . Discharge of Liability on Bonds . . . . . . Deposit of Money or Securities with Trustee Payment of Bonds After Discharge of Indenture ARTICLE XI MISCELLANEOUS Liability of City Limited to Revenues . . . . Successor is Deemed Included in All References to Predecessor . . . . . . . Limitation of Rights to Parties, the Corporation and Bondholders Waiver of Notice. . . . . . . . Destruction of Bonds . . . . . . Severability of Invalid provisions Notice to City, Corporation and Trustee Evidence of Rights of Bondholders Disqualified Bonds. . . . . . . Money Held for Particular Bonds Funds and Accounts . . . . . Article and Section Headings and References Waiver of Personal Liability. . Execution in Several Counterparts Governing Law .... Opinions of Bond Counsel . . . . . 2206m5/2166m5 111 Section Execution Exhibit A: Exhibit B: 2206m5/2166m5 Page Property Description Permitted Encumbrances iv THIS INDENTURE, made and entered into as of the first day of November, 1989, by and between CITY OF SAN BERNARDINO, a municipal corporation and charter city, duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"), and SECURITY PACIFIC NATIONAL BANK, a national banking association duly organized and existing under the laws of the United States and having a corporate trust office in Los Angeles, California, and being qualified to accept and administer the trusts hereby created (the "Trustee"); WIT N E SSE T H: WHEREAS, the City is a municipal corporation and charter city, duly organized and existing under a freeholders' charter pursuant to which the City has the right and power to make and enforce all laws and regulations in respect to municipal affairs and certain other matters in accordance with and as more particularly provided in sections 3, 5 and 7 of article XI of the Constitution of the State of California and Section 40 of the charter of the City (the "Charter"); WHEREAS, the City Council of the City, acting under and pursuant to the powers reserved to the City under sections 3, 5 and 7 of article XI of the Constitution of the State of California and Section 40 of the Charter, has enacted and amended Ordinance No. 3815 of the City (the "Law"), establishing a program and procedure for the authorization, sale and issuance of revenue bonds by the City for the purpose, inter alia, of providing financing and refinancing for health facilities as provided herein; WHEREAS, for the benefit of San Bernardino Community Hospital, a California nonprofit corporation (the "Corporation"), the City issued its Insured Hospital Revenue Bonds (San Bernardino Community Hospital) Series 1989 (the "Prior Bonds"); WHEREAS, the Corporation has requested the assistance of the City in the refunding of the Prior Bonds; WHEREAS, after due investigation and deliberation, the City has approved said request and authorized the issuance of its Hospital Revenue Refunding Bonds (San Bernardino Community Hospital), Series 1989 (the "Bonds"), in the aggregate principal amount of million dollars ($__,000,000), to provide such assistance to the Corporation in accordance with the Law; 2166m5/2206m5(3264a) WHEREAS, the City has duly entered into a loan agreement with the Corporation specifying the terms and conditions of a loan by the City to the Corporation of the proceeds of the Bonds to provide for the refunding of the Prior Bonds and of the payment by the Corporation to the City of amounts sufficient for the payment of the principal of and premium (if any) and interest on the Bonds and certain related expenses; WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof and premium (if any) and interest thereon, the City has authorized the execution and delivery of this Indenture; WHEREAS, the Bonds, the Trustee's certificate of authentication and registration form to appear thereon, and assignment to appear thereon, shall be in substantially the following forms, respectively, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture: 2 2166m5/2206m5-041132-000003-277 10/12/89 [FORM OF SERIES 1989 BOND] [Form of Front of Bond] Amount No. R $ CITY OF SAN BERNARDINO INSURED HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO COMMUNITY HOSPITAL) SERIES 1989 INTEREST RATE MATURITY DATE DATED DATE CUSIP November 1, 1989 REGISTERED HOLDER: PRINCIPAL AMOUNT: DOLLARS CITY OF SAN BERNARDINO, a municipal corporation and charter city, duly organized and existing under the Constitution and laws of the State of California (herein called the "City"), for value received, hereby promises to pay (but only out of the Revenues and other assets pledged therefor as hereinafter mentioned) to the registered holder stated above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter mentioned), the principal amount stated above in lawful money of the United States of America; and to pay interest thereon in like lawful money from the interest payment date next preceding the date of registration of this Bond (unless this Bond is registered between a Record Date (as hereinafter defined) and the close of business on the next succeeding interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or prior to May 15, 1990, in which event it shall bear interest from November 1, 1989) until payment of such principal sum shall be discharged as provided in the Indenture hereinafter mentioned, at the rate per annum set forth above, payable semiannually on June 1 and December 1 in each year commencing June 1, 1990. The principal (or redemption price) hereof is payable at the principal corporate trust office of Security Pacific National Bank (herein called the "Trustee"), in Los Angeles, California. Interest hereon is payable by check or draft 3 2166m5/2206m5-041132-000003-277 10/12/89 mailed to the person whose name appears on the registration books of the Trustee as of the close of business on the fifteenth day of each May and November preceding an interest payment date (herein called the "Record Date") at such person's address as shown on such registration books. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS HAVE THE SAME EFFECT AS IF SET FORTH HERE. It is hereby certified and recited that any and all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Law (as hereinafter defined), and by the Constitution and laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any limit prescribed by the Law, or by the Constitution and laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee. IN WITNESS WHEREOF, CITY OF SAN BERNARDINO has caused this Bond to be executed in its name and on its behalf by the facsimile signature of its Mayor and its seal to be reproduced hereon by facsimile and attested by the facsimile signature of its City Clerk. CITY OF SAN BERNARDINO By Mayor (SEAL) Attest: City Clerk 4 2166m5/2206m5-041132-000003-277 10/12/89 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within- mentioned Indenture which has been registered on the date set forth below. Dated: Security Pacific National Bank, as Trustee By Authorized Officer 5 2l66m5/2206m5-041132-000003-277 10/12/89 [Form of Back of Bond] This Bond is one of a duly authorized issue of bonds of the City designated as "Hospital Revenue Refunding Bonds (San Bernardino Community Hospital) Series 1989" (herein called the "Bonds"), limited in aggregate principal amount to dollars ($ ) and, issued pursuant to the provisions of Ordinance No. 3815 of the City as amended (herein called the "Law"), and pursuant to an indenture, dated as of November 1, 1989, between the City and the Trustee (herein called the "Indenture"). The Bonds are issued for the purpose of making a loan to San Bernardino Community Hospital (herein called the "Corporation") for the purposes and on the terms and conditions set forth in a loan agreement, dated as of November 1, 1989, between the City and the Corporation (herein called the "Loan Agreement"). Reference is hereby made to the Indenture (a copy of which is on file at said office of the Trustee) and all indentures supplemental thereto and to the Law for a description of the rights thereunder of the registered owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the City thereunder, to all the provisions of which Indenture the registered owner of this Bond, by acceptance hereof, assents and agrees. All capitalized terms herein not otherwise defined shall have the meaning ascribed to then in the Indenture. The Bonds and the interest thereon are payable from Revenues (as that term is defined in the Indenture) and are secured by a pledge and assignment of said Revenues and of amounts held in the funds and accounts established pursuant to the Indenture (including proceeds of the sale of the Bonds), subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. The Bonds are further secured by an assignment of the right, title and interest of the City in the Loan Agreement (to the extent and as more particularly described in the Indenture). The Bonds are limited obligations of the City and are not a lien or charge upon the funds or property of the City, except to the extent of the aforesaid pledge and assignment. Neither the faith and credit nor the taxing power of the City is pledged to the payment of the principal of, premium, if any, or interest on the Bonds, nor is the City in any manner obligated to make appropriation for payment. The Bonds are not a debt of the City or the State of California and said City and State are not liable for the payment thereof. 6 2l66m5/2206m5-041132-000003-277 10/12/89 The Bonds are subject to redemption prior to their stated maturity as a whole on any date (or in part on any interest payment date) from certain moneys derived from insurance or condemnation proceeds received with respect to the Facilities (as that term is defined in the Indenture), in each case under the circumstances prescribed and as provided in the Indenture, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium. The Bonds are also subject to redemption prior to their stated maturity, at the option of the City, from any source of available funds, as a whole on any date, or in part (by lot) on any interest payment date, on or after December 1, 1999, at the following redemption prices (expressed as a percentage of the principal amount of Bonds called for redemption), together with interest accrued thereon to the date fixed for redemption: Period (both dates inclusive) Redemption Price December 1, 1999 through November 30, 2000 December 1, 2000 through November 30, 2001 December 1, 2001 and thereafter 102 % 101 100 The Bonds maturing on December 1, 2009 and December 1, 2019 are also subject to redemption prior to their respective stated maturities in part, by lot, on any December 1 on or after December 1, 2000 and December 1, 2010, respectively, from Mandatory Sinking Account Payments deposited in the Sinking Account as provided in the Indenture, at the principal amount thereof together with interest accrued thereon to the date fixed for redemption, without premium. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption. If an Event of Default (as that term is defined in the Indenture) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be rescinded by the holders of not less than a majority in aggregate principal amount of the Bonds then outstanding or by the Trustee. 7 2l66m5/2206m5-041132-000003-277 10/12/89 The Bonds are issuable as fully registered Bonds in denominations of $5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged, at said office of the Trustee, for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations. This Bond is transferable by the registered holder hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges, if any, provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new registered Bond or Bonds, of authorized denomination or denominations, of the same maturity for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The City and the Trustee may treat the registered holder hereof as the absolute owner hereof for all purposes, and the City and the Trustee shall not be affected by any notice to the contrary. The Indenture and the rights and obligations of the City and of the holders of the Bonds and of the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (i) extend the fixed maturity of this Bond, or reduce the amount of principal hereof, or extend the time of payment or reduce the amount of any Mandatory Sinking Account Payment provided for in the Indenture for the payment of this Bond, or reduce the rate of interest hereon, or extend the time of payment of interest hereon, or reduce any premium payable upon the redemption hereof, without the consent of the holder hereof, or (ii) reduce the percentage of Bonds the consent of the holders of which is required to effect any such modification or amendment, or permit the creation of any lien on the Revenues and other assets pledged as security for the Bonds prior to or on a parity with the lien created by the Indenture, or deprive the holders of the Bonds of the lien created by the Indenture on such Revenues and other assets (except as expressly provided in the Indenture), without the consent of the holders of all Bonds then outstanding, all as more fully set forth in the Indenture. 8 2166m5/2206m5-041132-000003-277 10/12/89 [FORM OF ASSIGNMENT] For value received the undersigned do(es) hereby sell, assign and transfer unto whose social security or other tax identification number is , the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises. Dated: Signature Guaranteed By: Note: Signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company. Notice: The signature on this assignment must correspond with the name as it appears on the face of this Bond in every particular, without alteration, enlargement or any change whatsoever. 9 2l66m5/2206m5-041132-000003-277 10/12/89 WHEREAS, all acts and proceedings required by law necessary to make the Bonds, when executed by the City, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal limited obligations of the City, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth In accordance with its terms, have been done and taken, and the execution and delivery of the Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and the interest and premium, if any, on, all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other valuable consideration, the receipt whereof is hereby acknowledged, the City does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE I DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Indenture and of any indenture supplemental hereto and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Unless otherwise defined in this Indenture, all terms used herein shall have the meanings assigned to such terms in the Law. Accountant "Accountant" means any independent certified public accountant or firm of such accountants of national reputation selected by the Corporation and acceptable to the Trustee. Additional Payments "Additional Payments" means the payments so designated and required to be made by the Corporation pursuant to Section 4.2 of the Agreement. 10 2166m5/2206mS-041132-000003-277 10/12/89 Adjusted Annual Operating Revenues "Adjusted Annual Operating Revenues" means gross operating revenue and investment income, less adjustments for bad debts for any Fiscal Year, all related to the Facilities and as determined in accordance with generally accepted accounting principles. Administrative Fees and Expenses "Administrative Fees and Expenses" means any application, commitment, financing or similar fee charged, or reimbursement for administrative or other expenses incurred, by the City or the Trustee, including Additional Payments. Affiliated Corporation "Affiliated Corporation" means any corporation which directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Corporation. Aggregate Debt Service "Aggregate Debt Service" means, as of any date of calculation and with respect to any period, the sum of amounts of Debt Service for all Funded Debt for such period. Agreement or Loan Agreement "Agreement" or "Loan Agreement" means that certain loan agreement by and between the City and the Corporation, dated as of November 1, 1989, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof and of this Indenture. Architects' Certificate "Architects' Certificate" means a certificate signed by a duly authorized officer or agent of the architects, engineers or supervising contractors licensed in the State of California and selected by the Corporation in connection with installation or construction. Authorized Representative "Authorized Representative" means, with respect to the Corporation, its Chairman of the Board, Chief Executive Officer or Chief Financial Officer or any other person designated as an Authorized Representative of the Corporation by a Certificate of the Corporation signed by its Chairman of 11 2166m5/2206m5-041132-000003-277 10/12/89 the Board, Chief Executive Officer or Chief Financial Officer and filed with the Trustee. Average Annual Bond Service "Average Annual Bond Service" means, as of any date of calculation, the sum for each Bond Year, of (1) the interest falling due on then Outstanding Bonds (assuming that all the Outstanding Serial Bonds are retired on their respective maturity dates and that all then Outstanding Term Bonds are retired at the times of and in amounts provided for by Mandatory Sinking Account Payments), (2) the principal amount of then Outstanding Serial Bonds falling due by their terms, and (3) the amount of all Mandatory Sinking Account Payments required for each Bond Year in which such Bonds will be Outstanding, divided by the number of Bond Years such Bonds will be Outstanding. Bond Reserve Account "Bond Reserve Account" means the account by that name ln the Revenue Fund established pursuant to Section 5.02. Bond Reserve Account Requirement "Bond Reserve Account Requirement" means as of any date of calculation, an amount equal to the least of (i) Maximum Annual Bond Service, (ii) one hundred twenty-five percent (125%) of Average Annual Bond Service or (iii) ten percent (10%) of the principal amount of Bonds Outstanding as of such date. Bond Year "Bond Year" means the period of twelve consecutive months ending on December 1 in any year in which Bonds are Outstanding. Bonds, Serial Bonds, Term Bonds "Bonds" means the City's Hospital Revenue Refunding Bonds (San Bernardino Community Hospital) Series 1989, authorized by, and at any time Outstanding pursuant to, this Indenture. "Serial Bonds" means the Bonds, falling due by their terms in specified years, for which no Mandatory Sinking Account Payments are provided. "Term Bonds" means the Bonds payable at or before their specified maturity date or dates from Mandatory Sinking 12 2l66m5/2206m5-041132-000003-277 10/12/89 Account Payments established for that purpose and calculated to retire such Bonds on or before their specified maturity date or dates. Certificate, Statement, Request, Requisition or Order of the City or the Corporation "Certificate," "Statement," "Request," "Requisition" and "Order" of the City or the Corporation mean, respectively, a written certificate, statement, request, requisition or order signed in the name of the City by its Mayor, City Administrator and Executive Director of the Redevelopment Agency of the City of San Bernardino or such other person as may be designated and authorized to sign for the City, or in the name of the Corporation by an Authorized Representative of the Corporation. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by Section 1.02, each such instrument shall include the statements provided for in Section 1.02. City "City" means the City of San Bernardino, a municipal corporation and charter city, duly organized and existing under the Constitution and laws of the State of California. City Administration Fee "City Administration Fee" means the fee paid to the City upon the issuance of the Bonds in the amount of one percent (1%) of the original principal amount of the Bonds, which is subject to return to the Trustee as required by Section 3.04 hereof. Code "Code" means the Internal Revenue Code of 1986, and any regulations promulgated thereunder. Corporation "Corporation" means San Bernardino Community Hospital, a nonprofit public benefit corporation duly organized and existing under the laws of the State of California, or any corporation which is the surviving, resulting or transferee corporation in any merger, 13 2166m5/2206m5-041132-000003-277 10/12/89 consolidation or transfer of assets permitted under the Agreement. Costs of Issuance "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the City or the Corporation and related to the authorization, issuance, sale and delivery of the Bonds, including but not limited to costs of preparation and reproduction of documents, filing and recording fees, initial fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants and professionals, fees and charges for preparation, execution and safekeeping of the Bonds, [the City Administration Fee] and any other cost, charge or fee in connection with the original issuance of the Bonds. Costs of Issuance Fund "Costs of Issuance Fund" means the fund by that name established pursuant to Section 3.04. Council "Council" means the Common Council of the City. Debt Service "Debt Service," when used with respect to any Funded Debt, means, as of any date of calculation and with respect to any period, the sum of (1) the interest falling due on such Funded Debt during such period (except to the extent that such interest is payable from the proceeds of such Funded Debt set aside for such purpose), and (2) the principal (or mandatory sinking fund or installment purchase price or lease rental or similar) payments or deposits required with respect to such Funded Debt during such period; computed on the assumption that no portion of such Funded Debt shall cease to be outstanding during such period except by reason of the application of such scheduled payments; provided, however, that for purposes of such computation: (a) if Funded Debt is secured by an irrevocable letter of credit issued by a bank having a combined capital and surplus of at least one hundred million dollars ($100,000,000), principal payments or deposits with respect to such Funded Debt nominally due in the last Fiscal Year in which such Funded Debt matures may, at the option of the Corporation, be treated as if they were due as specified ln any loan agreement issued in connection with such letter of 14 2166mS/2206mS-041132-000003-277 10/12/89 credit or pursuant to the repayment provisions of such letter of credit and interest on such Funded Debt after such Fiscal Year shall be assumed to be payable pursuant to the terms of such loan agreement or repayment provisions; (b) if interest on Funded Debt (including interest on Funded Debt assumed to be payable in accordance with the terms of a loan agreement or the repayment provisions of a letter of credit as described above) is payable pursuant to a variable interest rate formula, the interest rate on such Funded Debt for periods when the actual interest rate cannot be yet determined shall be assumed to be equal to the greatest of (i) the average rate of interest borne or which would have been borne by such Funded Debt during the Fiscal Year immediately preceding the date of calculation, (ii) the current interest rate calculated pursuant to the provisions of such agreement and (iii) 65% of the Trustee's prime interest rate as of the date of calculation; (c) if Funded Debt is refinanced on maturity or earlier redemption, the principal of such Funded Debt shall not be deemed to be payable on the date of such refinancing but shall be payable pursuant to the terms of the refinancing of such Funded Debt; (d) if any Funded Debt is not payable with substantially level debt service or is redeemable at the option of the holder prior to maturity, such Funded Debt may, at the option of the Corporation, be treated as if the outstanding principal amount of such Funded Debt were amortized over a 15-year period commencing on the date of calculation with an interest rate equal to the Trustee's prime interest rate as of the date of calculation; (e) if any Funded Debt is a guaranty of another Person's indebtedness: (1) if such Person's obligation to repay the Corporation for advances made under such guaranty is secured directly or by right of subrogation by lien on real or personal property (subject only to liens directly securing such underlying obligation), 25% of the debt service on the underlying obligation shall be included in the computation of Debt Service to the extent that the principal amount of such obligation is less than or equal to the fair market value of such property and 100% of the Debt Service on the underlying obligation shall be included to the extent that the principal amount of such obligation exceeds the fair market value of such property. 15 2166m5/2206m5-041132-000003-277 10/12/89 (2) if the guaranty is not so secured but Net Income Available for Debt Service of the guaranteed Person is at least equal to 1.50 times Maximum Aggregate Annual Debt Service on all Funded Debt of such Person (including the Funded Debt to be guaranteed) for such Person's immediately preceding fiscal year, 50% of the Debt Service on the underlying obligation shall be included in such computation; or (3) otherwise 100% of the Debt Service on the underlying obligation shall be included in such computations; and (f) if interest income payable during any period on Investment Securities described in clauses (1) or (2) of the definition thereof which are in the actual possession of the Trustee (or independent trustee acting on behalf of the holders of such Funded Debt or the Trustee) is available for the payment of interest on Funded Debt during such period the interest falling due on Funded Debt shall be reduced by the amount of such interest income. Debt Service Coverage Ratio "Debt Service Coverage Ratio" means with respect to any period the ratio of Net Income Available for Debt Service to Maximum Aggregate Annual Debt Service for such period. Depository "Depository" shall mean The Depository Trust Company and its successors and assigns, or any other depository selected as set forth in Section 2.09 hereof, which agrees to follow the procedures required to be followed by such depository in connection with the Bonds. Depository Bank "Depository Bank" means any of the banks or financial institutions so designated pursuant to Section 4.4 of the Agreement. Depreciation Reserve Fund "Depreciation Reserve Fund" means the Fund by that name established pursuant to Section 5.09. Escrow Agreement "Escrow Agreement" means that certain escrow agreement by and among the Corporation, Security Pacific National Bank and the City dated as of November 1, 1989, as 16 2l6t ~ '~206m5-04ll32-000003-277 lO/J2/d' originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof. Escrow Fund "Escrow Fund" means the Fund by that name established pursuant to Section 3.03 hereof. Event of Default "Event of Default" means any of the events specified in Section 7.01. Facilities "Facilities" means (i) the real property described in Exhibit A to this Indenture; (ii) all buildings, structures and fixtures thereon and improvements thereto; and (iii) all tangible personal property owned by the Corporation and used in or on the aforesaid real property, whether now existing or hereafter constructed, installed or acquired. Fiscal Year "Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official fiscal year period of the Corporation. Funded Debt "Funded Debt" means (a) twenty-five percent (25%) by outstanding principal amount of all indebtedness of persons other than the Corporation or any Affiliated Corporation described in clause (b) hereof for which the Corporation is a guarantor, provided however that the Corporation shall not be deemed to be a guarantor for purposes of this clause (a) by reason of the "indorsement" of any "check" by the Corporation as such terms are used in Division 3 of the California Commercial Code, (b) all indebtedness of any Affiliated Corporation for which the Corporation is a guarantor, provided that the Net Income Available for Debt Service of such Affiliated Corporation shall be included in calculations required by the Agreement and the Indenture if Debt Service with respect to such indebtedness is included in such calculations, and (c) all indebtedness of the Corporation (including the obligation of the Corporation to make Loan Repayments, any installment purchase and lease rental obligations and Parity Debt) which (i) in accordance with generally accepted accounting 17 2166m5/2206m5-041132-000003-277 10/12/89 principles is classified as a liability on a balance sheet and (ii) has a final maturity (or which, pursuant to the terms of a revolving credit or similar agreement or otherwise, is renewable or extendable at the option of the Corporation to a date or for a period or periods ending) more than one year after the date of creation thereof, notwithstanding the fact that payments in respect thereof (whether installment, serial maturity or sinking fund payments or otherwise) are required to be made less than one year after the date of the creation thereof, excluding any indebtedness which is renewable or extendable pursuant to the terms of a revolving credit or similar agreement if, by the terms of such agreement, no indebtedness is permitted to be outstanding thereunder for a period of at least thirty (30) consecutive days during each period of twelve (12) consecutive months beginning with the effective date of such revolving credit or other similar agreement. Gross Revenue Fund "Gross Revenue Fund" means the fund by that name established pursuant to Section 4.4 of the Agreement. Gross Revenues "Gross Revenues" means all revenues, income, receipts and money received by or on behalf of the Corporation with respect to the Facilities, including (a) gross revenues derived from its operation and possession of the Facilities, (b) gifts, grants, bequests, donations and contributions allocated to the Facilities exclusive of any gifts, grants, bequests, donations and contributions to the extent specifically restricted by the donor to a particular purpose inconsistent with their use for the payment of Loan Repayments or Additional Payments or payments with respect to Parity Debt, (c) proceeds with respect to or relating to the Facilities and derived from (i) condemnation proceeds, (ii) accounts receivable, (iii) securities and other investments, (iv) inventory and other tangible and intangible property, (v) insurance proceeds, (vi) medical reimbursement programs and agreements, and (vii) contract rights and other rights and assets owned by the Corporation, and (d) rentals received with respect to the lease of space within the Facilities. Holder or Bondholder "Holder" or "Bondholder," whenever used herein with respect to a Bond means the person in whose name such Bond is registered. 18 2166m5/2206m5-041132-000003-277 10/12/89 Indenture "Indenture" means this Indenture, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Indenture. Information Services "Information Services" means Financial Information, Inc. 's "Daily Called Bond Service," 30 Montgomery Street, lOth Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York, 10004; Moody's "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard and Poor's "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or, in accordance with then current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other services providing information with respect to called bonds, or no such services, as the City may designate in a Request of the City delivered to the Trustee. Insurance and Condemnation Proceeds Fund "Insurance and Condemnation Proceeds Fund" means the fund by that name established pursuant to Section 6.6 of the Agreement. Insurance Consultant "Insurance Consultant" means a person having experience and a favorable reputation in consulting on the insurance requirements of facilities in the State of California of the general size and character of the Facilities, selected by the Corporation and acceptable to the Trustee. Interest Account "Interest Account" means the account by that name in the Revenue Fund established pursuant to Section 5.02. Investment Securities "Investment Securities" means any of the following which at the time are legal investments under the laws of the State of California for moneys held hereunder and then proposed to be invested therein: (1) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the united States of America and including certificates or other instruments evidencing ownership 19 2166m5/2206m5-041132-000003-277 10/12/89 interests in direct obligations of the United States of America such as CATS, TIGRS, Treasury Receipts and Stripped Treasury Coupons) or obligations the timely payment of the principal of and interest on which are fully guaranteed by the United States of America; (2) obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following: Banks for Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Bank System, Export-Import Bank of the United States, Federal Financing Bank, Federal Land Banks, Federal Farm Credits, Government National Mortgage Association, Farmer's Home Administration, Federal Home Loan Mortgage Corporation, Federal Housing Administration or by any agency, department or instrumentality of the United States if such obligations are rated in one of the two highest rating categories by S&P and Moody's; (3) bankers acceptances and interest-bearing demand or time deposits (including certificates of deposit) in banks (including the Trustee) and savings and loan associations, provided such deposits are either (a) secured at all times, in the manner and to the extent provided by law, by collateral security described in clauses (1) or (2) of this definition of a market value of no less than the original amount of moneys so invested or (b) in any bank (including the Trustee) or savings and loan association having a combined capital and surplus of at least fifty million dollars ($50,000,000) or (c) fully insured by the Federal Deposit Insurance Corporation; (4) bankers acceptances or certificates of deposit of, or time deposits in, any bank (including the Trustee), lead bank of a parent holding company, or savings and loan association whose unsecured obligations are rated in one of the two highest rating categories by S&P and Moody's; (5) repurchase agreements or investments agreements issued by banks (including the Trustee), lead banks of parent holding companies, or savings and loan associations, with a combined capital and surplus aggregating at least one hundred million dollars ($100,000,000) which is insured by the Federal Deposit Insurance Corporation and the unsecured securities of which are rated by S&P and Moody's in one of the two highest rating categories or which is a member of the Securities Investors Protection Corporation, or secured by a letter of credit issued by such bank, lead bank or savings and loan association, or, in the case of a repurchase agreement, the underlying securities of which are obligations described in clause (1) or (2) of this definition, are held by the Trustee free of all third party claims and are required to be continuously maintained at a market value (valued at least quarterly) at least equal to the repurchase price from time to time payable with respect thereto, or, in the case of an investment agreement, continuously secured and collateralized by obligations described in clause (1) or (2) of this definition, held by the Trustee free of all third party claims and having a market value (valued at least quarterly) 20 2l66m5/2206mS-04ll32-000003-277 10/12/89 at least equal to the principal balance collectible pursuant thereto; (6) commercial paper of "prime" quality of the highest ranking or one of the two highest rating categories as provided by S&P and Moody's and issued by corporations organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000); (7) obligations the interest on which is excludable from gross income for federal income tax purposes and the timely payment of the principal of and interest on which is fully provided for by the deposit in trust or escrow of cash or obligations described in clause (1) or (2) of this definition and which have been rated in the highest ratings category of both Moody's and S&P; (8) bonds of the State of California or any county or city of the State of California for which a nationally recognized rating service is maintaining a rating within the top two ratings of such rating service and (9) taxable government money market portfolios restricted to obligations with maturities of one year or less, issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States of America. Law "Law" means Ordinance No. 3815 of the City of San Bernardino, as amended, as now in effect and as it may from time to time hereafter be amended or supplemented. Loan Default Event "Loan Default Event" means any of the events specified in Section 8.1 of the Agreement. Loan Repayments "Loan Repayments" means the payments so designated and required to be made by the Corporation pursuant to Section 4.1 of the Agreement. Management Consultant "Management Consultant" means any firm of national reputation qualified to report on questions relating to the financial condition of health care facilities and selected by the Corporation and acceptable to the Trustee. Mandatory Sinking Account Payment "Mandatory Sinking Account Payment" means the amount required by this Indenture to be paid by the City on any single date for the retirement of Bonds. 21 2166m5/2206m5-041132-000003-277 10/12/89 Maximum Aggregate Annual Debt Service "Maximum Aggregate Annual Debt Service" means, as of any date of calculation, Aggregate Debt Service as computed for the then current or any future Fiscal Year in which such sum shall be largest. Maximum Annual Bond Service "Maximum Annual Bond Service" means, as of any date of calculation, the sum of (1) the interest falling due on then Outstanding Bonds (assuming that all the Outstanding Serial Bonds are retired on their respective maturity dates and that all then Outstanding Term Bonds are retired at the times of and in amounts provided for by Mandatory Sinking Account Payments), (2) the principal amount of then Outstanding Serial Bonds falling due by their terms, and (3) the amount of all Mandatory Sinking Account Payments required; all as computed for the Bond Year in which such sum shall be the largest. Moody's "Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Corporation by notice to the City and the Trustee. Net Income Available for Debt Service "Net Income Available for Debt Service" means, with respect to any period, the excess of revenues over expenses of the Corporation for such period, determined in accordance with generally accepted accounting principles, to which shall be added interest, amortization and depreciation expense and extraordinary noncash items, each item determined in accordance with generally accepted accounting principles, and excluding (a) any profits or losses on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets or resulting from the early extinguishment of debt and (b) gifts, grants, bequests, donations and contributions, to the extent specifically restricted by the donor to a particular purpose inconsistent with their use for the payment of Debt Service, and (c) the net proceeds of insurance (other than business interruption 22 2166m5/2206m5-041132-000003-277 10/12/89 insurance or health care insurance programs (third-party payors)) and condemnation awards and (d) interest income credited against the interest component of Debt Service pursuant to clause (f) of the definition of Debt Service; provided, however, that in calculating such excess of revenues over expenses, the amount of all contributions, grants, gifts, bequests and devises (collectively, the "Contributions") to be included, if otherwise not excluded by the terms hereof, shall be calculated as follows: the lesser of (i) Contributions actually received by the Corporation during any Fiscal Year or (ii) the Contributions actually received by the Corporation during such Fiscal Year and during the preceding four Fiscal Years divided by five. Net Property, Plant and Equipment "Net Property, Plant and Equipment" means all property of the Corporation which is property, plant and equipment, net of accumulated depreciation, in each case in accordance with generally accepted accounting principles. Non-Recourse Indebtedness "Non-Recourse Indebtedness" means indebtedness secured by a lien on property of the Corporation, liability for which is effectively limited to the property subject to the lien with no recourse, directly or indirectly, to any other property of the Corporation. Opinion of Counsel "Opinion of Counsel" means a written opinion of counsel (who may be counsel for the City) selected by the City and acceptable to the Trustee. If and to the extent required by the provisions of Section 1.02, each Opinion of Counsel shall include the statements provided for in Section 1.02. Optional Redemption Account "Optional Redemption Account" means the account by that name in the Redemption Fund established pursuant to Section 5.06. Outstanding "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this 23 2166m5/2206m5-041132-000003-277 10/12/89 Indenture except (1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds with respect to which all liability of the City shall have been discharged in accordance with Section 10.02, including Bonds (or portions of Bonds) referred to in Section 11.10; and (3) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture. Parity Debt "Parity Debt" means indebtedness incurred by the Corporation in accordance with Section 5.4 of the Agreement. Permitted Encumbrances "Permitted Encumbrances" with respect to the Facilities means and includes: (1) undetermined liens and charges incident to construction or maintenance, and liens and charges incident to construction or maintenance now or hereafter filed of record which are being contested in good faith and have not proceeded to judgment, provided that the Corporation shall have set aside reserves with respect thereto which, in the opinion of the board of directors of the Corporation, are adequate; (2) the lien of taxes and assessments which are not delinquent, or which are being contested in good faith, provided that the Corporation shall have set aside reserves with respect thereto which, in the opinion of the board of directors of the Corporation, are adequate; (3) minor defects and irregularities in the title to the Facilities which in the aggregate do not materially adversely affect the value or operation of the Facilities for the purposes for which they are or may reasonably be expected to be used; (4) easements, exceptions or reservations for the purpose of pipelines, telephone lines, telegraph lines, power lines and substations, roads, streets, alleys, highways, railroad purposes, drainage and sewerage purposes, dikes, canals, laterals, ditches, the removal of oil, gas, coal or other minerals, and other like purposes, or for the joint or common use of real property, facilities and equipment, which in the aggregate do not materially interfere with or impair the operation of the Facilities for the purposes for which they are or may reasonably be expected to be used; (5) rights reserved to or vested in any municipality or governmental or other public authority to control or regulate or use in any manner any portion of the Facilities which do not materially impair the operation of the Facilities for the purposes for which they are or may reasonably be expected to be used; (6) present or future valid zoning laws and ordinances; 24 2166m5/2206mS-041132-000003-277 10/12/89 (7) the rights of the City and the Trustee under the Agreement and the Deed of Trust; (8) liens securing indebtedness for the payment, redemption or satisfaction of which money (or evidences of indebtedness) in the necessary amount shall have been deposited in trust with a trustee or other holder of such indebtedness; (9) the lien and charge of the Deed of Trust and the Indenture; (10) purchase money security interests and security interests existing on any property prior to the time of its acquisition by the Corporation through purchase, merger, consolidation or otherwise, whether or not assumed by the Corporation, or placed upon property being acquired by the Corporation to secure a portion of the purchase price thereof, or lessor's interests in leases required to be capitalized in accordance with generally accepted accounting principles, if the principal amounts secured by any such interests shall not exceed the greater of the cost or fair market value thereof as determined in good faith by the board of directors of the Corporation; (11) statutory liens arising in the ordinary course of business which are not delinquent or are being contested in good faith by the Corporation; (12) liens securing Parity Debt on a parity with the obligations of the Corporation under the Agreement; (13) the lease or license of the use of a part of the Corporation's facilities for the proper and economical operation of the Facilities in accordance with customary business practices in the industry; (14) statutory rights of the United States of America to recover against the Corporation by reason of federal funds made available under 42 U.S.C. S 291 et seq., and similar rights under other federal and state statutes; (15) liens and encumbrances (a) specifically subordinated to the Deed of Trust and (b) securing Funded Debt in an aggregate principal amount not in excess of twenty percent (20%) of Adjusted Annual Operating Revenues; and (16) liens and encumbrances described in Exhibit B. Person "Person" means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. Principal Account "Principal Account" means the account by that name established in the Revenue Fund pursuant to Section 5.02. 25 2166m5/2206m5-041132-000003-277 10/12/89 Principal Installment "Principal Installment," when used with respect to any Funded Debt or the Bonds, means, as of any particular date of calculation and with respect to any period, the principal (or mandatory sinking fund or installment purchase price or lease rental or similar) payments required with respect to such Funded Debt or the Bonds, as the case may be, during such period. Prior Bonds "Prior Bonds" means the City of San Bernardino Insured Hospital Revenue Bonds (San Bernardino Community Hospital) Series 1985A. Prior Indenture "Prior Indenture" means that certain indenture dated as of December 1, 1985 by and between the Corporation and the Trustee with respect to the Prior Bonds. Program "Program" means the City's program of making loans under the Law. Rebate Certificate "Rebate Certificate" means the Rebate Certificate attached as Exhibit A to the No Arbitrage Certificate delivered by the City at the time of the issuance and delivery of the Bonds, as the same may be amended or supplemented in accordance with its terms. Rebate Fund "Rebate Fund" means the Rebate Fund established in Section 5.07 hereof. Record Date "Record Date" means, with respect to each interest payment date, the fifteenth day of the calendar month preceding such interest payment date. Redemption Price "Redemption Price" means, with respect to any Bond (or portion thereof), the principal amount of such Bond (or 26 2166m5/2206m5-041132-000003-277 10/12/89 portion) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and this Indenture. Redemption Fund "Redemption Fund" means the fund by that name established pursuant to Section 5.06. Revenue Fund "Revenue Fund" means the fund by that name established pursuant to Section 5.01. Revenues "Revenues" means all amounts received by the City or the Trustee pursuant or with respect to the Agreement, including, without limiting the generality of the foregoing, Loan Repayments (including both timely and delinquent payments and any late charges, and whether paid from any source), prepayments, insurance proceeds, condemnation proceeds, and all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to this Indenture, but not including any Administrative Fees or Expenses. Securities Depositories "Securities Depositories" means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex-(215) 496-5058; or, in accordance with the then current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other securities depositories or no such depositories as the City may designate in a Request of the City delivered to the Trustee. S&P "S&P" means Standard & Poor's Corporation, a corporation organized and existing under the laws of the State of New York, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, 27 2166m5/2206m5-041132-000003-277 10/12/89 any other nationally recognized securities rating agency designated by the Corporation by notice to the City and the Trustee. Sinking Account "Sinking Account" means the subaccount in the Principal Account so designated and established pursuant to Section 5.05. Special Redemption Account "Special Redemption Account" means the account by that name in the Redemption Fund established pursuant to Section 5.06. Special Services Covenant "Special Services Covenant," whenever used herein with respect to the Agreement, means the provision so designated in the Agreement by which the Corporation agrees to provide certain health care services. Supplemental Indenture "Supplemental Indenture" means any indenture hereafter duly authorized and entered into between the City and the Trustee, supplementing, modifying or amending this Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. Trustee "Trustee" means Security Pacific National Bank, a national banking association duly organized and existing under the laws of the United States and having its principal corporate trust office in Los Angeles, California, or its successor, as Trustee hereunder as provided in Section 8.01. SECTION 1.02. Content of Certificates and Opinions. Every certificate or opinion provided for in this Indenture with respect to compliance with any provision hereof shall include (1) a statement that the person making or giving such certificate or opinion has read such provision and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the certificate or opinion is based; (3) a statement that, in the opinion of such person, he has made or caused to be made such examination or investigation as is necessary to enable him to express an informed opinion 28 2166m5/2206mS-041132-000003-277 10/12/89 with respect to the subject matter referred to in the instrument to which his signature is affixed; and (4) a statement as to whether, in the opinion of such person, such provision has been complied with. Any such certificate or opinion made or given by an officer of the City or the Corporation may be based, insofar as it relates to legal, accounting or facility matters, upon a certificate or opinion of or representation by counsel, an accountant or a management consultant, unless such officer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel, an accountant or a management consultant may be based, insofar as it relates to factual matters (with respect to which information is in the possession of the City or the Corporation, as the case may be) upon a certificate or opinion of or representation by an officer of the City or the Corporation, unless such counsel, accountant or management consultant knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which such person's certificate or opinion or representation may be based, as aforesaid, is erroneous. The same officer of the City or the Corporation, or the same counselor accountant or management consultant, as the caSe may be, need not certify to all of the matters required to be certified under any provision of this Indenture, but different officers, counsel, accountants or management consultants may certify to different matters, respectively. ARTICLE II THE BONDS SECTION 2.01. Authorization of Bonds. An issue of Bonds to be issued hereunder in order to obtain moneys to carry out the purposes of the Program for the benefit of the City and the Corporation is hereby created. The Bonds are designated as "City of San Bernardino Hospital Revenue Refunding Bonds (San Bernardino Community Hospital) Series 1989." The aggregate principal amount of Bonds which may be issued and Outstanding under this Indenture shall not exceed million dollars ($__,000,000). This Indenture constitutes a continuing agreement with the Holders from time to time of the Bonds to secure the full payment of the principal (or Redemption Price) of and interest on all such Bonds subject to the covenants, provisions and conditions herein contained. 29 2166m5/2206m5-041132-000003-277 10/12/89 SECTION 2.02. Terms of Bonds. The Bonds shall be issued as fully registered Bonds in the denomination of $5,000 or any integral multiple thereof. The Bonds shall be registered initially in the name of "Cede Co.," as nominee of the Depository, and shall be evidenced by one Bond for each maturity of the Bonds in the aggregate principal amount of each such maturity. The Bonds shall be dated as of November 1, 1989, and interest thereon shall be payable semiannually on June 1 and December 1 in each year, commencing June 1, 1990, to the registered holder thereof as of the Record Date for such interest payment date. The Bonds shall mature on the dates and in the amounts (subject to the right of prior redemption as provided in Article IV hereof) and shall bear interest at the rates per annum set forth below. Maturity Date (December 1) Amount Interest Rate 1992 1993 1994 1995 1996 1997 1998 1999 2009 2019 $ % The principal or Redemption Price of and interest on the Bonds shall be payable in lawful money of the United States of America at the principal corporate trust office of the Trustee, in Los Angeles, California. Payment of the interest on any Bond shall be made to the person whose name appears on the bond registration books of the Trustee as the registered holder thereof, such interest to be paid by check or draft mailed to the registered holder at his address as it appears on such registration books or at such address as such holder may have filed with the Trustee for that purpose. Each Bond shall bear interest from the interest payment date next preceding the date of registration thereof unless it is registered between a Record Date and the close of business on the next succeeding interest payment date, in which event it shall bear interest from such interest payment date, or unless it is registered on or prior to May 15, 1990, in which event it shall bear interest from November 1, 1989; provided, however, that if, at the time of registration of any Bond, interest is in default on outstanding Bonds, such Bond shall bear interest from the interest payment date to 30 2166m5/2206m5-041132-000003-277 10/12/89 -- ............. - .-. -- --- .....- which interest has previously been paid or made available for payment on the Outstanding Bonds. The Bonds shall be subject to redemption as provided in Article IV. SECTION 2.03. Execution of Bonds. The Bonds shall be executed in the name and on behalf of the City with the manual or facsimile signature of its Mayor under its seal attested by the manual or facsimile signature of its City Clerk. Such seal may be in the form of a facsimile of the City's seal and may be reproduced, imprinted or impressed on the Bonds. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of the officers who shall have signed or attested any of the Bonds shall cease to be such officer or officers of the City before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee or issued by the City, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the City as though those who signed and attested the same had continued to be such officers of the City, and also any Bond may be signed and attested on behalf of the City by such persons as at the actual date of execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in one of the forms hereinbefore recited, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. SECTION 2.04. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.06, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds, of the same 31 2l66m5/2206m5-041132-000003-277 10/12/89 ~ maturity and for a like aggregate principal amount. Trustee shall require the Bondholder requesting such to pay any tax or other governmental charge required paid with respect to such transfer. The transfer to be The Trustee shall not be required to register the transfer of any Bond (1) within fifteen (15) days prior to the selection of Bonds for redemption or (2) selected for redemption. SECTION 2.05. Exchange of Bonds. Bonds may be exchanged at the principal corporate trust office of the Trustee in Los Angeles, California, for a like aggregate principal amount of Bonds of other authorized denominations of the same maturity. The Trustee shall require the Bondholder requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to register the exchange of any Bond (1) within fifteen (15) days prior to the selection of Bonds for redemption or (2) selected for redemption. SECTION 2.06. Bond Register. The Trustee will keep or cause to be kept, at its principal corporate trust office in Los Angeles, California, sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the City; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such books, Bonds as hereinbefore provided. SECTION 2.07. Temporary Bonds. The Bonds may be issued in temporary form exchangeable for definitive Bonds when ready for delivery. Any temporary Bond may be printed, lithographed or typewritten, shall be of such denomination as may be determined by the City, and may contain such reference to any of the provisions of this Indenture as may be appropriate. A temporary Bond may be in the form of a single Bond payable in installments, each on the date, in the amount and at the rate of interest established for the Bonds maturing on such date. Every temporary Bond shall be executed by the City and be authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at 32 2166mS/2206mS-041132-000003-277 10/12/89 the principal corporate trust office of the Trustee in Los Angeles, California, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations of the same maturity or maturities. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. SECTION 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City, at the expense of the holder of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and number in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and delivered to, or upon the order of, the City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the City and the Trustee and, if such evidence be satisfactory to both and indemnity satisfactory to them shall be given, the City, at the expense of the owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and number in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall be about to mature, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof). The City may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the City and the Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds secured by this Indenture. SECTION 2.09. Use of Depository. Notwithstanding any provision of this Indenture to the contrary: (a) The Bonds shall be initially issued as provided in Section 2.02. Registered ownership of the Bonds, or any portion thereof, may not thereafter be transferred except: (i) to any successor of the Depository or its nominee, or to any substitute depository designated pursuant to clause (ii) of this subsection (a) 33 2l66m5/2206m5-041132-000003-277 10/12/89 ("substitute depository"); provided that any successor of the Depository or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) To any substitute depository designated by the City (at the direction of the Corporation) and not objected to by the Trustee, upon (1) the resignation of the Depository or its successor (or any substitute depository or its successor) from its functions as depository or (2) a determination by the City (at the direction of the Corporation) that the Depository or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (iii) To any person as provided below, upon (1) the resignation of the Depository or its successor (or substitute depository or its successor) from its functions as depository; provided that no substitute depository which is not objected to by the Trustee can be obtained or (2) a determination by the City (with the concurrence of the Corporation) that it is in the best interests of the City to remove the Depository or its successor (or any substitute depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) hereof, upon receipt of the Outstanding Bonds by the Trustee, together with a Certificate of the City to the Trustee, a single new Bond shall be executed and delivered in the aggregate principal amount of the Bonds then Outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Certificate of the City. In the case of any transfer pursuant to clause (iii) of subsection (a) hereof, upon receipt of the Outstanding Bonds by the Trustee, new Bonds shall be executed and delivered in such denominations numbered in consecutive order from R-l up and registered in the names of such persons as are requested in such a Certificate of the City, subject to the limitations of Section 2.02 hereof, provided the Trustee shall not be required to deliver such new Bonds within a period less than sixty (60) days from the date of receipt of such a Certificate of the City. 34 2166m5/2206m5-041132-000003-277 10/12/89 (c) In the case of partial redemption or an advance refunding of the Bonds evidencing all or a portion of the principal amount Outstanding, the Depository shall make an appropriate notation on the Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. (d) The city and the Trustee shall be entitled to treat the person in whose name any Bond is registered as the Bondholder thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the City; and the City and the Trustee shall have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Bonds. Neither the city nor the Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including the Depository or its successor (or substitute depository or its successor), except for the Holder of any Bond. (e) So long as the outstanding Bonds are registered in the name of Cede & Co. or its registered assign, the City and the Trustee shall cooperate with Cede & Co., as sole registered Bondholder, and its registered assigns in effecting payment of the principal of and redemption premium, if any, and interest on the Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS SECTION 3.01. Issuance of Bonds. At any time after the execution of this Indenture, the City may sell and execute and the Trustee shall authenticate and, upon Request of the City, deliver Bonds in the aggregate principal amount of million dollars ($__,000,000). SECTION 3.02. Application of Proceeds of Bonds. The proceeds received from the sale of the Bonds shall be deposited in trust with the Trustee, who shall forthwith set aside such proceeds as follows: (a) The Trustee shall set aside in the Interest Account accrued interest on the Bonds. (b) The Trustee shall set aside Reserve Account the sum of ($ in the Bond ) . 35 2166m5/2206m5-041132-000003-277 10/12/89 (c) The Trustee shall set aside in the Costs of Issuance Fund the sum of dollars ($___,000.00). (d) The Trustee shall set aside the remainder of said proceeds in the Escrow Fund. SECTION 3.03. Establishment and Application of Escrow Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Escrow Fund." The amounts in the Escrow Fund shall be invested or held as uninvested cash balances, and shall be withdrawn by the Trustee solely to purchase the Escrow Securities (as such term is defined in the Escrow Agreement), in accordance with a Certificate of the City to be delivered to the Trustee at or subsequent to the issuance of the Bonds. SECTION 3.04. Establishment and Application of Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Costs of Issuance Fund." The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the Bonds upon receipt of a Requisition of the Corporation stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. On the first anniversary of the issuance of the Bonds or upon the earlier Request of the Corporation, amounts, if any, remaining in the Costs of Issuance Fund shall be transferred to the [ ] . [Fifteen days prior to the redemption of the Bonds in whole or in part, the City shall immediately return a portion of the City Administration Fee, as determined pursuant to the terms of this section, plus interest thereon from the date of issuance of the Bonds to the date the amount is received by the Trustee, at the rate of %. Such amount is to be deposited in the Special Redemption Account and used pursuant to the terms of Section 4.01(A) or (D) hereof, as applicable. The portion of the City Administration Fee to be returned at any time shall be the amount of $ ,000 less the sum of (i) .125% of the aggregate principal amount of Bonds per annum for every Bond Year or such portion of the Bond Year in which the Bonds were Outstanding prior to such redemption and (ii) .125% per annum of the aggregate principal amount of Bonds Outstanding for every Bond Year or such portion of the Bond Year during which the said Bonds are scheduled to remain Outstanding.] SECTION 3.05. Validity of Bonds. The validity of the authorization and issuance of the Bonds is not dependent on and shall not be affected in any way by any proceedings 36 2166m5/2206m5-041132-000003-277 10/12/89 taken by the City or the Trustee with respect to or in connection with the Agreement. The recital contained in the Bonds that the same are issued pursuant to the Law and the Constitution and laws of the State of California shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance. ARTICLE IV REDEMPTION OF BONDS SECTION 4.01. Terms of Redemption. (A) The Bonds are subject to redemption prior to their respective stated maturities at the option of the City (which shall be exercised as directed by the Corporation) as a whole on any date or in part (in inverse order of maturity and by lot within a maturity) on any interest payment date from moneys required to be deposited in the Special Redemption Account pursuant to Section 6.7(B) of the Agreement, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium. (B) The Bonds are also subject to redemption prior to their stated maturity, at the option of the City (which shall be exercised as directed by the Corporation), from any source of available funds, as a whole on any date, or in part (by lot) on any interest payment date, on or after December 1, 1999, at the following redemption prices (expressed as a percentage of the principal amount of Bonds called for redemption), together with interest accrued thereon to the date of redemption: Period (both dates inclusive) Redemption Price December 1, 1999 through November 30, 2000 December 1, 2000 through November 30, 2001 December 1, 2001 and thereafter 102% 101 100 (C) The Bonds maturing on December 1, 2009 and December 1, 2019 are also subject to redemption prior to their stated maturity in part, by lot, from Mandatory Sinking Account Payments established in Section 5.05 (C) and (D) respectively, on any December 1, on or after December 1, 2000 and December 1, 2010, respectively, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium. 37 2166m5/2206m5-041132-000003-277 10/12/89 [(D) The Bonds are subject to mandatory redemption prior to their stated maturity on , in part from moneys required to be deposited in the Special Redemption Account pursuant to Section 3.04 hereof, at the principal amount thereof and interest accrued thereon to the date fixed for redemption.] SECTION 4.02. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds or any given portion thereof, the Trustee shall select the maturity of Bonds to be redeemed as specified by the Corporation, and within such maturities by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair. The Trustee shall promptly notify the City in writing of the Bonds or portions thereof so selected for redemption. SECTION 4.03. Notice of Redemption. Notice of redemption shall be mailed by the Trustee, not less than thirty (30) days, and not more than sixty (60) days prior to the redemption date, to the respective Holders of any Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee. If the Bonds are no longer held by the Depository, the Trustee shall also give notice of redemption by overnight mail to the Securities Depositories and to one or more Information Services. Each notice of redemption shall state the date of such notice, the Bonds to be redeemed, the date of issue of the Bonds, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the maturity or maturities (including CUSIP numbers, if any), and, if less than all of any such maturity, the distinctive certificate numbers of the Bonds of such maturity, to be redeemed and, if the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Bonds the Redemption Price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Failure by the Trustee to give notice pursuant to this Section 4.03 to anyone or more of the Information Services or Securities Depositories, or the insufficiency of any such notice shall not affect the sufficiency of the proceedings for redemption. Failure by the Trustee to mail 38 2166m5/2206m5-041132-000003-277 10/12/89 notice of redemption pursuant to this Section 4.03 to anyone or more of the respective Holders of any Bonds designated for redemption shall not affect the sufficiency of the proceedings for redemption with respect to the Holders to whom such notice was mailed. Notice of redemption of Bonds shall be given by the Trustee, at the expense of the Corporation, for and on behalf of the City. SECTION 4.04. Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the City shall execute and the Trustee shall authenticate and deliver to the registered holder thereof, at the expense of the City, a new Bond or Bonds of authorized denominations, and of the same Series and maturity, equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. SECTION 4.05. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice and interest accrued thereon to the redemption date, interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest. ARTICLE V REVENUES SECTION 5.01. Pledge and Assignment; Revenue Fund. (A) Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, there are hereby pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the provisions of this Indenture, all of the Revenues and any other amounts (including proceeds of the sale of Bonds) held in any fund or account established pursuant to this Indenture. Said pledge shall constitute a lien on and security interest in such assets and shall attach, be perfected and be valid and binding from and after delivery by 39 2166m5/2206m5-041132-000003-277 10/12/89 the Trustee of the Bonds, without any physical delivery thereof or further act. (B) The City hereby transfers in trust, grants a security interest in and assigns to the Trustee, for the benefit of the Holders from time to time of the Bonds, all of the Revenues and other assets pledged in subsection (A) of this Section and all of the right, title and interest of the City in the Agreement (except for any Special Services Covenant [and the right to receive any City Administration Fee to the extent payable to the City] and any rights of indemnification and to be held harmless). The Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the City shall be deemed to be held, and to have been collected or received, by the City as the agent of the Trustee and shall forthwith be paid by the City to the Trustee. The Trustee also shall be entitled to and shall take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with the City or separately, all of the rights of the City and all of the obligations of the Corporation (other than with respect to any Special Services Covenant) under the Agreement. (C) All Revenues shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the "Revenue Fund" which the Trustee shall establish, maintain and hold in trust; except as otherwise provided in Sections 5.07, 5.08 and 5.09 and except that all moneys received by the Trustee and required by the Agreement to be deposited in the Redemption Fund shall be promptly deposited in the Redemption Fund, which the Trustee shall establish, maintain and hold in trust. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in this Indenture. (D) If by the fifth (5th) day of any month the Trustee has not received Revenues sufficient to make the transfers required in such month by Section 5.02, the Trustee shall immediately notify the Corporation of such insufficiency by telephone or telegram and confirm such notification by written notice. SECTION 5.02. Allocation of Revenues. On or before the twenty-fifth (25th) day of each month, the Trustee shall transfer from the Revenue Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Revenue Fund) and into the Rebate Fund, the following amounts, in the following order of priority, the requirements of each such account or fund (including the making up of any deficiencies in any such 40 2l66m5/2206m5-041132-000003-277 10/12/89 account or fund resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account or fund subsequent in priority: First: to the Interest Account, one-sixth of the aggregate amount of interest becoming due and payable during the next ensuing six months on all Bonds then Outstanding, until the balance in said account is equal to said aggregate amount of interest; Second: to the Principal Account, one-twelfth of the aggregate amount of principal becoming due and payable on the Outstanding Serial Bonds plus the aggregate amount of Mandatory Sinking Account Payments required to be paid into the respective Sinking Accounts for Outstanding Term Bonds, in each case during the next ensuing twelve months, until the balance in said account is equal to said aggregate amount of such principal and Mandatory Sinking Account Payments; and Third: to the Bond Reserve Account, one-twelfth of the aggregate amount of each prior withdrawal from the Bond Reserve Account for the purpose of making up a deficiency in the Interest Account or the Principal Account until the deposits on account of such withdrawal are sufficient to fully restore the amount withdrawn; and Fourth: to the Rebate Fund, such amounts as are required to be deposited therein by this Indenture (including the Rebate Certificate). Any moneys remaining in the Revenue Fund after the foregoing transfers shall be transferred to the Corporation. SECTION 5.03. Application of Interest Account. All amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to this Indenture). SECTION 5.04. Application of Principal Account. (A) All amounts in the Principal Account shall be used and withdrawn by the Trustee solely for the purposes of paying the principal of the Bonds when due and payable, except that all amounts in the Sinking Account shall be used and withdrawn by the Trustee solely to purchase or redeem or pay at maturity Term Bonds, as provided herein. 41 2166m5/2206m5-041132-000003-277 10/12/89 (B) The Trustee shall establish and maintain within the Principal Account a separate subaccount for the Term Bonds, designated as the "Sinking Account." On or before the twenty-fifth (25th) day of each month, the Trustee shall transfer the amount deposited in the Principal Account pursuant to Section 5.02 for the purpose of making a Mandatory Sinking Account Payment (if such deposit is required in such month) from the Principal Account to the Sinking Account. On each Mandatory Sinking Account Payment date the Trustee shall apply the Mandatory Sinking Account Payment required on that date to the redemption (or payment at maturity, as the case may be) of Term Bonds, upon the notice and in the manner provided in Article IV; provided that, at any time prior to giving such notice of such redemption, the Trustee may apply moneys in such Sinking Account to the purchase of Term Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as may be directed by the Corporation, except that the purchase price (excluding accrued interest) shall not exceed the Redemption Price that would be payable for such Bonds upon redemption by application of such Mandatory Sinking Account Payment. If, during the twelve-month period immediately preceding said Mandatory Sinking Account Payment date, the Trustee has purchased Term Bonds with moneys in such Sinking Account, or, during said period and prior to giving said notice of redemption, the Corporation has deposited Term Bonds with the Trustee, or Term Bonds were at any time purchased or redeemed by the Trustee from the Redemption Fund and allocable to said Mandatory Sinking Account Payment, such Bonds so purchased or deposited or redeemed shall be applied, to the extent of the full principal amount thereof, to reduce said Mandatory Sinking Account Payment. All Bonds purchased or deposited pursuant to this subsection shall be cancelled and delivered by the Trustee to or upon the Order of the City. Any amounts remaining in a Sinking Account when all of the Term Bonds for which such account was established are no longer Outstanding shall be withdrawn by the Trustee and transferred to the Revenue Fund. All Term Bonds purchased from a Sinking Account or deposited by the Corporation with the Trustee shall be allocated first to the next succeeding Mandatory Sinking Account Payment, then pro-rata to the remaining Mandatory Sinking Account Payments in proportion to the amount of such Mandatory Sinking Account Payments. (C) Subject to the terms and conditions set forth in this Section and Section 4.01(C), the Bonds maturing on December 1, 2009 shall be redeemed (or paid at maturity, as 42 2166rn5/2206m5-041132-000003-277 10/12/89 the case may be) by application of Mandatory Sinking Account Payments in the following amounts and upon the following dates: Mandatory Sinking Account Payment Dates (December 1) Mandatory Sinking Account Payments Mandatory (December 1) Mandatory Payments 2000 2001 2002 2003 2004 $ 2005 2006 2007 2008 2009 $ (D) Subject to the terms and conditions set forth in this Section and Section 4.01(C), the Bonds maturing on December 1, 2019 shall be redeemed (or paid at maturity, as the case may be) by application of Mandatory Sinking Account Payments in the following amounts and upon the following dates: Mandatory Sinking Account Payment Dates (December 1) Mandatory Sinking Account Payments Mandatory Sinking Account Payment Dates (December 1) Mandatory Sinking Account Payments 2010 2011 2012 2013 2014 $ 2015 2006 2017 2018 2019 $ SECTION 5.05. Application of Bond Reserve Account. All amounts in the Bond Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making up any deficiency in the Interest Account or Principal Account, or (together with any other moneys available therefor) for the payment or redemption of all Bonds then Outstanding. Any amount in the Bond Reserve Account in excess of the Bond Reserve Account Requirement (calculated as of December 1 of each year) shall be transferred on or before December 15 of each year to the Revenue Fund. If the amount on deposit in. the Bond Reserve Account is less than the Bond Reserve Requirement as of such date of calculation, the Trustee shall so notify the Corporation, and the Corporation (pursuant to the terms of the Loan Agreement) shall make equal monthly payments within twelve months of such annual valuation so that the balance in the Bond Reserve Account is increased to the Bond Reserve Account Requirement. 43 2l66m5/2206m5-041132-000003-277 10/12/89 SECTION 5.06. Application of Redemption Fund. The Trustee shall establish and maintain within the Redemption Fund a separate Optional Redemption Account and a separate Special Redemption Account. All amounts deposited in the Optional Redemption Account and in the Special Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of redeeming Bonds, in the manner and upon the terms and conditions specified in Article IV, at the next succeeding date of redemption for which notice has been given and at the redemption prices then applicable to redemptions from the Optional Redemption Account and the Special Redemption Account, respectively; provided that, at any time prior to giving such notice of redemption, the Trustee may apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as may be directed by the Corporation, except that the purchase price (exclusive of accrued interest) may not exceed the Redemption Price then applicable to such Bonds; and provided further that in the case of the Optional Redemption Account in lieu of redemption at such next succeeding date of redemption, or in combination therewith, amounts in such account may be transferred to the Revenue Fund and credited against Loan Repayments in order of their due date as set forth in a Request of the Corporation. All Term Bonds purchased or redeemed from the Redemption Fund shall be allocated to applicable Mandatory Sinking Account Payments in inverse order of their payment dates. SECTION 5.07. Rebate Fund. (A) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund. Within the Rebate Fund, the Trustee shall maintain such accounts, including an Earnings Account and an Excess Account, as shall be necessary to comply with the terms and conditions of the Rebate Certificate. Subject to the transfer provisions provided in paragraph (E) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Amount (as defined in the Rebate Certificate), for payment to the federal government of the United States of America. Neither the City, the Corporation nor the Holder of any Bonds shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section, by Section 6.06 hereof and by the Rebate Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the directions of the Corporation including supplying all necessary information in the manner provided in the Rebate Certificate, and shall 44 2166m5/2206m5-041132-000003-277 10/12/89 have no liability or responsibility to enforce compliance by the Corporation or the City with the terms of the Rebate Certificate. (B) Upon the Corporation's written direction, an amount shall be deposited to the Rebate Fund by the Trustee from deposits by the Corporation, if and to the extent required, so that the balance in the Rebate Fund shall equal the Rebate Amount. Computations of the Rebate Amount shall be furnished by or on behalf of the Corporation in accordance with the Rebate Certificate. (C) The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to this Section, other than from moneys held in the funds and accounts created under this Indenture or from other moneys provided to it by the Corporation. (D) At the written direction of the Corporation, the Trustee shall invest all amounts held in the Rebate Fund in Investment Securities, subject to the restrictions set forth in the Rebate Certificate. The Trustee shall not be liable for any consequences arising from such investment. Money shall not be transferred from the Earnings Account except as provided in Paragraph (E) below. (E) Upon receipt of the Corporation's written directions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States, as so directed. In addition, if the Corporation so directs, the Trustee will deposit money into or transfer money out of the Rebate Fund from or into such accounts or funds as directed by the Corporation's written directions. Any funds remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any Rebate Amount, or provision made therefor satisfactory to the Trustee, shall be withdrawn and remitted to the Corporation. (F) Notwithstanding any other provision of this Indenture, including in particular Article X hereof, the obligation to remit the Rebate Amounts to the United States and to comply with all other requirements of this Section, Section 6.06 and the Rebate Certificate shall survive the defeasance or payment in full of the Bonds. SECTION 5.08. Investment of Moneys in Funds and Accounts. Except as set forth in Section 5.07(D) hereof, all moneys in any of the funds and accounts established pursuant to this Indenture shall be invested by the Trustee, and, upon Request of the Corporation, shall be invested as directed by the Corporation, solely in Investment Securities. Investment 45 2166m5/2206m5-041132-000003-277 10/12/89 Securities may be purchased at such prices as the Trustee may in its discretion determine or as may be directed by the Corporation. All Investment Securities shall be acquired subject to the limitations set forth in Section 6.06, the limitations as to maturities hereinafter in this Section set forth and such additional limitations or requirements consistent with the foregoing as may be established by Request of the Corporation. In the absence of written investment directions from the Corporation, the Trustee shall invest solely in the Investment Securities set forth in clause (8) of the definition thereof. Moneys in the Bond Reserve Account shall be invested in Investment Securities maturing prior to the final maturity of the Bonds. Moneys in all other funds and accounts shall be invested in Investment Securities maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture. Investment Securities purchased under a repurchase agreement may be deemed to mature on the date or dates on which the Trustee may deliver such Investment Securities for repurchase under such agreement. All interest, profits and other income received from the investment of moneys in the Escrow Fund shall be deposited when received in such fund. All interest, profits and other income received from the investment of moneys in the Rebate Fund shall be deposited when received in such fund. All interest, profits and other income received from the investment of moneys in any other fund or account established pursuant to this Indenture shall be deposited when received in the Revenue Fund. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any Investment Security equal to the amount of accrued interest, if any, paid as part of the purchase price of such Investment Security shall be credited to the fund or account for the credit of which such Investment Security was acquired. Investment Securities acquired as an investment of moneys In any fund or account established under this Indenture shall be credited to such fund or account. For the purpose of determining the amount in any such fund or account other than the Bond Reserve Account, all Investment Securities credited to such fund or account shall be valued at the lower of cost (exclusive of accrued interest after the first payment of interest following acquisition) or market value. Investment Securities credited to the Bond Reserve Account shall be valued at their respective fair market values as of December 1 other than the Bond Reserve Account, in each year. 46 2166m5/2206m5-041132-000003-277 10/12/89 The Trustee may commingle any of the funds or accounts established pursuant to this Indenture (other than the Rebate Fund) into a single fund or funds for investment purposes only, provided that all funds or accounts held by the Trustee hereunder shall be accounted for separately as required by this Indenture. The Trustee may act as principal or agent in the making or disposing of any investment. The Trustee may sell at the best price obtainable, or present for redemption, any Investment Securities so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Investment Security is credited, and, subject to the provisions of Section 8.03, the Trustee shall not be liable or responsible for any loss resulting from such investment. SECTION 5.09 Establishment and Application of Depreciation Reserve Fund. (A) The Trustee shall establish, maintain and hold in trust a special fund designated as the "Depreciation Reserve Fund." The Trustee shall receive from the Corporation to deposit into the Depreciation Reserve Fund the following amounts on or before the following dates: Date Deposit Amount July 1, 1990 $671,000 July 1, 1991 635,000 July 1, 1992 599,000 July 1, 1993 539,000 July 1, 1994 520,000 July 1, 1995 481,000 July 1, 1996 423,000 July 1, 1997 368,000 July 1, 1998 284,000 July 1, 1999 224,000 July 1, 2000 204,000 July 1, 2001 184,000 July 1, 2002 162,000 July 1, 2003 138,000 The Corporation may reduce the Depreciation Reserve Fund deposit by Depreciation Reserve Fund deposit credits which shall be an amount equal to any amount the Corporation has expended during the then current Fiscal Year for property which is depreciable (as defined below) until the day of such deposit; provided that, the Corporation certifies to the Trustee at the time of payment of the Depreciation Reserve Fund deposit (1) the amount of the expenditure, (2) the election of the Corporation to have this amount credited against the then currently payable Depreciation Reserve Fund deposit, (3) that the property acquired is depreciable, in 47 2166m5/2206m5-041132-000003-277 10/12/89 accordance with generally accepted accounting and has been included as part of the Facilities, and (4) such amount has not previously been paid from the Depreciation Reserve Fund or used as a Depreciation Reserve Fund deposit credit. Subject to the limitations described below, moneys held in the Depreciation Reserve Fund may be withdrawn and paid to the Corporation, from time to time for any of the following purposes: (1) To the payment of the principal amount of any Funded Debt or to the payment of the interest on any Funded Debt if there is delivered to the Trustee a Certificate of the Corporation stating that no other monies are available to make such payment which are not committed, budgeted, earmarked, or necessary to be used for another purpose; (2) To make deposits to the Bond Reserve Account on any December 1 to make up any deficiency therein; (3) To the payment of the cost of acquisition or construction of any Facilities the cost of which is depreciable under generally accepted accounting principles; (4) As a loan to the Corporation to provide working capital to be repaid within one year with interest at the rate certified in a Certificate of the Corporation to be the rate at which the Corporation could then incur short-term indebtedness for working capital purposes. (B) Upon receipt of a Certificate of the Corporation stating (i) that no Event of Default has occurred and is continuing, (ii) the amount to be withdrawn from the Depreciation Reserve Fund, and (iii) the purpose for which such money is to be withdrawn (which shall be one of the purposes specified in clauses (1)-(4) above), and in the case of withdrawals for the purposes specified in clause (4) above, the Trustee shall pay the amount set forth in such Certificate as directed by the terms thereof out of the Depreciation Reserve Fund. ARTICLE VI PARTICULAR COVENANTS SECTION 6.01. Punctual Payment. The City shall punctually payor cause to be paid the principal or Redemption Price and interest to become due in respect of all 48 2166m5/2206m5-041l32-000003-277 10/12/89 the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, and shall punctually payor cause to be paid all Mandatory Sinking Account Payments, but only out of Revenues and other assets pledged for such payment as provided in this Indenture. SECTION 6.02. Extension of Payment of Bonds. The City shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any of the claims for interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the City to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of Bonds. SECTION 6.03. Against Encumbrances. The City shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation, the City expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Law, and reserves the right to issue other obligations for such purposes. SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment. The City is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues and other assets purported to be pledged and assigned, respectively, under this Indenture in the manner and to the extent provided in this Indenture. The Bonds and the provisions of this Indenture are and will' be the legal, valid and binding limited obligations of the City in accordance with their terms, and the City and Trustee shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bondholders under this Indenture against all claims and demands of all persons whomsoever. 49 2166m5/2206m5-041132-000003-277 10/12/89 SECTION 6.05. Accounting Records and Financial Statements. (A) The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with the Trustee's accounting practices for books of record and account relating to similar trust accounts and in accordance with the customary standards of the industry for such books of record and account, in which complete and accurate entries shall be made of all transactions relating to the proceeds of Bonds, the Revenues, the Agreement and all funds and accounts established pursuant to this Indenture. Such books of record and account shall be available for inspection by the City, the Corporation and any Bondholder, or his agent or representative duly authorized in writing, at reasonable hours and under reasonable circumstances. (B) The Trustee shall file and furnish to the City (if requested in a Request of the City) and to each Bondholder who, during the immediately preceding twelve months, shall have filed his name and address with the Trustee for such purpose, (1) a copy of the most recent audited financial statements of the Corporation, as furnished to the Trustee pursuant to the Agreement, and (2) on or before January 15 of each year, a statement (which need not be audited) covering receipts, disbursements, allocation and application of Revenues and any other moneys (including proceeds of Bonds) in any of the funds and accounts established pursuant to this Indenture for the year ended on the preceding December 1, or, at the option of the Trustee, monthly statements for such period. SECTION 6.06. Tax Covenants. The City and the Corporation each covenant that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103 of the Code. The City and the Corporation shall not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the City or the Corporation, or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. To that end, the City and the Corporation will comply with all requirements of Section 148 of the Code to the extent applicable to the Bonds. In the event that at any time the City or the Corporation is of the opinion that for purposes of this Section 6.06 it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under this Indenture or the Loan Agreement or otherwise, the City or the Corporation shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. 50 2166m5/2206m5-041132-000003-277 10/12/89 Without limiting the generality of the foregoing, the City and the Corporation agree that there shall be paid from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds from time to time. This covenant shall survive payment in full or defeasance of the Bonds. The City and the Corporation specifically covenant to payor cause to be paid to the United States, at the times and in the amounts determined pursuant to the Rebate Certificate, the Rebate Amounts, as described in the Rebate Certificate. The Trustee shall comply with all instructions of the Corporation given in accordance with the Rebate Certificate. Notwithstanding any provision of this Section, if the Corporation shall provide to the City and the Trustee an opinion of nationally recognized bond counsel to the effect that any action required under this Section, Section 5.07 hereof and the Rebate Certificate is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the City and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent. SECTION 6.07. Other Covenants. (A) The Trustee shall promptly collect all amounts due from the Corporation pursuant to the Agreement, shall establish all funds and accounts required to be established by it pursuant to the Agreement and hold all such amounts therein in trust for the purposes thereunder, will perform all duties imposed upon it pursuant to the Agreement, and shall diligently enforce, and take all steps, actions and proceedings reasonably necessary in its discretion for the enforcement of all of the rights of the City and all of the Obligations of the Corporation (other than with respect to any Special Services Covenant) under the Agreement. (B) The City shall not amend, modify or terminate any of the terms of the Agreement (other than with respect to any Special Services Covenant), or consent to any such amendment, modification or termination, without the written consent of the Trustee. The Trustee shall give such written consent only if (1) in the opinion of the Trustee, such amendment, modification or termination will not materially adversely affect the interests of the Bondholders or result in any material impairment of the security hereby given for the payment of the Bonds, or (2) the Trustee first obtains the written consent of the Holders of a majority in principal amount of the Bonds then Outstanding to such amendment, 51 2206m5/2166m5-0411) 2 -(H)noo' '77 }1)/12/89 modification or termination, provided that no such amendment, modification or termination shall reduce the amount of Loan Repayments to be made to the City or the Trustee by the Corporation pursuant to the Agreement, or extend the time for making such payments, without the written consent of all of the Holders of the Bonds then Outstanding. SECTION 6.08. Waiver of Laws. The City shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the City to the extent permitted by law. SECTION 6.09. Further Assurances. The City will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Holders of the Bonds of the rights and benefits provided in this Indenture. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS SECTION 7.01. Events of Default. The following events shall be Events of Default: (a) default ln the due and punctual payment of the principal or Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise, or default in the redemption from any Sinking Account of any Term Bonds in the amounts and at the times provided therefor; (b) default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable; (c) default by the City in the observance of any of the covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such default shall have continued for a period of sixty (60) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the City and the Corporation by the Trustee, or to the City, the Corporation and the Trustee 52 2206m5/2166m5-041l32-000003-277 10/12/89 by the Holders of not less than twenty-five per cent (25%) in aggregate principal amount of the Bonds at the time Outstanding; or (d) a Loan Default Event. Upon the occurrence of an Event of Default hereunder of which the Trustee has actual knowledge, the Trustee shall notify the Corporation and the City in writing as soon as practicable. SECTION 7.02. Acceleration of Maturities. If an Event of Default shall occur, then, and in each and every such case during the continuance of such Event of Default, the Trustee or the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the City and the Corporation, to declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Bonds contained to the contrary notwithstanding. Any such declaration, however, is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the City or the Corporation shall deposit with the Trustee a sum sufficient to pay all the principal or Redemption Price of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds, and the reasonable charges and expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason or such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the City, the Corporation and the Trustee, or the Trustee if such declaration was made by the Trustee, may, on behalf of the Holders of all of the Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. 53 2206m5/2166m5-041132-000003-277 10/12/89 SECTION 7.03. Application of Revenues and Other Funds After Default. If an Event of Default shall occur and be continuing, all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of this Indenture (subject to Section 11.10) shall be applied by the Trustee as follows and in the following order: (1) To the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Holders of the Bonds and payment of reasonable charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; (2) To the payment of the principal or Redemption Price of and interest then due on the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture (including Section 6.02), as follows: (i) Unless the principal of all of the Bonds shall have become or have been declared due and payable, First: To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid principal or Redemption Price of any Bonds which shall have become due, whether at maturity or by call for redemption, in the order of their due dates, with interest on the overdue principal at the rate borne by the respective Bonds, and, if the amount available shall not be sufficient to pay in full all the Bonds due on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal or Redemption Price due on such date to the persons entitled thereto, without any discrimination or preference. 54 2206m5/2166m5-041132-000003-277 10/12/89 (ii) If the principal of all of the Bonds shall have become or have been declared due and payable, to the payment of the principal and interest then due and unpaid upon the Bonds, with interest on the overdue principal at the rate borne by the respective Bonds, and, if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference. SECTION 7.04. Trustee to Represent Bondholders. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Holders of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Holders under the provisions of the Bonds, this Indenture, the Agreement, the Law and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, and upon the written request of the Holders of not less than twenty-five per cent (25%) in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, and being held harmless by the Holders of the Bonds requesting any such action for its performance of any such requested action (provided, however, that no such hold harmless agreement shall be deemed to apply to any instance in which the Trustee has performed negligently or with willful misconduct) shall, proceed to protect or enforce its rights or the rights of such Holders by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Holders under this Indenture, the Agreement, the Law or any other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under this Indenture, 55 2206m5/2l66m5-041132-000003-277 10/12/89 pending such proceedings. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Holders of such Bonds, subject to the provisions of this Indenture (including Section 6.02). SECTION 7.05. Bondholders' Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Holders of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bondholders not parties to such direction. SECTION 7.06. Limitation on Bondholders' Right to Sue. No Holder of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Agreement, the Law or any other applicable law with respect to such Bond, unless (1) such Holder shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Holders of not less than twenty-five per cent (25%) in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Holder or said Holders shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) such Holder or said Holders shall have submitted to the Trustee an agreement to hold the Trustee harmless for its performance of any such request, provided, however, that no such hold harmless agreement shall be deemed to apply to any instance in which the Trustee has performed negligently or with willful misconduct; and (5) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity and agreement to hold harmless shall have been made to, the Trustee. 56 2206m5/2166m5-041132-000003-277 10/12/89 Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Holders of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Holders of Bonds, or to enforce any right under this Indenture, the Law or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Holders of the Outstanding Bonds, subject to the provisions of this Indenture (including Section 6.02). SECTION 7.07. Absolute Obligation of City. Nothing in Section 7.06 or in any other provision of this Indenture, or in the Bonds, contained shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the principal or Redemption Price of and interest on the Bonds to the respective Holders of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Holders, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. SECTION 7.08. Termination of Proceedings. In case any proceedings taken by the Trustee or anyone or more Bondholders on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Bondholders, then in every such case the City, the Trustee and the Bondholders, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the City, the Trustee and the Bondholders shall continue as though no such proceedings had been taken. SECTION 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Holders of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. 57 2206m5/2166m5-041132-000003-277 10/12/89 SECTION 7.10. No Waiver of Default. No delay or omission of the Trustee or of any Holder of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee or to the Holders of the Bonds may be exercised from time to time and as often as may be deemed expedient. ARTICLE VIII THE TRUSTEE SECTION 8.01. Duties, Immunities and Liabilities of Trustee. (A) The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (B) The City may, and upon written request of the Corporation shall, remove the Trustee at any time unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with subsection (E) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee, and, thereupon shall appoint, with the consent of the Corporation, a successor Trustee by an instrument in writing. (C) The Trustee may at any time resign by giving written notice of such resignation to the City and the Corporation and by giving the Bondholders notice of such resignation by mail to the Bondholders at the addresses shown on the registration books maintained by the Trustee. Upon 58 2206m5/2166m5-041132-000003-277 10/12/89 receiving such notice of resignation, the City shall promptly appoint, with the consent of the Corporation, a successor Trustee by an instrument in writing. (D) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Bondholder (on behalf of himself and all other Bondholders) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the City and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Request of the City or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the City shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the City shall mail a notice of the succession of such Trustee to the trusts hereunder to the Bondholders at the addresses shown on the registration books maintained by the Trustee. If the City fails to mail such notice within thirty (30) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be published at the expense of the City. (E) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a trust company or bank having the powers of a trust company having a 59 2206m5/2l66m5-04l132-000003-277 10/12/89 corporate trust office in Los Angeles, California, having 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. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (E), the Trustee shall resign immediately in the manner and with the effect specified in this Section. SECTION 8.02. 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 such company shall be eligible under subsection (E) of Section 8.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. SECTION 8.03. Liability of Trustee. (A) The recitals of facts herein and in the Bonds contained shall be taken as statements of the City, and the Trustee assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Indenture or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee may become the owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as 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 Bondholders, whether or not such committee shall represent the Holders of a majority in principal amount of the Bonds then Outstanding. 60 2206m5/2166m5-04l132-000003-277 10/12/89 (B) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. (C) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (D) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Bondholders, pursuant to the provisions of this Indenture, unless such Bondholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby and shall have agreed to hold the Trustee harmless for its performance of any request, order or direction, provided, however, that no such hold harmless agreement shall be deemed to apply to any instance in which the Trustee has performed negligently or with willful misconduct. (E) The Trustee shall be entitled to payment for its reasonable fees and expenses for all services performed under this Indenture, subject to the provisions of any agreement between the Trustee and the City or the Corporation. Such fees and expenses shall be paid solely from Additional Payments or, to the extent the Corporation has defaulted in the payment of Additional Payments, from Revenues. The Trustee shall have a lien for its fees and expenses on the Revenues and other assets pledged hereunder, which lien shall be prior to the lien of the Holders of the Bonds. (F) The Trustee shall not be deemed to have knowledge of any Loan Default Event unless and until a trust officer or assistant trust officer in the office of the Trustee administering the trusts created hereby shall have actual knowledge thereof, or the Trustee shall have received written notice thereof, at its principal corporate trust office in Los Angeles, California. (G) No provision of this Indenture shall be deemed to require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of 61 2206mS/2l66mS-041132-000003-277 10/12/89 its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (H) 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 actions of any such attorney, agent, or receiver selected by it with reasonable care except for the negligence actions or willful misconduct of any such attorney, agent or receiver. SECTION 8.04. Right of Trustee to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the City, with regard to legal questions, and may consult with any independent certified public accountant or firm of such accountants of national reputation with regard to accounting or auditing questions or computations, and the opinion of such counselor the opinion or computations of such accountant or firm of accountants, respectively, shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of the City, and such Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, 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. SECTION 8.05. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject at all reasonable times to the inspection of the City and any Bondholder, and their 62 2206m5/2166m5-041132-000003-277 10/12/89 agents and representatives duly authorized in writing, at reasonable hours and under reasonable conditions. ARTICLE IX MODIFICATION OR AMENDMENT OF THE INDENTURE SECTION 9.01. Amendments Permitted. (A) This Indenture and the rights and obligations of the City and of the Holders of the Bonds and of the Trustee may be modified or amended from time to time and at any time by an indenture or indentures supplemental thereto, which the City and the Trustee may enter into, following prior written notice to the Corporation pursuant to Section 9.2 of the Agreement, when the written consent of the Holders of a majority in aggregate principal amount of the Bonds then Outstanding shall have been filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any particular maturity remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding under this Section. No such modification or amendment shall (I) extend the fixed maturity of any Bond, or reduce the amount of principal thereof, or extend the time of payment or reduce the amount of any Mandatory Sinking Account Payment provided in the Indenture for the payment of any Bond, or reduce the rate of interest thereon, or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the Holder of each Bond so affected, or (2) reduce the aforesaid percentage of Bonds the consent of the Holders of which is required to effect any such modification or amendment, or permit the creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture, or deprive the Holders of the Bonds of the lien created by this Indenture on such Revenues and other assets (except as expressly provided in this Indenture), without the consent of the Holders of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the City and the Trustee of any Supplemental Indenture pursuant to this subsection (A), the Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Indenture to the Bondholders at the addresses shown on the registration books maintained by the Trustee. Any failure to give such notice, or any defect therein, shall not, however, 63 2206m5/2166m5-041132-000003-277 10/12/89 in any way impair or affect the validity of any such Supplemental Indenture. (B) This Indenture and the rights and obligations of the City, of the Trustee and of the Holders of the Bonds may also be modified or amended from time to time and at any time by an indenture or indentures supplemental hereto, which the City and the Trustee may enter into, following prior notice to the Corporation without the consent of any Bondholders, but only to the extent permitted by law and only for anyone or more of the following purposes: (1) to add to the covenants and agreements of the City in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the City, provided, that no such covenant, agreement, pledge, assignment or surrender shall materially adversely affect the interests of the Holders of the Bonds; (2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the City may deem necessary or desirable and not inconsistent with this Indenture, and which shall not materially adversely affect the interests of the Holders of the Bonds; (3) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Holders of the Bonds; or (4) to provide any additional procedures, covenants or agreements to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, including the amendment of any Rebate Certificate. (C) The Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Indenture authorized by subsections (A) or (B) of this Section which materially adversely affects the Trustee's own 64 2206m5/2l66rn5-041132-000003-277 10/12/89 rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the City, the Trustee and all Holders of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the City and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Holder of any Bond Outstanding at the time of such execution and presentation of his or her Bond for the purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bond. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the City and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the City and authenticated by the Trustee, and upon demand of the Holders of any Bonds then Outstanding shall be exchanged at the principal office of the Trustee, without cost to any Bondholder, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amounts of the same maturity. SECTION 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bondholder from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. ARTICLE X DEFEASANCE SECTION 10.01. Discharge of Indenture. The Bonds may be paid by the City in any of the following ways; 65 2206m5/2l66m5-04l132-000003-277 10/12/89 provided that the City also pays or causes to be paid any other sums payable hereunder by the City: (a) by paying or causing to be paid the principal or Redemption Price of and interest on all Bonds then Outstanding, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, money or securities in the necessary amount (as provided in Section 10.03) to payor redeem all Bonds then Outstanding; or (c) by delivering to the Trustee, for cancellation by it, all Bonds then Outstanding. If the City shall pay all Bonds Outstanding and shall also payor cause to be paid all other sums payable hereunder by the City, then and in that case, at the election of the City (evidenced by a Certificate of the City, filed with the Trustee signifying the intention of the City to discharge all such indebtedness and this Indenture), and notwithstanding that any Bonds shall not have been surrendered for payment, this Indenture and the pledge of Revenues and other assets made under this Indenture and all covenants, agreements and other obligations of the City under this Indenture (except as otherwise provided in Section 5.07 hereof) shall cease, terminate, become void and be completely discharged and satisfied, except only as provided in Section 10.02. In such event, upon Request of the City, the Trustee shall cause an accounting for such period or periods as may be requested by the City to be prepared and filed with the City and shall execute and deliver to the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the Corporation all moneys or securities or other property held by them pursuant to this Indenture which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption; provided that in all events moneys in the Rebate Fund shall be subject to the provisions of Section 5.07 hereof. SECTION 10.02. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.03) to payor redeem any Outstanding Bond (whether upon or prior to its maturity or the redemption date of such Bond), provided that, if such Bond is to be redeemed prior to maturity, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the City in 66 2206m5/2166m5-04ll32-000003-277 10/12/89 respect of such Bond shall cease, determine and be completely discharged, except that thereafter, the Holder thereof shall be entitled to payment by the City, and the City shall remain liable therefore, but only out of such money or securities deposited with the Trustee as aforesaid, subject, however, to the provisions of Section 10.04. The City may at any time surrender to the Trustee for cancellation by it any Bonds previously issued and delivered, which the City may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. SECTION 10.03. Deposit of Money or Securities with Trustee. Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to payor redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to this Indenture (other than the Rebate Fund) and shall be: (a) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount or Redemption Price of such Bonds and all unpaid interest thereon to the redemption date; or (b) Investment Securities described in clause (1) of the definition thereof in Section 1.01 not subject to redemption by the issuer thereof prior to maturity, the principal of and interest on which when due will provide money sufficient to pay the principal or Redemption Price of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Bonds to be paid or redeemed, as such principal or Redemption Price and interest become due, provided that, in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this Indenture or by 67 2206m5/2166m5-041132-000003-277 10/12/89 Request of the City) to apply such money to the payment of such principal or Redemption Price and interest with respect to such Bonds, and provided further, that with respect to the deposit of Investment Securities pursuant to subsection (b), the Trustee shall have received the report of an Accountant to the effect that the amount deposited is sufficient to make the payments specified therein. SECTION 10.04. Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of this Indenture, any moneys held by the Trustee in trust for the payment of the principal or Redemption Price of, or interest on, any Bonds and remaining unclaimed for four years after the principal of all of the Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as provided in this Indenture), if such moneys were so held at such date, or four years after the date of deposit of such moneys if deposited after said date when all of the Bonds became due and payable, shall, upon Request of the City and subject to applicable law to the contrary, be repaid to the City free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the City as aforesaid, the Trustee may (at the cost of the City) first mail to the Holders of any Bonds remaining unpaid a notice, in such form as may be deemed appropriate by the Trustee, with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the City of the moneys held for the payment thereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. Liability of City Limited to Revenues. Notwithstanding anything in this Indenture or in the Bonds contained, the City shall not be required to advance any moneys derived from any source other than the Revenues and other assets pledged under this Indenture for any of the purposes in this Indenture mentioned, whether for the payment of the principal or Redemption Price of or interest on the Bonds or for any other purpose of this Indenture [except for the return of a portion of its City Administration Fee required by Section 3.04 hereof.] Nevertheless, the City may, but shall not be required to, advance for any of the purposes hereof any funds of the City which may be made available to it for such purposes. 68 2206m5/2166m5-041132-000003-277 10/12/89 The City shall not be liable to the Corporation, any Bondholder or any other person for losses, costs, damages, expenses and liabilities arising out of or related to, in whole or in part, one or more negligent acts or omissions of the City, any of its officers, directors, employees, agents or any other party acting for or on behalf of the City, in connection with the issuance of the Bonds or performance by the City of its obligations under this Indenture, the Loan Agreement or any other agreement relating hereto. The Loan Agreement shall provide that the Corporation releases the City from all liability to the Corporation for, and indemnifies the City against any liability arising from any claim by any Bondholder or any other person for any such losses, costs, damages, expenses and liabilities. The Loan Agreement shall further provide that the Corporation indemnifies the Bondholders against any failure by the City, any of its officers, directors, employees, agents or any other party acting for or on behalf of the City, to perform its obligations under this Indenture, the Loan Agreement or any other agreement relating hereto. SECTION 11.02. Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. SECTION 11.03. Limitation of Rights to Parties, the Corporation and Bondholders. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any person other than the City, the Trustee, the Corporation and the Holders of the Bonds, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the City, the Trustee, the Corporation and the Holders of the Bonds. SECTION 11.04. Waiver of Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. 69 2206m5/2166m5-041132-000003-277 10/12/89 SECTION 11.05. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the City of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds (in the presence of an officer of the City, if the City shall so require), and deliver a certificate of such destruction to the City. SECTION 11.06. Severability of Invalid Provisions. If anyone or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The City hereby declares that it would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that anyone or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. SECTION 11.07. Notice to City, Corporation and Trustee. Any notice to or demand upon the Trustee may be served or presented, and such demand may be made, at the principal corporate trust office of the Trustee in Los Angeles, California, which at the date of adoption of this Indenture is located at 333 South Beaudry Avenue, W24-30, Los Angeles, California 90017, Attention: Corporate Trust Division #____, or at such other address as may have been filed in writing by the Trustee with the City. Any notice to or demand upon the City or the Corporation shall be deemed to have been sufficiently given or served for all purposes by being deposited, postage prepaid, in a post office letter box, addressed, as the case may be, to the City at 300 North "0" Street, San Bernardino, California 92418, Attention: Director, Redevelopment Agency of the City of San Bernardino (or such other address as may have been filed in writing by the City with the Trustee), or, to the Corporation at 1500 West Seventeenth Street, San Bernardino, CA 92411, Attention: Administrator (or such other address as may have been filed in writing by the Corporation with the Trustee). SECTION 11.08. Evidence of Rights of Bondholders. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Bondholders may be in any number of concurrent instruments of 70 2206m5/2166m5-041132-000003-277 10/12/89 substantially similar tenor and shall be signed or executed by such Bondholders in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the City if made in the manner provided in this Section. The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The ownership of Bonds shall be proved by the registration books maintained by the Trustee. Any request, consent, or other instrument or writing of the Holder of any Bond shall bind every future Holder of the same Bond and the Holder of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the City in accordance therewith or reliance thereon. SECTION 11.09. Disqualified Bonds. In determining whether the Holders of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the City or the Corporation, or by any other obligor on the Bonds, or by any person directly or indirectly controlling or controlled. by, or under direct or indirect common control with, the City or the Corporation or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the City or the Corporation or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. 71 2206m5/2166m5-04l132-000003-277 10/12/89 SECTION 11.10. Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or Redemption Price due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Holders of the Bonds entitled thereto, subject, however, to the provisions of Section 10.04. SECTION 11.11. Funds and Accounts. Any fund required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds shall at all times be maintained in accordance with customary standards of the industry, to the extent practicable, and with due regard for the requirements of Section 6.05 and for the protection of the security of the Bonds and the rights of every holder thereof. SECTION 11.12. Article and Section Headings and References. 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 Indenture. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders. SECTION 11.13. Waiver of Personal Liability. No member of the Common Council, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal or Redemption Price of or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such member of the Common Council, officer, agent or employee from the performance of any official duty provided by law or by this Indenture. 72 2206m5/2166m5-041132-000003-277 10/12/89 SECTION 11.14. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the City and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. SECTION 11.15. Governing Law. This Indenture shall be construed in accordance with and governed by the Constitution and laws of the State of California. SECTION 11.16. Opinions of Bond Counsel. Whenever in this Indenture it is required that prior to the taking of any action an opinion of nationally recognized bond counsel is required to be delivered to the effect that such action will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes, and if such opinion is not given by Orrick, Herrington & Sutcliffe, such opinion shall instead affirmatively state, in a manner acceptable to the City and the Trustee, that interest on the Bonds is excluded from gross income for federal income tax purposes and will remain so after the action in question. This Section shall apply in the same fashion with respect to the affirmative opinion of any such successor bond counsel. 73 2206m5/2166m5-041132-000003-277 10/12/89 In WITNESS WHEREOF, CITY OF SAN BERNARDINO has caused this Indenture to be signed in its name by its Mayor, and its seal to be hereunto affixed and attested by its City Clerk, and Security Pacific National Bank, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by one of its authorized officers, all as of the day and year first above written. CITY OF SAN BERNARDINO By Mayor (Seal] Attest: City Clerk SECURITY PACIFIC NATIONAL BANK, as Trustee By Authorized Officer 74 2206m5/2166m5-041132-000003-277 10/12/89 EXHIBIT A Description: The land referred to herein is situated in the County of San Bernardino, State of California, and is described as follows: Parcel No.1: Lots 109 through 115 of Tract No. 2852, in the City of San Bernardino, County of San Bernardino, State of California, as per map recorded in Book 40, page 29 of Maps, in the Office of the County Recorder of said county. Parcel No.2: The north one-half of Lot 7, Block 59, Rancho San Bernardino, in the City of San Bernardino, County of San Bernardino, State of California, as per Map recorded in Book 7, Page 2, of Maps, in the Office of the County Recorder of said county. Except the south 30 feet thereof. Also excepting the east 37.93 feet thereof. Also excepting the west 10.57 feet of the east 48.5 feet of the north 145.5 feet thereof. 2206m5/2166m5 2206m5/2166m5 EXHIBIT B [Permitted Encumbrances -- to come from Title Report and UCC Search] OH&S DRAFT 10/11/89 CITY OF SAN BERNARDINO and SAN BERNARDINO COMMUNITY HOSPITAL LOAN AGREEMENT Dated as of November 1, 1989 CITY OF SAN BERNARDINO HOSPITAL REVENUE REFUNDING BONDS (SAN BERNARDINO COMMUNITY HOSPITAL) SERIES 1989 2164m5 TABLE OF CONTENTS Section Parties Preambles ARTICLE I DEFINITIONS 1.1 Definitions ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE CORPORATION; FINDINGS OF THE CITY 2.1 Representations and Warranties of the Corporation . . . 2.2 Findings of the City. . . . . . . . . ARTICLE III ISSUANCE OF BONDS; LOAN OF PROCEEDS 3.1 Bonds ARTICLE IV REPAYMENT OF LOANS 4.1 Loan Repayments . . . . . . . . . . 4.2 Additional Payments . . . . . . . . 4.3 Security for Corporation's Obligations 4.4 Gross Revenue Fund. . . . 4.5 Depreciation Reserve Fund 4.6 Obligations of the Corporation Unconditional; Net Contract 4.7 Prepayment. . . . . . . . . ARTICLE V PARTICULAR COVENANTS 5.1 Maintenance of Corporate Existence of the Corporation; Consolidation, Merger, Sale or Transfer Under Certain Conditions 5.2 Accreditation and Licensing 5.3 Limitation on Encumbrances . . . . . . . . 1 2164m5 Page 1 1 2 Section 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 Parity Debt.. .... Accounting Records, Financial Statements and Budget . Tax Covenants. .... Limitation on Disposition of Facilities and Cash Special Services Covenant Rates and Charges; Debt Coverage Limitation on Indebtedness Limitation on Acquisition of Properties Corporate Organization . . . Transfer of Assets Prohibited Uses . ARTICLE VI MAINTENANCE, TAXES, INSURANCE AND CONDEMNATION 6.1 Maintenance and Operation of the Facilities . . . . 6.2 Taxes, Assessments, Other Governmental Charges and Utility Charges . 6.3 Insurance Required . . . . 6.4 Worker's Disability Compensation Act 6.5 Insurers; Policy Forms and Loss Payees 6.6 Title Insurance. 6.7 Disposition of Insurance and Condemnation Proceeds 7.1 7.2 7.3 ARTICLE VII NON-LIABILITY OF CITY; EXPENSES; INDEMNIFICATION Non-Liability of City Expenses Indemnification . ARTICLE VIII LOAN DEFAULT EVENTS AND REMEDIES 8.1 Loan Default Events. 8.2 Remedies on Default. 8.3 Remedies Not Exclusive; No waiver of Rights . . 8.4 Expenses on Default 8.5 Notice of Default. 2164m5 11 Page Section 8.1 8.2 8.3 8.4 8.5 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 Page ARTICLE VIII LOAN DEFAULT EVENTS AND REMEDIES Loan Default Events . Remedies on Default . Remedies Not Exclusive; No Waiver of Rights . Expenses on Default Notice of Default . ARTICLE IX MISCELLANEOUS Further Assurances Amendment of Indenture Notices . Governing Law . Binding Effect Severability of Invalid Provisions Article and Section Headings and References . . . . Agreement Represents Complete Agreement; Amendments . Execution of Counterparts . . Term of Loan Agreement Waiver of Personal Liability Execution . Appendix A 2164m5 III LOAN AGREEMENT THIS LOAN AGREEMENT, dated as of November I, 1989, between CITY OF SAN BERNARDINO, a municipal corporation and charter city duly organized and existing under and by virtue of the constitution and laws of the State of California (the "City"), and SAN BERNARDINO COMMUNITY HOSPITAL, a nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the "Corporation"), WIT N E SSE T H: WHEREAS, the City has the right and power to make and enforce all laws and regulations in respect to municipal affairs and certain other matters in accordance with and as more particularly provided in Sections 3, 5 and 7 of Article XI of the Constitution of the State of California and Section 40 of the charter of the City (the "Charter"); WHEREAS, the Common Council of the City, acting under and pursuant to the powers reserved to the City under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California, Section 40 of the Charter, has duly enacted and amended Ordinance No. 3815 of the City (the "Law"), establishing a procedure for the authorization, sale and issuance of revenue bonds by the City for the purpose, inter alia, of making loans to exempt persons within the meaning of the Code as provided in the Law; WHEREAS, the City, for the benefit of the Corporation, issued the City of San Bernardino Insured Hospital Revenue Bonds (San Bernardino Community Hospital Series 1985A (the "Prior Bonds"); WHEREAS, the Corporation has requested the assistance of the City in the refunding of the Prior Bonds; WHEREAS, after due investigation and deliberation, the City has approved said request of the Corporation and has determined to issue its Hospital Revenue Refunding Bonds (S~n Bernardino Community Hospital), Series 1989 (the "Bonds"), in the aggregate principal amount of million dollars ($__,000,000), pursuant to the Law and an indenture, dated as of November I, 1989 (the "Indenture"), between the City and Security Pacific National Bank, as trustee, in order to fund a loan to the Corporation for the purposes and on the terms and conditions herein provided; WHEREAS, the City and the Corporation each has duly authorized the execution and delivery of this Loan Agreement; 2164m5 NOW, THEREFORE, for and in consideration of the premises and the material covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind themselves as follows: ARTICLE I DEFINITIONS SECTION 1.1. Definitions. Unless the context clearly otherwise requires, the capitalized terms in this Loan Agreement shall have the meanings specified in the Indenture. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE CORPORATION; FINDINGS OF THE CITY SECTION 2.1. Representations and Warranties of the Corporation. The Corporation makes the following representations and warranties to the City that as of the date of delivery of the Bonds to the initial purchaser(s) thereof (such representations and warranties to remain operative, true and in full force and effect regardless of delivery of the Bonds or any investigations by or on behalf of the City or the results thereof): (a) The Corporation is a nonprofit public benefit corporation duly formed and in good standing under the laws of the State of California, has full legal right, power and authority to enter into this Loan Agreement and the Escrow Agreement and to carry out and consummate all transactions contemplated by this Loan Agreement and the Escrow Agreement, and by proper corporate action has duly authorized the execution and delivery of this Loan Agreement and the Escrow Agreement. (b) The officer or officers of the Corporation executing this Loan Agreement and the Escrow Agreement are duly and properly in office and fully authorized to execute the same. 2 2164m5 (c) This Loan Agreement and the Escrow Agreement have been duly authorized, executed and delivered by the Corporation and (i) this Loan Agreement, when assigned to the Trustee pursuant to the Indenture, constitute the legal, valid and binding agreement of the Corporation to the Trustee enforceable against it in accordance with its terms for the benefit of the Holders of the Bonds, and (ii) any rights of the City and obligations of the Corporation under the Loan Agreement not so assigned to the Trustee constitute the legal, valid, and binding agreements of the Corporation enforceable against the Corporation in accordance with its terms; except as enforcement hereof and thereof may be limited by bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought. (d) The execution and delivery of this Loan Agreement and the Escrow Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, will not conflict with or constitute a violation or breach of or default by the Corporation (with due notice or the passage of time or both) under the articles of incorporation of the Corporation, its bylaws or, to the knowledge of the Corporation, any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Corporation is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Corporation, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would materially and adversely affect the consummation by the Corporation of the transactions contemplated by this Loan Agreement or the Escrow Agreement, or the financial condition, assets, properties or operations of the Corporation or its properties. (e) No consent or approval of any trustee or holder of any indebtedness of the Corporation, and no 3 2l64mS consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery by the Corporation of this Loan Agreement or the Escrow Agreement, or the consummation by the Corporation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect. (f) The Corporation is an acute care hospital which operates "health facilities" in the City as those terms are defined in the Law. (g) Except as disclosed in the Official Statement for the Bonds, there is no action, suit, proceeding, inquiry or investigation, before or by any court or federal, state, municipal or other governmental authority, to the knowledge of the Corporation after reasonable investigation, pending or threatened against or affecting the Corporation or the assets, properties or operations of the Corporation which, if determined adversely to the Corporation or its interests, would have a material adverse effect upon the consummation of the transactions contemplated by or the validity of this Loan Agreement or the Escrow Agreement, or upon the financial condition, assets, properties or operations of the Corporation, and the Corporation is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement, the Escrow Agreement, or the financial condition, assets, properties or operations of the Corporation or its properties. All tax returns (federal, state and local) required to be filed by or on behalf of the Corporation have been filed, and all taxes shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Corporation in good faith, have been paid or adequate reserves have been made for the payment thereof, which reserves, if any, are reflected in the financial statements described in subsection (h) of this Section. The Corporation enjoys the peaceful and undisturbed possession of all of the premises upon which it is operating as a health care institution. 4 2l64m5 (h) The audited balance sheet of the Corporation at June 30, 1989 and the related statements of revenue and expenses, changes in fund balances and changes in financial position for the year ended on such date (copies of which, certified by , independent certified public accountants, have been furnished to the City), fairly state the financial position of the Corporation at June 30, 1989 and the results of operations for the year ended on such date, with such exceptions as may be disclosed in such certificate, and since June 30, 1989 there has been no material adverse change in the financial condition or results of operations of the Corporation or otherwise. (i) No written information, exhibit or report furnished to the City by the Corporation in connection with the negotiation of this Loan Agreement or the Escrow Agreement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (j) The information pertaining to the Corporation in the Official Statement for the Bonds does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (k) The Corporation is an organization described in Section 501(c)(3) of the Code and is exempt from federal income tax under Section 501(a) of the Code. (1) The Corporation has good and marketable title to the Facilities free and clear from all encumbrances other than Permitted Encumbrances. (m) The Corporation does not restrict admission to its health facilities on racial or religious grounds. SECTION 2.2. Findings of the City. The City hereby finds and determines that (i) the Corporation is a "participating health institution" and the Facilities constitute a "health facility" as such terms are defined in the Law; (ii) the loan to be made hereunder with the proceeds of the Bonds will promote the purposes of the Law by 5 2164m5 providing funds to refund the Prior Bonds, the proceeds of which were used to pay the cost of financing and refinancing the construction, renovation, expansion and improvements to, and equipping of, a health facility; and (iii) said loan is in the public interest, serves a public purpose, promotes the health, welfare and safety of the citizens of the City, and constitutes a municipal affair. ARTICLE III ISSUANCE OF BONDS; LOAN OF PROCEEDS SECTION 3.1. Bonds. The City has authorized the issuance of the Bonds pursuant to the Indenture in the aggregate principal amount of million dollars ($__,000,000). The City hereby lends and advances to the Corporation and the Corporation hereby borrows and accepts from the City (solely from the proceeds of the sale of the Bonds) said principal amount, to be applied under the terms and conditions of this Loan Agreement and the Indenture. The Corporation hereby approves the Indenture, the assignment thereunder to the Trustee of the right, title and interest of the City (with certain exceptions specified in Section 5.01 in the Indenture) in this Loan Agreement, and the issuance under the Indenture by the City of the Bonds. ARTICLE IV REPAYMENT OF LOANS SECTION 4.1. Loan Repayments. In consideration of the issuance of the Bonds by the City and the loan of the proceeds thereof to the Corporation, the Corporation agrees that, on or before the first day of each month and as long as any of the Bonds remain Outstanding, it shall pay to the Trustee for deposit in the Revenue Fund such amount as is required by the Trustee to make the transfers and deposits required in such month by Section 5.02 of the Indenture. Notwithstanding the foregoing, if ten business days prior to any interest or principal payment date with respect to the Bonds, the aggregate amount in the Principal Account and Interest Account is for any reason insufficient or unavailable to make the required payments of principal (or Redemption Price) of or interest on the Bonds then becoming due (whether by maturity, redemption or acceleration), the Corporation shall forthwith pay the amount of any such 6 2164m5 deficiency to the Trustee. Each payment by the Corporation to the Trustee hereunder (the "Loan Repayments") shall be in lawful money of the United States of America and paid to the Trustee at its principal corporate trust office in Los Angeles, California, and held, invested, disbursed and applied as provided in the Indenture. SECTION 4.2. Additional Payments. In addition to Loan Repayments, the Corporation shall also pay to the City or to the Trustee, as the case may be, "Additional Payments," as follows: (a) All taxes and assessments of any type or character charged to the City or to the Trustee affecting the amount available to the City or the Trustee from payments to be received hereunder or in any way arising due to the transactions contemplated hereby (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Trustee and taxes based upon or measured by the net income of the Trustee; provided, however, that the Corporation shall have the right to protest any such taxes or assessments and to require the City or the Trustee, at the Corporation's expense, to protest and contest any such taxes or assessments levied upon them and that the Corporation shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the City or the Trustee; (b) All fees, charges and expenses of the Trustee under the Indenture, as and when the same become due and payable; (c) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the City or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under this Loan Agreement, the Indenture or the Escrow Agreement; and (d) The reasonable fees and expenses of the City (including the reasonable fees and expenses of its attorneys) in connection with this Loan Agreement, the 7 2l64m5 Bonds, the Indenture or the Escrow Agreement, including any and all expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or in connection with any litigation which may at any time be instituted involving this Loan Agreement, the Bonds, the Indenture or the Escrow Agreement or any of the other documents contemplated thereby, or otherwise in connection with the administration of this Loan Agreement. Such Additional Payments shall be billed to the Corporation by the City or the Trustee from time to time, together with a statement certifying that the amount billed has been incurred or paid by the City or the Trustee for one or more of the above items. After such a demand, amounts so billed shall be paid by the Corporation within thirty (30) days after receipt of the bill by the Corporation. Additionally, the Corporation shall pay to the Trustee the amounts required to be deposited into the Depreciation Reserve Fund in Section 4.5 hereof and to make up any deficiencies in the Bond Reserve Account as a result of the annual valuation of amounts on deposit therein as provided in Section 5.05 of the Indenture. SECTION 4.3. Security for Corporation's Obligations. In consideration of the issuance of the Bonds by the City and the loan of the proceeds thereof to the Corporation, and to secure the payment of Loan Repayments and Additional Payments and the performance of the other obligations of the Corporation hereunder, the Corporation hereby grants to the [Trustee as assignee of] City a security interest in the Facilities. The Corporation agrees to execute and cause to be filed Uniform Commercial Code financing statements in form and substance satisfactory to the Trustee, and to execute and deliver such other documents as the City or the Trustee may reasonably require in order to perfect and continuously maintain as perfected such security interest or give public notice thereof. SECTION 4.4. Gross Revenue Fund. (a) The Corporation agrees that, so long as any of the Bonds remain Outstanding or any Additional Payments remain unpaid, all of the Gross Revenues of the Corporation shall be deposited as soon as practicable upon receipt in a fund designated as the "Gross Revenue Fund" which the Corporation shall establish and maintain, subject 8 2164m5 to the provisions of subsection (b) of this Section, at such banking institution or institutions as the Corporation shall from time to time designate in writing to the Trustee for such purpose (the "Depository Bank(s)"). Subject only to the provisions of this Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein, the Corporation hereby pledges to the Trustee and to the extent permitted by law grants a security interest to the Trustee in, the Gross Revenue Fund and all of the Gross Revenues of the Corporation to secure the payment of Loan Repayments and Additional Payments, any payment required with respect to Parity Debt and the performance by the Corporation of its other obligations under this Agreement. The Corporation shall execute and cause to be filed Uniform Commercial Code financing statements in order to perfect such security interest and give public notice thereof, shall execute and cause to be sent to each Depository Bank a notice of the security interest granted hereunder and shall execute and deliver such other documents (including, but not limited to, continuation statements) as may be necessary or reasonably requested by the City or the Trustee in order to perfect and continuously maintain as perfected such security interest or give public notice thereof. (b) Amounts in the Gross Revenue Fund may be used and withdrawn by the Corporation at any time for any lawful purpose, except as hereinafter provided. In the event that there is a Loan Default Event, but only with respect to the payment of any Loan Repayment or any payment required with respect to Parity Debt as provided in subsections 8.l(a) and (e), the City or the Trustee shall notify the Corporation and the Depository Bank(s) of such Loan Default Event, and, unless such Loan Repayment or payment with respect to Parity Debt is paid within five days after receipt of such notice, the Depository Bank(s) shall transfer the Gross Revenue Fund to the name and credit of the Trustee. The Gross Revenue Fund shall remain in the name and to the credit of the Trustee until the amounts on deposit in said fund are sufficient to pay in full, or have been used to pay in full, all Loan Repayments, Additional Payments and payments with respect to Parity Debt and all other Loan Default Events and events of default with respect to Parity Debt known to the Trustee shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, whereupon the Gross Revenue Fund (except for the Gross Revenues required to make such payments or cure such defaults) shall be returned to the name and credit of the 9 2l64m5 Corporation. During any period that the Gross Revenue Fund is held in the name and to the credit of the Trustee, the Trustee shall use and withdraw amounts in said fund from time to time to make Loan Repayments, Additional Payments, payments to the Depreciation Reserve Fund and the other payments required of the Corporation under this Agreement or with respect to any Parity Debt as such payments become due (whether by maturity, redemption, acceleration or otherwise), and, if such amounts shall not be sufficient to pay in full all such payments due on any date, then to the payment of Loan Repayments and Debt Service on such Parity Debt ratably, according to the amounts due respectively for Loan Repayments and such Debt Service, without any discrimination or preference, and to such other payments in the order which the Trustee, in its discretion, shall determine to be in the best interests of the holders of the Bonds and such Parity Debt, without discrimination or preference. During any period that the Gross Revenue Fund is held in the name and to the credit of the Trustee, the Corporation shall not be entitled to use or withdraw any of the Gross Revenues of the Corporation unless and to the extent that the Trustee at its sole discretion so directs for the payment of current or past due operating expenses of the Corporation; provided, however, that the Corporation shall be entitled to use or withdraw any amounts in the Gross Revenue Fund which do not constitute Gross Revenues of the Corporation. The Corporation agrees to execute and deliver all instruments as may be required to implement this Section. The Corporation further agrees that a failure to comply with the terms of this Section shall cause irreparable harm to the holders from time to time of the Bonds and of Parity Debt, and shall entitle the Trustee, with or without notice, to take immediate action to compel the specific performance of the obligations of the Corporation as provided in this Section. (c) Notwithstanding the foregoing, the Corporation may pledge, encumber and grant security interests in its Gross Revenues in connection with any Parity Debt incurred in accordance with Section 5.4 hereof, or in connection with liens on the Facilities, or any portion thereof, incurred in accordance with Section 5.3 hereof. (d) Notwithstanding the foregoing, the Corporation may also pledge, encumber and grant security interests in its net accounts receivable (which security interests may be prior to the security interest granted to the Trustee under this Agreement) to secure indebtedness incurred pursuant to Section 5.10 hereof provided that the 10 2164m5 aggregate amount of indebtedness so secured may not exceed at the time of incurrence fifteen percent (15%) of Adjusted Annual Operating Revenues as shown on the Corporation's audited financial statements for the most recent Fiscal Year for which audited financial statements are available. SECTION 4.5. Depreciation Reserve Fund. The Corporation shall pay to the Trustee for deposit in the Depreciation Reserve Fund established in the Indenture the following amounts on or before the following dates: Date Deposit Amount July 1, 1990 $671,000 July 1, 1991 $635,000 July 1, 1992 $599,000 July 1, 1993 $539,000 July 1, 1994 $520,000 July 1, 1995 $481,000 July 1, 1996 $423,000 July 1, 1997 $368,000 July 1, 1998 $284,000 July 1, 1999 $224,000 July 1, 2000 $204,000 July 1, 2001 $184,000 July 1, 2002 $162,000 July 1, 2003 $138,000 The Corporation may reduce the Depreciation Reserve Fund deposit by Depreciation Reserve Fund deposit credits which shall be amounts equal to any amount the Corporation has expended for depreciable property (as described herein) during the then current Fiscal Year until the day of such deposit; provided that, the Corporation certifies to the Trustee at the time of payment of the Depreciation Reserve Fund deposit (1) the amount of the expenditure, (2) the election of the Corporation to have this amount credited against the then currently payable Depreciation Reserve Fund deposit, (3) that the property acquired is depreciable, in accordance with generally accepted accounting principles, and has been included as a part of the Facilities, and (4) such amount has not previously been paid from the Depreciation Reserve Fund or used as a Depreciation Reserve Fund deposit credit. SECTION 4.6. Obligations of the Corporation Unconditional; Net Contract. The obligations of the Corporation to make the Loan Repayments and Additional 11 2164m5 Payments required hereunder and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional, and shall not be abated, rebated, set-off, reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in any manner or to any extent whatsoever, while any Bonds remain Outstanding or any Additional Payments remain unpaid, regardless of any contingency, act of God, event or cause whatsoever, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, the taking by eminent domain or destruction of or damage to the Facilities, commercial frustration of purpose, any change in the laws of the United States of America or of the State of California or any political subdivision of either or in the rules or regulations of any governmental authority, or any failure of the City or the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Loan Agreement or the Indenture. This Loan Agreement shall be deemed and construed to be a "net contract," and the Corporation shall pay absolutely net the Loan Repayments, Additional Payments and all other payments required hereunder, regardless of any rights of set-off, recoupment, abatement or counterclaim that the Corporation might otherwise have against the City or the Trustee or any other party or parties. SECTION 4.7. Prepayment. The Corporation shall have the right at any time or from time to time to prepay all or any part of the Loan Repayments and the City agrees that the Trustee shall accept such prepayments when the same are tendered by the Corporation. All such prepayments (and the additional payment of any amount necessary to pay the applicable premiums, if any, payable upon the redemption of Bonds) shall be deposited upon receipt in the Optional Redemption Account and, at the Request of the Corporation, credited against Loan Repayments in order of their due date or used for the redemption or purchase of Outstanding Bonds in the manner and subject to the terms and conditions set forth in the Indenture. The Corporation also shall have the right to surrender Bonds acquired by it in any manner whatsoever, to the Trustee for cancellation, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired, and in the case of Term Bonds shall be allocated as set forth in the Indenture. Notwithstanding any such prepayment or surrender of Bonds, as long as any Bonds remain Outstanding or any Additional Payments remain unpaid, 12 2164m5 the Corporation shall not be relieved of its obligations hereunder. If the Corporation is not in default in the payment of any Additional Payments, the City, at the request of the Corporation, at any time that there is on deposit with the Trustee moneys or securities in the amount necessary to pay or redeem all Bonds Outstanding (as provided in Article X of the Indenture), shall forthwith take all steps that may be necessary to discharge the entire indebtedness on all Bonds Outstanding. ARTICLE V PARTICULAR COVENANTS SECTION 5.1. Maintenance of Corporate Existence of the Corporation; Consolidation, Merger, Sale or Transfer Under Certain Conditions. The Corporation covenants and agrees that it will maintain its existence as a California nonprofit public benefit corporation, and will not dissolve, sell or otherwise dispose of all or substantially all of its assets nor consolidate with or merge into another corporation or permit one or more other corporations to consolidate with or merge into it. Notwithstanding the foregoing, the Corporation may, without violating the covenants contained In this Section, consolidate with or merge into another corporation, or permit one or more other corporations to consolidate with or merge into it, or sell or otherwise transfer to another corporation all or substantially all of its assets (other than as permitted in Sections 5.7, 5.12 and 5.13 hereof) as an entirety and thereafter dissolve, if: (1) The surviving, resulting or transferee corporation, as the case may be: (a) is a California nonprofit corporation or a nonprofit corporation qualified to do business in California; (b) qualifies under the Law as a "health facility"; (c) assumes in writing, if such corporation is not the Corporation, all of the obligations of the Corporation under this Loan Agreement; 13 2164m5 (d) is not, after such transaction, otherwise in default under any provisions of this Loan Agreement; (e) is an organization described in Section 501(c)(3) of the Code, or a corresponding provision of the federal income tax laws then in effect; and (f) is licensed and certified to the extent required of the Corporation by this Loan Agreement; (2) The Trustee shall have received an Opinion of Counsel (who, in the case of the opinion required by clause (a) below, shall be experienced in matters relating to the exclusion from gross income for federal income tax purposes of interest on obligations of the same general type as the Bonds) to the effect that: (a) such merger, consolidation, sale or other transfer will not cause interest on the Bonds to be included in gross income for federal income tax purposes; and (b) the security interests referred to in Sections 4.3, 4.4 and 4.5 will not be adversely affected by such merger, consolidation, sale or other transfer; (3) The Trustee and the City shall have received the report of a Management Consultant to the effect that the Net Income Available for Debt Service of the surviving, resulting or transferee corporation (after giving effect to such merger, consolidation, sale or other transfer) for each of the first three full Fiscal years following such merger, consolidation, sale or other transfer is projected to be at least equal to the Net Income Available for Debt Service of the Corporation for the Fiscal Year immediately preceding such merger, consolidation, sale or other transfer; and (4) The Trustee and the City shall have received a report of an Accountant to the effect that the net worth of the surviving, resulting or transferee corporation, as the case may be, after giving effect to such merger, consolidation, sale or other transfer, is at least equal to the net worth of the Corporation immediately prior to such merger, consolidation, sale or other transfer. 14 2164m5 If a merger, consolidation, sale or other transfer is effected, as provided in this Section, the provisions of this Section shall continue in full force and effect and no further merger, consolidation, sale or transfer shall be effected except in accordance with the provisions of this Section. SECTION 5.2. Accreditation and Licensing. The Corporation covenants and agrees (as long as it is in the best interest of the Corporation and will not materially adversely affect the interests of the Bondholders) to maintain (1) all permits, licenses, certifications and other governmental approvals necessary for the operation of the Facilities as a health care institution, (2) accreditation by the Joint Commission on Accreditation of Healthcare Organizations or such other accrediting body generally accepted in the health care industry and (3) its qualification for participation in and payment under private insurance programs having broad application and federal, state and local governmental programs providing for payment or reimbursement for services rendered. SECTION 5.3. Limitation on Encumbrances. (A) The Corporation covenants and agrees that, from and after the date of delivery of this Agreement, it will not create, assume or suffer to exist any mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge of any kind (including the charge upon property purchased under conditional sales or other title retention agreements) (a "security interest") upon the Facilities prior to or on a parity with the security interests granted hereunder; provided, however, that notwithstanding the foregoing provision, the Corporation may create, assume or suffer to exist Permitted Encumbrances with respect to the Facilities. (B) The Corporation further covenants and agrees that it will not create, assume or suffer to exist any pledge, security interest, encumbrance, lien or charge of any kind (an "encumbrance") upon the Gross Revenues unless the obligations of the Corporation under this Agreement shall be secured prior to or on a parity with any indebtedness or other obligation secured by such encumbrance, and the Corporation further covenants and agrees that if such an encumbrance is created, it will make or cause to be made a provision whereby the obligations of the Corporation under this Agreement will be secured prior to or on a parity with the indebtedness or other obligation secured by such encumbrance; provided, however, that notwithstanding the 15 2164m5 foregoing provisions and without further securing the obligations of the Corporation under this Agreement, the Corporation may create, assume or suffer to exist Permitted Encumbrances with respect to the Facilities. SECTION 5.4. Parity Debt. The Corporation may incur Parity Debt, subject, however, to the terms of Section 5.10 hereof, and following conditions: (1) The agreement under which the Parity Debt is issued shall require that: (a) A Loan Default Event shall constitute an event of default under such agreement; (b) Rights and obligations of the holders of Parity Debt shall be substantially the same as the rights and obligations of the Holders of Bonds under the Indenture; and (c) Remedies upon an event of default shall be substantially the same as the remedies provided in the Indenture and Loan Agreement and, prior to exercising any such remedies, the holders of such Parity Debt (or a trustee representing their interests) shall be required to cooperate with the Trustee to the end that the interests of such holders and the Bondholders shall be equally protected; and (2) Any collateral given or to be given to secure Parity Debt shall also secure the Bonds on a pari passu basis; provided that the Bond Reserve Account shall only secure the Bonds and the Corporation may but need not establish similar reserve accounts for debt service of Parity Debt. SECTION 5.5. Accounting Records, Financial Statements and Budget. (A) The Corporation covenants and agrees at all times to keep, or cause to be kept, proper books of record and account, prepared in accordance with generally accepted accounting principles, in which complete and accurate entries shall be made of all transactions of or in relation to the business, properties and operations of the Corporation. Such books of record and account shall be available for inspection by the City or the Trustee at reasonable hours and under reasonable circumstances. 16 2164m5 (B) The Corporation covenants and agrees to furnish the City (if requested by the City) and the Trustee, within one hundred and twenty (120) days after the end of each Fiscal Year, with copies of its complete financial statements (including a balance sheet, a statement of revenues and expenses, a statement of changes in fund balances, a statement of changes in financial position and such other financial reports and schedules as may have been delivered to the Corporation in connection with such financial statements), together with (1) the report and opinion of an independent Accountant stating that the financial statements have been prepared in accordance with generally accepted accounting principles and that its examination was performed in accordance with generally accepted auditing standards, and (2) a Certificate of the chief financial officer of the Corporation stating that no event which constitutes a Loan Default Event or which with the giving of notice or the passage of time or both would constitute a Loan Default Event has occurred and is continuing as of the end of such Fiscal Year, or specifying the nature of such event and the actions taken and proposed to be taken by the Corporation to cure such default. (C) In order to assure the efficient management and operation of the Facilities and to assure and protect the holders of the Bonds, the Corporation shall each year prepare a budget, prior to the closing of each Fiscal Year, to set forth the estimated revenues and expenses anticipated for the ensuing Fiscal Year. This budget shall be made available for inspection by any Bondholder at the office of the Corporation. If the budget is not so approved and adopted, the budget for the then Fiscal Year shall remain in effect until a new budget is approved. SECTION 5.6. Tax Covenants. (A) The Corporation covenants and agrees that it will not use or permit the use by any Person of any of the funds provided by the City hereunder or any other funds of the Corporation, directly or indirectly, or direct the Trustee to invest any funds held by it under the Indenture or this Agreement, in such manner as would, or enter into, or allow any "related person," as defined in Section 144(a)(3) of the Code, to enter into, any arrangement, formal or informal, that would, or take or omit to take any other action that would, cause any Bond to be an "arbitrage bond" within the meaning of Section 148(a) of the Code. The Corporation acknowledges having read Sections 5.07 and 6.06 17 2164m5 of the Indenture and agrees to perform all duties imposed upon it by such Sections and by the Rebate Certificate. Insofar as such Sections and the Rebate Certificate impose duties and responsibilities on the Corporation, they are specifically incorporated herein by reference. (B) The Corporation covenants and agrees that it will maintain its status as an organization described in Section 501(c}(3} of the Code and its exemption from federal income tax under Section 501(a} of the Code. The Corporation further covenants and agrees that it will not use or permit the use of the Facilities by any person in such manner or to such extent as would result in loss of exclusion from gross income of interest on any of the Bonds under Section 103 of said Code. SECTION 5.7. Limitation on Disposition of Facilities and Cash. (A) The Corporation covenants and agrees that it will not sell, lease or otherwise dispose of any part or parts of the Facilities in any Fiscal Year aggregating in excess of the greater of two percent (2%) of the Net Property, Plant and Equipment (as shown on the Corporation's most recent audited financial statements) or $200,000 other than in the ordinary course of business, as part of a disposition of all or substantially all of its assets as permitted by Section 5.1 hereof, or to an Affiliated Corporation if the requirements of Section 5.12 or 5.13 hereof are met, unless: (i) such property shall have become inadequate, obsolete, worn-out, unsuitable, undesirable, unprofitable or unnecessary, and the sale, lease, removal or other disposition thereof will not impair the structural soundness, efficiency or economic value of the remaining Facilities; or (ii) such property shall be replaced by property with a fair market value at least equal to the fair market value of the property so disposed of within two years of the date of disposition; or (iii) the proceeds of such disposition are transferred to the Trustee for deposit in the Optional Redemption Account and applied to the redemption of Bonds. (B) The Trustee shall execute any releases required in connection with the disposition of property 18 2164m5 pursuant to this Section upon receipt from the Corporation of such Certificates and appraisals as may be reasonably requested by the Trustee. (C) The Corporation covenants and agrees that it will not dispose of any cash or cash equivalent other than in the ordinary course of business; provided, however, that the Corporation may dispose of cash or cash equivalent to the extent and subject to the conditions and limitations specified herein: (i) prior to such disposition the Trustee shall have received a report of a Management Consultant stating either that (a) the projected Debt Service Coverage Ratio for the Fiscal Year immediately following such disposition, assuming such disposition occurred on the first day of such Fiscal Year, shall be no lower than 2.00, and will not be greater than ten percent (10%) less than the Debt Service Coverage Ratio for the immediately preceding Fiscal Year for which audited financial statements are available, or (b) the average of the projected Debt Service Coverage Ratios for the two Fiscal Years immediately following such disposition, assuming such disposition occurred on the first day of the first of such Fiscal Years, shall not be less than 2.00 and will not be greater than ten percent (10%) less than the average of the projected Debt Service Coverage Ratios for such Fiscal Years without assuming such disposition, or (ii) prior to such disposition the Trustee shall have received a Certificate of the Corporation stating that such disposition plus all previous dispositions pursuant to this section of cash or cash equivalent by the Corporation do not exceed twenty percent (20%) of the Corporation's gross operating revenues for the most recent Fiscal Year for which audited financial statements are available. SECTION 5.8. Special Services Covenant. The Corporation covenants and agrees that, as long as any Bonds are Outstanding and subject to the provisions of Section 5.1, it will, subject to applicable requirements or restrictions imposed by law, operate a general acute care hospital within the City. For the benefit of the City and its residents, the Corporation further covenants and agrees that, subject to applicable requirements or restrictions imposed by law, it will provide the services described in Appendix A, as long as 19 2164m5 any Bonds are Outstanding (except as hereinafter in this Section provided or as otherwise provided in Appendix A). Notwithstanding the foregoing, the Corporation may terminate one or more of the services described in Appendix A provided that: (i) the Corporation continues to operate a general acute care hospital within the City; (ii) the Corporation notifies the City of its intent to terminate the service or services; and (iii) the Corporation agrees to provide additional or equivalent services for the benefit of the City and its residents which, in the good faith opinion of the Corporation, will result in the same or additional benefit to the City and its residents. Further, the Corporation may, without the consent of the City, terminate any service which, in the opinion of the Corporation, becomes obsolete or outmoded due to an advance in medical technique or technology. Notwithstanding the provisions of Section 8.1, failure to maintain at any time any of the services required by this Section shall not constitute a Loan Default Event, but, in the event of such failure, the City shall be entitled to institute and prosecute an action in any court or before any board or commission having jurisdiction to compel the Corporation to comply with the covenant contained in this Section and to exercise whatever other remedies (including an action for damages) the City might have with respect thereto arising from this Loan Agreement. SECTION 5.9. Rates and Charges; Debt Coverage. (A) The Corporation covenants and agrees to operate the Facilities as a revenue producing health care facility. The Corporation further covenants and agrees to fix, charge and collect, or cause to be fixed, charged and collected, subject to applicable requirements or restrictions imposed by law, such rates, fees and charges for the use of and for the services furnished or to be furnished at the Facilities which, together with all other receipts and revenues of the Corporation and any other funds available therefor, will be reasonably projected to be sufficient in each Fiscal Year to produce a Debt Service Coverage Ratio equal to at least 1.20; provided, however, that if additional Funded Debt is issued, the Debt Service on such additional Funded Debt shall be included in the computation of Maximum Aggregate Annual Debt Service and Net Income Available for Debt Service only in proportion to the amount of Debt Service on such Funded Debt payable from sources other than amounts (other than reserve funds) capitalized from the proceeds of such Funded Debt; and provided further that Debt Service with respect to indebtedness for which the Corporation is a guarantor shall 20 2l64m5 not be included in the computation of Maximum Aggregate Annual Debt Service for purposes of this subsection (A) or subsection (B) unless the Corporation has a current obligation to make payments with respect to such indebtedness. (B) Within one hundred fifty (150) days after the end of each Fiscal Year (commencing with the Fiscal Year during which the certificate required by Section 3.03(C)(1) of the Indenture is delivered to the Trustee) the Corporation shall compute Net Income Available for Debt Service and promptly furnish to the Trustee a Certificate setting forth the results of such computation. The Corporation further covenants and agrees that if such Fiscal Year's Debt Service Coverage Ratio shall have been less than 1.20 it will promptly employ a Management Consultant to make recommendations as to a revision of the rates, fees and charges at the Facilities or the methods of operation of the Facilities which will result in producing Net Income Available for Debt Service in the amount required by subsection (A) of this Section in the current Fiscal Year. Copies of the recommendations of the Management Consultant shall be filed with the Trustee. The Corporation shall, promptly upon its receipt of such recommendations, subject to applicable requirements or restrictions imposed by law, and subject to a good faith determination of the board of directors of the Corporation that such recommendations, in whole or in part, are feasible, revise its rates, fees and charges or its methods of operation or collection and shall take such other action as shall be in conformity with such recommendations. If the Corporation complies in all material respects with the reasonable recommendations of the Management Consultant in respect to said rates, fees, charges and methods of operation, the Corporation will be deemed to have complied with the covenants contained in this Section for such Fiscal Year notwithstanding that Net Income Available for Debt Service shall be less than the amount required under subsection (A) of this Section; provided, that this sentence shall not be construed as in any way excusing the Corporation from taking any action or performing any duty required under this Loan Agreement or be construed as constituting a waiver of any other Loan Default Event. (C) Notwithstanding the foregoing, the Corporation may permit the rendering of service at, or the use of, the Facilities without charge or at reduced charges, at the discretion of the board of directors of the Corporation to the extent necessary for maintaining its tax exempt status and to eligibility for grants, loans, subsidies or payments 21 2l64m5 from the United States of America, any instrumentality thereof, or the State of California or any political subdivision or instrumentality thereof, or in compliance with any recommendation for free services that may be made by the Management Consultant. SECTION 5.10. Limitation on Indebtedness. The Corporation covenants and agrees that it will not incur any indebtedness or financial obligations by borrowing money, by assuming or guaranteeing the obligations of others, by entering into installment purchase contracts or leases required to be capitalized in accordance with generally accepted accounting principles, or otherwise (other than Funded Debt, not for borrowed money, incurred in the ordinary course of business); provided, however, that the Corporation may incur Funded Debt, other than Funded Debt without substantially level debt service involving a payment of 30% or more of the principal amount of such Funded Debt in any one Fiscal Year, for the following purposes and subject to the following conditions and limitations: (a) Liabilities for contributions to self-insurance programs to the extent permitted by Section 6.3 hereof; (b) Funded Debt provided that the Trustee has received: (A) (1) a report of an Accountant stating that the Corporation has been in compliance with the provisions of Section 5.9(8) for the immediately preceding two Fiscal Years for which audited financial statements are available and setting forth the Debt Service Coverage Ratios for each such Fiscal Year, and (2) a report of a Management Consultant stating that the projected Debt Service Coverage Ratio, taking the proposed Funded Debt into account, for (a) in the case of Funded Debt (other than a guaranty) to finance capital improvements, for each of the three Fiscal Years succeeding the date on which such capital improvements are expected to be in operation, or (b) in the case of Funded Debt not financing capital improvements or in the case of a guaranty, for each of the three Fiscal Years succeeding the date on which the Funded Debt is incurred, is not less than 1.20; or 22 2164m5 (B) a report of an Accountant setting forth the Debt Service Coverage Ratio for the two most recent Fiscal Years for which audited financial statements are available, computed as if such proposed Funded Debt had been issued at the beginning of the first such Fiscal Year, and such Debt Service Coverage Ratio for each such Fiscal Year is not less than 1.20; (c) Funded Debt incurred for the purpose of refinancing outstanding Funded Debt provided that the Trustee shall have received a report of an Accountant to the effect that the issuance of such Funded Debt does not increase Maximum Aggregate Annual Debt Service by more than five percent (5%); (d) Funded Debt provided that the aggregate amount incurred by the Corporation under this subsection and outstanding shall not exceed at the time of incurrence twenty-five percent (25%) of the Corporation's Adjusted Annual Operating Revenues for the prior Fiscal Year; (e) Installment purchase contracts, leases and loans secured by purchase money mortgages or purchase money security interests, provided that the aggregate amount of indebtedness incurred by the Corporation pursuant to such contracts, leases and loans shall not exceed fifteen percent (15%) of the Corporation's gross operating revenues shown on the Corporation's most recent audited financial statements; (f) Non-Recourse Indebtedness arising (A) in connection with the Corporation's financing or refinancing of real or personal property not theretofore owned by the Corporation, or (B) in connection with the Corporation's financing or refinancing of real or personal property not constituting Facilities, whether, in either case, such indebtedness be to the sellers of such property or to banks or other lenders and whether, in either case, such indebtedness be unsecured or secured by liens on the property financed; (g) Indebtedness for borrowed money with a term of not exceeding 365 days (provided that the amount of such indebtedness shall be reduced to zero (0) for a period of at least thirty (30) consecutive days within each calendar year) in an aggregate amount outstanding that does not exceed at the time of incurrence ten percent 23 2164m5 (10%) of the Corporation's Adjusted Annual Operating Revenues for the prior Fiscal Year; and (h) Funded Debt in an amount exceeding the limitations of this section which is fully secured by a Permitted Encumbrance described in clause 15 of the definition thereof. SECTION 5.11. Limitation on Acquisition of Properties. The Corporation covenants and agrees that it will not acquire additional capital assets (except in the ordinary course of business or with the proceeds of indebtedness permitted by Section 5.10 or as a part of a merger or consolidation permitted by Section 5.1) by gift, purchase, construction, merger or consolidation unless: (a) in the written opinion of an Authorized Representative of the Corporation, such acquisition is reasonably expected to increase the Corporation's operating expenses by fifteen percent (15%) or less in the first full Fiscal Year following the date on which such acquisition is made or construction thereof completed; or (b) the Trustee shall have received the report of a Management Consultant to the effect that Net Income Available for Debt Service (including net revenues expected to be derived from the assets proposed to be acquired) for each of the first three Fiscal Years immediately following the date on which such acquisition is proposed to be made is expected to be at least 1.20 times Maximum Aggregate Annual Debt Service. SECTION 5.12. Corporate Organization. Without limiting any other provision of this Agreement, so long as a Loan Default Event has not occurred and is continuing, the Corporation may adopt new forms of corporate organization and transfer assets owned or leased by it to one or more Affiliated Corporations if (i) the transferee or transferees shall expressly agree that the assets so transferred shall continue to be treated as security for the performance of the Corporation's obligations hereunder; provided, however, that no assets so transferred shall be treated as security for the Corporation's obligations hereunder unless such transferred assets prior to transfer were treated as security for the Corporation's obligations hereunder; (ii) immediately after such transfer, the Corporation shall not be in default in the performance or obligation of any duties, obligations or 24 2164m5 covenants under this Agreement; (iii) if the transfer is to a for-profit corporation, the Corporation shall deliver to the City and the Trustee an opinion of nationally recognized bond counsel to the effect that such proposed transfer(s) will not cause the exclusion from gross income for federal income tax purposes of the interest on the Bonds to be impaired and an opinion of counsel acceptable to the City and the Trustee to the effect that (A) such proposed transaction(s) will not cause the Corporation's status as an organization described in Section 50l(c)(3) of the Code, exempt from federal income taxation under Section 50l(a) of the Code, to be impaired, and (B) such proposed transaction(s) comply with the Law; and (iv) the Corporation shall deliver to the City and the Trustee a Certificate of the Corporation stating and a written report of a Management Consultant confirming that Net Income Available for Debt Service following and after giving effect to such proposed transaction(s) for each of the three full Fiscal Years immediately following such transaction(s) is projected to be at least equal to 1.20 times Maximum Aggregate Annual Debt Service at the end of each such Fiscal Years. SECTION 5.13. Transfer of Assets. The Corporation may transfer all or substantially all of its assets to an Affiliated Corporation without complying with the requirements of Section 5.1 or 5.12 hereof provided that (i) such Affiliated Corporation agrees to become a co-obligor and jointly and severally liable with the Corporation under this Agreement, (ii) after such transactions, the Corporation and such Affiliated Corporations are in compliance with the provisions of this Agreement, (iii) the Corporation delivers to the City and the Trustee an opinion of nationally recognized bond counsel to the effect that such proposed transfer(s) will not cause the exclusion from gross income for federal income tax purposes of the interest on the Bonds under Section 103 of the Code to be impaired, and (iv) if the transfer is to a for-profit corporation, the Corporation delivers to the City and the Trustee an opinion of counsel acceptable to the City and the Trustee to the effect that (a) such proposed transaction(s) will not cause the Corporation's status as an organization described in Section 501(c)(3) of the Code, exempt from federal income taxation under Section 50l(a) of the Code, to be impaired, and (b) such proposed transaction(s) comply with the Law, and (v) the Corporation delivers to the City and the Trustee an opinion of counsel acceptable to the City and the Trustee to the effect that after such transaction this Agreement will be a valid and binding obligation of the Corporation and such 25 2164m5 Affiliated Corporation, enforceable according to its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally, or by the application of equitable principles if equitable remedies are sought. In such event, references in this Agreement to indebtedness of the Corporation shall apply to the combined indebtedness of both corporations and references to the financial condition or projected results of operation of the Corporation shall apply to the consolidated financial condition or results of operation of both corporations. SECTION 5.14. Prohibited Uses. No portion of the proceeds of the Bonds will be used to finance any facility, place or building used or to be used primarily for sectarian instruction or study or as a place for devotional activities or religious worship. ARTICLE VI MAINTENANCE, TAXES, INSURANCE AND CONDEMNATION SECTION 6.1. Maintenance and Operation of the Facilities. The Corporation covenants and agrees that it will operate and maintain the Facilities in accordance with all governmental laws, ordinances, approvals, rules, regulations and requirements including, without limitation, such zoning, sanitary, pollution and safety ordinances and laws and such rules and regulations thereunder as may be binding upon the Corporation. The Corporation further covenants and agrees that it will maintain and operate the Facilities as a health care facility and will maintain and operate the same, and all engines, boilers, pumps, machinery, apparatus, fixtures, fittings and equipment of any kind in or that shall be placed in any building or structure now or hereafter at any time constituting part of the Facilities in good repair, working order and condition, and that it will from time to time make or cause to be made all needful and proper replacements, repairs, renewals, remodeling and improvements so that the efficiency and value of the Facilities shall not be impaired. SECTION 6.2. Taxes, Assessments, Other Governmental Charges and Utility Charges. The Corporation covenants and agrees that it will pay and discharge all taxes, assessments, governmental charges of any kind whatsoever, water rates, meter charges and other utility 26 2164m5 charges which may be or have been assessed or which may have become liens upon the Facilities or the interest therein of the City, the Trustee or of the Holders of the Bonds, and will make such payments or cause such payments to be made, respectively, in due time to prevent any delinquency thereon or any forfeiture or sale of the Facilities or any part thereof, and upon request, will furnish to the City or Trustee receipts for all such payments, or other evidences satisfactory to the Trustee; provided, however, that the Corporation shall not be required to pay any tax, assessment, rate or charge as herein provided as long as it shall in good faith contest the validity thereof, provided that the Corporation shall have set aside reserves which the board of directors of the Corporation, in good faith, considers adequate with respect thereto; and provided further, however, that the Corporation shall promptly pay any tax, assessment, rate or charge as herein provided upon receipt of notice from the City or the Trustee that nonpayment of such tax, assessment, rate or charge would cause the lien of the Indenture on the Gross Revenues of the Corporation to be subject to imminent loss or forfeiture. SECTION 6.3. Insurance Required. (A) The Corporation covenants and agrees that, subject to subsection (B) of this Section, it will keep the Facilities and all of the operations of the Corporation adequately insured at all times and carry and maintain such insurance in amounts which are customarily carried and against such risks as are customarily insured against by other corporations in connection with the ownership and operation of facilities of similar character and size in the State of California. The Corporation further covenants and agrees that it will carry and maintain, or cause to be carried and maintained, and will payor cause to be paid in timely fashion the premiums for, at least the following insurance with respect to the Facilities and the Corporation when and as such insurance is available: (1) Insurance, on all properties constituting the Facilities, against loss or damage by fire, lightning and all other risks covered by the extended coverage insurance endorsement then in use in the State of California, subject to a deductible of not more than $50,000 per accident or casualty, in an amount equal to at least the lesser of the full replacement value of the property insured or the aggregate principal amount of Outstanding Bonds and Parity Debt. The replacement value of the Facilities shall be determined from time to 27 2164m5 time at the request of the Corporation (but not less frequently than once in every twenty-four months) by the Insurance Consultant or by an architect, contractor, appraiser or appraisal company selected by the Corporation and not objected to by the Trustee. During the course of construction of the Project, any Additional Project or other substantial addition, extension, alteration or improvement to the Facilities, the Corporation shall maintain or cause to be maintained builder's risk insurance in the amount of the full completed value of such construction work, subject to deductibles of not more than $50,000 per accident or casualty, covering loss by fire, lightning and all other risks covered by the extended coverage endorsement then in use in the State of California; (2) Comprehensive public liability insurance for death or bodily injury and property damage insurance in the minimum amount of $10,000,000 for damages arising out of anyone accident; and automobile liability insurance in the minimum amount of $500,000 for death and injury arising out of anyone accident, including property damage insurance coverage in a minimum amount of $500,000; (3) medical professional liability insurance in a minimum amount of $20,000,000 as to anyone occurrence, subject to reasonable deductions; (4) Fidelity bonds or other insurance on all Corporation officers and employees who collect or have custody of or access to revenues, receipts or income of the Corporation, in such amounts as are ordinarily carried by organizations engaged in like activities and with gross revenues comparable to those of the Corporation; and (5) Boiler insurance providing coverage of pressure vessels, auxiliary piping, pumps and compressors, refrigeration systems, transformers and miscellaneous electrical apparatus in the Facilities which present significant potential for loss, in an amount not less than $1,000,000, subject to deductibles not exceeding $100,000 per occurrence. (B) The Corporation shall employ an Insurance Consultant to review the insurance requirements of the Corporation from time to time (but not less frequently than 28 2164m5 annually). If the Insurance Consultant makes recommendations for the increase of any of the coverage required by subsection (A) of this Section, the Corporation shall increase such coverage in accordance with such recommendations, unless there is a good faith determination of the board of directors of the Corporation that such recommendations, in whole or in part, are not in the best interests of the Corporation. Notwithstanding anything in this Section to the contrary, the Corporation shall have the right, without giving rise to a Loan Default Event solely on such account, (1) to maintain insurance coverage below or deductibles above that required by subsection (A) of this Section, if the Corporation furnishes to the Trustee a certificate of the Insurance Consultant or other evidence satisfactory to the Trustee that the insurance so provided accords the greatest amount of coverage available for the risk being insured against at rates which in the judgment of the Insurance Consultant are reasonable in connection with reasonable and appropriate risk management, or (2) to adopt alternative risk management programs which the board of directors of the Corporation determines to be reasonable including, without limitation, to self-insure in whole or in part, to participate in programs of captive insurance companies, to participate with other health care institutions in mutual or other cooperative insurance or other risk management programs, to participate in state or federal insurance programs, to take advantage of state or federal laws now or hereafter in existence limiting medical and malpractice liability, or to establish or participate in other alternative risk management programs; all as may be approved as reasonable and appropriate risk management by the Insurance Consultant. SECTION 6.4. Worker's Disability Compensation Act. The Corporation will at all times comply with the Worker's Disability Compensation Act of the State of California, or any successor statute or statutes. SECTION 6.5. Insurers; Policy Forms and Loss Payees. Each insurance policy required by Section 6.3 shall be carried by stock or mutual insurance companies authorized to do business in the State of California which are financially responsible and capable of fulfilling the requirements of such policies and not objected to by the Trustee. All such policies (except liability policies) shall name the Corporation and the Trustee as insured parties, beneficiaries or loss payees as their interests may appear. Each policy shall be in such form and contain such provisions 29 2l64m5 as are generally considered standard for the type of insurance involved and shall contain a provision to the effect that the insurer shall not cancel or substantially modify the policy provisions without first giving at least thirty (30) days written notice thereof to the Corporation and the Trustee. In lieu of separate policies, the Corporation may maintain blanket policies which cover anyone or more risks required to be insured against so long as the minimum coverages required herein are met. The Corporation shall file at least annually with the Trustee a Certificate setting forth the policies of insurance maintained pursuant to this Loan Agreement, the names of the insurers and insured parties, the amounts of such insurance and applicable deductibles, the risks covered thereby and the expiration dates thereof. The Corporation shall also file with the Trustee a copy of any insurance review or recommendations received by the Corporation from the Insurance Consultant pursuant to Section 6.3. SECTION 6.6. Disposition of Insurance and Condemnation Proceeds. (A) The proceeds of the insurance carried pursuant to clause (1) of Section 6.3, the proceeds of any title insurance and the proceeds of any condemnation awards with respect to the Facilities shall be paid immediately upon receipt by the Corporation or other named insured parties to the Trustee for deposit in a special fund which the Trustee shall establish and maintain and hold in trust, to be known as the "Insurance and Condemnation Proceeds Fund." In the event the Corporation elects to repair or replace the property damaged, destroyed or taken, after deducting therefrom the reasonable charges and expenses of the Trustee in connection with the collection and disbursement of such moneys, moneys in the Insurance and Condemnation Proceeds Fund shall be disbursed by the Trustee for the purpose of repairing or replacing the property damaged, destroyed or taken in the manner and subject to the conditions set forth in subsection (C) of this Section. In the event that the proceeds of any loss or damage to or condemnation of the Facilities shall be less than the greater of two percent (2%) of Net Property, Plant and Equipment (as shown on the Corporation's most recent audited financial statement) or $200,000, the Trustee shall pay over such proceeds to the Corporation without requiring any of the documents referred to in this subsection and without any other formality whatsoever. (B) In the event the Corporation shall not elect to repair or replace the property damaged, destroyed or 30 2164m5 taken, as provided in subsection (A) of this Section, the Trustee shall transfer all amounts in the Insurance and Condemnation Proceeds Fund on account of such damage, destruction or condemnation to the Special Redemption Account; provided that if any Parity Debt is then outstanding, any such transfer from the Insurance and Condemnation Proceeds Fund shall be deposited in part in the Special Redemption Account and in part in such other fund or account as may be appropriate (and used for the retirement of such Parity Debt) in the same proportion which the aggregate principal amount of Outstanding Bonds then bears to the aggregate unpaid principal amount of such Parity Debt. If the amount transferred to the Special Redemption Account and any redemption account for the retirement of Parity Debt exceeds the greater of two percent (2%) of the Net Property, Plant and Equipment (as shown on the Corporation's most recent audited financial statement) or $200,000 but is not sufficient to retire all Bonds and Parity Debt then outstanding, the Corporation will file with the Trustee a report of a Management Consultant showing that Net Income Available for Debt Service will be sufficient to pay Aggregate Debt Service for the three full Fiscal Years immediately following such transfer after giving effect to the retirement of such Bonds and Parity Debt. (C) Before any payment from the Insurance and Condemnation Proceeds Fund shall be made for purposes of repairing or replacing damaged, destroyed or taken property, the Corporation shall file or cause to be filed with the Trustee: (1) a Requisition of the Corporation stating (i) the item number of such payment; (ii) the name of the Person to whom each such payment is due, which may be the Corporation in the case of reimbursement for costs of the project theretofore paid by the Corporation; (iii) the respective amounts to be paid; (iv) the purpose by general classification for which each obligation to be paid was incurred; (v) that obligations in the stated amounts have been incurred by the Corporation and are presently due and payable and that each item thereof is a proper charge against such" Insurance and Condemnation Proceeds Fund and has not been previously paid from said fund; (vi) that there has not been filed with or served upon the Corporation any notice of claim of lien, or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the persons named in such 31 2l64m5 Requisition, for which adequate surety for the payment of such obligation has been posted, or which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen's or mechanic's liens accruing by operation of law; (vii) whether any of such expenditures are made under a contract for installation or construction; and (viii) that the balance remaining in such Insurance and Condemnation Proceeds Fund after payment of such amounts, together with any investment income reasonably anticipated to be deposited in such Insurance and Condemnation Proceeds Fund pursuant to this Agreement and any other funds reasonably anticipated to be available therefor and which the Corporation agrees to deposit in such Insurance and Condemnation Proceeds Fund when so available, will be sufficient to pay the costs of completing the repair or replacement; and (2) in the case of each payment made under any contract for installation or construction, an Architects' Certificate stating or confirming the information required to be set forth in the Requisition pursuant to subsection (D)(1) of this Section and certifying that, insofar as such obligation was incurred for work, materials, equipment or supplies, such work was actually performed, or such materials, equipment or supplies were actually installed in furtherance of the respective project or delivered at the site for that purpose or delivered for storage or fabrication at an approved place or places. Upon receipt of each such document, the Trustee shall pay the amount set forth in such Requisition as directed by the terms thereof out of the Insurance and Condemnation Proceeds Fund. The Trustee need not make any such payment it if has received any written notice of claim of lien, attachment upon, or claim affecting the right to receive payment of, any of the monies to be so paid, which has not been released or will not be released simultaneously with such payment. When the repair or replacement of damaged, destroyed or taken property shall have been completed, a Certificate of the Corporation stating the fact and date of such completion and stating that all of the costs thereof have been determined and paid (or that all of such costs have been paid less specified claims that are subject to dispute and for which a retention in such Insurance and Condemnation 32 2l64m5 .... Proceeds Fund is to be maintained in the full amount of such claims until such dispute is resolved), together with an Architects' Certificate stating the fact and date of such completion, shall be delivered to the Trustee by the Corporation. Upon the receipt of such Certificate, the Trustee shall, as directed by said Certificate of the Corporation, transfer any remaining balance in such Insurance and Condemnation Proceeds Fund, less the amount of any such retention, to the Revenue Fund. ARTICLE VII NON-LIABILITY OF CITY; EXPENSES; INDEMNIFICATION SECTION 7.1. Non-Liability of City. The City shall not be obligated to pay the principal of, and premium, if any, and interest on the Bonds, except from Revenues. The issuance of the Bonds shall not directly or indirectly or contingently or morally obligate the City to levy or to pledge any form of taxation whatever therefor or to make any appropriation (unless and to the extent required by law with respect to Revenues) for their payment. Neither the faith and credit nor the taxing power of the City is pledged to the payment of the principal of or premium or interest on the Bonds. The Corporation hereby acknowledges that the City's sole source of moneys to repay the Bonds will be provided by the payments made by the Corporation pursuant to this Loan Agreement, together with investment income on certain funds and accounts held by the Trustee under the Indenture, and hereby agrees that if the payments to be made hereunder shall ever prove insufficient to pay all principal of, and premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise), then upon notice from the Trustee, the Corporation shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal, premium or interest, including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Corporation, the City or any third party. The City shall not be liable to the Corporation, any Bondholder or any other person for losses, costs, damages, expenses and liabilities arising out of or related to, in whole or in part, one or more negligent acts or 33 2l64m5 - - omissions of the City, any of its officers, directors, employees, agents or any other party acting for or on behalf of the City, in connection with the issuance of the Bonds or performance by the City of its obligations under the Indenture, this Loan Agreement or any other agreement relating hereto. The Corporation hereby releases the City from all liability to the corporation for any such losses, costs, damages, expenses and liabilities. SECTION 7.2. Expenses. The Corporation covenants and agrees to pay and to indemnify the City and the Trustee against all costs and charges, including reasonable fees of attorneys, accountants, consultants and other experts, incurred in good faith or arising out of or in connection with this Loan Agreement, the Bonds or the Indenture. SECTION 7.3. Indemnification. The Corporation agrees, to the extent permitted by law, to indemnify and hold harmless the City and the Trustee and their respective council members, directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities or expenses, of every conceivable kind, character and nature whatsoever (excepting therefrom only such losses, claims, damages, liabilities or expenses arising from the gross negligence of the City or its council members, officers, employees or agents or the negligence of the Trustee or its directors, officers, employees or agents), including, but not limited to, losses, claims, damages, liabilities, or expenses arising out of, resulting from or in any way connected with (1) the issuance of any Bonds and the carrying out of any of the transactions contemplated by this Loan Agreement or the Indenture; or (2) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading in any official statement or other offering circular utilized by the City in connection with the sale of the Bonds. The Corporation further agrees, to the extent permitted by law, to payor to reimburse the City and the Trustee and their respective council members, directors, officers, employees and agents for any and all costs, reasonable attorneys fees, liabilities or expenses incurred in connection with investigating, defending against or otherwise in connection with any such losses, claims, damages, liabilities, expenses or actions. The Corporation further agrees, to the extent permitted by law, to indemnify and hold harmless the 34 2l64m5 -- - Bondholders for any losses, costs, damages, expenses and liabilities arising out of or related to, in whole or in part, one or more negligent acts or any omissions of the City, any of its officers, directors, employees, agents or any other party acting for or on behalf of the City, in connection with the issuance of the Bonds or performance by the City of its obligations under the Indenture, this Loan Agreement or any other agreement relating hereto. ARTICLE VIII LOAN DEFAULT EVENTS AND REMEDIES SECTION 8.1. Loan Default Events. The following events shall be "Loan Default Events": (a) If the Corporation shall fail to pay any Loan Repayments on or before the twentieth (20th) day of the month in which such Loan Repayments are due and payable; (b) If the Corporation shall fail to comply with the provisions of Sections 5.1, 5.4, 5.7, 5.10 or 6.6(B); (c) If any representation or warranty made by the Corporation herein shall at any time prove to have been incorrect in any material respect as of the time made; (d) If the Corporation shall fail to observe or perform any covenant, condition, agreement or provision in this Loan Agreement on its part to be observed or performed, other than as referred to in subsection (a) or (b) of this Section, or shall breach any warranty by the Corporation herein or therein contained, for a period of sixty (60) days after written notice, specifying such failure or breach and requesting that it be remedied, has been given to the Corporation by the City or the Trustee; except that, if such failure or breach can be remedied but not within such sixty (60) day period and if the Corporation has taken all action reasonably possible to remedy such failure or breach within such sixty (60) day period, such failure or breach shall not become a Loan Default Event for so long as the Corporation shall diligently proceed to remedy same in accordance with and subject to any directions or limitations of time established by the Trustee; 35 2164m5 (e) If any default shall exist under any instrument pursuant to which Parity Debt was issued and is Outstanding; (f) If the Corporation files a petition in voluntary bankruptcy, for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to pay debts as they mature, or consents in writing to the appointment of a trustee or receiver for itself or for the whole or any substantial part of the Facilities; (g) If a court of competent jurisdiction shall enter an order, judgment or decree declaring the Corporation insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the Corporation or of the whole or any substantial part of the Facilities, or approving a petition filed against the Corporation seeking reorganization of the Corporation under any applicable law or statute of the United States of America or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of the entry thereof; (h) If, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Corporation or of the whole or any substantial part of the Facilities, and such custody or control shall not be terminated within sixty (60) days from the date of assumption of such custody or control; or (i) If any Event of Default under the Indenture shall occur. SECTION 8.2. Remedies on Default. If a Loan Default Event shall occur, then, and in each and every such case during the continuance of such Loan Default Event, the City or the Trustee may take anyone or more of the following remedial steps: (a) The City or the Trustee may, if the Bonds have been accelerated pursuant to Section 7.02 of the Indenture and upon notice in writing to the Corporation, declare all installments of Loan Repayments and 36 2l64m5 Additional Payments payable for the remainder of the term of this Loan Agreement to be immediately due and payable, whereupon the same shall be immediately due and payable, anything in this Loan Agreement to the contrary notwithstanding; "all installments" as used in this subsection shall mean an amount equal to the entire principal amount of the then outstanding Bonds, together with any applicable redemption premiums and all interest accrued or to accrue on and prior to the next succeeding redemption date or dates on which the Bonds can be redeemed after giving notice to the holders thereof as required by the Indenture (less moneys available for such purpose then held by the Trustee) plus any other payments due or to become due hereunder, including, without limitation, any unpaid fees and expenses of the Trustee which are then due or will become due prior to the time that the Bonds are paid in full and the trust established by the Indenture is terminated; provided, however, that if acceleration of the Bonds has been rescinded and annulled pursuant to Section 7.02 of the Indenture, acceleration of the Loan Repayments and Additional Payments required hereunder shall be waived; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon. (b) The City or the Trustee may take whatever action, at law or in equity, as may appear necessary or desirable to collect the Loan Repayments, Additional Payments and any other payments then due and thereafter to become due under this Loan Agreement or to enforce the performance and observance of any obligation, covenant, agreement or provision contained in this Loan Agreement to be observed or performed by the Corporation. (c) The City or the Trustee shall have all the rights and remedies of a secured party or creditor under the Uniform Commercial Code of the State of California, and the general laws of the State of California, with respect to the enforcement of the security interests granted or reserved hereunder, including without limitation to the extent permitted by law the right to require that all or a portion of the personal property' portion of the Facilities be assembled and delivered to the Trustee, and the Trustee may, to the extent permitted by law, impound books and records evidencing the Corporation's accounts, accounts receivable and other similar claims for the payment of money and take 37 2164m5 possession of all notes and other documents which evidence such accounts, accounts receivable and claims for money and give notice to obligors thereunder of its interest therein and make direct collections on such accounts, accounts receivable and claims for money. SECTION 8.3. Remedies Not Exclusive; No Waiver of Rights. No remedy herein conferred upon or reserved to the City or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy, to the extent permitted by law, shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity or otherwise. In order to entitle the City or the Trustee to exercise any remedy, to the extent permitted by law, reserved to it contained in this Loan Agreement, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. Such rights and remedies as are given to the City hereunder shall also extend to the Trustee, and the Trustee may exercise any rights and the Trustee and the Holders of the Bonds shall be deemed third party beneficiaries of all covenants and conditions herein contained. No delay in exercising or omitting 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 of any such default or an acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. SECTION 8.4. Expenses on Default. In the event the Corporation should default under any of the provisions of this Loan Agreement and the City or the Trustee should employ attorneys or incur other expenses for the collection of the payments due hereunder, the Corporation agrees that it will on demand therefor pay to the City or the Trustee the reasonable fee of such attorneys and such other reasonable expenses so incurred by the City or the Trustee. SECTION 8.5. Notice of Default. The Corporation agrees that, as soon as is practicable, and in any event within ten (10) days, the Corporation will furnish the Trustee notice of any event which is a Loan Default Event pursuant to Section 8.1 hereof which has occurred and is continuing on the date of such notice, which notice shall set forth the nature of such event and the action which the Corporation proposes to take with respect thereto. 38 2164m5 ARTICLE IX MISCELLANEOUS SECTION 9.1. Further Assurances. The Corporation agrees that it will execute and deliver any and all such further agreements, instruments, financing statements or other assurances as may be reasonably necessary, if requested by the City or the Trustee, to carry out the intention or to facilitate the performance of this Loan Agreement, including, without limitation, to perfect and continue the security interests herein intended to be created. SECTION 9.2. Amendment of Indenture. The City covenants that, except as may be necessary to protect the exclusion from gross income for federal income tax purposes of the interest on the Bonds, it will take no action to amend or supplement the Indenture in any manner that would materially adversely affect the interests of the Corporation without the prior written consent of the Corporation to such amendment or supplement; provided the City shall use its best efforts to notify the Corporation prior to any amendment or supplement which is necessary to protect the exclusion from gross income for federal income tax purposes of the interest on the Bonds and, in any event, the Trustee shall promptly notify the Corporation after the adoption of any such amendment or supplement. SECTION 9.3. Notices. All notices or communications herein required or permitted to be given shall be in writing and, if to the Corporation, mailed or delivered to it as follows: 1500 West Seventeenth Street, San Bernardino, California 92411, Attention: Administrator, and, if to the City, mailed or delivered to it as follows: 300 North "D" Street, San Bernardino, California 92418, Attention: Director, Redevelopment Agency of the City of San Bernardino, and, if to the Trustee, mailed or delivered to it as follows: 333 South Beaudry Avenue, W24-30, Los Angeles, California 90017, Attention: Corporate Trust Division # A duplicate copy of each notice or communication given hereunder by either the City or the Corporation to the other shall also be given to the Trustee. The City, the Corporation and the Trustee may, by notice given hereunder, designate any further or different address to which subsequent notices, certificates and other communications shall be sent. 39 2164mS SECTION 9.4. Governing Law. This Loan Agreement shall be construed in accordance with and governed by the Constitution and laws of the State of California. SECTION 9.5. Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the City, the Corporation and their respective successors and assigns, subject, however, to the limitations contained herein. SECTION 9.6. Severability of Invalid Provisions. If anyone or more of the provisions contained in this Loan Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Loan Agreement and such invalidity, illegality or unenforceability shall not affect any other provision of this Loan Agreement, and this Loan Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The City and the Corporation each hereby declares that it would have entered into this Loan Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that anyone or more Sections, paragraphs, sentences, clauses or phrases of this Loan Agreement may be held illegal, invalid or unenforceable. SECTION 9.7. Article and Section Headings and References. 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 Loan Agreement. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders. SECTION 9.8. Agreement Represents Complete Agreement; Amendments. This Loan Agreement represents the entire contract between the parties. This Loan Agreement may not be effectively amended, changed, modified, altered or terminated except by the written agreement of the Corporation and the City and the concurring written consent of the Trustee, given in accordance with the provisions of the Indenture. 40 2164m5 SECTION 9.9. Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument. SECTION 9.10. Term of Loan Agreement. Except as otherwise provided herein, this Loan Agreement shall remain in full force and effect from the date of execution hereof until no Bonds remain Outstanding under the Indenture. SECTION 9.11. Waiver of Personal Liability. No member of the board of directors, officer, agent or employee of the Corporation shall be individually or personally liable for the payment of Loan Repayments or Additional Payments or be subject to any personal liability or accountability by reason of this Loan Agreement; but nothing herein contained shall relieve any such member of the board of directors, officer, agent or employee from the performance of any official duty provided by law or by this Loan Agreement. IN WITNESS WHEREOF, the City and the Corporation have caused this Loan Agreement to be executed in their respective names and their respective corporate seals to be hereunto affixed by their duly authorized officers, all as of the date first above written. CITY OF SAN BERNARDINO By Mayor [SEAL] Attest: City Clerk SAN BERNARDINO COMMUNITY HOSPITAL By Administrator and Chief Executive Officer [SEAL] 41 2l64m5 APPENDIX A Inpatient general medical and surgical services Obstetrical and pediatric services Intensive care and coronary care services Basic emergency medical services Clinical and pathological laboratory services Radiological services Respiratory therapy services Physical therapy services Ambulatory same-day surgical and medical services All of the foregoing services are provided as intregral components of an acute care facility. 2l64m5 city of San Bernardino Hospital Revenue Refunding Bonds (San Bernardino Community Hospital) Series 1989 DRAfT BOND PURCHASE CONTRACT November __, 1989 City of San Bernardino San Bernardino, California Ladies and Gentlemen: The undersigned (the "Underwriter"), hereby offer to enter into this Bond Purchase Contract with you, the City of San Bernardino (the "City"), for the purchase by the Underwriter and sale by you of your Hospital Revenue Refunding Bonds (San Bernardino Community Hospital), Series 1989, as specified below. This offer is made subject to acceptance by the City prior to 11:59 P.M., California time, on the date hereof, and upon such acceptance this Bond Purchase Contract (the "Bond Purchase Contract") shall be in full force and effect in accordance with its terms and shall be binding upon both the City and the Underwriter. 1. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein and in the Letter of Representation dated the date hereof, executed and delivered by San Bernardino Community Hospital (the "Corporation") and attached hereto as Exhibit B (the "Letter of Representation"), the Underwriter hereby agrees to purchase from the City and the City hereby agrees to sell to the Underwriter all (but not less than all) of the aggregate principal amount of the City's Hospital Revenue Refunding Bonds (San Bernardino Community Hospital), Series 1989 (the "Bonds"), to be dated October 15, 1989 (the Bonds being more fully /i /\.-; described in the Official Statement hereinafter mentioned), at an aggregate purchase price of $ (which is the principal amount of the Bonds less Underwriter's discount of $ and $ of original issue discount) plus interest accrued thereon from October 15, 1989 to the date of the Closing referred to in Paragraph 5 hereof. The Bonds shall be as described in, and shall be issued and secured under and pursuant to, the Indenture dated as of November 1, 1989 (the "Indenture") between the City and , as trustee (the "Trustee"). The Bonds will be limited obligations of the City payable solely from Loan RepaYments (as that term is defined in the Indenture) made by the Corporation pursuant to that certain Loan Agreement dated as of November 1, 1989 (the "Loan Agreement") between the City and the Corporation and from amounts held in certain funds established pursuant to the Indenture and pledged therefor. The Bonds will be secured by an assignment of the right, title and interest of the City in the Loan Agreement, to the extent and as more particularly described in the Indenture. The Bonds shall mature, and shall bear interest from their date, payable semiannually on June 1 and December 1 in each year commencing June 1, 1990, in the amounts and at the rates set forth in Exhibit A attached hereto. The Underwriter agrees to make a public offering of the Bonds at the initial offering prices as set forth in the Official Statement, which prices may be changed from time to time by the Underwriter. 2. You shall deliver to or cause to be delivered to the undersigned, promptly after your acceptance hereof, two copies of your Official Statement relating to the Bonds substantially in the form of the Preliminary Official Statement dated October 11, 1989 (the "Preliminary Official Statement"), with only such changes therein as shall have been accepted by us and signed on behalf of the City by the Mayor and the City Clerk (or such other authorized officers as we shall have approved) and approved on behalf of the Corporation by an authorized representative thereof (the Official Statement dated November __ 1989, including the cover page, summary statement and appendices thereto, is herein referred to as the "Official Statement," except that if the Official Statement has been amended between the date hereof and the date of Closing referred to in Paragraph 5 hereof the term "Official Statement" shall refer to the Official Statement as so amended). The Official Statement is hereby approved for distribution by resolution of the City. You authorize the use of copies of the Official Statement, the Indenture and the Escrow Agreement dated as of November 1, 1989 (the "Escrow Agreement") between the City, Security Pacific National Bank, as trustee for the 1985A Bonds (as such term is defined 6789W -2- in the Official Statement), and the Corporation in connection with the public offering and sale of the Bonds. You hereby ratify, confirm and approve the prior distribution of the Preliminary Official Statement by the Underwriter. 3. The City represents and warrants to and agrees with the Underwriter that: (a) both at the time of acceptance hereof by the City, and at the date of the Closing, the statements and information contained in the Official Statement, as amended or supplemented pursuant to this Bond Purchase Contract, relating to the City and its functions, duties and responsibilities, are and will be true, correct and complete in all material respects and the Official Statement does not and will not contain any untrue statement of a material fact or omit to state any material fact which is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading; (b) the City is, and at the date of the Closing will be, a municipal corporation and charter city, duly organized and existing under the Constitution and laws of the State of California with the powers and authority, among others, (i) to issue the Bonds pursuant to the Constitution of the State of California and Section 40 of the charter of the City and Ordinance No. 3815 enacted and amended thereunder (the "Law"); (ii) to execute and deliver this Bond Purchase Contract, the Indenture, the Escrow Agreement, the Official Statement, and all other agreements and instruments relating thereto (collectively, the "Legal Documents"); and (iii) to carry out and consummate the transactions contemplated by the Legal Documents; (c) when delivered to and paid for by the Underwriter at the Closing in accordance with the provisions of this Bond Purchase Contract, the Bonds will have been duly authorized, executed issued and delivered and will constitute valid and binding limited obligations of the City of the character permitted to be issued by the City pursuant to the Law, in conformity with, and entitled to the benefit and security of, the Indenture; (d) by official action of the City prior to or concurrently with the acceptance hereof, the City has duly ratified the distribution of the Preliminary Official Statement, has duly adopted and authorized the distribution of the Official Statement, including all 6789W -3- 6789W amendments and supplements thereto, and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in, the Bonds and the Legal Documents, and the consummation by it of all other transactions contemplated by the Official Statement and this Bond Purchase Contract; (e) the execution and delivery of the Bonds and the Legal Documents and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided in the Indenture; (f) to the best knowledge of the City after reasonable investigation, the City is not in material breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Bonds and the Legal Documents or the financial condition, assets, properties or operations of the City; (g) to the best of its knowledge, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending or threatened against the City affecting the existence of the City or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the collection of revenues pledged or to be pledged to pay the principal of, and premium, if any, and interest on the Bonds, or the pledge -4- 6789W thereof, or in any way contesting or affecting the validity or enforceability of the Bonds or any of the Legal Documents, or contesting the powers of the City or its authority to issue, enter into, adopt or perform its obligations under any of the foregoing, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or any amendment or supplement thereto, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds or any of the Legal Documents; (h) all approvals, consents, authorizations, certifications and other orders of any governmental authority, board, agency or commission having jurisdiction, and all filings with any such entities, which would constitute conditions precedent to or the absence of which would materially adversely affect the performance by the City of its Obligations hereunder or under any of the other Legal Documents or the consummation of the transactions contemplated in the Official Statement, have been duly obtained, and further, no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the City that has not been obtained is or will be required for the issue and sale of the Bonds or the consummation by the City of the other transactions contemplated by this Bond Purchase Contract and the Official Statement, except as such may be required under the state securities or Blue Sky laws in connection with the distribution of the Bonds by the Underwriter; (i) the City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (1) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (2) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualification in effect so long as required for distribution of the Bonds; provided, however, that in no event shall the City be required to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is not now so subject; (j) the Legal Documents have been duly authorized and will, at the date of the Closing, be executed and -5- delivered by the City and constitute valid, binding and enforceable obligations of the City in accordance with their respective terms except as the same may be limited by bankruptcy, insolvency, moratorium and other laws affecting enforcement of creditors' rights generally and by the application of equitable principles regardless of whether such enforcement is considered in a proceeding in equity or at law, and except as enforcement may be held to be against public policy; and (k) if during such time as the Official Statement is used in connection with the offering and sales of the Bonds any event occurs, of which the City has knowledge, which might or would cause the information relating to the City, its functions, duties and responsibilities contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading, or if the City is requested to amend, supplement or otherwise change the Official Statement, the City will promptly notify the Corporation and the Underwriter in writing of the circumstances and details of such event, and if in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will amend or supplement the Official Statement in a form and in a manner approved by the Underwriter, provided all expenses thereby incurred will be paid by the City. The execution and delivery of this Bond Purchase Contract by the City shall constitute a representation by the City to the Underwriter that the representations and warranties contained in this Section 3 are true as of the date hereof; provided that as to information furnished by the Corporation pursuant to this Bond Purchase Contract, the Letter of Representation and in the Official Statement, the City is relying on such information in making the City's representations, warranties and agreements; and, provided further, that as to all matters of law the City is relying on the advice of counsel to the City; and, provided further, that no member of the governing body, employee or officer of the City shall be individually liable for the breach of any representation or warranty made by the City in this Section 3. 4. The Underwriter's Obligations under this Bond Purchase Contract are and shall be subject to the receipt on or 6789W -6- prior to the date of the Official Statement of a letter from Ernst & Young, dated the date of this Bond Purchase Contract with work extending to a date not more than five business days prior to the date of this Bond Purchase Contract, addressed to the Underwriter and substantially in the form set forth as Exhibit C hereto. 5. At 9:00 A.M., California time, on November __, 1989, or at such other time, or on such earlier or later date as we mutually agree upon (the "Closing"), the City will deliver or cause to be delivered to the Underwriter in New York, New York, or at such other place as we may mutually agree upon, the Bonds in definitive form [(all of the Bonds to be lithographed with steel engraved borders)], duly executed, and in Los Angeles, California, or at such other place as we may mutually agree upon, the other documents mentioned herein. It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such number on any Bonds, nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriter to accept delivery of and pay for the Bonds in accordance with the terms of this Bond Purchase Contract. [All expenses in relation to the printing of CUSIP numbers on said Bonds and the CUSIP Service Bureau charge for the assignment of said numbers shall be paid for by the .] The Underwriter will accept such delivery and pay the purchase price thereof as set forth in Section 1 hereof by certified or official bank check or checks payable in immediately available funds. The Bonds will be made available for checking and packaging at an office which we may mutually agree upon one business day prior to the Closing. 6. The Underwriter hereby enters into this Bond Purchase Contract in reliance upon the representations and warranties of the City contained herein and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the City of its Obligations hereunder, both on and as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter's obligations under this Bond Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the City of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions: (a) the representations and warranties of the City contained herein and the Corporation contained in the Letter of Representation shall be true, complete and correct on the date hereof and as of the Closing, as if made on and at the Closing; 6789W -7- 6789W (b) at the Closing, the Legal Documents shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by USi and there shall be in full force and effect such resolutions of the City as, in the opinion of Orrick, Herrington & Sutcliffe, Los Angeles, California ("Bond Counsel"), shall be necessary in connection with the transactions contemplated hereby; (c) the Underwriter shall have the right to cancel its obligation to purchase the Bonds if between the date hereof and the Closing (i) legislation shall have been introduced in or enacted by the Congress of the United States or enacted by the State of California or legislation pending in the Congress of the United States shall have been amended, or legislation shall have been recommended to the Congress of the United States or otherwise endorsed for passage (by press release, other form of notice or otherwise) by the President of the United States, a responsible official of the Treasury Department of the United States or the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or legislation shall have been proposed for consideration by either such Committee by any member thereof or legislation shall have been favorably reported for passage to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or a regulation shall have been proposed or made or a press release or other form or notice shall have been issued by the Treasury Department of the United States, or the Internal Revenue Service or other federal or State of California authority in each case, with respect to federal or State of California taxation upon revenues or other income of the general character to be derived by the city or by any similar body, or upon interest on obligations of the general character of the Bonds, which may have the purpose or effect, directly or indirectly, of adversely affecting the tax-exempt status of the City, its property or income, its securities (including the Bonds) or the interest thereon, or any tax exemption granted or otherwise authorized by State of California legislation, and which, in each case, in the reasonable judgment of the Underwriter, affecting materially and adversely the market for the Bonds, or (ii) there shall exist any event which, in the reasonable judgment of the Underwriter, either (A) makes untrue or incorrect in any material respect as -8- 6789W of such time any statement or information contained in the Official Statement or (B) is not reflected in the Official Statement but should be reflected therein in order to make the statements and information contained therein not misleading in any material respect, or (iii) there shall have occurred any outbreak of hostilities or other national or international calamity or crisis, the effect of such outbreak, calamity or crisis on the financial markets of the united States being such as, in the reasonable judgment of the Underwriter, would make it impracticable for the Underwriter to market or enforce contracts for the sale of the Bonds, or (iv) there shall be in force a general suspension of trading on any national securities exchange or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any national securities exchange, whether by virtue of a determination by such exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction, or (v) a general banking moratorium shall have been declared by either federalr California or New York authorities having jurisdiction and be in force, or (vi) there shall be any material adverse change in the affairs of the Corporation or the City, or (vii) there shall be established any new restriction on transactions in securities materially affecting the free market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or the charge to the net capital requirements of, underwriters established by the any national securities exchange, the Securities and Exchange Commission, any other federal or state agency or the Congress of the United States, or by Executive Order, or (viii) an adverse event described in Section 3(k) hereof occurs which, in the reasonable judgment of the Underwriter, requires or has required a supplement or amendment to the Official Statement, or (ix) a decision of any federal or state court or a ruling or regulation (final, temporary or proposed) of the Securities and Exchange Commission or other governmental agency shall have been made or issued to the effect that (A) the Bonds or any securities of the City or of any similar body of the type contemplated herein are subject to the registration requirements of the Securities Act of 1933, as amended, or (B) the qualification of an indenture in respect of the Bonds or any such securities is required under the Trust Indenture Act of 1939, as amended; and -9- 6789W (d) at or prior to the Closing, we shall receive the following documents, in each case satisfactory in form and substance to us and our counsel: (i) the unqualified approving opinion, dated the date of the Closing and addressed to the City, of Bond Counsel, substantially in the form attached hereto as Exhibit D, accompanied by a supplementary opinion of Bond Counsel, dated the date of the Closing and addressed to us, substantially to the effect that (A) the statements contained in the Official Statement in the sections thereof entitled: "Introduction," "Plan of Financing," "The 1989 Bonds," "Appendix D - Summary of the Principal Documents" and "Tax Exemption," insofar as such statements purport to summarize certain provisions of the Bonds, the Legal Documents, and the approving opinion of Bond Counsel on federal tax law, present an accurate summary of such provisions; (B) based upon information made available to such counsel in the course of such counsel's participation in the transaction as Bond Counsel and without having undertaken to determine independently or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, nothing has come to such counsel's attention that would lead them to believe that the Official Statement, as of the Closing Date, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading (except that such counsel need express no view as to the financial statements or the statistical data, contained in the Official Statement); (C) the Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (D) the 1985A Bonds have been discharged within the meaning of Prior Indenture (as such term is defined in the Indenture) and are no longer outstanding within the meaning of the Prior Indenture. (ii) the opinion of Stradling, Yocca, Carlson & Rauth, Newport Beach, California, counsel to the City, dated the date of the Closing and addressed to the City and the Underwriter, to the effect that (A) the City is a municipal corporation and charter city, duly organized and existing under a freeholders' charter and in good standing under the -10- Constitution and laws of the State of California with full legal right, power and authority to enter into the Legal Documents, and to carry out and consummate all transactions contemplated by this Bond Purchase Contract and the Official Statement; (B) the Official Statement has been duly authorized, signed and delivered by the City; (C) the Legal Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, constitute the legal, valid and binding obligations of the City, enforceable in accordance with their respective terms, except as enforcement of each may be limited by bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors' rights generally and by application of equitable principles regardless of whether such enforceability is considered in a proceeding in equity or at law, and except as enforcement may be held to be against public policy; (D) the resolutions of the City approving and authorizing the execution and delivery of the Legal Documents and the Bonds were duly adopted at meetings of the governing body of the City which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout; (E) no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by a court, regulatory agency, public board or bOdy, is pending or, to the best of such counsel's knowledge, threatened, in any way affecting the existence or powers of the City, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection of the Revenues (as such term is defined in the Indenture) pledged under the Indenture, or in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture, the Loan Agreement, or this Bond Purchase Contract; (F) the execution and delivery of the Bonds and the Legal Documents, and compliance with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the City a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation (except for state or federal Blue Sky or securities laws, as to which no opinion need be expressed), or any applicable court or administrative decree or order or consent decree, or any material 6789W -11- contract, agreement or instrument to which the City is a party or by which it or its properties is otherwise subject or bound or, to the best of such counsel's knowledge after reasonable investigation and inquiry, result in the creation or imposition of any prohibited lien, charge or encumbrance upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance materially and adversely affects the consummation of the transactions contemplated by the Legal Documents or the financial condition, assets, properties or operations of the City; (G) the Official Statement has been duly approved, executed and delivered by the City, and the information therein as to the City is correct and does not omit any statement which, in such counsel's opinion, should be included or referred to therein; and (H) to the best knowledge of such counsel, the City is not in any material respect in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any material loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute a material event of default under any such instrument. (iii) the opInIon of Musick, Peeler & Garrett, Los Angeles, California, counsel for the Corporation, dated the date of the Closing, and substantially the form attached hereto as Exhibit E; (iv) the opinion of McDermott, will & Emery, Los Angeles, California, counsel for the Underwriter, dated the date of the Closing, to the effect that (A) the Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (B) without passing upon or assuming any responsibility for the accuracy completeness or fairness of the statements contained in the Official Statement and making no representation that they have independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available to them in the course of their participation in the 6789W -12- preparation of the Official Statement as counsel for the Underwriter, such counsel does not believe that the Official Statement (excluding therefrom financial statements and the statistical data included in the Official Statement, as to which no opinion need be expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made, not misleading; (v) an opinion, dated the Closing Date and addressed to the City and the Underwriter, of counsel to the Trustee, to the effect that (A) the Trustee is a banking corporation duly organized and validly existing under the laws of the State of California and has full power, authority and legal right to execute and deliver the Legal Documents to which it is a party and to comply with the terms thereof and perform its obligations thereunder; (B) the Legal Documents to which it is a party have been duly authorized, executed and delivered by the Trustee and, assuming due authorization, execution and delivery by the other parties thereto, constitute valid, binding and enforceable agreements, in accordance with their respective terms, of the Trustee; (C) the Trustee has duly accepted the trusts under the Indenture and the duties imposed on it as trustee thereby; and (D) the enforceability of the Legal Documents to which it is a party may be limited by bankruptcy, insolvency, and other laws affecting the enforcement of creditors' rights generally and, to the extent that certain remedies in such instruments require or may require enforcement by a court of equity, such principles of equity as the court having jurisdiction may impose; (E) no consent, approval, authorization or other action by any government or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of the Indenture and the Escrow Agreement; and (F) the execution and delivery by the Trustee of the Legal Documents to which it is a party, and compliance with the terms thereof, will not conflict with, or result in a violation or breach of, or constitute a default under any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any 6789W -13- rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties or (except with respect to the lien of the Indenture, if any) result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the money or fund held under the indenture and the Escrow Agreement. (vi) a certificate or certificates, dated the date of Closing, signed by an authorized official of the City satisfactory to us, and in form and substance satisfactory to us, to the effect that (A) to the best of such official's knowledge no litigation is pending or threatened (1) to restrain or enjoin the issuance or delivery of any of the Bonds or the collection of revenues pledged under the Indenture, (2) in any way contesting or affecting the authority for the issuance of the Bonds or the validity of the Bonds or the Legal Documents, or (3) in any way contesting the existence or powers of the City; (B) to the best of such official's knowledge no event affecting the City has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect, as of the date of the Closing, any statement or information concerning the City contained in the Official Statement or which is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein concerning the City not misleading in any material respect; and (C) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the date of the Closing with the same effect as if made on the date of the Closing; (vii) a certificate, dated the date of the Closing, signed by a duly authorized official of the Trustee satisfactory in form and substance to the Underwriter to the effect that (A) the Trustee is duly organized and existing as a state banking corporation in good standing under the laws of the State of California having the full power and authority to enter into and perform its duties under the Escrow Agreement and the Indenture; (B) the Trustee is duly authorized to enter into the Legal Documents to which it is a party and has duly executed and delivered the Legal Documents to which it is a party; (C) no consent, approval, 6789W -14- authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is or will be required for the execution and delivery of the Legal Documents to which it is a party; (D) the execution and delivery by the Trustee of the Legal Documents to which it is a party and compliance with the terms thereof will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties, or (except with respect to the lien of the Indenture) result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon the Facilities (as defined by the Indenture); and (E) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending or, to the best knowledge of the Trustee, threatened against or affecting the existence of the Trustee, or in any way contesting or affecting the validity or enforceability of the Legal Documents to which it is a party or contesting the powers of the Trustee or its authority to enter into and perform its obligations under any of the foregoing, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated hereby and by the official Statement, or which, in any way, would adversely affect the validity of the Legal Documents to which it is a party, or any agreement or instrument to which the Trustee is a party and which is used or contemplated hereby and by the Official Statement or the exemption from taxation as set forth herein; (vii) (A) a letter of Ernst & Young, dated the date of the Closing, updating the letter previously' delivered to the Underwriter pursuant to Paragraph 4 hereof so that the cut-off date referred to in such letter will be a date not more than five business days prior to the date of the Closing, addressed to the Underwriter; and (B) a letter of Ernst & Young consenting to the use of its report dated August 18, 1989 included in the Official Statement and to the references to their firm in the Official Statement; 6789W -15- (ix) a Certificate, dated the date of the Closing, signed by a duly authorized officer or other representative of the Corporation satisfactory in form and substance to the Underwriter and its counsel to the effect that (A) the Corporation has not, since June 30, 1989, incurred any material liabilities other than in the ordinary course of business which are not set forth in or contemplated by the Official Statement; (B) since June 30, 1989, no material and adverse change has occured in the financial position or results of operation of the Corporation which is not described in the Official Statement; (C) no litigation is pending or, to the knowledge of such signatory, threatened (1) to restrain or enjoin the issuance or delivery of any of the Bonds or the collection of Revenues pledged under the Indenture, (2) in any way contesting or affecting the authority for the issuance of the Bonds or the validity of the Bonds or the Legal Document, or (3) in any way contesting the corporate existence, tax-exempt status or powers of the Corporation; (4) no event affecting the Corporation or the Facilities (as defined in the Indenture) has occured since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date of the Closing any statement or information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect; (5) to the best of such person's knowledge, all consents, approvals and authorizations of governmental bodies required for the due authorization, execution, issuance and delivery of the Bonds by the City have been obtained; and (6) to the best of such person's knowledge, after reasonable investigation and inquiry, the representations and warranties of the Corporation set forth in the Letter of Representation and the Legal Documents are true and correct at and as of the date of the Closing; (x) the certified Articles of Incorporation of the Corporation, as amended, the bylaws of the Corporation, as amended, and the resolutions of the Board of Directors of the Corporation authorizing the execution and delivery of the Loan Agreement and authorizing the execution and approval of the Official Statement and this Bond Purchase Contract and the Indenture, and all transactions contemplated by the Official Statement and this Bond Purchase Contract, all certified by its Secretary; 6789W -16- (xi) copies of the Letter of Determination to the effect that the Corporation is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or the corresponding provisions or prior law; (xii) a good standing certificate of recent date certified by the Secretary of State of the State of California and a letter of good standing of recent date certified by the Franchise Tax Board of the State of California, evidencing the good standing of the Corporation; (xiii) two copies of the Legal Documents duly executed by the parties thereto; (xiv) two copies of the Official Statement, executed on behalf of the City by the Mayor and attested to by the City Clerk, and executed by an authorized representive of the Corporation; (xv) two copies of the financial statements included as Appendix C to the Official Statement; (xvi) two copies of the Preliminary Blue Sky Memorandum prepared by our counsel; (xvii) two certified copies of the resolutions of the City approving and authorizing the execution and delivery of this Bond Purchase Contract, the Bonds and the Legal Documents and any and all other documentation contemplated thereby or hereby; (xviii) two certified copies of the signature resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of, among other things, the Indenture; (xix) evidence that the ratings of" "and" given the Bonds by Standard and Poor's Corporation and Moody's Investors Service, respectively, are in full force and effect as of the date of Closing; " (xx) a verification report, dated the Closing Date, to the effect that (A) the mathematical computations with respect to the adequacy of the 6789W -17- maturing principal of, and interest earned on, the federal securities, together with any other funds to be held in the Escrow Fund (as such terms is defined in the Escrow Agreement) in accordance with the Escrow Agreement, to provide for the paYment of the principal of and interest on the 1985A Bonds when due to and including 1, 1995 and to redeem the 1985A Bonds outstanding on such date at a redemption premium equal to 103% and (ii) the mathematical computations of the actuarial yield on the Escrow Fund and on the Bonds, which computations support the conclusion of Bond Counsel that the Bonds are not "arbitrage bonds" under Section 148 of the Internal Revenue Code of 1986, as amended, are accurate; (xxi) a non-arbitrage certificate in form satisfactory to Bond Counsel; (xxii) a copy of Form 8038G - ("Information Return for Tax-Exempt Governmental Bond Issues under Section 149(e) of the Code") - executed by an authorized officer of the City; (xxiii) the opinion of Bond Counsel, dated the Closing Date and addressed to the City and in form and substance satisfactory to the Underwriter concerning defeasance of the 1985A Bonds; and (xxiv) such additional legal opinions, certificates, proceedings, instruments and other documents as we or Bond Counsel may reasonably request to evidence compliance by the City with legal requirements, the truth and accuracy, as of the time of the Closing, of the representations of the City herein and in the Official Statement and the due performance or satisfaction by the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the City. If any of the conditions to the obligations of the Underwriters contained in this Bond Purchase Contract shall not have been satisfied when and as required herein, or if the Underwriter's obligations shall be terminated for any reason permitted herein, this Bond Purchase Contract shall terminate and neither the Underwriter nor the City shall have any further obligation hereunder. 6789W -18- 7. After the Closing, so long as the Underwriter, or dealers, if any, are participating in the initial public offering of the Bonds, the City will (a) not participate in the issuance of any amendment of or supplement to the Official Statement to which, after having been furnished with a copy, we shall object in writing or which shall be disapproved by counsel for the Underwriter and (b) if an event relating to or affecting the City shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in light of the circumstances existing at the time it is delivered to a purchaser, forthwith prepare and furnish to the Underwriter [(at the expense of the City for 90 days from the date of Closing, and thereafter printing and delivery costs to be at the expense of the Underwriter)] a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purpose of this Paragraph 7 the City shall furnish such information with respect to itself as we may from time to time reasonably request. 8. All expenses and costs of the City incident to the performance of its obligations in connection with the authorization, issuance, sale and registration of the Bonds to the Underwriter, including the cost of printing of the Bonds (and full execution thereof), the Preliminary Official Statement, the Official Statement and the Blue Sky Memorandum, in reasonable quantities, word processing fees of Underwriter's counsel in connection with the printing and distribution of the Preliminary official Statement and the Official Statement, fees of the auditor, fees in connection with providing immediately available funds for purchase of the Bonds, fees of consultants, fees of rating agencies, CUSIP Service Bureau charges and fees and expenses of Bond Counsel and counsel for the Corporation shall be paid by All expenses to be paid by the City pursuant to this Bond Purchase Contract may be paid from Bond proceeds to the extent permitted by the Indenture. Expenses of the Underwriter, consisting of the fees of counsel to the Underwriter, travel and other expenses incurred directly by the Underwriter shall be paid by the Underwriter. 6789W -19- 9. If any of the provisions of this Bond Purchase Contract shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Bond Purchase Contract and such invalidity, illegality or unenforceability shall not affect any other provision of this Bond Purchase Contract, and this Bond Purchase Contract shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The City and the Underwriter hereby declare that they would have entered into this Bond Purchase Contract and each and every paragraph, sentence, clause or phrase hereof irrespective of the fact that anyone or more paragraphs, sentences, clauses or phrases of this Bond Purchase Contract may be held illegal, invalid or unenforceable. 10. Any notice or other communication to be given to the City under this Bond Purchase Contract may be given by delivering the same in writing at your address set forth above and any such notice or other communications to be given to the Underwriter may be given by delivering the same in writing to Rauscher Pierce Refsnes, Inc., One California Street, Suite 2630, San Francisco, California 94111, Attention: Corporate Finance Department. The approval of the Underwriter when required hereunder or the determination of their satisfaction as to any document referred to herein shall be in writing signed by Rauscher Pierce Refsnes, Inc. and delivered to you. 11. All representations and agreements of the City in this Bond Purchase Contract shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Bonds. This Bond Purchase Contract shall be governed by the laws of the State of California. 12. This Bond Purchase Contract may be executed in any ~~w -20- number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument. RAUSCHER PIERCE REFSNES, INC. By: ACCEPTED AND AGREED TO: CITY OF SAN BERNARDINO By: Mayor APPROVED: SAN BERNARDINO COMMUNITY HOSPITAL By: An authorized representative 6789W -21- EXHIBIT A TO THE BOND PURCHASE CONTRACT MATURITY SCHEDULE (to come) EXHIBIT B TO THE BOND PURCHASE CONTRACT [Letterhead of the Corporation] LETTER OF REPRESENTATION November __, 1989 Rauscher Pierce Refsnes, Inc. One California Street Suite 2630 San Francisco, California 94111 ~~ City of San Bernardino San Bernardino, California Ladies and Gentlemen: The City of San Bernardino (the "City") and the undersigned San Bernardino Community Hospital, a California nonprofit public benefit corporation (the "Corporation") propose to execute and enter into a Loan Agreement dated as of November I, 1989 (the "Loan Agreement"). Pursuant to a Bond Purchase Contract dated the date hereof (the "Bond Purchase Contract"), with you, which the Corporation has approved, the City proposes to sell $ aggregate principal amount of its Hospital Revenue Refunding Bonds (San Bernardino Community Hospital), 1989 Series (the "Bonds"). The offering of the Bonds is described in a preliminary official statement dated October II, 1989 (the "Preliminary Official Statement") and in an official statement dated the date hereof (the "Official Statement"). Certain revenues and other moneys received by the City or the Trustee (as that term is defined below) pursuant or with respect to the Loan Agreement are pledged to secure the paYment of the Bonds, including the interest thereon, pursuant to an Indenture dated as of November I, 1989 (the "Indenture") between the City and , as trustee (the "Trustee"). In order to induce you to enter into the Bond Purchase Contract and to make the sale and purchase and reoffering of the Bonds therein contemplated, the Corporation hereby represents, warrants and agrees with each of you as follows (1) The Corporation is a nonprofit public benefit corporation in good standing under the laws of the State of California, has and at the Closing (as that term is defined in the Bond Purchase Contract) will have full legal right, power and authority to enter into this Letter of Representation and the Loan Agreement, to approve the Bond Purchase Contract and the Official Statement and to carry out and consummate all transactions contemplated by the Bond Purchase Contract to be carried out and consummated by the Bond Purchase Contract, the Loan Agreement, this Letter of Representation and the Official Statement, and by proper corporate action has duly authorized the execution and delivery of this Letter of Representation and the Loan Agreement and approval of the Bond Purchase Contract and the Official Statement. (2) The officers or authorized representatives of the Corporation executing this Letter of Representation and the Loan Agreement and approving the Bond Purchase Contract and the Official Statement are duly and properly in office and fully authorized to execute the same. (3) The Bond Purchase Contract and the Official Statement have been duly approved by the Corporation; this Letter of Representation has been duly authorized, executed and delivered by the Corporation; the Loan Agreement has been duly authorized and at the Closing (as that term is defined in the Bond Purchase Contract) will have been duly executed and delivered by the Corporation; and (i) the Loan Agreement, when assigned by the City to the Trustee pursuant to the Indenture, will constitute the legal, valid and binding agreement of the Corporation with the Trustee enforceable against the Corporation in accordance with its terms for the benefit of the holders of the Bonds, and (ii) this Letter of Representation and any rights of the City and obligations of the Corporation under the Loan Agreement not so assigned to the Trustee will constitute the legal, valid and binding agreements of the Corporation enforceable against the Corporation in accordance with their terms except as enforcement of each of the above-named documents may be limited by bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought. (4) The execution and delivery of this Letter of Representation; the approval of the Bond Purchase Contract and the Official Statement; at the Closing, the execution and delivery of the Loan Agreement; the consummation of the transactions therein contemplated; and the fulfillment of or compliance with the terms and conditions thereof will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under the articles of incorporation of the Corporation, its bylaws or any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Corporation is a party or by which it or its properties are 6809W B-2 otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Corporation, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Bond Purchase Contract, the Loan Agreement, this Letter of Representation or the Official Statement or the financial condition, assets, properties or operations of the Corporation. (5) No consent or approval of any trustee or holder of any indebtedness of the Corporation, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with (i) the execution and delivery of this Letter of Representation; (ii) at the Closing, the execution and delivery of the Loan Agreement; (iii) the approval of the Bond Purchase Contract or the Official Statement; or (iv) the consummation of any transaction therein contemplated, except as have been obtained or made and as are in full force and effect (or, in the case of the Loan Agreement, for which the Corporation shall use its best efforts to obtain prior to the Closing). (6) There is no action, suit, proceeding, inquiry or investigation before or by any court of federal, state, municipal or other government authority pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or the assets, properties or operations of the Corporation which, if determined adversely to the Corporation or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Bond Purchase Contract, the Loan Agreement, this Letter of Representation or the Official Statement or upon the financial condition, assets, properties or operations of the Corporation, and the Corporation is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consumation of the transactions contemplated by the Bond Purchase Contract, the Loan Agreement, this Letter of Representation or the Official Statement or the financial conditions, assets, properties or operations of the Corporation or its properties. (7) The Corporation is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), or corresponding provisions of prior law, based on a determination from the Internal Revenue Service; said determination has not been modified, limited or revoked as to the Corporation; there is no action, suit, proceeding, inquiry or 6809W B-3 investigation before or by any court or other governmental authority or agency pending or, to the knowledge of the Corporation, threatened which could affect the Corporation's status as an organization described in Section 501(c)(3) of the Code; the Corporation is in compliance with the terms, conditions and limitations in said determination; the facts and circumstances that form the basis of such determination as represented to the Internal Revenue Service continue substantially to exist; and based upon such determination the Corporation is exempt from federal income taxes under Section 501(a) of the Code, except for unrelated business income subject to taxation under Section 511 of the Code. (8) The Corporation is a corporation organized and operated exclusively for charitable purposes within the meaning of Section 501(a) of the Code, not for pecuniary profit, no part of the net earnings of which inure to the benefit of any private shareholder or individual. (9) The proceeds of the Bonds will not be used in connection with any unrelated trade or business of the Corporation as defined in Section 513 of the Code, in such manner or to such extent as would result in the loss of exemption from federal income tax of interest on any of the Bonds (as that term is defined in the Indenture) under Section 103 of the Code. (10) The Corporation has all necessary power and authority to conduct the business now being conducted by it and as contemplated by the Loan Agreement, and to enter into this Letter of Representation and the Loan Agreement, to approve the Bond Purchase Contract and Official Statement, and to be paid or reimbursed (to the extent such paYment or reimbursement is available under applicable statutes, regulations and administrative practices) under all third party payor programs accounting for a significant portion of the Corporation's gross revenues in its fiscal year ended June 30, 1989, including, without limitation, Medicare [and Medi-Cal]. (11) At the Closing, the Corporation will have good and marketable title to the Facilities free and clear from all encumbrances other than Permitted Encumbrances, as those terms are defined in the Indenture. [(12) The Corporation is not legally bound to comply with Section 1122 of the Social Security Act, as amended, with respect to the financing contemplated by the Official Statement, since the State of California has elected not to sign a Section 1122 Agreement.] 6809W B-4 (13) The Corporation has not incurred any material liabilities, direct or contingent, nor has there been any material adverse change in the financial position, results of operation or condition, financial or otherwise, of the Corporation since June 30, 1989 which is not described in the Official Statement, whether or not arising from transactions in the ordinary course of business. (14) Between the date hereof and the date of the Closing, the Corporation shall not, without the prior written consent of Rauscher Pierce Refsnes, Inc. (the "Underwriter"), except as described in or contemplated by the Official Statement, incur any material liabilities, direct or contingent, other than in the ordinary course of business. (IS) As of the date hereof, the Official Statement (including the financial statements and other financial and statistical data contained therein), as amended or supplemented pursuant to the Bond Purchase Contract or this Letter of Representation, if applicable, does not and will not contain any untrue statements of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (16) If between the date hereof and the Closing any event shall occur which might or would cause the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Corporation shall notify the City and the Underwriter and, if in the opinion of the Corporation, the City or the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Corporation shall request the City to cause the Official Statement to be amended or supplemented in a form and in a manner approved by the Underwriter. (17) After the Closing, the Corporation shall (i) not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the City or the Underwriter shall reasonably object in writing or which shall be disapproved by their respective co~nsel and (ii) if any event relating to or affecting the City or the Corporation or its present or proposed facilities shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter or the City, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, forthwith prepare and furnish to the 6809W B-5 Underwriter and the City [,at the expense of the Corporation for ninety days from the date of Closing, and thereafter at the expense of the Underwriters,] a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter and counsel to the City) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection, the Corporation will furnish such information with respect to itself and its present and proposed facilities as either of you may from time to time reasonably request. (18) To the extent permitted by law, the Corporation shall indemnify and hold harmless the Underwriter and the City and each person, if any, who controls (as such term is defined in Section 15 of the Securities Act of 1933, as amended) the Underwriter and the officers, agents and employees of the City against any and all losses, claims, damages, liabilities and expenses (i) arising out of any statement or information in the Preliminary Official Statement or in the Official Statement, relating to the Corporation, the Hospital or AHS (all as defined in the Official Statement and the Preliminary Official Statement), that is or is alleged to be untrue or incorrect in any material respect or the omission or alleged omission therefrom of any statement or information that should be stated therein or that is necessary to make the statements therein relating to the Corporation, the Hospital or AHS, (all as defined in the Official Statement and Preliminary Official Statement) not misleading in any material respect, and (ii) to the extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission if such settlement is effected with the written consent of the Corporation; provided, however, that in no event shall this indemnification agreement inure to the benefit of the Underwriter (or any person controlling the Underwriter) on account of any losses, claims, damages, liabilities or actions arising from the sale of the Bonds upon the public offering to any person by the Underwriter if such losses, claims, damages, liabilities or actions arise out of, or are based upon, an untrue statement or omission or alleged untrue statement or omission in the Preliminary Official Statement and if the Official Statement shall correct the untrue statement or omission or the alleged untrue statement or omission which is the basis of the loss, claim, damage, liability or action for which indemnification is sought and a copy of the Official Statement had not been sent or given to such person at or prior to confirmation of such sale to him or her, unless such failure to deliver the Official Statement was a result of noncompliance by the Corporation with Section 18 6809W B-6 ~ ~ -- hereof. In case any claim shall be made or action brought against the Underwriter or any controlling person based upon the Official Statement for which indemnity may be sought against the Corporation, as provided above, the Underwriter shall promptly notify the Corporation in writing setting forth the particulars of such claim or action and the Corporation shall assume the defense thereof, including the retaining of counsel acceptable to the Underwriter and the payment of all expenses. The Underwriter or any such controlling person shall have the right to retain separate counsel in any such action but shall bear the fees and expenses of such counsel unless (i) the Corporation shall have specifically authorized the retaining of such counselor (ii) the parties to such suit include the Underwriter or such controlling person or persons, and the Corporation and the Underwriter or such controlling person or persons have been advised by such counsel that one or more legal defenses may be available to it or them which may not be available to the Corporation, in which case the Corporation shall not be entitled to assume the defense of such suit but you shall bear the fees and expenses of such counse 1. The representations, warranties, agreements and indemnities herein shall survive the Closing under the Bond Purchase Contract and any investigation made by or on behalf of the Underwriter, the City or any person who controls the Underwriter or the City of any matters described in or related to the transactions contemplated hereby and by the Bond Purchase Contract, the Official Statement, the Loan Agreement and the Indenture. This Letter of Representation shall be binding upon and inure solely to the benefit of the Underwriter, the City and the Corporation and, to the extent set forth herein, persons controlling the Underwriter, and their respective officers, employees, agents and personal representatives, successors and assigns, and no other person or firm shall acquire or have any right under or by virtue of this Letter of Representation. 6809W B-7 ..-- ,.. This Letter of Representation may be executed in any number of counterparts, each of which shall for all purposes be deemed to be original and all of which shall together constitute but one and the same instrument. Very truly yours, SAN BERNARDINO COMMUNITY HOSPITAL By: Accepted and confirmed as of the date first above written: CITY OF SAN BERNARDINO By: Mayor RAUSCHER PIERCE REFSNES, INC. By: 6809W B-8 EXHIBIT C TO THE BOND PURCHASE CONTRACT [Letterhead of Ernst & Young] PROPOSED FORM OF ACCOUNTANT'S LETTER (to come) EXHIBIT 0 TO BOND PURCHASE CONTRACT [Letterhead of Orrick, Herrington & Sutcliffe] OPINIONS OF BOND COUNSEL (to come) EXHIBIT E TO THE BOND PURCHASE CONTRACT [Letterhead of Musick, Peeler & Garrett] OPINION OF CORPORATION'S COUNSEL (to come) Redevelopment Agency · City of San Bernardino 300 North "D" Street, Fourth Floor · San Bem.rdino, Califamia 92418 (714) 384-.5081 FAX (714) 888-9413 Pride ~ 1.::T SleYeD H. Dukett Executive Director OCTOBER 10, 1989 COURT & "E" Synopsis of Previous Commission/Council/Committee Action: 12-21-87 Resolution No. 5059 adopted a Pre-Disposition Agreement between the Redevelopment Agency and Simchowitz Corporation. 05-23-88 Resolution No. 5114 adopted approving execution of an Amendment to the Pre-Disposition Agreement. (continued on page 2) (MAYOR AND COMMON COUNCIL) (COMMUNITY DEVELOPMENT COMMISSION) Recommended Motion: OPEN JOINT PUBLIC HEARING. A) That the Joint Public Hearing be closed; that further reading of the following resolutions be waived. (continued on page 3) Respectfully Submitted, Ja Supporting data attached: Yes FUNDING REQUIREMENTS: $1,900,000 Ward: Project: Central City Project ... Commission Notes: SHD:GW:sm2238H Agenda of: October 16. 1989 Item NO.~ Redevelopment Agency (continued from page 1) Synopsis of Previous Commission/Council/Committee Action: 07-18-88 Resolution No. 5131 adopted approving execution of a Second Amendment to the Pre-Disposition Agreement. 09-19-88 Resolution No. 5151 adopted approving execution of a Third Amendment to the Pre-Disposition Agreement. 02-20-89 Commission authorized the execution of a Fourth Amendment to the Pre-Disposition Agreement. 08/10/89 Committee recommended setting public hearings and approval of DDA. 10/02/89 Mayor and Common Council and Commission set joint public hearings for 11:00 a.m. on October 16, 1989. SD:GW:sm:2238H 2 Redevelopment Agency ...'" .......:" .. (continued from Dage 1) (MAYOR AND COMMON COUNCIL) B) Move to adopt a RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT., LTD. (COMMUNITY DEVELOPMENT COMMISSION) C) Move to adopt a RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT, LTD. D) Move to authorize the execution of a Disposition and Development Agreement with One Sunset Court, Ltd. for the sale of Agency owned property in the Central City Project Area with such non-substantive changes as are approved by Agency Counsel. { SD:GH: sm:2238H 3 Redevelopment Agency S T A F F R E P 0 R T It is requested that the Commission authorize and the Council approve execution of a Disposition and Development Agreement (DDA) between One Sunset Court, Ltd and the Agency. BACKGROUND On December 12, 1987 the Commission authorized execution of a Pre-Disposition Agreement with the Simchowitz Corporation. Under the terms of that agreement, the attached DDA has been negotiated. The Developer has formed a limited partnership and has pre-leased approximately eighty percent of the building to the limited partners, which he represents will assure the availability of financing. The attached summaries outline key information relative to the proposed agreement. The Developer proposes to construct an eight to ten story retail/office building encompaSSing at least 155,500 square feet and a parking structure for at least 617 cars. Total construction cost is estimated at approximately $30,000,000. Construction is scheduled to start in July 1990 and to be completed in July 1992. Attached is a summary of the financial aspects of the transaction. It is estimated that the first year's revenue to the RDA/City will be $310,000 in tax increment and $43,000 in sales tax. Average projected revenues (tax incre.ent and sales tax) for the first 10 years are $415,000 per year. Both the Developer and Staff have worked diligently to negotiate a DDA. The Developer and Staff have completed discussions on the basic deal points reflected in the attached DDA. RECCJI4ENDA TI ON The DDA has been approved as to form and legal content by both Agency and Special Counsel and we are informed that it will be executed by One Sunset Court, Ltd. prior to the hearing. It is, therefore, requested that the Commission and the Council adopt the attached resolutions and that the Commission authorize execution of the DDA with such non-substantive changes as are Ipproved by Agency Counsel. In the event a signed copy is not received by October 16, 1989, it is recommended that the matter be continued. SD:QI:sm:2238H 4 SUMMARY OF FINANCIAL ASPECTS OF A PROPOSED SALE OF REDEVELOPMENT AGENCY OWNED REAL PROPERTY WITHIN THE CENTRAL CITY PROJECT AREA TO ONE SUNSET COURT, LTD. (In Accordance with California Health and Safety Code Section 33433) It is proposed that the Redevelopment Agency of the City of San Bernardino will enter into a Disposition and Development Agreement (DDA) with One Sunset Court, Ltd., A California Limited Partnership (Developer) under the terms of which the Agency will sell that certain parcel of land located at the southeast corner of Court Street and "E" Street as shown on the map attached as Exhibit "A" and further identified as Assessors Parcel Numbers 134-251-44 and 134-251-56. . The following financial summary has been prepared pursuant to Section 33433 of the Health and Safety Code. 1. Cost of the agreement to Agency a. Total cost to Agency to purchase b. Agency contribution under DDA * c. Estimated closing costs less payment by Developer Total Net Cost Land $ 402,283 $1,900,000 30.000 $2,332,283 1.300.000 $1,032,283 2. The estimated value of the interest to be conveyed is $1,300,000. 3. The purchase price to be paid by the Developer is $1,300,000. * Agency contributions to be used for: 1. Demolition, clearance, excavation and soil preparation costs; 2. . foot 1 ngs and foundations; and 3. Cost of parKing structure. GH:sm:2227H SUMMARY One Sunset Court, Ltd. Court & "E" Developer: One Sunset Court, Ltd., A California Limited Partnership. 2.03 Acres (88,426.80 square feet). Retail/Office containing at least 155,500 square feet Parking Structure for at least 617 cars. Land: Building: Estimated Development Costs: Land $ 1,300,000 Construction $30.000,000 $31,300,000 Estimated Revenue: Tax Increment Year 1 - $310,000 Sales Tax Year 1 - $ 43,000 Average projected revenues (tax increment and sales tax) for the first 10 years are $415,000 per year. Estimated Jobs: 564 Summary of Disposition and Development Agreement: · Land Purchase Price: $1,300,000 cash. · Agency Assistance: $1,900,000 cash upon Developer: Obtaining all building permits. Providing proof of construction financing. · $1,900,000 is to be used for: First, to pay for demolition, clearance, excavation and soil preparation costs incurred by Developer in the preparation of the Site for the office building and parking structure (the "Improvements") to be constructed on the Site; Second, to pay for the footings and foundations of the Improvements as well as toward the cost of offsite Public Improvements; and Third, the balance of such amount shall be used to pay for a portion of the cost of the parking structure to be constructed on the Site. · For fifteen (15) years the Agency will reimburse the Developer for Parking District fees in excess of $15,000 per year. · Construction Schedule: See attached. GW:sm:2219H ~ CC''IQ'' a ... .~& JIRO.7BC'1' Dav&lDPllDr s.-~K.wIJ"'- City Council Approval Design Review Application (60 Day Approval Process) Work Drawing Phase Submit Full Working Drawings to Building , Safety (60 Day Plan Check Process) Start of Construction (24 month Construction Phase) Notice of Completion of Project September 18, 1989 November 18, 1989 Six Months May 18, 1990 July 18, 1990 July 18, 1992 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 RESOLUTION NO. A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT, LTD. WHEREAS, the Redevelopment Agency of ~he City of San Bernardino (the "Agency") is authorized to conduct redevelopment activities within the Central City Redevelopment Project Survey Area (the "Survey Area"), which activities include the acquisition and conveyance of real property for private development; and WHEREAS, the Agency desires to enter into a Disposition and Development Agreement (the "Agreement") with One Sunset Court, Ltd., a California limited partnership, (the "Participant"), which Agreement provides for the acquisition and sale of the "Site," which is that certain portion of the Survey Area as set forth in the Agreement; and WHEREAS, the Agreement provides for the acquisition, upon satisfaction of applicable conditions, by Participant of certain real property as identified in the Agreement pursuant to the terms and conditions more particularly set forth in the Agreement; and WHEREAS, the Common Council of the City of San Bernardino and the Agency have conducted a duly noticed joint public hearing regarding the proposed acquisition and disposition of real property in accordance with California Health and Safety Code Sections 33431 and 33433; and WHEREAS, the staff report pertaining to the Agreement, DAB/ses October 6, 1989 1 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 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT, LTD. which has been on display prior to the joint public hearing in accordance with Section 33433 of the California Health and Safety Code, contains a detailed description of the provisions of the Agreement; NOW THEREFORE, the Mayor and Common Council do hereby resolve as follows: SECTION 1. Pursuant to the California Environmental Quality Act (CEQA), Public Resources Code Section 21090 and Section 15180 of Guidelines adopted pursuant thereto the Agreement is an activity pursuant to and in furtherance of the Central City Redevelopment Plan. SECTION 2. The Mayor and Common Council find and determine, based upon the testimony and information presented during the public hearing with respect to the Agreement that the consideration for the real property to be transferred to the Participant by deed is in compliance with and evaluated pursuant to Health and Safety Code Section 33433, and the value thereof is determined at the highest use permitted under the Redevelopment Plan, but that such consideration is necessary to secure the commitment of Participant to execute the Agreement, which Agreement will significantly benefit the Project Area and the community by alleviating blighting conditions, generating revenues, and providing for high-quality development activities to stimulate the economic enhancement of the Survey Area. DAB/ses October 6, 1989 2 15 16 17 18 19 20 21 22 1 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF 2 CERTAIN REAL PROPERTY PVRSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF 3 SAN BERNARDINO AND ONE SUNSET COURT, LTD. 4 5 SECTION 3. The Mayor and Common Council hereby approve the 6 Agreement and all of its provisions, inCluding without 7 8 9 10 limitation, the attachments therein, and authorize the Mayor and the City Clerk to execute all documents referenced in the Agreement and necessary to effectuate the provisions of the Agreement. 11 12 I HEREBY CERTIFY that the foregoing resolution was dUly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the , 1989, by the fOllowing vote, to wit: 13 day of 14 AYES: Council Members NAYS: ABSENT OR ABSTAIN: City Clerk The foregoing resolution is hereby approved this day of , 1989. 23 W.R. Holcomb, Mayor City of San Bernardino 25 24 Approved as to form and legal content: JAMES F. PENMAN, 26 City Attorney 27 28 BY:~t:. ./ DAB/ses October 6, 1989 3 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 RESOLUTION NO. A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE OF CERTAIN RgAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT, LTD. WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") is authorized to conduct redevelopment activities within the Central City Redevelopment Project Area (the "Project Area"), which activities include the acquisition and conveyance of real property for private development: and WHEREAS, the Agency desires to enter into a Disposition and Development Agreement (the "Agreement") with One Sunset Court, Ltd., a California limited partnership, (the "Participant"), which Agreement provides for the acquisition and sale of the "Site," which is that certain portion of the Project Area as set forth in the Agreement: and WHEREAS, the Agreement provides for the acquisition, upon satisfaction of applicable conditions, by Participant of certain real property as identified in the Agreement pursuant to the terms and conditions more particularly set forth in the Agreement: and WHEREAS, the Common Council of the City of San Bernardino and the Agency have conducted a duly noticed joint public hearing regarding the proposed acquisition and disposition of real property in accordance with California Health and Safety Code Sections 33431 and 33433: and WHEREAS, the staff report pertaining to the Agreement, which has been on display prior to the joint public hearing in DAB/ses October 6, 1989 1 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE 2 OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF 3 THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT, LTD. 4 5 6 7 8 9 accordance with Section 33433 of the California Health and Safety Code, contains a detailed description of the provisions of the Agreement; NOW THEREFORE, the Community Development Commission of the City of San Bernardino does hereby resolve as follows: 10 SECTION 1. Pursuant to the California Environmental 11 Quality Act (CEQA), Public Resources Code Section 21090 and 12 Section 15180 of Guidelines adopted pursuant thereto the Agreement is an activity pursuant to and in furtherance of the Central City Redevelopment Plan. SECTION 2. The Community Development Commission of the City of San Bernardino finds and determines, based upon the testimony and information presented during the public hearing with respect to the Agreement that the consideration for the real property to be transferred to the Participant by deed is in compliance with and evaluated pursuant to Health and Safety Code Section 33433, and the value thereof is determined at the highest use permitted under the Redevelopment Plan, but that such consideration is necessary to secure the commitment of Participant to execute the Agreement, which Agreement will significantly benefit the Commission, the Agency and the community by alleviating blighting conditions, generating revenues, and providing for high-quality development activities to stimulate the economic enhancement of the Project Area. DAB/ses October 6, 1989 2 12 13 14 15 16 17 18 19 20 21 22 1 A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE CONVEYANCE BY MEANS OF SALE 2 OF CERTAIN REAL PROPERTY PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF 3 THE CITY OF SAN BERNARDINO AND ONE SUNSET COURT, LTD. 4 5 6 SECTION 3. The Community Development Commission hereby approves the Agreement and all of its provisions, including without limitation, the attachments therein, and authorizes the 7 8 9 10 Chairman, the Executive Director and the Secretary to execute all documents referenced in the Agreement and necessary to effectuate the provisions of the Agreement. 11 I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Community Development Commission of the City of San Bernardino at a meeting thereof, held on the day of , 1989, by the following vote, to wit: AYES: Commissioners NAYS: ABSENT OR ABSTAIN: Secretary The foregoing resolution is hereby approved this day of , 1989. 23 Chairman of the Community Development Commission of the City 24 of San Bernardino Approved as to form 25 and legal content: 27 26 Agency Counsel 28 B~~<. ) DAB/ses October 6, 1989 3 DISPOSITION AND DEVELOPMENT AGREEMENT by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, AGENCY, and ( ONE SUNSET COURT, LTD., DEVELOPER TABLE OF CONTENTS I. 1~100] SUBJECT OF AGREEMENT A. 1~101] Background and Purpose of Agreement B. 1~102] The Redevelopment Plan C. 1~103] The Site D. f~104] Parties to the Agreement II. F. G. H. I. J. K. L. M. N. 1. 2. 3. A. 1~200] 1~201] f 9202 ] f9203] 19204] 19205] f9206] B. C. D. E. 19207] [9208] 1~209] 19210] 19211] 1~212] 1~213] [9214] 19105] 19106] f9107] The Agency The Developer Prohibition Against Change in Ownership, Management and Control of the Developer DISPOSITION OF THE SITE Purchase Price Disposition of the Site Agency Assistance Conditions Precedent Escrow Conveyance of Title and Delivery of Possession Form of Deed for the Disposition Conveyance Condition of Title Time for and Place of Delivery of Grant Deed Recordation of Documents Title Insurance Taxes and Assessments Condition of the Site Preliminary Work (i) I I I. D. A. [S300] [S301] Development of the Site by the Developer DEVELOPMENT OF THE SITE 1. r i302 ] 2. r i303 ] 3. [i304] Scope of Development Design Concept Drawings Construction Drawings and Related Documents 4. [S305] 5. I i306] 6. ri307] Cost of Construction Construction Schedule Bodily Injury and Property Damage Insurance 7. ri308] City and Other Governmental Agency Permits 8. r i 3 09 ] 9. [i310] 10. [S311] Rights of Access Local, State and Federal Laws Antidiscrimination During Construction B. r S312] [ S313 ] Taxes, Assessments, Encumbrances and Liens C. Prohibition Against Transfer of the Site, the Buildings or Structures Thereon and Assignment of Agreement IS314] Mortgage, Deed of Trust, Sale and Lease-Back Financing; Rights of Holders 1. IS315] No Encumbrances Except Mortgages, Deeds of Trust, or Sale and Lease-Back for Development 2. rS316] Holder Not Obligated to Construct Improvements 3. [S317] Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure 4. rS318] Failure of Holder to Complete Improvements (ii) IV V. D. VI. A. B. C. D. E. E. rS319] F. rS320] A. rS400] rS401] rS402] IS403] B. C. A. rSSOO] rSS01] B. rSS02] rSS03] C. rSS04] rS600] rS601] rS602] l. 2. 3. rS606] Ifi607] IS608] Right of the Agency to Satisfy Other Liens on the Site After Title Passes Certificate of Completion USE OF THE SITE Uses Rights of Access Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction GENERAL PROVISIONS Notices, Demands and Communications Among the Parties Conflicts of Interest; Nonliability Enforced Delay; Extension of Times of Performance Inspection of Books and Records DEFAULTS AND REMEDIES Defaults -- General Legal Actions IS603] IS604] lfi60S] Institution of Legal Actions Applicable Law Acceptance of Service of Process Rights and Remedies Are Cumulative Inaction Not a Waiver of Default Remedies and Rights of Termination Prior to Conveyance (iii) 1. 2. 3. 4. F. [~614J 1. 2. 3. VII. [97OOJ }>. . (~701J B. [ 9702 J ( VI I I. [98OOJ IX. [~900] Attachment No. 1 Attachment No. 2 Attachment No. 3 Attachment No. 4 Attachment No. 5 Attachment No. 6 (fi609J [fi610] [~611J [9612] [fi615] [9616J [fi617] Damages Prior to Conveyance Specific Performance Termination by the Developer Termination by the Agency Remedies of the Agency and the Developer for Default After Passage of Title and Prior to Completion of Construction Damages Action for Specific Performance Reentry and Revesting of Title in the Agency SPECIAL PROVISIONS Submission of Documents to the Agency for Approval Successors in Interest ENTIRE AGREEMENT, WAIVERS TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY ATTACHMENTS Site Map Legal Description of the Site Schedule of Performance Scope of Development Certificate of Completion Grant Deed (iv) DISPOSITION AND DEVELOPMENT AGREEMENT ~IS AGREEMENT is entered into by and between the REDEVEImENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Age~>> and ONE SUNSET COURT, LTD., a California limited partfh-,'-~,ip (the "Developer"). The Agency and the Developer herebJ' ~e as follows: 1. A.. If100] 111011 SUBJECT OF AGREEMENT Purpose of Agreement ( 2he purpose of this Agreement is to effectuate the Redeve~nt Plan for the Central City Redevelopment Project (the "hoject") by providing for the development of certain property situated within the Central City Project Area (the "Project. Area") of the Project. That certain real property to be developed pursuant to this Agreement (the "Site") is depicted on the "Site Map", which is attached hereto as Attachment No. 1 and incorporated herein by reference. This Agreement js entered into for the purpose of developing the Site and not for speculation in land holding. Completing the develop.eDt on the Site pursuant to this Agreement is in the vital and best interest of the City of San Bernardino, California (the 'lei ty") and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the Project has been undertaken. B. (S102] The Redevelopment Plan The Redevelopment Plan was approved and adopted by Ordinance No. 2649 and amended by Ordinance Nos. 3059 and MC559 of the Common Council of the City of San Bernardino; said ordinance and the Redevelopment Plan as so approved (the "Redevelopment Plan") are incorporated herein by reference. C. lSl03) The Site The Site is that certain real property designated on the Site Map (Attachment No.1) and described in the "Legal Description of the Site", which is attached hereto as Attachment No. 2 and is incorporated herein by this reference. The Site is held in fee by the Agency. D. ri104] Parties to the Agreement 1. [i10S] The Agency The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The principal office of the Agency is located at 300 North "D" Street, San Bernardino, California 92418. "Agency", as used in this Agreement, includes the Redevelopment Agency of the City of San Bernardino, and any assignee of or successor to its rights, powers and responsibilities. 2. rfi106] The Developer The Developer is One Sunset Court, Ltd., a California limited partnership. The General Partners of the partnership will be THE SIMCHOWITZ CORPORATION, a California corporation, and MERVYN SIMCHOWITZ, an individual. The principal office and mailing address of the Developer for purposes of this Agreement is One Sunset Court, Ltd., Attention: Mervyn Simchowitz, 22S West Hospitality Lane, Suite 100, San Bernardino, California 92408. 3. [fi107] Prohibition Against Change in Ownership, Management and Control of the Developer The qualifications and identity of the Developer are of particular concern to the City and the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Developer. No voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. The Developer shall not assign all or any part of this Agreement or any rights hereunder without the prior written approval of the Agency, which approval the Agency may grant, withhold or deny at its discretion. In the event of such transfer or assignment: (1) the assignee shall expressly' assume the obligations of the Developer pursuant to this Agreement in writing satisfactory to the Agency; (2) the original Developer shall remain fully responsible for the performance and liable for the obligations of the Developer pursuant to this Agreement. 08/08/89 S731n/2601/00 -2- In the absence of specific written agreement by the Agency, no such transfer, assignment or approval by the Agency shall be deemed to relieve the Developer or any other party from any obligation under this Agreement. All of the terms, covenants and conditions of this Agreement shall be binding upon and shall inure to the benefit of the Developer and the permitted successors and assigns of the Developer. Whenever the term "Developer" is used herein, such term shall include any other permitted successors and assigns as herein provided. Subject to the requirements of the operating covenant in Section 402, the restrictions of this Section 107 shall terminate and be of no further force and effect upon the issuance by the Agency of a Certificate of Completion in the form attached hereto as Attachment No. 5 as provided in Section 321 upon completion of the Developer Improvements described in Section 302 of this Agreement. 11. A. ri200] li201] DISPOSITION OF THE SITE Purchase Price i Subject to applicable terms and conditions of this Agreement, the Agency agrees to sell to the Developer and the Developer shall purchase from the Agency the Site for an amount equal to One Million Three Hundred Thousand Dollars (the "Purchase Price") due and payable concurrently with close of escrow: B. r i202 ] Disposition of the Site The Developer shall purchase from the Agency the Site and the Agency agrees to sell to the Developer the Site, in accordance with and subject to all of the terms, covenants and conditions of this Agreement. Thereupon, the Developer agrees to and shall develop the Site within the times, for the uses and subject to the terms, conditions and provisions as hereinafter provided. In addition to the consideration set forth in Sections 201 and 202, the Developer shall pay all of those costs, charges, fees and expenses as hereafter expressly provided to be paid by Developer pursuant to this Agreement and shall, except as herein provided, at its cost, provide all of the improvements required by this Agreement to be provided by the Developer (the "Developer Improvements"). 08/08/89 5731n/2601/00 -3- C. ( i203 J Agency Assistance 1. Basic Assistance Concurrently with the close of excrow, the Agency shall pay Developer One Million Nine Hundered Thousand Dollars ($1,900,000) (the "Basic Assistance"), which amount Developer shall apply as follows: a. First, to pay for demolition, clearance, excavation and soil preparation costs incurred by Developer in the preparation of the Site for the office bUilding and parking structure (the "Improvements") to be constructed on the Site; b. Second, to pay for the footings and foundations of the Improvements as well as toward the cost of offsite Public Improvements; and c. Third, the balance of such amount shall be used to pay for a portion of the cost of the parking structure to be constructed on the Site. 2. Parking District Fee For a period of fifteen years from the date of the issuance of a Certificate of Completion (Attachment No.5) the Agency shall reimburse the Developer for those Parking District Fees assessed against the Site in excess of Fifteen Thousand Dollars ($15,000). D. [9204J Conditions Precedent The fOlloWing are conditions precedent to the conveyance of the Site by the Agency to the Developer: 1. the Developer shall have paid or shall have caused to be paid to escrow all closing costs and charges which Developer is obligated to pay pursuant to this Agreement; 2. the Developer shall have provided proof of insurance (certificates) conforming to Section 307 of this Agreement; 3. the Developer shall have obtained all building and other permits needed to commence construction of the Developer Improvements; 4. the Developer provides proof reasonably satisfactory to the Agency or its designee that the Developer has obtained an irrevocable commitment of an institutional lender for interim (construction) financing which commitment requires that the Developer guaranty completion; 08/08/89 5731n/2601/00 -4- 5. the Agency shall execute and deliver to the Escrow Agent the Grant Deed (Attachment No.9). The foregoing conditions numbered 1 to 5, inclusive, as set forth in Section 202, shall collectively constitute the "Conditions Precedent." All of the Conditions Precedent shall be satisfied prior to the Disposition Conveyance. E. rS205] Escrow This Agreement constitutes the joint basic escrow instructions of the Agency the Developer for the conveyance of the Site by the Agency to the Developer (the "Conveyance"). The Agency and the Developer shall provide such additional escrow instructions as may be necessary, provided that such instructions shall be consistent with this Agreement. Ticor Title Insurance Company of California, or another escrow holder mutually acceptable to the parties (the "Escrow Agent") is hereby empowered to act under this Agreement, and the Escrow Agent shall carry out its duties as Escrow Agent hereunder. Escrow Agent shall open a separate escro~ to handle the delivery and recordation of documents provided for under this Agreement. ( Upon delivery of the Grant Deed (Attachment No.6), the Escrow Agent shall cause to be recorded the Grant Deed (Attachment No.6), when title can be vested in the Developer in accordance with the terms and provisions of this Agreement. The Developer shall accept conveyance of title and possession of the Site by the time set forth in the Schedule of Performance (Attachment No.3) subject to the satisfaction of the Conditions Precedent. The Escrow Agent shall cause to be paid any applicable transfer tax with funds provided by the Agency. The Developer and the Agency shall pay in escrow to the Escrow Agent the following fees, charges and costs with respect to the Conveyance promptly after the Escrow Agent has notified the Developer and the Agency of the amount of such fees, charges and costs, but not earlier than ten (10) days prior to the scheduled date for closing the Escrow: a. The premium for the title insurance policy to be paid by the Agency as set forth in Section 209 of this Agreement; b. Recording fees to be paid by Developer; c. Notary fees (evenly divided between Agency and Developer); d. Any State, County or City documentary stamps (Agency) ; 08/08/89 5731n/2601/00 -5- e. Any transfer tax (Agency); and f. Ad valorem taxes, if any, upon the Site for any time prior to transfer of title (Agency). The Escrow Agent is authorized to: a. Pay, and charge the Agency and the Developer, respectively, for any fees, charges and costs payable under this Section 205 of this Agreement. Before such payments or charges are made, the Escrow Agent shall notify the Agency, and the Developer of the fees, charges and costs necessary to clear title and close the Escrow. b. Disburse funds and deliver the deed and other documents to the parties entitled thereto when the conditions of this Escrow have been fulfilled by the Agency and the Developer. c. Record any instruments delivered through this Escrow, if necessary or proper, to vest title in the Developer in accordance with the terms and provisions of this Agreement. All funds received in this Escrow shall be deposited by the Escrow Agent with other escrow funds of the Escrow Agent in a general escrow account or accounts with any state or national bank doing business in the State of California. Such funds may be transferred to any other general escrow account or accounts. All disbursements shall be made by check of the Escrow Agent. All adjustments are to be made on the basis of a thirty (30) day month. All interest earned shall be credited to the benefit of the party depositing the corresponding funds. If the Escrow is not in condition to close on or before the time for conveyance established in Section 206 of this Agreement, any party who then shall have fully performed the acts to be performed before the conveyance of title may, in writing, demand from the Escrow Agent the return of its money, papers or documents deposited with the Escrow Agent. No demand for return shall be recognized until twenty (20) days after the Escrow Agent shall have mailed copies of such demand to the other party or parties at the address of its or their principal place or places of business. Objections, if any, shall be raised by written notice to the Escrow Agent and to the other party within the twenty (20) day period, in which event the Escrow Agent is authorized to hold all money, papers and documents with respect to the Site until instructed by a mutual agreement of the parties or by a court of competent jurisdiction. If no written reply to an objection is delivered to the Escrow Agent within said twenty (20) day period, to any demand, then the Escrow Agent shall comply with such original demand and cancel escrow forthwith. If such demand and reply are complied with within such twenty (20) day period, Escrow shall close in accordance with the terms hereinabove set forth. 08/08/89 5731n/2601jOO -6- In the event of an objection to any demand to release money, papers or documents, the Escrow Agent shall not be obligated to return any such money, papers or documents except upon the written instructions of the Agency and the Developer or until the party entitled thereto has been determined by a final decision of a court of competent jurisdiction. Any amendment to these Escrow instructions shall be in writing and signed by the Agency and the Developer. At the time of any amendment, the Escrow Agent shall agree to carry out its duties as Escrow Agent under such amendment. All communications from the Escrow Agent to the Agency or the Developer shall be directed to the addresses and in the manner established in Section 501 of this Agreement for notices, demands and communications between the Agency and the Developer. The liability of the Escrow Agent under this Agreement, insofar as it acts in the capacity of escrow holder and without limitation to its responsibility or liability insofar as it may act in another capacity, is limited to performance of the obligations imposed upon it under Sections 203 to 209, both inclusive, of this Agreement. F. (~206] Conveyance of Title and Delivery of Possess~on Subject to any extensions of time mutually agreed upon between the Agency and the Developer, the Conveyance shall be completed on or prior to the date specified therefor in the Schedule of Performance (Attachment No.3). Said Schedule of Performance (Attachment No.3) is subject to revision from time to time as mutually agreed upon in writing between the Developer and the Agency. The Developer shall accept title and possession on or before the date established in the Schedule of Performance (Attachment No.3) for the Conveyance provided all conditions to performance by Developer have been satisfied. G. (~207] Form of Deed for the Disposition Conveyance Subject to the requirements of Section 201, and all applicable terms and conditions of this Agreement, and subject to acquisition of the Site by the Agency, the Agency shall convey to the Developer title to the Site in the co~dition provided in Section 206 of this Agreement by grant deed in the form of the Grant Deed (Attachment No.6). 08/08/89 5731n/2601/00 -7- H. [i208J Condition of Title The Agency shall convey to the Developer fee simple merchantable title to the Site, excepting therefrom mineral rights, free and clear of all recorded or unrecorded liens, encumbrances, covenants, assessments, easements, leases and taxes, except for covenants and easements of record at the time of execution of this Agreement which the Developer has approved in writing, the Redevelopment Plan, the provisions contained in the Grant Deed (Attachment No.6) and such other encumbrances to which the Developer may consent. The condition of title shall be compatible with and not preclude development of the Developer Improvements, and the Developer shall review easements prior to and as a condition of closing consistent with the foregoing. The parties shall act reasonably in evaluation of any encumbrances and shall act diligently and promptly to conform the condition of title to that required for the Developer to proceed with development of the Developer Improvements. In no event shall the Developer be required to accept title subject to a deed of trust or mortgage or any prior Disposition and Development Agreement or other agreement between the Agency and Frank Dominquez. 1. [i209) Time for and Place of Delivery of Agency Deed ( Subject to any mutually agreed upon extension of time, the Agency shall deposit the Grant Deed (Attachment No.9) with the Escrow Agent on or before the date established for the date of the Conveyance pursuant to the Sehedule of Performance (Attachment No.3). J. [i210J Recordation of Documents The Escrow Agent shall file among the land records in the Office of the County Recorder for San Bernardino County those instruments enumerated in Section 205. K. [i211) Title Insurance Concurrently with recordation of the Grant Deed (Attachment No.6), Ticor Title Insurance Company of California (the "Title Company") shall provide and deliver to the Developer a title insurance policy issued by the Title Company. insuring that the title to the Site is vested in the Developer in the condition required by Section 208 of this Agreement. The amount of such title insurance policy shall be One Million Three Hundred Thousand Dollars ($1,300,000); provided that the Agency shall bear that portion of the premium for such policy as would be applicable for a CLTA policy based upon the Purchase Price. The Title Company shall provide the Agency with a copy of such title policy. 08/08/89 5731n/2601/00 -8- L. [~212J Taxes and Assessments Ad valorem taxes and assessments, if any, on the Site, levied, assessed or imposed for any period commencing prior to the Conveyance shall be the responsibility of the Agency, and shall be paid through escrow. Any of such taxes imposed after the Conveyance shall be borne by the Developer. M. [~213J Condition of the Site The Developer assumes all responsibility for any demolition and clearance of each phase of the Site as necessary for the provision of the Developer Improvements and the Developer assumes all responsibility for the suitability of the Site, for the operation of a professional office and associated commercial center (as hereinafter defined in Section 401 of this Agreement). The Agency makes no representations or warranties concerning the Site, its suitability for the use intended by the Developer, or the surface or subsurface conditions of the Site. In the event Developer completes its acquisition of the Site and if the soil or other surface or subsurface conditions of the Site are not in all respects entirely suitable for the use or uses to which the Site will be put as of the conveyance of the Site, then it is the responsibility and obligation of Developer (and such third parties, if any, as may be legally responsible for the removal of hazardous substances) and not th~ Agency to take such action as may be necessary to place the Site in a condition entirely suitable for the commencement, development and completion of the Developer Improvements. The Developer shall defend, indemnify and hold harmless the Agency for any claim related to or arising out of hazardous waste contamination occurring after transfer of title to Developer which claim against the Agency is based upon the fact that the Agency held title to the property. N. 1~214J Preliminary Work Any preliminary work undertaken on the Site by Developer prior to conveyance of title thereto shall be done only after obtaining the written consent of the Agency, and at the sole expense of Developer. The Developer shall save and protect the Agency and the City against any claims resulting from all preliminary work, access or use of the Site undertaken by the Developer pursuant to this Section 214. Any preliminary work by the Developer shall be undertaken only after securing any and all necessary permits from the appropriate governmental agencies. 08/08/89 5731n/2601/00 -9- I I I . A. [~300] [~301] DEVELOPMENT OF THE SITE Development of the Site by the Developer 1. [~302] Scope of Development The Site shall be developed as provided in the Scope of Development, which is attached hereto as Attachment No. 4 and is incorporated herein. The Developer Improvements shall consist of an office building and related commercial facilities containing not less than One Hundred Fifty-Five Thousand Five Hundred (155,500) square feet. The development shall include any plans and specifications submitted to Agency or the City for approval, and shall incorporate or show compliance with all applicable mitigation measures. By the time set forth in the Schedule of Performance (Attachment No.3) for completion of the Developer Improvements, the Developer shall have completed construction of improvements on the Site. 2. [~303] DeSign Concept Drawings By the respective times set forth therefor in the Schedule of Performance (Attachment No.3), the Developer shall prepare and submit to the City for its approval Design Concept Drawings and related documents containing the overall plan for development of the Site. The Site shall be developed as established in this Agreement and such documents except as changes may be mutually agreed upon between the Developer and the Agency. Any such changes shall be within the limitations of the Scope of the Development (Attachment No.4). 3. [~304] Construction Drawings and Related Documents By the time set forth therefor in the Schedule of Performance (Attachment No.3), the Developer shall prepare and submit to the City, construction drawings, landscape plan and related documents for development of the Site for architectural review and written approval. The landscaping and finish grading plans shall be prepared by a professional landscape architect who may be the same firm as the Developer's architect. During the preparation of all drawings and plans, staff of the Agency and the Developer shall hold regular progress meetings to coordinate the preparation of, submission 08/08/89 5731n/2601/00 -10- to, and review of drawings, plans and related documents. The staff of Agency and the Developer shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to the Agency can receive prompt and speedy consideration. 4. 19305] Cost of Construction Except as herein provided, the cost of developing the Site and constructing all improvements thereon shall be borne by the Developer. 5. 19306] Construction Schedule The Developer shall promptly begin and thereafter diligently prosecute to completion the construction of the Developer Improvements and the development of the Site. The Developer shall begin and complete all construction and development within the times specified in the Schedule of Performance (Attachment No.3). The Developer shall strictly conform to all time requirements and limitations set forth in this Agreement. 6. 19307] Bodily Injury and Property Damage Insurance { ! The Developer shall defend, assume all responsibility for and hold the Agency, the City, and their respective officers and employees, harmless from all claims or suits for, and damages to, property and injuries to persons, inclUding accidental death (including attorneys fees and costs), which may be caused by any of the Developer's activities under this Agreement, to the extent the activities of the Developer are performed negligently, constitute intentional misconduct, or are breach of the obligations of the Developer under this Agreement, whether such activities or performance thereof be by the Developer or anyone directly or indirectly employed or contracted with by the Developer and whether such damage shall accrue or be discovered before or after termination of this Agreement. The Developer shall take out and maintain until (i) the issuance of a Certificate of Completion for all of the Developer Improvements pursuant to Section 320 of this Agreement (if an "occurrence" policy is obtained or (ii) the second anniversary of the completion of the Developer Improvements (if a "claims made" policy is obtained, a comprehensive liability policy in the amount of One Million Dollars ($1,000,000) combined Single limit policy, including contractual liability, as shall protect the Developer, City and Agency from claims for such damages. 08/08/89 5731n/2601/00 -11- The Developer shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier on a form of the insurance carrier setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the City and the Agency and their respective offices, agents, and employees as additional insures under the policy. The certificate by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify City and the Agency of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Developer shall be primary insurance and not contributing with any insurance maintained by the Agency or City, and the policy shall contain such an endorsement. The insurance policy or the certificate of insurance shall contain a waiver of subrogation for the benefit of the City and the Agency. The required certificate shall be furnished by the Developer at the time set forth therefor in the Schedule of Performance (Attachment No.3). The Developer shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that any contractor with whom it has contracted for the performance of work on the Site or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. 7. 19308J Citv and Other Governmental Agency Permits Before commencement of construction or development of any buildings, structures or other works of improvement upon the Site, the Developer shall, at its own expense, secure or cause to be secured any and all permits which may be required by the City or any other governmental agency affected by such construction, development or work. 8. (9309) Rights of Access For the purpose of assuring compliance with this Agreement, representatives of the Agency and the City shall have the right of access to the Site, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement including, but not limited to, the inspection of the work being performed in constructing the improvements, so long as they comply with all safety rules and have given prior notice to the Developer. Such representatives of the Agency or of the City shall be those who are so identified in writing by the Executive Director of the 08/08/89 5731n/2601/00 -12- Agency. The Agency shall hold the Developer harmless from any bodily injury or related damages arising out of the activities of the Agency and the City as referred to in this Section 309. This Section 309 shall not be deemed to diminish or limit any rights which the City or the Agency may have by operation of law irrespective of this Agreement. 9. rfi310] Local, State and Federal Laws The Developer shall carry out the construction of the improvements in conformity with all applicable laws, including all applicable federal and state labor standards; provided, however, Developer and its contractors, successors, assigns, transferees and lessees are not waiving their rights to contest any such laws, rules or standards. 10. [9311J Antidiscrimination During Construction The Developer, for itself and its successors and assigns, agrees that in the construction of the improvements provided for in this Agreement, the Developer shall not discriminate against any employee or applicant for employment because of race, color, creed, religion, age, sex, marital status, handicap, national origin or ancestry. E. r fi312] Taxes, Assessments, Encumbrances and Liens ( ( The Developer shall pay when due all ad valorem taxes and assessments on the Site and levied subsequent to the acquisition of title heretofore by the Developer. Prior to issuance of a Certificate of Completion with respect to all of the Developer Improvements pursuant to this Agreement, the Developer shall not place or allow to be placed on the Site or any part thereof any mortgage, trust deed, encumbrance or lien other than as expressly allowed by this Agreement. The Developer shall remove or have removed any levy or attachment made on any of the Site or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to a sale thereunder. C. [9313] Prohibition Against Transfer of the Site, the Buildings or Structures Thereon and Assignment of Agreement Prior to the issuance by the Agency of a Certificate of Completion as to any building or structure, the Developer shall not, except as permitted by this Agreement, without the prior written approval of the Agency (which may be given by the Executive Director of the Agency on behalf of the Agency), make any total or partial sale, transfer, conveyance, assignment or lease of the whole or any part of the Site or of the buildings 08/08/89 5731n/2601/00 -13- or structures on the Site. This prohibition shall not be deemed to prevent a transfer expressly permitted pursuant to Section 108 of this Agreement, or the granting of temporary or permanent easements or permits to facilitate the development of the Site. D. 19314] Mortgage, Deed of Trust, Sale and Lease-Back Financing; Rights of Holders 1. 19315] No Encumbrances Except Mortgages, Deeds of Trust, or Sale and Lease-Back for Development Mortgages, deeds of trust and sales and leases-back are to be permitted before completion of the construction of the improvements, but only for the purpose of securing loans of funds to be used for financing the acquisition of the Site, the construction of improvements on the Site, and any other purposes necessary and appropriate in connection with development under this Agreement, and only if the instruments effecting such mortgages, deeds of trust and sales and leases-back contain the provisions of Sections 319 and 320 of this Agreement. The Developer shall notify the Agency in advance of any mortgage, deed of trust or sale and lease-back financing, if the Developer proposes to enter into the same before completion of the construction of the improvements on the Site. The words "mortgage" and "trust deed" as used hereinafter shall include sale and lease-back. The Developer shall not enter into any such conveyance for financing without the prior written approval of the Agency, which approval the Agency agrees to give if any such conveyance for financing is given to a bank, savings and loan association, or other similar lending institution and such lender shall be deemed approved unless rejected in writing by the Agency within fifteen (15) days after written notice thereof is received by the Agency. The form of approval by the Agency shall be a writing which references this Section 315, executed by the Executive Director of the Agency. The Agency, by its Executive Director, agrees to approve financing by a recognized commercial lender in an amount reasonably determined to represent the Developer's cost to construct the Developer Improvements so long as the loan documents (i) contain the provisions of Section 318 and 319 of this Agreement and (ii) provide that, in the event of foreclosure by the lender (or acceptance of a deed in lieu of foreclosure) the lender would take the Site free of this Agreement (except for Section 318) but subject to the terms of the Grant Deed (Attachment No.9) which do not terminate upon recordation of the Certificate of Completion. 08/08/89 5731n/2601/00 -14- 2. 1~316J Holder Not Obligated to Construct Improvements The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct or complete the improvements or to guarantee such construction or completion; nor shall any covenant or any other provision in the deed for the Site be construed so to obligate such holder. Nothing in this Agreement shall be deemed to construe, permit or authorize any such holder to devote the Site to any uses or to construct any improvements thereon, other than those uses or improvements provided for or authorized by the Redevelopment Plan. 3. 19317J Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure With respect to any mortgage or deed of trust granted by Developer as provided herein, whenever the Agency shall deliver any notice or demand to Developer with respect to any breach or default by the Developer in completion of construction of the improvements, the Agency shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, within thirty (30) days after the receipt of the notice, to cure or remedy or commence to cure or remedy any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage. Any such holder shall be entitled, upon compliance with the requirements of Section 320 of this Agreement, to a Certificate of Completion (as therein defined). 4. 19318J Failure of Holder to Complete Improvements In any case where, thirty (30) days after default by the Developer in completion of construction of improvements under this Agreement, the holder of any mortgage or deed of trust creating a lien or encumbrance upon the Site or any part thereof has not elected to construct the Developer Improvements, or if it has elected to construct the Developer Improvements has not proceeded diligently with construction, the Agency may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. 08/08/89 5731n/2601/00 -15- ~P~9] Right of the Agency to Satisfy Other Liens on the Site After Title Passes ~or to the completion of construction of the ~rovements, and after the Developer has had written has failed after a reasonable time, but in any event fifteen (15) days, to challenge, cure, adequately # or satisfy any liens or encumbrances on the Site t otherwise permitted under this Agreement, the have the right but no obligation to satisfy any or encumbrances. ~~. l!l320] Certificate of Completion ~ Executive Director of the Agency, without further the City or the Agency and as a ministerial act shall execute, and deliver the Certificate of and Release in the form attached hereto as Bo. S after final inspection of the Developer SUch Certificate of Completion shall be a ,determination of satisfactory completion of the i~on required by this Agreement upon the Site and the :~ of Completion shall so state.. The Agency may also .~~ Developer with a Certificate of Completion for ~~~~ the 1mprovements upon the Site as they are properly ~~aDd ready to use if the Developer is not in default 1J~ Aqreement. After r~cordation of such Certif~cate of ..~ any party then ownlng or thereafter purchaslng, ;I~~l~ otherwise ac~iring any interest therein.s~a~l not .. l-ctf s~ch ~wnershl~, ~u:chase, leas~ or acqulsl tlon), ~. ebl19&tlon or llablllty under thlS Agreement except . .... party ahall be bound by any covenants contained in ~~'Deed, which by their terms survive recordation of the ~ of Completion. . Certificate of Completion of construction for the ~~vement and development of the Site shall be in such ,.. ... __ permi tit to be recorded in the Recorder's Office of SIa ~ino County. If the Agency refuses or fails to furnish a ~ti~te of Completion for the Site, or part thereof, after -t~ ~est from the Developer, the Agency shall, within ~ tv ()O) days of written request therefor, provide the l' ~ r vi th a written statement of the reasons the Agency Ie~::-~ failed to furnish a Certificate of Completion. The ~ ~.nt ahall also contain Agency's opinion of the actions · at t~e peveloper must take to obtain a Certificate of lba let1on. If the reason for such refusal is confined to the ~dilte availapility of specific items of materials for t:::SClpin;, the Agency will issue its Certificate of os /08/' 9 S731n/Z601/00 ...16.. Completion upon the posting of a bond by the Developer with the Agency in an amount representing a fair value of the work not yet completed. If the Agency shall have failed to provide such written statement within said thirty (30) day period. the Developer shall be deemed entitled to the Certificate of Completion. Such Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of any mortgage, or any insurer of a mortgage securing money loaned to finance the improvements, or any part thereof. Such Certificate of Completion is not a notice of completion as referred to in the California Civil Code, Section 3093. II!. A. r~400J r~40lJ USE OF THE SITE Uses The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Site or any part thereof, that during construction and thereafter, the Developer and such successors and such assignees, shall devote the Site to the uses specified in the Redevelopment Plan as may be amended from time to time for the periods of time specified therein. The Developer further covenants and warrants that the Developer shall develop on the Site a multistory commercial and professional office complex consisting of not less than One Hundred and Fifty-Five Thousand (155,000) square feet gross leaseable area. The Developer covenants to develop on the Site in conformity with all applicable laws. The foregoing covenants shall run with the land as provided in the Grant Deed. Developer and its successors-in-interest shall be liable for compliance with the foregoing, only so long as they own the Site or any portion thereof. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, handicap, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land. Developer and its successors-in-interest shall be liable for compliance with the foregoing, only so long as they own the Site or any portion thereof. 08/08/89 5731n/2601/00 -17- The Developer shall refrain from restricting the rental, sale or lease of the Site on the basis of race, color, creed, religion, sex, marital status, handicap, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or non-segregation clauses: 1. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, age, handicap, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 2. In leases: "The less~e herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, handicap, age, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." 08/08/89 5731n/2601/00 -18- 3. In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, age, handicap, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." B. [~402] Rights of Access The Agency, for itself and for the City and other public agencies, at their sole risk and expense, reserves during the term of this Agreement the right to enter the Site or any part thereof at all reasonable times for the purpose of construction, reconstruction, main~enance, repair or service of any public improvements or public facilities located on the Site. Any such entry shall be made only after reasonable notice to the Developer, and Agency shall indemnify and hold the Developer harmless from any costs, claims, damages or liabilities pertaining to any entry. This Section 403 shall not be deemed to diminish or limit any rights which the City or the Agency may have by operation of law irrespective of this Agreement. C. r~403] Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction The covenants established in this Agreement and the deeds shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, as to those covenants which are for its benefit. The covenants contained in this Agreement shall remain in effect until the issuance of a Certificate of Completion for all of the Developer Improvements except for the folloWing: ( i ) the covenants pertaining to use of the Site as set forth in Section 401 (but not including nondiscrimination) shall remain in effect until the termination of the Redevelopment Plan; 08/08/89 5731n/2601/00 -19- (ii) the covenants against discrimination as set forth in Section 401 shall remain in perpetuity. Covenants contained in documents recorded pursuant to this Agreement shall remain in effect as therein set forth. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site or in the Project Area. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. v. A. I~500J [~501J GENERAL PROVISIONS Notices, Demands and Communications Among the Parties Written notices, demands and communications between the Agency and the Developer shall be sufficiently given if delivered by hand (and a receipt therefor is obtained or is refused to be given) or dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency, and the Developer. Such written notices, demands and communications may be sent in the same manner to such other addresses as such party may from time to time deSignate by mail as provided in this Section 401. 'Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the tenth day from the date it is postmark~d if delivered by registered or certified mail. B. [~502J Conflicts of Interest; Nonliability No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any 08/08/89 5731n/2601/00 -20- corporation, partnership or association in which he is directly or indirectly interested. No member, official or employee of the Agency shall be personally liable to the Developer or any successor in interest, in the event of any default or breach by the Agency or for any amount which may become due to the Developer or successor or on any obligations under the terms of this Agreement. The Developer represents and warrants that, except for the Purchase Price, it has not paid or given, and shall not pay or give, any third party any money or other consideration for obtaining this Agreement. C. fiS03] Enforced Delay; Extension of Times of Performance ( In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; acts or omissions of another party; acts or failures to act of the City of San Bernardino or any other public or governmental Agency or entity (other than the acts or failures to act of the Agency which shall not excuse performance by the Agency); or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Developer. The Developer is not entitled pursuant to this Section 403 to an extension of time to perform because of past, present, or future difficulty in obtaining suitable temporary or permanent financing for the acquisition or development of the Site. D. riS04] Inspection of Books and Records The Agency has the right at all reasonable times to inspect the books and records of the Developer pertaining to the Site for the purposes of this Agreement. Any such persons 08/08/89 S731n/2601/00 -21- examining the books and records of the Developer on behalf of the Agency shall first be identified in writing by the Agency. The Developer has the right at all reasonable times to inspect the public records of the Agency pertaining to the Site as pertinent to the purposes of the Agreement. VI. A. [i600J [~601] DEFAULTS AND REMEDIES Defaults -- General Subject to the extensions of time set forth in Section 503, failure or delay by any party to perform any term or provision of this Agreement constitutes a default under this Agreement. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with diligence. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, and except for Sections 317 and 319 of this Agreement, the injured party may not institute proceedings against the party in default until thirty (30) days after giving such notice. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. B. 1~602] Legal Actions 1. li603] Institution of Legal Actions In addition to any other rights or remedies and subject to the restrictions in Section 601, the Agency or the Developer may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Any legal actions initiated pursuant to this Agreement or otherwise with respect to its subject matter must be instituted in the Superior Court of the County of San Bernardino, State of California, in an appropriate municipal court in that county, or in the Federal District Court in the Central District of California. 2. 1~604] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 08/08/89 5731n/2601/00 -22- 3. (9605] Acceptance of Service of Process In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director or in such other manner as may be provided by law. In the event that any legal action is commenced by any party against the Developer or in such other manner as may be provided by law, service of process on such party shall be made by personal service upon the Developer, and shall be valid whether made within or without the State of California. C. 19606] Rights and Remedies Are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by any other party. D. [9607] Inaction Not a Waiver of Default ( I I Any failures or delays by any party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive any party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. E. (~608] Remedies and Rights of Termination Prior to Conveyance 1 . 1~609] Damages Prior to Conveyance If any party defaults with regard to any of the provisions of this Agreement, the non-defaulting party shall serve written notice of such default upon the other parties. If the default is not cured or commenced to be cured by the defaulting party within thirty (30) days after service of the notice of default (or within such other period as is set forth herein), the defaulting party shall be liable to the other party or parties for any damages caused by such default. 2. (9610] Specific Performance If any party defaults under any of the provisions of this Agreement, a non-defaulting party shall serve written notice of such default upon the defaulting party (with a copy to the other party). If the default is not cured by the 08/08/89 5731n/2601/00 -23- defaulting party within thirty (30) days of service of the notice of default, or such other time limit as may be set forth herein with respect to such default, any non-defaulting party at its option may thereafter (but not before) commence an action for specific performance of terms of this Agreement. 3. r~611] Termination by the Developer In the event that: (a) the Conditions Precedent are not satisfied by the time established therefor in the Schedule of Performance (Attachment No.3), and such failure is not caused or contributed to by the Developer; or (b) the Agency does not tender conveyance of the Site or possession thereof, in the manner and condition, and by the date provided in this Agreement, and any such failure shall not be cured within thirty (30) days after the date of written demand therefor by the Developer; then this Agreement may, at the option of the Developer, be terminated by written notice thereof to the Agency. Upon such termination, neither the Agency nor the Developer shall have any further rights against or liability to the other with respect to the Site. In the event of the failure or default by the Agency with respect to any event set forth in Section 611(a) or 611(b) above, said right of termination provided in Section 611 shall be Developer's sole and exclusive remedy with respect to the Agency. Upon termination of this Agreement, all monies or documents deposited by any party into escrow shall be returned to the party making such deposit. 5. (~612) Termination by the Agency In the event that prior to the Conveyance: (a) The Developer (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein or in the Site in violation of this Agreement; or (b) There is a change in the ownership of the Developer contrary to the provisions of Section 107 hereof; or (c) The Developer does not submit certificates of insurance, construction plans, drawings and related documents as required by this Agreement, in the manner and by the dates respectively provided in this Agreement therefor any such default or failure shall not be cured within thirty (30) days after the date of written demand therefor by the Agency; or 08/08/89 5731n/2601/00 -24- (d) Any Conditions Precedent are not satisfied by the time established therefor in the Schedule of Performance (Attachment No.3); then this Agreement may at the option of the Agency, be terminated by the Agency by written notice thereof to the Developer. Upon such termination, neither the Agency nor the Developer shall have any further rights against or liability to the other. Upon termination of this Agreement, all monies or documents deposited by any party into escrow shall be returned to the party making such deposit. F. [~614] Remedies of the Agency and the Developer for Default After Passage of Title and Prior to Completion of Construction 1 . [~615] Damages After the Conveyance and prior to the recordation of a Certificate of Completion with respect to all of the Developer Improvements, if either the Developer or the Agency defaults with regard to any of the provisions of this Agreement, the non-defaulting party shall serve written notice of such default upon the defaulting party with a copy to the remaining party. If the default is not cured by the defaulting party within thirty (30) days after service of the notice of default, the defaulting party shall be liable to the other for any damages caused by such default. 2. [~616] Action for Specific Performance If either the Developer or the Agency defaults under any of the provisions of this Agreement after the conveyance of title and prior to the recordation of a Certificate of Completion for the improvements and development to be made thereon, the non-defaulting party shall serve written notice of such default upon the defaulting party with a copy to the remaining party. If the default is not commenced to be cured by the defaulting party within thirty (30) days after service of the notice of default, the non-defaulting party at its option may institute an action for specific performance of the terms of this Agreement. 3. [~617] Reentry and Revesting of Title in the . Agency The Agency has the additional right, at its option, to reenter and take possession of the Site, with all improvements thereon, and terminate and revest in the Agency the estate conveyed to the Developer if after conveyance of title and prior to the issuance of the Certificate of Completion pursuant 08/08/89 5731n/2601/00 -25- to Section 320, the Developer (or its successors in interest) shall: 1. Fail, within ninety (90) days after the date of recordation of the Grant Deed (Attachment No.9), to commence construction on the Site of the Developer Improvements in conformity with plans and specifications which are approved in the manner required by this Agreement; or 2. Abandon or sUbstantially suspend construction of the Developer Improvements for a period of forty-five (45) days after written notice thereof from the Agency; or 3. Fail to complete construction of the Developer Improvements to the condition required for the issuance of a Certificate of Completion pursuant to Section 320 within three hundred sixty (360) days after the date of commencement of construction; or 4. Transfer or suffer any involuntary transfer of the Site in violation of this Agreement. ( All time periods stated in this Article 3, Paragraphs 1 and 2 above and elsewhere in this Agreement are subject to extension by force majeure as more particularly provided in Section 503 above. Such right to reenter, terminate and revest shall be subject to and be limited by and shall not defeat, render invalid or limit: 1. Any mortgage or deed of trust permitted by this Agreement; or 2. Any rights or interests provided in this Agreement for the protection of the holders of such mortgages or deed of trust. Upon the revesting in the Agency of title to the Site as provided in this Section 617, the Agency shall, pursuant t~ its responsibilities under state law, use its best efforts to' resell the Site as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan, as it may be amended, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligation or making or completing the improvements, or such other improvements in their stead as shall be satisfactory to the Agency and in 08/08/89 5731n/2601/00 -26- accordance with the uses specified for such Site or part thereof in the Redevelopment Plan. Upon such resale of the Site, the proceeds thereof shall be applied: 1. First, to satisfy the loan of the construction lender, then to reimburse the Agency, on its own behalf or on behalf of the City, for all costs and expenses incurred by the Agency including, but not limited to, any expenditures by the Agency or the City in connection with the recapture, management and resale of the Site or part thereof (but less any income derived by the Agency from the Site or part thereof in connection with such management); all taxes, assessments and water or sewer charges with respect to the Site or part thereof which the Developer has not paid (or, in the event the Site is exempt from taxation or assessment or such charges during the period of ownership thereof by the Agency, an amount, if paid, equal to such taxes, assessments, or charges as would have been payable if the Site were not so exempt); any payments made or necessary to be made to discharge any encumbrances or liens existing on the Site or part thereof at the time of revesting of title thereto in the Agency, or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Site, or part thereof; and any amounts otherwise owing the Agency, the Developer and their successors or transferees; and 2. Second, to reimburse the Developer or their successor or transferee (if applicable), up to the amount equal to the sum of (a) the cost incurred for the acquisition and development of the Site and for the improvements existing on the Site at the time of the entry and repossession, less (b) any gains or income withdrawn or made by the Developer from the Site or the improvements thereon. Any balance remaining after such reimbursements shall be retained by the Agency as its property. 08/08/89 5731n/2601/00 -27- The rights established in this Section 617 are to be interpreted in light of the fact that the Site was conveyed to the Developer for development, and not for speculation in undeveloped land. VII. A. [5700] (5701) SPECIAL PROVISIONS Submission of Documents to the Agency for Approval. Whenever this Agreement requires the Developer to submit plans, drawings or other documents to the Agency for approval, which shall be deemed approved if not acted on by the Agency within the specified time, said plans, drawings or other documents shall be accompanied by a letter stating that they are being submitted and will be deemed approved unless rejected by the Agency within the stated time. If there is not time specified herein for such Agency action, the Developer may submit a letter requiring Agency approval or rejection of documents within thirty (30) days after submission to the Agency or such documents shall be deemed approved. B. [5702] Successors In Interest The terms, covenants, conditions and restrictions of this Agreement shall extend to and shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the Developer. VIII. [5800] ENTIRE AGREEMENT, WAIVERS This Agreement is executed in five (5) duplicate originals, each of which is deemed to be an original. This Agreement includes pages 1 through 33 and Attachments 1 through 9, which constitutes the entire understanding and agreement of the parties. No private entity shall be deemed to be a third party beneficiary with respect to any provisions of this Agreement. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements among the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of the Agency and the Developer, and all amendments hereto must be in writing by the appropriate authorities of the Agency and the Developer. 08/08/89 5731n/2601/00 -28- Each individual signing below represents and warrants that he has the authority to execute this Agreement on behalf of and bind the party he purports to represent. IX. (~900] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY This Agreement, when executed by the Developer and delivered to the Agency, must be authorized, executed and delivered by the Agency on or before thirty (30) days after signing and delivery of this Agreement by the Developer or this Agreement shall be void, except to the extent that the Developer shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement. The date of this Agreement shall be the date when it shall have been signed by the Agency. IN WITNESS WHEREOF, the Agency, the Developer have signed this Agreement on the respective dates set forth below. "Agency" REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO '( By: Executive Director ATTEST: Secre'tary APPROVED AS TO PROGRAM: By: APPROVED AS TO FORM AND LEGAL CONTENT: S'tradling, Yocca, Carlson & Rauth, Special Counsel to the Agency ~the Agency 08/08/89 5731n/2601jOO -29- Dated: Dated: \, I 08/08/89 5731n/2601/00 "Developer" ONE SUNSET COURT, LTD., a California limited partnership By: Mervyn Simchowitz, an individual General Partner THE SIMCHOWITZ CORPORATION, a California corporation, General Partner By: Its: -30- STATE OF CALIFORNIA ) ) ss. ) COUNTY OF SAN BERNARDINO On this day of I in the year , before me, the undersigned, a Notary Public in and for the State of California, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument as the Executive Director of the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO and acknowledged to me said Agency executed it. Signature of Notary Public ( 08/08/89 5731n/2601/00 STATE OF CALIFORNIA ) ) ss. ) COUNTY OF SAN BERNARDINO On this day of , in the year , before me, the undersigned, a Notary Public in and for the State of California, personally known to me (or proved to me on the basis of satisfactory evidence) to be MERVYN SIMCHOWITZ the person who executed this instrument as the General Partner of ONE SUNSET COURT, LTD., a California limited partnership. Signature of Notary Public 08/08/89 5731n/2601/00 STATE OF CALIFO~_~ ) ) ss. ) COUNTY OF SAN BERNARDINO On this day of , in the year , before me, the undersigned, a Notary Public in and for the State of California, personally known to me (or proved to me on the basis of satisfactory evidence) to be MERVYN SIMCHOWITZ, president of THE SIMCHOWITZ CORPORATION, a California corporation, who executed this instrument as a General Partner of ONE SUNSET COURT, LTD. and acknowledged that the Board of said corporation approved the execution. Signature of Notary Public ," I 08/08/89 5731n/2601/00 Court ....4. KALE 1M. 100' Street .1.10' ~ \_~J I I - -8 I I: "8 . 2 I : Q - . .. .. I ..' . ~ I I ~ - I : en ~ I I - I I en I I I I I I I I , I 1 ~l I (~ r---': I I I I I I I r--------------------4 I I I I I I I I I ) I I ( I I l I I ) ~--------------------~ I I --_...._--------------~ I I I - o : r------------ I , ATTACHMENT NO. 1 PARCEL A: ALL THAT PORTION OF PARCELS 22 AND 25 OF PARCEL MAP NO. 688. AS PER MAP RECORDED IN PARCEL MAP BOOK 25. PAGES 47 THROUGH 58. INCLUSIVE. RECORDS OF SAN BERNARDINO COUNTY. CALIFORNIA. MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST CORNER OF SAID PARCEL 22; THENCE NORTH 0 DEGREES 04 MINUTES 11 SECONDS EAST. ALONG THE WEST LINE OF SAID PARCEL 22. AND DISTANCE OF 210.00 FEET TO THE NORTHWEST CORNER THEREOF; THENCE SOUTH B9 DEGREES 55 MINUTES 49 SECONDS EAST. ALONG THE NORTH LINE OF SAID PARCEL 22. A DISTANCE OF 223.50 FEET TO THE NORTHEAST CORNER OF SAID PARCEL 22. BEING ALSO THE NORTHWEST CORNER OF PARCEL 23 OF SAID PARCEL MAP NO. 688; THENCE SOUTH 0 DEGREES 04 MINUTES 11 SECONDS WEST. ALONG THE WEST LINE OF SAID PARCEL 23. A DISTANCE OF 210.00 FEET TO THE SOUTHWEST CORNER OF SAID PARCEL 23; THENCE NORTH B9 DEGREES 55 MINUTES 49 SECONDS WEST 223.50 FEET TO THE POINT OF BEGINNING. AS CREATED BY THAT CERTAIN CERTIFICATE OF COMPLIANCE. LOT LINE ADJUSTMCNT NO. 88-25 RECORDED NOVEMBER 1. 1988 AS INSTRUMENT NO. 88-368872 OF OFFICIAL RECORDS. PARCEL B: PARCEL NO. 21 OF PARCEL MAP NO. 688. COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA. AS PER MAP RECORDED IN BOOK 25. PAGE(S) 47 OF PARCEL MAPS. IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. A TT ACHMENT NO.2 ATTACHMENT NO. 2 LEGAL DESCR!PT!ON 08/08/89 5731n/2601/00 ATTACHMENT NO. 2 CDtI.Ia' a ... ~ JIJtO.rBc1' DaV5lD1WBIIT .CR KIlIIJJ.B City Council Approval Design Review Application (60 Day Approval Process) Work Drawing Phase Submit Full Working Drawinqs to BUilding , Safety (60 Day Plan Check Process) Start of Construction (24 month Construction Phase) Notice of Completion of Project ATTACHMENT NO.3 September 18, 1989 November 18, 1989 Six Months May 18, 1990 July 18, 1990 July 18, 1992 ATTACHMENT NO. 4 SCOPE OF DEVELOPMENT I. GENERAL DESCRIPTION The Site is specifically delineated on the Site Map (Attachment NO.1) and the Legal Description (Attachment NO.2) pursuant to Section 103 of this Agreement. II. DEVELOPMENT The Developer shall develop the Site with commercial and professional office buildings of not less than One Hundred and Fifty-Five Thousand (155,000) square feet of gross leasable area, suitable for operation of professional offices and support commercial facilities. All such space shall consist of bUildings approved for occupancy, fully enclosed and under roof, unless the Agency hereafter allows deviation from such requirement in a writing referencing this Scope of Development (Attachment No.4). Such buildings shall be constructed of masonry, concrete, concrete block, or such other materials as may hereafter be approved by the Agency; prefabricated metal components shall not be utilized on exterior walls. The Developer shall complete all of the improvements set forth in this Scope of Development (Attachment NO.4) to be constructed on the Site in one phase. All of the improvements to be provided by the Developer on the Site constitute the "Basic Developer Improvements." The Basic Developer Improvements and all those off-site improvements, which are required in connection with this development, and which are required to be provided by the Developer (the "Off-Site Improvements") together constitute the "Developer Improvements". The Developer shall commence and complete the Developer Improvements by the respective times established therefor in the Schedule of Performance (Attachment No.3). The Developer shall provide parking on the Site in conformity with all applicable City requirements. The design and configuration of the parking facilities shall be compatible with adjacent and nearby uses, as reasonably determined by the Agency. 08/08/89 5731n/2601/00 ATTACHMENT NO. 4 Page 1 of 3 III. DEVELOPMENT STANDARDS The following development standards shall apply to the Developer Improvements unless otherwise expressly authorized by variances approved by the City: A. Building Setbacks. Minimum building setbacks for buildings and parking areas shall conform to the San Bernardino City Code (the "City Code"). B. Building Coverage. The amount of land within the Site covered by buildings shall conform to the City Code. C. Building Height. Building hieght shall be subject to Agency and City approval. D. Vehicular Access. The placement of vehicular driveways shall be coordinated with the needs of proper street traffic flow. In the interest of minimizing traffic congestion, the Agency will control the number and location of curb breaks for access to the Site for off-street parking and truck loading. E. Loading. Adequate loading and unloading space shall be provided. Loading spaces visible from streets shall be . landscaped or screened to prevent an unsightly or barren appearance. Said requirements shall also conform to the City Code. F. Signs. Signs shall be limited in size, subdued and otherwise designed to contribute positively to the environment. Signs identifying the building use will be permitted, but their height, size, location, color, lighting and design will be subject to Agency and City approval. G. Screening. All outdoor storage of materials or equipment shall be enclosed or screened to the extent and in the manner required by the Agency and the City. H. Landscaping. The Developer shall provide and maintain landscaping within the public rights-of-way and within setback area along all street frontages and conforming with the Design Concept Drawings as approved by the Agency. Landscaping shall consist of trees, shrubs and installation of an automatic irrigation system adequate to maintain such plant material. The type and size of trees to be planted, together with a landscaping plan, shall be subject to approval by the City's Planning Department prior to planting. 08/08/89 5731n/2601/00 ATTACHMENT NO. 4 Page 2 of 3 I. Utilities. All utilities on the Site shall be underground or enclosed at Developer's expense except as may be otherwise specified in the City's conditions of approval of the Developer Improvements. J. Painting. All exterior walls shall be painted by the Developer with color(s) subject to approval by the City's Planning Department. K. Building Design. Buildings shall be constructed such that the Developer Improvements be of high architectural quality, and shall be effectively and aesthetically designed. IV. PUBLIC IMPROVEMENTS AND UTILITIES The Developer, at its own cost and expense, shall provide or cause to be provided all public improvements which are specified in the City's conditions of approval to Developer's development of the Developer Improvements. Those of the improvements required to be provided pursuant to this part IV of the Scope of Development (Attachment No.4) constitute the "Off-Site Improvements." v. DEMOLITION AND SOILS As between the Agency and the Developer, only, the Developer assumes all responsibility for surface and subsurface conditions at the Site, and the suitability of the Site for the Developer Improvements and the operation of commercial facilities thereon. If the surface and subsurface conditions are not entirely suitable for such development and use, the Developer shall at its cost take all actions necessary to render the Site entirely suitable for such development. The Developer has undertaken all investigation of the Site it has deemed necessary and has not received or relied upon any representations of the Agency, the City, or their respective officers, agents and employees. Except as herein provided, the Developer shall undertake at its cost all demolition required in connection with the development of the Developer Improvements. 08/08/89 5731n/2601/00 ATTACHMENT NO. 4 Page 3 of 3 ATTACHMENT NO. 5 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: ) ) ) ) ) ) ) ) ) [Space above for Recorder.] CERTIFICATE OF COMPLETION WHEREAS, by Grant Deed dated and recorded on as No. of the official records of the County Recorder of the County of San Bernardino, California (the "Grant Deed"), the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic, hereinafter referred to as "Agency", reserved certain rights and imposed certain restrictions affecting that certain real property situated in the City of San Bernardino, California described on Exhibit "1" attached hereto and made a part hereof (the "Site"); and WHEREAS, pursuant to that certain Disposition and Development Agreement entered into between the Agency, One Sunset Court, Ltd., a California limited partnership, (the "Developer") dated as of (the "DDA"), the Developer and their authorized successors are entitled to the issuance of a Certificate of Completion upon the completion of those improvements required by the DDA to be developed by the Developer (the "Developer Improvements") and other obligations imposed by the DDA; and WHEREAS, the Agency has conclusively determined that the construction on the above described real property required by the DDA has been satisfactorily completed; and NOW THEREFORE, 1. The Agency does hereby certify that the construction of the Developer Improvements has been fully and satisfactorily performed and completed. 08/08/89 5731n/2601/00 ATTACHMENT NO. 5 Page 1 of 3 2. All other obligations imposed by the DDA have also been fully and satisfactorily performed and the DDA is hereby terminated, released and of no further force or effect by reason thereof. Those covenants, conditions and restrictions, in the Grant Deed which by their terms expire upon issuance of a Certificate of Completion are hereby deemed to be expired and of no further force and effect. 3. Nothing contained in this instrument shall modify in any other way any other provisions of the Grant Deed. IN WITNESS WHEREOF, the Agency has executed this certificate this day of , 19__ REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Executive Director ATTEST: 08/08/89 5731n/2601/00 ATTACHMENT NO. 5 Page 2 of 3 STATE OF CALIFORNIA ) ) ss. ) COUNTY OF SAN BERNARDINO On this ____ day of , 19 before me, the undersigned, a Notary Public in and for saia-state, personally appeared known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument as the Executive Director of the Redevelopment Agency of the City of San Bernardino and acknowledged to me that the Redevelopment Agency of the City of San Bernardino executed it. Signature of Notary Public SEAL 08/08/89 5731n/2601/00 ATTACHMENT NO. 5 Page 3 of 3 EXHIBIT "1" THE SITE rTo Be Inserted] ATTACHMENT NO. 6 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO AND MAIL TAX STATEMENTS TO: ) ) ) ) ) ) ) ) ) (Space above for recorder.] GRANT DEED For a valuable consideration receipt of which is hereby aCknowledged, The SAN BERNARDINO REDEVELOPMENT AGENCY, a public body, corporate and politic, of the State of California, herein called "Grantor" acting to carry out the Redevelopment Plan, herein called "Redevelopment Plan" for the San Bernardino Redevelopment Project, herein called "Project", under the Community Redevelopment Law of California, hereby grants to ONE SUNSET COURT, LTD., a California limited partnership, herein called "Grantee", the real property hereinafter referred to as "Property", described in Exhibit "A" attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants or record described there. 1. Said Property is conveyed in accordance with and subject to the Redevelopment Plan which was approved and adopted by Ordinance No. ___ of the Common Council of the City of San Bernardino, as amended by Ordinances No. ___ and ___, and a Disposition and Development Agreement entered into between Grantor and Grantee dated (the "DDA"), a copy of which is on file with the Grantor at its offices as a public record and which is incorporated herein by reference. 2. The Grantee hereby covenants and agrees, for itself and its successors and assigns, that during construction and thereafter, the Grantee shall not use the Property for other than the uses specified in the Specific Plan, the Redevelopment Plan and the DDA. No use other than a professional office bUilding and associated commercial uses shall be allowed on the Property without the prior written approval of the Agency 08/08/89 5731n/2601/00 ATTACHMENT NO. 6 Page 1 of 9 (which the Agency may grant or deny at its sole discretion). The Grantee covenants: (i) to operate and occupy on the Property a professional office bUilding for a period of ten (10) years commencing with the issuance of a Certificate of Completion pursuant to Section of the DDAi (ii) to refrain from taking any action which may cause the Property to cease to be a professional office bUilding with associated commercial usesi and (iii) to operate uses on the Property in conformity with all applicable federal, state and local laws. 3. The Property is conveyed to grantee at a purchase price, herein called "Purchase Price", determined in accordance with the uses permitted. Therefore, Grantee hereby covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property that the Grantee, such successors and such assigns, shall develop, maintain, and use the Property only as follows: (a) Grantee shall develop the Property as required by the DDA, and with parking conforming to the requirements of the San Bernardino City Code. (b) Grantee shall maintain the improvements on the Property and shall keep the Property free from any accumulation of debris or waste materials. Grantee shall also maintain the required landscaping in a healthy condition. If, at any time, Grantee fails to maintain the said landscaping, and said condition is not corrected after expiration of thirty (30) days from the date of written notice from the Grantor, either the Grantor, or the City of San Bernardino may perform the necessary maintenance and Grantee shall pay such costs as are reasonably incurred for such maintenance. (c) Grantee shall only sell, transfer or convey the Property as a whole and is not permitted to subdivide the Property for the duration of the Redevelopment Plan without the prior approval of the Grantor, or the City of San Bernardino if the Agency is no longer in existence at the date of request for approval. 4. Prior to recordation of a Certificate of Completion issued by the Grantor for the improvements to be constructed on the Property: (a) The Grantee shall not make any sale, transfer, conveyance, or assignment of the Property or any part thereof or any interest therein, without the prior written consent of the Grantor except as permitted by paragraph 5(b) of this Grant Deed. In the event that the Grantee does sell, transfer, 08/08/89 5731n/2601/00 ATTACHMENT NO. 6 Page 2 of 9 convey, or assign any part of the Property, buildings, or structures thereon prior to the recordation of a Certificate of Completion, the Grantor shall be entitled to increase the Purchase Price paid by the Grantee by the amount that the consideration payable for such assignment or transfer is in excess of the Purchase Price paid by the Grantee, plus the cost of improvements, including carrying charges. The consideration payable for the assignment or transfer, to the extent it is in excess of the amount so authorized, shall belong and be paid to the Grantor and until so paid the Grantor shall have a lien on the Property and any part involved for such amount. This prohibition shall not be deemed to prevent the granting of easements or permits to facilitate the development of the Property. (b) The Grantee shall not place or suffer to be placed on the Property any lien or encumbrance other than mortgages, deeds of trust, or any other form of conveyance required for financing of the acquisition of the Property, the construction of improvements on the Property, and any other expenditures necessary and appropriate to develop the Property. The Grantee shall not enter into any such conveyance for financing without prior written approval of Grantor. No approval will be given for a conveyance of the property to finance the construction or improvements on real property other than the real property described in Exhibit A hereto. 5. Prior to recordation of any Certificate of Completion issued by Grantor for the improvements to be constructed on the Property: (a) The Grantor shall have the right at its option to reenter and take possession of the Property hereby conveyed with all improvements thereon and to terminate and revest in the Grantor the Property hereby conveyed to the Grantee if the Grantee (or its successors in interest) shall: (i) Fail to commence the construction of the improvements as required by paragraph 3(a) of this Grant Deed for a period of 45 days after written notice thereof from the Grantor, provided that Grantee shall not have obtained an extension or postponement to which Grantee may be entitled; or ( i i ) Abandon or substantially suspend construction of the improvements for a period of 45 days after written notice thereof from the Grantor, provided that Grantee shall not have obtained an extension or postponement to which Grantee may be entitled; or 08/08/89 5731n/2601jOO ATTACHMENT NO. 6 Page 3 of 9 (iii) Transfer, or suffer an involuntary transfer of, the Property, or any part thereof in violation of this Grant Deed. (b) The right to reenter, repossess, terminate and revest shall be subject to and be limited by and ahall not defeat, render invalid, or limit: (i) Any mortgage or deed of trust or other security interest permitted by paragraph 4(b) of this Grant Deed; or (ii) Any rights or interests provided for the protection of the holders or such mortgages or deed of trust or other security interests. (c) The right to reenter, repossess, terminate and revest with respect to the Property shall terminate when the Certificate of Completion regarding the improvements to be constructed under paragraph 3 on the Property has been recorded by the Grantor. (d) In the event title to the Property or any part thereof is revested in the Grantor as provided in this paragraph 5, the Grantor shall, pursuant to its responsibilities under State law, use its best efforts to resell the Property or any part thereof as soon and in such manner as the Grantor shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified party or parties (as determined by the Grantor) who will assume the obligation of making or completing the improvements or such other improvements in their stead as shall be satisfactory to the Grantor and in accordance with the uses specified for such Property or part thereof in the Redevelopment Plan. Upon such resale of the Property the proceeds thereof shall be applied: (i) First, to reimburse the Grantor, on its own behalf or on behalf of the City of San Bernardino, for all costs and expenses incurred by the Grantor, including but not limited to, salaries to personnel engaged in such action (but excluding Grantor's general overhead expense), in connection with the recapture, management, and resale of the Property or part thereof (but less any income derived by the Grantor from the Property or part thereof in connection with such management); all taxes, assessments, and water and sewer 08/08/89 5731n/2601/00 ATTACHMENT NO. 6 Page 4 of 9 (ii) (iii) charges with respect to the Property or part thereof (or, in the event the Property is exempt from taxation or assessment or such charges during the period of ownership thereof by the Grantor), an amount, if paid, equal to such taxes, assessments, or charges, as determined by the County assessing official, as would have been payable if the Property were not so exempt; any payments made or necessary to be made to discharge any encumbrances or liens existing on the Property or part thereof at the time of revesting of title thereto in the Grantor or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults, or acts of the Grantee, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Property or part thereof; and any amounts otherwise owed to the Grantor by the Grantee and its successor or transferee; and Second, to reimburse the Grantee, its successor or transferee, up to the amount equal to the sum of (1) the Purchase Price paid to the Grantor by the Grantee for the Property (or allocable to the part thereof); (2) the costs incurred for the development of the Property and for the improvements existing on the Property at the time or reentry and repossession, less (3) any gains or income withdrawn or made by the Grantee from the Property or the improvements thereon. Any balance remaining after such reimbursements shall be retained by the Grantor. (e) To the extent that this right of reverted involves a forfeiture, it must be strictly interpreted against the Grantor, the party for whose benefit it is created. This right is to be interpreted in light of the fact that the 08/08/89 5731n/2601/00 ATTACHMENT NO. 6 Page 5 of 9 Grantor hereby conveys the Property to the Grantee for development and not for speculation in undeveloped land. 6. The Grantee agrees for itself and any successor in interest not to discriminate upon the basis of race, color, creed or national origin in the sale, lease, or rental or in the use or occupancy of the Property hereby conveyed or any part thereof. Grantee covenants by and for itself, its successors, and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the Grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sublessees, or vendees in the Property. The foregoing covenants shall run with the land. 7. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest permitted by paragraph 4(b) of this Grant Deed; provided, however, that any subsequent owner of the Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such owner's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. 8. All covenants contained in this Grant Deed shall be covenants running with the land. The covenants contained in paragraphs 4 and 5 and Grantee's obligation to develop the improvements on the Property provided in paragraph 3(a) of this Grant Deed shall terminate and shall become null and void upon recordation of a Certificate of Completion issued by Grantor for the Property. The obligation to use the Property in conformity with the Redevelopment Plan shall terminate on (the expiration date of the Redevelopment Plan). Every covenant contained in this Grant Deed against discrimination contained in paragraph 6 of this Grant Deed shall remain in perpetuity. 9. All covenants without regard to technical classification or designation shall be binding for the benefit of the Grantor, and such covenants shall run in favor of the Grantor for the entire period during which such covenants shall be in force and effect, without regard to whether the Grantor is or remains an owner of any land or interest therein to which such covenants relate. The Grantor, in the event of any breach 08/08/89 5731n/2601jOO ATTACHMENT NO. 6 Page 6 of 9 of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. 10. Both before and after recordation of a Certificate of Completion, both Grantor, its successors and assigns, and Grantee and the successors and assigns of Grantee in and to all or any part of the fee title to the Property shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements or restrictions contained in this Grant Deed without the consent of any tenant, lessee, easement holder, licenses, mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Property. The covenants contained in this Grant Deed, without regard to technical classification shall not benefit or be enforceable by any owner of any other real property within or outside the Project Area, or any person or entity having any interest in any other such realty. Any amendments to the Redevelopment Plan which change the uses or development permitted on the Property, or otherwise change any of the restrictions or controls that apply to the Property, shall require the written consent of Grantee or the successors and assigns of Grantee in and to all or any part of the fee title to the Property, but any such amendment shall not require the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Property. 11. Except for paragraph 5, the covenants contained in this Grant Deed shall be construed as covenants running with the land and not as conditions which might result in forfeiture of title. IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized, this day of , 1989. SAN BERNARDINO REDEVELOPMENT AGENCY By: ATTEST: Secretary 08/08/89 5731n/2601/00 ATTACHMENT NO. 6 Page 7 of 9 The Grantee agrees to be bound by the covenants set forth above. ONE SUNSET COURT, LTD., a California corporation By: Its: By: Its: 08/08/89 5731n/2601/00 ATTACHMENT NO. 6 Page 8 of 9 STATE OF CALIFORNIA ) ) ss. ) COUNTY OF RIVERSIDE On this ____ day of I 19 before me, the undersigned, a Notary Public in and for said State, personally appeared , known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument as the (insert title of the officer) of the San Bernardino Redevelopment Agency and aCknowledged to me that the San Bernardino Redevelopment Agency executed it. Signature of Notary Public Name typed or printed 08/08/89 5731n/2601/00 ATTACHMENT NO. 6 Page 9 of 9 08/08/89 5731n/2601/00 EXHIBIT "A" -LEGAL DESCRIPTION OF THE PROPERTY (To Be Inserted) r" II I J ara", ._~ on of '""'":".t'U ':E." t . t. '. -- years l r .,..-l\.j.JJ.et. on ! ~ ~ EXHIBIT A .. '- 't.. T'.J~ " c v' ....oJ _'m'!' :8 c.. ,~ r "l :') Redevelopment Agency · City of San Bernardino 300 North "D" Street, Fourth Floor. San Bernardino, California 92418 (714) 384-5081 FAX (714) 888-9413 Pride ~ ~~ Steven H. Dukett Executive Director October 13, 1989 TO: Chairman and Community Development Commissioners fROM: James E. Robbins, Acting Executive Direc~~ SUBJECT: COURT & E - PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT At approximately 2:30 P.M., Friday, October 13, 1989, Mr. Pat Hopkins of One Sunset Court, Ltd. delivered an a copy of the above referenced document with minor changes on page 5 and Attachments 1 and l-A. Copies of these pages are attached for your information. Attachments 09765 1(-3 * Developer an~ Agency hereby acknowledge that T;cor Title Insurance Com~ y of California ("Ticor"), or c... affiliate, is a limited partner of Developer and, notwithstanding such fact, consent to Ticor acting as Escrow Agent. ~o 5. the Agency shall execute and deliver to the Escrow Agent the Grant Deed (Attachment No.9). The foregoing conditions numbered 1 to 5, inclusive, as set forth in Section 202, shall collectively constitute the "Conditions Precedent." All of the Conditions Precedent shall be satisfied prior to the Disposition Conveyance. E. (1205] Escrow This Agreement constitutes the joint basic escrow instructions of the Agency the Developer for the conveyance of the Site by the Agency to the Developer (the "Conveyance"). The Agency and the Developer shall provide such additional escro~ instructions as may be necessary, provided that such instructions shall be consistent with this Agreement. Ticor Title Insurance Company of California, or .nother escrow holder mutually acceptable to the parties (the "Escrow Agent") is hereby empowered to act under this Aqreement, and the Escrow Agent shall carry out its duties as Escrow Agent hereunder. * Escrow Agent shall open a separate escrow to handle the delivery and recordation of documents provided for under this Agreement~* Upon delivery of the Crant Deed (Attachment No.6), ~he Escrow Agent shall cause to be recorded the Grant Deed (Attachment No.6), when title can be vested in the Developer in accordance with the terms and provisions of this Agreement. The Developer shall accept conveyance of title and possession of the Site by the time set forth in the Schedule of Performance (Attachment No.3) subject to the satisfaction of the Conditions Precedent. The Escrow Agent shall cause to be paid any applicable transfer tax with funds provided by the Agency. The Developer and the Agency shall pay in escrow to the Escrow Agent the follOWing fees, charges and costs with respect to the Conveyance promptly after the Escrow Agent has notified the Developer and the Agency of the amount of such fees, charges and costs, but not earlier than ten (10) days prior to the scheduled date for closing the Escrow: a. The premium for the title insurance policy to be paid by the Agency as set forth in Section 209 of this Agreement; b. Recording fees to be paid by Developer; c. Notary fees (evenly divided between Agency and Developer) ; d. Any State, County or City documentary stamps (Agency) i 08/02/89 S731n/2601/00 -5- ...... ("'") ~ * ::50 X * O::5~ o ("toO OJ -s -s s:: ::5 "COJ("toC- oo~ -s ("to ...... OJ OJ::5 ("to ):0 ::5 ~tOc..o -s 0 ("to~c..::5 ::T~~::5 ...... 3 --' ~ II' ~ .....0 ::5< ("to ):0 ("to ~ ..... to -sO -s rT'l ::5 ~ln("to ~OO("to 3-s ::T ~Oln~ ::5~S::-s ("to o~ _::T~ ::5 ..... lnrT'l("to ("toln::T -sO S::-S("to OO::T ("to~~ ...... o ):O"C ::5 to OJ ln~-S ::5 ("to ~ ("to..... ::T ~ ............V') o ("to ::Tln::T ~ lnln-S ::T("to~ OJ OJ ("to --'::50 --' C- PI V> -S::T C-OJ --' --' ~ V 0.'. ~... "' /' ......... g ! en =4 III ." ~ I . z ~ I I r I ~ ~ ~ J /~. ~ ~ I tr.l tr.l '-------'" '- ',--- ~ H == ~ . .TM:n 0 ~ ~ t::I ~ e E t::I t::I I .TalIT "'- ~\ I o I i! i . ~ 'i' =J~ ~; ::; ! i .. ; 0 i z .. S! _ t>> ~i; i ; m .. ... 9 o. .gQ. r' .' . 0; c C --:8 i . ;rS!. .. ~ z . ,~ D' 0 ~ ... III . \1 = ~ ~ ~ m - ~ 0 / . ., . n , ., . 0 x ~! ~ c:: ., n :D ., : . ~ ATTACHMENT NO. 1 ..r @) . ! .. .. '" COURT 20 STREET .. : - .. .. . . ... B .~ I I 12 l' '@~- I , 1 --~--.i.----- I I I I I , I I I I I +---- 10 ,. .~ i , , , .., '- Q . .~ VANIR ~~ \ B , . ~ . . @ HOTEL ',~.; . . .____..L~~__ I I,~ I I I I I @ I I @V I I I I I I I I I I '" -....- . , I I t;1 ~I "I -~OI"T C t I I I I I I I I I I I $' ~ \1 . tl \, 1J~ ~ I~ '---_-!.--- t?///d FEE SIMPLE LAND ~ " \ ~ LEASEHOLD LAND ,. 5 6 t CITY PARKING GARAGE ... ~, i / 13 @ I' '. ATTACHMENT NO. I-A Assessor's Mo, ~'" l'2tt Qro,,.,1 (') t..., Redevelopment Agency · City of San Bernardino 300 North "D" Street, Fourth Floor. San Bernardino, California 92418 (714) 384-5081 FAX (714) 888-9413 Pride .! ~~ Steven H. Dukett Executive Director October 13, 1989 TO: Chairman and Community Development Commissioners FROM: James E. Robbins, Acting Executive Direc~~ SUBJECT: COURT & E - PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT At approximately 2:30 P.M., Friday, October 13, 1989, Mr. Pat Hopkins of One Sunset Court, Ltd. delivered an a copy of the above referenced document with minor changes on page 5 and Attachments 1 and 1-A. Copies of these pages are attached for your information. Attachments 0976S '~-3 * Developer an~ Agency hereby acknowledge that T'~or Title Insurance ComJ:. j of California (/ITicor"), or a. dffiliate, is a limited partner of Developer and, notwithstanding such fact, consent to Ticor acting as Escrow Agent. ~c 5. the Agency shall execute and deliver to the Escrow Agent the Grant Deed (Attachment No.9). The foregoing conditions numbered 1 to 5, inclusive, as set forth in Section 202, shall collectively constitute the "Conditions Precedent." All of the Conditions Precedent ahall be satisfied prior to the Disposition Conveyance. E. ( 1205 ) Escrow This Agreement constitutes the joint basic escrow instructions of the Agency the Developer for the conveyance of the Site by the Agency to the Developer (the "Conveyance"). The Agency and the Developer shall provide such additional escrow instructions as may be necessary, provided that such instructions shall be consistent with this Agreement. Ticor Title Insurance Company of California, or .nother escrow holder mutually acceptable to the parties (the "Escrow Agent") is hereby empowered to act under this Agreement, and the Escrow Agent shall carry out its duties as Escrow Agent hereunder. * Escrow Agent shall open a separate escrow to handle the delivery and recordation of documents prOVided for under this Agreement~* Upon delivery of the Grant Deed (Attachment No.6), ~he Escrow Agent shall cause to be r~corded the Grant Deed (Attachment No.6), when title can be vested in the Developer in accordance with the terms and provisions of this Agreement. The Developer shall accept conveyance of title and possession of the Site by the time set forth in the Schedule of Performance (Attachment No.3) subject to the satisfaction of the Conditions Precedent. The Escrow Agent shall cause to be paid any applicable transfer tax with funds provided by the Agency. The Developer and the Agency shall pay in escrow to the Escrow Agent the follOWing fees, charges and costs with respect to the Conveyance promptly after the Escrow Agent has notified the Developer and the Agency of the amount of such fees, charges and costs, but not earlier than ten (10) days prior to the scheduled date for closing the Escrow: a. The premium for the title insurance policy to be paid by the Agency as set forth in Section 209 of this Aqreement; b. Recording fees to be paid by Developer; c. Notary fees (evenly divided between Agency and Developer) ; d. Any State, County or City documentary stamps (Agency) ; 08/02/89 5731n/2601/00 -5- -... ("") ct> * ::lOX * n ::I ct> OM-no. -s-sC:::I "'COIM-O- onct> -s M- -... 01 01::1 M-;r:.::I ct> to 0- n -s 0 M-ct>0-::I ::Tct>ct>::I -... 3 --- ct> Vl ct> -...n ::I<M- ;r:. M- ct> ..... to -sO -S I'T1 ::I ct>VlM- ct>nOM- 3-s ::T ct>OVlct> ::I~C:-s M- nct> ~::T~ ::I -... VlI'T1M- M-Vl::T -sn C:-SM- nO::T M-~ct> -... o ;r:. "0 ::I to 01 Vlct>-S ::1M- ~ M- -... ::T ct> ..,j.....tf) nM- ::TVl::T ct> VlVl-S ::T..+ct> 0I01M- ---::10 .-- 0- 01 VI -S::T 0- 01 .-- .-- ~ V 0.' .~ -\ ! I (It =l III ;! I . z ~ I I r I ~ l:"i tz:I I (~ ~ tz:I ~ I tf) tf) '--- '-- ',- tz:I 1-1 tt:: ~ . ."'., 0 l:"i l:"i 0 tz:I ~ ~ z 0 0 ./ "'- I .""IT '- ~\ , . i o I . i . ~ 'i =I~ ~: i:; ~ i .. ; i~ .. ~_I>> ;; ~ i ; i ~~ .. '!! '? . ~Q. C' ~:gi Iii . i c . ~m. .... ,. . ' '" ~ I~ . '" .. . ; I ; I - )! i ~ . - ' 0 EI . (") ,/ . . 0 ~ c: ; n :Ill ., : >> ~ ., ATTACHMENT NO. 1 ..,r ..., ( ~ . ! 01 COURT 20 .. - " .. .. .., STREET - " . I I .... e .f I , If l' .@~- I I I --~--.i.- ---- I I I I I , I .... - --- 10 I I ,. ,~ i , , ~.". Q . -I VANIR ~~ \ 8 , . ~ . . @ HOTEL ',~.I ~ .L~~_ I I,~ I I I I I @ I I I I H tl \., -"0'''' C I I I I I I I I I I I ~. ~ ,t . tl I. J:j~ ~ I ~ \ __~___ I t?"//./J FEE SIMPLE LAND h\ ~ \ ~ LEASEHOLD LAND ,. 5 6 t CITY PARKING GARAGE ... ., @V I I I I I I I I I I '- -'-- i I 15 @ I. '. ATTACHMENT NO. I-A Assessor's Mo( ~" ''2tf c,.,...r n '..., Redevelopment Agency · City of San Bernardino 300 North "D" Street, Fourth Floor. San Bernardino, California 92418 (714) 384-5081 FAX (714) 888-9413 Pride -t e'~ Steven H. Dukett Executive Director OCTOBER 10, 1989 AUTHORIZING THE ISSUANCE OF CERTAIN COLLATERALIZED MORTGAGE BONDS Synopsis of Previous Commission/Council/Committee Action: 08-21-89 Mayor and Common Council and Community Development Commission approved the formation of the San Bernardino Joint Powers Financing Authority. 08-21-89 Mayor and Common Council, Community Development Commission and Joint Powers Authority approved certain financings. 09-18-89 Community Development Commission continued approval of final documents to 09-25-89. 09-25-89 Community Development Commission approved final documents. Recommended Motion: (MAYOR AND COMMON COUNCIL) a) RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING THE ISSUANCE OF CERTAIN COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO. (Continued on Page 2) Respectfully Submitted, Director Supporting data attached: Yes Ward : All Funding requirements: N/A Project: All Commission Notes: 1135A Age:::mo:~.OctOb~ 16, 1989 Redevelopment Agency (COMMUNITY DEVELOPMENT COMMISSION) b) RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE ISSUANCE OF CERTAIN COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B, AND THE TERMS OF CERTAIN FINANCING DOCUMENTS TO BE EXECUTED AND DELIVERED IN CONNECTION THEREWITH. (JOINT POWERS FINANCING AUTHORITY) c) RESOLUTION OF THE SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY AUTHORIZING THE PURCHASE BY THE AUTHORITY OF A PRINCIPAL AMOUNT APPROXIMATELY EQUAL TO $3,080,000 OF COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B, AUTHORIZING AND DIRECTING EXECUTION OF AUTHORITY PURCHASE AGREEMENT AND THE SALE THEREOF PURSUANT TO AN UNDERWRITERS PURCHASE AGREEMENT AND AUTHORIZING OFFICIAL ACTION ON CONNECTION THEREWITH. Redevelopment Agency Staff Report On August 21, 1989 the Mayor and Common Council and the Community Development Commission authorized the formation of the San Bernardino Joint Powers Financing Authority, authorized the borrowing of funds from the Joint Powers Authority and authorized the execution of related documents as required for the Taxable Collateralized Mortgage Bonds, 1989 Series A. On September 25, 1989 the Community Development Commission approved the final form of documents in connection with certain financings. The attached Resolutions will authorize the issuance of certain Collateralized Mortgage Bonds, Series 1989-B and will authorize the purchase by the Joint Powers Authority of a principal amount approximately equal to $3,080,000 of Collateralized Mortgage Bonds, Series 1989-B. The Resolutions will also authorize the execution of the related documents. SBE00097D-139/3211S/bs 10/06/89 1215 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING THE ISSUANCE OF CERTAIN COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO WHEREAS, the Redevelopment Agency of the Ci ty of San Bernardino (the "Agency") a redevelopment agency (a public body, corporate and politic) duly created and existing pursuant to the Community Redevelopment Law (Part 1 of Division 24, commencing with Section 33000) of the Health and Safety Code of the State of California (the "Community Redevelopment Law"), has previously issued its $34,500,000 Taxable Collateralized Mortgage Bonds Series 1989-A ("Series 1989-A Bonds") to finance, among other things, the acquisition of the right, title and interest of the City of San Bernardino, California (the "City"), In and to those certain mortgage loans facilitated by and acquired with the proceeds of the City Bonds (as defined In the Original Indenture hereinafter described); and WHEREAS, the Agency has heretofore executed and delivered to Security Pacific National Bank, as the Trustee, that certain Trust Indenture dated as of September 1, 1989 (the "Original Indenture"), pursuant to which the Agency issued the Series 1989-A Bonds for the purpose of refunding certain outstanding revenue bonds - 1 - of the Agency in advance of their respective maturities and for the purpose of obtaining certain assigned interests In certain mortgages, mortgage notes and mortgage loans; and WHEREAS, pursuant to the Community Redevelopment Law, the Agency has the power and authority to issue bonds for the purpose of financing certain public improvements in its redevelopment project areas within the City of San Bernardino, California; and WHEREAS, pursuant to the Communi ty Redeve lopment Law, the Agency now desires to issue bonds and to repay the principal of and interest on such bonds from amounts available from a certain Trust Estate (as defined in the Original Indenture); and the WHEREAS, issuance of Section 2.12 of additional bonds the Original Indenture authorizes (the "Additional Bonds") by the Agency from time to time In acco rdance wi th the prov is ions the reof and secured by the Trust Estate (as defined In the Original Indenture); and WHEREAS, the Agency proposes at this time to issue its Collateralized Mortgage Bonds, Series 1989-B, In an aggregate principal amount approximately equal to $3,080,000 (the "Bonds") pursuant to the Community Redevelopment Law and pursuant to a certain First Supplemental Trust Indenture dated as of October 1, 1989 (the "First Supplemental Indenture"), by and between the Agency and Security Pacific National Bank, as trustee (the "Trustee"); and - 2 - WHEREAS, such Bonds of the Agency constitute an issue of Additional Bonds as defined ln and pursuant to Section 2.12 of the Original Indenture; and WHEREAS, the Agency has now determined to enter into an Authori ty Purchase Agreement wi th the San Bernardino Joint Powers Financing Authority (the "Authority") for the sale of the Agency's Bonds, and to use the proceeds recei ved from the sale thereof to finance certain public improvements; and WHEREAS, the payment of the principal of and interest on the Bonds will be insured pursuant to the terms of a municipal bond insurance policy (the "Policy") to be issued by AMBAC Indemnity Corporation, ("AMBAC"); and a Wisconsin-domiciled stock insurance company WHEREAS, the Mayor and Common Council have duly considered such transactions and documentation and wish at this time to approve said transactions and documentation ln the public interests of the City; NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, DO HEREBY FIND, RESOLVE, DETERMINE AND ORDER AS FOLLOWS: - 3 - Section 1. Approval of the Agency Bonds. The Mayor and Common Counci I hereby approve the issuance by the Agency of the Redevelopment Agency of the City of San Bernardino, Collateralized Mortgage Bonds, Series 1989-B, In an aggregate principal amount approximately equal to $3,080,000 for the purpose of financing public capital improvement projects and certain other costs related thereto within or benefitting the redevelopment project areas of the Agency. Section 2. Official Actions. The Mayor and Common Council, the City Clerk, and any and all other officers of the City a re hereby autho r i zed and di rected, for and In the name and on behalf of the City, to do any and all things and to take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, warrants and other documents which they, or any of them, may deem necessary or advisable in connection with the execution and delivery of the Bonds and any related closing documents, as required, and the consummation of the transactions described herein and therein. - 4 - Section 3. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. I HEREBY adopted by the San Bernardino at held on the the following vote, CERTIFY Mayor a that the foregoing and Common Counc i 1 resolution of the meeting day of to wit: AYES: Council Members was duly City of thereof, 19 8 9 , by NAYS: ABSENT: City Clerk day of The foregoing resolution is hereby approved this , 1989. Mayor of the City of San Bernardino Approved as to form and legal content: B~~ City Arney 3211S - 5 - STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO) ss CITY OF SAN BERNARDINO ) I, SHAUNA CLARK, City Clerk In and for San Bernardino, DO HEREBY CERTIFY that the foregoing copy of San Bernardino City Resolution No. true and correct copy of that now on file in this office. the and is City of attached a full, IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Bernardino this day of , 1989. City Clerk 3211S - 6 - SBE00097D-137/3209S/1w 10/05/89 0420 RESOLUTION NO. RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE ISSUANCE OF CERTAIN COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B, AND THE TERMS OF CERTAIN FINANCING DOCUMENTS TO BE EXECUTED AND DELIVERED IN CONNECTION THEREWITH WHEREAS, the Redevelopment Agency of the City of San Bernardino, a redevelopment agency (a public body, corporate and politic) (the "Agency"), duly created and existing pursuant to the Community Redevelopment Law (Part 1 of Division 24, commencing with Section 33000) of the Health and Safety Code of the State of California (the "Community Redevelopment Law") has previously issued its $34,500,000 Taxable Collateralized Mortgage Bonds, Series 1989-A (the "Series 1989-A Bonds") for the purpose of refunding certain outstanding revenue bonds of the Agency ln advance of their respective maturities and for the purpose of obtaining certain assigned interests in certain mortgages, mortgage notes and mortgage loans; and WHEREAS, the Agency has heretofore executed and delivered to Security Pacific National Bank, as the Trustee, that certain Trust Indenture dated as of September 1, 1989 (the "OriQinal Indenture"), pursuant to which the Agency issued the Series 1989-A Bonds; and -1- WHEREAS, pursuant to the Communi ty Redevelopment Law, the Agency has the power and authority to issue bonds for the purpose of financing certain public improvements in its redevelopment project areas within the City of San Bernardino, California; and WHEREAS, pursuant to the Communi ty Redevelopment Law, the Agency now desires to issue bonds and to repay the principal of and interest on such bonds from amounts available from a certain Trust Estate (as defined in the Original Indenture); and WHEREAS, Section 2.12 of the Original Indenture authorizes the issuance of addi t iona 1 bonds (the "Addi t iona 1 Bonds") by the Agency from time to time in accordance with the provisions thereof and secured by the Trust Estate (as defined ln the Original Indenture); and WHEREAS, the Agency proposes to lssue its Collateralized Mortgage Bonds, Series 1989-B, in an aggregate principal amount approximately equal to $3,080,000 (the "Bonds") pursuant to the Community Redevelopment Law and under and pursuant to a certain First Supplemental Trust Indenture dated as of October I, 1989 (the "First Supplemental Indenture"), by and between the Agency and Security Pacific National Bank, as trustee (the "Trustee"); and WHEREAS, such Bonds of the Agency constitute an lssue of Additional Bonds as defined in and pursuant to Section 2.12 of the Original Indenture; and '1 -L- WHEREAS, the Agency has now determined to enter into an Authority Purchase Agreement with the San Bernardino Joint Powers Financing Authority (the "Authority") for the sale of the Agency's Bonds, and to use the proceeds received from the sale thereof to finance certain public improvements; and WHEREAS, the payment of the principal of and interest on the Bonds will be insured pursuant to the terms of a municipal bond insurance policy (the "Policy") to be issued by AMBAC Indemnity Corporation, ("AMBAC"); and a Wisconsin-domiciled stock insurance company WHEREAS, the Agency proposes to secure the Bonds wi th a pledge of certain revenues and certain other amounts constituting the Trust Estate under the Original Indenture in the priority and at the times described in the First Supplemental Indenture; and WHEREAS, the Authority, a joint powers authority created pursuant to the California Government Code Section 6500, et ~. (the "General JPA Law"), in exercising the powers granted thereunder and pursuant to a certain joint powers agreement (the "Agreement"), has initiated certain actions in connection with the purchase of the Bonds from the Agency pursuant to Section 6584, et ~., of the California Government Code (the "Marks-Roos Act") and the resale of such Bonds to the Underwriters (hereinafter defined); and -3- WHEREAS, the Authority has initiated certain actions In connection with the purchase of the Bonds and the financing of certain capital improvement projects of the Agency from the proceeds received by the Agency from the Authority In accordance with the Authority Purchase Agreement and pursuant to the provisions of the Marks-Roos Act; and WHEREAS, Miller & Schroeder Financial, Inc., Stifel, Nicolaus & Company and Meridian Capital Markets, Inc., as prospective underwriters of the Bonds (collectively, the "Underwriters") have informed the Authority that they intend to submit a joint offer to purchase the Bonds from the Authority and have caused to be prepared an Underwri ters Purchase Agreement to pu rchase the Bonds and an Of f ic i a 1 St atement desc r i bi ng the Bonds; and WHEREAS, the execution and delivery of the First Supplemental Indenture and the repayment obligation of the Agency thereunder complies with the terms and conditions of Section 2.12 of the Original Indenture; and WHEREAS, transactions and the Commission documentation and said transactions Agency; and documentation has duly considered such wishes at this time to approve in the public interests of the -4- NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION ACTING ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Determinations. The Commission hereby finds and determines that the issuance of the Bonds by the Agency and the purchase of such Bonds from the Agency by the Authority results ln "significant public benefits" within the meaning of Section 6586 of the Marks-Roos Act, consisting of demonstrable savings ln effective interest rates, bond preparation, bond underwriting and bond lssuance costs. The Commission hereby approves the issuance by the Agency of the Bonds in accordance with the terms of the First Supplemental Indenture and this Resolution and under the authority of the Community Redevelopment Law and the provisions of the Marks-Roos Act. Section 2. Issuance of Bonds; Approval of First Supplemental Indenture. The Commission hereby authorizes the issuance of the Bonds under and pursuant to the Communi ty Redevelopment Law and the First Supplemental Indenture ln an aggregate principal amount approximately equal to $3,080,000 for the purposes hereinbefore described. The Commission hereby approves the First Supplemental Indenture by and between the Agency and the Trustee in substantially the form on file with the Secretary of the Commission, together with any additions thereto or changes therein deemed necessary or advisable by the Chairman upon the recommendation of Bond Counsel and Agency Counsel, whose execution -5- thereof shall be conclusive evidence of such approval. The Chairman / or the Vice-Chairman is hereby authorized and directed to execute, and the Secretary or Assistant Secretary 1S hereby authorized and directed to attest and affix the seal of the Commission to, the final form of the First Supplemental Indenture for and in the name and on behalf of the Agency. The Commission hereby authorizes the delivery and performance of the First Supplemental Indenture. Section 3. Approval of Authority Purchase Agreement. The Commission hereby approves the sa Ie of the Bonds by negot iated purchase with the Authority pursuant to the Authority Purchase Agreement by and between the Agency and the Authority 1n substantially the form on file with the Secretary of the Commission, together with any additions thereto or changes therein deemed necessary or advisable by the Chairman upon the recommendation of Bond Counsel and Agency Counsel, whose execution thereof shall be conclusive evidence of such approval. The Chairman, Vice-Chairman, or such other authorized officer of the Agency is hereby authorized and directed to execute and deliver the final form of the Authority Purchase Agreement for and in the name and on behalf of the Agency. The Commission hereby authorizes the delivery and performance of the Authority Purchase Agreement. Section 4. Official Statement. The Commission hereby approves the Preliminary Official Statement describing the Bonds, 1n substantially the form submitted by the Underwriters and on file with the Secretary of the Commission. Distribution of the -6- Preliminary Official Statement by the Underwriters to persons who may be interested in the purchase of the Bonds is hereby approved. The Commission hereby authorizes the distribution of the final Official Statement by the Underwriters; and the Underwriters are hereby directed to distribute copies of the final Official Statement to all actual purchasers of the Bonds from the Underwriters acting ln such capacity. The Chairman is hereby authorized and directed to approve any changes in or additions to a final form of said Official Statement approved by the Chairman, whose execution thereof shall be conc 1 us i ve ev i dence of app rov a I 0 f any such changes and addi t ions. The final Official Statement shall be executed in the name and on behalf of the Agency by the Chairman, the Vice-Chairman or such other authorized officer of the Agency, each of whom is individually hereby authorized and directed to execute, if necessary, the final Official Statement on behalf of the Agency. Section 5. Official Actions. All actions taken heretofore by any officer or officers of the Agency with respect to the issuance of the Bonds or in connection with or related to any of the agreements referenced herein are hereby approved, confirmed and ratified. The Chairman, the Vice-Chairman and other members of the Commission, the Secretary, counsel to the Commission, the Acting Execu t i ve oi recto r 0 f the Agency, Agency Counse I, and any and all other members and officers of the Commission and the Agency are hereby authorized and directed, for and in the name and on behalf of the Agency, to do any and all things and to take any and all actions, including execution and delivery of any and all -7- assignments, certificates, requisitions, agreements, notices, consents, inst ruments of conveyance, wa r rants and other documents which they, or any of them, may deem necessary or advisable in connection with the lssuance of the Bonds, the distribution of the Official Statement and the execution and delivery of the First Supplemental Indenture and the Authority Purchase Agreement and related closing documents, as required, and the consummation of the transactions described herein and therein, including, but not limited to, obtaining municipal bond insurance, the any and all documents to a municipal bond rating distribution of the Preliminary Official Statement shall become available for distribution. submission of agency and the when the same / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / -8- Section 6. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the day of , 1989, by the following vote, to wit: AYES: Commissioners NAYS: ABSENT: Secretary The foregoing resolution is hereby approved this day of ,1989.. Chairman of the Community Development Commission of the City of San Bernardino Approved as to form and legal content: AGENCY COUNSEL, By: ~4144J ./ -9- SBE00097D-138/3210S/1w 10/06/89 0330 RESOLUTION NO. RESOLUTION OF THE SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY AUTHORIZING THE PURCHASE BY THE AUTHORITY OF A PRINCIPAL AMOUNT APPROXIMATELY EQUAL TO $3,080,000 OF COLLATERALIZED MORTGAGE BONDS, SERIES 1989-B, AUTHORIZING AND DIRECTING EXECUTION OF AUTHORITY PURCHASE AGREEMENT AND THE SALE THEREOF PURSUANT TO AN UNDERWRITERS PURCHASE AGREEMENT AND AUTHORIZING OFFICIAL ACTION IN CONNECTION THEREWITH WHEREAS, the San Bernardino Joint Powers Financing Authority (the "Authority"), a joint powers authority created pursuant to the California Government Code Section 6500, et ~. (the "General JPA Law") in exercising the powers granted thereunder and pursuant to a certain joint powers agreement (the "Agreement"), has initiated certain actions in connection with the purchase of certain bonds of the Redevelopment Agency of the Ci ty of San Bernardino (the "Agency"), pursuant to Section 6584, et ~., of the General JPA Law (the "Marks-Roos Act") and the sale of such bonds to certain purchasers at negotiated sale; and WHEREAS, the Agency has heretofore executed and delivered to Security Pacific National Bank, as the Trustee, that certain Trust Indenture dated as of September 1, 1989 (the "Original Indenture"), pursuant to which the Agency issued $34,034,745 initial aggregate principal amount of its Taxable Collateralized Mortgage Bonds, Series 1989-A (the "Series 1989-A Bonds") for the purpose of refunding certain outstanding revenue bonds of the Agency in advance -1- of their respective maturities and for the purpose of certain assigned interests in certain mortgages, mortgage mortgage loans; and obtaining notes and WHEREAS, pursuant to the codified as Part 1 of Division 24 Community Redevelopment Law, of the California Health and Safety Code, as supplemented and amended (the "Community Redevelopment Law"), the Agency has the power and authority to issue bonds for the purpose of financing certain public improvements ln its redevelopment areas within the City of San Bernardino, California; and WHEREAS, pursuant to the Communi ty Redevelopment Law, the Agency now desires to issue bonds and to repay the principal of and interest on such bonds from amounts available from a certain Trust Estate (as defined in the Original Indenture); and WHEREAS, the Agency proposes at this time to lssue its Collateralized Mortgage Bonds, Series 1989-B, in an aggregate principal amount approximately equal to $3,080,000 (the "Bonds") pursuant to the Community Redevelopment Law, and pursuant to a certain First Supplemental Trust Indenture dated as of October 1, 1989 (the "First Supplemental Indenture"), by and between the Agency and Security Pacific National Bank, as trustee (the "Trustee"); and -2- WHEREAS, the Bonds will be purchased by the Authority from the Agency pursuant to and in accordance with a certain Authority Purchase Agreement dated the date of execut ion thereof (the "Authority Purchase Agreement"), by and between the Authority and the Agency; and WHEREAS, the Agency proposes to secure the Bonds wi th a pledge of certain revenues and certain other amounts constituting the Trust Estate under the Original Indenture, such Bonds being payable from such sources in the priority and at the times described in the First Supplemental Indenture; and WHEREAS, Section 2.12 of the Original Indenture authorizes the issuance of additional bonds (the "Additional Bonds") by the Agency from time to time in accordance with the provisions thereof and secured by the Trust Estate (as defined In the Original Indenture); and WHEREAS, such Bonds of the Agency constitute an issue of Additional Bonds as defined In and pursuant to Section 2.12 of the Original Indenture; and WHEREAS, the payment of the principal of and interest on the Bonds will be insured pursuant to the terms of a municipal bond -3- insurance policy (the "Policy") to be issued by AMBAC Indemnity Corporation, ("AMBAC"); and a Wisconsin-domiciled stock insurance company WHEREAS, the Agency has now determined to enter into an Authority Purchase Agreement with the Authority for the sale of the Agency's Bonds, and to use the proceeds thereof to finance certain public improvements; and WHEREAS, Miller & Schroeder Financial, Inc., Stifel, Nicolaus & Company and Meridian Capital Markets, Inc., as prospective underwriters of the Bonds (collectively, the "Underwriters"), have informed the Authority that they intend to submit a joint offer to purchase the Bonds from the Authority and have caused to be prepared an Underwri ters Purchase Agreement to purchase the Bonds and an Official Statement describing the Bonds; and WHEREAS, the Board has duly considered such transactions and wishes at this time to approve said transactions in the public interests of the Authority; -4 - NOW, THEREFORE, THE SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Findings and Determinations. Pursuant to the Mello-Roos Act, the Board hereby finds and determines that the issuance of the Bonds will result 1n savings in effective interest rates, bond preparation, bond underwriting and/or bond issuance costs and thereby results 1n significant public benefits to its members within the contemplation of Section 6586 of the Mello-Roos Act. Section 2. Purchase of Bonds; Approval of Authority Purchase Agreement. The Board hereby approves the purchase of the Bonds by negotiated purchase from the Agency pursuant to the Authority Purchase Agreement by and between the Agency and the Authority, 1n substantially the form on file with the Secretary together wi th any changes therein or addi tions thereto approved by the Chairman or an authorized representative of the Chairman, whose execution thereof shall be conclusive evidence of such approval. The Chairman, the Vice-Chairman or such other authorized officer of the Authority 1S hereby authorized and directed to execute and deliver the Authority Purchase Agreement for and in the name of the Authority. The Board hereby authorizes the delivery and performance of the Authority Purchase Agreement. -5- Section 3. Sale of the Bonds; Approval of Underwriters Purchase Agreement. The Board hereby approves the sale of the Bonds by negotiated purchase with the Underwriters pursuant to the Underwriters Purchase Agreement by and between the Authority and the Underwriters, in substantially the form on file with the Secretary together wi th any changes therein or addi tions thereto approved by the Chairman or an authorized representative of the Chairman, whose execution thereof shall be conclusive evidence of approval of any such additions and changes. The Underwriters Purchase Agreement shall be executed in the name and on behalf of the Authority by the Chairman, the Vice-Chairman or such other authorized officer of the Authority, who is hereby authorized and directed to execute and deliver said form of Underwriters Purchase Agreement on behalf of the Authority upon submission of the proposal by the Underwriters to acqui re the Bonds, which proposa 1 is accept able to the Cha i rman. The purchase price received by the Authority for the Bonds shall not be less than ninety-seven and one-half percent (97-1/2%) of the par amount thereof and the net effective rate of interest to be borne by the Bonds sha 11 not exceed a rate per annum equa 1 to seven and seventy-five hundredths percent (7.75%). Section 4. Official Action. The Chairman, the Vice-Chairman, the Secretary, the Assistant Secretary, the Authority Counsel and any and all other officers of the Authority are hereby au tho r i zed and di rected, for and in the name and on beha 1 f 0 f the Authority, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, -6- certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, may deem necessary or advisable in order to consummate thelawful issuance and sale of the Bonds as described herein. Whenever in this Resolution any officer of the Authority is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. Section 5. Effective Date; Subject to Agency and City Approval. This Resolution shall take effect from and after its passage and adoption. This Resolution shall be subject in all respects to the approval by the Agency and by the City, as applicable, of the issuance of the Bonds by the Agency and the execution and delivery of the Bond financing documents required in connection therewith. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the day of , 1989, by the following vote, to wit: AYES: Authority Members NAYS: ABSENT: Secretary -7- The foregoing resolution is hereby approved this day of , 1989. Chairman of the San Bernardino Joint Powers Financing Authority Approved as to form and legal content: AUTHORITY COUNSEL, By: ~fitUA..) J -8-