The URL can be used to link to this page

Home My WebLink AboutSS - Newport Beach Facilities CorporationSTHP'V SESSION IIGENDn May 26, 1992 - 2:10 P.M.* 1. Joint meeting with the Harbor Quality Committee (agenda attached). 2. Budget Reuiew (please bring your budget document with you to the Study Session). 3, Matters not listed which Council Members may wish to raise for question or discussion. 4. Clarification of items on the evening consent calendar. 5. Matters for continuing review: a. lair Transportation b. Surface Transportation C. Planning Department d. Legislation and Litigation 6. Review reports concerning unusual situations which may have an impact upon the City's affairs. 7. Closed Session to discuss personnel matters and possible and pending litigation. * Study Session will convene after the meeting of the Newport Beach Public Facilities Corporation to complete the sale of the Certificates of Participation for the Central Library project ORGANIZATIONAL MEETING NEWPORT BEACH PUBLIC FACILITIES CORPORATION AGENDA May 26, 1992 1. Call the meeting to order. The meeting will be called to order by the original incorpor or of the Corporation. 2. Election of Chairperson of the Board. l� '�°' l' The original incorporator shall conduct an election of the Chairperson of the Board of Directors of the Corporation. Following the election of the Chairperson, the Chairperson shall preside over the remainder of the meeting. 3. Motion confirming the appointment of Corporation's agent for service of process. State law requires that the Corporation designate an agent for service of process. The original incorporator designated as such agent. The Board is asked to confirm and ratify this appointment. 4. Resolution approving the bylaws of the Corporation. The Bylaws contain the general organizational rules governing the Corporation such as membership of the Board of Directors, officers of the Corporation, rules regarding the calling and conduct of meetings, etc.JD 5. Motion approving a seal for the corporation. It is recommended that the Board of Directors approve a seal of the Corporation, to consist of a circle having on its circumference the name of the corporation, and the words and figures "Incorporated" and the date of incorporation and "California". 6. Motion directing the Chief Financial Officer of the Corporation to file documents with the State Franchise Tax Board and the Internal Revenue Service to establish the -�� Corporation's tax-exempt status. In order to obtain a tax-exempt status, it will be necessary for the Corporation to file applications with both the State Franchise Tax Board and the Internal Revenue Service. Special Counsel will assist the Chief Financial Officer in completing and filing these applications. 8. Resolution authorizing the preparation, sale and delivery of not to exceed 37,500,000 Principal amount of Certificates of Participation and approving certain dOCL 7lents and authorizing certain actions in connection therewith. 9. Motion, if necessary, to authorize any other action by the Corporation necessary for the preparation, sale and delivery of the Certificates of Participation. to Adjourn . AFFADAVIT OF NOTICE OF ORGANIZATIONAL MEETING OF NEWPORT BEACH PUBLIC FACILITIES CORPORATION I, Wanda E. Raggio , hereby declare as follows: 1. I am the City Clerk for the City of Newport Beach which has its principal office located at IMO Newport Boulevard, Newport Beach, California. 3 2. On May 2.� 1992, acting upon the direction of the Incorporator of the Newport Beach Public Facilities Corporation, Dennis Danner, I caused to be mailed or delivered a copy of the Notice of Organizational Meeting of the Newport Beach Public Facilities Corporation, a copy of which is attached hereto as Exhibit A, to each of the members of the Council members of the City of Newport Beach and to each local newspaper of general circulation, radio or television station requesting such notices in writng. 2. On May 20, 1992, I posted a copy of such notice in a location that is freely accessible to the members of the public. I declare under penalty of perjury that the foregoing is true and correct and that this affadavit was executed this 20 day of May, 1992, at Newport Beach, California. WON PUBLIC AC-T10ES I PUBLIC NOT 23 I PUBLIC WO i ICES I PUBLIC NOTICES I PUBLIC NOTICES NOTICE OF SALE $795009000 CERTIFICATES OF PARTICIPATION Series 1992 (Central Library Building Project) Evidencing A Proportionate Interest Of The Owners Thereof In Lease Payments To Be Made By the CITY OF NEWPORT BEACH (Orange County, California) To The NEWPORT BEACH PUBLIC FACILITIES CORPORATION (A California Nonprofit Public Benefit Corporation) Sealed proposals will be received up to 11:00 a.m., Wednesday JUNE 391992 at the offices of Jeffries Banknote Company, 1330 West Pico Boulevard, Los Angeles, California 90015 for the purchase of the $7,500,000 Certificates of Participation, Series 1992 (Central Library Building Project). The principal of and interest on the Certificates will be paid from lease payments to be received by the Corporation from the City of Newport Beach for the lease of certain real property and improvements to be leased to the City of Newport Beach. The Certificates will be dated June 1, 1992 and will mature serially on June 1 in the years 1994 to 2005, inclusive, and on June 1, 2019 (Term Bonds with mandatory sinking account installments in the years 2006 to 2019, inclusive) as provided in the Trust Agreement securing the payments of the Certificates. Interest will be paid on December 1, 1992 and semiannually thereafter on June 1 and December 1 of each year. The Certificates are subject to call as provided in the Trust Agreement. The legal opinion of Brown, Diven & Hentschke, San Diego, California will be furnished to the successful bidder. - Further information may be obtained from Miller & Schroeder Financial, Inc. at 505 Lomas Santa Fe Drive, Suite 100, Solana Beach, California 92075-0819 or by telephone at (619) 481-5894. KEVIN I MURPHY President, Newport Beach Public Facilities Corporation f Authorized to Publish Advertisements of all kinds it _.,ding public notices by Decree of the Superior court of Orange County, California, Number A-6214, September 29, 1961, and A-24831 June 11, 1963 STATE OF CALIFORNIA County of Orange -- I am a Citizen of the United States and a resident of the County aforesaid; I am over .the age of eighteen years, and not a party to or interested in the below entitled matter. I am a principal clerk of the NEWPORT BEACH —COSTA MESA PILOT, a newspaper of general circulation, printed and published in the City of Costa Mesa, County of Orange, State of California, and that attached Notice is a true and complete copy as was printed and published on the following dates: May 23, 1992 I declare, under penalty of perjury, that the foregoing is true and correct. Executed on May 23 ,199 2 at Costa `GMesa, California-, r Signature PROOF OF PUBLICATION (G°`ba $7,500,000 CERTIFICATES OF PARTICIPATION SERIFS 1992 (Central Library Building Project) Evidencing Proportionate Interests of the Owners Thereof in Lease Payments to be Made by CITY OF NEWPORT BEACH to the NEWPORT BEACH PUBLIC FACILITIES CORPORATION CERTIFICATE REGARDING ARTICLES OF INCORPORATION AND BYLAWS OF CORPORATION The undersigned hereby certifies: 1. that she is the duly appointed, qualified and acting Secretary of the NEWPORT BEACH PUBLIC FACILITIES CORPORATION , a nonprofit, public benefit corporation, duly organized and existing under the laws of the State of California (the "Corporation"), and as such, she is familiar with the facts herein certified and is authorized to certify the same; 2. that attached hereto is a true and correct copy of the Articles of Incorporation of the Corporation, including any and all amendments thereto, as filed with the California Secretary of State, which Articles of Incorporation have not been amended, modified, supplemented or rescinded and are in full force and effect as of the date hereof; and 3. that attached hereto is a true, correct and complete copy of the Bylaws of the Corporation, including any and all amendments thereto, which Bylaws have not been amended, modified, supplemented or rescinded and are in full force and effect as of the date hereof. DATED: June 17, 1992 NEWPORT BEACH PUBLIC FACILITIES CORPORATION J / g Secretary a 01 ifornia i OFFICE OF THE SECRETARY OF STATE CORPORATION DIVISION I, MARCH FONG E U, Secretary of State of the State of California, hereby certify: That the annexed transcript has been compared \N,ith the corporate record on file in this office, of «/hick it purports to be a copy, and that same is f ull, true and correct. REKq'**,* F^Y m IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this MAY 1 5 1992 V l/ ,0 `JA qWj �� Secretary of State SEC/STATE FORM CE-107 - "' 86 40888 1821 31 ARTICLES OF INCORPORATION OF NEWPORT BEACH PUBLIC FACILITIES CORPORATION 1'v;r: 1 1992 I. The name of this corporation is: NEWPORT BEACH PUBLIC FACILITIES CORPORATION. II. This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for public purposes. The specific public purposes for which the corporation is organized include the following: (a) To render financial assistance to the City of Newport Beach, California ("City") by financing, acquiring, constructing, improving, leasing and selling buildings, building improvements, equipment, electrical, water, sewer, road and other public improvements, lands and any other real or personal property, tangible and intangible, for the benefit of residents of the City and surrounding areas; (b) To acquire by lease, purchase or otherwise, real or personal property, tangible or intangible, or any interest therein; to construct, reconstruct, modify, add to, improve or otherwise acquire or equip buildings, structures or improvements and (by sale, lease, sublease, leaseback, gift or otherwise) make any part of all or any such real or personal property available to or for the benefit of the public, the City, or any one or more il departments, commissions, or agencies of the City; (c) To promote the common good and general welfare of the City and the inhabitants thereof, and the governmental, commercial, industrial or other enterprises in the City and surrounding areas by financing the acquisition of the real and personal property, tangible and intangible, as hereinabove described; (d) To borrow the necessary funds to pay the cost of financing, acquiring, constructing, replacing, establishing, improving, maintaining, equipping and operating such properties and facilities for the herein described purposes, the indebtedness for which borrowed money may, but need not, be evidenced by securities of this corporation of any kind or character issued at any one or more times, which may be either unsecured or secured by any mortgage, trust deed, pledge, encumbrance or other lien upon any part or all of the properties and assets at any time then or thereafter owned or acquired by this corporation. (e) To receive limited or conditional gifts or grants in trust, inter vivos, or by way of testamentary devises, bequests or grants in trust, or otherwise, funds of all kinds including property, both real, personal and mixed, whether principal or income, tangible or intangible, present or future, vested or contingent, in order to carry on the purposes of this corporation. The general purposes and powers for which the corporation is organized are to have and exercise all rights and powers now or hereafter conferred on nonprofit corporations under the laws of the State of California; provided, however, that this corporation shall 2 not, except to an insubstantial degree, engage in any activities or exercise any powers that are not in furtherance of the specific and primary purposes of this corporation as set forth above. III. This Corporation is organized and operated exclusively for civic purposes within the meaning of Section 501(c)(4) of the Internal Revenue Code of 1986, and under the direction of a group of public spirited citizens for the sole purpose of acquiring and constructing or providing for the construction of public improvements as a civic venture for and on behalf of the City. This corporation shall never engage in any business or activity other than that necessary or convenient for or incidental to the carrying out of the purposes set forth in Article II hereof. IV. No part of the net earnings, if any, of this corporation, either during its existence or upon its dissolution, shall ever inure to the benefit of any private individual, or any director, officer or member thereof, or any person, firm or corporation excepting only the City. No substantial part of the activities or this corporation shall consist of carrying on propaganda, or otherwise attempting to influence legislation; nor shall it participate in, or intervene in (including the publishing or distributing of statements) any political campaign on behalf of any candidate for public office. The property, assets, profits and net revenues of this corporation are irrevocably dedicated to the City; provided, however, that until all indebtedness of this 3 corporation shall have been paid, such net revenues may be used for the purpose of paying, prepaying, or calling for redemption any bonds, debentures, notes or other evidences of indebtedness issued to finance public improvements. Upon the dissolution, liquidation or winding up of this corporation, or upon abandonment, the assets of this corporation remaining after payment of all or provision for all debts or liabilities of this corporation and after compliance with Chapters 15, 16 and 17 of the California Nonprofit Public Benefit Corporation Law shall be distributed to the City. V. The name and address in this state of the corporation's initial agent for service of process is; Dennis Danner, City Treasurer City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92659-1768 VI. The number of directors of this corporation may be fixed by its bylaws. The persons who are directors of this corporation, from time to time, shall be its only members, and upon ceasing to be a director of this corporation any such person shall cease to be a member thereof. The members and directors of this corporation shall have no liability for dues or assessments. 4 IN WITNESS WHEREOF, for the purpose of forming the Corporation under the law of the State of California, the undersigned has executed these Articles of Incorporation this 1Q111 day of C// , 1992. i '44Z-01"Oees'e J. DiARIS DANNER, Incorporator DECLARATION I declare that I am the person who executed the above Articles of Incorporation, and that this instrument is my act and deed. Executed on,(-ll /6�, 1992 at Newport Beach, California. I declare under penalty or perjury that the foregoing is true and correct. DEITNIS DANNER, Incorporator 5 BYLAWS OF NEWPORT BEACH PUBLIC FACILITIES CORPORATION ARTICLE I. Name, Organization, Purpose and Principal Office SECTION 1.01. Name. The name of this corporation is CITY OF NEWPORT BEACH PUBLIC FACILITIES CORPORATION (hereinafter referred to as the "Corporation"). SECTION 1.02. Organization, Purpose and Use of Funds. The Corporation is a nonprofit public benefit corporation organized under the Nonprofit Corporation Law of the.State-of--California to provide assistance to the City of Newport Beach, California, by, among other methods, acquiring, leasing, constructing or financing r various public facilities, land, equipment and other improvements and property for the use, benefit and enjoyment of the public (herein referred to as "public improvements"). The activities of the Corporation shall be limited to the activities described in its Articles of Incorporation. No gains, profits or dividends shall be distributed to any of the members of the Corporation; no part of the net earnings, funds or assets of the Corporation shall inure to the benefit of any member, shareholder, individual person, firm or corporation, excepting only the City of Newport Beach. SECTION 1.03. Principal Office. The principal office of the Corporation is hereby fixed and located at 3300 Newport Boulevard, 1 Newport Beach, California, City Manager's Office. The Board of Directors is hereby granted full power and authority to change said principal office from one location to another in the City of Newport Beach. Any such. change shall be noted by the Secretary opposite this section, but shall not be considered an amendment to these Bylaws. ARTICLE II. Members SECTION 2.01. Members. Pursuant to Section 5310 of the Government Code, the bylaws of a nonprofit corporation may provide that the corporation shall have no members. The Corporation shall have no members other than the Directors as specified by Article V of the Articles of Incorporation. ARTICLE III. Directors SECTION 3.01. Powers. Subject to limitation of the Articles of Incorporation, or the Bylaws, and of the California Nonprofit Corporation Law, and subject to the duties of Directors as prescribed by the Bylaws, all powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be controlled by, the Board of Directors. No Director shall be responsible for any error in judgment or for anything that he or she may do or refrain from doing in good faith. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Directors shall have all of the powers permitted by law, 2 including, but not limited to, the following powers, to wit: First - To select and remove all the other officers, agents and employees of the Corporation, prescribe such powers and duties for them as may not be inconsistent with law or the Articles of Incorporation or Bylaws, fix their compensation and require from them security for faithful service; Second - To conduct, manage and control the affairs and business of the Corporation and to make such rules and regulations therefor not inconsistent with law or the Articles of Incorporation or Bylaws, as they may deem best; Third - To borrow money and incur indebtedness for the purposes of the Corporation, and to cause to be executed and delivered therefor, in the name of the Corporation, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor; Fourth - To purchase, rent or otherwise acquire, hold, maintain, lease, sell or otherwise dispose any real or personal property for the purposes of the Corporation. 3 SECTION 3.02. Number and Qualifications of Directors. The authorized number of Directors shall be seven (7) until changed by amendment of the Articles of Incorporation or by amendment of the Bylaws. SECTION 3.03. Selection and Term of Office. Directors of he Corporation shall be the members of the City Council of the City of Newport Beach or persons designated by the City Council, and no person shall be eligible to serve as a Director of the Corporation except a person initially approved by a resolution of the City Council. Unless a vacancy in the office occurs as herein provided, each Director shall hold office for the same term as the member of the City Council of the City of Newport Beach nominating that Director or until a successor has been designated and -has -accepted the office. The member of the City Council of the City of Newport Beach nominating a Director of the Corporation may, with or without cause, remove that Director of the Corporation from office. SECTION 3.04. Vacancies. Subject to the provisions of Section 5226 of the California Nonprofit Corporation Law, any Director may resign effective upon giving written notice to the President, the Secretary, or the Board, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be selected before such time, to take office when the resignation becomes effective. The Board of Directors may remove a Director for failing to attend three consecutive meetings of the Board of Directors. 4 A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the death, resignation, or removal of any Director, or if the authorized number of Directors is increased. Vacancies in the Board shall be filed in the same manner as the Director whose office is vacant was selected. Each Director so selected shall hold office until the expiration of the term of the replaced Director and until a successor has been selected and has accepted the office. SECTION 3.05. Organization and Annual Meeting. The Board of Directors shall hold an annual meeting for the purpose of organization, selection of Directors and officers, and the transaction of other business. Annual meetings of the Board shall be held without call or notice on the second Monday of July at 2:00 o'clock p.m., local time; provided, however, should any said day fall upon a holiday observed by the Corporation at its principal office, then said meeting shall be held at the same time on the next day thereafter ensuing which is a full business day. SECTION 3.06. Regular Meetings. The Board of Directors by resolution may provide for the holding of regular meetings and may f ix the time and place of holding such meetings. Notice of regular meetings need not be given. SECTION 3.07. Special meetings. Notice Waiver. A special meeting of the Board of Directors shall be held whenever called by the President, or by a majority of the Directors. Written notice of each such meeting shall be delivered personally or by mail to 5 each Director to be received at least twenty-four (24) hours before the time of such meeting. The call and notice shall be posted at least twenty-four (24) hours prior to the special meeting in a location that is freely accessible to the members of the public. Notice shall also be given to the City Council of the City of Newport Beach if the Directors or any of them are not members of the City Council. The call and notice shall signify the time and place of the special meeting and the business to be transacted. No other business shall be considered at such meetings by the Board of Directors. Notice of Adjournment of a meeting need not be given to absent Directors if the time and place are fixed at the meeting adjourned. The transactions of any meeting of the Board of Directors, however called and noticed and wherever -held, .shall be as valid as though had at a meeting held after regular call and notice, if a quorum be present; provided, however, that before the meeting, each of the Directors not present signs a written waiver of notice and files said written waiver of notice with the Secretary; and provided further, that notice be given to each local newspaper of general circulation, radio or television station requesting notice in writing pursuant to Government Code Section 54956. All waivers, shall be filed with the corporate records and made a part of the minutes of the meeting. SECTION 3.08. Adjourned Meetings, Notice of Adjournment. The N. Board of Directors may adjourn any regular, adjourned regular, special or adjourned special meeting to a time and place specified in the order of adjournment. Less than a quorum may so adjourn from time to time. A copy of the order or notice of adjournment shall be conspicuously posted on or near the door of the place where the regular, adjourned regular, special or adjourned special meeting was held within twenty four hours after the time of adjournment. When a regular or adjourned regular meeting is adjourned as provided in this section, the resulting adjourned regular meeting is a regular meeting for all purposes. SECTION 3.09. Quorum. A majority of the authorized number of Directors shall be necessary to constitute a quorum for the transaction of business. Every act or decision done or,made by.a majority of the Directors present at a meeting duly held at which a quorum is present, shall be regarded as the act of the Board of Directors unless a greater number be required by law or by the Articles of Incorporation. SECTION 3.10. Fees and Compensation. Directors shall receive no compensation or expenses for their services as Directors. SECTION 3.11. Ralph M. Brown Act. Notwithstanding any of the provisions of these Bylaws to the contrary, all meetings of Directors shall be subject to the Ralph M. Brown Act, commencing at Section 54940 of the Government Code of the State of California. SECTION 3.12. Conduct of Meetings. The President or, in his 7 absence, the Vice President, or a Chairman chosen by a majority of the Directors present, shall preside. Articles IV. Officers SECTION 4.01. Officers. The officers of the Corporation shall be the Chairman of the Board, a President, and a Chief Financial Officer. The Corporation may also have, at the discretion of the Board of Directors, one or more Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed by the Board of Directors. One person may hold two or more offices, except that the offices of President and Secretary or President and Chief Financial Officer may' not be combined. SECTION 4.02. Election. The Chairman of the Board and any Vice -Presidents shall be chosen annually by the Board of Directors and each shall hold office until the officer shall resign, be removed, or otherwise disqualified to serve, or the officer's successor shall be elected and qualified. SECTION 4.03. Removal and Resignation. Vice -Presidents may resign, or may be removed, with or without cause, by the Board of Directors at any time. Vacancies caused by death, resignation or removal of any Vice -Presidents may be filled by appointment by the Board of Directors, or by the President until such appointment by the Board of Directors. SECTION 4.04. President. The City Manager of the City of :7 Newport Beach shall be the President of the Corporation and, subject to the control of the Board of Directors, shall be responsible for the management, supervision, direction and control of the affairs of the Corporation. SECTION 4.05'. Vice -President. In the absence or disability of the President, the Vice Presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice President shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors.or-�by-the.Bylaws. SECTION 4.06. Secretary. The Secretary shall be the City Clerk of the City of Newport Beach. The Secretary shall keep at the principal office of the Corporation a book of minutes of all meetings of Directors and members, with the time and place of holding, how called or authorized, the notice thereof given, the names of those present or represented at member's meetings, and the proceedings thereof. SECTION 4.07. Chief Financial Officer. The Chief Financial Officer shall be the City Treasurer of the City of Newport Beach. The Chief Financial Officer shall keep and maintain adequate and correct books of account showing the receipts and disbursements of the Corporation, and an account of its cash and other assets, if any. Such books of account shall at all reasonable times be open 01 to inspection by any member or Director. The Chief Financial Officer shall deposit all moneys of the Corporation with such depositories as are designated by the Board of Directors, and shall disburse the funds of the Corporation as may be ordered by the Board of Directors, and shall render to the President or the Board of Directors, upon request, statements of the financial condition of the Corporation. SECTION 4.08. Subordinate Officers. Subordinate officers shall perform such duties as shall be prescribed from time to time by the Board of Directors or the President. Articles V. Miscellaneous SECTION 5.01. Execution of Documents. The. Board of Directors may authorize any officer, agent or both to enter into any contract or execute any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances; unless so authorized by the Board of Directors, no officer, agent or other person shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or to any amount. SECTION 5.02. Inspection of Bylaws. The Corporation shall keep in its principal office the original or a copy of these Bylaws, as amended or otherwise altered to date, certified by the Secretary, which shall be open to inspection by the members at all reasonable times during office hours. SECTION 5.03. Annual Report. The annual report referred to 10 in Section 6321 of the Government Code of the State of California is expressly dispensed with. SECTION 5.03. Fiscal Year. The fiscal year of the Corporation shall begin July 1 and end June 30 of each year, except the first fiscal year which shall run from the date of incorporation to June 30, 1992. SECTION 5.05. Dissolution. In the event of dissolution of the Corporation in any manner and for any cause, after the payment or adequate provision for the payment of all of its debts and liabilities, all of the remaining funds, assets and properties of the Corporation shall be paid or distributed to the City of Newport Beach, California. SECTION 5.06. Construction and Definitions. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the Nonprofit Corporation Law of the State of California shall govern the construction of these Bylaws. If any section, subsection, sentence, clause or phrase of these Bylaws, or the application thereof, is contrary to the Nonprofit Corporation Law of the State of California the provisions of that law shall prevail. Without limiting the generality of the foregoing the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, and the term "person" includes a corporation as well as a natural person. Articles VI. 11 0 Amendments SECTION 6.01. Power of Directors. New Bylaws may be adopted or these Bylaws may be amended or repealed by a majority vote of the Board of Directors. 12 RESOLUTION NO. 1 RESOLUTION OF THE BOARD OF DIRECTORS OF THE NEWPORT BEACH PUBLIC FACILITIES CORPORATION ADOPTING BYLAWS WHEREAS, the Newport Beach Public Facilities Corporation (the "Corporation") was duly incorporated as of May 10, 1992; and WHEREAS, the Corporation desires to approve Bylaws to govern the affairs of the Corporation. 'I NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Newport Beach Public Facilities Corporation that: SECTION 1: The Bylaws of the Corporation, attached hereto and incorporated herein by this reference as Exhibit "A", are hereby adopted and approved and shall stand as the Bylaws of the Corporation until valid amendment thereof. SECTION 2: The Secretary is to execute the Bylaws and the Certificate of Adoption of the Bylaws, and to insert the certified Bylaws in the book of minutes of the Corporation and to see that a copy of the certified Bylaws is kept at the principal office of the Corporation. SECTION 3: This Resolution shall take effect from and after its date of adoption. ADOPTED, SIGNED AND APPROVED this 26th day of May, 1992. Newport Beach Public Facilities Corporation By: Its: Ctiairperson/ ATTEST: rye PO C� t Secretary. Cqj 1 STATE OF CALIFORNIA SS. COUNTY OF 07NGE ) Secretary of the Newport Beach Public Facilities Corporat' , do hereby certify that the foregoing Resolution No. ' was introduced and adopted by the Board of Directors of said Corporation at an organizational meeting held on the 26th day of May, 1992, by the following vote of the Directors thereof: AYES: DIRECTORS: NOES: DIRECTORS: ABSENT: DIRECTORS; Secretary, Newport h Public Facilities Corporation Secretary of the Newport Beach Public Facilities Corporatio do hereby certify that the foregoing resolution is a full, true an correct copy of Resolution No._/ duly passed and adopted by said Board on the 26th day of May, 1992. ZZ) � Z. Z�Z� Secretary, Newport Wich Public Facilities Corporation RESOLUTION NO. 2 A RESOLUTION OF THE NEWPORT BEACH PUBLIC FACILITIES CORPORATION, AUTHORIZING AND DIRECTING APPROPRIATE REPRESENTATIVES OF THE CORPORATION TO CAUSE THE EXECUTION OF A SITE LEASE, PROJECT LEASE, TRUST AGREEMENT, AND OTHER NECESSARY DOCUMENTS IN CONNECTION WITH THE DELIVERY AND SALE OF A MAXIMUM OF $7,500,000.00 OF CERTIFICATES OF PARTICIPATION; AUTHORIZING THE SALE AND AWARD OF THE CERTIFICATES AND THE DISTRIBUTION OF THE OFFICIAL STATEMENT; ALL IN CONNECTION WITH FINANCING A CENTRAL LIBRARY FACILITY AND EQUIPMENT FOR THE BENEFIT OF THE CITY OF NEWPORT BEACH RESOLVED, by the Board of Directors of the Newport Beach Public Facilities Corporation, California (the "Corporation"): WHEREAS, the Corporation is a }ion -profit corporation organized under the Laws of the State of California and authorized pursuant to said law and the charter creating the Corporation to assist the financing of public capital improvements of the City of Newport Beach, California (the "City") through, among other things, the leasing transactions described in this resolution; WHEREAS, the Corporation desires to assist the City in financing the construction of a new central library for the City through the issuance of certain certificates of participation all as described in the various documents identified and approved by this resolution and on file with the Secretary of the Corporation, including the Preliminary Official Statement, said construction financing generally referred to herein and in the other documents as the "Project"; WHEREAS, the City and the Corporation wish to finance the Project Costs and Delivery Costs (as such terms are defined in the transaction documents) by entering into a Site Lease whereby the City will lease the Project site to the Corporation and by entering into a Project Lease whereby the Corporation will leaseback the site improved by the Project to the City, which leases contain terms and condition as this Board deems to be in the best interest of the Corporation; WHEREAS, the City will pay Lease Payments under the Project Lease representing the fair market rental value of the property leased thereunder in amounts sufficient to pay components of principal, premium, if any, and interest with respect to the Certificates hereinafter defined; WHEREAS, Bank of America National Trust and Savings Association (the "Trustee") agrees to execute and deliver to the purchaser thereof Certificates of Participation in the maximum principal amount of $7,500,000.00 (the "Certificates"), each representing proportionate interests in the Lease Payments made by the City under the Project Lease, pursuant to a Trust Agreement entered into by the City, the Corporation and the Trustee; WHEREAS, as security for the Certificate owners, the Corporation will assign pursuant to an Assignment Agreement the rights to receive the Lease Payments to the Trustee for the benefit of the owners of the Certificates; WHEREAS, the Trustee has agreed to disburse proceeds received from the sale of the Certificates (to be deposited in a project fund) to pay the Project Costs and Delivery Costs of the Project; WHEREAS, the Financial Advisor to the City has caused to be prepared a Preliminary Official Statement and Official Notice of Sale describing the Certificates and providing for the sale of the Certificates, which documents this Board has had an opportunity to review; WHEREAS, a public sale of the Certificates pursuant to the Official Notice of Sale is scheduled and a highest and best bid (determined as prescribed in the Official Notice of Sale) is anticipated to be received; WHEREAS, the Corporation desires to authorize the award, sale and issuance of the Certificates, the distribution of the Preliminary Official Statement and the lease transactions necessary for the financing of the Project; WHEREAS, this Board approves all of said transactions; NOW, THEREFORE, it is hereby ORDERED and DETERMINED, as follows: SECTION 1. Recitals. The above recitals are true and correct, confirmed and ratified. SECTION 2. Commitment to Issue and Sell Certificates. The Corporation hereby authorizes the award, sale and issuance of the Certificates for such purposes and in such maximum principal amount as are described above. The Certificates shall be issued under and pursuant to the Trust Agreement, in substantially the form on file with the Secretary together with any changes therein, additions thereto, or both deemed advisable by the President or his designee whose execution thereof shall be conclusive evidence of his consent to such changes, additions or both. SECTION 3. Approval, of Lease Trc3llsagta,ons; APrrov,=�l. 9f Documents. The Corporation hereby approves the leasing transactions contemplated by the Site Lease, Project Lease, Assignment Agreement and Trust Agreement on file with the Secretary and authorizes the execution and delivery of the Site Lease, Project Lease, Assignment Agreement and Trust Agreement in form substantially similar to the form on file with the Secretary, together with any changes therein or additions thereto deemed advisable by the President or his designee, whose execution thereof shall be conclusive evidence of his consent to such changes, additions or both. SECTION 4. Approval of Preliminary Official Statement and Notice of sale. The Corporation hereby ratifies and approves the form of Preliminary Official Statement and Official Notice of Sale submitted to and on file with the Secretary. SECTION 5. Certificate Sale. The award of the sale of the Certificates is hereby delegated to the Chief Financial Officer or his designee (provided, however, that the net interest cost on the Certificates shall not be in excess of 8.0-1 per annum and the underwriter's discount shall not exceed 2.0% of the principal amount of the Certificates issued). Final acceptance of the successful bid shall be evidenced by the signature of the Chief Financial Officer or his designee on behalf of the Corporation. SECTION 6. Official Action. The President, Chief Financial Officer and any other officers of the City are hereby authorized and directed to take all actions and do all things necessary or desirable hereunder with respect to the sale of the Certificates, the issuance thereof, the lease transactions, and the financing of the Project. SECTION 9. EffectiveDate. This Resolution shall take effect immediately upon its passage and adoption. ATTEST: By: " - " � � - (- secretary F0 h U q.Chairma Recording Requested By: CITY OF NEWPORT BEACH When Recorded Mail To: CITY OF NEWPORT BEACH 3300 Newport Boulevard Newport Beach, California 92659 Attn: Finance Director S -Zh-47Z This document is recorded for the benefit of the CITY OF NEWPORT BEACH, and recording is fee exempt under §27383 of the Government Code. SITE LEASE between CITY OF NEWPORT BEACH and NEWPORT BEACH PUBLIC FACILITIES CORPORATION Dated as of June 1, 1992 SITE LEASE This Site Lease is made and entered into as of June 1, 1992, by and between CITY OF NEWPORT BEACH (the "City"), a municipal corporation duly organized and existing under the laws of the State of California, as lessor hereunder, and NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a not for profit corporation duly organized and existing under the laws of the State of California, (the "Corporation"), as lessee hereunder. WITNESSETH: WHEREAS, the City may lease (as lessor) any real property of the City for municipal purposes pursuant; WHEREAS, the City has entered into this Site Lease (the "Site Lease") with the Corporation, without an option to purchase, dated the date hereof, wherein the City has leased the real property described in Exhibit "A" hereto (the "Site") to the Corporation, as lessee hereunder; WHEREAS, the City intends to lease back such Site from the Corporation pursuant to the terms of a Project Lease dated the date hereof, between the Corporation and the City (the "Lease"); and WHEREAS, the City and the Corporation intend to enter into a Trust Agreement, dated the date hereof (the "Trust Agreement"), with the Trustee thereunder (the "Trustee") to provide for the execution and delivery of Certificates of Participation (the "Certificates") representing, in part, proportionate interests in Lease Payments and Prepayments made by the City thereunder; NOW, THEREFORE, it is hereby mutually agreed as follows: SECTION 1. Definitions. Unless the context otherwise requires, the capitalized terms herein shall have the meanings specified in the Trust Agreement. SECTION 2. Site Lease. The City hereby leases to the Corporation and the Corporation hereby leases from the City, on the terms and conditions hereinafter set forth, the Site (i.e., the Site described in Exhibit "A" hereto, together with the structures located thereon) provided that the Lease is duly executed and delivered by the parties hereto simultaneously herewith. SECTION 3. Term. The term of this Site Lease shall commence as of the date of recordation hereof and shall remain in effect until the expiration of the term of the Lease, as defined in the Lease and which terminates as provided therein, provided, however, if Lease Payments (as defined therein) due under the Lease remain unpaid at the expiration of the Lease term, then this Site Lease shall not terminate until the earlier of (i) June 1, 2020 or (ii) the date on which the Certificates have been paid in full (plus a recovery of the cost of any investment made by the Trustee as assignee of the Corporation); provided that this Site Lease shall not expire during the term of any lease executed and delivered in place of the Lease pursuant to Section 13.10 of the Trust Agreement, unless such term is sooner terminated as - 1 - hereinafter provided. SECTION 4. Rental. The Corporation, and any assignee or successor in interest of the Corporation under this Site Lease, shall pay annually to the City as and for rental hereunder, the sum of One Dollar ($1.00), commencing on the date hereof, and continuing to and including the date of termination of this Site Lease. SECTION 5. Purpose. The Corporation shall use the Site solely for the purpose of leasing back the Site to the City or others pursuant to the Lease and for such purposes as may be incidental thereto. SECTION 6. Owner in Fee. The City covenants that it is the owner in fee of the Site. SECTION 7. Assignments and Site Leases. The City acknowledges and affirms the assignment by the Corporation of its rights under this Site Lease to the Trustee, under the terms of the Assignment Agreement, dated as of the date hereof, between the Corporation and the Trustee, for the benefit of the Owners of the Certificates. SECTION 8. Termination. The Corporation agrees, upon the termination of this Site Lease, to quit and surrender the Site in the same good order and condition as the same was in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements and structures existing upon the Site at the time of the termination of this Site Lease shall remain thereon and title thereto shall vest in the City. Upon prepayment by the City of all Lease Payments due during the term of the Lease, the term of this Site Lease shall terminate as provided herein. Upon payment by the City of all Lease Payments due during the term of the Lease, as provided for in Article IV thereof, the term of this Site Lease shall terminate subject to Section 3 hereof. SECTION 9. Quiet Enjoyment. The Corporation at all times during the term of this Lease shall peaceably and quietly have, hold and enjoy all of the Site. SECTION 10. Default. In the event the Corporation shall be in default in the performance of any obligation on its part to be performed under the terms of this Site Lease, which default continues for 30 days following written notice to and demand for correction thereof, by the Corporation, the City, with the consent of the Trustee (subject to the Trust Agreement), may exercise any and all remedies granted by law which do not adversely affect the interests of the Owners of the Certificates, provided that the City may not terminate this Site Lease and shall exercise only remedies providing for specific performance hereunder, and provided further, however, that so long as any of the Certificates are Outstanding and unpaid in accordance with the terms thereof, the Lease Payments assigned by the Corporation to the Trustee under the Trust Agreement shall continue to be paid to the Trustee. SECTION 11. Taxes. Subject to the provisions of Section 7.6(c) of the Lease, the City covenants and agrees to pay any and all assessments of any kind or character and also all -2- taxes, including possessory interest taxes, levied or assessed upon the Site. SECTION 12. Eminent Domain. In the event the whole or any part of the Project is taken by eminent domain proceedings, the interest of the Corporation shall be recognized and is hereby determined to be the amount of unpaid Lease Payments or Additional Payments due the Corporation under the Lease. SECTION 13. Partial Invalidity. If any one or more of the terms, provisions, covenants or conditions of this Site Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the fullest extent permitted by law. SECTION 14. Applicable Law. This Site Lease shall be governed by and construed in accordance with the laws of the State of California. SECTION 15. Representatives. Whenever under the provisions of this Site Lease the approval of the Corporation or the City is required, or the Corporation or the City is required to take some action at the request of the other, such approval or such request shall be given for the Corporation by the Representative as defined in the Lease and for the City by its City Representative, and any party hereto shall be authorized to rely upon any such approval or request. SECTION 16. Notices. All notices or other communications hereunder shall be sufficiently given and shall be deemed to have been received 24 hours after deposit in the United States mail in registered or certified form, postage prepaid: If to the City: CITY OF NEWPORT BEACH 3300 Newport Boulevard Newport Beach, California 92659 Attention: Finance Director If to the Corporation: NEWPORT BEACH PUBLIC FACILITIES CORPORATION 3300 Newport Boulevard Newport Beach, California 92659 Attention: Chief Financial Officer The Corporation and the City, by notice given hereunder, may designate different addresses to which subsequent notices or other communications will be sent. -3- SECTION 17. Captions. The captions or headings in this Site Lease are for convenience only and in no way define, limit or describe the scope or intent of any provision or Section of this Site Lease. SECTION 18. Execution in Counterparts. This Site Lease may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same instrument. SECTION 19. Incorporation. This Site Lease is hereby made a part of the Lease and shall be subject to all the terms and conditions of the Lease. SECTION 20. Amendment. This Site Lease may be amended with the consent of the Trustee to provide for the substitution of sites for the Site or the addition of real property as a Site hereunder, provided that the Lease is correspondingly amended as provided in Section 8.3 thereof. IN WITNESS WHEREOF, the parties have caused this Site Lease to be executed by their duly authorized officers on the date and year first above written. CITY OF NEWPORT BEACH Bv: City Manager NEWPORT BEACH PUBLIC FACILITIES CORPORATION Bv: Corporation Representative -4- STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) On this day of June in the year 1992 before me, the undersigned, a Notary Public in and for the State of California, personally appeared to me , known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument and acknowledged to me that he executed the within instrument pursuant to a resolution of the Board of Directors of the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, the public agency that executed the within instrument. WITNESS my hand and official seal. Notary Public - 5 - STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) On this day of June in the year 1992 before me, the undersigned, a Notary Public in and for the State of California, personally appeared to me, , known to me (or proved to me on the basis of satisfactory evidence) to be the of CITY OF NEWPORT BEACH, the public agency that executed the within instrument, and personally known to me (or proved on the basis of satisfactory evidence) to be the person who executed the within instrument on behalf of said City, and acknowledged to me that he executed the within instrument pursuant to a resolution of said City. WITNESS my hand and official seal. Notary Public 2. EXHIBIT "A" DESCRIPTION OF SITE [description of Library Site] A-1 Recording Requested By: CITY OF NEWPORT BEACH When Recorded Mail To: CITY OF NEWPORT BEACH 3300 Newport Boulevard Newport Beach, California 92659 Attn: Finance Director This document is recorded for the benefit of CITY OF NEWPORT BEACH, and recording is fee exempt under §27383 of the Government Code. PROJECT LEASE between NEWPORT BEACH PUBLIC FACILITIES CORPORATION Lessor and CITY OF NEWPORT BEACH Lessee Dated as of June 1, 1992 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND EXHIBITS SECTION 1.1 Definitions and Rules of Construction ................. 2 SECTION 1.2 Exhibits ..................................... 2 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES SECTION 2.1 Representations, Covenants and Warranties of the City ..... 3 SECTION 2.2 Representations, Covenants and Warranties of the Corporation 4 ARTICLE III ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT SECTION 3.1 Deposit of Certificate Proceeds ..................... 5 SECTION 3.2 Payment of Project Costs ......................... 5 SECTION 3.3 Completion Certification 5 SECTION 3.4 Further Assurances and Corrective Instruments .......... 6 ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS; ADDITIONAL PAYMENTS SECTION 4.1 Lease ....................................... 6 SECTION 4.2 Term ....................................... 6 SECTION 4.3 Lease Payments ................................ 6 SECTION 4.4 No Withholding ................................ 7 SECTION 4.5 Fair Market Rental Value .......................... 7 SECTION 4.6 Assignment of Lease Payments ..................... 7 SECTION 4.7 Use and Possession ............................. 7 SECTION 4.8 Abatement of Lease Payments in Event of Loss of Use ..... 8 SECTION 4.9 Additional Payments ............................. 8 SECTION 4.10 Net -Net -Net Lease .............................. 8 ARTICLE V INSURANCE SECTION 5.1 Public Liability and Property Damage ................. 9 SECTION 5.2 Workers' Compensation .......................... 9 SECTION 5.3 Casualty Insurance .............................. 9 SECTION 5.4 Rental Interruption Insurance ....................... 10 SECTION 5.5 Title Insurance ................................. 10 SECTION 5.6 General Insurance Provisions ....................... 10 SECTION 5.7 Cooperation .................................. 11 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1 Application of Net Proceeds ....................... 12 SECTION 6.2 Application of Other Moneys ....................... 14 ARTICLE VII COVENANTS WITH RESPECT TO THE SITE SECTION 7.1 Use of the Site; Non -abandonment ................... 14 SECTION 7.2 Interest in the Site .............................. 14 SECTION 7.3 Quiet Enjoyment ............................... 14 SECTION 7.4 Installation of City's Personal Property ................ 15 SECTION 7.5 Access to the Site .............................. 15 SECTION 7.6 Maintenance, Utilities, Taxes and Assessments; Operating Costs 15 SECTION 7.7 Modification of the Site .......................... 16 SECTION 7.8 Liens ....................................... 17 SECTION 7.9 Corporation's Disclaimer of Warranties ................ 17 ARTICLE Vlll ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8.1 Assignment by the Corporation ..................... SECTION 8.2 Assignment and Subleasing by the City ............... SECTION 8.3 Amendments and Modifications ..................... ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9.1 Events of Default Defined ......................... SECTION 9.2 Remedies on Default ............................ SECTION 9.3 No Remedy Exclusive ............................ SECTION 9.4 Agreement to Pay Attorneys' Fees and Expenses ........ SECTION 9.5 No Additional Waiver Implied by One Waiver ............ SECTION 9.6 Application of the Proceeds from the Re -Lease of the Project SECTION 9.7 Trustee and Certificate Owners to Exercise Rights ........ 18 18 18 18 19 21 21 21 22 22 ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1 Mandatory Prepayment From Net Proceeds or Other Moneys ............................... 22 SECTION 10.2 Optional Prepayment ............................ 22 SECTION 10.3 Credit for Amounts on Deposit ..................... 22 SECTION 10.4 Effect of Prepayment ............................ 23 ARTICLE XI MISCELLANEOUS SECTION 11.1 Notices ...................................... 23 SECTION 11.2 Binding Effect ................................. 24 SECTION 11.3 Severability................................... 24 SECTION 11.4 Execution in Counterparts ......................... 24 SECTION 11.5 Applicable Law ................................ 24 Exhibit A - Schedule of Lease Payments ............................. A-1 Exhibit B - General Description of the Project .......................... B-1 Exhibit C - Form of Lease Supplement ............................... C-1 Exhibit D - Legal Description of the Site .............................. D-1 PROJECT LEASE THIS PROJECT LEASE, dated as of June 1, 1992, by and between the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a nonprofit corporation duly organized and existing under the laws of the State of California, as lessor (the "Corporation"), and CITY OF NEWPORT BEACH, a municipal corporation duly organized and existing under the Constitution and laws of said State, as lessee (the "City"); WITNESSETH: WHEREAS, the Corporation and the City wish to provide financing for the acquisition and construction, as described herein, of certain improvements described in Exhibit B hereto referred to as the "Project" by entering into this Project Lease (the "Lease") and authorizing and directing the execution and delivery of Certificates of Participation, described below, evidencing an undivided and proportionate interest in Lease Payments to be made by the City hereunder; WHEREAS, the City has entered into a Site Lease of even date herewith (the "Site Lease") with the Corporation under which the Corporation has agreed to lease the site (as herein defined) from the City and improve or provide for the acquisition, construction and improvement of the Project to be used by the City and to lease back the Project to the City pursuant to Section 4.1 hereof, and which Site Lease provides that the title to such Project shall vest in the City at the expiration of such Site Lease (as provided in Section 8 thereof), and contains other terms and conditions as the City Council of the City deems to be in the best interest of the City; WHEREAS, the City is authorized to enter into the lease and leaseback of the Site to provide financing for the Project; NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND EXHIBITS SECTION 1.1. Definitions and Rules of Construction. Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of this Lease, have the meanings specified in the Trust Agreement, dated as of the date hereof, by and among Bank of America, NT & SA, as trustee thereunder, the Corporation, and the City (the "Trust Agreement"), together with any amendments thereof or supplements thereto permitted to be made thereunder; and the additional terms defined in this Section shall, for all purposes of this Lease, have the meanings herein specified. Unless the context otherwise indicates, words - 1 - importing the singular number shall include the plural number and vice versa. The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this Lease, refer to this Lease as a whole. "Permitted Encumbrances" means, as of any particular time: (i) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article VII hereof, permit to remain unpaid; (ii) the Assignment Agreement, as it may be amended from time to time; (iii) the Site Lease, as it may be amended from time to time; (iv) this Lease, as it may be amended from time to time; (v) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; NO easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which will not materially impair the use of the Site by the City; and (vii) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of this Lease and to which the Corporation, the Trustee and the City consent in writing, and which, in the opinion of Counsel to the City do not materially affect use by the City of the Project as intended. "Project" means the Project described in Exhibit B hereto. "Site" means the site or sites described in Exhibit D hereto together with all improvements thereon. SECTION 1.2. Exhibits. The following Exhibits are attached to, and by reference made a part of, this Lease: Exhibit A: Schedule of Lease Payments to be paid by the City to the Corporation, showing the Lease Payment Date and amount of each Lease Payment. Exhibit B: General description of the Project. Exhibit C: Lease Supplement Form. Exhibit D: Legal Description of the Site. ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES SECTION 2.1. Representations Covenants and Warranties of the City. The City represents, covenants and warrants to the Corporation as follows: (a) Due Organization and Existence. The City is a municipal corporation of the State, duly organized and existing under the Constitution and laws of the State. -2- (b) Authorization; Enforceability. The Constitution and laws of the State authorize the City to enter into this Lease, the Site Lease and the Trust Agreement and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid lease transaction agreements, and the City has duly authorized and executed all of the aforesaid lease transaction agreements. This Lease, the Site Lease and the Trust Agreement constitute the legal, valid and binding obligations of the City enforceable in accordance with their respective terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (c) No Conflicts or Default; No Liens or Encumbrances. Neither the execution and delivery of this Lease, the Site Lease or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, (i) conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City, or upon the Project except for the pledges contained in the Trust Agreement and except for Permitted Encumbrances, and (ii) results in an abatement of the City's obligations hereunder. (d) Execution and Delivery. The City has duly authorized and executed this Lease in accordance with the Constitution and laws of the State. (e) Indemnification of Corporation. The City covenants to defend, indemnify and hold harmless the Corporation and its directors and employees and assignees (collectively, the "Indemnified Party") against any and all losses, claims, damages or liabilities, joint or several, including fees and expenses incurred in connection therewith, to which such Indemnified Party may become subject under any statute or at law or in equity or otherwise in connection with the transactions contemplated by this Lease, and shall reimburse any such Indemnified Party for any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of the transactions contemplated by this Lease. In particular, without limitation, the City shall and hereby agrees to indemnify and save the Indemnified Party harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the Project by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Lease, (iii) any act or negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Project, (iv) any act or negligence of any assignee or sublessee of the City with respect to the Project, or (v) the acquisition and construction of the Project or the authorization of payment of the Project Costs by the City. (f) General Tax and Arbitrage Covenant. The City hereby covenants that, notwithstanding any other provision of this Lease, it will make no use of the proceeds of the Certificates or of any other amounts or property regardless of the source or take any action or refrain from taking any action that may cause the obligations of the City under this -3- Agreement to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"). In addition, the City covenants that it will not make any use of the proceeds of the obligations provided herein or in the Trust Agreement or any other funds of the City or take or omit to take any other action that would cause such obligations to be a "private activity bond" within the meaning of Section 141 of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code. To that end, so long as any Lease Payment is unpaid, the City, with respect to such proceeds and such other funds, will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1954, as amended, to the extent that such requirements are, at the time, applicable and in effect. (g) Budget. The City covenants to budget and appropriate all Lease Payments and Additional Payments (to the extent the amount of such Additional Payments are known to the City at the time its annual budget is proposed) due hereunder in its annual budget and to maintain such items to the extent unpaid in that Fiscal Year in its budget throughout such Fiscal Year. To the extent the amount of such payments becomes known after the adoption of the annual budget, such amounts shall be included and maintained in such budget as amended. During the Term, the City will annually on or before October 1 of each year furnish to the Trustee certification that the City has complied with the requirements of this Section. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the City. SECTION 2.2. Representations, Covenants and Warranties of the Corporation. The Corporation represents, covenants and warrants to the City as follows: (a) Due Organization and Existence; Enforceability. The Corporation is a nonprofit Corporation duly organized and existing under and by virtue of the laws of the State, has the power to enter into this Lease, the Site Lease, the Assignment Agreement and the Trust Agreement; is possessed of full power to own and hold real and personal property, and to lease and sell the same; and has duly authorized the execution and delivery of all of the aforesaid lease transaction agreements. This Lease, the Site Lease, the Assignment Agreement and the Trust Agreement constitute the legal, valid and binding obligations of the Corporation enforceable in accordance with their respective terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (b) No Conflicts or Defaults; No Liens or Encumbrances. Neither the execution and delivery of this Lease, the Site Lease, the Assignment Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or -4- instrument to which the Corporation is now a party or by which the Corporation is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Corporation, or upon the Project except by the pledges contained in the Trust Agreement and except for Permitted Encumbrances. (c) Execution and Delivery. The Corporation has duly authorized and executed this Lease in accordance with the Constitution and laws of the State. (e) General Tax and Arbitrage Covenant. The Corporation covenants that, notwithstanding any other provision of this Lease, it will make no use of the proceeds of the Certificates or of any other amounts or property regardless of the source or take any action or refrain from taking any action that may cause the obligations of the City under this lease to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Internal Revenue Code of 1986, as amended. In addition, the Corporation covenants that it will not make any use of the proceeds of the obligations provided herein or in the Trust Agreement or any other funds of the City or take or omit to take any other action that would cause such obligations to be a "private activity bond" within the meaning of Section 141 of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code. To that end, so long as any Lease Payment is unpaid, the Corporation, with respect to such proceeds and such other funds, will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1954, as amended, to the extent that such requirements are, at the time, applicable and in effect. ARTICLE III ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT SECTION 3.1. Deposit of Certificate Proceeds. On the Closing Date the Corporation agrees to pay or cause to be paid to the City certain moneys to be deposited with the Trustee as provided in Section 3.01 of the Trust Agreement. SECTION 3.2. Payment of Project Costs. The City, as agent of the Corporation, will provide for the construction, acquisition and improvement of the Project pursuant to the requirements of the City. Payment of the Project Costs shall be made from the moneys deposited with the City in the Acquisition and Construction Fund as provided in Section 3.01 of the Trust Agreement, which shall be disbursed from the Acquisition and Construction Fund in accordance and upon compliance with Article III of the Trust Agreement. SECTION 3.3. Completion Certification. Upon acquisition, construction, improvement or conclusion of the Project satisfactory to the City, the City shall deliver to the Trustee the certificate of completion with respect thereto. On the date of filing the certificate of Completion, all excess moneys remaining in the Acquisition and Construction Fund shall be transferred by the City to the Trustee as provided in Section 3.03 of the Trust Agreement. -5- SECTION 3.4. Further Assurances and Corrective Instruments. The Corporation and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project or for carrying out the expressed intention of this Lease. ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS; ADDITIONAL PAYMENTS SECTION 4.1. Lease. The Corporation hereby leases the Site, as improved by the Project, to the City, and the City hereby leases the Site, as improved by the Project, from the Corporation, upon the terms and conditions set forth herein. SECTION 4.2. Term. (a) The term of this Lease shall commence on the date hereof and shall end on June 1, 2020, unless terminated prior thereto upon the earliest of any of the following events: (i) Default and Termination. A default by the City and the Corporation's election to terminate this Lease under Section 9.2(b) hereof; (ii) Payment of All Lease Payments. The payment by the City of all Lease Payments required under Section 4.3 hereof and any Additional Payments required under Section 4.9 hereof when due and payable, upon prepayment as provided in Article X hereof or upon provision for payment of all Outstanding Certificates, as provided by Article XIV of the Trust Agreement. (b) If on June 1, 2020, the Certificates shall not be fully paid, or if the Lease Payments hereunder shall have been abated at any time and for any reason, then the Term shall be extended until all Certificates shall be fully paid, except that the Term shall in no event be extended beyond June 1, 2030. SECTION 4.3. Lease Payments. (a) Time and Amount. Commencing as of the date hereof, subject to the provisions of Section 4.8 (regarding abatement in event of loss of use of any portion of the Site) and Article X (regarding prepayment of Lease Payments), the City agrees to pay to the Corporation, its successors and assigns, as annual rental for the use and possession of the Site, the Lease Payments (denominated into components of principal and interest), in the semi-annual amounts specified in Exhibit "A", to be due and payable on the dates specified in Exhibit "A" (each a "Lease Payment Date") which are sufficient in both time and amount to pay when due the annual principal and semi-annual interest represented by the Certificates. WE In the event the City does not pay Lease Payments on any such day, the Trustee shall provide prompt written notice to the City of such failure to pay and, if unpaid, that failure to make Lease Payments shall become an event of default in accordance with Section 9.1 hereof; provided, however, that failure to give such notice shall not excuse any event of default under such section 9.1. (b) Credits. Any monies on deposit in the Lease Payment Fund at the time that the Trustee gives the City notice pursuant to Section 5.03 of the Trust Agreement (other than amounts required for payment of past due principal or interest with respect to any Certificates not presented for payment) shall be credited to the payment of Lease Payments due and payable on such Lease Payment Date. (c) Rate on Overdue Payments. In the event the City should fail to make any of the Lease Payments required in this Section, the Lease Payment in default shall continue as an obligation of the City until the amount in default shall have been fully paid, and the City agrees to pay the same with interest thereon, to the extent permitted by law, from the date such amount was originally payable at the rate equal to the original interest rate payable with respect to each Certificate. (d) Reserve Replenishment Rent. If (1) funds have been withdrawn from the Reserve Fund in order to pay interest or principal represented by the Certificates, or there shall be a deficiency in the Reserve Fund resulting from a decrease of 10% or more in the market value of the Permitted Investments in the Reserve Fund determined as provided in Section 8.05(a) of the Trust Agreement, and (2) Lease Payments are not in abatement pursuant to Section 4.8 hereof, and (3) the amount on deposit in the Reserve Fund is less than the Reserve Requirement, then the City shall pay, from its first available moneys after payment of Lease Payments, to the Trustee Reserve Replenishment Rent consistent with the fair market rental value of the Project. (i) over a period of not more than four months, in four (4) substantially equal payments, in the event such deficiency results from a decrease of ten percent (10%) or more in the market value of the Permitted Investments on deposit in the Reserve Fund, or (ii) over a one-year period, in substantially equal semi-annual payments, in the event such deficiency results from a withdrawal from the Reserve Fund. SECTION 4.4. No Withholding. Notwithstanding any dispute between the Corporation and the City, including a dispute as to the failure of any portion of the Site in use by or in possession of the City to perform the task for which it is leased, the City shall make all Lease Payments and Additional Payments when due and shall not withhold any Lease Payments pending the final resolution of such dispute. -7- SECTION 4.5. Fair Market Rental Value. The Lease Payments shall be paid by the City in consideration of the right of possession of, and the continued quiet use and enjoyment of, the Site during each such period for which said rental is to be paid. The parties hereto have agreed and determined that such total rental is not in excess of the fair market rental value of the Site. In making such determination, consideration has been given to the fair market value of the Site, other obligations of the parties under this Lease (including but not limited to costs of maintenance, taxes and insurance), the uses and purposes which may be served by the Site and the benefits therefrom which will accrue to the City and to the general public, the ability of the City to make additions, modifications and improvements to the Site and to replace the Site as provided in Section 7.7 hereof, and the transfer of the Corporation's leasehold interest in the Site at the end of the Term hereof. SECTION 4.6. Assignment of Lease Payments. Certain of the Corporation's rights under this Lease, including the right to receive and enforce payment of the Lease Payments, Additional Payments, and Prepayments to be made by the City hereunder, have been assigned to the Trustee, subject to certain exceptions, pursuant to the Assignment Agreement, dated the date hereof, between the Trustee and the Corporation, to which assignment the City hereby consents. The Corporation hereby directs the City, and the City hereby agrees to pay to the Trustee at the Trustee's corporate trust office in Los Angeles, California, or to the Trustee at such other place as the Trustee shall direct in writing, all Lease Payments or Prepayments thereof, and Additional Payments payable by the City hereunder. The Corporation will not assign or pledge the Lease Payments or other amounts derived from the Site and from its other rights under this Lease except as provided under the terms of this Lease, or its duties and obligations except as provided under the Assignment Agreement and the Trust Agreement. SECTION 4.7. Use and Possession. The total Lease Payments due in any Fiscal Year shall be for the use and possession of the Site for such Fiscal Year. SECTION 4.8. Abatement of Lease Payments in Event of Loss of Use. (a) Period. The obligation of the City to pay Lease Payments shall be abated during any period in which by reason of damage, destruction or taking by eminent domain or condemnation with respect to any item or portion of the Site there is substantial interference with the use and possession of such item or portion of the Site by the City. (b) Amount. The amount of such abatement shall be determined by the City such that the resulting Lease Payments represent fair market rental value for the use and possession of the item or portion of the Site not damaged, destroyed, or taken. Such abatement shall commence with such damage, destruction or taking and end with the substantial completion of the replacement or repair provided, however, that during abatement, available moneys on deposit in the Reserve Fund or from drawings under an insurance policy and the Lease Payment Fund, other special fund sources of money, including without limitation, proceeds of rental interruption insurance, shall be applied to pay the Lease Payments. (c) Repair or Replacement. In the event of such abatement, the City will use its best efforts to repair or replace the damaged or destroyed portion of the Site, with due diligence and dispatch, as the case may be, from special funds of the City or other moneys, including the proceeds of any property insurance policies associated with the Site, the application of which would, in the opinion of Special Counsel addressed to the Trustee, the City and the Corporation, not result in the obligations of the City hereunder constituting indebtedness of the City in contravention of the Constitution and laws of the State. SECTION 4.9. Additional Payments. In addition to the Lease Payments, the City shall also pay such amounts ("Additional Payments") as shall be required for the payment of all administrative costs of the Corporation relating to the Site or the Certificates, including without limitation all expenses, compensation and indemnification of the Trustee payable by the City under the Trust Agreement, fees of auditors, accountants, attorneys or engineers, and all other necessary administrative costs of the Corporation or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Certificates or of the Trust Agreement, including premiums on insurance maintained pursuant to Article V hereof, or to indemnify the Corporation and its officers and directors. SECTION 4.10. Net -Net -Net Lease. This Lease shall be deemed and construed to be a "net -net -net lease" and the City hereby agrees that the Lease Payments shall be an absolute net return to the Corporation, free and clear of any expenses, charges or set -offs whatsoever, except as expressly provided herein. ARTICLE V INSURANCE SECTION 5.1. Public Liability and Property Damage. (a) Coverage. Prior to the commencement of work by the contractor, a certificate of insurance will be provided to the City which shall indicate that public liability and property damage insurance in the amount of not less than $1,000,000 is in effect and will be maintained in full force and effect during the period of construction. The policies must be in a form acceptable to the City and require at least 30 days written notice before any of the policies are cancelled, limited or not renewed. (b) Limits. After the completion of the construction and acceptance of the Project, the City shall at its sole cost and expense, maintain or cause to be maintained at all times during the Lease Term general property damage and public liability insurance (including but not limited to coverage for all losses whatsoever arising from the ownership, maintenance, operation or use of any automobile, truck or other motor vehicle), with respect to the Project under which the Corporation, the City and the Trustee shall be named as insureds, properly protecting and indemnifying the Corporation and the Trustee in an amount not less than $1,000,000 for boidly injury (including death) of each person and property damage in one occurrence and $5,000,000 in the aggregate. Such public liability and property damage insurance may, however, be in the form of a single limit policy covering all risks in an amount equal to $5,000,000. The policies of said insurance shall contain a provision that such insurance may not be cancelled by the issuer thereof without at least thirty (30) days' advance written notice to the Corporation, the City and the Trustee. Such policies or copies or certificates thereof shall be furnished to the Corporation. (c) Joint or Self -Insurance. Such liability insurance, including the deductible, may be maintained as part of or in conjunction with any other insurance coverage carried by the City. (d) Payment of Net Proceeds. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds shall have been paid. SECTION 5.2. Workers' Compensation. The City shall also maintain workers' compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure its employees against liability for compensation under the Workers' Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof (with provision for self- insurance of $100,000). SECTION 5.3. Casualty Insurance. (a) Casualty Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, insurance against loss or damage to any item or portion of the Site by fire and lightning, with extended coverage and vandalism and malicious mischief insurance, and earthquake insurance (but as to such earthquake insurance only if such insurance is available at reasonable cost on the open market from reputable insurance companies and only following completion of construction). Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to 100% of the full insurable value of the Site as improved (except that such insurance may be subject to deductible clauses of not to exceed $100,000 for any one loss). The full insurable value of the Project shall be determined from time to time at the request of the Corporation or the City (but note more frequently than once in every three years) by an architect, contractor, appraiser, appraisal company or one of the insurers, to be selected and paid by the City, provided, however, that in no event shall such insurance be maintained in an amount less than the aggregate principal amount of Certificates at the time Outstanding. The insurance required pursuant to this Section shall be maintained at the City's sole cost and expense and shall be maintained with a generally recognized responsible insurance company or companies authorized to do business in the State as may be selected by the City. Copies of the insurance policies, or originals or certificates thereof, each bearing notations evidencing payment of the premiums or other evidence of such payment, shall be delivered by the City to the Corporation. All such policies of insurance and all renewals thereof, shall name the Corporation, the City and the Trustee as insureds as their respective interests may appear, shall contain a provision that such insurance may not be cancelled by the issuer thereof without at least thirty (30) days' advance written notice to the Corporation, the City and -10- Trustee, and shall be payable to the Trustee. Such insurance may be maintained as part of or in conjunction with any other insurance carried or required to be carried by the City. In the event that earthquake insurance is not available at reasonable cost on the open market from reputable insurance companies as provided above, the City shall immediately notify the Trustee of such event. (b) Payment of Net Proceeds. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Net Proceeds Account and applied as provided in Section 6.1. SECTION 5.4. Rental Interruption Insurance. (a) Coverage and Amount. The City shall maintain or cause to be maintained on or prior to the date that the City files the Certificates of Completion, rental interruption insurance in an amount not less than the maximum remaining scheduled Lease Payments in any future twelve (12) month period, to insure against loss of Lease Payments from the Site caused by perils covered by the insurance required to be maintained as provided in Section 5.3 hereof. Such insurance shall be obtained as of the date on which the City obtains possession of the Site. (b) Joint Insurance. Such insurance may be maintained as part of or in conjunction with any other rental interruption insurance carried by the City. (c) Payment of Net Proceeds. The net proceeds of such rental interruption insurance shall be paid to the Trustee and deposited in the Reserve Fund to the extent necessary and to the Lease Payment Fund, to be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. SECTION 5.5. Title Insurance. The City shall obtain and, throughout the Term hereof, maintain or cause to be maintained title insurance on the Project, in the form of a CLTA owner's title policy in an amount equal to the aggregate principal component of unpaid Lease Payments, issued by a company of recognized standing, duly authorized to issue the same, subject only to Permitted Encumbrances. The Net Proceeds of such insurance shall be applied as provided in Section 6.1 hereof. SECTION 5.6. General Insurance Provisions. (a) Form of Policies. All policies of insurance required to be procured and maintained pursuant to this Lease, except the insurance required by Section 5.2 hereof, and any statements of self-insurance shall be in form certified by an insurance agent, broker or consultant to the City to comply with the provisions hereof. All such policies shall give the Corporation, the City and the Trustee 30 days' notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. Each policy of insurance required to be procured and maintained pursuant to Section 5.3 (regarding casualty insurance), and Section 5.4 (regarding rental interruption insurance) and Section 5.5 (regarding title - 11 - insurance) shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Owners. All policies pursuant to Section 5.3, 5.4 and 5.5 hereof shall be endorsed to name the Trustee as co -loss payee with the City. (b) Payment of Premiums. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. (c) Protection of the Corporation and the Trustee. The Trustee shall not be responsible for the sufficiency or adequacy of any insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. The Corporation and the Trustee shall be named as additional insureds under all policies required by this Article V. (d) Evidence of Insurance. The City shall cause to be delivered to the Trustee on the Closing Date and annually thereafter on or before October 1 of each year, a certificate of the City stating that the insurance policies or self-insurance programs required by this Lease are in full force and effect. (e) Blanket Insurance Policies. The City may satisfy any of the insurance requirements set forth in this Lease by using blanket policies of insurance, provided that the City complies with each and all of the requirements and specifications of this Lease. (f) Modification of Insurance Policies. Subject to the other provisions of this Lease, the City may modify its insurance coverage, including its self-insurance, in whole or in part, taking into account the cost and availability of insurance and the effect of the terms and rates of such insurance on the City's costs and charges for its services, upon filing with the Trustee the City's Certificate that the new coverage is equal to or better than that which it replaces. (g) In the event that the insurance reserves provided pursuant to Sections 5.1 and 5.2 shall be insufficient as determined in the annual actuarial valuation (under any program of self-insurance) by the independent insurance consultant, the City shall immediately fund such reserves to the required level. SECTION 5.7. Cooperation. The Corporation shall cooperate fully with the City at the expense of the City in filing any proof of loss with respect to any insurance policy maintained pursuant to this Article and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Site or any portion thereof. ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1. Application of Net Proceeds. (a) Deposit in Net Proceeds Account. The City shall remit promptly to the Trustee any Net Proceeds received by the City and the Trustee shall deposit such Net Proceeds -12- pursuant to Section 7.01 of the Trust Agreement, which it receives in the Net Proceeds Fund as provided in Section 5.3 (regarding casualty insurance) and Section 5.5 (regarding title insurance) promptly upon receipt thereof. The City, the Corporation, or both shall transfer to the Trustee any other Net Proceeds received by the City, Corporation, or both in the event of any accident, destruction, or taking by eminent domain or condemnation with respect to the Site, for deposit in the Net Proceeds Fund. (b) Disbursement for Replacement or Repair of the Proiect. Upon receipt of the certification described in paragraph (1) below and the requisition described in paragraph (2) below, the Trustee shall disburse moneys in the Net Proceeds Account to the person, firm or corporation named in the requisition as provided in Section 7.02 of the Trust Agreement. (1) Certification. The City Representative must certify to the Corporation and the Trustee that: (i) Sufficiency of Net Proceeds. The Net Proceeds available for such purpose, together with any other funds supplied by the City to the Trustee in a subaccount of the Net Proceeds Fund for such purpose, are expected to equal at least 1 10% of the projected costs of replacement or repair, as demonstrated in an attached reconstruction budget; (ii) Timely Completion. In the event that damage, destruction or taking results or is expected to result in an abatement of Lease Payments, such replacement or repair can be fully completed within a period not in excess of the period in which rental interruption insurance proceeds as described in Section 5.4, together with other identified available moneys will be available to pay in full all Lease Payments coming due during such period as demonstrated in an attached reconstruction schedule; and (iii) No Unauthorized Encumbrances. There are no encumbrances on the Site other than Permitted Encumbrances. (2) Requisition. The City Representative must state with respect to each payment to be made (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid and (iv) that each obligation mentioned therein has been properly incurred, is a proper charge against the Net Proceeds Account, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation. Subject to the requirements of section 7.02 of the Trust Agreement, any balance of the Net Proceeds remaining after such replacement or repair has been completed shall be paid to the City. -13- (c) Disbursement for Prepayment. If the City shall not have determined to repair or replace as provided above, the Trustee shall promptly transfer the Net Proceeds to the Prepayment Account as provided in Section 7.02 of the Trust Agreement and apply them to prepayment of the Certificates as provided in Section 4.02 of the Trust Agreement and prepayment of Lease Payments as provided in Section 10.1 hereof, upon the earlier of the following events: (1) Written determination of the City Representative that the certification provided in Section 6.1(b)(1) cannot be made and that replacement or repair of any item or portion of the Site is not economically feasible or in the best interest of the City, or (2) One year after the receipt of Net Proceeds. SECTION 6.2. Application of Other Moneys. In the event of any accident, destruction, theft or taking by eminent domain or condemnation with respect to a major portion of the Site, as declared in a written certification to the Trustee, the City may pay to the Trustee for deposit in the Prepayment Account, moneys, together with other available moneys therein, if any, sufficient to prepay the Certificates in whole or in part as provided in Section 4.02 of the Trust Agreement and prepayment of Lease Payments as provided in Section 10.1 hereof. ARTICLE VII COVENANTS WITH RESPECT TO THE SITE SECTION 7.1. Use of the Site; Non -abandonment. The City represents and warrants that it is using and will continue to use all of the Site, and that the City's need for the Site is not temporary or expected to diminish in the foreseeable future. The City shall not abandon the Site during the term of this Lease, nor shall the City acquire or construct a facility which would render the Site useless to the City. SECTION 7.2. Interest in the Site. (a) Corporation Holds Interest During Term. During the Term of this Lease, the Corporation shall hold a leasehold interest in the Site pursuant to the Site Lease. The City shall take any and all actions reasonably required, including but not limited to executing and filing any and all documents, reasonably required to maintain and evidence the Corporation's leasehold interest in the Site at all times during the Term hereof. (b) InterestyTransferred to City at End of Term. Upon expiration of the Term as provided in Section 4.2 hereof, the interest of the Corporation in and to the Site shall be transferred to and vest in the City, without the necessity of any additional document of transfer. SECTION 7.3. Quiet Enjoyment. During the Term, the Corporation shall provide the City with quiet use and enjoyment of the Site, and the City shall during such Term peaceably and quietly have and hold and enjoy the Site, without suit, trouble or hindrance from the -14- Corporation, or any person or entity claiming under or through the Corporation except as expressly set forth in this Lease or the Trust Agreement. The Corporation will, at the request of the City, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Corporation may lawfully do so. Notwithstanding the foregoing, the Corporation shall have the right to inspect the Site as provided in Section 7.5 hereof. SECTION 7.4. Installation of City's Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon any portion of the Site. All such items shall remain the sole personal property of the City, regardless of the manner in which the same may be affixed to such portion of the Site, in which neither the Corporation nor the Trustee shall have any interest, and may be modified or removed by the City at any time; provided that the City shall repair and restore any and all damage to such portion of the Site resulting from the installation, modification or removal of any such items of equipment. Nothing in this Lease shall prevent the City from purchasing items to be installed pursuant to this Section, provided that no lien or security interest attaching to such items shall attach to any part of the Site. SECTION 7.5. Access to the Site. The City agrees that the Corporation, any Corporation Representative and the Corporation's successors or assigns, shall have the right at all reasonable times to enter upon the Site or any portion thereof to examine and inspect the Site. The City further agrees that the Corporation, any Corporation Representative, and the Corporation's successors or assigns shall have such rights of access to the Site as may be reasonably necessary to cause the proper maintenance of the Site in the event of failure by the City to perform its obligations hereunder. SECTION 7.6. Maintenance Utilities Taxes and Assessments; Operating Costs. (a) Maintenance; Repairs and Replacement. Throughout the Term of this Lease, as part of the consideration for the rental of the Site, all repair and maintenance of the Site shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of any portion of the Site resulting from ordinary wear and tear or want of care on the part of the City or any sublessee thereof. In exchange for the Lease Payments herein provided, the Corporation agrees to provide only the Site, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the City under the terms of this Lease. (b) Tax and Assessments• Utility Charges. The City shall also pay or cause to be paid all taxes and assessments, including but not limited to utility charges of any type or nature charged to the Corporation or the City or levied, assessed or charged against any portion of the Site or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due. - 15 - (c) Contests. The City may, at its expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom; Provided that prior to such nonpayment it shall furnish the Corporation and the Trustee with the opinion of an Independent Counsel, acceptable to the Trustee, to the effect that, by nonpayment of any such items, the interest of the Corporation in such portion of the Site will not be materially endangered and that the Site will not be subject to loss or forfeiture. Otherwise, the City shall promptly pay such taxes, assessments or charges or make provisions for the payment thereof in form satisfactory to the Corporation. The Corporation will cooperate fully in such contest upon the request and at the expense of the City. (d) Throughout the Term of this Lease the City shall pay all of the costs incurred by the City in operating, maintaining and using the Site; and the City shall under no circumstances look to the Corporation for any part of such costs SECTION 7.7. Modification of the Site. (a) Additions, Modifications and Improvements. The City shall, at its own expense, have the right to make additions, modifications, and improvements to any portion of the Site if such additions, modifications or improvements are necessary or beneficial for the use of such portion of the Site. All such additions, modifications and improvements shall thereafter comprise part of the Site and be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in any way damage any portion of the Site or cause it to be used for purposes other than those authorized under the provisions of State and federal law or in any way which would impair the federal income tax exclusion or the State tax-exempt status of the interest components of the Lease Payments or diminish the fair rental value of the Site; and the Site, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is not less than the value of the Site immediately prior to the making of such additions, modifications and improvements. (b) No Liens. The City will not permit any mechanics' or other lien to be established or remain against the Site for labor or materials furnished in connection with any additions, modifications or improvements or replacements made by the City pursuant to this Section; provided that if any such lien is established and the City shall first notify or cause to be notified the Corporation of the City's intention to do so, the City may in good faith contest any lien filed or established against the Site, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Corporation with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Trustee as assignee of the Corporation. The Corporation will cooperate fully in any such contest upon the request and at the expense of the City. (c) Replacements Redevelopment and Renovation. The City shall, at its own expense, have the right to make replacements, redevelopment or renovation of all or a portion -16- of the Site, including substitution of any other unencumbered assets of the City as and for the Site, if the following conditions precedent are satisfied: (1) The City receives an opinion of Special Counsel, which the City shall furnish to the Corporation and the Trustee, that (i) such replacement does not adversely affect the federal income tax exclusion or the State tax-exempt status of the interest components of the Lease Payments, and (ii) the Lease will remain the legal, valid, binding and enforceable obligation of the City; (2) In the event such replacement, redevelopment or renovation would result in the temporary abatement of Lease Payments as provided in Section 4.9 hereof, the City shall provide in advance for payment of Lease Payments from special funds of the City or other moneys, the application of which would not, in the opinion of Special Counsel (a copy of which shall have been delivered to the Trustee), result in such Lease Payments constituting indebtedness of the City in contravention of the Constitution and laws of the State; (3) The City shall certify to the Trustee that it has sufficient funds to complete such replacement, redevelopment or renovation; (4) In the event of such substitution, the City shall provide the Trustee and the Corporation with (a) an appraisal of the fair rental value of such substituted Site prepared by an independent commercial real estate appraiser showing that the fair rental value is equal to or greater than the Lease Payments due hereunder, and (b) a policy of Title Insurance for such substituted Site in accordance with Section 5.5 of this Lease; and (5) The City shall determine and certify to the Trustee that the annual fair rental value of the replacements (including any substituted Site) will be at least equal to the lesser of (i) the annual fair rental value of the Site immediately prior to such replacement, redevelopment or renovation, or (ii) 150% of the maximum annual Lease Payments remaining under the Lease. (d) Release of Portion of Project. In connection with the City's option to partially prepay Lease Payments, the City may release a portion of the Site from the lien of the Lease so long as the City determines and certifies to the Trustee that the annual fair rental value of the remaining components of the Site will be at least equal to the Lease Payments remaining under the Lease. SECTION 7.8. Liens. Except as provided in this Article, (including without limitation Section 7.7 hereof) the City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim, as applicable, on or with respect to the Site, other than the respective rights of the Corporation and the City as herein provided and except as to Permitted Encumbrances. Except as expressly provided in this Article, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time; provided that the City may contest such liens if it desires to do so. The City shall reimburse the Corporation for any expense -17- incurred by it in order to discharge or remove any such mortgage, pledge, lien, change, encumbrance or claim. SECTION 7.9. Corporation's Disclaimer of Warranties. THE Corporation MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE SITE OR ANY ITEM OR PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE Corporation IS NOT A MANUFACTURER OF ITEMS OR PORTIONS OF THE SITE OR A DEALER THEREIN, AND THAT THE CITY IS LEASING THE ITEMS OF THE SITE AS IS. In no event shall the Corporation be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease, the Site Lease, the Assignment Agreement, or the Trust Agreement for the existence, furnishing, functioning or City's use and possession of the Site. ARTICLE Vill ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8.1. Assignment by the Corporation. Except as provided herein and in the Trust Agreement, the Corporation will not assign this Lease to any other person, firm or corporation unless the Corporation has certified to the Trustee that such assignment will not impair or violate the representations, covenants and warranties contained in Section 2.2 hereof. SECTION 8.2. Assignment and Subleasing by the City. The rights under this Lease may not be assigned by the City, nor may the City sublease all or any portion of the Site, unless the City receives an opinion of Special Counsel stating that such assignment or subleasing does not adversely affect the federal income tax exclusion or the State tax-exempt status of the interest components of the Lease Payments or affect the validity of this Lease. In the event that this Lease is assigned or subleased by the City, the obligation to make Lease Payments hereunder shall remain the obligation of the City. SECTION 8.3. Amendments and Modifications. This Lease may be amended or any of its terms modified with the written consent of the City and the Trustee, as assignee of the Corporation, in accordance with the Trust Agreement. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9.1. Events of Default Defined. The following shall be "events of default" under this Lease and the terms "events of default" and "default" shall mean, whenever they are used in this Lease, any one or more of the following events: Ms1 (a) Lease Payment Default. Failure by the City to pay any Lease Payment required to be paid hereunder by each Lease Payment Date. (b) Covenant Default. Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed herein or otherwise with respect hereto or in the Trust Agreement or in the Site Lease, other than as referred to in clause (a) of this Section, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Corporation, the Trustee or the Owners of not less than twenty percent (20%) in aggregate principal amount of Certificates then Outstanding; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Trustee as assignee of the Corporation or such Owners, as the case may be, shall not unreasonably withhold consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the default is corrected. (c) Bankruptcy or Insolvency; Abandonment. The filing by the City of a case in bankruptcy, or the subjection of any right or interest of the City under this Lease to any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the federal bankruptcy code, as amended, or under any similar act which may hereafter be enacted; or the abandonment of the Site. SECTION 9.2. Remedies on Default. Whenever any event of default referred to in Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the Corporation to exercise any and all remedies available pursuant to law or granted pursuant to this Lease; provided, however, that in the event that there is in effect a Certificate Insurance Policy issued by MBIA insuring the payment of principal and interest on the Certificates and an Event of Default occurs, MBIA shall have the right to direct the selection and exercise of the remedies; but, provided further that notwithstanding anything herein or in the Trust Agreement to the contrary, THERE SHALL BE NO RIGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE LEASE PAYMENTS OR OTHERWISE DECLARE ANY LEASE PAYMENTS NOT THEN IN DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE. After the occurrence of an event of default hereunder, the City will surrender possession of the Site to the Corporation, if requested to do so by the Corporation, the Trustee or the Owners of Certificates in accordance with Section 13.08 of the Trust Agreement. (a) No Termination• Repossession and Re -Lease on Behalf of City. In the event the Corporation does not elect to terminate this Lease in the manner hereinafter provided for in subparagraph (b) hereof, the Corporation may, with the consent of the City, which consent is hereby irrevocably given, repossess the Site and re -lease the Site for the account of the City, in which event the City's obligation will accrue from year to year in accordance with this Lease and the City will continue to receive the value of the use of the Site from year to year in the form of credits against its obligation to pay Lease Payments. The obligations of the City shall remain the same as prior to such default: to pay fixed Lease Payments and Additional Payments whether the Corporation re-enters or not. The City agrees to and shall remain liable -19- for the payment of all Lease Payments and Additional Payments and the performance of all conditions contained herein and shall reimburse the Corporation for any deficiency arising out of the re -leasing of the Site, or, in the event the Corporation is unable to re -lease the Site, then for the full amount of all Lease Payments to the end of the Term of this Lease, but said Lease Payments, deficiency, or both, shall be payable only at the same time and in the same manner as provided above for the payment of Lease Payments hereunder, notwithstanding such repossession by the Corporation or any suit brought by the Corporation for the purpose of effecting such repossession of the Site or the exercise of any other remedy by the Corporation. The City hereby irrevocably appoints the Corporation as the agent and attorney -in -fact of the City to repossess and re -lease the Site in the event of default and to remove all personal property whatsoever situated upon the Site, to place such property in storage or other suitable place in the CITY OF NEWPORT BEACH, for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Corporation from any costs, loss or damage whatsoever arising or occasioned by any such repossession and re -leasing of the Site. The City hereby waives any and all claims for damage caused or which may be caused by the Corporation in repossessing the Site as provided herein and all claims for damages that may result from the destruction of or the injury to the Site and all claims for damages to or loss of any property belonging to the City that may be in or upon the Site. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Corporation to re -lease the Site in the event of such repossession without effecting a surrender of this Lease, and further agrees that no acts of the Corporation in effecting such re -leasing shall constitute a surrender or termination of this Lease irrespective of the term for which such re -leasing is made or the terms and conditions of such re -leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease shall vest in the Corporation to be effected in the sole and exclusive manner provided for in subparagraph (b) below. The Trustee shall remit to the City the portion of rental obtained by the Trustee as assignee of the Corporation in excess of the Lease Payments and of the costs of the Corporation of re -leasing the Site. In the event that the liability of the City under this subsection (a) is held to constitute indebtedness or liability in any year exceeding in any year the income and revenue provided for such year, the Corporation, or the Trustee or the Certificate Owners as assignees of the Corporation, shall not exercise the offending remedies provided by this subsection (a). (b) Termination: Repossession and Re -Lease. In the event of the termination of this Lease by the Corporation at its option and in the manner hereinafter provided on account of default by the City (and notwithstanding any repossession of the Site by the Corporation in any manner whatsoever or the re -leasing of the Site), the City nevertheless agrees to pay to the Corporation all costs, losses or damages howsoever arising or occurring payable at the same time and in the same manner as is provided herein in the case of payment of Lease Payments. Any proceeds of the re -lease or other disposition of the Site by the Corporation shall be deposited into the Lease Payment Fund and be applied in accordance with the -20- provisions of Section 5.04 of the Trust Agreement. Any surplus received by the Trustee as assignee of the Corporation from such re -leasing over the total Lease Payments that would have been due hereunder and the cost of the Trustee as assignee of the Corporation on re- leasing the Site shall be remitted to the City. Neither notice to pay rent or to deliver up possession of the Site given pursuant to law nor any proceeding taken by the Corporation to recover possession of the Site shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Corporation shall have given written notice to the City of the election on the part of the Corporation to terminate this Lease. The City covenants and agrees that no surrender of the Site for the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Corporation by such written notice. No such termination shall be effected either by operation of law or act of the parties hereto, except only in the manner herein expressly provided. The Corporation and City hereby agree that Section 1951.2 of the California Civil Code shall apply to this Lease and that upon such termination, the Corporation may recover, in addition to all other damages available by contract or at law, from the City: (i) the worth at the time of award of the unpaid rental which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rental for the balance of the term after the time of the award exceeds the amount of such rental loss that the City proves could have been reasonably avoided; and (iii) any other amount necessary to compensate the Corporation for all the detriment proximately caused by the City's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. The "worth at the time of award" of the amounts referred to in clauses (i), (ii) and (iii) above is computed by allowing interest at the legal rate of interest per annum at which judgments for money in the State bear interest. (c) Opinion of Special Counsel. The re -leasing of the Site as provided herein shall be subject (i) to the opinion of Special Counsel that such re -leasing will not cause interest on the Certificates to become includable in gross income for Federal income tax purposes or subject to State of California personal income taxes and (ii) the written consent of the Trustee. SECTION 9.3. No Remedy Exclusive. No remedy conferred herein upon or reserved to the Corporation is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Corporation to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice, other than such notice as may be required in this Article or by law. SECTION 9.4. A_areement to Pay Attorneys' Fees and Expenses. In the event either party to this Lease should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the -21- enforcement of performance or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party. SECTION 9.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Lease should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. SECTION 9.6. Application of the Proceeds from the Re -Lease of the Project. All amounts received by the Corporation under this Article IX (other than as provided in Section 9.2(b) herein regarding certain surplus) shall be deposited by the Trustee in the Lease Payment Fund and credited towards the Lease Payments in order of Lease Payment Date. SECTION 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and remedies as are given to the Corporation under this Article IX have been assigned by the Corporation to the Trustee under the Trust Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners as provided in the Trust Agreement. ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1. Mandatory Prepayment From Net Proceeds or Other Moneys. The City shall be obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds, State reimbursement moneys or other moneys theretofore deposited in the Prepayment Account pursuant to Section 4.02 of the Trust Agreement. The City and the Corporation hereby agree that such Net Proceeds or other moneys shall be credited towards the City's obligations hereunder (except in the case of such prepayment of the Lease Payments in whole)'pro rata among Lease Payments so that following prepayment, remaining annual Lease Payments are proportionate to initial annual Lease Payments. SECTION 10.2. Optional Prepayment. Subject to the terms and conditions of this Section, the Corporation hereby grants an option to the City to prepay in whole or in part, the principal amount of Lease Payments relating to Certificates in the amounts, on the dates and at the prepayment prices provided in Section 4.03 of the Trust Agreement. The City shall execute said option by giving written notice to the Trustee thereof at least 60 days prior to the date of prepayment and depositing with said notice cash, in the amount of the Principal Components of all Lease Payments to be prepaid plus (1) accrued interest on the principal amount of Lease Payments to be prepaid to the date of prepayment, plus (2) any Lease Payments then due but unpaid. The City and the Corporation hereby agree that such prepayment in part shall be credited towards the City's obligations hereunder pro rata among the principal components -22- of Lease Payments not previously paid, so that following such prepayment the remaining annual Lease Payments will, to the extent practicable given that amounts prepaid will be used to prepay Certificates in integral multiples of $5,000, be proportionate to the initial amounts of such Lease Payments. SECTION 10.3. Credit for Amounts on Deposit. In the event of prepayment of the Lease Payments in full under this Article X and the payment of all Additional Payments such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all amounts then on deposit in the Lease Payment Fund, the Acquisition and Construction Fund and the Reserve Fund shall be credited toward the amounts then required to be so prepaid. SECTION 10.4. Effect of Prepayment. (a) In Whole. In the event that the City prepays all remaining Lease Payments pursuant to Section 10.1 or 10.2 hereof and all amounts owing the Trustee pursuant to Section 4.10 hereof, then the City's obligations under this Lease shall thereupon cease and terminate, including but not limited to the City's obligation to continue to pay Lease Payments under this Article X. (b) In Part. In the event the City prepays less than all of the remaining principal components of the Lease Payments either pursuant to Sections 10.1 or 10.2 hereof from Net Proceeds or other moneys, the amount of such prepayment shall be applied to reduce the principal components of the remaining Lease Payments pro rata, corresponding to the resulting prepayment of principal with respect to the Certificates. ARTICLE XI MISCELLANEOUS SECTION 11.1. Notices. All notices, certificates or other communications hereunder to the Corporation and City shall be sufficiently given and shall be deemed to have been received five business days after deposit in the United States mail in certified form, postage prepaid, to the City or the Corporation, as the case may be, at the following addresses: If to the City: CITY OF NEWPORT BEACH 3300 Newport Boulevard Newport Beach, California 92659 Attention: Finance Director If to the Corporation: Newport Beach Public Facilities Corporation 3300 Newport Boulevard -23- Newport Beach, California 92659 Attention: Chief Financial Officer If to the Trustee: Bank of America National Trust and Savings Association Attention: Corporate Trust Division All notices, certificates and other communications to the Trustee shall be sufficiently given upon receipt by the Trustee. The Corporation, the City and the Trustee, by notice given in writing hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. SECTION 11.2. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Corporation and the City and their respective successors and assigns. SECTION 11.3. Severability. In the event any provision of this Lease shall be held invalid or unenforceable by a court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. SECTION 11.4. Execution in Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same instrument. SECTION 11.5. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS THEREOF, the Corporation has caused this Lease to be executed in its name by its duly authorized officers, and the City has caused this Lease to be executed in its name by its duly authorized officers, as of the date first above written. NEWPORT BEACH PUBLIC FACILITIES CORPORATION, as Lessor Bv: Authorized Representative - 24 - CITY OF NEWPORT BEACH, as Lessee By: City Manager -25- STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) On this day of June in the year 1992 before me, the undersigned, a Notary Public in and for the State of California, personally appeared to me, , known to me (or proved to me on the basis of satisfactory evidence) to be the Authorized Representa- tive of the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, the public agency that executed the within instrument, and personally known to me (or proved on the basis of satisfactory evidence) to be the person who executed the within instrument on behalf of said Corporation, and acknowledged to me that he executed the within instrument pursuant to a resolution of the Board of Directors of said Corporation. WITNESS my hand and official seal. Notary Public -26- STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) On this day of June in the year 1992 before me, the undersigned, a Notary Public in and for the State of California, personally appeared to me, , known to me (or proved to me on the basis of satisfactory evidence) to be the of CITY OF NEWPORT BEACH, the public agency that executed the within instrument, and personally known to me (or proved on the basis of satisfactory evidence) to be the person who executed the within instrument on behalf of said City, and acknowledged to me that he executed the within instrument pursuant to a resolution of said City. WITNESS my hand and official seal. Notary Public -27- EXHIBIT A SCHEDULE OF LEASE PAYMENTS Lease Interest Principal Payment Date Component Component Total November 15, 1992 May 15, 1993 November 15, 1993 May 15, 1994 November 15, 1994 May 15, 1995 November 15, 1995 May 15, 1996 November 15, 1996 May 15, 1997 November 15, 1997 May 15, 1998 November 15, 1998 May 15, 1999 November 15, 1999 May 15, 2000 November 15, 2000 May 15, 2001 November 15, 2001 May 15, 2002 November 15, 2002 May 15, 2003 November 15, 2003 May 15, 2004 November 15, 2004 May 15, 2005 November 15, 2005 May 15, 2006 November 15, 2006 May 15, 2007 November 15, 2007 May 15, 2008 November 15, 2008 May 15, 2009 November 15, 2009 May 15, 2010 November 15, 2010 May 15, 2011 November 15, 2011 May 15, 2012 November 15, 2012 May 15, 2013 November 15, 2013 May 15, 2014 November 15, 2014 May 15, 2015 November 15, 2015 May 15, 2016 November 15, 2016 May 15, 2017 November 15, 2017 May 15, 2018 November 15, 2018 May 15, 2019 Ind TOTAL A-2 EXHIBIT B GENERAL DESCRIPTION OF PROJECT m EXHIBIT C FORM OF LEASE SUPPLEMENT There is hereby subjected to the terms of that certain Project Lease, dated as of June 1 , 1992 (the "Lease"), between the NEWPORT BEACH PUBLIC FACILITIES CORPORATION (the "Corporation") and CITY OF NEWPORT BEACH (the "City") the following property items which shall comprise a portion of the Site, as defined therein: Description of Substituted Site I, the City Representative, hereby certify that: (1) the fair rental value and the useful life of the above -described portion of the Site at least equals the fair rental value and the useful life of the portion of the Site for which it was substituted; if the fair rental value of such portion of the Site is greater than the portion of the Site for which it was substituted, the City has deposited or caused to be deposited in the Acquisition and Construction Fund held by the City an amount sufficient to pay such increased cost; and (2) the above -described portion of the Site will be used by the City for authorized public purposes and can be leased under the provisions of the Lease; I, the City Representative, hereby certify that the portion of the Site being acquired, constructed or improved will be owned by the Corporation free and clear of all liens or claims of others, except for the lien of the Trust Agreement referred to in the Lease and the rights of the City under the Lease, and that the Corporation will not encumber title to the substituted portion of the Site while the Certificates remain outstanding. The following property items, which formerly constituted a portion of the Site, are released from the terms of the Lease: CITY OF NEWPORT BEACH By: City Representative BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION Sm C-1 EXHIBIT D LEGAL DESCRIPTION OF THE SITE D-1 S -J26-q Z TRUST AGREEMENT Dated as of June 1, 1992 by and among BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION as Trustee NEWPORT BEACH PUBLIC FACILITIES CORPORATION, and CITY OF NEWPORT BEACH TABLE OF CONTENTS ARTICLE I DEFINITIONS SECTION 1.01 Definitions and Rules of Construction 2 SECTION 1.02 Authorization 9 ARTICLE II THE CERTIFICATES OF PARTICIPATION SECTION 2.01 Authorization 9 SECTION 2.02 Date 9 SECTION 2.03 Maturity; Interest Rates 10 SECTION 2.04 Registration; Interest 10 SECTION 2.05 Form of Certificates 11 SECTION 2.06 Execution 11 SECTION 2.07 Transfer and Exchange 11 SECTION 2.08 Certificates Mutilated, Lost, Destroyed or Stolen 12 SECTION 2.09 Payment 12 SECTION 2.10 Execution of Documents and Proof of Ownership 13 SECTION 2.11 Certificate Register 13 SECTION 2.12 Destruction of Canceled Certificates 13 ARTICLE III APPLICATION OF PROCEEDS; ACQUISITION AND CONSTRUCTION FUND SECTION 3.01 Application of Proceeds and other moneys 13 SECTION 3.02 [Reserved] 14 SECTION 3.03 Acquisition and Construction Fund 14 SECTION 3.04 Additional Certificates 15 SECTION 3.05 Validity of Certificates 15 ARTICLE IV PREPAYMENT OF CERTIFICATES SECTION 4.01 Establishment of Prepayment Fund 16 SECTION 4.02 Mandatory Prepayment 16 SECTION 4.03 Optional Prepayment 16 SECTION 4.04 Selection of Certificates for Prepayment 17 SECTION 4.05 Notice of Prepayment 17 SECTION 4.06 Partial Prepayment of Certificates 17 SECTION 4.07 Effect of Notice of Prepayment 18 SECTION 4.08 No Surplus 18 ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND SECTION 5.01 Security Provisions 18 SECTION 5.02 Establishment of Lease Payment Fund 19 SECTION 5.03 Deposits 19 SECTION 5.04 Application of Moneys 19 ARTICLE VI RESERVE FUND SECTION 6.01 Establishment of Reserve Fund 20 SECTION 6.02 Deposits to the Reserve Fund 20 SECTION 6.03 Transfers of Excess 20 SECTION 6.04 Application of Reserve Fund in Event of Deficiency in Lease Payment 20 SECTION 6.05 Transfer to Make all Lease Payments 21 ARTICLE VII NET PROCEEDS FUND SECTION 7.01 Establishment of Net Proceeds Fund; Deposits 21 SECTION 7.02 Disbursements 21 SECTION 7.03 Cooperation 21 ARTICLE VIII MONEYS IN FUNDS; INVESTMENT SECTION 8.01 Held in Trust 22 SECTION 8.02 Investments Authorized 22 SECTION 8.03 Disposition of Investments 22 SECTION 8.04 Accounting 22 SECTION 8.05 Valuation and Disposition of Investments 22 SECTION 8.06 Commingling of Moneys in Funds 23 SECTION 8.07 Arbitrage Covenant 23 SECTION 8.08 Rebate Fund 23 SECTION 8.09 Information Concerning Investments 24 SECTION 8.10 Notice Concerning Investments 24 ARTICLE IX THE TRUSTEE SECTION 9.01 Appointment of Trustee 25 SECTION 9.02 Merger or Consolidation 25 SECTION 9.03 Protection of the Trustee 26 SECTION 9.04 Rights of the Trustee 26 SECTION 9.05 Standard of Care 27 SECTION 9.06 Compensation of the Trustee 27 SECTION 9.07 Indemnification of the Trustee 28 ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS SECTION 10.01 Amendments Permitted 28 SECTION 10.02 Procedure for Amendment with Written Consent of the Owners 29 SECTION 10.03 Disqualified Certificates 30 SECTION 10.04 Effect of Supplemental Agreement 30 SECTION 10.05 Endorsement or Replacement of Certificates Delivered After Amendments 31 SECTION 10.06 Amendatory Endorsement of Certificates 31 SECTION 10.07 Trustee's Reliance on Opinion of Special Counsel 31 ARTICLE XI COVENANTS; NOTICES SECTION 11.01 Compliance With and Enforcement of the Lease 31 SECTION 11.02 Payment of Taxes 32 SECTION 11.03 Observance of Laws and Regulations 32 SECTION 11.04 Prosecution and Defense of Suits 32 SECTION 11.05 City Budgets 32 SECTION 11.06 Further Assurances 32 SECTION 11.07 Tax Covenants 32 SECTION 11.08 Notice of Trustee 33 ARTICLE XII LIMITATION OF LIABILITY SECTION 12.01 Limited Liability of the City 33 SECTION 12.02 No Liability of the City or Corporation for Trustee Performance 33 SECTION 12.03 Limited Liability of Trustee 33 SECTION 12.04 Limitation of Rights of Parties and Certificate Owners 34 ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS SECTION 13.01 Assignment of Rights 34 SECTION 13.02 Events of Default 34 SECTION 13.03 Application of Funds 34 SECTION 13.04 Institution of Legal Proceedings 35 SECTION 13.05 Non -waiver 35 SECTION 13.06 Remedies Not Exclusive 35 SECTION 13.07 Power of Trustee to Control Proceedings 35 SECTION 13.08 Limitation on Certificate Owners' Right to Sue 36 SECTION 13.09 Agreement to Pay Attorneys' Fees and Expenses 36 SECTION 13.10 Term of a Substitute Lease 37 ARTICLE XIV MISCELLANEOUS SECTION 14.01 Defeasance 37 SECTION 14.02 Non -Presentment of Certificates 38 SECTION 14.03 Records 38 SECTION 14.04 Execution in Counterparts 38 SECTION 14.05 Headings 38 SECTION 14.06 Waiver of Notice 39 SECTION 14.07 Separability of Invalid Provisions 39 SECTION 14.08 Payment on a Business Day 39 ARTICLE XV CERTIFICATE INSURANCE SECTION 15.01 General 39 SECTION 15.02 Consents Required 39 SECTION 15.03 Notices 40 SECTION 15.04 Payment of Certificate Insurance 40 SECTION 15.05 Subrogation 42 (iv) Exhibit A - Form of Certificate of Participation Exhibit B - (RESERVED) (v) A-1 B-1 AGREEMENT TO TRUST AGREEMENT SUPPLEMENT AGREEMENT TO SUPPLEMENTAL TRUST AGREEMENT THIS AGREEMENT TO TRUST AGREEMENT SUPPLEMENTAL AGREEMENT TO SUPPLEMENT TRUST AGREEMENT, made and entered into as of this 1 st day of June, 1992, by and among BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as trustee (the "Trustee"), NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a not for profit corporation duly organized and existing under the laws of the State of California, (the "Corporation"), and CITY OF NEWPORT BEACH, a municipal corporation duly organized and existing under the Constitution and laws of the State of California, as lessee under said lease (the "City"); WITNESSETH: WHEREAS, the City and the Corporation have entered into a leasing arrangement whereby the Corporation has agreed to lease certain undeveloped property from the City and the City has agreed to lease back such property and improvements thereto from the Corporation; WHEREAS, the City will pay Lease Payments under the Project Lease representing fair market rental value of property leased thereunder in amounts sufficient to pay the components of principal, premium, if any, and interest represented by the Certificates executed and delivered hereunder; WHEREAS, as security for the Certificates, the Corporation will assign the rights to receive such Lease Payments to the Trustee, and the Corporation and City will grant a security interest in all moneys held by the Trustee hereunder to the Trustee for the benefit of the Owners of Certificates; WHEREAS, the Trustee has agreed to transfer proceeds of the Certificates for deposit in the Acquisition and Construction Fund to the City hereunder to pay certain Project Costs and Delivery Costs for the Project described herein and in the Project Lease; WHEREAS, the Trustee has agreed to execute and deliver Certificates, each evidencing proportionate interests in the Lease Payments and Prepayments made by the City under the Project Lease; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: - 1 - ARTICLE I DEFINITIONS SECTION 1.01 Definitions and Rules of Construction. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Agreement to Trust Agreement Supplement Agreement to Supplemental Trust Agreement, have the meanings herein specified. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa. The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this Agreement, refer to this Agreement as a whole. "Acquisition and Construction Fund" means the Acquisition and Construction Fund established and held by the City pursuant to Article III hereof. "Additional Payments" means Additional Payments as defined in Section 4.9 of the Lease. "Assignment Agreement" means the Assignment Agreement, dated as of the date hereof, by and between the Trustee and the Corporation, and any duly authorized and executed amendments thereto. "Authorized Denomination" means $5,000.00 or any integral multiple thereof. "Business Day" means any day of the year other than Saturday or Sunday on which banks in New York, New York, Los Angeles, California, or San Francisco, California, are not authorized or obligated by law or executive order to close and on which the New York Stock Exchange is not closed. "Certificate Insurance Policy" or "Policy" means generally an insurance policy, if any, which guarantees all or a portion of the Lease Payments and means initially insurance policy numbered issued by "Certificate Payment Date" means June 1 and December 1 of each year, commencing December 1, 1992, so long as any Certificates remain outstanding. "Certificate" or "Certificates" means the Certificates of Participation Series 1992 (Central Library Building Project) to be executed and delivered pursuant hereto. "Certificate Year" means each successive one-year period ending on a date selected by the City. "City" means City of Newport Beach. "City Representative" means the City Manager, or a person authorized by the City Council or the City Manager to act on behalf of the City under or with respect to this Agreement. -2- "Closing Date" means the day when the Certificates, duly executed by the Trustee, are delivered to the Original Purchasers thereof. "Code" means the Internal Revenue Code of 1986, as amended, and all regulations promulgated thereunder, and all citations herein shall be deemed to refer to corresponding sections in any such amended Code and regulations. "Corporation" means Newport Beach Public Facilities Corporation. "Corporation Representative" means the President or Vice President or Secretary of the Corporation, or any person authorized to act on behalf of the Corporation under or with respect to the Lease. "Delivery Costs" means and further includes all items of expense directly or indirectly payable by or reimbursable to the City or the Corporation relating to the financing of the Project from the proceeds of the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, word processing costs, reproduction and binding costs, initial fees and charges of the Trustee including its first annual administration fee and the fees and charges of its counsel, Certificate insurance premiums, legal fees and charges, financing and other professional consulting fees, costs of rating agencies or credit ratings, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Event of Default" means an event of default under the Lease, as defined in Section 9.1 thereof. "Fiscal Year" means the fiscal year of the City commencing July 1 and ending on the next following June 30. "Government Obligations" means Permitted Investments as described in paragraph A of the definition thereof. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Corporation, the Trustee or the City. "Insurer" means generally the issuer, if any, of a Certificate Insurance Policy and means initially "Lease" means the Project Lease. "Lease Payment" or "Lease Payments" means any payment or payments required to be paid by the City to the Corporation pursuant to Section 4.3 of the Lease, including the payments set forth in Exhibit B to this Trust Agreement. "Lease Payment Date" means May 15 and November 15 in each year. -3- "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Article V hereof. "Moody's" means Moody's Investors Service, Inc., its successors and assigns. "Net Proceeds" means any proceeds of insurance carried pursuant to Sections 5.3 and 5.5 of the Lease, performance bonds, or a taking by eminent domain or condemnation paid with respect to the Project and remaining after payment therefrom of any expenses (including attorneys' fees) incurred in the collection thereof. "Net Proceeds Fund" means the account by that name established and held by the Trustee pursuant to Article VII hereof. "Original Purchaser" means the original purchaser of the Certificates, or any successors or assigns thereof. "Outstanding" when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 10.03 hereof) all Certificates theretofore executed and delivered by the Trustee under this Agreement except - (1) Certificates theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Certificates for the payment or prepayment of which funds or Government Obligations, together with interest earned thereon, in the necessary amount shall have theretofore been deposited with the Trustee (whether upon or prior to the maturity or prepayment date of such Certificates) pursuant to Article XIV hereof, provided that, if such Certificates are to be prepaid prior to maturity, notice of such prepayment shall have been given as provided in Section 4.05 hereof or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (3) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to Sections 2.07 and 2.08 hereof. "Owner" or "Certificate Owner" or "Owner of a Certificate, or any similar term, when used with respect to a Certificate, means the person in whose name such Certificate is registered on the registration books maintained by the Trustee. "Permitted Investments means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein: A. 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) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. -4- B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies, provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Export -Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FHA) Certificates of beneficial ownership 3. Federal Financing Bank Federal Housing Administration Debentures(FHA) General Services Administration Participation certificates Government National Mortgage Association ("GNMA" or "Ginnie Mae") GNMA - guaranteed mortgage -backed bonds GNMA - guaranteed pass -through obligations U.S. Maritime Administration Guaranteed Title XI financing 8. U.S. Department of Project Notes Housing and Urban Development(HUD) Local Corporation Bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following (non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System (FHL Banks Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or "Fannie Mae") senior debt obligations(excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal) 4. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations 26V 5. Resolution Funding Corporation (REFCORP) Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry from are acceptable. D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G, AAAm, or AAm. E. Certificates of deposit secured at all times by collateral described in (A), (B) or (A) and (B) above. The collateral must be held by a third party and the Trustee on behalf of the Certificate Owners must have a perfected first security interest in the collateral. The certificates must have a one year or less maturity and must be issued by commercial banks, savings and loan associations or mutual savings banks whose short term obligations are rated A or better by S & P. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by the FDIC. G. Investment Agreements, including guaranteed investment contracts, acceptable to H. Commercial paper rated, at the time of purchase, "Prime-1 " by Moody's and "A-1 " or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime-1 " or "A-3" or better by Moody's and "A-1 " or "A" or better by S&P. K. Repurchase agreements which provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to a municipal entity in exchange for the securities at a specified date. Repurchase agreements must satisfy the following criteria or be approved by 1. They must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which fall under the jurisdiction of the Securities Investors Protection Corporation (the "SIPC") and which are rated "A" or better by S&P and Moody's, or b. Banks rated "A" or above by S&P and Moody's. 2. The written repo contract must include the following_ a. Securities which are acceptable for transfer: 0.) Direct U.S. governments (2.) Federal agencies backed by the full faith and credit of the U.S. Government b. The term of the repo may be up to 30 days C. The collateral must be delivered to the municipal entity, Trustee (if the Trustee is not supplying the collateral) or third party acting as agent for the Trustee (if the Trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). d. The Trustee has a perfected first priority security interest in the collateral. e. Collateral is free and clear of third -party liens and in the case of a SIPC broker was not acquired pursuant to a repo agreement or reverse repo agreement. f. Failure to maintain the requisite collateral percentage will require the Trustee to liquidate collateral. g. Valuation of Collateral (1) The securities must be valued at least weekly, marked -to -market at current market price plus accrued interest (a) the value of collateral must be equal to 104% of the amount of cash transferred by a municipal entity to the dealer bank or security firm under the Repurchase Agreement plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by a municipal entity, then additional cash and/or acceptable securities must be transferred. If the securities used as collateral are FNMA or FMAC, then the value of the collateral must equal 105%. 3. Legal opinion must be delivered to the municipal entity: -7- a. Repo Agreement meets guidelines under state law for legal investment of public funds. Additional Notes (i) There is no list of permitted investments for non -indentured funds. Issuer's own credit judgment and the relevant circumstances (e.g., amount of investment timing of investment) should dictate what is permissible. (ii) Any state or county administered pool investment fund in which the issuer is statutorily permitted or required to invest will be deemed a permitted investment if approved by bond insurer. (iii) Reserve Fund CRF") investments should be valued at cost if maturity is one year or less, and should be valued at fair market value and marked to market annually if maturity is longer than one year. In no event should RF investments have maturities extending beyond 5 years. "Prepayment" means any payment made by the City pursuant to Article X of the Lease as a prepayment of the Lease Payments. "Prepayment Fund" means the account by that name established and held by the Trustee pursuant to Article IV hereof. "Principal Office" means the corporate trust office of the Trustee in Los Angeles, California, or such other designated office of the Trustee, or the principal corporate trust office of any successor Trustee. "Proiect" means the Project as defined in the Lease. "Project Costs" means, with respect to any item or portion of the Project, the contract price paid or to be paid therefor upon construction, procurement or improvement thereof, in accordance with a purchase order or contract therefor. Project Costs include, but are not limited to, the administrative, engineering, legal, financial and other costs incurred by the City and the Corporation in connection with the construction, procurement or improvement of the Project, all applicable sales taxes and other charges resulting from such construction, procurement or improvement of the Project, and the costs associated with making rebate calculations required by the Code. "Project Lease" means the lease dated the date hereof, between the City and the Corporation, and any authorized and executed amendments thereto. "Rebate Fund" means the fund established pursuant to Section 8.08 hereof. "Record Date" means the close of business on the fifteenth day of the month preceding each Certificate Payment Date, whether or not such fifteenth day is a Business Day. "Reserve Fund" means the fund by that name established and held by the Trustee pursuant to Article VI hereof. "Reserve Replenishment Rent" means Reserve Replenishment Rent payable pursuant to Section 4.3(d) of the Lease. "Reserve Requirement" means an amount equal to the least of (1) the maximum aggregate annual Lease Payments payable under the Lease, (2) 125% of the average annual aggregate Lease Payments payable under the Lease, or (3) 10% of the principal amount of the Certificates Outstanding. "Revenues" means all revenues subject to this Agreement to Trust Agreement Supplement Agreement to Supplement Trust Agreement including, without limitation, Lease Payments, Net Proceeds and Certificate Insurance Policy payments. "S&P" means Standard & Poor's Corporation, its successors and assigns. "Site" means the Site, as defined in the Lease. "Site Lease" means the Site Lease, dated the date hereof, between the Corporation and the City. "Special Counsel" means an attorney or firm of attorneys of nationally recognized standing in matters pertaining to the tax-exempt status of interest on certificates of participation issued by states and their political subdivisions and acceptable to the City and the Trustee. "State" means the State of California. "Tax Certificate" means that certain Tax Certificate executed by the City in connection with the execution and delivery of the Certificates. "Term" means the time during which the Lease is in effect, as provided in Section 4.2 of the Lease. "Trustee" means Bank of America National Trust and Savings Association, a national banking association or any successor trustee. "Trust Agreement" or "Agreement" means this Agreement to Trust Agreement Supplement Agreement to Supplemental Trust Agreement, together with any amendments hereof or supplements hereto permitted to be made hereunder. SECTION 1.02 Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Agreement, and has taken all actions necessary to authorize the execution of this Agreement by the officers and persons signing it. ARTICLE 11 THE CERTIFICATES OF PARTICIPATION SECTION 2.01 Authorization. The Trustee is hereby authorized and directed to execute and deliver Certificates of Participation in an aggregate principal amount of $7,500,000.00 evidencing proportionate and undivided ownership interests in the Lease Payments and the Prepayments payable under the Lease. SECTION 2.02 Date. Each Certificate shall be dated June 1, 1992, and interest with respect thereto shall be payable from the Certificate Payment Date next preceding the date of execution thereof, unless: (i) it is executed as of a Certificate Payment Date, in which event interest with respect thereto shall be payable from the date thereof; or (ii) it is executed after a Record Date and before the following Certificate Payment Date, in which event interest with respect thereto shall be payable from such following Certificate Payment Date, or (iii) it is executed prior to the close of business on November 15, 1992, in which event interest with respect thereto shall be payable from June 1, 1992; provided, however, that if, as of the date of any Certificate, interest has not been paid when due with respect to any Outstanding Certificate, interest with respect to such Certificate shall be payable from the Certificate Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding Certificates or from June 1, 1992 if no interest has been paid or made available for payment. SECTION 2.03 Maturity; Interest Rates. The Certificates shall mature on June 1 of the following years and shall bear interest at the following rates: CERTIFICATES OF PARTICIPATION Maturity Principal Interest (June 1) Amount Rate 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 -10- 2004 2005 2019 [Term Certificates] SECTION 2.04 Registration; Interest. The Certificates shall be delivered in the form of fully registered Certificates without coupons in the denomination of $5,000 or any integral multiple thereof. The Certificates shall be numbered as the Trustee deems appropriate. Interest with respect to the Certificates shall be payable semiannually on June 1 and December 1 of each year, commencing December 1, 1992, to the date of maturity or prepayment, whichever is earlier. Said interest shall represent the portion of Lease Payments designated as interest and coming due during the six-month period preceding each Certificate Payment Date with respect to the Certificates computed on the basis of a 360-day year of twelve 30-day months. The proportionate share of the portion of Lease Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Lease Payments designated as principal with respect to such Certificate by the rate of interest applicable to such Certificate. SECTION 2.05 Form of Certificates. The Certificates and the assignment to appear thereon shall be substantially in the respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein. Pending the preparation of definitive Certificates, at the request of the Original Purchaser, the Certificates may be delivered in temporary form exchangeable for definitive Certificates when ready for delivery. If the Trustee delivers temporary Certificates, it shall execute and deliver definitive Certificates in an equal aggregate principal amount, when available and thereupon the temporary Certificates shall be surrendered to the Trustee at its Principal Office. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. SECTION 2.06 Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of any authorized signatory of the Trustee. The Trustee shall insert the date of execution of each Certificate in the place provided thereon. SECTION 2.07 Transfer and Exchange. (a) Transfer of Certificates. Any Certificate may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of Section 2.11 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Certificate for cancellation at the Principal Office accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for transfer, the Trustee shall execute and deliver a new Certificate or Certificates of the same maturity and interest rate, for like aggregate principal amount. (b) Exchange of Certificates. Certificates may be exchanged at the Principal Office for a like aggregate principal amount of Certificates of other authorized denominations of the same maturity and interest rate. - 11 - (c) Costs of Transfer or Exchange. The Trustee may require the payment by the Certificate Owner requesting transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange. The City shall pay all other registration and transfer or exchange costs, including the cost of printing Certificates, except the expense incurred under Section 2.08 hereof. All Certificates surrendered pursuant to the provisions of this Section shall be canceled by the Trustee and shall not be redelivered. (d) Time for Transfer or Exchange. The Trustee shall not be obligated to transfer or exchange any Certificate (i) between 15 days prior to selection of Certificates for prepayment and the date notice of prepayment is mailed and (ii) selected for prepayment. SECTION 2.08 Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute and deliver a new Certificate of like tenor and numbered as the Trustee shall determine in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be canceled by it. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and, if an indemnity, satisfactory to the Trustee indemnifying the Trustee, the Corporation and the City, shall be given, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new Certificate of like tenor and maturity and numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each new Certificate delivered under this Section and of the expenses which may be incurred by the Trustee in carrying out the duties under this Section. Any Certificate executed under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Agreement with all other Certificates secured by this Agreement. The Trustee shall not be required to treat both the original Certificate and any replacement Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and replacement Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Certificate which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Certificate. SECTION 2.09 Payment. Payment of interest with respect to any Certificate on any Certificate Payment Date or prepayment date shall be made to the person appearing on the registration books of the Trustee as the Owner thereof as of the Record Date immediately preceding such Certificate Payment Date or prepayment date, as the case may be, such interest to be paid by check mailed on the Certificate Payment Date by first class mail to such Owner at his address as it appears on such registration books. Payment of interest with respect to Certificates may, at the option of any Owner of at least $1,000,000 principal amount of Certificates (such option to be exercised by the written request of such Owner to the Trustee on or before the Record Date), be transmitted by wire transfer to the bank account number on file with the Trustee as of the Record Date before the applicable Certificate Payment Date. The principal payable upon maturity or prepayment with respect to -12- the Certificates shall be payable upon surrender at the Principal Office. Said amounts shall be payable in lawful money of the United States of America. The Trustee is hereby authorized to pay or prepay the Certificates when duly presented for payment at maturity or on prepayment and to cancel all Certificates upon payment thereof. SECTION 2.10 Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Agreement to be signed or executed by Certificate Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person, the amount and numbers of such Certificates and the date of execution shall be proved by the registration books maintained pursuant to Section 2.11. Nothing contained in this Article II shall be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters herein stated which the Trustee may deem sufficient. Any request or consent of the Owner of any Certificate shall bind every future Owner of the same Certificate in respect of anything done or to be done by the Trustee in pursuance of such request or consent. SECTION 2.11 Certificate Register. The Trustee will keep or cause to be kept at its operational office sufficient books for the registration and transfer of the Certificates which shall, during normal working hours, be open to inspection by the City and the Corporation; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, Certificates as hereinbefore provided. The City, the Corporation and the Trustee shall be entitled to treat the registered owner of a Certificate as the absolute owner thereof for all purposes, whether or not a Certificate shall be overdue, and the City, the Corporation and the Trustee shall not be affected by any notice to the contrary. SECTION 2.12 Destruction of Canceled Certificates. Whenever in this Agreement provision is made for the surrender or cancellation by the Trustee and the delivery to the City -13- of any Certificates, the Trustee shall, in lieu of such delivery, destroy such Certificates and deliver a certificate of such destruction to the City. ARTICLE III APPLICATION OF PROCEEDS; ACQUISITION AND CONSTRUCTION FUND SECTION 3.01 Application of Proceeds and Other Moneys. The proceeds and other moneys received by the Trustee from the original sale of the Certificates shall forthwith be set aside or transferred by the Trustee in or to the following respective funds and accounts and in the following order of priority: (a) Lease Payment Fund: The Trustee shall deposit $ (representing accrued interest and capitalized interest) in the Lease Payment Fund; (b) Reserve Fund: The Trustee shall deposit $ in the Reserve Fund; (c) Acquisition and Construction Fund: The Trustee shall transfer to the City the balance of the proceeds to be held in the Acquisition and Construction Fund. SECTION 3.02 [Reserved] SECTION 3.03 Acquisition and Construction Fund. The proceeds of the Certificates deposited in the Acquisition and Construction Fund shall be held by the City in the Acquisition and Construction Fund for the purpose of providing funds to pay Delivery Costs and Project Costs of the Project. The moneys in the Acquisition and Construction Fund shall be held by the City in trust and applied to the costs of acquisition, construction and financing of the Project and the expenses incident thereto or connected therewith, including, if necessary, interest during construction and for a period of not to exceed twenty-four months thereafter, architectural, engineering and inspection fees and expenses, apparatus, equipment and furnishings for the Project, testing and inspection, surveys, insurance premiums, losses during construction not insured against because of deductible amounts, the fees and expenses of the Trustee, expenses in connection with the preparation, issuance, sale and delivery of the Certificates, legal and accounting fees and expenses, and similar expenses. When the Project shall have been completed and a certificate of the City stating the fact and date of such acquisition or completion and stating that all of the cost of acquisition or construction thereof, as the case may be, and incidental expenses have been determined and paid (or that all of such costs and expenses have been paid less specified claims which are subject to dispute and for which a retention in the Acquisition and Construction Fund is to be maintained in the full amount of such claims until such dispute is resolved), shall be delivered to the Trustee by the City. Any remaining balance in the Acquisition and Construction Fund not needed for Acquisition and Construction Fund purposes (but less the amount of any such retention) will be transferred to the Trustee for deposit in the Lease Payment Fund established pursuant to Section 5.02 or at the direction of the City and upon -14- the receipt of an opinion of Special Counsel to the effect that the transfer will not adversely effect the excludability of the interest component of the Certificate payments from federal income taxation, to the Trustee for deposit in the Prepayment Fund and used to prepay certificates as early as practicable thereafter. SECTION 3.04. Additional Certificates. So long as any of the Certificates remain Outstanding, the City will not issue any Additional Certificates or certificates payable from Revenues on a parity with the Certificates unless the Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding shall have consented in writing to the issuance of such Additional Certificates or certificates. SECTION 3.05. Validity of Certificates. The validity of the authorization and issuance of the Certificates shall not be dependent on or affected in any way by any proceedings taken by the City for acquisition or construction of the Project , or by any contracts made by the City in connection therewith, or the failure to acquire or construct the Project or any part thereof. The recital contained in the Certificates that the same are regularly issued pursuant to law shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance. ARTICLE IV PREPAYMENT OF CERTIFICATES SECTION 4.01 Establishment of Prepayment Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach Prepayment Fund", shall keep such Fund separate and apart from all other funds and moneys held by it, and shall administer such fund as herein provided. Moneys to be used for prepayment of the Certificates shall be deposited into the Prepayment Fund and used solely for the purpose of prepaying the Certificates in advance of their maturity on the date designated for prepayment and upon presentation and surrender of such Certificates. SECTION 4.02 Mandatory Prepayment. (a) The Certificates are subject to prepayment on any date, in whole or in part, from Net Proceeds which the Trustee shall transfer to the Prepayment Fund or other moneys deposited with the Trustee as provided in Sections 6.1(c) and 6.2 of the Lease at least 60 days prior to a Certificate Payment Date and credited towards the Prepayment made by the City pursuant to section 10.1 of the Lease, at a prepayment price equal to the principal amount of Certificates prepaid together with accrued interest to the date fixed for prepayment, without premium. (b) The Certificates are subject to mandatory prepayment in whole or in part on any date, in any Authorized Denomination, if and to the extent the Corporation is required to do so in order to preserve the excludability of interest on the Certificates from gross income for purposes of federal income taxation, as set forth in an opinion of Special Counsel, at a prepayment price equal to the principal amount of Certificates prepaid together with accrued interest to the date fixed for pre -payment, without premium. -15- (c) Mandatory Prepayment -Sinking Fund Payment. The Term Certificates maturing on June 1, 2019 (the "Term Certificates") will be subject to mandatory prepayment, on each June 1, commencing on June 1, 2006, at a prepayment price equal to the principal amount thereof together with accrued interest thereon to the prepayment date, without premium, in the years and amounts as set forth in the following table: Year Year (June 1) Amount (June 1) Amount 2006 $250,000 2013 $385,000 2007 $265,000 2014 $410,000 2008 $280,000 2015 $435,000 2009 $300,000 2016 $465,000 2010 $320,000 2017 $495,000 2011 $340,000 2018 $525,000 2012 $360,000 2019 $560,000 If some but not all of the Term Certificates have been optionally prepaid or prepaid by mandatory prepayment other than mandatory sinking fund prepayments, the total amount of the respective future sinking fund payments shall be reduced by the aggregate principal amount of Term Certificates so prepaid, to be allocated among such sinking funds payments on a pro rata basis in integral multiples of $5,000. (d) In lieu of depositing cash with the Trustee as a payment for prepayment price of any Certificate required to be prepaid as provided for above, the Corporation or its assignee will have the option to tender to the Trustee for cancellation any amount of Certificates which have been purchased by or upon the direction of the City with amounts on deposit in the Prepayment Fund or from any other source of available funds. Such Certificates may be purchased with amounts in the Prepayment Fund at public or private sale at prices not in excess of the otherwise applicable prepayment price; provided, however that such Certificates must be tendered to the Trustee for cancellation prior to the date on which the Trustee mails notice of prepayment with respect thereto. SECTION 4.03. Optional Prepayment. Certificates maturing on or before June 1, 2000 are not subject to optional prepayment prior to their stated maturity dates. The Certificates, including portions thereof, maturing on or after June 1, 2001, shall be subject to prepayment prior to maturity, upon instructions from the City, on June 1, 2000, and each Certificate Payment Date thereafter as a whole or in part in inverse order of maturity and by lot within any maturity, at the respective prepayment prices (expressed as percentages of principal amount) set out below, plus accrued interest thereon to the prepayment date: Prepayment Dates Prepayment Prices June 1, 2000 and December 1, 2000 102% June 1, 2001 and December 1, 2001 101 % June 1, 2002 and thereafter 100% -16- SECTION 4.04 Selection of Certificates for Prepayment. Whenever provision is made in this Agreement for the prepayment of Certificates and less than all Outstanding Certificates are called for prepayment, the Trustee shall select Certificates for prepayment, from the Outstanding Certificates not previously called for prepayment pursuant to Section 4.02 hereof, pro rata among maturities and by lot within any maturity and, to the extent not equally allocable among maturities, in inverse order of maturities so that following such prepayment, remaining annual payments of principal and interest represented by the Certificates are, to the extent practicable given that Certificates are issued in integral multiples of $5,000, proportionate to the initial amounts of such payments. The Trustee shall promptly notify the City in writing of the Certificates so selected for prepayment. SECTION 4.05 Notice of Prepayment. (a) Content. When prepayment is authorized or required pursuant to this Article IV, the Trustee shall give written notice to the Owners of the prepayment of the Certificates on behalf of and at the expense of the City. In connection with an optional prepayment, the Trustee shall not give notice of such prepayment until the City's payment pursuant to Section 10.2 of the Lease has been received by the Trustee. Such notice shall specify: (a) that the Certificates or a designated portion thereof are to be prepaid, (b) the numbers of the Certificates together with the CUSIP numbers to be prepaid, (provided, however, neither the Trustee, City or the Corporation shall be liable for the accuracy of the CUSIP numbers), (c) the date of notice and the date of prepayment, (d) the place or places where the prepayment will be made, and (e) the following descriptive information regarding the Certificates: date, interest rates and stated maturity dates; provided that if all Outstanding Certificates are being prepaid, the notice need not contain the information required by (b) above. Such notice shall further state that on the specified date there shall become due and payable upon each Certificate to be prepaid, the portion of the principal amount of such Certificate to be prepaid, together with interest accrued to said date and prepayment premium, if any, and that from and after such date, provided that moneys therefor have been deposited with the Trustee, interest with respect thereto shall cease to accrue and be payable. (b) Recipients; Timing. Notice of such prepayment shall be sent by first class mail, postage prepaid, to the Corporation, the City, Depository Trust Company and the respective Owners of any Certificates designated for prepayment at their addresses appearing on the Certificate registration books, at least 30 days, but not more than 60 days, prior to the prepayment date; provided that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the prepayment of such Certificates. SECTION 4.06 Partial Prepayment of Certificates. Upon surrender by the Owner of a Certificate for partial prepayment at the Principal Office, payment of such partial prepayment of the principal amount of a Certificate will be made to such Owner by check mailed by first class mail to the Owner at his address as it appears on the registration books of the Trustee. Upon surrender of any Certificate prepaid in part only, the Trustee shall execute and deliver to the registered Owner thereof, at the expense of the City, a new Certificate or Certificates which shall be of authorized denominations equal in aggregate principal amount to the unrepaid portion of the Certificate surrendered and of the same interest rate and the same maturity. Such partial prepayment shall be valid upon payment of the amount thereby required -17- to be paid to such Owner, and the City, the Corporation and the Trustee shall be released and discharged from all liability to the extent of such payment. SECTION 4.07 Effect of Notice of Prepayment. Notice having been given as aforesaid, and the moneys for the prepayment (including the interest to the applicable date of prepayment), having been set aside in the Prepayment Fund, the Certificates shall become due and payable on said date of prepayment, and, upon presentation and surrender thereof at the Principal Office, said Certificates shall be paid at the unpaid prepayment price with respect thereto, plus interest accrued and unpaid to said date of prepayment. If, on said date of prepayment, moneys for the prepayment of all the Certificates to be prepaid, together with interest to said date of prepayment, shall be held by the Trustee so as to be available therefor on such date of prepayment, and, if notice of prepayment thereof shall have been given as aforesaid, then, from and after said date of prepayment, interest with respect to the Certificates shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the prepayment of Certificates shall be held in trust for the account of the Owners of the Certificates so to be prepaid. All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions of this Article shall be canceled upon surrender thereof and delivered to or upon the order of the City. SECTION 4.08 No Surplus. Prepayment of Certificates shall be made in such manner that there shall be no more than a minimal amount of funds remaining in the Prepayment Fund after prepayment and payment of all Certificates Outstanding, of any series, including accrued interest and payment of any applicable fees to the Trustee or provision made therefor satisfactory to the Trustee and provision for any amounts required to be transferred to the Rebate Fund pursuant to Sections 8.07 and 8.08 hereof, and after payment of any amounts due the Trustee pursuant to Sections 9.06 and 9.07 hereof. ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND SECTION 5.01 Security Provisions. (a) Assignment of Rights in Lease. The Corporation has, pursuant to the Assignment Agreement, assigned and set over to the Trustee certain of its rights in the Site Lease and Lease, including but not limited to all of the Corporation's rights to receive and collect all of the Lease Payments, the Prepayments, and all other amounts required to be deposited in the Lease Payment Fund pursuant to the Lease or pursuant hereto. All Lease Payments, Prepayments, and such other amounts to which the Corporation may at any time be entitled shall be paid directly to the Trustee, and all of the Lease Payments and Prepayments collected or received by the Corporation shall be deemed to be held and to have been collected or received by the Corporation as the agent of the Trustee, and if received by the Corporation at any time shall be deposited by the Corporation with the Trustee within one Business Day after the receipt thereof, and all such Lease Payments, Prepayments, and such -18- other amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund or Prepayment Fund. (b) Security Interest in Moneys and Funds. The Corporation and the City, as their interest may appear, hereby grant to the Trustee for the benefit of the Owners a first priority lien on and a security interest in all moneys in the funds held by the Trustee under this Trust Agreement (excepting only the Rebate Fund and any moneys to be deposited into such Rebate Fund), including, without limitation, the Lease Payment Fund, the Prepayment Fund, and the Net Proceeds Fund, and all such moneys shall be held by the Trustee in trust and applied to the respective purposes specified herein and in the Lease. (c) Pledge of Lease Payments. The Lease Payments are hereby irrevocably pledged to and shall be used for the punctual payment of the interest and principal represented by the Certificates and the Lease Payments shall not be used for any other purpose while any of the Certificates remain Outstanding. This pledge shall constitute a first and exclusive lien on the Lease Payments in accordance with the terms hereof, subject only to the provisions contained in Section 9.06 hereof. SECTION 5.02 Establishment of Lease Payment Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach Lease Payment Fund." All moneys at any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates. So long as any Certificates are Outstanding, neither the City nor the Corporation shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited therein, except only as provided in this Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. SECTION 5.03 Deposits. There shall be deposited in the Lease Payment Fund all Lease Payments received by the Trustee and any payments received by the Trustee under the Certificate Insurance Policy, if any, including any moneys received by the Trustee for deposit therein pursuant to Section 4.3 of the Lease (regarding Lease Payments), Section 3.03 hereof (regarding unexpended Certificate proceeds), and any other moneys required to be deposited therein pursuant to the Lease or pursuant to this Agreement, including pursuant to Section 5.4(c) of the Lease (regarding proceeds of rental interruption insurance) and Section 15.04 hereof (regarding any Certificate Insurance Policy). No later than five Business Days prior to each Lease Payment Date, the Trustee shall notify the City as to what amounts are on deposit in the Lease Payment Fund to be credited towards the Lease Payment due on such Lease Payment Date as provided in Section 4.3(b) and Article X of the Lease; provided, however, that any failure of the Trustee to send such notice shall not relieve the City of its obligation to make Lease Payments. SECTION 5.04 Application of Moneys. Except as provided in Section 5.05, all amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal and interest with respect to the Certificates, as the same shall become due and payable, in accordance with the provisions hereof. On each Certificate Payment Date, the Trustee shall mail by first class mail, postage prepaid, to the Owners an amount sufficient to pay the principal and interest evidenced by the -19- Certificates becoming due and payable on such date and retain any other amounts to pay the principal and interest evidenced by the Certificates next becoming payable. SECTION 5.05 Interest before Completion; Surplus. All interest earnings on the Lease Payment Fund prior to the completion date shall be transferred to the Acquisition and Construction Fund. Any funds remaining in the Lease Payment Fund on any Certificate Payment Date after payment of all principal and interest and premiums, if any, due and payable on the Certificates on such date, including accrued interest and payment of any applicable fees to the Trustee, or provision made therefor satisfactory to the Trustee, and provision for any amounts required to be transferred to the Rebate Fund pursuant to Sections 8.07 and 8.08 hereof, shall be withdrawn by the Trustee and remitted to the City after payment of any amounts due the Trustee pursuant to Sections 9.06 and 9.07 hereof. ARTICLE VI RESERVE FUND SECTION 6.01 Reserve Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach Reserve Fund". All moneys at any time on deposit in the Reserve Fund shall be held by the Trustee in trust for the benefit of the City and for the benefit of the Owners, as a reserve for the payment when due of all the Lease Payments and Prepayments to be paid pursuant to the Lease and of all payments on the Certificates and applied solely as provided herein. SECTION 6.02 Deposits to the Reserve Fund. (a) From Delinquent Lease Payments. The City hereby agrees that if at any time the balance in the Reserve Fund shall be reduced below the Reserve Requirement, the first payments of Lease Payments thereafter payable by the City and not needed to pay interest and principal components of Lease Payments payable to the Certificate Owners on the next Certificate Payment Date shall be used to increase the balance in the Reserve Fund to the required Reserve Requirement. (b) Reserve Replenishment Rent. Any Reserve Replenishment Rent payable pursuant to the Replenishment terms of the Lease shall be deposited in the Reserve Fund. SECTION 6.03 Transfers of Excess. The Trustee shall, on or before May 1 and November 1 of each year, provide written notice to the City of any moneys held in the Reserve Fund which are in excess of the Reserve Requirement and the Trustee shall transfer such excess moneys to the Lease Payment Fund to be applied to the next Lease Payment due from the City. SECTION 6.04 Application of Reserve Fund in Event of Deficiency in Lease Payment Fund. Whether or not Lease Payments are then in abatement, if three days immediately preceding any Certificate Payment Date the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest with respect to the Certificates then coming -20- due and payable, the Trustee shall apply the moneys available in the Reserve Fund (including any investments purchased with such moneys, which investments shall be liquidated and the proceeds thereof applied as required hereunder) to make delinquent Lease Payments on behalf of the City by transferring the amount necessary for this purpose to the Lease Payment Fund. The Trustee shall notify the City of the amount withdrawn from the Reserve Fund. The City shall either pay Reserve Replenishment Rent if the requirements of Section 4.3 (d) of the Lease can be met or certify to the Trustee its inability to do so. SECTION 6.05 Transfer to Make All Lease Payments. If on any Certificate Payment Date the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding amounts required for payment of past due principal or interest with respect to Certificates not presented for payment) are sufficient to pay all Outstanding Certificates, including all principal, interest and prepayment premiums (if any), the Trustee shall, upon the written direction or oral direction confirmed in writing of the City Representative, transfer all amounts then on hand in the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease Payments or Prepayments on behalf of the City, and such moneys shall be distributed to the Owners of Certificates in accordance with Articles II and IV of this Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates, or upon provision for such payments as provided in Section 14.01 hereof, shall be withdrawn by the Trustee and paid to the City after payment of any amounts due the Trustee pursuant to Sections 9.06 and 9.07 hereof. ARTICLE VII NET PROCEEDS FUND SECTION 7.01 Establishment of Net Proceeds Fund; Deposits. The Trustee hereby establishes a special fund designated as the "City of Newport Beach Net Proceeds Fund" to be maintained and held in trust for the benefit of the Owners, subject to disbursement therefrom as provided herein. The Trustee shall deposit Net Proceeds in the Net Proceeds Fund as provided in Section 6.1(a) of the Lease. SECTION 7.02 Disbursements. The Trustee shall disburse Net Proceeds for replacement or repair as provided in Section 6.1(b) of the Lease only if it has received the certification and moneys, if any, required by Section 6.1(b)(1)(i) of the Lease (and the Trustee shall be absolutely protected in making any disbursements from the Net Proceeds Fund in reliance upon the requisition described in Section 6.1(b)(2) of the Lease), or transfer such proceeds to the Prepayment Fund upon notification of the City Representative as provided in section 6.1(c) of the Lease. After all of the Certificates have been retired and the entire amount of principal and interest with respect to the Certificates has been paid in full, or provision made for payment satisfactory to the Trustee, including provision for all amounts required to be transferred to the Rebate Fund pursuant to Sections 8.07 and 8.08 hereof, the Trustee shall pay any remaining moneys in the Net Proceeds Fund to the City after payment of any amounts due to the Trustee pursuant to Sections 9.06 and 9.07 hereof. SECTION 7.03 Cooperation. The Corporation and the Trustee shall cooperate fully with the City at the expense of the City in filing any proof of loss with respect to any insurance policy maintained pursuant to Article V of the Lease and in the prosecution or -21 - defense of any prospective or pending condemnation proceeding with respect to the Project or any item or portion thereof; provided, however, the Trustee shall not be required to conduct such action. ARTICLE VIII MONEYS IN FUNDS; INVESTMENT SECTION 8.01 Held in Trust. The moneys and investments held by the Treasurer under this Agreement are irrevocably held in trust for the benefit of the Owners of the Certificates, and, in the case of the Rebate Fund, for payment as required to the United States Treasury and for the purposes herein specified, and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Agreement and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Corporation, the Trustee or the City, or any of them. SECTION 8.02 Investments Authorized. (a) Upon Direction of City. The City Representative shall by written order filed with the Trustee at least two days prior to making an investment direct such investment in specific Permitted Investments identified in such written order. In the absence of such written order, the Trustee shall make investments solely in those Permitted Investments set forth in (D) of the definition thereof. (b) Registration. Such investments, if registrable, shall be registered in the name of the Trustee for the benefit of the Owners and held by the Trustee. (c) Trustee as Purchaser or Anent. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section. The Trustee may act as purchaser or agent in the making or disposing of any investment. (d) Trustee Standard of Care. Except as otherwise provided in Section 9.05. the Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this Section. SECTION 8.03 Disposition of Investments. Any income, profit or loss on the investment of moneys held by the Trustee or the Treasurer hereunder shall be credited to the respective fund (or account within a fund, if applicable) for which it is held, except as otherwise provided herein. SECTION 8.04 Accounting. The Trustee shall furnish to the City, not less than monthly, an accounting of all investments made by the Trustee and all amounts held by the Trustee. The Trustee shall keep accurate records of all funds administered by it and of all Certificates paid and discharged. -22- SECTION 8.05 Valuation and Disposition of Investments. (a) Valuation. Subject to the provisions of Sections 8.07 and 8.08 hereof for the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued at the lower of the cost or the market price, exclusive of accrued interest. With respect to all funds and accounts, valuation shall occur annually on or before May 1, except in the event of a withdrawal from the Reserve Fund, whereupon it shall be valued immediately after such withdrawal pursuant to being replenished as provided in Section 4.3(d) of the Lease. (b) Disposition. Subject to the provisions of Sections 8.07 and 8.08 hereof and the Tax Certificate, the Trustee shall sell or present for prepayment, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited. SECTION 8.06 Commingling of Moneys in Funds. The Trustee may at its sole discretion commingle any of the funds held by it pursuant to this Agreement into a separate fund or funds for investment purposes only; provided, however, that all funds or accounts held by the Trustee hereunder shall be accounted for separately notwithstanding such commingling by the Trustee. SECTION 8.07 Arbitrage Covenant. The Corporation and the City hereby covenant with the Owners of the Certificates that, notwithstanding any other provision of this Agreement, they will make no use of the proceeds of the Certificates that would cause the Certificates to be "arbitrage bonds" under Section 148 of the Code, the interest on which is not excludable from gross income for federal income tax purposes under Section 103 of the Code. SECTION 8.08 Rebate Fund. (a) The Trustee shall establish a special fund designated as the "City of Newport Beach Rebate Fund" (the "Rebate Fund"). Within 55 days of the end of each Certificate Year, (1) the City shall calculate or cause to be calculated the amount that would be considered "rebatable arbitrage" in accordance with Section 148(f) of the Code, including Section 148(f)(4)(B) of the Code, and Section 1.148-2T(a) of the Proposed and Temporary Regulations issued under Section 148(f) of the Code (the "Rebate Regulations"), using as the "computation date" for this purpose the end of such Certificate Year, and (2) upon the City's written direction, an amount shall be deposited to the Rebate Fund by the Trustee from deposits from the City, if and to the extent required, so that the balance in the Rebate Fund shall equal the amount of "rebatable arbitrage" so calculated. 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 Requirement, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund shall be governed by this Section 8.08 and Section 8.07 of this Trust Agreement and by the Tax Certificate. The Trustee shall be deemed conclusively to have complied with such provisions if it follows the directions of the City, and shall have no liability or responsibility to enforce compliance by the City with the terms of the Tax Certificate. -23- (b) Any funds remaining in the Rebate Fund after redemption and payment of all the Certificates and any amounts described in paragraph (2) of subsection (c), or provision made therefor satisfactory to the Trustee, including accrued interest and payment of any applicable fees to the Trustee, shall be withdrawn by the Trustee and remitted to the City. (c) Upon the City's written direction, which directions shall be specific as to payment amounts, the Trustee shall pay to the United States Treasury, out of amounts in the Rebate Fund: (1) not later than 60 days after the end of (i) the fifth Certificate Year, and (ii) each fifth Certificate Year thereafter, an amount equal to at least 90% of the "rebatable arbitrage" calculated as of the end of such Certificate Year in accordance with Section 148(f) of the Code, including Section 148(f)(4)(B) of the Code, and Section 1.148-2T of the Rebate Regulations; and (2) not later than 60 days after the payment of all Certificates, an amount equal to 100% of the "rebatable arbitrage" calculated as of the end of such Certificate Year, and any income attributable to the "rebatable arbitrage, both determined in accordance with Section 148(f) of the Code, including Section 148(f)(4)(B) of the Code, and Section 1.148-2T of the Rebate Regulations. (d) In the event that, prior to the time of any payment required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the City shall calculate the amount of such deficiency and direct the Trustee to deposit an amount received from the City equal to such deficiency into the Rebate Fund prior to the time such payment is due. (e) Each payment required to be made pursuant to subsection (c) shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, which shall be prepared by the City and provided to the Trustee. (f) In the event that immediately following the calculations required by the Tax Certificate and the transfer of accounts required by subsection (a) above, the amount then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein to make the payments required under subsection (c) above, upon written instructions from the City, the Trustee shall withdraw the excess from the Rebate Fund and credit the excess to the Lease Payment Fund. (g) The Trustee shall invest all amounts held in the Rebate Fund in Permitted Investments as directed in writing 2 days prior to the investment date by the City. Monies, including investment earnings, shall not be transferred from the Rebate Fund until all rebate requirements have been satisfied and certified by the City to the Trustee. -24- SECTION 8.09 Information Concerning Investments. The Trustee shall supply information regarding investments made under this Article VIII at the request of the City, in writing, including (i) purchase date; (ii) purchase price; (iii) information , if any, reasonably establishing that the purchase price is the fair market value as of such date (e.g., the published quoted bid by a dealer in such an investment on the date of purchase); (iv) any accrued interest paid; (v) face amount; (vi) coupon rate; (vii) periodicity of its interest payments; (viii) disposition price; (ix) any accrued interest received; and (x) disposition date. SECTION 8.10 Notice Concerning Investments. The Trustee shall provide notice to the City of any investments made under this Article VIII in monthly financial statements. ARTICLE IX THE TRUSTEE SECTION 9.01 Appointment of Trustee. (a) Appointment. Bank of America National Trust and Savings Association, is hereby appointed Trustee by the Corporation and the City. (b) Qualifications. The Corporation and the City agree that they will maintain a Trustee having a principal administrative office in Los Angeles or San Francisco, California. Any successor Trustee appointed pursuant to the provisions of this section shall be a trust company or bank duly authorized to exercise trust powers and subject to examination by federal or state authority, and have a reported capital and surplus of not less than $25,000,000. If such bank or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to then for the purpose of this Section 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. (c) Removal. So long as there is no Event of Default or occurrence that with the passage of time will become an Event of Default, the City, upon the consent of the Insurer, or the Insurer may upon 30 days written notice remove the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors thereto. (d) Resignation. The Trustee may resign by giving written notice to the City and the Corporation provided that such resignation shall not take effect until the successor Trustee is appointed as provided in this Section. Upon receiving such notice of resignation, the City shall promptly appoint a successor Trustee. In the event the City does not name a successor Trustee within 30 days of receipt of notice of the Trustee's resignation, then the Trustee may petition a court of suitable jurisdiction to seek the immediate appointment of a successor Trustee. (e) Successor. Any successor Trustee shall be a bank or trust company meeting the qualifications as set forth in Subsection (b) above. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon consent to the appointment by the Insurer and acceptance of appointment by the successor Trustee. Upon -25- such acceptance, the successor Trustee shall mail notice thereof to the Certificate Owners at their respective addresses set forth on the Certificate registration books maintained pursuant to Section 2.11. SECTION 9.02 Merger or Consolidation. Any company or national banking association into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall be eligible under Section 9.01, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Notice of such merger or consolidation shall be given to the City and the Corporation. SECTION 9.03 Protection of the Trustee. (a) Reliance Upon Papers or Documents. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or other paper or document which it shall in good faith believe to be genuine and to have been passed or signed by the proper board or person or to have been prepared and furnished pursuant to any of the provisions of this Agreement, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may, in the absence of bad faith on its part, accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. (b) Reliance Upon Opinions of Counsel. The Trustee may consult with counsel, who may be counsel to the City, with regard to legal questions and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith in accordance therewith. Before being required to take any action, the Trustee may require an opinion of Independent or Special Counsel acceptable to the Trustee which opinion shall be made available to the other parties hereto upon request, which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, Trustee shall be absolutely protected in relying thereon. (c) Reliance Upon Requested Certificates. Whenever in the administration of its duties under this Agreement, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed), in the absence of bad faith on its part, shall be deemed to be conclusively proved and established by the certificate of the City Representative or the Corporation Representative and such certificate shall be full warranty to the Trustee, in the absence of bad faith on its part, for any action taken or suffered under the provisions of this Agreement, 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. -26- (d) Additional Protections. No provision in this Trust Agreement shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. The Trustee shall not be accountable for the use or application by the City or the Corporation or any other party of any funds which the Trustee has released in accordance with the terms of this Trust Agreement. The Trustee makes no representation or warranty, express or implied, as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City or the Corporation of the Project or the Site (as that term is defined in the Lease). In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Lease or this Trust Agreement for the existence, furnishing or use of the Project or the Site. Before taking any action under Article XIII hereof or this Section at the request or declaration of the Owners, the Trustee may require indemnity satisfactory to the Trustee be furnished by the Owners for the reimbursement of all expenses to which it may reasonably incur and to protect the Trustee against all liability except liability which is adjudicated to have resulted from the Trustee's negligence or willful misconduct in connection with any action. SECTION 9.04 Rights of the Trustee. (a) Ownership of Certificates. The Trustee may become the Owner of the Certificates with the same rights it would have if it were not Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the City with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Certificates, whether or not such committee shall represent the Owners of the majority in principal amount of the Certificates then Outstanding. (b) Attorneys Agents, Receivers. The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, custodians, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder and the Trustee shall not be answerable for the default or misconduct of any such attorney, agent or receiver selected by it with reasonable care. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or arrangements herein or of any of the documents executed in connection with the Certificates, or as to the exercise of an Event of Default thereunder. SECTION 9.05 Standard of Care. So long as there is no Event of Default, the Trustee shall not be liable in connection with the performance of its duties hereunder or under the Assignment Agreement, except for its own negligence or willful misconduct. In the Event of Default, the Trustee shall exercise such care in performing its duties hereunder as a prudent person would exercise in the conduct of his affairs. The Trustee shall make investments as provided in Section 8.02. The Trustee undertakes to perform such duties, and only such BOOM duties, as are specifically set forth in this Trust Agreement and no implied duties or obligations shall be read into this Agreement against the Trustee. SECTION 9.06 Compensation of the Trustee. As Additional Rent under Section 4.9 of the Lease, the City shall pay to the Trustee compensation for its services as shall be agreed upon by the Trustee and the City in connection with the Trustee's entry into this Trust Agreement and shall reimburse the Trustee for all its reasonable expenses, advances and disbursements, including but not limited to advances to and fees and expenses of independent appraisers, accountants, consultants, counsel, agents, custodians and attorneys -at -law or other experts employed by it in the exercise and performance of its powers and duties hereunder and the Trustee shall have a lien therefor on any and all funds at any time held by it under this Agreement, which lien shall be prior and superior to the lien of the Certificate Owners. The City's obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates and the termination of this Agreement. The compensation of the Trustee hereunder shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust. SECTION 9.07 Indemnification of the Trustee. The City shall, to the extent permitted by law, indemnify and hold the Trustee, its directors, officers, agents, employees, successors and assigns harmless from and against all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the Site or Project by the City, (ii) any breach or default on the part of the City in the performance of any of its certificates under this Agreement, the Lease and any other agreement made and entered into for purposes of the Project, (iii) any act of negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Site or Project, (iv) any act of negligence of any assignee of, or purchaser from, the City or of any of its or their agents, contractors, servants, employees or licensees with respect to the Site or Project, (v) the construction or acquisition of the Site or Project or Project Costs, (vi) the actions of any other party, including but not limited to the ownership, operation or use of the Site or Project by the City, (vii) the Trustee's exercise and performance of its powers and duties hereunder or (viii) 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 in connection with the sale of the Certificates, including the costs and expenses of defending itself against any claim of liability arising under this Trust Agreement. No indemnification will be made under this Section or elsewhere in this Agreement for willful misconduct or negligence under this Agreement by the Trustee, its officers, agents, employees, successors or assigns. The City's obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates or resignation or removal of the Trustee or the termination of this Trust Agreement. 1111104 0 ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS SECTION 10.01 Amendments Permitted. (a) With Consent. This Agreement and the rights and obligations of the Owners, and the Lease and the rights and oblications of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consents of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in section 10.03 hereof, shall have been filed with the Trustee. No such modification or amendment shall: (1) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof or reducing any premium payable upon the prepayment thereof without the express consent of the Owner of such Certificate, or (2) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease, or (3) modify any of the rights or obligations of the Trustee without its written assent thereto. In the event that a Certificate Insurance Policy is in effect insuring payment of principal and interest on the Certificates, no amendment or modification of this Trust Agreement, the Project Lease, the Site Lease or the Assignment Agreement which requires the consent of the Owners shall be made without also obtaining the consent in writing of the Insurer. Copies of any such amendments or modifications to any of the foregoing documents consented to by the Insurer shall be sent to S&P and Moody's. Any such supplemental agreement shall become effective as provided in section 10.02 hereof. (b) Without Consent. This Agreement and the rights and obligations of the Owners, and the Lease and the Site Lease and the rights and certificates of the parties thereto, may be modified or amended at any time by a supplemental agreement, without the consent of any such Owners, but only to the extent permitted by law and only: (1) to add to the agreements and covenants required herein and therein to be performed by the City or Corporation other agreements and covenants thereafter to be performed by the City or Corporation or to surrender any right or power reserved to the City; or -29- (2) to cure, correct or supplement any ambiguous or defective provision contained herein or therein which shall not materially adversely affect the interests of the Owners; or (3) in regard to matters arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which, in the opinion of the Trustee (which may be based upon opinions as provided in Section 9.03(b), shall not adversely affect the interests of the Owners. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto as the case may be. SECTION 10.02 Procedure for Amendment with Written Consent of the Owners. This Agreement or the Lease may be amended by supplemental agreement as provided in this Section 10.02 in the event the consent of the Owners is required pursuant to Section 10.01(a) hereof. A copy of such supplemental agreement, together with a request to the Owners for their consent thereto, shall be mailed by the Trustee by first class mail, postage prepaid, to each Owner of a Certificate at his address as set forth in the Certificate registration books maintained pursuant to Section 2.11 hereof, but failure to receive copies of such supplemental agreement and request so mailed shall not affect the validity of the supplemental agreement when assented to as in this Section provided. Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consent of the Owners of at least a majority in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 10.03 hereof) and notices shall have been mailed as hereinafter provided in this Section. Each such consent shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.11 hereof. Any such consent shall be binding upon the Owner of the Certificate giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Certificates shall have filed their consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of the Certificates in the manner hereinbefore provided in this Section for the mailing of such supplemental agreement, stating in substance that such supplemental agreement has been consented to by the Owners of the required percentage of Certificates and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A record, consisting of the papers required by this Section to be filed with the Trustee, shall be proof of the matters therein stated until the contrary is proved. SECTION 10.03 Disqualified Certificates. Certificates owned or held by or for the account of the City or the Corporation or by any person directly or indirectly controlled or controlled by, or under direct or indirect common control with the City or the Corporation -30- (except any Certificates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Agreement. The City or Trustee may adopt appropriate regulations to require each Owner, before his consent provided for in this Article X shall be deemed effective, to reveal if the Certificates as to which such consent is given are disqualified as provided in Section 10.03 hereof. SECTION 10.04 Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article X, this Agreement, the Site Lease or the Lease, as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Agreement, the Site Lease or the Lease, as the case may be, for any and all purposes. SECTION 10.05 Endorsement or Replacement of Certificates Delivered After Amendments. The Trustee may determine that Certificates delivered after the effective date of any action taken as provided in this Article X shall bear a notation, by endorsement, in form approved by the Trustee, as to such action. In that case, upon demand of the Owner of any Outstanding Certificate at such effective date and presentation of his Certificate for the purpose at the Principal Office, a suitable notation shall be made on such Certificate at the cost of the City. The City may determine that new Certificates, so modified as in the opinion of the City is necessary to conform to such Owners' action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such new Certificate shall be exchanged in the Principal Office without cost to such Owner, for a certificate of the same character then Outstanding, upon surrender of such Certificate. SECTION 10.06 Amendatory Endorsement of Certificates. Subject to Section 10.01 hereof, the provisions of this Article X shall not prevent any Certificate Owner from accepting any amendment as to the particular Certificates held by him, provided that due notification thereof is made on such Certificates. SECTION 10.07 Trustee's Reliance on Opinion of Special Counsel. The Trustee may obtain an opinion of Special Counsel that any such supplemental agreement complies with the provisions of this Article X and the Trustee may rely conclusively upon such opinion. ARTICLE XI COVENANTS; NOTICES SECTION 11.01 Compliance With and Enforcement of the Lease. The City covenants and agrees with the Owners to perform all obligations and duties imposed on it under the Lease. The Corporation covenants and agrees with the Owners to perform all obligations and duties imposed on them under the Lease. -31 - The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of the Lease by the Corporation. The Corporation and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or the leasehold interests therein, which may or can in any manner affect such estate of the City, will deliver the same, or a copy thereof, to the Trustee. SECTION 11.02 Payment of Taxes. The City shall pay all taxes relating to the Project or the Certificates as provided in Section 7.6(b) of the Lease. SECTION 11.03 Observance of Laws and Reaulations. The City will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the City, including its right to exist and carry on business as a municipal corporation, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. SECTION 11.04 Prosecution and Defense of Suits. The City shall promptly, and also upon request of the Trustee or any Owner, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Project, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose and shall, to the extent permitted by law, indemnify and save the Trustee and every Owner harmless from all loss, cost, damage and expense, including attorneys' fees, which they or any of them may incur by reason of any such defect, cloud, suit, action or proceeding. SECTION 11.05 City Budgets. In accordance with Section 2.1(g) of the Lease, the City will provide the Trustee with an annual certification by October 1 of each year that it has complied with the obligations of the City required thereunder, and the City Representative shall certify to the Trustee that the City has included all Lease Payments (other than Lease Payments of advance rental) due under the Lease in the Fiscal Year covered by its proposed annual budget and adopted budget. If the City fails to provide the Trustee with such certification, the Trustee shall promptly provide the City written notice specifying that the City has failed to observe and perform its covenant and agreement in such Section 2.1(g) and requesting that such failure be remedied within 30 days, or such failure shall constitute an Event of Default under Section 9.i(b) of the Lease. The Trustee shall forward a copy of such notice to the Corporation. Upon receipt of such notice, the City shall notify the Trustee of the proceedings proposed to be taken by the City, and shall keep the Trustee advised of all proceedings thereafter taken by the City. SECTION 11.06 Further Assurances. The Corporation and the City will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners the rights and benefits provided herein. -32- SECTION 1 1.07 Tax Covenants. The City will not make any use of the proceeds of the Certificates or any other funds of the City or take or omit to take any other action that would cause such certificates to be "private activity bonds" within the meaning of Section 141 of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code. To that end, so long as any rental payments are unpaid, the City, with respect to such proceeds and such other funds, will comply with all requirements of such sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1954, as amended, to the extent that such requirements are, at the time, applicable and in effect. The City will not use or permit the use of the Project or any portion thereof by any person other than a governmental unit as such term is used in section 141 of the Code, in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of the interest portion of any Lease Payments. SECTION 11.08 Notice of Trustee. The Trustee shall provide the City and the Corporation with written notice within five days of the Trustee acquiring actual knowledge of an Event of Default as defined in Section 9.1 of the Lease. ARTICLE XII LIMITATION OF LIABILITY SECTION 12.01 Limited Liability of the City. Except for the payment of Lease Payments, Additional Payments, and Prepayments when due in accordance with the Lease and the performance of the other covenants and agreements of the City contained herein and in the Lease, the City shall have no obligation or liability to any of the other parties or to the Owners with respect to this Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee. SECTION 12.02 No Liability of the City or Corporation for Trustee Performance. Except as expressly provided herein, neither the City nor the Corporation shall have any obligation or liability to any of the other parties or to the Owners with respect to the performance by the Trustee of any duty imposed upon it under this Agreement. SECTION 12.03 Limited Liability of Trustee. (a) No Investment Advice. The Trustee shall have no obligations or responsibility for providing information to the Owners concerning the investment character of the Certificates. (b) Sufficiency of this Agreement or Lease Payments. The Trustee makes no representations as to the validity or sufficiency of the Certificates, shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Certificates assigned to or imposed upon it. The Trustee shall not be responsible for the sufficiency of the Lease. The Trustee shall not be liable for the sufficiency or collection of any Lease Payments or other moneys required to be paid to it under the Lease (except as provided -33- in this Agreement), its right to receive moneys pursuant to said Lease, or the value of or title to the premises upon which the Site is located or the Project. (c) Actions of Corporation and City. The Trustee shall have no obligation or liability to any of the other parties or the Owners with respect to this Agreement or the failure or refusal of any other party to perform any covenant or agreement made by any of them under this Agreement or the Lease, but shall be responsible solely for the performance of the duties and obligations expressly imposed upon it hereunder as provided in Section 9.05. (d) Recitals and Agreements of Corporation and City. The recitals of facts, covenants and agreements herein and in the Certificates contained shall be taken as statements, covenants and agreements of the City or the Corporation (as the case may be), and the Trustee assumes no responsibility for the correctness of the same. (e) The Trustee shall have no responsibility or liability with respect to any information, statement or recital in any disclosure material prepared or distributed with respect to the sale of the Certificates. SECTION 12.04 Limitation of Rights of Parties and Certificate Owners. Nothing in this Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Corporation, the Trustee and the Owners, any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenant, condition or provision hereof; and all such covenants, conditions and provisions are and shall be for the sole and exclusive benefit of the City, the Corporation, the Trustee and the Owners. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS SECTION 13.01 Assignment of Rights. to the Assignment Agreement the Corporation Trustee for the benefit of the Owners, certain SECTION 13.02 Events of Default. The parties hereto acknowledge that pursuant has transferred, assigned and set over to the of the Corporation's rights under the Lease. (a) Remedies. If an Event of Default shall happen, then, and in each and every such case during the continuance of such Event of Default, the Trustee may exercise any and all remedies available pursuant to law or granted pursuant to the Lease; provided, however, that in the event that there is in effect a Certificate Insurance Policy insuring the payment of principal and interest on the Certificates and an Event of Default occurs, the Insurer shall be notified of the existence thereof and shall have the right to direct, upon providing reasonable indemnity to the Trustee, the selection and exercise of the remedies; but, provided further, that notwithstanding anything herein or in the Lease to the contrary, THERE SHALL BE NO RIGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE MATURITIES OF THE CERTIFICATES OR OTHERWISE TO DECLARE ANY LEASE PAYMENTS NOT THEN IN DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE. -34- (b) Actual Knowledge. The Trustee shall not be deemed to have knowledge of any Event of Default hereunder unless and until it shall have actual knowledge thereof, or shall have received written notice thereof, at its Principal Office. SECTION 13.03 Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XIII or of Article IX of the Lease, shall be deposited into the Lease Payment Fund and be applied by the Trustee in the following order upon presentation and surrender of the several Certificates, or the stamping thereon of the payment if partially paid in amounts not equal to integral multiples of $5,000 - First, Costs and Expenses: to the payment of the costs and expenses of the Trustee and of the Owners, including reasonable compensation to its or their agents, attorneys and counsel; Second, Interest: to the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installment, 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 Third, Principal: to the payment to the persons entitled thereto of the unpaid principal of any Certificates which shall have become due, whether at maturity or by call for prepayment, in the order of their due dates, with interest on the overdue principal and interest at a rate equal to the rate paid with respect to the Certificates and, if the amount available shall not be sufficient to pay in full all the amounts due with respect to the Certificates on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference. SECTION 13.04 Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein or in the Lease, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder. SECTION 13.05 Non -waiver. Nothing in this Article XIII or in any other provision of this Agreement or in the Certificates shall affect or impair the obligations of the City which is absolute and unconditional, to pay or prepay the Lease Payments as provided in the Lease. No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or power arising upon the happening of any event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence -35- therein, and every power and remedy given by this Article XIII to the Trustee or to the Owners may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners. SECTION 13.06 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. SECTION 13.07 Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interest of the Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of at least a majority in principal amount of the Outstanding Certificates hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation and if such Owners continue to indemnify the Trustee to its satisfaction. SECTION 13.08 Limitation on Certificate Owners' Right to Sue. No Owner of any Certificate executed hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default under the Lease; (b) the Owners of a majority in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under this Agreement, except in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. The right of any Owner of any Certificate to receive payment of said Owner's proportionate interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Agreement. -36- SECTION 13.09 Agreement to Pay Attorneys' Fees and Exoenses. In the event the City or Corporation should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party. SECTION 13.10 Term of a Substitute Lease. In the event that the Trustee as assignee of the Corporation enters into a new lease or leases of the Site or a portion thereof pursuant to Section 9.2 of the Lease in the event of a default thereunder, or in the event that the Lease terminates before all Lease Payments have been paid, then such new lease shall have a term no longer than the remaining term of the Site Lease and no longer than is necessary to recover all payments on the Certificates payable hereunder and any further expenditure of money made on the Site under the Site Lease in order to facilitate the execution of such new lease. ARTICLE XIV MISCELLANEOUS SECTION 14.01 Defeasance. (a) Methods. If and when any Outstanding Certificates shall be paid and discharged in any one or more of the following ways: (1) Payment: by well and truly paying or causing to be paid the principal of and interest and prepayment premiums (if any) with respect to such Certificates, as and when the same become due and payable, and all Additional Payments have been paid; (2) Cash: if prior to maturity and having given notice of prepayment by irrevocably depositing with the Trustee, in trust, at or before maturity, an amount of cash which (together with cash then on deposit in the Lease Payment Fund (and the Reserve Fund], in the event of payment or provision for payment of all Outstanding Certificates) is sufficient to pay such Certificates, including all principal and interest and premium, if any, and all Additional Payments have been paid; or (3) Government Obligations: by irrevocably depositing with the Trustee, in trust, noncallable Government Obligations together with cash, if required, in such amount as will, together with interest to accrue thereon (and, in the event of payment or provision for payment of all Outstanding Certificates moneys then on deposit in the Lease Payment Fund together with the interest to accrue thereon), be fully sufficient to pay and discharge all such Certificates (including all principal and interest represented thereby and prepayment premiums, if any) at or before their maturity date, as evidenced by an independent certified -37- public accountant verification as to the mathematical accuracy of the calculations delivered to the Trustee, and all Additional Payments; then, notwithstanding that any Certificates shall not have been surrendered for payment, all obligations of the Corporation, the Trustee and the City with respect to such Certificates shall cease and terminate, except only the obligations of the Trustee to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from funds deposited pursuant to paragraphs (2) and (3) of this Section, to the Owners of the Certificates not so surrendered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraphs (2) and (3) of this Section, the Certificates shall continue to represent direct and proportionate interests of the Owners thereof in Lease Payments under the Lease. (b) Refunding. If payment or provision for payment of Outstanding Certificates pursuant to subsection (a) is made wholly or partially from funds received from the issuance of refunding bonds, Trustee shall receive an opinion of Special Counsel as to the effect that (1) the refunding bonds are being issued in compliance with the laws of the State, (2) the interest on the refunding bonds is tax exempt, and (3) the Certificates have been legally defeased. (c) Surplus Monies. Any funds held by the Trustee, at the time of payment or provision for payment of all Outstanding Certificates pursuant to one of the procedures described in paragraphs (1) through (3) of subsection (a), which are not required for the payment to be made to Owners, shall be transferred to the Rebate Fund pursuant to Section 8.07 and 8.08 hereof, or paid to the Trustee pursuant to Section 9.06 and 9.07 hereof, and then shall be paid over to the City. (d) Surviving Provisions. Notwithstanding the satisfaction and discharge hereof, the Trustee shall retain such rights, powers and privileges hereunder as may be necessary or convenient for the payment of the principal, interest and prepayment premium, if any, on the Certificates and for the registration, transfer and exchange of the Certificates. SECTION 14.02 Non -Presentment of Certificates. In the event any Certificate shall not be presented for payment when the principal with respect thereof becomes due, either at maturity, or at the date fixed for prepayment thereof, if moneys sufficient to pay such Certificate shall have been deposited in the Lease Payment Fund, all liability of the City to the Owner thereof for payment of such Certificate shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys, without liability for interest thereon, for the benefit of the Owner of such Certificate who shall thereafter be restricted exclusively to such moneys, for any claim of whatever nature on his or her part under this Trust Agreement or on, or with respect to, said Certificate. Any moneys so deposited with and held by the Trustee not so applied to the payment of Certificates within two (2) years after the date on which the same shall have become due shall be paid by the Trustee to the City in proportion to the shares in the Lease Payments represented by the Certificates for payment of which such moneys were held, free from the trusts created by this Trust Agreement. Thereafter, Owners shall be entitled to look only to the City for payment, and then only to the extent of the amount so disbursed by the Trustee. -38- The City shall not be liable for any interest on the sums paid to it pursuant to this Section and shall not be regarded as a trustee or trustees of such money. SECTION 14.03 Records. The Trustee shall keep complete and accurate records of all moneys received and disbursed under this Agreement, which shall be available upon prior written notice for inspection by the City, the Corporation and any Owner, or the agent of any of them, at any time during regular business hours. SECTION 14.04 Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. SECTION 14.05 Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Agreement. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. SECTION 14.06 Waiver of Notice. Whenever in this Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 14.07 Separability of Invalid Provisions. In case any one or more of the provisions contained in this Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable. SECTION 14.08 Payment on a Business Day. If the date for making any payment or the last day for the performance of any act or the exercising of any right, as provided in this Agreement, is not a Business Day, such payment, with no interest accruing for the period after such nominal date, or performance, may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided in this Agreement. ARTICLE XV CERTIFICATE INSURANCE -39- SECTION 15.01 General. During the period when a Certificate Insurance Policy is in effect with respect to the Certificates, the provisions in this Article shall be effective and shall supersede any contrary provisions of this Agreement, to the extent of any inconsistency herewith. SECTION 15.02 Consents Required. (a) Any provisions of this Agreement expressly recognizing or granting rights in or to the Insurer may not be amended in any manner which affects the rights of the Insurer hereunder without the prior written consent of the Insurer. (b) Anything in this Agreement, the Site Lease, the Assignment Agreement or the Project Lease to the contrary notwithstanding, , the Insurer's consent shall be required whenever the consent of Certificates Owners, the City or the Trustee is required under this Agreement, the Project Lease, the Site Lease or the Assignment Agreement. (c) Anything in this Agreement or the Project Lease to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default as defined herein, the Insurer, upon providing reasonable indemnity to the Trustee, shall be entitled to control and direct the enforcement of all rights and remedies granted to the Certificate Owners or the Trustee for the benefit of the Certificate owners under this Agreement, and the Insurer shall also be entitled to approve all waivers of Events of Default. SECTION 15.03 Notices. While the Certificate Insurance Policy is in effect, the City or the Trustee, as appropriate, shall furnish to the Insurer (to the attention of the Surveillance Department): (a) A copy of any notice to be given to the registered Owners of the Certificates, the City or the Trustee and any Certificates rendered pursuant to this Agreement relating to the security for the Lease Payments or the Certificates; and (b) Such additional information the Insurer may reasonably request. Notwithstanding any other provision of this Agreement the Trustee shall notify Insurer if at any time there are insufficient moneys to make payments with respect to the Certificates as required and as soon as practicable upon being notified of the occurrence of any Event of Default hereunder. SECTION 15.04 Payment of Certificate Insurance. (a) In the event that, on the second Business Day, and again on the Business Day prior to a Certificate Payment Date, the Trustee has not received sufficient moneys to pay all principal of and interest on the Certificates due on the second following or following, as the case may be, Business Day, the Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone, telegraph or facsimile, confirmed in writing by registered or certified mail, of the amount of the deficiency. -40- (b) If the deficiency is made up in whole or in part prior to or on the payment date, the Trustee shall so notify the Insurer or its designee. (c) In addition, if the Trustee has notice that any certificate holder has been required to disgorge payments of principal or interest on the Certificate to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such certificate holder within the meaning of any applicable bankruptcy laws, then the Trustee shall notify the Insurer or its designee of such fact by telephone, telephonic or facsimile notice, confirmed in writing by registered or certified mail or express courier. (d) The Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for Owners of the Certificates as follows: 1 . If and to the extent there is a deficiency in amounts required to pay interest on the Certificates, the Trustee shall (a) execute and deliver to the Insurer's agent (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent for such Owners in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Owners (and not as Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Owners; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Certificates, the Trustee shall (a) execute and deliver to the Insurance Trustee in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Owner in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Certificate surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Trustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Owners (and not as Trustee) in accordance with the tenor of the Policy payment therefore from the Insurance Paying Agent, and (c) disburse the same to such Owners. (e) Payments with respect to claims for interest on and principal of Certificates disbursed by the Trustee from proceeds of the Policy shall not be considered to discharge the Certificates, and the Insurer shall become the Owner of such unpaid Certificate and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (f) Irrespective of whether any such assignment is executed and delivered, the Issuer and the Trustee hereby agree for the benefit of the Insurer that, -41 - 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Trustee), on account of principal of or interest on the Certificates, the Insurer will be subrogated to the rights of such Owners to receive the amount of such principal and interest from the City, with interest thereon as provided and solely from the sources stated in this Agreement to Trust Agreement Supplemental Agreement to Supplemental Trust Agreement and the Certificates; and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the Certificate, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Certificates to Owners, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. (g) In connection with the issuance of additional Certificates, the City shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Certificates. (h) Copies of any amendments made to the documents executed in connection with the issuance of the Certificates which are consented to by the Insurer shall be sent to appropriate national rating agencies. (i) The Insurer shall receive notice of the resignation or removal of the Trustee and the appointment of a successor thereto. (j) The Insurer shall receive copies of all notices required to be delivered to certificate holders from the Trustee and, on an annual basis, copies of the Issuer's audited financial statements and Annual Budget from the City. Notices: Any notice that is required to be given to an Owner of the Certificates or to the Trustee pursuant to the Agreement to Trust Agreement Supplement Agreement to Supplementql Trust Agreement shall also be provided to the Insurer. All notices required to be given to the Insurer under the Agreement to Trust Agreement Supplement Agreement to Supplemental to Supplemental Trust Agreement shall be in writing and shall be sent by registered, certified mail, facsimile or express courier. SECTION 15.05 Subrogation. In the event that any principal or interest component due with respect to the Certificates shall be paid by the Insurer pursuant to the Certificate Insurance Policy the Certificates shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Corporation or the City, and the assignment and pledge of the Lease Payments and all covenants, agreements and other certificates of the Corporation or the City to the Owners shall continue to exist and shall run to the benefit of the Insurer, and the Insurer shall be subrogated to the rights of such Owners. -42- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee By: Authorized Signatory NEWPORT BEACH PUBLIC FACILITIES CORPORATION, as Lessor By: Corporation Representative CITY OF NEWPORT BEACH, as Lessee Bv: City Representative -43- CERTIFICATE OF PARTICIPATION Series 1992 (Central Library Building Project) Evidencing A Proportionate Interest of the Owner Hereof In Lease Payments to be Made by the CITY OF NEWPORT BEACH (Orange County, California) to NEWPORT BEACH PUBLIC FACILITIES CORPORATION (A CALIFORNIA NONPROFIT PUBLIC FACILITIES CORPORATION) Interest Rate Maturity Date Dated Date CUSIP June 1, 1992 REGISTERED OWNER: PRINCIPAL AMOUNT: THIS IS TO CERTIFY THAT the registered owner named above, or registered assigns, as the Registered Owner of this Certificate of Participation (the "Certificate") is the owner of a proportionate and undivided interest in the right to receive certain Lease Payments and Prepayments thereof under and defined in that certain Project Lease, dated as of June 1, 1992 (the "Lease"), by and between NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a public agency duly organized and existing under the laws of the State of California and the CITY OF NEWPORT BEACH, a municipal corporation duly organized and existing under and by virtue of the Constitution and the laws of the State of California (the "City"), which Lease Payments and Prepayments and certain other rights and interests under the Lease have been assigned to BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as trustee (the "Trustee"), having a corporate trust office at which it conducts corporate trust business in Los Angeles, California (said office being herein referred to as the "Principal Office"). The Registered Owner of this Certificate is entitled to receive, subject to the terms of the Lease, on the maturity date specified above, the principal amount specified above, representing a portion of the Lease Payments designated as principal coming due during the preceding twelve months, and to receive on December 1, 1992, and semiannually thereafter on June 1 and December 1 of each year (the "Certificate Payment Dates") until payment in full of said portion of principal, the Registered Owner's portion of the Lease Payments designated as interest coming due during the six months immediately preceding each of the A-1 Certificate Payment Dates; provided that interest with respect hereto shall be payable from the Certificate Payment Date next preceding the date of execution of this Certificate (unless (i) this Certificate is executed on a Certificate Payment Date in which event it shall be payable from the date thereof, or (ii) this Certificate is executed after the close of business on the fifteenth day of the month prior to a Certificate Payment Date (the "Record Date"), and before such Certificate Payment Date in which event interest shall be payable from such Certificate Payment Date, or (iii) unless this Certificate is executed prior to the close of business on October 15, 1992, in which event interest shall be payable from June 1, 1992). The portion of the Lease Payments designated as interest is computed on the basis of a 360-day year of twelve 30-day months and is the result of the multiplication of the aforesaid portion of the Lease Payments designated as principal by the rate per annum identified above. Said amounts are payable in lawful money of the United States of America. The amount representing principal payable at maturity or upon prepayment in whole or in part is payable to the Registered Owner upon presentation and surrender of this Certificate at the Principal Office. In the event that this Certificate is paid in part only, payment of such partial prepayment of principal represented by this Certificate will be by check mailed on the Payment Date by first class mail upon presentation and surrender of this Certificate at the Principal Office. The amounts representing interest are payable by check mailed by first class mail on each Payment Date by the Trustee to the Registered Owner hereof as of the Record Date preceding the Certificate Payment Date at his address as it appears on the registration books of the Trustee or by wire transfer at the written request of the Registered Owner of $1,000,000 or more of principal amount, such request to be filed with the Trustee on or before the applicable Record Date. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE ON THE REVERSE HEREOF WHICH SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN. IN WITNESS WHEREOF, this Certificate has been executed and delivered by Bank of America National Trust and Savings Association, as Trustee, acting pursuant to the Trust Agreement. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee Authorized Signatory Date of Execution: A-2 [REVERSE SIDE OF CERTIFICATE] This Certificate has been executed and delivered by the Trustee pursuant to the terms of a Trust Agreement by and among the Trustee, Newport Beach Public Facilities Corporation, as lessor (the "Corporation"), and the City, dated as of June 1, 1992 (the "Trust Agreement"). Reference is hereby made to the Lease and the Trust Agreement (copies of which are on file at the Principal Office) for a description of the terms on which the Certificates are delivered, the rights thereunder of the Registered Owners of the Certificates, the rights, duties and immunities of the Trustee and the rights and certificates of the City under the Lease, to all of the provisions of which Lease and Trust Agreement the Registered Owner of this Certificate, by acceptance hereof, assents and agrees. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Trust Agreement. The City is obligated to pay Lease Payments from any source of legally available funds, and the City has covenanted in the Lease to make the necessary annual appropriations therefor. The obligation of the City to pay the Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligations of the City to pay Lease Payments does not constitute a debt of the City, the State of California or any of its political subdivisions, and does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The City's obligations to pay Lease Payments may be abated during any period in which, by reason of material damage, destruction or condemnation, there is substantial interference with the use and right of possession by the City of the property which is the subject of the Lease. Failure of the City to pay Lease Payments during any such period shall not constitute a default under the Lease, the Trust Agreement or this Certificate. To the extent and in the manner permitted by the terms of the Trust Agreement, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the Registered Owners of at least a majority in aggregate principal amount of the Certificates then Outstanding, and may be amended without such consent under certain circumstances. No such modification or amendment shall (1) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof or reducing any premium payable upon the prepayment thereof, without the express consent of the Owner of such Certificate, or (2) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease, or (3) modify any of the rights or certificates of the Trustee without its written assent thereto. This Certificate is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, at the Principal Office, but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement and upon surrender and cancellation of this Certificate. Upon such transfer a new Certificate or Certificates, of authorized denomination or denominations, for the same aggregate principal amount, maturity and interest rate, will be delivered to the transferee. The Trustee shall not be required to A-3 register the transfer or exchange of any certificate (i) between 15 days prior to selection of certificates for redemption and the date of mailing notice of redemption and (ii) as to any certificate selected for redemption. This Certificate also may be exchanged for a like aggregate principal amount of Certificates of other authorized denominations as prescribed in the Trust Agreement. The City, the Corporation and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes whether or not this Certificate shall be overdue, and the City, the Corporation and the Trustee shall not be affected by any notice to the contrary. The Certificates are subject to mandatory prepayment on any date prior to maturity, in whole or in part, from the Net Proceeds of insurance or condemnation if such proceeds are insufficient to repair or replace the Site and the City has elected to apply such proceeds to the prepayment of all or a portion of the outstanding Certificates, at a prepayment price equal to the principal amount thereof, without premium, together with accrued interest to the date fixed for prepayment. The Certificates are also subject to mandatory prepayment if and to the extent required in order to preserve to excludability of interest on the Certificates from gross income for purposes of federal income taxation, as set forth in an opinion of Special Counsel at a prepayment price equal to the principal amount to be prepaid, without premium, together with accrued interest to the date fixed for prepayment. Certificates maturing on or before June 1, 2000 are not subject to optional prepayment prior to their stated maturity dates. Certificates maturing on or after June 1, 2000 are subject to optional prepayment prior to maturity or any Certificate Payment Date on or after June 1, 2000, at the option of the City, as a whole, or in part on any Certificate Payment Date, in inverse order of maturity and by lot within a maturity, , from amounts deposited with the Trustee by the City for that purpose in accordance with the provisions of the Agreement to Trust Agreement Supplemental Agreement to Supplemental Trust Agreement. Certificates so called for prepayment will be prepaid at the principal amount thereof plus accrued interest to the prepayment date, plus a premium of one percent (of 1 %) of the principal amount being prepaid for each whole year or fraction of a year remaining between the date fixed for prepayment and the stated maturity date. Whenever provision is made for the mandatory prepayment of Certificates and less than all Outstanding Certificates are called for mandatory prepayment, the Trustee shall select Certificates for prepayment, from the Outstanding Certificates not previously called for prepayment, pro rata among maturities and by lot within any maturity so that following such prepayment remaining annual payments of principal and interest represented by the Certificates are, to the extent practicable given that Certificates are issued in integral multiples of $5,000, proportionate to the initial amounts of such payments. As provided in the Trust Agreement, notice of prepayment shall be sent by first class mail, postage prepaid, not less than 30 days before the prepayment date, to the Registered Owner of this Certificate, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for prepayment. A-4 If this Certificate is called for prepayment and payment is duly provided therefor as specified in the Trust Agreement, interest shall cease to accrue with respect hereto from and after the date fixed for prepayment. The Trustee has no obligation or liability to the Registered Owners to make payments of principal or interest components of Lease Payments pertaining to the Certificates except from Lease Payments paid to the Trustee and from the various funds and accounts established under the Trust Agreement. The City has certified that all acts, conditions and things required by the Constitution and statutes of the State of California and the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate, and that the amount of this Certificate, together with all other Certificates executed and delivered under the Trust Agreement, is not in excess of the amount of Certificates authorized to be executed and delivered thereunder. F—IM41 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (Please print or typewrite name, address and social security or other federal tax identifying number of Transferee) the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints to transfer the within Certificate on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed NOTICE: Signature(s) must be guaranteed by aNOTICE: The signature to this member of the New York Stock Exchange or a assignment must correspond with the commercial bank of trust company.name as it appears upon the face of the within Certificate in every particular, without alteration or enlargement or any change whatever. A-6 EXHIBIT B LEASE PAYMENT SCHEDULE Lease Interest Principal Payment Date Component Component Total November 15, 1992 May 15, 1993 November 15, 1993 May 15, 1994 November 15, 1994 May 15, 1995 November 15, 1995 May 15, 1996 Noverriber 15, 1996 May 15, 1997 November 15, 1997 May 15, 1998 November 15, 1998 May 15, 1999 November 15, 1999 May 15, 2000 November 15, 2000 May 15, 2001 November 15, 2001 May 15, 2002 November 15, 2002 May 15, 2003 November 15, 2003 May 15, 2004 November 15, 2004 May 15, 2005 November 15, 2005 May 15, 2006 November 15, 2006 May 15, 2007 November 15, 2007 May 15, 2008 November 15, 2008 May 15, 2009 November 15, 2009 May 15, 2010 November 15, 2010 May 15, 2011 November 15, 2011 May 15, 2012 November 15, 2012 May 15, 2013 November 15, 2013 May 15, 2014 November 15, 2014 May 15, 2015 November 15, 2015 May 15, 2016 November 15, 2016 May 15, 2017 November 15, 2017 May 15, 2018 November 15, 2018 May 15, 2019 M Recording Requested By: CITY OF NEWPORT BEACH When Recorded Mail To: CITY OF NEWPORT BEACH 3300 Newport Boulevard Newport Beach, California 92659 Attn: Finance Director This document is recorded for the benefit of the CITY OF NEWPORT BEACH, and recording is fee exempt under §27383 of the Government Code. ASSIGNMENT AGREEMENT between NEWPORT BEACH PUBLIC FACILITIES CORPORATION and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee Dated as of June 1, 1992 ASSIGNMENT AGREEMENT This ASSIGNMENT AGREEMENT, executed and entered into as of June 1, 1992, by NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a nonprofit duly organized and existing under and by virtue of the laws of the State of California, (the "Corporation"), and accepted by BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association as Trustee (the "Trustee"); WITNESETH: WHEREAS, the Corporation and CITY OF NEWPORT BEACH, a municipal corporation duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"), have executed and entered into a Site Lease (the "Site Lease") and a Project Lease (the "Lease") as of the date hereof and previously recorded whereby the City has agreed to respectively lease certain improved property of the City, as described in Exhibit "A" hereto and incorporated by reference herein (the "Site"), to the Corporation and the Corporation has agreed to lease back the Site as improved (the "Project"), to the City as provided therein; WHEREAS, under and pursuant to the Lease, the City is obligated to make Lease Payments, as defined therein, to the Corporation for the lease of such Site as improved; WHEREAS, the Corporation desires to assign without recourse all of its rights to receive the Lease Payments scheduled to be paid by the City under and pursuant to the Lease to the Trustee; WHEREAS, in consideration of such assignment and the execution and entering into of a Trust Agreement (the "Trust Agreement") to be executed and entered into as of the date hereof, by and among the Trustee, the Corporation and the City, the Trustee has agreed to execute and deliver certificates of participation (the "Certificates") in an aggregate principal amount equal to the aggregate principal components of such Lease Payments; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this assignment agreement (the "Assignment Agreement") do exist, have happened and have been performed in regular and due time, form and manner as required by law and the parties hereto are now duly authorized to execute and enter into the Assignment Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows: SECTION 1. Assignment. (a) Site Lease. The Corporation hereby transfers, assigns and sets over to the Trustee, for the benefit of the Owners of the Certificates, executed and delivered under the Trust Agreement, all of the Corporation's rights under the Site Lease. -1- (b) Lease. The Corporation hereby transfers, assigns and sets over to the Trustee, for the benefit of the Owners of Certificates executed and delivered under the Trust Agreement, all of the Corporation's rights under the Lease (excepting only the Corporation's rights under Section 9.4 of the Lease, regarding payment of attorneys' fees), including, without limitation: (1) the right to receive and collect all of the Lease Payments, Additional Payments and Prepayments (all as defined in the Trust Agreement) from the City under the Lease; (2) the right to receive and collect any proceeds of any insurance maintained thereunder, any condemnation award rendered with respect to the Site, or any lease of the Project in the event of a default by the City under the Lease; (3) the right to take all actions and give all consents under the Lease, including without limitation, Section 7.8 (regarding liens), 8.2 (regarding subleases), Section 8.3 (regarding amendments of the Lease), and Section 9.2 (regarding defaults); (4) the right to exercise such rights and remedies conferred on the Corporation pursuant to the Lease as may be necessary or convenient (i) to enforce payment of the Lease Payments, Additional Payments, Prepayments, and any other amounts required to be deposited in the Lease Payment Fund, the Prepayment Fund, the Net Proceeds Fund or any other funds established under the Trust Agreement, or (ii) otherwise to protect the interests of the Corporation in the event of a default by the City under the Lease; and (5) the right of the Corporation to receive rental in excess of Lease Payments as compensation for re -leasing the Site upon events of default under the Lease, as provided in Section 9.2(a) and (b) of the Lease. (c) Assignment for Owners of Certificates. All rights assigned by the Corporation shall be administered by the Trustee as assignee thereof according to the provisions of the Trust Agreement and for the equal and proportionate benefits of the Owners of Certificates. SECTION 2. Acceptance. The Trustee hereby accepts the foregoing assignment for the benefit of the Owners of Certificates, subject to the conditions and terms of the Trust Agreement, and all such Lease Payments shall be applied and all such rights so assigned shall be exercised by the Trustee under and pursuant to the Trust Agreement. SECTION 3. Conditions. This Assignment Agreement shall confer no rights and shall impose no obligations upon the Trustee beyond those expressly provided in the Trust Agreement. -2- SECTION 4. No Other Claims. The Authority hereby represents and warrants that there are no present and outstanding claims on Lease Payments or any other moneys assigned by the Authority to the Trustee hereunder. SECTION 5. Execution in Counterparts. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same instrument IN WITNESS WHEREOF, the parties hereto have executed and entered into this Assignment Agreement by their officers thereunto duly authorized as of the day and year first above written. NEWPORT BEACH PUBLIC FACILITIES CORPORATION Bv: Corporation Representative Accepted by: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee By: Authorized Signatory -3- STATE OF CALIFORNIA ) SS. COUNTY OF ORANGE ) On this day of June in the year 1992 before me, the undersigned, a Notary Public in and for the State of California, personally appeared to me , known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument on behalf of NEWPORT BEACH PUBLIC FACILITIES CORPORATION, the authority that executed the within instrument. WITNESS my hand and official seal. Notary Public -4- STATE OF CALIFORNIA ) SS. COUNTY OF LOS ANGELES ) On this day of in the year 1992 before me, the undersigned, a Notary Public in and for the State of California, personally appeared to me, known to me to be (or proved to me on the basis of satisfactory evidence), a BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, the banking corporation that executed the within instrument, and known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument on behalf of said banking corporation. WITNESS my hand and official seal. Notary Public -5- EXHIBIT "A" DESCRIPTION OF SITE 0