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HomeMy WebLinkAboutPFC1 - Fire Station No. 2 Financing, Bond Authorization and Award of Construction Contract No. 8269-2 (15F13)Q �EwPpRT CITY OF O � _ z NEWPORT BEACH Newport Beach Public Facilities Corporation Staff Report November 10, 2020 Agenda Item No. PFC1 TO: HONORABLE MAYOR AND MEMBERS OF THE PUBLIC FACILITIES CORPORATION FROM: David A. Webb, Public Works Director - 949-644-3311, dawebb@newportbeachca.gov Carol Jacobs, Assistant City Manager / Interim Finance Director - 949-644-3313, cjacobs@newportbeachca.gov PREPARED BY: Peter Tauscher, Senior Civil Engineer - 949-644-3316 ptauscher@newportbeachca.gov Steve Montano, Deputy Finance Director — 949-644-3240 smontano@newportbeachca.gov Fire Station No. 2 — Fire Station No. 2 Financing, Bond Authorization, TITLE: and Award of Construction Contract No. 8269-2 (15F13) ABSTRACT: Staff has received acceptable bids for the Fire Station No. 2 project. This new Fire Station No. 2, located at the corner of 28th Street and Newport Boulevard, will replace the current Lido Fire Station No. 2 on 32nd Street, which has exceeded its useful life. After this meeting of the Public Facilities Corporation, staff will request City Council approval to award the construction contract to Robert Clapper Construction Services, Inc. (RCC) of Rialto, California; approve the supporting professional consultant service agreement and specified project financing as requested. This report also describes the contours of a financing plan and its conformance to the City's Debt Policy and seeks City Council approval of a resolution which sets forth the terms and conditions for the sale of City of Newport Beach Certificates of Participation 2020A for the Fire Station No. 2 project. RECOMMENDATION: a) Find this project exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15332 (In -Fill Development Projects) of the CEQA Guidelines. This exemption applies to in -fill development projects in urban areas that are consistent with the General Plan and applicable development standards. In addition, the proposed development must occur on a site of no more than five acres, have no value as habitat for endangered, rare or threatened species, be adequately served by all utilities and public services, and must not result in any significant effects relating to traffic, air quality, water quality, or any other significant effect on the environment due to an unusual circumstance; and PFC 14 Fire Station No. 2 — Fire Station No. 2 Financing, Bond Authorization, and Award of Construction Contract No. 8269-2 (15F13) November 10, 2020 Page 2 b) Adopt Resolution No. PFC2020-2, A Resolution of the Board of Directors of the Newport Beach Public Facilities Corporation Approving the Execution and Delivery of Documents in Connection with the Sale and Delivery of Not to Exceed $10, 000, 000 Principal Amount of City of Newport Beach Certificates of Participation and Authorizing Certain Actions in Connection Therewith. BACKGROUND: Constructed 68 years ago, Lido Fire Station No. 2 has exceeded its service life and requires frequent repairs. In the 2014 Facility Maintenance Management Program Report, this building received a low Condition Index rating and was identified of in need of replacement. Additionally, Lido Fire Station No. 2 does not meet current building codes or expectations for a modern Fire Department. On November 22, 2016, Council awarded a Professional Services Agreement (PSA) in the amount of $525,800 to WLC Architects (WLC) for the design of a new Fire Station on the current 32nd Street site. In lieu of demolishing and constructing a new fire station on the existing property (which would also require constructing and relocating the fire station operation to a temporary facility), the City had the opportunity to purchase a 17,693 square -foot property located at 2807 Newport Boulevard where the new Fire Station No. 2 facility could be constructed while the existing station remained operational. In January 2018, the new property was purchased by the City and all planning and design efforts for the new station were then directed at this property. Fire Station No. 2 replacement design focuses on a land efficient layout that meets Fire Department and community programming needs, including the ability to increase staffing/equipment levels during peak periods. The project design team, Public Works and Fire Department staff prepared multiple conceptual designs for consideration and worked extensively with the community, including conducting District Townhall meetings, Planning Commission and City Council meetings were held as well as other public outreach activities that sought comments and suggestions on the community needs regarding the new planned facility. The general design and layout were ultimately approved by community. On October 22, 2019, City Council reviewed and approved the conceptual design that included a fire station and separate public restroom facility as requested by the community. The final contract documents are for construction of an 11,649 SF fire station building and detached 148 SF public restroom building. During the design process, Fire Department staff were instrumental in determining the most efficient layout of the proposed fire station. Additionally, on June 9, 2020, City Council awarded a Professional Services Agreement (PSA) with Erickson Hall Construction (EHC) for the Fire Station No. 2 construction management contract for a not -to -exceed price of $371,150. To date EHC has been able to assist the City by providing design and constructability reviews of the bid packages and utility coordination. PFC 1-2 Fire Station No. 2 — Fire Station No. 2 Financing, Bond Authorization, and Award of Construction Contract No. 8269-2 (15F13) November 10, 2020 Page 3 FUNDING REQUIREMENTS: Planning and construction of this project has been included within the City Facility Financing Plan (FFP) for many years. The adopted FY 2020-21 Capital Improvement Program budget includes sufficient funding for award of the construction contract, related construction oversight and testing work, and other incidental cost. These construction costs will be expensed to the Fire Station Fund Account No. 53201-980000-15F13. Total overall current and estimated remaining project costs (excluding land purchase) are as follows: Vendor WLC Architects Erickson Hall Construction R.C. Construction Services, Inc R.C. Construction Services, Inc WLC Architects Geocon West, Inc. Various* Various Various Various Various City of Newport Beach Purpose Amount Design $ 525,800 Construction Management $ 371,150 Construction Contract $ 6,289,000 Construction Contingency $ 628,900 Construction Support Services $ 92,000 Testing/Inspecting/Geotech $ 72,000 Roadway and Signal Improvements* $ 735,000% Fire Communication System $ 130,000 Utilities Connections $ 50,000 Specialty Equipment/Service $ 40,000 Incidentals $ 100,000 Permitting Fees $ 16,500 Total: $ 9,050,350 *Portion of the Balboa Peninsula Crosswalk Improvement Project, Contract No. 7288-2 PROJECT FINANCING: On May 12, 2020, the City Council reviewed the Proposed FY 2020-21 Capital Improvement Program budget. As part of the steps taken to address the estimated revenue losses due to the global pandemic, some capital projects were proposed to be delayed. During the discussion, Mayor O'Neill proposed moving forward with the Fire Station No. 2 project, to be financed for a term not to exceed 10 years. This would allow the City to take advantage of a very favorable interest rate environment, free up General Fund resources during a time of economic uncertainty and allow the City to continue to move forward with the project. With Council Member Muldoon recusing himself, there was a unanimous straw vote to support evaluating financing for the Fire Station No. 2 project. The City proposes to issue certificates of participation (COPs) to finance project costs and costs related to the issuance of the bonds. The COPS will be structured with a 10 - year term or final maturity of July 1, 2030. Though the term of the COPS may be considered less than the useful life of the project, the accelerated repayment conforms to the City's Debt Policy by reducing the debt burden and total borrowing costs. Annual debt service payments are level and also conform with the Debt Policy. Current market rates estimate annual repayment is approximately $962,000 for total debt service of approximately $9,618,000. To provide a cost ceiling for the Resolution to authorize COPs, as required by the Debt Policy, we assume a 2% maximum true interest cost, which would equate to a maximum annual debt service of 1,073,700. PFC 1-3 Fire Station No. 2 — Fire Station No. 2 Financing, Bond Authorization, and Award of Construction Contract No. 8269-2 (15F13) November 10, 2020 Page 4 Other structuring elements are market driven. The COPs assume serial, current interest certificates and premium coupons (i.e. the coupon rate is greater than the yield rate). All help improve the cost effectiveness of the borrowing as well as conform to the Debt Policy. The City's Debt Policy recommends an optional par call provision no later than 10 years. Because the term of the bonds is 10 years, the market standard 10 -year call option does not apply. To maximize repayment flexibility, a shorter call provision may be considered, but is likely to make the COPs less attractive. No additional funding is needed for a reserve or capitalized interest. The City benefits from the highest lease credit ratings (Aa1/AA+/AA+), so the municipal market will not require a debt service reserve fund. In line with the Debt Policy, there will be no capitalized interest to defer debt service until project completion. The COPs are secured by lease payments through a lease -lease -back structure, whereby the City will lease to and lease -back from the Newport Beach Public Facilities Corporation the Corona del Mar Fire Station and the Santa Ana Heights Fire Station properties to effectuate lease payments securing the COPs. In accordance with the Debt Policy, please see Attachment A to this staff report an independent analysis of all financing scenarios considered with respect to this financing including the specific recommendation for the bonds, as well as the draft resolution authorizing sale of bonds and proposed parameters staff is authorized to negotiate when the bonds are priced in Attachment B. Below is a Sources and Uses Table for the financing, which is preliminary based on current market rates. The issuance of COPs will generate $9.235 million in proceeds through a combination of principal and premium. The proceeds will be allocated accordingly: $9.050 million to the Fire Station No. 2 project, and $185,000 to issuance costs. COP Proceeds Principal Amount $7,955,000 COP Proceeds Premium 1,280,356 TOTAL SOURCES $9,235,356 Project Fund Deposits Project Fund $9,050,350 Delivery Date Expenses Cost of Issuance 146,800 Delivery Date Expenses Underwriter's Discount 35,002 Other Uses of Funds Rounding Proceeds 3,204 TOTAL USES $9,235,356 The Finance Committee reviewed the contours of the proposed financing plan and its conformance to the City's Debt Policy on September 24, 2020. PFC 1-4 Fire Station No. 2 — Fire Station No. 2 Financing, Bond Authorization, and Award of Construction Contract No. 8269-2 (15F13) November 10, 2020 Page 5 DISCUSSION: On October 22, 2020, at 2 p.m. the City Clerk opened and read the following electronic bids for this project: After the bid opening, staff received a bid protest letter from the second lowest bidder, PCN3, Inc., claiming that the low bidder's bid was non-responsive. According to the bid protest letter, PCN3 suggests RCC is not self -performing at least 50 -percent of the contract work. The low bidder then submitted a response to the bid protest. Staff has reviewed the bid protest as well as the low bidder's response and determined the low bidder does comply with the contract specifications for this project. Staff recommends the City Council declare RCC as the lowest responsive bidder and award a contract to RCC for the construction of Fire Station No. 2. The bid amount submitted by RCC is 26 percent below the Engineer's Estimate of $7,900,000. RCC possesses a California State General Building "B" Contractors License, as required by the project specifications. Staff has performed background and reference checks and has received good reports including their satisfactorily completion of essential facility projects for local agencies including Monterey Park, Rancho Cucamonga, and Ontario. Pursuant to the contract specifications, RCC is allotted 12 -months to complete the work. Liquidated damages in the amount of $2,500.00 per calendar day may be assessed in case of tardy completion. Additional consulting services needed during construction: In addition to approving the construction contract with RCC, a contract amendment with the project's design consultant, WLC Architects is necessary for $92,000. Additional architectural oversite services are necessary to review construction submittals; respond to requests for information and attend construction job site meetings. PFC 1-5 BIDDER TOTAL BID AMOUNT Low Robert Clapper Construction Services, Inc. $ 6,289,000.00 2 PCN3, Inc. $ 6,790,000.00 3 TELACU Construction Management $ 6,839,897.00 4 AMG & Associates, Inc. $ 6,941,900.00 5 Barnhart -Reese Construction, Inc. $ 7,135,584.00 6 P. H. Hagopian Contractor $ 7,137,300.00 7 Act 1 Construction, Inc. $ 7,178,000.00 8 CALIBA, Inc. $ 7,548,000.00 9 Woodcliff Corporation $ 7,593,000.00 10 Horizons Construction Company Int'I Inc. $ 7,639,300.00 11 Royal Construction Corporation $ 7,777,000.00 12 Kemcorp Construction, Inc. $ 8,599,000.00 After the bid opening, staff received a bid protest letter from the second lowest bidder, PCN3, Inc., claiming that the low bidder's bid was non-responsive. According to the bid protest letter, PCN3 suggests RCC is not self -performing at least 50 -percent of the contract work. The low bidder then submitted a response to the bid protest. Staff has reviewed the bid protest as well as the low bidder's response and determined the low bidder does comply with the contract specifications for this project. Staff recommends the City Council declare RCC as the lowest responsive bidder and award a contract to RCC for the construction of Fire Station No. 2. The bid amount submitted by RCC is 26 percent below the Engineer's Estimate of $7,900,000. RCC possesses a California State General Building "B" Contractors License, as required by the project specifications. Staff has performed background and reference checks and has received good reports including their satisfactorily completion of essential facility projects for local agencies including Monterey Park, Rancho Cucamonga, and Ontario. Pursuant to the contract specifications, RCC is allotted 12 -months to complete the work. Liquidated damages in the amount of $2,500.00 per calendar day may be assessed in case of tardy completion. Additional consulting services needed during construction: In addition to approving the construction contract with RCC, a contract amendment with the project's design consultant, WLC Architects is necessary for $92,000. Additional architectural oversite services are necessary to review construction submittals; respond to requests for information and attend construction job site meetings. PFC 1-5 Fire Station No. 2 — Fire Station No. 2 Financing, Bond Authorization, and Award of Construction Contract No. 8269-2 (15F13) November 10, 2020 Page 6 Furthermore, Public Works invited four professional geotechnical firms to propose on providing the necessary materials testing and special inspections required for this project. Staff received and reviewed four proposals and selected Geocon West, Inc. (Geocon) as the top team to meet the City's needs based on their experience and proposal recommendations. Geocon's $72,000 testing and inspection proposal is cost effective and reasonable for this project. Public Works will utilize their current on-call contract to provide for the necessary geotechnical and material testing for this project. ENVIRONMENTAL REVIEW: On October 22, 2019, City Council found this project exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15332 (In -Fill Development Projects) of the CEQA Guidelines. This exemption applies to in -fill development projects in urban areas that are consistent with the General Plan and applicable development standards. On June 18, 2020, Planning Commission approved Site Development Review No. SD2019-002 and Coastal Development Permit No. CD2019-039 (PA2019-098). NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the Item). Moreover, Public Works has presented and discussed this project at several prior City Council meetings, two District 1 Town Hall meetings, a Planning Commission meeting, as well as sent notification letters regarding proposed 28th Street frontage and parking modification to the affected 28th Street property owners. ATTACHMENTS AND EXHIBITS: Attachment A — Municipal Advisor's Analysis of Financing Scenarios Attachment B — Resolution No. PFC2020-2 Exhibit A — Site Lease Exhibit B — Lease Agreement Exhibit C — Trust Agreement Exhibit D — Agency Agreement Exhibit E — Purchase Agreement Exhibit F — Assignment Agreement PFC 1-6 Attachment A Municipal Advisor's Analysis of Financing Scenarios PFC 1-7 wKNN public finance Date: September 16, 2020 To: Dan Matusiewicz, Finance Director, City of Newport Beach From: Mark Young and Larry Lom, KNN Public Finance Re: Financing Scenario Analyses for the Certificates of Participation 2020A (Lido Fire Station Project) The City of Newport Beach will issue certificates of participation (bonds) to finance its Lido Fire Station project of $9,500,000. KNN Public Finance, as Municipal Advisor, has analyzed various financing scenarios to help evaluate costs and options available to the City. The following discussion details the approach and analyses undertaken. Initial Analysis of Financing Scenarios Upon the City's request, our initial analysis as of May 2020 included four scenarios for different financing terms: 10, 15, 20 and 30 years. Other assumptions, such as project size, costs of issuance and level debt service structure, were the same across scenarios. The objective was to evaluate borrowing costs and debt burden in terms of annual debt service payments. A summary of the results is provided in the table below; please see Exhibit A for an expanded table. Financing Scenarios As illustrated, total borrowing costs increase as the term of the debt becomes longer. Estimated total debt service was $10.5 million for a 10 -year borrowing and $14.5 million for a 30 -year borrowing. The debt burden, however, declined with longer term debt. Annual debt service was $1 million for a 10 - year borrowing and $490,000 for a 30 -year borrowing. Therefore, a recommended financing scenario 2054 University Avenue, Suite 300 I Berkeley, CA 94704 1 Main 510-839-8200 Fax 510-208-8282 1451 Quail Street, Suite 200 I New ort Beach, CA 92660 1 Main 949-346-4900 Fax 510-208-8282 5901 W. Century Boulevard, Suite 750 Los Angeles, CA 90045 I Main 310-348-2901 I Fax 510-208-8282 A Limited Liability Company PFC 1-8 10 -Year 15 -Year 20 -Year 30 -Year Par Amount 8,530,000.00 8,475,000.00 8,500,000.00 9,060,000.00 Premium 1,191,500.75 1,245,224.85 1,218,807.10 663,771.55 Total Sources 9,721,500.75 9,720,224.85 9,718,807.10 9,723,771.55 Project Fund 9,500,000.00 9,500,000.00 9,500,000.00 9,500,000.00 Cost of Issuance 167,750.00 167,750.00 167,750.00 167,750.00 Underwriter's Discount 51,180.00 50,850.00 51,000.00 54,360.00 Rounding Proceeds 2,570.75 1,624.85 57.10 1,661.55 Total Uses 9,721,500.75 9,720,224.85 9,718,807.10 9,723,771.55 True Interest Cost (TIC) 1.563% 2.180% 2.598% 2.887% Average Coupon 4.000% 4.000% 4.000% 3.352% Total Debt Service 10,516,000 11,433,600 12,511,600 14,579,600 Maximum Annual Debt Service 1,053,200 764,800 628,600 488,550 Average Annual Debt Service 1,051,600 762,240 625,580 485,987 As illustrated, total borrowing costs increase as the term of the debt becomes longer. Estimated total debt service was $10.5 million for a 10 -year borrowing and $14.5 million for a 30 -year borrowing. The debt burden, however, declined with longer term debt. Annual debt service was $1 million for a 10 - year borrowing and $490,000 for a 30 -year borrowing. Therefore, a recommended financing scenario 2054 University Avenue, Suite 300 I Berkeley, CA 94704 1 Main 510-839-8200 Fax 510-208-8282 1451 Quail Street, Suite 200 I New ort Beach, CA 92660 1 Main 949-346-4900 Fax 510-208-8282 5901 W. Century Boulevard, Suite 750 Los Angeles, CA 90045 I Main 310-348-2901 I Fax 510-208-8282 A Limited Liability Company PFC 1-8 Financing Scenario Analyses for COPS (Lido Fire Station Project) I pg. 2 would need to balance the City's desire to keep total borrowing costs low and the capacity of the General Fund to make annual debt service payments. For example, borrowing long to reduce annual debt service pressure on the General Fund may be desirable as the costs for long term bonds are at historic lows and the interest rate difference (or spread) along the yield curve has narrowed. Many of the other structuring elements of the bonds are market driven and thus achieve cost effectiveness. For example, we assume across scenarios: serial and term bonds; semi-annual current interest; premium coupons (i.e. the coupon rate is greater than the yield rate); and a 10 -year par call where applicable. Also, we assume no additional funding for a debt service reserve fund or capitalized interest. The City benefits from the highest lease credit ratings (Aa1 /AA+/AA+), so the municipal market will not require a debt service reserve fund. In line with the Debt Policy, there will be no capitalized interest to defer debt service until project completion. This is accomplished by the lease - lease -back structure, whereby the City will lease -back from the Newport Beach Public Facilities Corporation the Corona Del Mar Fire Station and the Santa Ana Heights Fire Station properties to effectuate lease payments securing the bonds. All help improve the cost effectiveness of the borrowing. Updated Analysis of Financing Scenarios We updated our analysis in August 2020 by eliminating the 30 -year term scenario. We also updated the scenarios for current market rates and assumed one rating to reduce cost of issuance by approximately $20,000. The City has historically issued bonds with all three ratings from Moody's, S&P and Fitch. However, because the financing is relatively small, being under $10 million in par, one rating will be sufficient to market bonds. We assume S&P only because they have an explicit policy of not penalizing the credit for no reserve funds and they are well received by investors. This rating approach was recommended in several underwriter proposals and reconfirmed by the selected underwriter, Stifel, Nicolaus & Company, Inc. A summary of the results is provided in the table below; please see Exhibit B for an expanded table. Financing Scenarios Par Amount 10 -Year 15 -Year 20 -Year 8,185, 000.00 7, 950, 000.00 7, 920, 000.00 Premium 1, 500, 326.05 1, 731, 980.25 1, 764, 010.55 Total Sources 9,685,326.05 9,681,980.25 9,684,010.55 Project Fund Cost of Issuance Underwriter's Discount Rounding Proceeds Total Uses True Interest Cost (TIC) Average Coupon Total Debt Service Maximum Annual Debt Service Average Annual Debt Service 9, 500, 000.00 9, 500, 000.00 9, 500, 000.00 146, 800.00 146, 800.00 146, 800.00 36, 014.00 34, 980.00 34, 848.00 2.512.05 200.25 2.362.55 9,685,326.05 9,681,980.25 9,684,010.55 0.621% 1.245% 1.802% 4.000% 4.000% 4.000% 9,958,938 10, 586,150 11, 499,160 998,400 708,400 578,560 995,894 705,743 574,958 B _ public financc PFC 1-9 Financing Scenario Analyses for COPS (Lido Fire Station Project) I pg. 3 After reviewing and discussing the various financing scenarios, the City ultimately decided to proceed with the 10 -year term financing or final maturity of July 1, 2030. At the time of the analysis, annual debt service is approximately $995,000 for total debt service of approximately $9,950,000. Though the term of the bonds may be considered less than the useful life of the project, the accelerated repayment conforms to the City's Debt Policy by reducing the total borrowing costs. Method of Sale The City has experience selling bonds through a public negotiated sale as well as a privately placed negotiated sale. We recommended a public negotiated sale because of the small size of the bonds, historically low market rates, and active retail account participation in the current market. We believe the public offering will maximize retail participation to drive borrowing costs lower. The ultimate decision by the City to use a 10 -year term further positions the bonds as a "retail" product. We solicited 23 underwriters through a formal RFP process and received five responses. Stifel, Nicolaus & Company, Inc. was selected to sell the bonds based on the high quality of their proposal and their significant experience in the municipal market, particularly with certificates of participation and lease revenue bonds. WillVN public finance PFC1-10 Financing Scenario Analyses for COPS (Lido Fire Station Project) I pg. 4 Exhibit A Financing Scenarios 10 -Year 15 -Year 20 -Year 30 -Year Par Amount 8,530,000.00 8,475,000.00 8,500,000.00 9,060,000.00 Premium 1,191,500.75 1,245,224.85 1,218,807.10 663,771.55 Total Sources 9,721,500.75 9,720,224.85 9,718,807.10 9,723,771.55 Project Fund 9,500,000.00 9,500,000.00 9,500,000.00 9,500,000.00 Cost of Issuance 167,750.00 167,750.00 167,750.00 167,750.00 Underwriter's Discount 51,180.00 50,850.00 51,000.00 54,360.00 Rounding Proceeds 2,570.75 1,624.85 57.10 1,661.55 Total Uses 9,721,500.75 9,720,224.85 9,718,807.10 9,723,771.55 Cost of Issuance Breakout (est.) 10 -Year 15 -Year 20 -Year 30 -Year Bond and Disclosure Counsel 60,000 60,000 60,000 60,000 Financial Advisor 40,000 40,000 40,000 40,000 Moody's Rating Agency 23,000 23,000 23,000 23,000 S&P Rating Agency 20,750 20,750 20,750 20,750 Title Insurer Company 9,000 9,000 9,000 9,000 Trustee 7,500 7,500 7,500 7,500 Printer 2,500 2,500 2,500 2,500 Contingency 5,000 5,000 5,000 5,000 Total 167,750 167,750 167,750 167,750 Additional Fitch rating is $21,000 Arbitrage Yield 1.463% 1.867% 2.097% 2.728% True Interest Cost (TIC) 1.563% 2.180% 2.598% 2.887% Average Coupon 4.000% 4.000% 4.000% 3.352% Total Debt Service 10,516,000 11,433,600 12,511,600 14,579,600 Maximum Annual Debt Service 1,053,200 764,800 628,600 488,550 Average Annual Debt Service 1,051,600 762,240 625,580 485,987 Annual Debt Service Schedules 10 -Year 15 -Year 20 -Year 30 -Year 11/1/2021 1,051,200 764,000 620,000 485,950 11/1/2022 1,052,800 762,000 623,800 484,350 11/1/2023 1,053,200 764,400 627,000 487,550 11/1/2024 1,052,400 761,000 624,600 485,350 11/1/2025 1,050,400 762,000 626,800 487,950 11/1/2026 1,052,200 762,200 628,400 485,150 11/1/2027 1,052,600 761,600 624,400 487,150 11/1/2028 1,051,600 760,200 625,000 483,750 11/1/2029 1,049,200 763,000 625,000 485,150 11/1/2030 1,050,400 759,800 624,400 486,150 11/1/2031 0 760,800 628,200 486,750 11/1/2032 0 760,800 626,200 486,950 11/1/2033 0 764,800 628,600 486,750 11/1/2034 0 762,600 625,200 486,150 11/1/2035 0 764,400 626,200 485,150 11/1/2036 0 0 626,400 483,750 11/1/2037 0 0 625,800 486,950 11/1/2038 0 0 624,400 484,550 11/1/2039 0 0 627,200 486,750 11/1/2040 0 0 624,000 488,350 11/1/2041 0 0 0 484,350 11/1/2042 0 0 0 488,550 11/1/2043 0 0 0 487,300 11/1/2044 0 0 0 485,750 11/1/2045 0 0 0 483,900 11/1/2046 0 0 0 486,750 11/1/2047 0 0 0 484,150 11/1/2048 0 0 0 486,250 11/1/2049 0 0 0 487,900 11/1/2050 0 0 0 484,100 K r N public finance PFC1-11 Financing Scenario Analyses for COPS (Lido Fire Station Project) I pg. 5 Exhibit B Financing Scenarios ,J I<N public finance PFC1-12 10 -Year 15 -Year 20 -Year Par Amount 8,185,000.00 7,950,000.00 7,920,000.00 Premium 1, 500, 326.05 1, 731, 980.25 1, 764, 010.55 Total Sources 9,685,326.05 9,681,980.25 9,684,010.55 Project Fund 9,500,000.00 9,500,000.00 9,500,000.00 Cost of Issuance 146,800.00 146,800.00 146,800.00 Underwriter's Discount 36,014.00 34,980.00 34,848.00 Rounding Proceeds 2,512.05 200.25 2,362.55 Total Uses 9,685,326.05 9,681,980.25 9,684,010.55 Cost of Issuance Breakout (est.) 10 -Year 15 -Year 20 -Year Bond and Disclosure Counsel 75,000 75,000 75,000 Financial Advisor 32,500 32,500 32,500 S&P Rating Agency 16,750 16,750 16,750 Title Insurer Company 9,000 9,000 9,000 Trustee 3,550 3,550 3,550 Printer 2,500 2,500 2,500 DAC 2,500 2,500 2,500 Contingency 5,000 5,000 5,000 Total 146,800 146,800 146,800 Arbitrage Yield 0.547% 0.880% 1.121% True Interest Cost (TIC) 0.621% 1.245% 1.802% A\,erage Coupon 4.000% 4.000% 4.000% Total Debt Service 9,958,938 10,586,150 11,499,160 Maximum Annual Debt Service 998,400 708,400 578,560 Average Annual Debt Service 995,894 705,743 574,958 Annual Debt Service Schedules 10 -Year 15 -Year 20 -Year 7/1/2021 995,538 704,350 578,560 7/1/2022 996,200 703,200 577,000 7/1/2023 998,200 707,000 576,000 7/1/2024 994,000 705,000 574,600 7/1/2025 993,800 707,400 572,800 7/1/2026 997,400 704,000 575,600 7/1/2027 994,600 705,000 572,800 7/1/2028 995,600 705,200 574,600 7/1/2029 995,200 704,600 575,800 7/1/2030 998,400 708,200 576,400 7/1/2031 0 705,800 576,400 7/1/2032 0 707,600 575,800 7/1/2033 0 708,400 574,600 7/1/2034 0 703,200 572,800 7/1/2035 0 707,200 575,400 7/1/2036 0 0 572,200 7/1/2037 0 0 573,400 7/1/2038 0 0 573,800 7/1/2039 0 0 573,400 7/1/2040 0 0 577,200 ,J I<N public finance PFC1-12 Attachment B Resolution No. PFC2020-2 PFC1-13 RESOLUTION NO. PFC2020-2 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE NEWPORT BEACH PUBLIC FACILITIES CORPORATION APPROVING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION WITH THE SALE AND DELIVERY OF NOT TO EXCEED $10,000,000 PRINCIPAL AMOUNT OF CERTIFICATES OF PARTICIPATION AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Newport Beach ("City") and the Newport Beach Public Facilities Corporation ("Corporation"), desire to enter into a Site Lease dated as of December 1, 2020 ("Site Lease") and a Lease/Purchase Agreement, dated as of December 1, 2020 ("Lease"), whereby the City, as agent of the Corporation, shall cause the acquisition, improvement and equipping of a new Fire Station No. 2, as described therein ("Project"), and the City has agreed to lease the leased property identified in Exhibit A to the Lease from the Corporation WHEREAS, in order to finance the Project, the City and the Corporation desire to authorize the sale of the City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates") evidencing fractional interests in the Lease Payments made by the City under the Lease; WHEREAS, Section 5450 et seq. of the California Government Code (the "Government Code") provides statutory authority for pledging collateral for the payment of principal or prepayment price of, and interest on, any agreement, including certificates of participation, and the Government Code creates a continuing perfected security interest which shall attach immediately to such collateral irrespective of whether the parties to the pledge document have notice of the pledge and without the need for any physical delivery, recordation, filing or further act, and, therefore, the City and the Corporation hereby warrant and represent that pursuant to the Lease, the Trust Agreement, to be dated as of December 1, 2020, by and among The Bank of New York Mellon Trust Company, N.A., as trustee ("Trustee"), the City and the Corporation ("Trust Agreement"), and the Government Code, the Trustee will have a first priority perfected security interest in the Lease Payments described in the Lease represented by the Certificates pursuant to the Government Code; PFC1-14 Resolution No. PFC2020-2 Page 2 of 4 WHEREAS, the Board of Directors of the Newport Beach Public Facilities Corporation ("Board of Directors") desire to consent to the assignment of certain of the Corporation's rights, title and interest in and to the Site Lease and the Lease Agreement, including the right to receive such lease payments from the City, to the Trustee pursuant to an Assignment Agreement, between the Corporation and the Trustee, to be dated as of December 1, 2020 ("Assignment Agreement"), the form of which together with the form of the Trust Agreement are attached hereto and incorporated herein; WHEREAS, the Board of Directors desire to approve the form of an Agency Agreement between the City and the Corporation, the form of which is attached hereto and incorporated herein; and WHEREAS, the Board of Directors desires to approve the form of the Purchase Agreement ("Purchase Agreement"), by and among, the Corporation, the City and Stifel, Nicolaus & Company, Incorporated ("Purchaser"), pursuant to which the Purchaser will agree to buy the Certificates on the terms and conditions set forth therein, the form of which is attached hereto and incorporated herein. NOW, THEREFORE, the Board of Directors of the Newport Beach Public Facilities Corporation resolves as follows: Section 1: This Board of Directors hereby consents to the preparation, sale and delivery of the Certificates in an aggregate amount of not to exceed $10,000,000 in accordance with the terms and provisions of the Trust Agreement, with the exact principal amount of the Certificates to be that determined necessary by the City Manager or the Finance Director of the City to pay the costs of the Project and to pay all associated costs. The proceeds of the Certificates shall be expended to finance the costs of the Project, to provide for a reserve fund, if any, and the costs of the preparation, sale and delivery of the Certificates. Section 2: The forms of the Site Lease, the Lease Agreement, the Trust Agreement, the Agency Agreement, the Purchase Agreement and the Assignment Agreement attached hereto as Exhibit A, B, C, D, E and F, and incorporated herein by this reference, are hereby approved. Each of the Chairman of the Board of Directors, the President, Chief Financial Officer and the Secretary (each an "Authorized Officer") is hereby authorized for and in the name of the Corporation to execute the Site Lease, the Lease Agreement, the Assignment Agreement, the Agency Agreement, the Purchase Agreement and the Trust Agreement in substantially the forms hereby approved, with such additions thereto and changes therein as are recommended or approved by the City Attorney. Approval of such changes shall be conclusively evidenced by the execution and delivery of the foregoing documents by one or more of the authorized officers. Each Authorized Officer is hereby authorized to execute, acknowledge and deliver any and all PFC1-15 Resolution No. PFC2020-2 Page 3 of 4 documents required to consummate the transactions contemplated by the Site Lease, the Lease Agreement, Purchase Agreement, the Trust Agreement, the Agency Agreement and the Assignment Agreement. Section 3: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 4: If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 5: The Board of Directors finds the adoption of this resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Section 6: Each of the Authorized Officers is hereby authorized, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary and advisable in order to consummate the sale and delivery of the Certificates and otherwise effectuate the purposes of this Resolution (including but not limited to the execution and delivery of any consents or agreements to remove encumbrances to title with respect to the real property identified in Exhibit A to the Lease and to substitute, remove or add property to Exhibit A to the Lease, the Site Lease and the Assignment Agreement that is determined by the President to be in the best interests of the Corporation) and such actions previously taken by such officers are hereby ratified and confirmed. In the event the Chairman of the Board of Directors is unavailable or unable to execute and deliver any of the above -referenced documents, any other Director of the Board of Directors may validly execute and deliver such document, and, in the event the Secretary is unavailable or unable to execute and deliver any of the above - referenced documents, any Assistant Secretary may validly execute and deliver such document in her place. PFC1-16 Resolution No. PFC2020-2 Page 4 of 4 Section 7: This resolution shall take effect immediately upon its adoption by the Board of Directors, and the Secretary shall certify the vote adopting the resolution. ADOPTED this 10th day of November, 2020. Chairman of the Board of Directors Newport Beach Public Facilities Corporation F-A09*3S Secretary APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE C."', C. ff C.." Aaron C. Harp City Attorney Attachments: Exhibit A - Site Lease Exhibit B - Lease Agreement Exhibit C - Trust Agreement Exhibit D - Agency Agreement Exhibit E - Purchase Agreement Exhibit F - Assignment Agreement PFC1-17 SITE LEASE PFC1-18 RECORDING REQUESTED BY: City of Newport Beach AND WHEN RECORDED MAIL TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attn: Brian P. Forbath, Esq. [Space above for Recorder's use.] 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 by and between CITY OF NEWPORT BEACH and NEWPORT BEACH PUBLIC FACILITIES CORPORATION Dated as of December 1, 2020 Relating to CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A (FIRE STATION NO. 2) NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC1-19 SITE LEASE This SITE LEASE, dated as of December 1, 2020, by and between the CITY OF NEWPORT BEACH, a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"), and the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under and by virtue of the laws of the State of California (the "Corporation"); WITNESSETH: WHEREAS, the Corporation has agreed to enter into this Site Lease (the "Site Lease") with the City wherein the City will lease the real property described in Exhibit A hereto and the existing improvements thereon (the "Leased Premises") to the Corporation; and WHEREAS, the Corporation intends to lease back to the City the Leased Premises pursuant to a Lease/Purchase Agreement to be executed and entered into as of the date hereof (the "Lease"); and WHEREAS, by resolutions the City and the Corporation have agreed to execute this Site Lease, and to deliver it upon performance and compliance by each party with all terms or conditions of this Site Lease to be performed concurrently herewith, including, without limitation, the delivery of the City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates") executed and delivered pursuant to a Trust Agreement, dated as of the date hereof (the "Trust Agreement"), by and among the City, the Corporation, and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"); 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 the Site Lease 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 Site Lease. 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. Definitions. All terms not otherwise defined herein shall have the definitions given such terms in the Trust Agreement. Section 2. The Leased Premises. The City hereby leases to the Corporation and the Corporation hereby leases from the City, on the terms and conditions hereinafter set forth, the Leased Premises; 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 execution hereof and shall remain in effect until the later of July 1, 2030 or the Term, as defined in the Lease, NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC I -20 expires as provided therein, unless such term is sooner terminated as hereinafter provided; provided, however, that in the event of a default by the City under the Lease and the Corporation's election to terminate the Lease under Section 9.2(b) thereof, the term of this Site Lease shall not terminate until such time as all amounts payable by the City under the Lease and the Trust Agreement have been paid in full. Section 4. Rental. The Corporation, and any assignee or successor in interest of the Corporation under this Site Lease, shall pay to the City a single rental payment of $ , from proceeds of sale of the Certificates, by causing such amount to be deposited to the Project Fund under and as further specified in the Trust Agreement. Section 5. Purpose. The Corporation shall use the Leased Premises solely for the purpose of leasing back such Leased Premises to the City pursuant to the Lease and for such purposes as may be incidental thereto; provided, that in the event of default by the City under the Lease or termination pursuant thereto, the Corporation may exercise the remedies of repossession of the Leased Premises, as provided in the Lease. Section 6. Interest in Leased Premises. The City warrants and covenants that it has sufficient interest in the Leased Premises to lease it hereunder. In the event of a title defect in the Leased Premises that impairs the right to use and occupy the Leased Premises, the City covenants that it will exercise its power, including but not limited to, its condemnation powers to the extent permitted by law, to obtain the necessary rights in the Leased Premises and to cure such defect and limitation of the right to use and occupancy. Section 7. Assignments and Subleases. 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, for the benefit of the Owners of the Certificates. This Site Lease may also be assigned and the Leased Premises subleased, as a whole or in part, by the Corporation without necessity of obtaining the consent of the City, if any event of default occurs under the Lease. Section 8. Termination. The Corporation agrees, upon the termination of this Site Lease, to quit and surrender the Leased Premises 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 Leased Premises at the time of the termination of this Site Lease shall remain thereon and title thereto shall vest in the City. Upon the exercise by the City of its option to purchase a portion of the Leased Premises, as set forth in Section 7.3 of the Lease and upon payment therefor, a corresponding portion of the Leased Premises may be released from this Site Lease. Upon payment by the City of all Lease Payments and all Additional Payments due during the term of the Lease, as provided for in Article IV thereof, the term of this Site Lease shall terminate. Under no circumstances may the City terminate this Site Lease as a remedy for a default by the Corporation in the performance of any obligation of the Corporation hereunder. Section 9. Quiet Enjoyment. The Corporation at all times during the term of this Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Premises; provided, W NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-21 however, that the City shall have the right to demolish some or all of the existing improvements on the Leased Premises in order to complete the Project or to replace or renovate some or all of the existing improvements with new improvements of equivalent or greater value. 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 and demand for correction thereto by the City, the City may exercise any and all remedies granted by law; provided, however, that no merger of this Site Lease and the Lease shall be deemed to occur as a result thereof and, so long as any Certificates and Additional Certificates are outstanding, the Site Lease shall not be terminated except as provided in Section 8 hereof. Section 11. Taxes. Subject to the provisions of Section 7.7 of the Lease, the City covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Premises. Section 12. Eminent Domain. In the event the whole or any part of the Leased Premises 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 and all 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 City by the City Manager or the Assistant City Manager, or their written designees, as representative, and for the Corporation by its President, Vice -President, Secretary, Assistant Secretary or Chief Financial Officer, or their written designees, as representative, and any party hereto shall be authorized to rely upon any such approval or request. Section 16. Captions. The captions or headings in this Site Lease are for convenience only and in no way define, limit or describe the scope of intent of any provision or Section of this Site Lease. Section 17. Execution in Counterparts. This Site Lease may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall constitute but one and the same instrument. Section 18. Amendments. This Site Lease may be amended in writing as may be mutually agreed by the City and the Corporation; provided, however, that no such amendment which NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-22 materially adversely affects the rights of the Owners of the Certificates and any Additional Certificates shall be effective unless it shall have been consented to by the Trustee and the Owners of a majority in aggregate principal amount of the Certificates then Outstanding. Section 19. Incorporation. This Site Lease shall be subject to all the terms and conditions of the Lease. Section 20. Warranties of the City as to the Leased Premises. The City covenants and warrants to the Corporation that: (a) except for Permitted Encumbrances, the Leased Premises is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the financing as contemplated by the Lease; (b) all taxes, assessments, or impositions of any kind with respect to the Leased Premises, except current taxes, have been paid in full; (c) the Leased Premises is properly zoned for its intended purposes; and (d) the Leased Premises is necessary to the City in order for the City to perform its governmental functions. [REMAINDER OF PAGE INTENTIONALLYLEFT BLANK] M NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC I -23 IN WITNESS WHEREOF, the parties have caused this Site Lease to be executed by their duly authorized officers as of the date and year first above written. CITY OF NEWPORT BEACH [SEAL] By: Its: City Manager ATTEST: City Clerk NEWPORT BEACH PUBLIC FACILITIES CORPORATION Bv: Its: Chief Financial Officer ATTEST: Secretary S-1 NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-24 [Site Lease Signature Pages Continued] APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: Aaron C. Harp, City Attorney NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-25 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in the Leased Premises conveyed under the foregoing to the Newport Beach Public Facilities Corporation (the "Corporation"), a 501(c)4 nonprofit public benefit corporation duly organized under the laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the Corporation, pursuant to authority conferred by resolution of the said Corporation adopted on November 10, 2020, and the grantee consents to recordation thereof by its duly authorized officer. Dated: , 2020 NEWPORT BEACH PUBLIC FACILITIES CORPORATION BY: Its: Chief Financial Officer [SEAL] ATTEST: Secretary NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-26 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF ORANGE On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-27 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF ORANGE On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-28 EXHIBIT A DESCRIPTION OF THE LEASED PREMISES Real property and improvements thereon in the City of Newport Beach, County of Orange, State of California, described as follows: A-1 NG-U9ZQVMF2/4838-4700-1797v3/022459-0033 PFC 1-29 EXHIBIT B LEASE AGREEMENT PFC 1-30 LEASE/PURCHASE AGREEMENT by and between NEWPORT BEACH PUBLIC FACILITIES CORPORATION, as Lessor and CITY OF NEWPORT BEACH, as Lessee Dated as of December 1, 2020 Relating to CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A (FIRE STATION NO. 2) NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-31 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1. Definitions and Rules of Construction............................................................. 2 Section1.2. Exhibits.............................................................................................................3 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 ...................... 5 ARTICLE III Section 3.1. Deposit of Certificate Proceeds........................................................................ 7 Section 3.2. Defeasance of Refunded Certificates............................................................... 7 Section 3.3. Payment of Project and Delivery Costs............................................................ 7 Section 3.4. Further Assurances and Corrective Instruments ............................................... 8 ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS Section4.1. Lease................................................................................................................. 9 Section4.2. Term................................................................................................................. 9 Section 4.3. Extension of Lease Term.................................................................................. 9 Section 4.4. Lease Payments................................................................................................ 9 Section 4.5. No Withholding..............................................................................................10 Section 4.6. Fair Rental Value............................................................................................10 Section 4.7. Budget and Appropriation..............................................................................11 Section 4.8. Assignment of Lease Payments...................................................................... I I Section 4.9. Use and Possession......................................................................................... I I Section 4.10. Abatement of Lease Payments and Additional Payments..............................11 Section 4.11. Additional Payments......................................................................................12 Section 4.12. Net -Net -Net Lease..........................................................................................12 I NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-32 TABLE OF CONTENTS (continued) ARTICLE V INSURANCE Section 5.1. Public Liability and Leased Premises Damage Section 5.2. Workers' Compensation .................................. Section 5.3. Casualty and Theft Insurance .......................... Section 5.4. Rental Interruption Insurance .......................... Section 5.5. Title Insurance ................................................. Section 5.6. General Insurance Provisions .......................... Section 5.7. Cooperation..................................................... ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1 Section 7.1. Section 7.2. Section 7.3. Section 7.4. Section 7.5. Section 7.6. Section 7.7. Section 7.8. Section 7.9. Section 7.10. Section 7.11. Section 7.12. Section 7.13. Section 7.14. Section 7.15. Section 8.1. Section 8.2. Application of Net Proceeds ARTICLE VII COVENANTS WITH RESPECT TO THE LEASED PREMISES Page ..13 ..13 ..13 ..14 ..14 ..15 ..16 16 Use of the Leased Premises............................................................................17 Interest in the Leased Premises and the Lease...............................................17 Optionto Purchase.........................................................................................18 QuietEnjoyment.............................................................................................18 Installation of the City's Personal Property....................................................18 Access to the Leased Premises.......................................................................18 Maintenance, Utilities, Taxes and Assessments.............................................19 Modification of the Leased Premises.............................................................19 Encumbrances; Alternative Financing Methods ............................................. 20 Corporation's Disclaimer of Warranties........................................................ 21 The City's Right to Enforce Warranties of Vendors or Contractors .............. 21 Substitution or Release of the Leased Premises ............................................. 22 Compliance with Law, Regulations, Etc ........................................................ 23 Environmental Compliance............................................................................ 23 Condemnation of Leased Premises................................................................ 25 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Assignment by the Corporation...................................................................... 25 Assignment and Subleasing by the City.........................................................25 ii NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-33 TABLE OF CONTENTS (continued) Page Section 8.3. Amendments and Modifications..................................................................... 26 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.1. Events of Default Defined..............................................................................26 Notices............................................................................................................30 Section 9.2. Remedies on Default...................................................................................... 26 Section 9.3. No Remedy Exclusive.................................................................................... 28 Section 9.4. Agreement to Pay Attorneys' Fees and Expenses..........................................28 Section 9.5. No Additional Waiver Implied by One Waiver .............................................. 29 Section 9.6. Application of the Proceeds from the Re -Lease of the Leased Premises....... 29 Section 9.7. Trustee and Owners to Exercise Rights.......................................................... 29 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Security Deposit............................................................................................. 29 Section 10.2. Extraordinary Prepayment.............................................................................. 29 Section 10.3. Optional Prepayment......................................................................................29 ARTICLE XI MISCELLANEOUS Section11.1. Notices............................................................................................................30 Section 11.2. Binding Effect................................................................................................ 30 Section11.3. Severability.....................................................................................................30 Section 11.4. Execution in Counterparts.............................................................................. 30 Section 11.5. Applicable Law.............................................................................................. 30 Signatures...................................................................................................................... S-1 EXHIBIT A SCHEDULE OF LEASE PAYMENTS.......................................................A-1 EXHIBIT B DESCRIPTION OF THE LEASED PREMISES.........................................B-1 EXHIBIT C DESCRIPTION OF THE PROJECT........................................................... C-1 EXHIBIT D LEASE SUPPLEMENT FORM...................................................................D-1 EXHIBIT E FORM OF CERTIFICATE OF SUBSTITUTION OR ADDITION OF PROJECT COMPONENT........................................................................... E-1 ui NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-34 LEASE/PURCHASE AGREEMENT THIS LEASE/PURCHASE AGREEMENT, dated as of December 1, 2020, by and between the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under the laws of the State of California, as lessor (the "Corporation"), and the CITY OF NEWPORT BEACH, a chartered city duly organized and existing under the Constitution and laws of said State, as lessee (the "City"); WITNESSETH. - WHEREAS, the City may enter into leases and agreements relating to real property and buildings to be used by the City; and WHEREAS, the Corporation and the City wish to provide financing for the acquisition, improving and equipping of a new Fire Station, all as described in Exhibit C hereto (the "Project") by entering into this Lease/Purchase Agreement (this "Lease") and authorizing and directing the execution and delivery of the City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates") evidencing fractional interests in Lease Payments (as defined in the Trust Agreement) to be made by the City under this Lease; and WHEREAS, the City has entered into a Site Lease of even date herewith (the "Site Lease") with the Corporation under which the City has agreed to lease the real property described in Exhibit B hereto, including any improvements thereon (the "Leased Premises"), to the Corporation, and which Site Lease provides that the title to the Leased Premises shall vest in the City at the expiration of the Site Lease (as provided in Section 8 thereof), and contains other terms and conditions as the governing board of the City deems to be in the best interest of the City; and WHEREAS, in consideration of the Lease Payments to be paid by the City to the Corporation hereunder, the Corporation will lease to the City the Leased Premises and will grant to the City a right to purchase the Corporation's interest in the Leased Premises; and WHEREAS, the Corporation is authorized pursuant to the laws of the State of California and its formation documents to provide financial assistance to the City by acquiring, constructing and financing various public facilities, land and equipment and the leasing of facilities, land and equipment for the use, benefit and enjoyment of the public; 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 Lease 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 this Lease; 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: 1 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC I -35 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 related to the Certificates (the "Trust Agreement"), dated as of the date hereof, by and among The Bank of New York Mellon Trust Company, N.A., as Trustee thereunder, the Corporation, and the City, 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 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. "Completion Certificate" means the certificate of the City filed with the Trustee and signed by a City Representative, as prescribed by Section 3.4 hereof. "Environmental Regulations" shall mean all Laws and Regulations, now or hereafter in effect, with respect to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C. Section 9601, et seq.) (together with the regulations promulgated thereunder, "CERCLA"), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, et seq.) (together with the regulations promulgated thereunder, "RCRA"), the Emergency Planning and Community Right -to - Know Act, as amended (42 U.S.C. Section 11001, et sM.) (together with the regulations promulgated thereunder, "Title III"), the Clean Water Act, as amended (33 U.S.C. Section 1321 et sec .) (together with the regulations promulgated thereunder, "CWA"), the Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.) (together with the regulations promulgated thereunder, "CAA") and the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et s�Mc.) (together with the regulations promulgated thereunder, "TSCA"), and any state or local similar laws and regulations and any so- called local, state or federal "superfund" or "superlien" law. "Interest Component" means the portion of each Lease Payment designated in Exhibit A hereto as the Interest Component. "Leased Premises" means the site described in Exhibit B hereto and any improvements thereon being leased to the City by the Corporation. "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 Section 7.7 hereof, permit to remain unpaid; (ii) the Assignment Agreement; (iii) this Lease; (iv) the Site Lease; (v) any contested right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law to the extent permitted under Section 7.8(b) hereof, (vi) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions, liens or restrictions which exist of record as of the Closing Date, which the City hereby certifies will not materially impair the use of the Leased Premises 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 and the City consent in writing. NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-36 "Principal Component" means the portion of the Lease Payments designated in Exhibit A hereto as the Principal Component. "Project" means the improvements described in Exhibit C hereto, and any and all additions or substitutions thereto made as provided in Section 3.5 hereof, and any additional improvements financed with the proceeds of Additional Certificates. 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: Legal Description of the Leased Premises. Exhibit C: Description of the Project Exhibit D: Lease Supplement Form. Exhibit E: Form of Certificate of Substitution or Addition of Project Component. ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1. Representations, Covenants and Warranties of the CitX. The City represents, covenants and warrants to the Corporation as follows: (a) Due Organization and Existence. The City is a municipal corporation and a chartered city duly organized and existing under the Constitution and laws of the State. (b) Authorization; Enforceability. The Constitution and laws of the State authorize the City to enter into this Lease, the Site Lease, the Trust Agreement, the Agency Agreement and the Continuing Disclosure Agreement, and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid leases and agreements; the City has duly authorized and executed all of the aforesaid leases and agreements. This Lease, the Site Lease, the Trust Agreement, the Agency Agreement and the Continuing Disclosure 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, the Continuing Disclosure Agreement, the Agency Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City, or upon the Leased Premises except for Permitted Encumbrances and the pledges contained in the Trust Agreement. NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-37 (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, officers, employees and assigns (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 Leased Premises 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 of negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Premises, (iv) any act of negligence of any assignee or sublessee of the City with respect to the Leased Premises, or (v) the completion of the Project or the authorization of payment of the Project Costs by the City. No indemnification is made under this Section or elsewhere in this Lease for claims, losses or damages, including legal fees and expenses, arising out of the willful misconduct or negligence under this Lease by the Corporation, its directors, officers, agents, employees, successors or assigns. (f) General Tax and Arbitrage Covenant. The City hereby covenants that, notwithstanding any other provision of this Lease, it shall not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of interest due with respect to the Certificates or any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates) under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"). The City shall not, directly or indirectly, use or permit the use of proceeds of the Certificates, any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates), the Project or the Leased Premises, 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 interest with respect to the Certificates or any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates). The City shall not take any action, or fail to take any action, if any such action or failure to take action would cause the Certificates or any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates) to be "private activity bonds" within the meaning of Section 141 of the Code, and in furtherance thereof, shall not make any use of the proceeds of the Certificates, any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates) or the Leased Premises, or any portion thereof, or any other funds of the City, that would cause the Certificates or any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates) to be "private activity bonds" within the meaning of Section 141 of the Code. To that end, so long as any Certificates or any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates) are outstanding, the City, with respect to such proceeds, the Leased Premises and the E NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-38 Project and such other funds, will comply with applicable requirements of the Code and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent such requirements are, at the time, applicable and in effect. The City shall not, directly or indirectly, use or permit the use of any proceeds of the Certificates, any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) or of the Leased Premises, or other funds of the City, or take or omit to take any action, that would cause the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) to be "arbitrage bonds" within the meaning of Section 148 of the Code. To that end, the City shall comply with all requirements of Section 148 of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent such requirements are, at the time, in effect and applicable to the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates). The City shall not make any use of the proceeds of the Certificates, any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) or any other funds of the City, or take or omit to take any other action, that would cause the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (g) Flood Plain. The City hereby represents that the Leased Premises are not in a 100 year flood plain. (h) Essentiality of the Leased Premises. The City hereby represents that the Leased Premises are essential for the City's performance of its governmental functions. (i) Zoning Environmental and Safety Ordinance Compliance. The City hereby represents that the Leased Premises comply in all respects with applicable zoning, environmental and safety ordinances. 0) Title Insurance. The City hereby represents that the Leased Premises are the same property which is the subject of the ALTA title insurance policy (with western regional exceptions) or CLTA title insurance policy issued by First American Title Insurance Company pursuant to Section 5.5 hereof. 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 501(c)(4) nonprofit public benefit corporation duly organized, existing and in good standing under and by virtue of the laws of the State, has the power to enter into this Lease, the Assignment Agreement, the Site Lease, the Agency 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 leases and agreements. This Lease, the Assignment Agreement, the Site Lease, the Agency Agreement and the Trust Agreement constitute the legal, valid and binding obligations of the Corporation, enforceable in accordance with their 5 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-39 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 Assignment Agreement, the Site Lease, the Agency Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of the joint powers agreement of the Corporation or any restriction or any agreement or instrument to which the Corporation is now a party or by which the Corporation is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Corporation, or upon the Leased Premises except by Permitted Encumbrances and by the pledge contained in the Trust Agreement. (c) Execution and Delivery. The Corporation has duly authorized and executed this Lease in accordance with the laws of the State. (d) Maintenance of Existence. To the extent permitted by law, the Corporation agrees that during the term hereof it will maintain its existence as a 501(c)(4) nonprofit public benefit corporation, will not combine or consolidate with or merge into any other entity or permit one or more other entities to consolidate with or merge into it. (e) General Tax and Arbitrage Covenant. The Corporation covenants that, notwithstanding any other provision of this Lease, it shall not take any action if any such action would adversely affect the exclusion from gross income of interest due with respect to the Certificates or any Additional Certificates under Section 103 of the Code (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates). To the extent that the Corporation may control the Leased Premises or the proceeds of the Certificates or any Additional Certificates, the Corporation shall not, directly or indirectly, use or permit the use of proceeds of the Certificates, any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), the Project or the Leased Premises 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 interest with respect to the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates). The Corporation shall not take any action if any such action would cause the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) to be "private activity bonds" within the meaning of Section 141 of the Code, and in furtherance thereof, to the extent that the Corporation may control the Leased Premises or the proceeds of the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), shall not make any use of the proceeds of the Certificates, any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), the Project or the Leased Premises, or any portion thereof, or any other funds of the City, that would cause the Certificates or any Additional Certificates to be "private activity bonds" within the meaning of Section 141 of the Code. To that end, so long as any Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) are outstanding, to the extent that the Corporation may control the Leased Premises or the proceeds of the Certificates or any Con NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-40 Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), the Corporation, with respect to such proceeds, the Leased Premises, the Project and such other funds, will comply with applicable requirements of the Code and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent such requirements are, at the time, applicable and in effect. To the extent that the Corporation may control the Leased Premises or the proceeds of the Certificates or any Additional Certificates, the Corporation shall not, directly or indirectly, use or permit the use of any proceeds of any Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), or of the Project, the Leased Premises, or other funds available to it, or take or omit to take any action, that would cause the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) to be "arbitrage bonds" within the meaning of Section 148 of the Code. To that end, to the extent that the Corporation may control the Leased Premises or the proceeds of the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), the Corporation shall comply with all requirements of Section 148 of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent such requirements are, at the time, in effect and applicable to the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax-exempt Certificates). To the extent that the Corporation may control the proceeds of the Certificates or any Additional Certificates, the Corporation shall not make any use of the proceeds of the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax-exempt Certificates) or any other of its funds, or take or omit to take any other action, that would cause the Certificates or any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax-exempt Certificates) to be "federally guaranteed" within the meaning of Section 149(b) of the Code. ARTICLE III APPLICATION OF PROCEEDS Section 3.1. Deposit of Certificate Proceeds. On the Closing Date for the Certificates and on the Closing Date for any Additional Certificates, the Corporation agrees to pay or cause to be paid to the Trustee the proceeds of the sale of the Certificates and Additional Certificates, which moneys, in the case of the Certificates, shall be deposited with the Trustee as provided in Section 2.05 of the Trust Agreement, or in the case of Additional Certificates as provided in any Supplemental Trust Agreement which relates to such Additional Certificates. Section 3.2. Completion of the Project. The Corporation and the City agree to execute and deliver the Agency Agreement pursuant to which the City, as the agent of the Corporation, will acquire, construct, deliver and install the Project. The City and the Corporation each covenants and agrees to comply with the terms of the Agency Agreement. Section 3.3. Payment of Project and Delivery Costs. Payment of the Project Costs and Delivery Costs shall be made from the moneys deposited with the Trustee in the Project Fund as provided in Section 3.1 hereof and Section 2.05 of the Trust Agreement, which shall be disbursed in accordance and upon compliance with Article III of the Trust Agreement. 7 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-41 Section 3.4. Completion Certification. The City and the Corporation expect that the Project will be substantially completed in accordance with plans and specifications described in the Agency Agreement on or prior to the dates specified in Section 3 to the Agency Agreement. Upon the completion of acquisition, construction, delivery and installation of the portion of the Project to be financed with the proceeds of the Certificates, and upon the completion of the improvements to be financed with each series of Additional Certificates, the City shall deliver to the Trustee a Completion Certificate with respect thereto. A separate Completion Certificate will be filed with respect to the portion of the Project to be financed from the Certificates and the portion to be financed with each series of Additional Certificates. On the date of filing a Completion Certificate, all excess moneys remaining in the Project Fund for the Certificates or issue of Additional Certificates for which such Completion Certificate is delivered shall be applied in accordance with the provisions of Section 3.04 of the Trust Agreement. Section 3.5. Substitution of or Addition to the Project. The City shall have the right to substitute alternate items for any portion of the Project listed in Exhibit C hereto or provide for additional components of the Project by providing the Trustee with a written certificate in the form contained in Exhibit E hereto, so long as such substitution or addition does not cause, in and of itself, the Interest Component evidenced by the Certificates or any Additional Certificates (to the extent such Certificates are executed and delivered as tax exempt Certificates) to be included in gross income for federal income tax purposes or result in a reduction in the fair rental value of the Leased Premises. Section 3.6. Compliance with Law. (a) Public Bidding. Except as otherwise provided by City Charter and the City of Newport Beach Municipal Code, the City shall comply with all applicable provisions for bids and contracts prescribed by law, including, without limitation, the Public Contract Code and the Government Code of the State. (b) Wage Rates and Working Hours. Except as otherwise provided by City Charter and the City of Newport Beach Municipal Code, the City shall comply with all provisions relating to prevailing wage rates and working hours applicable to it under the laws of the State. (c) Plans and Specifications. Except as otherwise provided by City Charter and the City of Newport Beach Municipal Code, the City shall prepare and adopt plans and specifications for the acquisition, construction and installation of the Project pursuant to the Government Code and Public Contracts Code of the State. Section 3.7. 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 Leased Premises hereby leased or intended so to be or for carrying out the expressed intention of this Lease. NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-42 ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS Section 4.1. Lease. The Corporation hereby leases the Leased Premises to the City, and the City hereby leases the Leased Premises from the Corporation, upon the terms and conditions set forth herein. This Lease shall not operate as a merger of the City's leasehold estate in the Leased Premises pursuant to this Lease and its fee estate in the Leased Premises and shall not cause the extinguishment of the leasehold interest granted to the Corporation under the Site Lease. Section 4.2. Term. The Term of this Lease shall commence on the date of execution hereof and shall end on July 1, 2030, unless extended pursuant to Section 4.3 hereof, or unless terminated prior thereto upon the earliest of any of the following events: (a) Default and Termination. A default by the City and the Corporation's election to terminate this Lease under Section 9.2(b) hereof, (b) Payment of All Lease Pam. The payment by the City of all Lease Payments required under Section 4.4 hereof and any Additional Payments required under Section 4.11 hereof; (c) Prepayment. The deposit of funds or Government Obligations with the Trustee in amounts sufficient to pay all Lease Payments as the same shall become due, as provided in Section 10.1 hereof and in Section 14.01 of the Trust Agreement; or (d) Purchase. Upon the exercise by the City of its option to purchase all of the Corporation's interest in the Leased Premises as provided in Section 7.3 hereof, provided, however, that upon exercise by the City of its option to purchase the Corporation's interest in a portion of the Leased Premises, as provided in Section 7.3, the Lease shall be terminated only with respect to the portion of the Leased Premises purchased. Section 4.3. Extension of Lease Term. The Term of this Lease may be extended in connection with the execution and delivery of any Additional Certificates. If on the final maturity date of the Certificates or any Additional Certificates all Interest Components and Principal Components represented thereby shall not be fully paid by the City as a result of a default in the payment of Lease Payments, or because the Lease Payments hereunder shall have been abated at any time as permitted by the terms hereof, then the Term shall be extended until all Certificates and Additional Certificates shall be fully paid, except that the Term shall in no event be extended beyond the tenth anniversary of the final scheduled maturity of any Certificate or Additional Certificate. Section 4.4. Lease Payments. (a) Time and Amount. Subject to the provisions of Section 4.10 (regarding abatement in event of loss of use of any portion of the Leased Premises), Section 7.3 (regarding option to purchase) 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 Leased Premises, the Lease Payments (denominated into components of principal and interest, the Interest Component of such Lease Payment being paid semiannually) in the amounts specified in Exhibit A, to be due and payable in arrears on the fifteenth (15th) day of the month (or if such day is NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-43 not a Business Day, the next succeeding Business Day) specified in Exhibit A (the "Lease Payment Date") which are sufficient in both time and amount to pay when due the annual principal and interest represented by the Certificates. In the event that any Additional Certificates are executed and delivered pursuant to the Trust Agreement, the City and the Trustee shall execute an amendment to Exhibit A to state the Lease Payments due hereunder as a result of the execution and delivery of such Additional Certificates. The obligation of the City to pay Lease Payments shall commence on the Closing Date for the Certificates. In the event the City does not pay a Lease Payment due on the respective Lease Payment Date, the Trustee shall provide prompt written notice to the City of such failure to pay; provided, however, that failure to give such notice shall not excuse any event of default under Section 9.1 hereof. (b) Credits. Any amount held in the Lease Payment Fund on any Lease Payment Date (other than capitalized interest, which shall be credited in accordance with Section 5.03 of the Trust Agreement, and other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to Section 10.2 hereof and other amounts required for payment of principal with respect to any Certificates or Additional Certificates that have matured or been called for payment and have not been presented for payment or interest) shall be credited towards the applicable Lease Payment then due and payable. The City need not transfer additional cash to the Trustee on any Lease Payment Date if the amounts then held in the Lease Payment Fund (other than those amounts excluded under the prior sentence) are at least equal to the Lease Payment then required to be paid. (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 or Additional Certificate, as applicable, represented by such delinquent Lease Payment. Section 4.5. No Withholding. Notwithstanding any dispute between the Corporation and the City, including a dispute as to the failure of any portion of the Leased Premises in use by or 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. Section 4.6. Fair Rental Value. The Lease Payments and Additional Payments shall be paid by the City in consideration of the right of possession of, and the continued quiet use and enjoyment of, the Leased Premises during each such period for which said Lease Payments are to be paid. The parties hereto have agreed and determined that such total rental represents the fair rental value of the Leased Premises. In making such determination, consideration has been given to the fair market value and replacement cost of the Leased Premises, 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 Leased Premises and the benefits therefrom which will accrue to the City and the general public, and the transfer of the Corporation's leasehold interest in the Leased Premises at the end of the Term. 10 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-44 Section 4.7. Budget and Appropriation. The City covenants to take such action as may be necessary to include all Lease Payments and Additional Payments (to the extent the amounts 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 make the necessary annual appropriations therefor, and to maintain such items to the extent unpaid for 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 furnish annually, on or before August 1 of each year, to the Trustee a certificate of the City Representative stating that all Lease Payments and Additional Payments due hereunder for the applicable Fiscal Year have been included in its annual budget and the amount so included. 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 ministerial 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. The obligation of the City to pay Lease Payments and Additional Payments hereunder shall constitute a current expense of the City and shall not in any way be construed to be a debt of the City, or the State, or any political subdivision thereof, in contravention of any applicable constitutional or statutory limitation or requirements concerning the creation of indebtedness by the City, the State, or any political subdivision thereof, nor shall anything contained herein constitute a pledge of general revenues, funds or moneys of the City beyond the Fiscal Year for which the City has appropriated funds to pay Lease Payments and Additional Payments hereunder or 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. Section 4.8. 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 absolutely to the Trustee, subject to certain exceptions, pursuant to the Assignment Agreement, 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 designated in the Trust Agreement, or to the Trustee at such other place as the Trustee shall direct in writing, all Lease Payments, Additional Payments or Prepayments thereof payable by the City hereunder. The Corporation will not assign or pledge the Lease Payments or other amounts derived from the Leased Premises and from its other rights under this Lease except as provided under the terms of this Lease, the Assignment Agreement and the Trust Agreement, or its duties and obligations except as provided under this Lease. Section 4.9. Use and Possession. The total Lease Payments due in any Fiscal Year shall be for the City's right to use and possession of the Leased Premises for such Fiscal Year. During the Term of this Lease, the City shall be entitled to the exclusive use and possession of the Leased Premises, subject only to the Permitted Encumbrances. Section 4.10. Abatement of Lease Payments and Additional Pam. (a) In the Event of Damage, Destruction, Condemnation or Title Defect. Except to the extent that proceeds of the type described in the following paragraph are available, the amount of Lease Payments and Additional Payments shall be abated during any period in which by reason of damage, destruction or taking by eminent domain or condemnation of the Leased Premises or defects 11 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-45 in the title with respect to the Leased Premises there is substantial interference with the use and possession of all or a portion of the Leased Premises by the City. The amount of such abatement shall be such that the resulting Lease Payments, exclusive of the amounts described in the following paragraph, do not exceed the fair rental value (as determined by an independent real estate appraiser selected by the City, who is not an employee of the City) for the use and possession of the portion of the Leased Premises not damaged, destroyed, interfered with or taken. Such abatement shall continue for the period commencing with such damage, destruction, interference or taking and ending with the substantial completion of the replacement or work of repair or the removal of the title defect causing such interference with use. Except as provided herein, in the event of any such damage, destruction, interference or taking, this Lease shall continue in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage, destruction, interference or taking. Notwithstanding a substantial interference with the use and possession of all or a portion of the Leased Premises, the City shall remain obligated to make Lease Payments which would otherwise be abated (i) to the extent that moneys derived from any person as a result of any delay in the reconstruction, replacement or repair of the Leased Premises, or any portion thereof, are available to pay the amount which would otherwise be abated; and (ii) to the extent that moneys are available in the Lease Payment Fund to pay the amount which would otherwise be abated. The Lease Payments shall be payable from such amounts paid under (i) and (ii) above as an obligation of the City payable from a special fund. (b) Repair or Replacement. In the event of such abatement, unless the abatement will be avoided as a result of a prepayment of Lease Payments from Net Proceeds pursuant to Section 6.1(c), the City will use its best efforts to repair or replace the damaged or destroyed or taken portion of the Leased Premises, as the case may be, from Net Proceeds or special funds of the City or other moneys 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 4.11. 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 Leased Premises, the Certificates and any Additional Certificates, including without limitation all expenses, compensation and indemnification of the Trustee payable by the City under the Trust Agreement, taxes of any sort whatsoever payable by the Corporation as a result of its interest in the Leased Premises or undertaking of the transactions contemplated herein or in the Trust Agreement, fees of auditors, accountants, attorneys or engineers and any and all other necessary administrative costs of the Corporation or charges required to be paid by it in order to comply with the terms of the Certificates and any Additional Certificates or of the Trust Agreement including premiums or insurance maintained pursuant to Article V hereof or to indemnify the Corporation and its employees, officers and directors and the Trustee. All such Additional Payments to be paid hereunder shall be paid when due directly by the City to the respective parties to whom such Additional Payments are owing. Section 4.12. 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, taxes, fees, insurance premiums, rebate payments, reserve deposits, costs associated with the Leased Premises, charges or set -offs whatsoever, except as expressly provided herein. 12 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-46 ARTICLE V F1 LN LIN :. ► • Section 5.1. Public Liability and Leased Premises Damage. (a) Coverage. The City shall maintain or cause to be maintained, throughout the Term hereof, a standard comprehensive general public liability and property damage insurance policy or policies in protection of the City and the Corporation and their officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or operation of any City property or portion thereof. (b) Limits. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $500,000 for damage to property resulting from each accident or event (in each case subject to a deductible clause of not to exceed $500,000). Such public liability and property damage insurance may, however, be in the form of a single limit policy covering all such risks in an amount equal to the liability limits set forth herein. (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, and, subject to compliance with Section 5.6(e) hereof, may be maintained in the form of self- insurance by the City. Insurance obtained through a California joint powers authority of which the City is a member shall not be deemed to be self-insurance. (d) Payment of Net Proceeds. The 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 to insure its employees against liability for compensation under the Workers' Compensation Insurance and Safety Act now in force in the State, or any act hereafter enacted as an amendment or supplement thereto (with provision for self-insurance). Section 5.3. Casualty and Theft Insurance. (a) Casualty and Theft Insurance; Coverage. 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 portion of the Leased Premises caused by fire and lightning, with extended coverage and theft, vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, excluding flood and earthquake. The City shall not be required to purchase or maintain earthquake or flood insurance with respect to the Leased Premises. 13 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-47 (b) Amount. Such insurance shall be in an amount not less than the replacement cost of the Leased Premises, subject to a "deductible clause" not to exceed five hundred thousand dollars ($500,000) for any one loss or, in the case of a flood and earthquake rider, ten percent (10%) of the coverage obtained. The term "full replacement value" as used in this Section 5.3 shall mean the actual replacement cost of the improvements constituting the Leased Premises. (c) Joint or Self -Insurance. Such insurance may be maintained as part of or in conjunction with any other insurance carried or required to be carried by the City, and, subject to compliance with Section 5.6(e) hereof, may be maintained in the form of self-insurance by the City. Insurance obtained through a California joint powers authority of which the City is a member shall not be deemed to be self-insurance. (d) Payment of Net Proceeds. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Net Proceeds Fund and applied as provided in Section 6.1. Section 5.4. Rental Interruption Insurance. (a) Coverage and Amount. Upon delivery of the Leased Premises to it for occupancy, the City shall maintain or cause to be maintained rental income or use and occupancy insurance in an amount not less than the maximum remaining scheduled Lease Payments in any future 24 -month period, to insure against loss of rental income from the Leased Premises caused by perils covered by the insurance required to be maintained as provided in Section 5.3 hereof. Such rental interruption insurance shall name the Trustee and the Corporation as additionally insured parties and the Trustee as the loss payee. (b) Joint Insurance. Such insurance may be maintained as part of or in conjunction with any other rental income or use and occupancy insurance carried by the City but may not be maintained in the form of self-insurance 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 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 if there are insufficient Net Proceeds to pay all Lease Payments due in any such Certificate Year. Section 5.5. Title Insurance. The City shall obtain and, throughout the Term of this Lease, maintain or cause to be maintained title insurance on the Leased Premises, in the form of an ALTA title policy (with western regional exceptions) or in the form of a CLTA title policy, in an amount equal to the aggregate principal amount of the Certificates and Additional Certificates Outstanding, issued by a company of recognized standing, duly authorized to issue the same, payable to the Trustee for the benefit of the Owners, subject only to Permitted Encumbrances. Said policy or policies shall insure the City's leasehold estate hereunder in the Leased Premises, subject only to Permitted Encumbrances. All Net Proceeds received under said policy or policies shall be deposited with the Trustee and applied as provided in Section 7.01 of the Trust Agreement. So long as any of the Certificates and Additional Certificates remain Outstanding, each policy of the title insurance obtained pursuant hereto or required hereby shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Certificate Owners and the owners of any Additional Certificates. The Net Proceeds of such insurance shall be applied as provided in Section 6.1. 14 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-48 Section 5.6. General Insurance Provisions. (a) Form of Policies. All policies of insurance required to be procured and maintained pursuant to this Lease and any statements of self-insurance shall be in a form certified by the City Representative or an insurance agent, broker or consultant to the City to comply with the provisions hereof. All such policies shall provide that the insured parties shall be given thirty (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 and theft insurance), Section 5.4 (regarding rental interruption insurance) and Section 5.5 (regarding title insurance) shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Owners. All required insurance policies must be provided by a commercial insurer rated A by Best or A- and A3 by S&P and Moody's, respectively. All policies shall name the City, the Corporation and the Trustee as insureds and the Trustee as a loss payee. (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, and shall promptly furnish or cause to be furnished to the Trustee a certificate to such effect, as described in paragraph (d) below. (c) Protection of 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. (d) Evidence of Insurance. The City shall cause to be delivered to the Trustee annually on or before August 1 a certificate stating that the insurance policies required by this Lease are in full force and effect. (e) Self Insurance. The City may only elect to self insure pursuant to Sections 5.1 and 5.2 hereof if and to the extent such self-insurance method or plan of protection shall afford reasonable protection to the Corporation and the Trustee, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by other cities in the State other than the City. Insurance provided through a California joint powers authority of which the City is a member or with which the City contracts for insurance shall not be deemed to be self-insurance for purposes hereof. Any self-insurance maintained by the City pursuant to this Article V shall comply with the following terms: (i) The self-insurance program shall be approved in writing by the City's City Manager or Assistant City Manager and an independent insurance consultant in accordance with the California Labor Code and the California Government Code; (ii) The self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid; the adequacy of such fund shall be evaluated on an annual basis by the City Representative in a certified statement delivered to the Trustee; and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of the City Representative; and 15 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-49 (iii) In the event the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by the City Representative, shall be maintained. 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 Leased Premises 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 Fund. The City shall remit promptly to the Trustee any Net Proceeds received by the City and the Trustee as provided in Section 5.3 (regarding casualty and theft insurance) and Section 5.5 (regarding title insurance) promptly upon receipt thereof, and pursuant to Section 7.01 of the Trust Agreement, the Trustee shall deposit such Net Proceeds of insurance in the Net Proceeds Fund. The City and/or the Corporation shall transfer to the Trustee any other Net Proceeds (other than Net Proceeds paid under Sections 5.1, 5.2 and 5.4 hereof which shall be applied as described in such sections) received by the City and/or Corporation in the event of any accident, destruction, theft or taking by eminent domain or condemnation with respect to the Leased Premises, for deposit in the Net Proceeds Fund. (b) Disbursement for Replacement or Repair of the Leased Premises. Upon receipt of the certification described in paragraph (i) below and the requisition described in paragraph (ii) below, the Trustee shall disburse moneys in the Net Proceeds Fund to the person, firm or corporation named in the requisition as provided in paragraph (ii) below. (i) Certification. The City Representative must certify to the Corporation and the Trustee that: (x) 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 100% of the projected costs of replacement or repair, as demonstrated in an attached reconstruction budget, and (y) 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. (ii) Requisition. The City Representative must deliver to the Trustee a requisition stating with respect to each payment to be made (1) the requisition number, (2) the name and address of the person, firm or corporation to whom payment is due, (3) the amount to be paid and (4) that each obligation mentioned therein has been properly incurred, is a proper charge against the 16 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-50 Net Proceeds Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation. Each such cost requisition shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Any balance of the Net Proceeds remaining after such replacement or repair has been completed and after payment or provision for payment of all Certificates as provided in Section 7.01 of the Trust Agreement and all Additional Certificates as provided in any Supplemental Trust Agreement pursuant to which such Additional Certificates are executed and delivered shall be paid to the City after payment of amounts due the Trustee pursuant to Sections 9.6 and 9.7 of the Trust Agreement. (c) Disbursement for Prepayment. If the City Representative notifies the Trustee in writing of the City's determination that the certification provided in Section 6.1(b)(i) cannot be made or that replacement or repair of any portion of the Leased Premises is not economically feasible or in the best interest of the City, then the Trustee shall promptly transfer the Net Proceeds to the Prepayment Fund as provided in Section 7.01 of the Trust Agreement and apply them to prepayment of the Certificates as provided in Section 4.02 of the Trust Agreement and Additional Certificates as provided in a Supplemental Trust Agreement and prepayment of Lease Payments as provided in Section 10.2 hereof, provided that in the event of damage or destruction in whole of the Leased Premises and in the event such Net Proceeds, together with funds then on hand in the Lease Payment Fund are not sufficient to prepay all the Certificates and Additional Certificates then Outstanding, then the City shall not be permitted to certify that repair, replacement or improvement of all of the Leased Premises is not economically feasible or in the best interest of the City. In such event, the City shall proceed to repair, replace or improve the Leased Premises as described herein from legally available funds in the then -current Fiscal Year and shall make the required notification to the Trustee pursuant to Section 7.01 of the Trust Agreement and the Trustee shall disburse moneys in the Net Proceeds Fund to the person, firm, or corporation named in the requisition as provided therein. ARTICLE VII COVENANTS WITH RESPECT TO THE LEASED PREMISES Section 7.1. Use of the Leased Premises. The City represents and warrants that it has an immediate need for, and expects to make immediate use of, all of the Leased Premises, which need is not temporary or expected to diminish in the foreseeable future. Section 7.2. Interest in the Leased Premises and the Lease. (a) Corporation Holds Leasehold Interest DuringTom. During the Term of this Lease, the Corporation does and shall hold a leasehold interest in the Leased Premises 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 such title and interest at all times during the Term of this Lease. (b) Title Transferred to the City at End of Term. Upon expiration of the Term as provided in Section 4.2(b) or 4.2(c) hereof, all right, title and interest of the Corporation in and to all of the Leased Premises shall be transferred to and vest in the City, without the necessity of any additional document of transfer. 17 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-51 Section 7.3. Option to Purchase. The City may exercise an option to purchase the Corporation's interest under the Site Lease and this Lease in the Leased Premises by depositing with the Trustee cash and/or Government Obligations as provided in Section 14.01 of the Trust Agreement. In such event, all or a portion of the obligations of the City under this Lease, and the security provided by this Lease for said obligations or said portion of the obligations, shall cease and terminate as provided in Section 4.2 hereof, excepting in the case all of the Corporation's interest has been purchased, only the obligation of the City to make, or cause to be made, such Lease Payments from such deposit. In the event Lease Payments and Additional Payments under this Lease have been paid in full, on the date of said deposit, the Corporation's interest in the Leased Premises shall revert and transfer to the City automatically and without further action by the City or the Corporation, and the Corporation shall execute and deliver such further instruments and take such further action as may reasonably be requested by the City for carrying out the reversion and transfer of the Corporation's interests in the Leased Premises. In the event Lease Payments under this Lease have been paid in part only, on the date of said deposit, the City shall specify a discrete portion of the Corporation's interest in the Leased Premises for reversion and transfer to the City and the Corporation shall execute and deliver such further instruments and take such further action as may reasonably be requested by the City for carrying out the reversion and transfer of such portion of the Corporation's interest in the Leased Premises; provided, that such portion shall revert and transfer to the City only if the reduction in the fair rental value of the Leased Premises resulting from such reversion and transfer at the time of such reversion and transfer (as determined by an independent appraisal acceptable to the Corporation) is proportionately less than or equal to the reduction in the maximum annual Lease Payments under this Lease resulting from such purchase. Any such deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with Section 4.4 hereof. Section 7.4. Quiet Enjoyment. During the Term, the Corporation shall provide the City with quiet use and enjoyment of the Leased Premises, and the City shall during such Term peaceably and quietly have and hold and enjoy the Leased Premises, without suit, trouble or hindrance from the Corporation, or any person or entity claiming under or through the Corporation except as expressly set forth in this Lease. 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 Leased Premises as provided in Section 7.6 hereof. Section 7.5. Installation of the 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 property in or upon any portion of the Leased Premises. All such items shall remain the sole property of the City, regardless of the manner in which the same may be affixed to such portion of the Leased Premises, 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 Leased Premises 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 shall attach to any part of the Leased Premises. Section 7.6. Access to the Leased Premises. The City agrees that the Corporation, any Corporation Representative and the Corporation's successors, assigns or designees shall have the right at all reasonable times to enter upon the Leased Premises or any portion thereof to examine and inspect the Leased Premises. The City further agrees that the Corporation, any such Corporation 18 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-52 Representative, and the Corporation's successors, assigns or designees shall have such rights of access to the Leased Premises as may be reasonably necessary to cause the proper maintenance of the Leased Premises in the event of failure by the City to perform its obligations hereunder. Section 7.7. Maintenance, Utilities, Taxes and Assessments. (a) Maintenance; Repair and Replacement. Throughout the Term of this Lease, as part of the consideration for the rental of the Leased Premises, all repair and maintenance of the Leased Premises 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 the Leased Premises 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 Leased Premises, 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 Leased Premises 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. (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 Corporation, to the effect that, by nonpayment of any such items, the interest of the Corporation in such portion of the Leased Premises will not be materially endangered and that the Leased Premises 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. Section 7.8. Modification of the Leased Premises. (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 Leased Premises if such improvements are necessary or beneficial for the use of such portion of the Leased Premises. All such additions, modifications and improvements shall thereafter comprise part of the Leased Premises and be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in any way cause an abatement of Lease Payments with respect to the Leased Premises 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 State tax-exempt status or the exclusion from gross income for federal income tax purposes of the interest with respect to the Certificates and Additional Certificates (to the extent such Additional Certificates were executed and delivered as tax exempt Certificates); and the Leased Premises, upon completion of any additions, 19 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-53 modifications and improvements made pursuant to this Section, shall have an annual fair rental value which is not less than the annual Lease Payments. (b) No Liens. Except for Permitted Encumbrances, the City will not permit any mechanic's or other lien to be established or remain against the Leased Premises for labor or materials furnished in connection with any additions, modifications or improvements 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 Leased Premises, 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, or with the proceeds of Additional Certificates, have the right to make replacements, redevelopment or renovation of all or a portion of the Leased Premises if the following conditions precedent are satisfied: (i) The City receives an opinion of Special Counsel, a copy of which the City shall furnish to the Corporation and the Trustee, that (1) such replacement does not adversely affect the federal income tax exclusion or the State tax-exempt status of the interest with respect to the Certificates and Additional Certificates (to the extent such Additional Certificates were executed and delivered as tax exempt Certificates), and (2) the Lease will remain the legal, valid, binding and enforceable obligation of the City; (ii) In the event such replacement, redevelopment or renovation would result in the temporary abatement of Lease Payments as provided in Section 4.10 hereof the City shall have notified any rating agency then providing a rating on the Certificates and shall deposit moneys with the Trustee in advance for payment of Lease Payments from the proceeds of Additional Certificates or 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; (iii) The City shall certify to the Trustee that it has sufficient funds to complete such replacement, redevelopment or renovation; and (iv) In the case of replacement(s), redevelopment or renovation other than from the proceeds of Additional Certificates, the City and the Trustee receive an independent appraisal from a California certified general appraiser that the annual fair rental value of the Leased Premises following the replacement, redevelopment or renovation will be at least equal to the annual Lease Payments immediately prior to such replacement, redevelopment or renovation. Section 7.9. Encumbrances; Alternative Financing Methods. (a) Encumbrances. Except as provided in this Article VII (including without limitation Section 7.8 hereof and this Section 7.9), the City shall not, directly or indirectly, create, 20 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-54 incur, assume or suffer to exist any mortgage, pledge, liens, charges, encumbrances or claims, as applicable, on or with respect to the Leased Premises, other than Permitted Encumbrances and other than the respective rights of the Corporation and the City as herein provided. Except as expressly provided in this Article VII, 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 incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. (b) Alternative Financing Methods. Notwithstanding the foregoing, the City may create or suffer to create any mortgage, pledge, liens, charges, encumbrances or claims upon the Leased Premises or any improvements thereto, provided that (1) any such mortgage, pledge, liens, charges, encumbrances or claims shall at any time while any of the Certificates or Additional Certificates remain Outstanding be and remain subordinate in all respects to the Site Lease and Lease and any security interest given to the Trustee for the benefit of the Owners and (2) the City shall have first delivered to the Trustee an opinion of Special Counsel substantially to the effect that such mortgage, pledge, liens, charges, encumbrances or claims would not result in the inclusion of the interest with respect to the Certificates and the Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) in the gross income of the owners thereof for purposes of federal income taxation or impair the State tax-exempt status of such interest payments. Section 7.10. 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 LEASED PREMISES, OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE CITY IS LEASING THE LEASED PREMISES 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, the Agency Agreement or the Trust Agreement for the existence, furnishing, functioning or the City's use and possession of the Leased Premises. Section 7.11. The CAY's 's Right to Enforce Warranties of Vendors or Contractors. The Corporation hereby irrevocably appoints the City its agent and attorney-in-fact during the Term of this Lease, so long as the City shall not be in default hereunder, to assert from time to time whatever claims and rights, including without limitation, warranty claims, claims for indemnification and claims for breach of any representations, respecting the Leased Premises which the Corporation may have against any vendor or contractor. The City's sole remedy for the breach of any such warranty, indemnification or representation shall be against the vendor or contractor with respect thereto, and not against the Corporation, nor shall such matter have any effect whatsoever on the rights and obligations of the Corporation with respect to this Lease, including the right to receive full and timely Lease Payments and all other payments due hereunder. The City shall be entitled to retain any and all amounts recovered as a result of the assertion of any such claims and rights. The Corporation shall, upon the City's request and at the City's expense, do all things and take all such actions as the City may request in connection with the assertion of any such claims and rights. 21 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-55 Section 7.12. Substitution or Release of the Leased Premises. (a) The City shall have the right to substitute alternate real property for any portion of the Leased Premises described in Exhibit B hereto or to release a portion of the Leased Premises from the lien of this Lease by providing the Trustee with a supplement to this Lease substantially in the form attached as Exhibit D hereto and by satisfying the conditions set forth in paragraphs (i) through (vi) of this Section 7.12. All costs and expenses incurred in connection with such substitution or release shall be borne by the City. Notwithstanding any substitution pursuant to this Section, there shall be no reduction in or abatement of the Lease Payments due from the City hereunder as a result of such substitution. No substitution or release shall be permitted hereunder unless: (i) in the case of a substitution, the City provides the Trustee with a certificate that the substituted real property has an equivalent or greater useful life as the Leased Premises to be released and that the useful life of the substituted Leased Premises exceeds the remaining term of the Lease Payments hereunder; (ii) the City provides the Trustee with a certificate certifying that the Leased Premises following any release or substitution has an annual fair rental value greater than or equal to the corresponding Lease Payments due hereunder so that the Lease Payments payable by the City pursuant to the Lease will not be abated. (iii) the City obtains or causes to be obtained an ALTA title insurance policy (with western regional exceptions) or CLTA title insurance policy with respect to any substituted property, with an endorsement so as to be payable to the Trustee for the benefit of the Owners, showing no prior liens thereon other than Permitted Encumbrances. Such policy shall comply with Section 5.5 hereof, shall be in the amount equal to the principal component of Lease Payments attributable to the substituted property, and shall insure the leasehold interest or the fee simple interest of the Corporation or the City, as applicable, to the substituted property; (iv) the City provides the Corporation and the Trustee with an opinion of Special Counsel that such substitution or release does not cause, in and of itself, the interest evidenced and represented by the Certificates and any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) to be included in gross income for federal income tax purposes; (v) the City shall give, or cause to be given, any notice of the occurrence of such substitution or release required to be given pursuant to the Continuing Disclosure Agreement; and (vi) upon the substitution of any real property and improvements thereon for all or a portion of the Leased Premises then existing, or the release of any portion of the Leased Premises, the City, the Corporation and the Trustee shall execute and the City shall record with the office of the County Recorder, County of Orange, California, any document necessary to reconvey to the City the portion of the Leased Premises being released and to include any substituted real property and/or improvements as all or a portion of the Leased Premises. 22 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-56 Section 7.13. Compliance with Law, Regulations, Etc. (a) Except as described in subsection (b) below, the City has, after due inquiry, no knowledge and has not given or received any written notice indicating that the past or present use of the Leased Premises or any practice, procedure or policy employed by it in the conduct of its business materially violates any applicable law, regulation, code, order, rule, judgment or consent agreement, including, without limitation, those relating to zoning, building, use and occupancy, fire safety, health, sanitation, air pollution, ecological matters, environmental protection, hazardous or toxic materials, substances or wastes, conservation, parking, architectural barriers to the handicapped, or restrictive covenants or other agreements affecting title to the Leased Premises (collectively, "Laws and Regulations"). Without limiting the generality of the foregoing, to the best of its knowledge, after due inquiry, neither the City nor any prior or present owner, tenant or subtenant of the Leased Premises has, other than as set forth in subsections (a) and (b) of this Section or as may have been remediated in accordance with Laws and Regulations, (i) used, treated, stored, transported or disposed of any material amount of flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos, methane, radioactive materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and Title III, and the regulations promulgated pursuant thereto, and in all other Environmental Regulations applicable to the City, the Leased Premises or the business operations conducted by the City thereon (collectively, "Hazardous Materials") on, from or beneath the Leased Premises, (ii) pumped, spilled, leaked, disposed of, emptied, discharged or released (hereinafter collectively referred to as "Release") any material amount of Hazardous Materials on, from or beneath the Leased Premises, or stored any material amount of petroleum products at the Leased Premises in underground storage tanks. (b) Excluded from the representations and warranties in subsection (a) hereof with respect to Hazardous Materials are those Hazardous Materials in the amounts ordinarily found in the inventory of, or used in the maintenance of the City's City Hall or related buildings, the use, treatment, storage, transportation and disposal of which has been and shall be in compliance with all Laws and Regulations (the "Permitted Use"). (c) No portion of the Leased Premises located in an area of high potential incidence of radon has an unventilated basement or subsurface portion which is occupied or used for any purpose other than the foundation or support of the improvements to the Leased Premises. Section 7.14. Environmental Compliance. (a) Other than the Permitted Use, the City shall not use or permit the Leased Premises or any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, if necessary to maintain the improvements on the Leased Premises and then, only in compliance with all Environmental Regulations, and any state equivalent laws and regulations, nor shall it permit, as a result of any intentional or unintentional act or omission on its part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee and agent, the storage, transportation, disposal or use of Hazardous Materials or the Release or threat of Release of Hazardous Materials on, from or beneath the Leased Premises or onto any other Leased Premises excluding, however, those Hazardous Materials in those amounts ordinarily found in the inventory of a municipal corporation, the use, storage, treatment, transportation and disposal of which shall be in compliance with all 23 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-57 Environmental Regulations. Upon the occurrence of any Release or threat of Release of Hazardous Materials other than the Permitted Use, the City shall promptly commence and perform, or cause to be commenced and performed promptly, without cost to the Trustee, all investigations, studies, sampling and testing, and all remedial, removal and other actions necessary to clean up and remove all Hazardous Materials so released, on, from or beneath the Leased Premises, in compliance with all Environmental Regulations. Notwithstanding anything to the contrary contained herein, underground storage tanks shall only be permitted subject to compliance with subsection (d) and only to the extent necessary to maintain the improvements on the Leased Premises. (b) The City shall comply with, and shall cause all tenants, subtenants, licensees, guests, invitees, contractors, employees and agents on the Leased Premises to comply with, all Environmental Regulations, and shall keep the Leased Premises free and clear of any liens imposed pursuant thereto; provided, however, that notwithstanding that a portion of this covenant is limited to the City's use of its best efforts, the City shall remain solely responsible for ensuring such compliance and such limitation shall not diminish or affect in any way the City's obligations contained in subsection (c) hereof as provided in subsection (c) hereof. Upon receipt of any notice from any person with regard to the Release of Hazardous Materials other than the Permitted Use on, from or beneath the Leased Premises, the City shall give prompt written notice thereof to the Trustee prior to the expiration of any period in which to respond to such notice under any Environmental Regulation. (c) Irrespective of whether any representation or warranty contained in Section 7.13 is not true or correct, the City shall, to the extent permitted by law, defend, indemnify and hold harmless the Trustee, the Owners, the Corporation and each of their respective employees, agents, officers, directors, trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys' fees (including, without limitation, attorneys' fees incurred to enforce the indemnification contained in this Section 7.14, consultants' fees, investigation and laboratory fees, liabilities, settlements (five Business Days' prior notice of which the Trustee shall have delivered to the City) court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in part, arising out of, or in any way related to, (i) the presence, disposal, Release, threat of Release, removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the Leased Premises, (ii) any personal injury (including wrongful death) or Leased Premises damage (real or personal) arising out of or related to such Hazardous Materials, (iii) any lawsuit brought or threatened, settlement reached (five Business Days' prior notice of which the Trustee shall have delivered to the City), or governmental order relating to Hazardous Materials on, from or beneath the Leased Premises, (iv) any violation of Environmental Regulations or subsection (a) or (b) hereof by it or any of its agents, tenants, employees, contractors, licensees, guests, subtenants or invitees, and (v) the imposition of any governmental lien for the recovery of environmental cleanup or removal costs. To the extent that the City is strictly liable under any Environmental Regulation, its obligation under the foregoing indemnification shall likewise be without regard to fault on its part with respect to the violation of any Environmental Regulation which results in liability to any indemnitee. The obligations and liabilities under this Section 7.14(c) shall survive the payment and satisfaction of all Certificates and Additional Certificates or resignation or removal of the Trustee. (d) The City shall conform to and carry out a reasonable program of maintenance and inspection of all underground storage tanks, and shall maintain, repair, and replace such tanks only in accordance with Laws and Regulations, including but not limited to Environmental Regulations. 24 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-58 Section 7.15. Condemnation of Leased Premises. The City hereby covenants and agrees, to the extent it may lawfully do so, that, except as described in Section 6 of the Site Lease, so long as any of the Certificates or Additional Certificates remain outstanding and unpaid, the City will not exercise the power of condemnation with respect to the Leased Premises. The City further covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City shall fail or refuse to abide by such covenant and condemns the Leased Premises, then the appraised value of the Leased Premises shall not be less than the sum of. (i) as to Certificates and Additional Certificates then subject to optional prepayment, the principal and interest components of such Certificates and Additional Certificates outstanding through the date of their prepayment, and (ii) as to Certificates and Additional Certificates not then subject to optional prepayment, the amount necessary to defease such Certificates and Additional Certificates to the first available prepayment date in accordance with the Trust Agreement. ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1. Assignment by the Corporation. Except as provided herein, in the Trust Agreement and the Assignment Agreement, the Corporation will not assign this Lease to any other person, firm or corporation so as to impair or violate the representations, covenants and warranties contained in Section 2.2 hereof. Section 8.2. Assignment and Subleasing by the City. (a) Assignment. This Lease may be assigned by the City, so long as such assignment does not, in the opinion of Special Counsel, adversely affect the State tax-exempt status or the exclusion from gross income for federal income tax purposes of the interest with respect to the Certificates and any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) or affect the validity of this Lease. In the event that this Lease is assigned by the City, the obligation to make Lease Payments hereunder shall remain the obligation of the City. (b) Sublease. The City may sublease all or any portion of the Leased Premises subject to all of the following conditions: (i) This Lease and the obligation of the City to make Lease Payments and Additional Payments hereunder shall remain obligations of the City; (ii) The City shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Corporation and the Trustee, a true and complete copy of such sublease; and (iii) The City shall furnish to the Corporation and the Trustee, an opinion of Special Counsel to the effect that the sublease will not cause the interest due with respect to the Certificates and any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) to be subject to State personal income tax or adversely affect the exclusion from gross income for federal income tax purposes of such amounts, provided that no such opinion shall be required with respect to the subleases in effect upon the Date of 25 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-59 Delivery or with respect to any lease with respect to the use of the auditorium, soundstage and recording studio. Section 8.3. Amendments and Modifications. This Lease may be amended or any of its terms modified with the written consent of the City, the Corporation and the Trustee, in accordance with Article X of 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: (a) Payment Default. Failure by the City to pay any Lease Payment required to be paid hereunder by the corresponding Lease Payment Date; and (b) Covenant Default. Failure by the City to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed hereunder 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 and Additional Certificates then Outstanding; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Corporation, the insurer of any Additional Certificates or such Owners, as the case may be, shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the default is corrected. (c) Bankruptcy or Insolvency. 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. 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. 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 Leased Premises to the Corporation, if requested to do so by the Corporation, the Trustee or the Owners, in accordance with the provisions of the Trust Agreement. we NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-60 (a) No Termination; Repossession and Re -Lease on Behalf of The 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 Leased Premises and re -lease it 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 Leased Premises 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 Lease Payments and Additional Payments whether the Corporation re-enters or not. The City agrees to and shall remain liable 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 Leased Premises, or, in the event the Corporation is unable to re -lease the Leased Premises, then for the full amount of all Lease Payments and Additional Payments to the end of the Term of this Lease, but said Lease Payments and Additional Payments and/or deficiency shall be payable only at the same time and in the same manner as provided above for the payment of Lease Payments and Additional Payments hereunder, notwithstanding such repossession by the Corporation or any suit brought by the Corporation for the purpose of effecting such repossession of the Leased Premises 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 Leased Premises in the event of default by the City in the performance of any covenants contained herein to be performed by the City and to remove all personal property whatsoever situated upon the Leased Premises, to place such property in storage or other suitable place in the County of Orange, 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 Leased Premises. The City hereby waives any and all claims for damage caused or which may be caused by the Corporation in repossessing the Leased Premises as provided herein and all claims for damages that may result from the destruction of or the injury to the Leased Premises and all claims for damages to or loss of any property belonging to the City that may be in or upon the Leased Premises. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Corporation to re -lease the Leased Premises 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 City shall retain the portion of rental obtained by the Trustee, as assignee of the Corporation, that is in excess of the Lease Payments and Additional Payments, the fees, expenses and costs of the Trustee of re-leasing the Leased Premises, and all amounts payable by the City under this Lease and the Trust Agreement. 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 Owners, as assignees of the Corporation, shall not exercise the remedies provided in this subsection (a). 27 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-61 (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 Leased Premises by the Corporation in any manner whatsoever or the re-leasing of the Leased Premises), 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 and Additional Payments. Any proceeds of the re -lease or other disposition of the Leased Premises by the Corporation shall be deposited into the Lease Payment Fund and be applied in accordance with the 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 total Lease Payments shall be remitted to the City. Additional Payments that would have been due hereunder and the fees, expenses and costs of the Trustee as assignee of the Corporation on re-leasing the Leased Premises shall be remitted to the City. Neither notice to pay rent or to deliver up possession of the Leased Premises given pursuant to law nor any proceeding taken by the Corporation to recover possession of the Leased Premises 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 Leased Premises 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. (c) Opinion of Special Counsel. The re-leasing of the Leased Premises as provided herein shall be subject to the opinion of Special Counsel that such re-leasing will not cause the interest with respect to the Certificates and any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax-exempt Certificates) to be subject to State personal income tax or adversely affect the exclusion from gross income for federal income tax purposes of such amounts. (d) No Termination by The City. Under no circumstances may the City terminate this Lease as a remedy for a default by the Corporation in the performance of any obligation of the Corporation hereunder. 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. Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this Lease should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the 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. NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-62 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 Leased Premises. All amounts received by the Corporation under this Article IX shall, subject to Section 13.03 of the Trust Agreement, be deposited by the Trustee in the Lease Payment Fund and credited towards the Lease Payments in order of Lease Payment Dates. Section 9.7. Trustee and 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 Assignment 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. In addition to the rights and remedies assigned by the Corporation to the Trustee, to the extent that the Trust Agreement and this Lease confer upon or gives or grants to the Trustee any right, remedy or claim under or by reason of the Trust Agreement or this Lease, the Trustee is hereby explicitly recognized as being a third party beneficiary hereunder and may enforce any such right, remedy or claim conferred given or granted. ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Security Deposit. Notwithstanding any other provision of this Lease, the City may, on any date, secure the payment of Lease Payments and Additional Payments by a deposit by it with the Trustee of cash and/or Government Obligations as provided in Section 14.01 of the Trust Agreement. In such event, and provided that the City has paid any other amounts due and owing under this Lease and the Trust Agreement, all obligations of the City under this Lease, and all security provided by this Lease for said obligations, shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, Lease Payments and Additional Payments from such deposit. On the date of said deposit title to the Leased Premises shall vest in the City automatically and without further action by the City or the Corporation (except as provided herein). Said deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with the provisions of this Lease. The Corporation shall execute and deliver such further instruments and take such further action as may reasonably be requested by the City for carrying out the title transfer of the Leased Premises. Section 10.2. Extraordinary Prepayment. 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 or other moneys theretofore deposited in the Prepayment Fund (at least 45 days prior to the date fixed for prepayment of the Certificates and any Additional Certificates) 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, the remaining annual Lease Payments will be proportional to the initial annual Lease Payments. Section 10.3. Reserved . 29 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-63 ARTICLE XI MISCELLANEOUS Section 11.1. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received on the earlier of the day of actual receipt or five Business Days after deposit in the United States mail in first-class or certified form, postage prepaid, to the City or the Corporation, as the case may be, at the addresses indicated in Section 14.05 of the Trust Agreement. The Corporation, the City, and the Trustee, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. Section 11.2. BindingEffect. ffect. 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 an original and all of which shall constitute but one and the same instrument. Section 11.5. Applicable Law. This Lease shall be governed by and construed in accordance with the laws of the State. [REMAINDER OF PAGE INTENTIONALLYLEFT BLANK] 30 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-64 IN WITNESS WHEREOF, the Corporation has caused this Lease to be executed in its name by its duly authorized officer, and the City has caused this Lease to be executed in its name by its duly authorized officer, as of the date first above written. NEWPORT BEACH PUBLIC FACILITIES CORPORATION, as Lessor By: Its: Attest: Secretary Chief Financial Officer CITY OF NEWPORT BEACH, as Lessee By: Its: Attest: City Clerk APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: am Aaron C. Harp, City Attorney S-1 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 City Manager PFC1-65 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in the Leased Premises conveyed under the foregoing to the City of Newport Beach, a chartered city duly organized under the Constitution and the laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the City Council of the City of Newport Beach, pursuant to authority conferred by resolution of the said City Council adopted on November 10, 2020, and the grantee consents to recordation thereof by its duly authorized officer. Dated: '2020 CITY OF NEWPORT BEACH By: Its: ATTEST: By: Its: City Clerk NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 City Manager PFC1-66 EXHIBIT A SCHEDULE OF LEASE PAYMENTS Principal Interest Date Component Component Lease Payments A-1 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-67 EXHIBIT B DESCRIPTION OF THE LEASED PREMISES Real property and improvements located thereon in the City of Newport Beach, County of Orange, State of California, described as follows: NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-68 EXHIBIT C DESCRIPTION OF THE PROJECT The acquisition, improvement and equipping of a new Fire Station No. 2 consisting of a two story building of approximately 7,084 square feet located within the City and including all design, engineering and soft costs associated therewith. C-1 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC 1-69 EXHIBIT D LEASE SUPPLEMENT FORM There is hereby subjected to the terms of that certain Lease/Purchase Agreement, dated as of December 1, 2020, by and between the Newport Beach Public Facilities Corporation and the City of Newport Beach (the "City") the following items which shall comprise a portion of the Leased Premises, as defined therein: Description of Substituted Leased Premises [Insert Description] Cost I, the City Representative, hereby certify that: (1) the fair rental value (based on the attached appraisal by an independent real estate appraiser) and the useful life of the above-described portion of the Leased Premises, as substituted, at least equals the fair rental value and the useful life of the portion of the Leased Premises for which it was substituted; (2) the above-described portion of the Leased Premises will be used by the City for authorized public purposes and can be leased under the provisions of the Lease and the Government Code; (3) the above-described portion of the Leased Premises is currently owned by the City; and (4) the above-described portion of the Leased Premises is of approximately the same degree of essentiality to the City as the portion of the Leased Premises being replaced. I, the City Representative, hereby certify that the portion of the Leased Premises being substituted is free and clear of all liens or claims of others, except for Permitted Encumbrances referred to in the Lease. CITY OF NEWPORT BEACH By: (signature] City Representative D-1 NG-U9ZQVMF2/483 5 -4704-3 525x5/022459-0033 PFC 1-70 EXHIBIT E FORM OF CERTIFICATE OF SUBSTITUTION OR ADDITION OF PROJECT COMPONENT I, of the City of Newport Beach (the "City") hereby certify that project is to become a part of the Project as defined under the Lease/Purchase Agreement, dated as of December 1, 2020 (the "Lease"), by and between the City and the Newport Beach Public Facilities Corporation (the "Corporation") [in addition to the components of the Project as defined in the Lease or in substitution for component of the Project as defined in the Lease]. This Certificate shall be filed with the Trustee under the Trust Agreement, dated as of December 1, 2020, by and among the City, the Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee thereunder, until such time as the Lease is terminated. City Representative E-1 NG-U9ZQVMF2/4835-4704-3 525x5/022459-0033 PFC1-71 EXHIBIT C TRUST AGREEMENT PFC 1-72 TRUST AGREEMENT Dated as of December 1, 2020, 2020 by and among THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee and NEWPORT BEACH PUBLIC FACILITIES CORPORATION and CITY OF NEWPORT BEACH Relating to the CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A (FIRE STATION NO. 2) NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-73 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.01. Definitions and Rules of Construction....................................................................... 2 Section1.02. Authorization............................................................................................................. 9 Section1.03. Equal Security............................................................................................................ 9 ARTICLE II THE CERTIFICATES OF PARTICIPATION Section2.01. Authorization............................................................................................................. 9 Section 2.02. Description of Certificates.......................................................................................10 Section 2.03. Form of Certificates.................................................................................................11 Section2.04. Execution.................................................................................................................11 Section 2.05. Application of Proceeds and Other Amounts..........................................................11 Section 2.06. Transfer and Exchange............................................................................................11 Section 2.07. Certificates Mutilated, Lost, Destroyed or Stolen...................................................12 Section 2.08. Execution of Documents and Proof of Ownership..................................................12 Section 2.09. Certificate Register..................................................................................................13 Section 2.10. Book -Entry System..................................................................................................13 Section 2.11. Destruction of Cancelled Certificates......................................................................16 Section 2.12. Additional Certificates.............................................................................................16 ARTICLE III PROJECT FUND Section 3.01. Establishment of Project Fund.................................................................................18 Section3.02. Purpose.....................................................................................................................18 Section 3.03. Deposit of Moneys; Payment of Project Costs and Delivery Costs ......................... 18 Section 3.04. Transfers of Unexpended Proceeds.........................................................................18 ARTICLE IV PREPAYMENT FUND Section 4.01. Establishment of Prepayment Fund.........................................................................19 Section 4.02. Extraordinary Prepayment.......................................................................................19 Section 4.03. Prepayment.............................................................. Error! Bookmark not defined. Section 4.04. Selection of Certificates for Prepayment.................................................................19 Section 4.05. Notice of Prepayment..............................................................................................19 Section 4.06. Partial Prepayment of Certificates........................................................................... 20 Section 4.07. Effect of Notice of Prepayment............................................................................... 20 Section4.08. Surplus..................................................................................................................... 20 i NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-74 TABLE OF CONTENTS (continued) Page ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Security Provisions.................................................................................................. 21 Section 5.02. Establishment of Lease Payment Fund.................................................................... 21 Section5.03. Deposits................................................................................................................... 22 Section 5.04. Application of Moneys............................................................................................ 22 Section5.05. Surplus..................................................................................................................... 22 ARTICLE VI [RESERVED] ARTICLE VII NET PROCEEDS FUND Section 7.01. Establishment of Net Proceeds Fund: Deposits....................................................... 22 Section7.02. Cooperation.............................................................................................................. 23 ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Section8.01. Held in Trust............................................................................................................ 23 Section 8.02. Investments Authorized........................................................................................... 24 Section 8.03. Crediting of Investments.......................................................................................... 25 Section8.04. Accounting...............................................................................................................25 29 Section 8.05. Valuation and Disposition of Investments...............................................................25 30 Section 8.06. Commingling of Moneys in Funds.......................................................................... 25 Section 8.07. Tax Covenants......................................................................................................... 25 Section8.08. Rebate Fund............................................................................................................. 26 ARTICLE IX THE TRUSTEE Section 9.01. Appointment of Trustee........................................................................................... 28 Section 9.02. Merger or Consolidation..........................................................................................28 Section 9.03. Protection of the Trustee.......................................................................................... 29 Section 9.04. Rights of the Trustee................................................................................................ 29 Section 9.05. Standard of Care...................................................................................................... 30 Section 9.06. Compensation of the Trustee................................................................................... 30 Section 9.07. Indemnification of Trustee....................................................................................... 30 Section 9.08. Trustee's Disclaimer of Warranties......................................................................... 32 ii NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-75 TABLE OF CONTENTS (continued) Page ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted............................................................................................ 32 Section 10.02. Procedure for Amendment with Written Consent of the Owners ............................ 33 Section 10.03. Disqualified Certificates.......................................................................................... 34 Section 10.04. Effect of Supplemental Agreement.......................................................................... 34 Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments .......... 34 Section 10.06. Amendatory Endorsement of Certificates................................................................ 35 Section 10.07. Copies of Amendments Delivered to Rating Agencies ........................................... 35 ARTICLE XI COVENANTS; NOTICES Section 11.01. Compliance With and Enforcement of the Lease .................................................... 35 Section 11.02. Payment of Taxes..................................................................................................... 35 Section 11.03. Observance of Laws and Regulations...................................................................... 35 Section 11.04. Prosecution and Defense of Suits............................................................................ 35 Section11.05. City Budgets............................................................................................................ 36 Section 11.06. Further Assurances.................................................................................................. 36 Section 11.07. Continuing Disclosure............................................................................................. 36 ARTICLE XII LIMITATION OF LIABILITY Section 12.01. Limited Liability of the City.................................................................................... 36 Section 12.02. No Liability of the City or Corporation for Trustee Performance ........................... 36 Section 12.03. Limitation of Rights to Parties and Certificate Owners ........................................... 37 Section 12.04. No Liability of Corporation to the Owners.............................................................. 37 ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. Assignment of Rights............................................................................................... 37 Section 13.02. Events of Default..................................................................................................... 37 Section 13.03. Application of Funds............................................................................................... 38 Section 13.04. Institution of Legal Proceedings.............................................................................. 38 Section13.05. Non-Waiver............................................................................................................. 39 Section 13.06. Remedies Not Exclusive..........................................................................................39 Section 13.07. Power of Trustee to Control Proceedings................................................................ 39 Section 13.08. Limitation on Certificate Owners' Right to Sue ...................................................... 39 iii NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-76 TABLE OF CONTENTS (continued) Page ARTICLE XIV MISCELLANEOUS Section14.01. Defeasance............................................................................................................... 40 Section 14.02. Non -Presentment of Certificates.............................................................................. 41 Section 14.03. Acquisition of Certificates by City.......................................................................... 41 Section14.04. Records.................................................................................................................... 41 Section14.05. Notices..................................................................................................................... 41 Section14.06. Governing Law........................................................................................................ 42 Section 14.07. Binding Effect: Successors..................................................................................... 42 Section 14.08. Execution in Counterparts....................................................................................... 43 Section14.09. Headings.................................................................................................................. 43 Section14.10. Waiver of Notice...................................................................................................... 43 Section 14.11. Separability of Invalid Provisions............................................................................ 43 Signatures S-1 EXHIBIT A FORM OF 2020A CERTIFICATE........................................................................A-1 EXHIBIT B-1 FORM OF WRITTEN DELIVERY COST REQUISITION..............................B-1-1 EXHIBIT B-2 FORM OF WRITTEN PROJECT COST REQUISITION.................................B-2-1 iv NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-77 TRUST AGREEMENT THIS TRUST AGREEMENT, is dated as of December 1, 2020, 2020, and entered into by and among THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized under the laws of the United States of America, as trustee (the "Trustee"), the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under the laws of the State of California, as lessor under the Lease hereinafter referred to (the "Corporation"), and the CITY OF NEWPORT BEACH, a chartered city duly organized and existing under the Constitution and laws of the State of California, as lessee under the Lease (the "City"); WITNESSETH. - WHEREAS, the City and the Corporation have entered into a Lease/Purchase Agreement, dated as of December 1, 2020, 2020 (the "Lease"), whereby the City, as agent of the Corporation, shall cause the acquisition of certain property, as described therein (the "Project"), and the City has agreed to lease the Leased Premises (defined below) from the Corporation; and WHEREAS, in order to finance the Project, the City and the Corporation have authorized the sale of the $ City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates"); and WHEREAS, as security for the Certificates, the Corporation has assigned the rights to receive all Lease Payments described in the Lease, and the Corporation and the City have granted a security interest in all moneys held by the Trustee hereunder (other than the Rebate Fund as described herein) to the extent described herein to the Trustee for the benefit of the Owners of Certificates and any Additional Certificates executed and delivered hereunder; and WHEREAS, Section 5420 et seq. of the California Government Code (the "Government Code") provides statutory authority for pledging collateral for the payment of principal or prepayment price of, and interest on, any agreement, including certificates of participation, and the Government Code creates a continuing perfected security interest which shall attach immediately to such collateral irrespective of whether the parties to the pledge document have notice of the pledge and without the need for any physical delivery, recordation, filing or further act, and, therefore, the City and the Corporation hereby warrant and represent that pursuant to the Lease, this Trust Agreement and the Government Code, the Trustee has a first priority perfected security interest in the Lease Payments described in the Lease represented by the Certificates pursuant to the Government Code; and WHEREAS, the Trustee has agreed to apply the proceeds of the Certificates deposited in the Project Fund to pay certain Project Costs and Delivery Costs (as such terms are defined herein). NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC I -78 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 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 Trust Agreement, refer to this Trust Agreement as a whole. "Additional Certificates" means certificates of participation authorized by a Supplemental Agreement that are executed and delivered by the Trustee under and pursuant to Section 2.12. "Additional Pam" means all amounts payable by the City as Additional Payments as defined in Section 4.11 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. "Beneficial Owner" means any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income tax purposes. "Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a day on which banking institutions in the State of New York or the State of California are authorized or required by law or executive order to remain closed. "Certificates" means the $ City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) to be executed and delivered by the Trustee pursuant to this Agreement. "Certificate of Completion" means a certificate of the City Representative delivered pursuant to Section 3.4 of the Lease stating that all components of the Project have been completed or concluded in conformity with the requirements of the Lease. "Certificate Year" means the period extending from July 2 each year to July 1 of the subsequent calendar year, provided that the first Certificate Year shall commence on the Closing Date and end on July 1, 2021. "CC" means the City of Newport Beach, a chartered city organized and existing under the laws and Constitution of the State, and its successors and assigns. "City Representative" means the City Manager of the City, the Assistant City Manager or any other person authorized by the City Manager of the City to act on behalf of the City with respect to the Lease or this Trust Agreement. "Closing Date" means the date on which the Certificates, duly executed by the Trustee, are delivered to the Original Purchaser thereof. W NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-79 "Code" means the Internal Revenue Code of 1986, and the regulations issued thereunder, as the same may be amended from time to time, and any successor provisions of law. Reference to a particular section of the Code shall be deemed to be a reference to any successor to any such section. "Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement dated as of December 1, 2020, 2020, by and between the City and the Digital Assurance Certification, LLC as Dissemination Agent, as it may be amended from time to time in accordance with the terms thereof. "Corporation" means the Newport Beach Public Facilities Corporation, a 501(c)(4) nonprofit public benefit corporation organized under the laws of the State, its successors and assigns. "Corporation Representative" means the President, Vice President, Secretary, Chief Financial Officer of the Corporation, or any other person authorized to act on behalf of the Corporation under or with respect to the Lease. "Delivery Cost Requisition" means a written requisition substantially in the form attached hereto as Exhibit B-1. "Delivery Costs" means and 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 or prepayment of the Refunded Certificates from the proceeds of the Certificates, including but not limited to costs provided in the contract of purchase with the Original Purchaser, 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 of its counsel, legal fees and charges, financing and other professional consultant fees, fees of auctioning the Certificates, costs of rating agencies and costs of providing information to such rating agencies, any computer and other expenses incurred in connection with the Certificates, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Delivery Costs Subaccount" means the fund by that name established and held by the Trustee pursuant to Section 3.01 hereof. "Delivery Date" means December , 2020. "Depository" means the securities depository acting as depository pursuant to Section 2.10 hereof. "DTC" means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York in its capacity as securities depository for the Certificates. "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 June 30 of the next year. "Fitch" means Fitch Ratings Group or any successors or assigns thereto. NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-80 "Government Obligations" means Permitted Investments of the type described in paragraphs (A) or (B) 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. "Interest Payment Date" means July 1 and January 1 of each year commencing July 1, 2021. "Lease" means the Lease/Purchase Agreement related to the Certificates, dated as of the date hereof, by and between the City and the Corporation, and any duly authorized and executed amendments thereto. "Lease Payment" means any of the Lease Payments required to be paid by the City to the Corporation pursuant to Section 4.4 of the Lease. "Lease Payment Date" means the Lease Payment Date defined in Section 4.4(a) of the Lease, which shall be each December 15 and June 15 commencing June 15, 2021. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.02 hereof. "Leased Premises" has the meaning set forth in the Lease. "Letter of Representations" means the letter of the City delivered to and accepted by the Depository on or prior to delivery of the Certificates as book -entry certificates making reference to the DTC Operational Arrangements memorandum, as it may be amended from time to time, setting forth the basis on which the Depository serves as depository for such book -entry certificates, as such letters were originally executed or as they may be supplemented or revised or replaced by letters from the City and the Trustee delivered to and accepted by the Depository. "Mood" means Moody's Investors Service or any successors or assigns thereto. "Net Proceeds" means any proceeds of any insurance, performance bonds or taking by eminent domain or condemnation paid with respect to the Leased Premises remaining after payment therefrom of any expenses (including attorneys' fees) incurred in the collection thereof. "Net Proceeds Fund" means the fund by that name established and held by the Trustee pursuant to Section 7.01 hereof. "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.10 hereof. "Original Purchaser" means Stifel, Nicolaus & Company, Incorporated, as representative of original purchasers of the Certificates on the Closing Date, or the original purchaser of any Series of Additional Certificates. "Outstanding" when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 10.03 hereof) all Certificates or Additional Certificates theretofore executed and delivered by the Trustee under this Trust Agreement except: E NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-81 (1) Certificates or Additional Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Certificates or Additional 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 or Additional Certificates), 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 or Additional Certificates in lieu of or in exchange for which other Certificates or Additional Certificates shall have been executed and delivered by the Trustee pursuant to Sections 2.06 and 2.07 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. "Participants" means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds book -entry certificates as securities depository. "Permitted Investments" means, if and to the extent permitted by law and by any policy guidelines promulgated by the City: 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. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. Farmers Home Administration (FmHA) Certificates of beneficial ownership 2. Federal Housing Administration Debentures (FHA) 3. General Services Administration Participation certificates 4. Government National Mortgaize Association (GNMA or "Ginnie Mae") GNMA-guaranteed mortgage-backed bonds GNMA-guaranteed pass-through obligations 5 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-82 U.S. Maritime Administration Guaranteed Title XI financing (qualified under the Ship Financing Act of 1972) 6. U.S. Department of Housing and Urban Development (HUD) Project Notes 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 Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation certificates Senior debt obligations Federal National Mortgage Association (FNMA or "Fannie Mae") Mortgage-backed securities and senior debt obligations (excluding 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 5. Resolution Funding Corp (REFCORP) The interest only component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York 6. Farm Credit System Corp. - Consolidated system -wide bonds and notes D. Money market funds registered under the Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by Standard & Poor's of "AAAm-G," "AAAm" or "AAm" and by Moody's of "Aaa," "Aal" or "Aa2," including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide investment advisory or other management services. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above and having a maturity of one year or less. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks whose short- term obligations are rated "A-1+" by Standard & Poor's and "Prime -1" by Moody's, which may include the Trustee and its affiliates. The collateral must be held by a third party and the Bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC (including those of the Trustee and its affiliates). on NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-83 G. Commercial paper rated at the time of investment "Prime - 1" by Moody's and "A-1+" or better by Standard & Poor's. H. Investment agreements, including guaranteed investment agreements, acceptable to the Trustee. I. Bonds or notes issued by any state or municipality which are rated by Moody's and Standard & Poor's 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 or unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A -W' or better by Standard & Poor's, including those of the Trustee and its affiliates. K. Repurchase agreements rated "AA" or better by Standard and Poor's and that provide for the transfer of securities from a dealer bank or securities firm (sellerlborrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee 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 the Trustee, in exchange for the securities at a specified date or dates. L. Any guaranteed investment contract, including forward delivery agreements ("FDAs") and forward purchase agreements ("FPAs"), with a financial institution or insurance company which has at the date of execution thereof an outstanding issue of unsecured, uninsured and unguaranteed debt obligations or a claims -paying ability rated within the two highest rating categories of Standard & Poor's and Moody's. Only Permitted Investments described in clauses A, B or C above and having maturities equal to or less than 30 years from their date of delivery will be considered eligible for any collateralization/delivery purposes for guaranteed investment contracts, FDAs or FPAs; M. Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard & Poor's. If, however, the issue is only rated by Standard & Poor's (i.e., there is no Moody's rating), then the pre -refunded bonds must have been pre -refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre -refunded municipals to satisfy this condition. N. The Local Agency Investment Fund of the State, provided that the Trustee may deposit and withdraw monies in its own name. O. Any other investment which the City is permitted by law to make (including investment agreements and forward delivery or forward purchase agreements). "Value" of the above investments shall be determined by the manner currently employed by the Trustee or any other manner consistent with industry standard. "Prepayment" means any payment made by the City pursuant to Article X of the Lease as a prepayment of Lease Payments. "Prepayment Fund" means the fund by that name established and held by the Trustee pursuant to Section 4.01 hereof. 7 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-84 "Principal Office or Corporate Trust Office" means the corporate trust office of the Trustee at 400 South Hope Street, Suite 500, Los Angeles, California 90071, Attention: Corporate Trust Services, or such other or additional offices as may be designated by the Trustee; provided, however, that for the purposes of payment, transfer or exchange of Certificates such term means the office or agency of the Trustee at which, at any particular time its corporate trust agency business shall be conducted. "Project" has the meaning set forth in the Lease. "Project Cost Requisition" means a written requisition substantially in the form attached hereto as Exhibit B-2. "Project Costs" means, with respect to any item or portion of the Project, the contract price paid or to be paid therefor upon acquisition, 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, interior decorating, fixtures, furnishings and equipment, legal, financial and other costs incurred by the City and the Corporation in connection with the acquisition, construction, procurement, remodeling or improvement of the Project, all applicable sales taxes and other charges resulting from such construction, procurement, remodeling or improvement of the Project and the costs associated with making rebate calculations required by the Code. Project Costs shall not include any costs of the City or the Corporation to enforce remedies hereunder or under the Lease. "Project Fund" means the fund by that name established and held by the Trustee pursuant to Section 3.01 hereof. "Record Date" means the close of business on the fifteenth day of the month preceding each Interest Payment Date, whether or not such fifteenth day is a Business Day. "Series" means the Certificates and such Additional Certificates which are secured by Lease Payments. "S&P" or "Standard & Poor's" means S&P Global Ratings, a Standard & Poor's Financial Services LLC business, or any successors or assigns thereto. "Site Lease" means the Site Lease related to the Certificates, dated the date hereof, by and between the Corporation and the City. "Special Counsel" means Stradling Yocca Carlson & Rauth, a Professional Corporation, or any other attorney or firm of attorneys of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions and acceptable to the City. "State" means the State of California. "Supplemental Agreement" means a supplement to this Trust Agreement providing for the execution and delivery of Additional Certificates pursuant to Section 2.12. "Tax Certificate" means the Tax Certificate, dated as of the Closing Date, concerning matters pertaining to the use and investment of proceeds of the Certificates executed and delivered to the NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-85 City on the date of execution and delivery of the Certificates, including any and all exhibits attached thereto. "Term" means the time during which the Lease is in effect, as provided in Section 4.2 of the Lease. "Trustee" means The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States of America, and any successor trustee. "Trust Agreement" or "Agreement" means this 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 Trust Agreement, and has taken all actions necessary to authorize the execution of this Trust Agreement by the officers and persons signing it. Section 1.03. Equal Security. In consideration of the acceptance of the Certificates by the Owners, this Trust Agreement shall be deemed to be and shall constitute a contract between the Trustee and the Owners to secure the full and final payment of the interest, if any, and principal represented by the Certificates and any Additional Certificates which may be executed and delivered hereunder, subject to each of the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit, protection and security of all Owners without distinction, preference or priority as to security or otherwise of any Certificates or Additional Certificates of a Series over any other Certificates or Additional Certificates of a Series by reason of the number or date thereof or the time of execution or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. All of the Certificates and any Additional Certificates of a Series are equally secured as provided in this Section 1.03, except as may be otherwise expressly provided in this Trust Agreement. ARTICLE II THE CERTIFICATES OF PARTICIPATION Section 2.01. Authorization. Upon written request of the City Representative, the Trustee will execute and deliver to the Original Purchaser Certificates in an aggregate principal amount of $ representing proportionate ownership interests in the Lease Payments and the Prepayments. The Certificates shall be initially executed and delivered as book -entry certificates. 6 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-86 Section 2.02. Description of Certificates. (a) Each Certificate shall be dated the Delivery Date and shall mature on July 1 in each of the years and in the amounts, and shall bear interest (calculated on the basis of a 360 -day year of twelve 30 -day months) at the rates, as follows: Maturity Principal Interest Jul 1 Amount Rate The Certificates shall be delivered in fully registered form, numbered from one upwards in consecutive numerical order (with such alphabetical prefix as the Trustee shall determine). The Certificates shall be executed and delivered in the denominations of $5,000 and any integral multiple thereof. Each Certificate and any Additional Certificates shall bear interest from the Interest Payment Date next preceding the date of execution thereof, unless (i) it is executed during the period from the day after the Record Date for an Interest Payment Date to and including such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is executed on or prior to the Record Date for the first Interest Payment Date, in which event interest shall be payable from the Delivery Date; provided, however, that if, at the time of execution of any Certificate or any Additional Certificates interest with respect to such Certificate or Additional Certificate is in default, such Certificate or Additional Certificate shall bear interest from the Interest Payment Date to which interest has been paid or made available for payment with respect to such Certificate or Additional Certificate. 10 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-87 (b) Payment Provisions. Interest with respect to any Certificate shall be payable in lawful money of the United States of America by check or draft of the Trustee, mailed no later than the Interest Payment Date to the Owner at his address as it appears, on the Record Date, on the registration books maintained by the Trustee or at such other address as has been furnished to the Trustee in writing by the Owner on or prior to such Record Date; provided, however, that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Certificates or Additional Certificates filed with the Trustee prior to any Record Date, interest with respect to such Certificates shall be paid to such Owner on each succeeding Interest Payment Date (unless such request has been revoked in writing) by wire transfer of immediately available funds to an account in the continental United States designated in such written request. Payments of defaulted interest with respect to the Certificates or Additional Certificates shall be paid by check or draft to the registered Owners of the Certificates or Additional Certificates as of a special record date to be fixed by the Trustee, notice of which special record date shall be given to the registered Owners of the Certificates or any Additional Certificates no less than ten days prior thereto. The principal of and premium, if any, on the Certificates or Additional Certificates is payable when due upon surrender thereof at the Principal Office in lawful money of the United States of America. Section 2.03. Form of Certificates. The Certificates and the assignment to appear thereon shall be substantially in the forms set forth in Exhibit A attached hereto and by this reference incorporated herein with such appropriate additions, modifications, and insertions as are permitted or required by this Trust Agreement. Pending the preparation of definitive Certificates the Certificates may be executed and 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 of authorized denominations, when available, without additional charge, 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 Trust Agreement as definitive Certificates. The form of any Additional Certificates shall be as set forth in the Supplemental Agreement relating to such Additional Certificates. Section 2.04. 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 2.05. Application of Proceeds and Other Amounts. The proceeds from the sale of the Certificates in the amount of $ (representing the par amount of the Certificates of $ , plus original premium of $ , less Original Purchaser's discount of $) shall be deposited with the Trustee as follows: $ shall be deposited to the Delivery Costs Subaccount of the Project Fund for the payment of Delivery Costs, and $ to the Project Fund. The Trustee may, in its discretion, establish a temporary fund or account in its books or records to facilitate such deposits and transfers. Section 2.06. 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 2.09 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 11 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-88 instrument of transfer in a form acceptable to 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 tenor and maturity, for like aggregate principal amount in authorized denominations. The cost of printing Certificates and any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the City. The Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer, and there shall be no other charge to any Owner for any such transfer. (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 tenor and maturity. The Trustee may require the payment by the Certificate Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The cost of printing Certificates and any services rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by the City. All Certificates surrendered pursuant to the provisions of this Section shall be cancelled and destroyed by the Trustee and shall not be redelivered. (c) Time for Transfer or Exchange. The Trustee shall not be obligated to transfer or exchange any Certificate after a Record Date and before the following Interest Payment Date, or during the period in which it is selecting Certificates for prepayment, or after notice of prepayment has been given as provided in Section 4.05. Section 2.07. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute and deliver a new Certificate of like tenor, maturity and principal amount in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be cancelled by it. 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, maturity and principal amount 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 Trust Agreement with all other Certificates secured by this Trust Agreement. Notwithstanding any other provision of this Section, in lieu of delivering a new Certificate in place of one which has been mutilated, lost, destroyed or stolen, and which has matured, or has been called for prepayment, the Trustee may make payment with respect to such Certificate upon receipt of the above-mentioned indemnity. Section 2.08. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Trust Agreement to be signed or executed by Certificate Owners may be in any number of 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 12 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-89 of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Trust Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person, the amount and numbers of such Certificates and the date of execution shall be proved by the registration books maintained pursuant to Section 2.09 hereof. Nothing contained in this Article 11 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 in its sole discretion. 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 2.09. Certificate Re ig ster. The Trustee will keep or cause to be kept at its Principal Office or another office designated by the Trustee sufficient books for the registration and transfer of the Certificates which shall, during normal working hours and upon reasonable notice, 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 2.10. Book -Entry System. (a) Election of Book -Entry System. Prior to the execution and delivery of the Certificates, the City may provide that such Certificates shall be initially executed and delivered as book -entry Certificates. If the City shall elect to deliver any Certificates in book -entry, then the City shall cause the delivery of a separate single fully registered Certificate (which may be typewritten) for each maturity date of such Certificates in an authorized denomination corresponding to that total principal amount of the Certificates designated to mature on such date. Upon initial execution and delivery, the ownership of each such Certificate shall be registered in the Certificate register in the name of the Nominee, as nominee of the Depository, and ownership of the Certificates, or any portion thereof, may not thereafter be transferred except as provided in Section 2.10(d). With respect to book -entry Certificates, the City and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such book -entry Certificates. Without limiting the immediately preceding sentence, the 13 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-90 City and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in book -entry Certificates, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the Certificate register, of any notice with respect to book -entry Certificates, including any notice of prepayment, (iii) the selection by the Depository and its Participants of the beneficial interests in book -entry Certificates to be prepaid in the event the City prepays the Certificates in part, or (iv) the payment by the Depository or any Participant or any other person, of any amount with respect to principal, premium, if any, or interest evidenced and represented by book -entry Certificates. The City and the Trustee may treat and consider the person in whose name each book - entry Certificate is registered in the Certificate register as the absolute Owner of such book -entry Certificate for the purpose of payment of principal, premium and interest with respect to such Certificate, for the purpose of giving notices of prepayment and other matters with respect to such Certificate, for the purpose of registering transfers with respect to such Certificate, and for all other purposes whatsoever. The Trustee shall pay all principal, premium, if any, and interest evidenced and represented by the Certificates only to or upon the order of the respective Owner, as shown in the Certificate register, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal, premium, if any, and interest evidenced and represented by the Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Certificate register, shall receive a Certificate evidencing the obligation to make payments of principal, premium, if any, and interest evidenced and represented by the Certificates. Upon delivery by the Depository to the Owner and the Trustee, of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word "Nominee" in this Trust Agreement shall refer to such nominee of the Depository. (b) Delivery of Letter of Representations. In order to qualify the book -entry Certificates for the Depository's book -entry system, the City shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the City any obligation whatsoever with respect to persons having interests in such book -entry Certificates other than the Owners, as shown on the Certificate register. In addition to the execution and delivery of a Letter of Representations, the City shall take such other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify book -entry Certificates for the Depository's book -entry program. (c) Selection of Depository. In the event (i) the Depository determines not to continue to act as securities depository for book -entry Certificates, or (ii) the City determines that continuation of the book -entry system is not in the best interest of the beneficial owners of the Certificates or the City, then the City will discontinue the book -entry system with the Depository. If the City determines to replace the Depository with another qualified securities depository, the City shall prepare or direct the preparation of a new single, separate, fully registered Certificate for each of the maturity dates of such book -entry Certificates, registered in the name of such successor or substitute qualified securities depository or its Nominee as provided in subsection (d) hereof. If the City fails to identify another qualified securities depository to replace the Depository, then the Certificates shall no longer be restricted to being registered in such Certificate register in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Certificates shall designate, in accordance with the provisions of Section 2.06 hereof. 14 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-91 (d) Payments to Depository. Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all Outstanding Certificates are held in book -entry and registered in the name of the Nominee, all payments with respect to principal, prepayment premium, if any, and interest evidenced and represented by such Certificate and all notices with respect to such Certificate shall be made and given, respectively to the Nominees, as provided in the Letter of Representations or as otherwise instructed by the Depository and agreed to by the Trustee notwithstanding any inconsistent provisions herein. (i) The Certificates shall be initially executed and delivered as provided in Section 2.01 hereof. If such Certificates are initially registered in the name of the Nominee, then registered ownership of such Certificates, or any portions thereof, may not thereafter be transferred except: (A) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (B) of subsection (i) of this Section 2.10(d) ("Substitute Depository"); provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any Substitute Depository, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the City that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (C) to any person as provided below, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the City that DTC or its successor (or Substitute Depository or its successor) is no longer able to carry out its functions as depository. (ii) In the case of any transfer pursuant to clause (A) or clause (B) of subsection (i) of this Section 2.10(d), upon receipt of all Outstanding Certificates by the Trustee, together with a written request of the City to the Trustee designating the Substitute Depository, a single new Certificate, which the City shall prepare or cause to be prepared, shall be executed and delivered for each maturity of Certificates then Outstanding, registered in the name of such successor or such Substitute Depository or their Nominees, as the case may be, all as specified in such written request of the City. In the case of any transfer pursuant to clause (C) of subsection (i) of this Section 2.10(d), upon receipt of all Outstanding Certificates by the Trustee, together with a written request of the City to the Trustee, new Certificates, which the City shall prepare or cause to be prepared, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such written request of the City, subject to the limitations of Section 2.01 hereof, provided that the Trustee shall not be required to deliver such new Certificates within a period of less than sixty (60) days from the date of receipt of such written request from the City. 15 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-92 (iii) In the case of a partial prepayment or an advance refunding of any Certificates evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such Certificates indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee, all in accordance with the Letter of Representations. The Trustee shall not be liable for such Depository's failure to make such notations or errors in making such notations. (iv) The City and the Trustee shall be entitled to treat the person in whose name any Certificate is registered as the Owner thereof for all purposes of this Trust Agreement and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the City; and the City and the Trustee shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the Certificates. Neither the City nor the Trustee shall have any responsibility or obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or Substitute Depository or its successor), except to the Owner of any Certificates, and the Trustee may rely conclusively on its records as to the identity of the Owners of the Certificates. Section 2.11. Destruction of Cancelled Certificates. Whenever in this Trust Agreement provision is made for the surrender or cancellation by the Trustee and the delivery to the City of any Certificates, the Trustee will cancel and destroy such Certificates and deliver a certificate of such destruction to the City upon its request. Section 2.12. Additional Certificates. Subsequent to the execution and delivery by the Trustee of the Certificates, the Trustee shall, upon written request or requests of the City Representative and of the Corporation Representative, execute and deliver from time to time one or more series of Additional Certificates in such aggregate principal amount as may be set forth in such written request or requests, provided that there shall have been compliance with all of the following conditions, which are hereby made conditions precedent to the preparation, execution and delivery of such Additional Certificates: (a) The parties to this Trust Agreement shall have executed a Supplemental Agreement which sets forth the terms and provisions of such Additional Certificates, including the establishment of such funds and accounts, which may be separate and apart from the funds and accounts established hereunder for the Certificates, as shall be necessary or appropriate; (b) The scheduled principal and interest payable with respect to such Additional Certificates shall be payable only on Interest Payment Dates applicable to the Certificates; (c) The Lease shall have been amended, if necessary, to (i) increase or adjust the Lease Payments due and payable on each Lease Payment Date to an amount sufficient to pay the principal, premium (if any) and interest payable with respect to all Outstanding Certificates, including all Additional Certificates as and when the same mature or become due and payable (except to the extent such principal, premium and interest may be payable out of moneys then on deposit with the Trustee in accordance with this Trust Agreement), (ii) if appropriate, amend the definition of "Leased Premises" to include as part of the Leased Premises all or any portion of additions, betterments, extensions, improvements or replacements, or such other real or personal property (whether or not located upon the Leased Premises as such Leased Premises is constituted as 16 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-93 of the date of this Trust Agreement), to be financed, acquired or constructed by the preparation, execution and delivery of such Additional Certificates, and (iii) make such other revisions to the Lease as are necessitated by the execution and delivery of such Additional Certificates (provided, however, that such other revisions shall not materially prejudice the rights of the Owners of Outstanding Certificates as granted them under the terms of this Trust Agreement); (d) There shall have been delivered to the Trustee a counterpart of the amendments required by subsection 2.12(c) hereof; (e) The Trustee shall have received a certificate of the City Representative that the Lease Payments as increased or adjusted do not exceed in any year the fair rental value of the Leased Premises (as such term is defined in the amended Lease); (f) The Trustee shall have received an opinion of Special Counsel substantially to the effect that (i) said Supplemental Agreement and said amendments to the Lease comply in all respects with the requirements of this Section 2.12, (ii) said Supplemental Agreement and said amendments to the Lease have been duly authorized, executed and delivered by the City and the Corporation, as applicable, (provided that said opinion of Special Counsel, in rendering the opinions set forth in this clause (ii), shall be entitled to rely upon one or more other opinions of counsel, including counsel to any of the respective parties to said Supplemental Agreement or said amendments to the Lease), (iii) assuming that no Event of Default has occurred and is continuing, this Trust Agreement, as amended by said Supplemental Agreement, and the Lease, as amended by the respective amendments thereto, constitute the legal, valid and binding obligations of the City and Corporation, as applicable, enforceable against said parties in accordance with their respective terms (except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, moratorium, debt adjustment or other laws affecting creditors' rights generally, and except to the extent that enforcement thereof may be limited by general principles of equity, regardless of whether enforcement is sought in a legal or equitable proceeding) and (iv) the execution of such Supplemental Agreement and said amendments to the Lease, and performance by the parties thereunder, will not result in the inclusion of the interest portion of any Lease Payments payable with respect to any Certificates, including Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates), theretofore prepared, executed and delivered, in the gross income of the Owners of the Certificates or the owners of any Additional Certificates (to the extent such Additional Certificates are executed and delivered as tax exempt Certificates) for purposes of federal income taxation; (g) There shall have been delivered to the Trustee an endorsement to or reissuance of the title insurance policy delivered under Section 5.5 of the Lease providing that the insured amount is at least equal to the aggregate principal amount of all of the Certificates and Additional Certificates outstanding upon the execution and delivery of such Additional Certificates; and (h) Such other conditions shall have been satisfied, and such other instruments shall have been duly executed and delivered to the Trustee, as the City or the Corporation shall have reasonably requested. Upon delivery to the Trustee of the foregoing instruments, the Trustee shall cause to be executed and delivered Additional Certificates of a Series representing the aggregate principal amount specified in such Supplemental Agreement, and such Additional Certificates shall be equally 17 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-94 and ratably secured with all Certificates of like Series, including any Additional Certificates, theretofore prepared, executed and delivered, all without preference, priority or distinction (other than with respect to maturity, payment, prepayment or sinking fund payment (if any)) of any one Certificate of a Series, including Additional Certificates, over any other; provided, however, that no provision of this Trust Agreement shall require the City to consent to or otherwise permit the preparation, execution and delivery of Additional Certificates, it being understood and agreed that any such consent or other action of the City to permit the preparation, execution and delivery of Additional Certificates, or lack thereof, shall be in the sole discretion of the City. ARTICLE III PROJECT FUND Section 3.01. Establishment of Project Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach (2020A Certificates) Project Fund," referred to herein as the "Project Fund." Within the Project Fund, there shall be established a Delivery Costs Subaccount. The Trustee shall keep the Project Fund separate and apart from all other funds and moneys held by it; and shall administer such fund as herein provided. The Project Fund shall be held and applied by the Trustee in accordance herewith. Section 3.02. Purpose. Moneys in the Project Fund shall be expended for Project Costs and Delivery Costs. Section 3.03. Deposit of Moneys; Pqyment of Project Costs and Delivery Costs. (a) Deposits. There shall be credited to the Project Fund the following amounts: (1) the proceeds of sale of the Certificates required to be deposited therein pursuant to Section 2.05 hereof, (2) all investment earnings on moneys held in the Project Fund, which shall remain in the Project Fund until expended for Project Costs or applied to the prepayment of Certificates, as described in Section 3.04 below; and (3) any other funds from time to time deposited with the Trustee to pay Project Costs. (b) Disbursements. The Trustee shall disburse moneys in the Project Fund from time to time to pay Project Costs directly or to reimburse the City for payment of Project Costs, upon receipt by the Trustee of a Project Cost Requisition signed by the City Representative. The Trustee shall have no duty or liability to monitor the application of any moneys disbursed hereunder. The Trustee shall disburse moneys from the Delivery Costs Subaccount to pay Delivery Costs or to reimburse the City for payment of such Delivery Costs upon receipt by the Trustee of a Delivery Cost Requisition signed by the City Representative. The Trustee shall be absolutely protected in making any disbursement from the Project Fund in reliance upon a Project Cost Requisition or Delivery Cost Requisition signed by the City Representative. Each such Project Cost Requisition and Delivery Cost Requisition shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Any remaining balance in the Delivery Costs Subaccount after 1, 2021 shall be transferred by the Trustee to the Project Fund as directed in writing by City Representative and the Delivery Costs Subaccount shall be closed. Section 3.04. Transfers of Unexpended Proceeds. Upon the filing with the Trustee of the Certificate of Completion pursuant to Section 3.4 of the Lease, the Trustee shall withdraw all 18 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-95 remaining moneys in the Project Fund (other than any moneys retained therein to pay Project Costs not then due and payable and certified by the City Representative) and shall transfer such moneys to the Lease Payment Fund to be applied to the payment of principal and interest with respect to the applicable Series of Certificates as prescribed in Section 5.04 hereof or, at the written election of the City Representative delivered to the Trustee, together with an opinion of Special Counsel that such transfer will not cause interest due with respect to the Certificates to be included in gross income for federal income tax purposes, shall transfer such moneys to the City for the purpose of capital expenditures of the City, and following such transfer, the Project Fund shall be closed. ARTICLE IV PREPAYMENT FUND Section 4.01. Establishment of Prepayment Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach (2020A Certificates) Prepayment Fund," referred to herein as the "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 and Additional Certificates shall be deposited into the Prepayment Fund established for such Series and used solely for the purpose of prepaying the applicable Certificates or Additional Certificates in advance of their maturity on the date designated for prepayment and upon presentation and surrender of such Certificates or Additional Certificates to the Trustee. Section 4.02. Extraordinary Prepayment. The Certificates are subject to prepayment prior to their respective maturity dates on any date, in whole or in part, from Net Proceeds which the Trustee shall deposit in the Prepayment Fund as provided in Section 6.1(c) of the Lease at least 45 days prior to the date fixed for prepayment and credited towards the prepayment made by the City pursuant to Section 10.2 of the Lease, at a prepayment price equal to the principal amount thereof together with accrued interest to the date fixed for prepayment, without premium. Section 4.03. Reserved . Section 4.04. Selection of Certificates for Prepayment. For extraordinary prepayment of Certificates pursuant to Section 4.02 hereof, the Trustee shall select Certificates for prepayment so that the Net Proceeds will be applied to prepay a proportionate amount of Certificates and Additional Certificates based on the Outstanding principal amount and by lot within any maturity or sinking account prepayment. The Trustee shall promptly notify the City and the Corporation in writing of the Certificates so selected for prepayment by mailing to the City and the Corporation copies of the notice of prepayment provided for in Section 4.05. Section 4.05. Notice of Prepayment. (a) Content. When prepayment is authorized or required pursuant to this Article IV, the Trustee shall give notice of the prepayment of the Certificates. Such notice shall specify: (a) the prepayment date, (b) the prepayment price, (c) if less than all of the Outstanding Certificates of a maturity are to be prepaid, the Certificate numbers (and in the case of partial prepayment, the respective principal amounts), (d) the CUSIP numbers of the Certificates to be prepaid, (e) the place or places where the prepayment will be made, and (f) the original date of execution and delivery of the Certificates. Such notice shall further state that on the specified date there shall become due and 19 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-96 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 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 or delivery service postage prepaid, or by telecopy, to the Depository on the date of mailing of notice to the Owners by first class mail and by first class mail, postage prepaid, to the Corporation and the respective Owners of any Certificates designated for prepayment at their addresses appearing on the Certificate registration books, at least thirty (30) days, but not more than sixty (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. Under no circumstances shall the Trustee have any liability to any party for any inaccurate CUSIP number. 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 paid to such Owner. 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 principal amount to the unprepaid portion of the Certificate surrendered and of the same tenor and maturity. Such partial prepayment shall be valid upon payment of the amount thereby required 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 to the Owners of the Certificates as set forth in Section 4.05 hereof, 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 prepayment price with respect thereto, plus interest accrued and unpaid to said date of prepayment. If, on the date of a 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 set forth in Section 4.05 hereof, then, from and after said date of prepayment, interest with respect to the Certificates to be prepaid 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, without liability for interest thereon. All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions of this Article shall be cancelled upon surrender thereof and destroyed. Section 4.08. Su lus. Any funds remaining in the Prepayment Fund after prepayment and payment of all Certificates Outstanding, including accrued interest and payment of any applicable fees and expenses to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments payable under the Lease 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. NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-97 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, absolutely assigned and set over to the Trustee certain of its rights in the 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 (other than amounts due to the Corporation under Section 4.11 of the Lease) 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 five (5) Business Days after the receipt thereof, and all such Lease Payments shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund, all such Prepayments shall be forthwith deposited by the Trustee upon the receipt thereof in the Prepayment Fund. (b) Security Interest in Moneys and Funds. The Corporation and the City, as their interests may appear, hereby grant to the Trustee for the benefit of the Owners of the Certificates and all Additional Certificates a lien on and a security interest in all moneys in the following funds or accounts held by the Trustee under this Trust Agreement (excepting only the Rebate Fund and any moneys to be deposited into the 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 and Proceeds. 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 Additional Certificates to the extent provided in a Supplemental Agreement). Any proceeds from the re -letting or any other disposition of the Leased Premises pursuant to Article IX of the Lease (the "Lease Proceeds") are hereby irrevocably pledged equally to the Certificates and any Additional Certificates. Except as permitted under Section 2.12 hereof with respect to Additional Certificates, the Lease Payments and Lease Proceeds shall not be used for any other purpose while any of the Certificates remain Outstanding. This pledge shall constitute a first lien on the Lease Payments and Lease Proceeds in accordance with the terms hereof, subject to Section 13.03 hereof and subject to Section 2.12 hereof. Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish a special fund designated as the "City of Newport Beach (2020A Certificates) Lease Payment Fund," referred to herein as the "Lease Payment Fund." All moneys at any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates. So long as any Certificates are Outstanding, neither the City nor the Corporation shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited therein, except only as provided in this Trust Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. 21 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-98 Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all Lease Payments and in the Prepayment Fund all Prepayments received by the Trustee, including any moneys received by the Trustee for deposit therein pursuant to Section 2.05 hereof and Section 4.4 of the Lease, including without limitation Section 5.4(c) of the Lease (regarding proceeds of rental interruption insurance) or pursuant to this Trust Agreement, which moneys shall be applied as a credit towards any Lease Payment then due. Section 5.04. Application of Moneys. Except as provided in this Section 5.04 and 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 of Article II and Article IV hereof, subject to the requirement that certain investment earnings may be transferred to the Rebate Fund, as provided in Section 8.08 hereof. On or before each Interest Payment Date, the Trustee shall set aside an amount sufficient to pay the interest becoming due and payable on such Interest Payment Date on all Outstanding Certificates and Additional Certificates. Moneys so set aside shall be used and withdrawn by the Trustee solely for the purpose of paying the interest with respect to the Certificates as it shall become due and payable (including, accrued interest with respect to any Certificates prepaid prior to maturity). On or before each Interest Payment Date on which the principal of the Certificates shall be payable, the Trustee shall set aside an amount equal to (i) the principal amount of the Certificates and Additional Certificates coming due and payable on such Interest Payment Date pursuant to Section 2.02, and (ii) the prepayment price of the Certificates and Additional Certificates (consisting of the principal amount thereof and any applicable premiums) required to be prepaid on such Interest Payment Date pursuant to any of the provisions of Article IV hereof. Moneys so set aside shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the principal of the Certificates and Additional Certificates at the maturity thereof, or (ii) paying the principal of and premium (if any) on any Certificates and Additional Certificates upon the prepayment thereof pursuant to Section 4.03 hereof. Section 5.05. Surplus. Any funds remaining in the Lease Payment Fund after payment of all Certificates Outstanding, including accrued interest and payment of any applicable fees to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease, or provision made therefor satisfactory to the Trustee, and provision for any amounts required to be transferred to the Rebate Fund pursuant to Section 8.08 hereof, shall be withdrawn by the Trustee and remitted to the City. ARTICLE VI [RESERVED] ARTICLE VII NET PROCEEDS FUND Section 7.01. Establishment of Net Proceeds Fund: Deposits. The Trustee shall establish when required a special fund designated as the "City of Newport Beach (2020A Certificates) Net 22 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-99 Proceeds Fund," referred to herein as the "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. (a) Casualty Insurance. The Trustee shall disburse Net Proceeds for replacement or repair of the Leased Premises as provided in Section 6.1(b) 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. Pending such application, such Net Proceeds may be invested by the Trustee as directed by the City Representative in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement. After all of the Certificates have been paid 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 Section 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 and any other Additional Payments due under the Lease. (b) Title Insurance. Proceeds of any policy of title insurance received by the Trustee with respect to the Leased Premises shall be applied and disbursed by the Trustee upon the Written Request of the City as follows: (i) If the City determines that the title defect giving rise to such proceeds has not substantially interfered with its use and occupancy of the Leased Premises and will not result in an abatement of Lease Payments and Additional Payments payable by the City under the Lease (such determination to be certified by the City in writing), such proceeds shall be remitted to the City and used for any lawful purpose thereof, or (ii) If the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Leased Premises and will result in an abatement of Lease Payments and Additional Payments payable by the City under the Lease; then the Trustee shall immediately deposit such proceeds in the Prepayment Fund and such proceeds shall be applied to the prepayment of Certificates in the manner provided in Section 4.02 hereof. Section 7.02. 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 defense of any prospective or pending condemnation proceeding with respect to the Leased Premises or any item or portion thereof, provided, however, the Trustee shall not be obligated to take any action hereunder if it is not indemnified to its satisfaction from and against any liability or expense arising therefrom. ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Section 8.01. Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement, other than in the Rebate Fund, are irrevocably held in trust for the benefit of the respective Owners 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 23 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-100 thereon, shall be expended only as provided in this Trust Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Corporation, the Trustee or the City, or any of them. Section 8.02. Investments Authorized. (a) By Trustee. Subject to the further provisions of this Article VIII, moneys held by the Trustee hereunder shall be invested and reinvested on maturity thereof by the Trustee pursuant to Section 8.02(b). The Trustee will report any such investments to the City on a monthly basis in its regular statements. (b) Upon Direction of the City. The City Representative shall direct by facsimile, to the designated trust officer responsible for the administration of this Trust Agreement, followed by oral notification and distribution by U.S. Mail or overnight courier service of such notice, such investment in specific Permitted Investments not less than two Business Days prior to the date that such Permitted Investment is to take effect. Such investments and reinvestments shall be made giving full consideration for the time at which funds are required to be available based among other things, scheduled completion of the various components of the Project. In the event that the City Representative does not so direct the Trustee, the Trustee shall invest in the Permitted Investments described in paragraph (D) of the definition thereof contained in Section 1.01. Investments purchased with funds on deposit in the Lease Payment Fund and Prepayment Fund shall mature not later than the Interest Payment Date or prepayment date, as appropriate, immediately succeeding the investment. Investments instructed by the City Representative to be purchased with funds on deposit in the Project Fund shall mature not later than the dates upon which such funds shall be needed to be expended for the payment of Project Costs. The Trustee may conclusively rely upon the written instructions of the City Representative as to both the suitability and legality of the directed investments. (c) 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 or its nominee. (d) Trustee as Purchaser or Agent. 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. The Trustee or any of its affiliates may act as a sponsor of, or as an advisor to any provider of, Permitted Investments hereunder. The City and Corporation acknowledge that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City and the Corporation the right to receive brokerage confirmations of security transactions as they occur, the City and the Corporation specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder. (e) Trustee Standard of Care. Except as otherwise provided in Section 9.05, the Trustee shall not be responsible or liable for any consequences of any investment of funds or sale of such investment made by it in accordance with this Section or disposition made by it in accordance with Section 8.05(b). 24 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-101 Section 8.03. Crediting of Investments. Except as otherwise provided in this Trust Agreement, any income, profit or loss on the investment of moneys held by the Trustee hereunder shall be credited to the respective fund for which it is held. Section 8.04. Accounting. The Trustee shall furnish to the City, not less than monthly, an accounting (which may be in the form of its regular statements) of all investments made by the Trustee and all funds and amounts held by the Trustee; provided, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (i) has a balance of zero and (ii) has not had any activity since the last reporting date. The Trustee shall keep accurate records of all funds administered by it and of all Certificates paid and discharged. Section 8.05. Valuation and Disposition of Investments. (a) Valuation. Subject to the provisions of Section 8.08 hereof, for the purpose of determining the amount in any fund, all Permitted Investments (except investment agreements) 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, investments shall be valued by the Trustee not less often than annually nor more often than monthly. In making any such valuations, the Trustee may utilize, and conclusively rely upon such valuation services as may be available to the Trustee, including those within its regular accounting system. (b) Disposition. Subject to the provisions of Section 8.08 hereof, 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, and upon the written request of the City Representative shall, commingle any of the funds held by it pursuant to this Trust 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. The City shall ensure that any such commingling complies with Section 1.148-4 of the Treasury Regulations, and shall provide direction to the Trustee accordingly. In no event shall the Trustee have any duty or obligation, at any time and in any manner to monitor compliance with any governmental regulations relating to commingling of accounts. Section 8.07. Tax Covenants. (a) General. The City and the Corporation hereby covenant with the holders of the Certificates that, notwithstanding any other provisions of this Trust Agreement, (to the extent that the Corporation may have control over the Project, the Leased Premises or the proceeds of the Certificates) they shall not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of interest with respect to the Certificates under Section 103 of the Code. The City and the Corporation (to the extent that the Corporation may have control over the Project, the Leased Premises or the proceeds of the Certificates) shall not, directly or indirectly, use or permit the use of proceeds of the Certificates, the Leased Premises or 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 interest due with respect to the Certificates. 25 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-102 (b) Use of Proceeds. The City and the Corporation (to the extent that the Corporation may have control over the Project, the Leased Premises or the proceeds of the Certificates) shall not take any action, or fail to take any action, if any such action or failure to take action would cause the Certificates to be "private activity bonds" within the meaning of Section 141 of the Code, and in furtherance thereof, shall not make any use of the proceeds of the Certificates, the Leased Premises or the Project, or any portion thereof, or any other funds of the City, that would cause the Certificates to be "private activity bonds" within the meaning of Section 141 of the Code. To that end, so long as any Certificates are outstanding, the City and the Corporation, with respect to such proceeds, the Leased Premises and the Project and such other funds, will comply with applicable requirements of the Code and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent such requirements are, at the time, applicable and in effect. The City shall establish reasonable procedures necessary to ensure continued compliance with Section 141 of the Code and the continued qualification of the Certificates as "governmental bonds." (c) Arbitrage. The City and the Corporation (to the extent that the Corporation may have control over the Project or the proceeds of the Certificates) shall not, directly or indirectly, use or permit the use of any proceeds of any Certificates, the Leased Premises or of the Project, or other funds of the City, or take or omit to take any action, that would cause the Certificates to be "arbitrage bonds" within the meaning of Section 148 of the Code. To that end, the City and the Corporation shall comply with all requirements of Section 148 of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent such requirements are, at the time, in effect and applicable to the Certificates. (d) Federal Guarantee. The City and the Corporation (to the extent that the Corporation may have control over the proceeds of the Certificates) shall 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 the Certificates to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (e) Compliance with Tax Certificate. In furtherance of the foregoing tax covenants of this Section, the City covenants that it will comply with the provisions of the Tax Certificate, which is incorporated herein as if fully set forth herein. These covenants shall survive payment in full or defeasance of the Certificates. Section 8.08. Rebate Fund. (a) General. The Trustee shall establish a special fund designated the "City of Newport Beach (2020A Certificates) Rebate Fund" (the "Rebate Fund"). All amounts at any time on deposit in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the requirement to make rebate payments to the United States (the "Rebate Requirement") pursuant to Section 148 of the Code and the Treasury Regulations promulgated thereunder (the "Treasury Regulations"). Such amounts shall be free and clear of any lien under this Trust Agreement and shall be governed by this Section and Section 8.07 of this Trust Agreement and by the Tax Certificate executed by the City. The Trustee shall be deemed conclusively to have complied with the Rebate Requirement if it follows the directions of the City, and shall have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the City with the Rebate Requirement. The Trustee shall have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the City with the terms of this Section 8.08 or the Tax Certificate. we NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-103 (i) Within 45 days of the end of the fifth Certificate Year and each fifth Certificate Year thereafter, (1) the City shall calculate or cause to be calculated with respect to the Certificates the amount that would be considered the "rebate amount" within the meaning of Section 1.148-3 of the Treasury Regulations, and (2) the City shall make an Additional Payment under Section 4.11 of the Lease and transfer to the Trustee for deposit in the Rebate Fund, if and to the extent required, amounts sufficient to cause the balance in the Rebate Fund to be equal to the "rebate amount" so calculated. (ii) The City shall not be required to deposit any amount to the Rebate Fund in accordance with preceding sentence if the amount on deposit in the Rebate Fund prior to the deposit required to be made under this subsection (a) equals or exceeds the "rebate amount" calculated in accordance with the preceding sentence. Such excess may be withdrawn from the Rebate Fund to the extent permitted under subsection (f) of this Section. (b) Withdrawal Following Payment of Certificates. Any funds remaining in the Rebate Fund after prepayment of all the Certificates and any amounts described in paragraph (ii) of subsection (c) of this Section, 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) Withdrawal for Payment of Rebate. Upon the City's written direction, but subject to the exceptions contained in subsection (a) of this Section to the requirement to calculate the "rebate amount" and make deposits to the Rebate Fund, the Trustee shall pay to the United States, from amounts on deposit in the Rebate Fund, not later than 60 days after the end of (1) the fifth Certificate Year, and (2) each fifth Certificate Year thereafter, an amount that, together with all previous rebate payments, is equal to at least 90% of the `rebate amount" calculated as of the end of such Certificate Year in accordance with Section 1.148-3 of the Treasury Regulations. (d) Rebate Pam. Each payment required to be made pursuant to subsection (c) of this Section shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 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 completed by the arbitrage rebate consultant for execution by the City and provided to the Trustee. (e) Deficiencies in the Rebate Fund. In the event that, prior to the time any payment is 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. (f) Withdrawals of Excess Amounts. In the event that immediately following the calculation required by subsection (a) of this Section, but prior to any deposit made under said subsection, the amount on deposit in the Rebate Fund exceeds the "rebate amount" calculated in accordance with said subsection, upon written instructions from the City, the Trustee shall withdraw the excess from the Rebate Fund and credit such excess to the Lease Payment Fund. (g) Record Keep. The City shall retain records of all determinations made hereunder until six years after the complete retirement of the Certificates. 27 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-104 (h) Survival after Defeasance. Notwithstanding anything in this Trust Agreement to the contrary, the Rebate Requirement shall survive the payment in full or defeasance of the Certificates. ARTICLE IX THE TRUSTEE Section 9.01. Appointment of Trustee. (a) Appointment. The Bank national banking association organized under the appointed Trustee by the Corporation and the City. of New York Mellon Trust Company, N.A., a laws of the United States of America, is hereby (b) Qualifications. The Corporation and the City agree that they will maintain a Trustee having a corporate trust office in New York, New York, San Francisco, California, Santa Ana, California, or Los Angeles, California capable of exercising trust powers in the State of California, with a combined capital (exclusive of borrowed capital) and a surplus of at least Seventy - Five Million Dollars ($75,000,000), or be a member of a bank holding company system, which shall have a combined capital and surplus of at least Seventy -Five Million Dollars ($75,000,000), and subject to supervision or examination by federal or state authority, so long as any Certificates are Outstanding. If such bank, corporation 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, corporation 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, the City may remove the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors thereto. (d) Resignation. The Trustee may, upon written notice to the City and the Corporation, resign; provided that such resignation shall not take effect until the successor Trustee is appointed as provided in this Section 9.01. 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 thirty (30) days of receipt of notice of the Trustee's resignation, then the Trustee may petition a federal or state court to seek the immediate appointment of a successor Trustee and be reimbursed by the City for all costs incurred in connection therewith. (e) Successor. Any successor Trustee shall be a bank, corporation 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 acceptance of appointment by the successor Trustee. Upon such acceptance, the successor Trustee shall mail notice thereof to the Owners at their respective addresses set forth on the Certificate registration books maintained pursuant to Section 2.12. Section 9.02. Merger or Consolidation. Any company or 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 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-105 which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall be eligible under Section 9.01, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 9.03. 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, facsimile, request, consent, direction, 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 Trust 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. In the event the Trustee shall make any investigation into the content of any such certifications, the Trustee shall not thereby be deemed to have expanded the scope of its duties. (b) Reliance Upon Opinions of Counsel. The Trustee may consult with its counsel or 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 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 and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken by the Trustee in reliance thereon and the City shall promptly reimburse the Trustee for such costs. (c) Reliance Upon Requested Certificates. Whenever in the administration of its duties under this Trust 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 for any action taken or suffered under the provisions of this Trust Agreement in reliance thereon, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable, provided however that the duties and obligations of the Trustee shall not be deemed expanded thereby. Section 9.04. Rights of the Trustee. (a) Ownership of Certificates. The Trustee may become an Owner 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, whether or not such committee shall represent the Owners of the majority in principal amount of the Certificates then Outstanding. M NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-106 (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, or receivers, shall not be responsible for the actions or omissions of such attorneys, agents or receivers if appointed by it with reasonable care, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder. (c) Funds and Accounts. In addition to the funds and accounts established or required to be established pursuant to this Trust Agreement, the Trustee may establish such additional funds and accounts as it deems necessary or appropriate to perform its duties hereunder, and shall have the right to close such accounts in its discretion. Section 9.05. Standard of Care. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall only perform those duties specifically set forth herein and no implied duties, covenants or obligations whatsoever shall be read into this Trust Agreement. In the event of and during the continuance of an Event of Default, the Trustee shall exercise such care in performing its duties hereunder as a prudent person would exercise under the circumstances in the conduct of its own affairs. No action by the Trustee shall be construed or deemed to expand the limitations on the scope of the Trustee's duties. The Trustee shall not be considered in breach of or in default in its obligations hereunder in the event of a delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the Project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee. Section 9.06. Compensation of the Trustee. As an Additional Payment under Section 4.11 of the Lease, the City shall, from time to time, pay such amounts as are specified in any written agreement with the City and, on demand, pay to the Trustee to the extent not covered by such agreement reasonable compensation for its services and the services of any accountants, consultants, attorneys and other experts as may be engaged by the Trustee to provide services under this Trust Agreement pursuant to a written agreement between the City and the Trustee. Further, in the event of a default hereunder, the City agrees that the Trustee's fees and costs shall be deemed to be a substantial contribution to the trust and bankruptcy estate, if applicable. The City's obligation hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates or resignation and removal of the Trustee. Section 9.07. Indemnification of Trustee. The City shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors, agents, and employees harmless from and against (whether or not litigated) 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 Leased Premises by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Trust Agreement and any other agreement made and entered into for purposes of the Leased Premises, (iii) any act of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Premises, 30 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-107 (iv) any act 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 Leased Premises, (v) the construction or acquisition of the Project or the expenditure of Project Costs, (vi) the exercise and performance by the Trustee of its powers and duties hereunder or any related document, (vii) the sale of the Certificates and the carrying out of any of the transactions contemplated by the Certificates or this Trust Agreement, 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 in which they were made, not misleading in any official statement or other disclosure document utilized in connection with the sale of the Certificates. The indemnification set forth in this Section 9.07 shall extend to the Trustee's officers, agents, employees, successors and assigns. No indemnification will be made under this Section or elsewhere in this Trust Agreement or other agreements for willful misconduct or negligence 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 the resignation or removal of the Trustee. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity, and all persons, including, without limitation, the Owners, Corporation and the City, having any claim against the Trustee arising from the Trust Agreement shall look only to the funds and accounts held by the Trustee hereunder for payment, except as otherwise provided herein or where the Trustee has breached its standard of care as described in Section 9.05 hereof. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Certificates. No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder or in the exercise of any of its rights or powers. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Certificates at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or in the exercise of any right hereunder. In the event of conflicting instructions hereunder, the Trustee shall have the right to decide the appropriate course of action and be protected in so doing. The Trustee is authorized and directed to execute, in its capacity as Trustee, the Assignment Agreement. Every provision of this Trust Agreement, the Lease, the Site Lease and the Assignment Agreement relating to the conduct or liability of the Trustee shall be subject to the provisions of this Trust Agreement, including without limitation, this Article IX. The Trustee shall have no responsibility or liability with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed in any respect relating to the Certificates. The Trustee shall not to be deemed to have knowledge of any Event of Default hereunder or under the Lease unless it has actual knowledge thereof at its Principal Office. 31 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-108 Before taking any action under Article XIII or this Article at the request of the Owners, the Trustee may require that a satisfactory indemnity bond be furnished by the Owners for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken. Section 9.08. Trustee's Disclaimer of Warranties. THE TRUSTEE 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 LEASED PREMISES, OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE CITY IS LEASING THE LEASED PREMISES AS IS. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of the Lease, the Site Lease, the Assignment Agreement or this Trust Agreement for the existence, furnishing, functioning or the City's use and possession of the Leased Premises. ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted. (a) With Consent. This Trust Agreement and the rights and obligations of the Owners, and the Lease and the rights and obligations of the parties thereto, may be modified or amended at any time, with notice to any rating agency then rating the Certificates by a Supplemental Agreement or amendment thereto 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: (i) extend or have the effect of extending the maturity of any Certificate or reducing the fixed 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 Certificates being affected, or (ii) 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 (iii) modify any of the rights or obligations of the Trustee without its written assent thereto, or (iv) amend this Section 10.01 without the prior written consent of the Owners of all Certificates then outstanding. The Trustee shall have the right to require such opinions of counsel as it deems necessary concerning (i) the lack of material adverse effect of the amendment on Owners and (ii) the fact that the amendment will not affect the tax status of interest with respect to the Certificates or any Additional 32 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-109 Certificates. Any such Supplemental Agreement or amendments thereto shall become effective as provided in Section 10.02 hereof. (b) Without Consent. This Trust Agreement and the rights and obligations of the Owners, and the Lease and the rights and obligations of the parties thereto, may be modified or amended at any time by a Supplemental Agreement or amendments thereto or a supplement or amendment to the Lease, without the consent of any such Owners, but only to the extent permitted by law and only: (i) to add to the covenants and agreements of the City hereunder, (ii) to cure, correct or supplement any ambiguous or defective provision contained herein or therein, (iii) in regard to matters arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable (which may be based upon opinions as provided in Section 9.03(b)), shall not materially adversely affect the interest of the Owners, (iv) to substitute the Leased Premises, or a portion thereof, in accordance with Sections 3.5 and 7.12 of the Lease, (v) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest component of Lease Payments and the interest payable with respect to the Certificates, (vi) to add to the rights of the Trustee, (vii) to maintain the rating or ratings assigned to the Certificates, or (viii) to provide for the execution and delivery of Additional Certificates in accordance with the provisions of Section 2.12 hereof. No such modification or amendment, however, shall modify any of the rights or obligations of the Trustee without its written assent thereto. Any such Supplemental Agreement shall become effective upon execution and delivery by the parties hereto or thereto as the case may be. The Trustee shall have the right to require such opinions of counsel as it deems necessary concerning (i) the lack of material adverse effect of the amendment on Owners and (ii) the fact that the amendment will not affect the tax status of interest with respect to the Certificates or any Additional Certificates. Any such Supplemental Agreement or amendments thereto shall become effective as provided in Section 10.02 hereof. Section 10.02. Procedure for Amendment with Written Consent of the Owners. This Trust 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 the form of such Supplemental Agreement, together with a request to the Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as set forth in the Certificate registration books maintained pursuant to Section 2.09 hereof, but failure to 33 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-110 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 in this Section provided. 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 consent 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. The Trustee may obtain and conclusively rely on an opinion of counsel with regard to such matters. Section 10.03. Disqualified Certificates. Certificates or Additional 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 (except any Certificates or Additional Certificates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Trust Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Trust Agreement. The City or the 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 or Additional Certificates as to which such consent is given are disqualified as provided in this Section 10.03 hereof. Upon request of the Trustee, the City and Corporation shall specify to the Trustee those Certificates and Additional Certificates disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate. Section 10.04. Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article X, this Trust Agreement or the Lease, as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Agreement shall be deemed to be part of the terms and conditions of this Trust Agreement or the Lease, 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 34 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-111 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 such purpose at the Principal Office, a suitable notation shall be made on such Certificate. The Trustee may determine that new Certificates, so modified as in the opinion of the Trustee is necessary to conform to such Owner's 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 an 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. Copies of Amendments Delivered to Rating _ Agencies. Copies of any modifications or amendments to this Agreement, the Lease, the Site Lease or the Assignment Agreement shall be delivered by the City to any rating agency then rating the Certificates at least 10 days prior to the effective date thereof. 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 it under the Lease. 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 thereunder. The Corporation and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Leased Premises, 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 as provided in Section 7.7(b) of the Lease. Section 11.03. Observance of Laws and Regulations. 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 35 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-112 proper to remedy or cure any defect in or cloud upon the title to the Leased Premises, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose. Section 11.05. City Budgets. In accordance with Section 4.7 of the Lease, the City Representative shall certify to the Trustee on or before August 1 of each year that the City has included all Lease Payments (other than Lease Payments of advance rental), Additional Payments due under the Lease in the Fiscal Year covered by its annual budget and the amount so included. If the City fails to certify that it has included all such Lease Payments and Additional Payments in such annual budget, 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 4.7 and requesting that such failure be remedied within 30 days, or such failure shall constitute an Event of Default under Section 9.1(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 in writing of the proceedings proposed to be taken by the City, and shall keep the Trustee advised in writing 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. Section 11.07. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Trust Agreement, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder; however, any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section and the Continuing Disclosure Agreement. 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 hereto or to the Owners with respect to this Trust Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee. Section 12.02. No Liability of the Ci , or Corporation for Trustee Performance. Except as expressly provided herein, neither the City nor the Corporation shall have any obligation or liability to any other parties hereto or to the Owners with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement. (a) No Investment Advice. The Trustee shall have no obligation or responsibility for providing information to the Owners concerning the investment character of the Certificates. 36 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-113 (b) Sufficiency of this Trust Agreement or Lease Payments. The Trustee makes no representations as to the validity or sufficiency of the Certificates, shall incur no responsibility or liability 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 or liable for the sufficiency or enforceability of the Lease, the Site Lease or the Assignment Agreement. 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 in this Trust Agreement), its right to receive moneys pursuant to said Lease, or the value of or title to the Leased Premises. (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 Trust Agreement or failure or refusal of any other party to perform any covenant or agreement made by any of them under this Trust 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. Section 12.03. Limitation of Rights to Parties and Certificate Owners. Nothing in this Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Corporation, the Trustee and the Owners, any legal or equitable right, remedy or claim under or in respect of this Trust Agreement or any covenant, condition or provision hereof, and all such covenants, conditions and provisions are and shall be for the sole and exclusive benefit of the City, the Corporation, the Trustee and the Owners. Section 12.04. No Liability of Corporation to the Owners. Except as expressly provided herein, the Corporation shall not have any obligation or liability to the Owners with respect to the payment when due of the Lease Payments by the City or with respect to the observance or performance by the City of the other agreements, conditions, and covenant imposed upon the City by the Lease or by this Trust Agreement. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. Assignment of Rights. The parties hereto acknowledge that pursuant to the Assignment Agreement the Corporation has transferred, assigned and set over to the Trustee for the benefit of the Owners, certain of the Corporation's rights under the Lease. Section 13.02. Events of Default. (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 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 37 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-114 DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE. Section 9.2 of the Lease is hereby incorporated by reference. (b) Actual Knowledge. The Trustee shall not be deemed to have knowledge of any Event of Default unless and until the trust officer responsible for the administration of this Trust Agreement shall have actual knowledge thereof, or shall have received written notice thereof at the 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 after payment of all amounts due and payable under Sections 9.06 and 9.07 hereof and Section 4.11 of the Lease in the following order upon presentation of the Certificates, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid - First, Costs and Expenses: to the payment of the costs, fees and expenses of the Trustee in declaring such Event of Default and in performing its duties and obligations hereunder, including reasonable compensation to its agents, attorneys and counsel and then to any such amounts incurred by the Owners; 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 with respect to 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 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; provided that such written request shall not be otherwise than in accordance with provisions of law and this Trust Agreement and that the Trustee shall have the right to decline to follow any such written request if the Trustee shall be advised by counsel that the action or proceeding so requested may not be taken lawfully or if the Trustee in good faith shall determine that the action or proceeding so requested would be unjustly prejudicial to the Certificate Owners not a party to such written request or expose the Trustee to liability. In no event shall counsel to the Trustee be deemed counsel 38 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-115 to the Owners, and any communications between the Trustee and its counsel shall be deemed confidential and privileged. Section 13.05. Non -Waiver. Nothing in this Article XIII or in any other provision of this Trust Agreement or in the Certificates shall affect or impair the obligation of the City to pay or prepay the Lease Payments as provided in the Lease. No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article XIII to the Trustee or to the Owners 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. 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 Trust 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; (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; and (e) there shall have been a default in the payment of such Owner's proportionate interest in the Lease Payments as the same become due. Such notification, request, tender of indemnity, refusal or omission, and default 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 Trust Agreement, except in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. 39 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-116 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 Trust Agreement. 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: (i) Payment or Prepayment: by well and truly paying or causing to be paid the principal, interest and prepayment premiums (if any) with respect to such Certificates Outstanding, as and when the same become due and payable; (ii) Cash: by depositing with the Trustee, in trust, an amount of cash which (together with cash then on deposit in the Lease Payment Fund together with the interest to accrue thereon, in the event of payment or provision for payment of all Outstanding Certificates) is sufficient to pay such Certificates Outstanding, including all principal and interest and premium, if any; or (iii) Government Obligations: by irrevocably depositing with the Trustee, in trust, Government Obligations together with cash, if required, in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon (and, 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 such Certificates (including all principal and interest represented thereby and prepayment premiums if any) at or before their maturity or prepayment date; and all other amounts due hereunder have been paid in full, 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 obligation of the City and the Corporation to comply with the provisions of Sections 8.07 and 8.08 hereof and the obligation 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 (ii) and (iii) 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 (ii) and (iii) of this Section, the Certificates shall continue to represent direct and proportionate interests of the Owners thereof in applicable Lease Payments under the Lease. (b) Surplus MoneS. 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 (a)(i) through (a)(iii) of this Section, which are not required for the payment to be made to the Owners, shall be paid over to the City, after the payment of any amounts due to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease. no] NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-117 (c) 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. (d) Opinions and Reports. Prior to any defeasance becoming effective under this Section, the City shall cause to be delivered (i) unless the defeasance is to be accomplished solely through a cash deposit, an executed copy of a report, addressed to the Trustee, the City, in form and substance acceptable to the City of a nationally recognized firm of certified public accountants, verifying that the Government Obligations and cash, if any, satisfy the requirements of Section 14.01(a) above, (ii) a copy of the escrow deposit agreement entered into in connection with such defeasance, and (iii) a copy of an opinion of Special Counsel, dated the date of such defeasance and addressed to the Trustee and the City, in form and substance acceptable to the City, to the effect that such Certificates are no longer Outstanding under the Trust Agreement. Section 14.02. Non -Presentment of Certificates. In the event any Certificate shall not be presented for payment when the principal with respect thereto 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 Prepayment Fund or Lease Payment Fund, as applicable, all liability of the City and the Trustee 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, free from the trusts created by this Trust Agreement. Prior to forwarding any such moneys to the City, the Trustee may publish notice of its intention to transfer such funds in The Bond Buyer or another financial newspaper of general circulation in New York, New York. In addition, Trustee shall be indemnified from and against any and all liabilities to third parties resulting from its actions under this Section. Thereafter, Owners shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid by the Trustee. 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. Acquisition of Certificates by City. All Certificates acquired by the City, whether by purchase, gift or otherwise, shall be surrendered by the City to the Trustee for cancellation. Section 14.04. Records. The Trustee shall keep complete and accurate records of all moneys received and disbursed by it under this Trust Agreement until four years after no Certificate is Outstanding (or such longer period as required by the Trustee's policies and procedures, or by applicable law), which shall be available for inspection by the City, the Corporation and any Owner, or the agent of any of them, at any time during regular business hours upon reasonable prior notice. Section 14.05. Notices. Except as specifically provided otherwise in this Trust Agreement, all written notices to be given under this Trust Agreement shall be given by mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide 41 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-118 to the other party in writing from time to time. Notice shall be deemed to have been received upon the earlier of actual receipt or five Business Days after deposit in the United States mail, in certified form, postage prepaid or, in the case of personal delivery, upon delivery to the address set forth below: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Attention: City Manager If to the Corporation: Newport Beach Public Facilities Corporation 100 Civic Center Drive Newport Beach, California 92660 Attention: Secretary If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 400 S. Hope St., Ste. 500 Los Angeles, CA 90071 Attention: Corporate Trust Department If to S&P: S&P Global Ratings 55 Water Street New York, New York 10004 Attention: Public Finance Department If to Moody's Moody's Investors Service 7 World Trade Center 250 Greenwich Street New York, NY 10007 Attention: Structured Finance Group - Fully Supported If to Fitch: Fitch Ratings, Inc. One State Street Plaza New York, New York 10004 Attention: Public Finance Department, Municipal Structured Finance Group Section 14.06. Governing Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State. Section 14.07. Binding Effect: Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Whenever in this Trust Agreement either the Corporation, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof and all the covenants and agreements in this Trust Agreement contained by or on behalf of the Corporation, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. 42 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC1-119 Section 14.08. Execution in Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Section 14.09. Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Trust Agreement. All references herein to "Articles", "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 14.10. Waiver of Notice. Whenever in this Trust Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 14.11. Separability of Invalid Provisions. In case any one or more of the provisions contained in this Trust Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Trust Agreement, and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid or unenforceable. 43 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-120 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Its: Authorized Officer NEWPORT BEACH PUBLIC FACILITIES CORPORATION By: Its: ATTEST: Secretary Chief Financial Officer CITY OF NEWPORT BEACH By: Its: City Manager ATTEST: City Clerk S-1 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-121 [Trust Agreement Signature Pages Continued] APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: Aaron C. Harp, City Attorney NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-122 EXHIBIT A FORM OF 2020A CERTIFICATE R- $ UNLESS THIS CERTIFICATE IS PRESENTED BY ANA UTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE TRUST AGREEMENT) TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH CERTIFICATE OF PARTICIPATION 2020A (FIRE STATION NO. 2) Evidencing the Fractional Interest of the Owner Hereof In Lease Payments to be Made by the CITY OF NEWPORT BEACH As Rental for Certain Leased Premises Pursuant to a Lease/Purchase Agreement With the NEWPORT BEACH PUBLIC FACILITIES CORPORATION INTEREST RATE MATURITY DATE DELIVERY DATE CUSIP % 92020 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: AND NO/100 DOLLARS 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 fractional and undivided interest in the right to receive certain Lease Payments thereof under and as defined in that certain Lease/Purchase Agreement dated as of December 1, 2020, 2020 (the "Lease"), by and between the Newport Beach Public Facilities Corporation, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the "Corporation') and the City of Newport Beach, a chartered city organized and existing under and by A-1 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-123 virtue of the laws and Constitution of the State of California (the "City"), which Lease Payments and certain other rights and interests under the Lease have been assigned to The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). 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 July 1 and January 1 of each year (the "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 Payment Dates provided that interest with respect hereto shall be payable from the Payment Date next preceding the date of execution of this Certificate unless (i) this Certificate is executed during the period from the day after the fifteenth day of the month preceding a Payment Date (the "Record Date") to and including such Payment Date, in which event interest shall be payable from such Payment Date, or (ii) unless this Certificate is executed on or prior to [June 15, 2021], in which event interest shall be payable from the Delivery Date hereof. 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. The amounts representing interest are payable by check mailed by the Trustee by first class mail to the Registered Owner hereof as of the Record Date preceding the Payment Date at his address as it appears on the registration books of the Trustee. Interest with respect to any Certificates may, at the option of any Owner of Certificates in an aggregate principal amount of $1,000,000 or more evidenced by the written request of such Owner to the Trustee, be paid to such Owner by wire transfer to the bank and account number on file with the Trustee as of the Record Date. This Certificate is one of the $ aggregate principal amount of Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates") which have been executed and delivered by the Trustee pursuant to the terms of a Trust Agreement dated as of December 1, 2020, 2020 (the "Trust Agreement"), by and among the Trustee, the Corporation and the City. The City is authorized to enter into the Lease and the Trust Agreement under the Constitution and laws of the State of California. 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 obligations 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. 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 obligation of the City to pay Lease Payments does not constitute a debt of the City, the State of California or any of its political subdivisions within the meaning of any Constitutional or statutory debt limitation or restriction. The City's obligation to pay Lease Payments may be completely or partially abated during any period in which, by reason of noncompletion of the Project by the date specified in the Lease or material damage, destruction, title A-2 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-124 defect, or taking by eminent domain or condemnation there is substantial interference with the use and right of possession by the City of the Leased Premises. 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 of the Registered Owners under certain circumstances. No such modification or amendment shall (i) extend or have the effect of extending the 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 Registered Owner of such Certificate being affected, or (ii) 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, (iii) modify any of the rights or obligations of the Trustee without its written assent thereto, or (iv) amend the section of the Trust Agreement dealing with permitted amendments thereof without the prior written consent of the owners of all Certificates. 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 an authorized denomination or denominations, for the same aggregate principal amount, maturity and interest rate, will be delivered to the transferee. 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 Trustee shall not be required to transfer any Certificate selected for prepayment or be required to transfer any Certificate during the period in which the Trustee is selecting Certificates for prepayment or after notice of prepayment has been given in accordance with the Trust Agreement. The Certificates are subject to prepayment, on any date, in whole or in part, from Net Proceeds deposited by the Trustee in the Prepayment Fund established under the Trust Agreement at least forty-five (45) days prior to the date fixed for prepayment, at a prepayment price equal to the principal amount thereof together with accrued interest to the dated fixed for prepayment, without premium. In the event that Net Proceeds are to be applied to the prepayment of Certificates when Certificates and Additional Certificates, if any, are Outstanding, the Net Proceeds will be applied to prepay a proportionate amount of Certificates and Additional Certificates based on the Outstanding principal amount and by lot within any maturity or sinking account prepayment. As provided in the Trust Agreement, notice of prepayment shall be mailed, not less than 30 nor more than 60 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. If this Certificate is called for prepayment and payment is duly A-3 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-125 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 City has certified that all acts, conditions and things required by the 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. Terms used herein which are not otherwise defined shall have the respective meanings assigned thereto in the Trust Agreement. The Trustee has no obligation or liability to the Registered Owners to make payments of principal or interest with respect to this Certificate except from Lease Payments paid to the Trustee and from the various funds and accounts established under the Trust Agreement. The Trust Agreement provides that the recitals of facts, covenants and agreements in this Certificate shall be taken as statements, covenants and agreements of the City, and the Trustee assumes no responsibility for the correctness of the same. The Trustee has executed this Certificate solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity. IN WITNESS WHEREOF, this Certificate has been executed and delivered by the Trustee, acting pursuant to the Trust Agreement. Date of Execution: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee A-4 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 Authorized Officer PFC 1-126 [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (print or typewrite name, address, including postal zip code, and social security or other 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) guarantee should be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or such other guarantee program acceptable to the Trustee. NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration or enlargement or any change whatever. A-5 PFC 1-127 EXHIBIT B-1 FORM OF WRITTEN DELIVERY COST REQUISITION The Bank of New York Mellon Trust Company, N.A., as Trustee RE: Disbursement from the Project Fund pursuant to Section 3.03 of the Trust Agreement related to the City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2), dated as of December 1, 2020, 2020 (the "Agreement"), by and among you, as trustee, the Newport Beach Public Facilities Corporation and the City of Newport Beach (the "City") REQUISITION NO. You are hereby instructed to pay to the City, or to at $ as a Delivery Cost from the Project Fund as provided in Section 3.03 of the Agreement. This Delivery Cost has been properly incurred, is a proper charge against the Project Fund and has not been the basis of any previous disbursements. The amount remaining in the Project Fund, together with interest earnings on the Project Fund plus investment earnings on other funds that will be transferred into the Project Fund, will, after payment of the amount set forth in this requisition, be sufficient to pay all remaining Delivery Costs and Project Costs as presently estimated. Very truly yours, City Representative B-1-1 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-128 EXHIBIT B-2 FORM OF WRITTEN PROJECT COST REQUISITION The Bank of New York Mellon Trust Company, N.A., as Trustee RE: Disbursement from the Project Fund pursuant to Section 3.03 of the Trust Agreement related to the City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2), dated as of December 1, 2020, 2020 (the "Agreement"), by and among you, as trustee, the Newport Beach Public Facilities Corporation and the City of Newport Beach (the "City") REQUISITION NO. You are hereby instructed to pay to the City, or to at $ as a Project Cost from the Project Fund as provided in Section 3.03 of the Agreement. This Project Cost has been properly incurred, is a proper charge against the Project Fund and has not been the basis of any previous disbursements. The amount remaining in the Project Fund, together with other moneys available to the City and together with interest earnings on the Project Fund plus investment earnings on other funds that will be transferred into the Project Fund, will, after payment of the amount set forth in this requisition, be sufficient to pay all remaining Delivery Costs and Project Costs as presently estimated. Very truly yours, City Representative B-2-1 NG-U9ZQ VMF2/4824-3 896-0837v5/022459-0033 PFC 1-129 EXHIBIT D AGENCY AGREEMENT PFC 1-130 AGENCY AGREEMENT by and between NEWPORT BEACH PUBLIC FACILITIES CORPORATION and CITY OF NEWPORT BEACH Relating to CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A (FIRE STATION NO. 2) Dated as of December 1, 2020 NG-U9ZQVMF2/4838-0582-9574x3/022459-0033 PFC1-131 AGENCY AGREEMENT THIS AGENCY AGREEMENT (the "Agency Agreement"), dated as of December 1, 2020, is entered into by and between NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "Corporation"), and the CITY OF NEWPORT BEACH, a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"); WITNESSETH: WHEREAS, the Corporation and the City have entered into a Lease/Purchase Agreement, dated as of December 1, 2020 (the "Lease"), whereby the Corporation has leased to the City certain real property and the existing improvements thereon (the "Leased Premises") in connection with the execution and delivery of the $ City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates"); and WHEREAS, the Corporation desires to appoint the City as its agent for the purposes of the acquisition, construction, delivery and installation of the improvements to be constructed with the proceeds of the Certificates (collectively, the "Project"); 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 Agency 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 this Agency Agreement; NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: Section 1. City to Act as Agent for the Corporation. The Corporation hereby appoints the City as its agent in connection with the acquisition, construction, delivery and installation of the Project. The City, as the agent of the Corporation for the foregoing purpose, shall cause the acquisition, construction, delivery and installation of the Project to be completed on or before the dates set forth in Section 3 of this Agency Agreement and otherwise in accordance with the Lease and all other laws applicable to the Project. The appointment by the Corporation of the City as its agent as provided in this Section and the acceptance by the City of such appointment results in the assumption by the City of duties, responsibilities and liabilities which are separate and apart from its duties, responsibilities and liabilities under the Lease, and such assignment does not include or transfer to the City any of the rights of the Corporation under the Lease which have been assigned by the Corporation to the Trustee pursuant to the Assignment Agreement. It is recognized by the parties that the Corporation has appointed the City for the purposes specified in this Agency Agreement, rather than appoint another firm or entity for said purposes, based upon the Corporation's and the City's determination that the City is suitable to perform the duties, responsibilities and liabilities delegated to and assumed NG-U9ZQVMF2/4838-0582-9574v3/022459-0033 PFC 1-132 by it pursuant to this Agreement due to the expertise, knowledge and ability of the City's personnel with respect to similar undertakings. Section 2. Acceptance. The City, for one dollar ($1.00) and other good and valuable consideration in hand received, does hereby accept the foregoing appointment as agent of the Corporation for the purposes set forth in Section 1 hereof. Section 3. Time of Completion. The construction and equipping of the Project shall be completed on or prior to 1, 2023. Section 4. Construction and Acquisition of the Project. The City agrees to oversee the construction, acquisition, delivery and installation of the Project in accordance with the following terms: (a) Construction and Completion. The City agrees to proceed with all due diligence to complete the construction, acquisition, delivery and installation of the Project. The City shall comply with all statutes and laws applicable to the performance of its obligations hereunder, including all public laws applicable thereto and all laws regarding the approval, acquisition and construction of public projects by cities in the State of California. The City shall make certain that each contract relating to the Project is awarded in accordance with applicable law and contains a scheduled completion date which requires completion on or before the scheduled completion date referred to in Section 3 above; (b) Change Orders. Subject to any other restrictions imposed upon the City, the City may approve any changes to the Project so long as any change does not, and all such changes as a whole do not, (i) substantially alter the nature of the Project, (ii) delay the completion of the Project beyond its scheduled completion date, or (iii) increase the total Project Costs to an amount in excess of the amount in the Project Fund unless the City has sufficient reserves in an amount equal to such excess or unless there has been deposited with the City a certificate of a City Representative, together with a revised construction budget demonstrating that the total amount on deposit to pay for the Project is adequate to allow the completion of the Project as planned; (c) Payment of Project Costs. Payment of the portion of the Project Costs being financed by the City shall be made from moneys deposited in the Project Fund [and from moneys on deposit in certain City reserves], and shall be disbursed for such purpose in accordance and upon compliance with the Trust Agreement. Neither the Corporation nor the City shall be liable for the payment of Costs of the Project other than from amounts on deposit in the Project Fund; (d) Unexpended Monies. The City agrees that unexpended moneys remaining in the Project Fund shall, upon payment in full of all Costs of the Project, be applied solely in accordance with the provisions of the Trust Agreement; and (e) Partial Invalidity. If any one or more of the terms, provisions, covenants or conditions of this Agency Agreement 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 Agency Agreement shall be affected thereby, and each provision of this Agency Agreement shall be valid and enforceable to the fullest extent permitted by law. NG-U9ZQVMF2/4838-0582-9574x3/022459-0033 PFC 1-133 Section 5. Applicable Law. This Agency Agreement shall be governed by and construed in accordance with the laws of the State. Section 6. Representatives. Whenever under the provisions of this Agency Agreement the approval of the Corporation or the City is required, or the Corporation or the City is required to take some action at the request of the other, such approval or such request shall be given for the Corporation by an Authorized Representative of the Corporation and for the City by an Authorized Representative of the City and any party hereto shall be authorized to rely upon any such approval or request. Section 7. Notices. All notices or other communications hereunder shall be sufficiently given and shall be deemed to have been received five days after deposit in the United States mail in registered or certified form, postage prepaid: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Attention: City Manager If to the Corporation: Newport Beach Public Facilities Corporation c/o City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Attention: Secretary If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 400 South Hope Street, Suite 500 Los Angeles, California 90017 Attention: Corporate Trust Department The Corporation, the City and the Trustee, by notice given hereunder, may designate different addresses to which subsequent notices or other communications will be sent. Section 8. Captions. The captions or headings in this Agency Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provision or section of this Agency Agreement. Section 9. Execution in Counterparts. This Agency 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. Section 10. Amendment. The terms of this Agency Agreement shall not be waived, altered, modified, supplemented or amended in any manner whatsoever, except by written instrument signed by the Corporation and the City, with the prior written consent of the Trustee for the Certificates. The City hereby irrevocably appoints the Authorized Representative of the City to act as its attorney-in-fact for purposes of providing the foregoing consent. Section 11. Definitions. Capitalized terms not otherwise defined herein shall have the definitions set forth in the Trust Agreement or the Lease. NG-U9ZQVMF2/4838-0582-9574v3/022459-0033 PFC 1-134 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] NG-U9ZQVMF2/4838-0582-9574x3/022459-0033 PFC 1-135 IN WITNESS WHEREOF, the parties hereto have executed this Agency Agreement as of the day and year first written above. CITY OF NEWPORT BEACH City Manager ATTEST: City Clerk NEWPORT BEACH PUBLIC FACILITIES CORPORATION ATTEST: M. Secretary S -t NG-U9ZQVMF2/4838-0582-9574x3/022459-0033 Chief Financial Officer PFC 1-136 [Agency Agreement Signature Pages Continues] APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: an Aaron C. Harp, City Attorney S-2 NG-U9ZQVMF2/4838-0582-9574x3/022459-0033 PFC 1-137 EXHIBIT E PURCHASE AGREEMENT PFC 1-138 CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A (FIRE STATION NO. 2) CERTIFICATE PURCHASE AGREEMENT , 2020 City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Ladies and Gentlemen: The undersigned, Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), hereby offers to enter into this Certificate Purchase Agreement (the "Purchase Agreement") with the City of Newport Beach (the "City") for the purchase by the Underwriter of $ aggregate principal amount of City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2), (the "Certificates"). Upon acceptance of this offer by the City, this Purchase Agreement will be binding upon the City and the Underwriter. The offer made hereby is subject to acceptance by the City (by delivery to the Underwriter of an executed counterpart hereof by the City) at or before 11:59 p.m., California time, on the date hereof or at such later time and date as shall have been consented to by the Underwriter. The City acknowledges and agrees that: (a) the purchase and sale of the Certificates pursuant to this Purchase Agreement is an arm's-length commercial transaction between the City and the Underwriter; (b) the Underwriter is acting solely as underwriter and principal in connection with the process leading to, the matters contemplated by and all communications under this Purchase Agreement, and is not acting as the agent or fiduciary of the City; (c) the Underwriter has neither assumed an advisory or fiduciary responsibility in favor of the City or its advisors with respect to the offering of the Certificates or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the City on other matters) nor has it assumed any other obligation to the City except the obligations expressly set forth in this Purchase Agreement; (d) the Underwriter has financial and other interests that differ from those of the City; and (e) in connection with the purchase and sale of the Certificates, the City has consulted its own financial and other advisors to the extent it has deemed appropriate. The City also acknowledges that it previously received from the Underwriter a letter regarding Municipal Securities Rulemaking Board ("MSRB") Rule G-17 Disclosures, and that it has provided to the Underwriter an acknowledgement of such letter. The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of December 1, 2020 (the "Trust Agreement"), by and among The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), the Newport Beach Public Facilities Corporation (the "Corporation") and the City. Capitalized but undefined terms used herein shall have the meanings ascribed thereto in the Preliminary Official Statement (defined below). PFC 1-139 1. Purchase and Purchase Price; Terms of Certificates. Upon the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the City agrees to cause the Trustee to execute and deliver to the Underwriter, and the Underwriter agrees to purchase, all (but not less than all) of the Certificates at an aggregate purchase price of $ (representing the aggregate principal amount evidenced by the Certificates, plus a net original issue premium of $ , less an Underwriter's discount of $). The Certificates shall be dated the Closing Date. The Certificates shall have the principal payment dates and evidence interest at the rates per annum as provided in the Official Statement and as set forth in Exhibit A hereto. The Certificates shall be substantially in the form described in, shall be executed and delivered under and pursuant to, and shall be payable and subject to prepayment as provided in, the Trust Agreement, substantially in the form previously submitted to the Underwriter, with only such changes therein as shall be mutually agreed upon by the Underwriter, the City and the Corporation. The proceeds of the Certificates will be used to (a) finance a portion of the costs of the acquisition, improvement and equipping of a new Fire Station No. 2 and (ii) pay the costs of issuance incurred in connection with the execution and delivery of the Certificates. The City hereby ratifies, confirms and approves the use by the Underwriter, prior to the date hereof, of the Preliminary Official Statement of the City, dated , 2020, relating to the Certificates (the "Preliminary Official Statement"), which Preliminary Official Statement the City deemed final and so certified as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), except for information permitted to be omitted therefrom by Rule 15c2-12. The City hereby agrees to deliver or cause to be delivered to the Underwriter, within seven business days after the date hereof and at least two (2) business days prior to the Closing Date (as hereinafter defined), whichever occurs first, copies of the final Official Statement substantially in the form of the Preliminary Official Statement and with only such additions thereto, deletions therefrom and changes therein as the Underwriter shall approve (the "Official Statement"), (a) in "designated electronic format" (as defined in Rule G-32 of the Municipal Securities Rulemaking Board), and (b) in printed form in such reasonable quantity as the Underwriter shall request. The City hereby approves of the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offer and sale of the Certificates. The City will undertake, pursuant to the Trust Agreement and the Continuing Disclosure Agreement, to provide certain annual financial information and notices of the occurrence of certain enumerated events. A description of such undertaking is set forth in the Official Statement. The City hereby further authorizes the Underwriter to use, in connection with the offer and sale of the Certificates, the following documents: the Trust Agreement, the Lease/Purchase Agreement, dated as of December 1, 2020 (the "Lease"), by and between the Corporation and the City, the Site Lease, dated as of December 1, 2020 (the "Site Lease"), by and between the Corporation and the City, the Assignment Agreement, dated as of December 1, 2020 (the "Assignment Agreement"), by and between the Trustee and the Corporation and the Continuing Disclosure Agreement (collectively, the "Certificate Documents") and all information contained herein and therein and all of the documents, certificates or statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement. 2 PFC 1-140 The Underwriter agrees that, in connection with the public offering and initial delivery of the Certificates to the purchasers thereof from the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the Official Statement. It shall be a condition to the Underwriter's obligation to purchase, accept delivery of and pay for the Certificates that the entire principal amount of the Certificates shall be sold and delivered by the City on the Closing Date. 2. Closing Date; Certificates. At 8:30 a.m. California Time, on , 2020, or at such other time or on such earlier or later date as the Underwriter and the City mutually agree upon (the "Closing Date"), the City will deliver or cause to be delivered the executed certificates, opinions and other documents required by Section 4(d) below at the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation ("Special Counsel") in Newport Beach, California, or at such other place as shall have been mutually agreed upon by the Underwriter and the City. On the Closing Date, the City will deliver or cause to be delivered to the Underwriter, through the facilities of The Depository Trust Company ("DTC") in New York, New York, or at such other place as the City and the Underwriter may mutually agree upon, the Certificates in fully registered book -entry form, duly executed and registered in the name of Cede & Co., as nominee of DTC, and at the offices of Special Counsel, in Newport Beach, California, the other documents hereinafter mentioned; and the Underwriter will accept such delivery and pay the purchase price of the Certificates identified in Section 1 above on the Closing Date in immediately available funds to the account or accounts designated by the City. 3. Covenants, Representations and Warranties of the City. The City hereby covenants, represents and warrants to the Underwriter that: (a) The City is duly organized and validly existing as a municipal corporation under the constitution and laws of the State of California. The City has all necessary power and authority and has taken all official actions necessary to execute and deliver the Official Statement and to execute, deliver and perform its duties under this Purchase Agreement and each of the Certificate Documents to which it is a party, and this Purchase Agreement and each of the Certificate Documents to which the City is a party has been duly authorized, has or will be executed and delivered by the City and, assuming the due authorization, execution and delivery by the other respective parties thereto, when executed and delivered by the City will constitute legally valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors' rights generally or principles of equity involving judicial discretion. (b) The City is not in material breach of, or default under, any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States of America material to the conduct of its governmental or financial functions or any applicable judgment or decree or any loan agreement, indenture, bond, certificate, note, resolution or other agreement or instrument to which the City is a party or to which the City or any of its properties is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any of the foregoing; and the authorization, execution and delivery of this Purchase Agreement, the Certificate Documents to which the City is a party and the Certificates, and compliance with the provisions hereof and thereof, will not conflict with or constitute a material breach of or default under any constitutional provision, law, administrative rule or regulation, or any judgment, decree, license, permit, loan agreement, indenture, bond, certificate, note, resolution, agreement or other instrument to which the 3 PFC1-141 City (or any of its officers in their respective capacities as such) is subject or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument except as may be provided by the Certificates or the Certificate Documents to which the City is parry. (c) To the best knowledge of the City, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory entity having jurisdiction over the City required for the execution and delivery of this Purchase Agreement or the Certificate Documents to which the City is a party, or the execution and sale of the Certificates or the consummation by the City of the transactions contemplated herein, in the Official Statement or in the Certificate Documents to which the City is party, which has not been duly obtained or made on or prior to the date hereof. (d) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental or public entity pending or, to the best knowledge of the City, threatened against the City which affects or seeks to prohibit, restrain or enjoin the execution or delivery of the Certificates, this Purchase Agreement or the Certificate Documents to which the City is party, or contesting the validity of this Purchase Agreement, the Certificates or any of the Certificate Documents to which the City is party or the powers of the City to enter into or perform its obligations under this Purchase Agreement or the Certificate Documents to which it is a party or the existence or powers of the City, or which, if determined adversely to the City, would materially impair the City's ability to meet its obligations under the Lease or materially and adversely affect the City's financial condition. (e) The Preliminary Official Statement, as of the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the City makes no representation or warranty as to the statements or information contained in or omitted from the Preliminary Official Statement regarding DTC or in reliance upon and in conformity with information furnished in writing to the City by or on behalf of the Underwriter through a representative of the Underwriter specifically for inclusion therein. (f) As of its date and as of the date of the Closing, the Official Statement will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made not misleading; provided, however, that the City makes no representation or warranty as to the statements or information contained in or omitted from the Official Statement regarding DTC or in reliance upon and in conformity with information furnished in writing to the City by or on behalf of the Underwriter through a representative of the Underwriter specifically for inclusion therein. (g) From the date hereof until twenty-five (25) days after the End of the Underwriting Period, the City will amend or supplement the Official Statement in any manner necessary to make the Official Statement not misleading in light of the circumstances existing at the time it is delivered to a purchaser, and (at the expense of the City) shall deliver in the electronic format designated by the MSRB each amendment of or supplement to the Official Statement (in form and substance reasonably satisfactory to the Underwriter) which will amend or supplement the Official Statement 4 PFC 1-142 so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. As used herein, the term "End of the Underwriting Period" means the later of such time as (i) the Closing Date, or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Certificates for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the date of the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the City at or prior to the Closing Date, and shall specify a date (other than the Closing Date and not more than 25 days after the Closing Date) to be deemed the "End of the Underwriting Period." (h) The proceeds from the sale to the Underwriter of the Certificates will be applied in the manner and for the purposes specified in Section 1 hereof, the Trust Agreement and as described in the Official Statement. (i) Any certificate signed by any official of the City and delivered in connection with the transactions contemplated by the Official Statement and this Purchase Agreement shall be deemed to be a representation by the City to the Underwriter as to the statements made therein. 0) The City agrees to cooperate with the Underwriter in endeavoring to qualify the Certificates for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may reasonably request; provided, however, that the City will not be required to consent to service of process in any such jurisdiction or to qualify as a foreign corporation in connection with any such qualification in any jurisdiction and that the Underwriter shall be solely responsible for the cost of such qualification. (k) The City has complied with the Internal Revenue Code of 1986, as amended, with respect to the Certificates. (1) The financial statements of, and other financial information regarding, the City contained in the Official Statement fairly present the financial position and results of the operations of the City as of the dates and for the periods therein set forth, and, to the best of the City's knowledge, (i) the audited financial statements have been prepared in accordance with generally accepted accounting principles consistently applied, and (ii) the other financial information has been determined on a basis substantially consistent with that of the City's audited financial statements included in the Official Statement. (m) Except as described in the Official Statement, within the last five years the City has not failed to comply in all material respects with any prior continuing disclosure obligations entered into pursuant to Rule 15c2-12. (n) Between the date of this Purchase Agreement and the date of Closing, the City will not, without the prior written consent of the Underwriter, and except as disclosed in the Official Statement, offer or issue any certificates, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, secured by or payable from the City's general fund. 4. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to accept delivery of and pay for the Certificates on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations, PFC 1-143 warranties and agreements on the part of the City contained herein as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City, the Corporation and the Trustee made in any certificates or other documents furnished pursuant to the provisions hereof or the Certificate Documents, and to the performance by the City, the Corporation and the Trustee of their respective obligations to be performed hereunder and under the Certificate Documents at or prior to the Closing Date, and to the following additional conditions: (a) At the Closing Date, the Certificates, the Certificate Documents and the Official Statement shall have been duly authorized, and the Certificate Documents and the Official Statement shall have been executed and delivered by the respective parties thereto, in substantially the forms heretofore submitted to the Underwriter with only such changes as shall have been agreed to by the Underwriter, and said documents shall not have been amended, modified or supplemented, except as may have been agreed to by the Underwriter, and there shall have been taken in connection therewith, with the execution and delivery of the Certificates and with the transactions contemplated thereby and by this Purchase Agreement, all such actions as Special Counsel, shall deem to be necessary and appropriate; (b) The representations and warranties of the City contained in this Purchase Agreement shall be true, correct and complete in all material respects on the date hereof and on the Closing Date, as if made again on the Closing Date, and the Official Statement (as the same may be supplemented or amended with the written approval of the Underwriter) shall be true, correct and complete in all material respects and such information shall not contain any untrue statement of fact or omit to state any fact required to be stated therein or necessary to make the statements therein relating to the City, in light of the circumstances under which such statements were made, not misleading; (c) Between the date hereof and the Closing Date, the Underwriter shall have the right to cancel its obligation to purchase the Certificates if the market price or marketability of the Certificates or the ability of the Underwriter to enforce contracts for the sale of the Certificates shall be materially adversely affected, in the reasonable judgment of the Underwriter, by the occurrence of any of the following: (1) legislation enacted or introduced in the Congress or recommended for passage by the President of the United States, or a decision rendered by a court established under Article III of the Constitution of the United States or by the Tax Court of the United States, or an order, ruling, regulation (final, temporary or proposed) or official statement issued or made: (i) by or on behalf of the Treasury Department of the United States or the Internal Revenue Service with the purpose or effect, directly or indirectly (except as described in the Official Statement), of imposing federal income taxation upon such interest as would be received by the owners of the Certificates, or (ii) by or on behalf of the Securities and Exchange Commission, or any other governmental entity having jurisdiction of the subject matter, to the effect that obligations of the general character of the Certificates, or the Certificates, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Trust Agreement is not exempt from qualification under the Trust Indenture Act of 1939, as amended; 0 PFC 1-144 (2) legislation enacted by the legislature of the State or a decision rendered by a Court of the State, or a ruling, order, or regulation (final or temporary) made by State authority, which would have the effect of changing, directly or indirectly, the State tax consequences of interest on obligations of the general character of the Certificates in the hands of the holders thereof; (3) there shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; (4) the declaration of a general banking moratorium by federal, New York or California authorities; (5) the imposition by the New York Stock Exchange or other national securities exchange, or any governmental entity, of any material restrictions not now in force with respect to the Certificates or obligations of the general character of the Certificates or securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; (6) an order, decree or injunction of any court of competent jurisdiction, or order, filing, regulation or official statement by the Securities and Exchange Commission, or any other governmental entity having jurisdiction of the subject matter, issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Certificates, or the execution, delivery, offering or sale of the Certificates, including any or all underlying obligations, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws as then in effect; (7) the occurrence of any adverse change of a material nature of the financial condition, results of operation or properties of the City; (8) any rating of the Certificates or other debt obligations of the City has been downgraded, suspended or withdrawn by a national rating service or a negative qualification (e.g., "credit watch" or "negative outlook" designation) or other announcement made by a national rating service that the Certificates or other debt obligations of the City are under review without indication of a potentially favorable result, which, in the reasonable opinion of the Underwriter, materially adversely affects the marketability or market price of the Certificates; (9) any event occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; 7 PFC 1-145 (10) the marketability of the Certificates or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets; (11) the suspension by the Securities and Exchange Commission of trading in the outstanding securities of the City; (12) the purchase of and payment for the Certificates by the Underwriter, or the resale of the Certificates by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; (13) any state Blue Sky or securities commission, or other governmental agency or body, shall have withheld registration, exemption or clearance of the offering of the Certificates as described herein, or issued a stop order or similar ruling relating thereto; (14) the occurrence of a material disruption in securities settlement payment or clearance services; (15) a general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; or (16) any amendment shall have been made to the federal or State Constitution or action by any federal or State court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the City or its property, income securities (or interest thereon). (d) At or prior to the Closing Date, the Underwriter shall have received the following documents, in each case satisfactory in form and substance to the Underwriter: (1) the Official Statement and each of the Certificate Documents, duly executed and delivered by the respective parties thereto, with such amendments, modifications or supplements as may have been agreed to by the Underwriter; (2) the unqualified approving opinion of Special Counsel, dated the Closing Date and addressed to the City, in substantially the form attached to the Official Statement as Appendix D; (3) a letter dated as of the date of Closing and addressed to the Underwriter of Special Counsel to the effect that the Underwriter may rely upon the letter described in (4)(d)(2) above; (4) the supplemental opinion of Special Counsel, dated the Closing Date and addressed to the Underwriter, substantially to the effect that (i) the Certificates are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended, (ii) this Purchase Agreement and the Continuing Disclosure Agreement have been duly executed and delivered by, and constitute valid and binding obligations of, the City PFC1-146 enforceable in accordance with their respective terms, and (iii) the statements contained in the Official Statement under the captions "THE 2020 CERTIFICATES" "SECURITY AND SOURCES OF PAYMENT FOR THE 2020 CERTIFICATES" and "TAX MATTERS" and in "APPENDIX C — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS," excluding any material that may be treated as included under such captions by cross-reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Certificates, the Lease, the Site Lease, the Trust Agreement, and the form and content of Special Counsel's final legal opinion concerning the validity of the Lease and certain other matters, are accurate in all material respects; (5) the letter of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel, dated the Closing Date and addressed to the City and Underwriter, substantially to the effect that based on such counsel's participation in conferences with representatives of the Underwriter, the City and others, during which conferences the contents of the Official Statement and related matters were discussed, and in reliance thereon and on the records, documents, certificates and opinions described therein, such counsel advises the City, as a matter of fact and not opinion, that during the course of its engagement as Disclosure Counsel no information came to the attention of such counsel's attorneys rendering legal services in connection with such representation which caused such counsel to believe that the Preliminary Official Statement, as of its date and as of the date of the Purchase Agreement and the Official Statement, as of its date and as of the Closing Date contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that Disclosure Counsel need not express any opinion with respect to (i) any information contained in the appendices to the Official Statement, (ii) financial or statistical data or forecasts, numbers, charts, estimates, projections, assumptions or expressions of opinion contained in the Official Statement, including in any of the appendices thereto, (iii) information with respect to DTC or its book -entry only system included therein, (iv) any CUSIP numbers or information relating thereto, (v) any information with respect to the Underwriter or underwriting matters with respect to the Certificates; and (vi) any information with respect to the rating on the Certificates and the rating agency referenced therein, including, but not limited to, information under the caption "RATINGS), as to which such counsel need express no opinion or view); (6) an opinion of the City Attorney, in substantially the form of Exhibit B attached hereto, dated the Closing Date and addressed to the City, the Underwriter and the Trustee; (7) an opinion of City Attorney, in substantially the form of Exhibit C attached hereto, dated the Closing Date, addressed to the Corporation, the City, the Underwriter and the Trustee; (8) an opinion of counsel to the Trustee, dated the Closing Date, addressed to the City and the Underwriter, to the effect that (i) the Trustee is a duly organized and validly existing national banking association in good standing under the laws of the United States and has full power and authority to undertake the trust of the Trust Agreement and the Assignment Agreement, (ii) the Trustee has duly authorized, executed and delivered the Trust Agreement and the Assignment Agreement and by all proper corporate action has authorized the acceptance of the trust of the Trust Agreement and the Assignment Agreement, (iii) the 0 PFC1-147 Trust Agreement and the Assignment Agreement constitute legally valid and binding agreements of the Trustee, enforceable against the Trustee in accordance with their terms, (iv) the Certificates have been validly executed and delivered by the Trustee and are entitled to the benefits of the Trust Agreement, (v) no authorization, approval, consent, or other order of any governmental authority or agency having jurisdiction over the Trustee is required for the valid authorization, execution, delivery and performance by the Trustee of the Trust Agreement and the Assignment Agreement, and (vi) the execution and delivery of the Trust Agreement and the Assignment Agreement and compliance by the Trustee with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the Trustee a breach or default under any agreement or other instrument to which the Trustee is a party (and of which such counsel is aware after reasonable investigation) or by which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law, regulation, court order or consent decree to which the Trustee is subject; (9) a certificate of the Trustee dated the Closing Date, signed by a duly authorized officer of the Trustee, to the effect that (i) the Trustee is a national banking association organized and existing under and by virtue of the laws of the Unites States, having the full power and being qualified to enter into and perform its duties under the Trust Agreement and the Assignment Agreement and to execute and deliver the Certificates to the Underwriter pursuant to the Trust Agreement, (ii) when delivered to and paid for by the Underwriter on the Closing Date, the Certificates will have been duly executed and delivered by the Trustee, (iii) the execution and delivery of the Trust Agreement and the Assignment Agreement, and compliance with the provisions on the Trustee's part contained therein, will not conflict in any material respect with or constitute a breach of or default under any law, administrative regulation, judgment, decree, material agreement, or other material instrument to which the Trustee is a party or is otherwise subject (except that no representation, warranty or agreement is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant to the lien created by the Trust Agreement under the terms of any such law, administrative regulation, judgment, decree, material agreement, or other material instrument, except as provided by the Trust Agreement, (iv) the Trust Agreement and the Assignment Agreement have been duly authorized, executed and delivered by Trustee and constitute the legal, valid and binding obligations of the Trustee, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought and (v) to the knowledge of the Trustee, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental or public entity pending or, threatened against the Trustee, affecting the existence of the Trustee, or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the execution and delivery of the Certificates, or in any way contesting or affecting the validity or enforceability of the Trust Agreement or the Assignment Agreement, or contesting the powers of the Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Trust Agreement or the Assignment Agreement or the ability of the Trustee to perform its obligations thereunder; 10 PFC 1-148 (10) a certificate of the City, dated the Closing Date, signed by an authorized officer thereof, to the effect that (i) such officials are authorized to execute this Purchase Agreement and the Certificate Documents to which it is a party, (ii) the representations and warranties of the City contained in the Purchase Agreement and in the Certificate Documents to which it is a parry are true and correct in all material respects as of the Closing Date as if made on the Closing Date, (iii) the City has complied with all the terms of the Certificate Documents and this Purchase Agreement to be complied with by the City prior to or concurrently with the Closing Date, and, as to the City, such documents are in full force and effect, (iv) such City officials have reviewed the Official Statement and on such basis certify that the Official Statement (excluding therefrom information regarding DTC and its book - entry only system) does not contain any untrue statement of a material fact required to be stated therein or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and (v) no event affecting the City has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing Date the statements or information (except for statements and information regarding DTC) contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information (except for statements and information regarding DTC) therein not misleading in any material respect; (11) a certificate of the Corporation, dated the Closing Date, signed by an authorized officer thereof, to the effect that (i) the Corporation is a nonprofit public benefit corporation duly organized and validly existing under the laws of the State of California, (ii) the Corporation has all necessary power and authority and has taken all official actions necessary to execute, deliver and perform its duties under each of the Certificate Documents to which it is a party, and each of the Certificate Documents to which the Corporation is a party has been duly authorized, executed and delivered by the Corporation and, assuming the due authorization, execution and delivery by the other respective parties thereto, will constitute legally valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors' rights generally or principles of equity involving judicial discretion, (iii) the Corporation is not in material breach of, or default under, any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States of America material to the conduct of its functions or any applicable judgment or decree or any loan agreement, indenture, bond, certificate, note, resolution or other agreement or instrument to which the Corporation is a party or to which the Corporation or any of its properties is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any of the foregoing; and the authorization, execution and delivery of the Certificate Documents to which the Corporation is a party, and compliance with the provisions thereof, will not conflict with or constitute a breach of or default under any constitutional provision, law, administrative rule or regulation, or any judgment, decree, license, permit, loan agreement, indenture, bond, certificate, note, resolution, agreement or other instrument to which the Corporation (or any of its officers in their respective capacities as such) is subject or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument except as 11 PFC1-149 may be provided by the Certificate Documents, (iv) there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory entity having jurisdiction over the Corporation required for the execution and delivery of the Certificate Documents to which the Corporation is a parry, or the consummation by the Corporation of the transactions contemplated in the Official Statement or in the Certificate Documents, which has not been duly obtained or made on or prior to the date hereof, (v) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental or public entity pending or, to the knowledge of the Corporation, threatened against the Corporation which affects or seeks to prohibit, restrain or enjoin the execution or delivery of the Certificates or any of the Certificate Documents, or contesting the validity of the Certificates or any of the Certificate Documents or the powers of the Corporation to enter into or perform its obligations under the Certificate Documents to which it is a party or the existence or powers of the Corporation, and (vi) no event affecting the Corporation has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing Date the statements or information regarding the Corporation contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein regarding the Corporation not misleading in any material respect; (12) a certified copy of the Resolution of the City Council authorizing the execution and delivery of the Certificate Documents to which the City is a party and other matters pertaining thereto; (13) a certified copy of the Resolution of the governing board of the Corporation authorizing the execution and delivery of the Certificate Documents to which the Corporation is a party and other matters pertaining thereto; (14) a copy of the Certificate of Status issued by the Secretary of State of the State of California, a certified copy of the articles of incorporation of the Corporation, and a certified copy of the Bylaws of the Corporation; (15) a certified copy of the general resolution of the Trustee authorizing the execution and delivery of the Certificate Documents to which the Trustee is a party; (16) evidence that any ratings described in the Official Statement are in full force and effect as of the Closing Date; (17) a copy of the Notices of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code; (18) evidence of arrangements for the issuance of a binder for a CLTA title insurance policy or policies (with western regional exceptions) providing the title insurance required by the Lease, in form and substance acceptable to the Underwriter; (19) a tax certificate of the City relating to the Certificates in form and substance acceptable to Special Counsel dated as of the Closing Date; 12 PFC 1-150 (20) evidence that the federal tax information Form 8038-G with respect to the Certificates has been prepared for filing, delivered and signed as of the Closing Date; (21) an opinion of Kutak Rock LLP, Irvine, California, counsel to the Underwriter ("Underwriter's Counsel"), dated the Closing Date and addressed to the Underwriter in form reasonably satisfactory to the Underwriter; and (22) such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Special Counsel may reasonably request to evidence compliance by the Trustee, the Corporation and the City with legal requirements, the truth and accuracy, as of the Closing Date, of the representations of the Trustee, the Corporation and the City, and the due performance or satisfaction by the Trustee, the Corporation and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Trustee, the Corporation and the City. If the City shall be unable to satisfy the conditions to the Underwriter's obligations contained in this Purchase Agreement or if the Underwriter's obligations shall be terminated for any reason permitted herein, all obligations of the Underwriter hereunder may be terminated by the Underwriter at, or at any time prior to, the Closing Date by written notice to the City and the Underwriter shall have no further obligations hereunder. 5. Establishment of Issue Price. A. The Underwriter agrees to assist the City in establishing the issue price of the Certificates and shall execute and deliver to the City at the Closing Date an "issue price" or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit D, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the City and Special Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Certificates. B. Except as otherwise set forth in Exhibit A attached hereto, the City will treat the first price (meaning single) at which 10% of each maturity of the Certificates (the "10% test") is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the City the price or prices at which it has sold to the public each maturity of Certificates. If at that time the 10% test has not been satisfied as to any maturity of the Certificates, the Underwriter agrees to promptly report to the City the prices at which it sells the unsold Certificates of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Certificates of that maturity or (ii) the 10% test has been satisfied as to the Certificates of that maturity, provided that, the Underwriter's reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or Special Counsel. For purposes of this Section, if Certificates mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Certificates. C. The Underwriter confirms that it has offered the Certificates to the public on or before the date of this Purchase Agreement at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the 13 PFC1-151 maturities, if any, of the Certificates for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the "hold -the -offering -price rule"). So long as the hold -the -offering -price rule remains applicable to any maturity of the Certificates, the Underwriter will neither offer nor sell unsold Certificates of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth (5t) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Certificates to the public at a price that is no higher than the initial offering price to the public. The Underwriter will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Certificates to the public at a price that is no higher than the initial offering price to the public. D. The Underwriter confirms that: (i) any selling group agreement and any third -party distribution agreement relating to the initial sale of the Certificates to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker- dealer that is a party to such third -party distribution agreement, as applicable: (A)(i) to report the prices at which it sells to the public the unsold Certificates of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Certificates of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Certificates of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold -the -offering -price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Certificates that, to its knowledge, are made to a purchaser who is a related parry to an underwriter participating in the initial sale of the Certificates to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public. (ii) any selling group agreement relating to the initial sale of the Certificates to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third -party distribution agreement to be employed in connection with the initial sale of the Certificates to the public to require each broker-dealer that is a parry to such third - party distribution agreement to (A) report the prices at which it sells to the public the unsold 14 PFC 1-152 Certificates of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Certificates of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Certificates of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold -the -offering -price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. E. The City acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Certificates to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Certificates, including, but not limited to, its agreement to comply with the hold -the -offering -price rule, if applicable to the Certificates, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third -party distribution agreement was employed in connection with the initial sale of the Certificates to the public, the agreement of each broker-dealer that is a parry to such agreement to comply with the requirements for establishing issue price of the Certificates, including, but not limited to, its agreement to comply with the hold -the -offering -price rule, if applicable to the Certificates, as set forth in the third -parry distribution agreement and the related pricing wires. The City further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third -party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Certificates, including, but not limited to, its agreement to comply with the hold -the -offering -price rule, if applicable to the Certificates. F. The Underwriter acknowledges that sales of any Certificates to any person that is a related party to an underwriter participating in the initial sale of the Certificates to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: a. "public" means any person other than an underwriter or a related party; b. "underwriter" means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Certificates to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Certificates to the public (including a member of a selling group or a party to a third -parry distribution agreement participating in the initial sale of the Certificates to the public); C. a purchaser of any of the Certificates is a "related parry" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a 15 PFC 1-153 partnership (including direct ownership of the applicable stock or interests by one entity of the other); and d. "sale date" means the date of execution of this Purchase Agreement by all parties. 6. Fees and Expenses. Except as provided in the following paragraph, the City shall pay all costs and expenses incurred in connection with or relating to the execution and sale of the Certificates, including but not limited to (a) the fees and expenses of Special Counsel, (b) the fees and expenses of Disclosure Counsel, (c) the fees and expenses of counsel to the City and the Corporation, (d) all expenses and costs of the City incident to the performance of its obligations hereunder and in connection with the authorization, execution and sale of the Certificates, (e) the costs of printing, distributing and delivering the Preliminary Official Statement and the Official Statement, (f) the fees and expenses of the Trustee and its counsel, and (g) rating agency fees for rating the Certificates. The Underwriter shall pay any advertising expenses incurred in connection with the public offering of the Certificates, the fees of the California Debt and Investment Advisory Commission, fees of the Municipal Securities Rulemaking Board, fees of Underwriter's Counsel and, except as provided in the preceding paragraph, all other expenses incurred by the Underwriter in connection with the public offering and sale of the Certificates. 7. Notices. All notices, certificates and other communications provided for hereunder shall be in writing and, if to the City, mailed, certified, return receipt requested, or delivered to it, addressed to it at: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention: City Manager and if to the Underwriter, mailed, certified, return receipt requested, or delivered to it, addressed to it at: Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35t' Floor San Francisco, CA 94104 Attention: Sara Oberlies Brown, Managing Director or such other address as shall be designated by any such party in a written notice to each of the other parties. 8. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements of the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of the Certificates hereunder. 9. Applicable Law. This Purchase Agreement shall be interpreted, governed and enforced in accordance with the laws of the State of California. 16 PFC 1-154 10. Effectiveness. This Purchase Agreement shall become effective upon its execution by duly authorized officers of the Underwriter and the City and shall be valid and enforceable from and after the time of such execution. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 17 PFC 1-155 11. Counterparts. This Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. The foregoing is hereby agreed to and accepted as of the date first above written: STIFEL, NICOLAUS & COMPANY, INCORPORATED LM Authorized Officer CITY OF NEWPORT BEACH I -A Authorized Representative Time of Execution: California time ATTEST: R -A City Clerk APPROVED AS TO FORM: Office of the City Attorney R -A Assistant City Attorney p.m. [EXECUTION PAGE OF CERTIFICATE PURCHASE AGREEMENT — CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A] S-1 PFC1-156 Principal Payment Date (July 1) 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 20 (T) Principal Interest Amount Rate EXHIBIT A MATURITY SCHEDULE 10% Test 10% Test Not Yield Price Satisfied* Satisfied Subject to Hold -The - Offering -Price Rule (marked if used) (T) Term Certificate. (c) Priced to optional call at [par] on July 1, 20 At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement. A-1 PFC1-157 EXHIBIT B FORM OF OPINION OF CITY ATTORNEY , 2020 City of Newport Beach Newport Beach, California The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Stifel, Nicolaus & Company, Incorporated San Francisco, California Re: City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) Ladies and Gentlemen: We have acted as counsel to the City of Newport Beach (the "City") in connection with the execution and delivery of $ aggregate principal amount of City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates"). In connection with rendering this opinion, we have examined documents, obtained certificates and undertaken other actions as we have determined necessary to render this opinion. We have examined the following documents: a Lease/Purchase Agreement, dated as of December 1, 2020 (the "Lease"), by and between the City and the Newport Beach Public Facilities Corporation (the "Corporation"); a Trust Agreement, dated as of December 1, 2020 (the "Trust Agreement"), by and among The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), the Corporation and the City; a Site Lease, dated as of December 1, 2020 (the "Site Lease"), by and between the City and the Corporation; a Continuing Disclosure Agreement, dated , 2020 (the "Continuing Disclosure Agreement"), executed by the City; a Certificate Purchase Agreement, dated 2020 (the "Purchase Agreement"), by and between the City and Stifel, Nicolaus & Company, Incorporated (the "Underwriter"); a Resolution adopted by the City Council of the City on 2020 (the "Resolution") relating to the Certificates; an Official Statement, dated , 2020 (the "Official Statement'), which describes, among other things, the Certificates and the City; and the certificates and certifications of the City, the Trustee, the Corporation and others as to certain factual matters and such other documents and matters to the extent we deemed necessary to render the opinions set forth herein. Based on the foregoing and without having made independent inquiry, we are of the opinion that: 1. The City is a municipal corporation duly organized and validly existing under the Constitution and laws of the State of California with full legal right, power and authority to execute, deliver and perform all of its obligations under the Purchase Agreement, the Trust Agreement, the Lease, the Site Lease, and the Continuing Disclosure Agreement (collectively, the "City Documents"), and to participate in the transactions contemplated by the Official Statement. PFC1-158 2. The Resolution was duly adopted at a meeting of the City Council of the City, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Resolution is in full force has not been modified, amended or rescinded. 3. The City has duly authorized the distribution of the Official Statement and the City Documents have been duly authorized, executed and delivered and, assuming due authorization, execution and delivery by the other parties thereto, constitute the legally valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought. 4. There is no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, government agency, public board or body, pending or, to our knowledge, threatened: (a) which would materially adversely affect the financial position of the City; (b) affecting, contesting or seeking to prohibit, restrain or enjoin the execution and delivery of the Certificates or in any way contesting or affecting the validity of or security of the Certificates or the City Documents or the consummation of the transactions contemplated thereby, or contesting the powers of the City or its authority to execute and deliver the City Documents or perform its obligations thereunder; or (c) contesting the completeness or accuracy of the Official Statement, or any supplement or amendment thereto or asserting that the Official Statement contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstance under which they were made, not misleading. 5. The City is not in breach of or default under any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or to which it or any of its property or assets is otherwise subject, which breach or default would materially adversely affect the City's ability to enter into or perform its obligations under the City Documents and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a breach or default; and the execution and delivery by the City of the City Documents, and compliance with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any court order or consent decree to which the City is subject. This letter is not to be used, circulated, quoted, or otherwise referred to for any purpose other than the offering of the Certificates and may not be relied upon other than by the addresses hereof without our express written permission. Respectfully submitted, IM PFC 1-159 EXHIBIT C FORM OF OPINION OF COUNSEL TO THE CORPORATION , 2020 City of Newport Beach Newport Beach, California The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Stifel, Nicolaus & Company, Incorporated San Francisco, California Re: City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) Ladies and Gentlemen: We have acted as counsel to the Newport Beach Public Facilities Corporation (the "Corporation") in connection with the execution and delivery of $ aggregate principal amount of City of Newport Beach Certificates of Participation 2020A (Fire Station No. 2) (the "Certificates"). In connection with rendering this opinion, we have examined documents, obtained certificates and undertaken other actions as we have determined necessary to render this opinion. We have examined the following documents: a Resolution of the Board of Directors of the Corporation adopted on , 2020 (the "Resolution") relating to the Certificates; the Lease/Purchase Agreement, dated as of December 1, 2020 (the "Lease"), by and between the City and the Corporation; a Site Lease, dated as of December 1, 2020 (the "Site Lease"), by and between the City and the Corporation; the Trust Agreement, dated as of December 1, 2020 (the "Trust Agreement"), by and among The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), the Corporation and the City; the Assignment Agreement, dated as of December 1, 2020 (the "Assignment Agreement"), by and between the Trustee and the Corporation; the certificates and certifications of the City, the Trustee, the Corporation and others as to certain factual matters; and such other documents and matters to the extent we deemed necessary to render the opinions set forth herein. With your permission we have assumed, without undertaking to verify the same by independent investigation, the following: (a) the authenticity of original documents and the genuineness of all signatures; (b) the conformity to the originals of all documents submitted to us as copies; (c) the truth, accuracy, and completeness of the information, representations, and warranties contained in these documents, certificates, records and papers we have reviewed; and (d) compliance with all covenants and agreements contained in such documents. Based on the foregoing, we are of the opinion that: 1. The Corporation is a nonprofit public benefit corporation organized and existing under and by virtue of the laws and the Constitution of the State of California and has full legal C-1 PFC 1-160 power and lawful authority to execute and deliver and perform all obligations under the Lease, the Site Lease, the Assignment Agreement and the Trust Agreement (collectively, the "Corporation Documents") and to participate in the transactions contemplated by the Official Statement. 2. The Resolution has been duly adopted at a meeting of the Board of Directors of the Corporation, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Resolution is in full force and effect and has not been modified, amended or rescinded. 3. The Corporation has duly authorized, executed and delivered the Corporation Documents and, assuming due authorization, execution and delivery by the parties thereto other than the Corporation, the Corporation Documents constitute the legally valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought. 4. There is no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, government agency, public board or body, pending or, to our knowledge after reasonable investigation, threatened: (a) which would materially adversely affect the financial position of the Corporation; (b) affecting, contesting or seeking to prohibit, restrain or enjoin the execution and delivery of any of the Certificates or the Corporation Documents, or in any way contesting or affecting the validity of or security for the Certificates or the Corporation Documents or the consummation of the transactions contemplated thereby, or contesting the powers of the Corporation or its authority to execute and deliver the Corporation Documents or perform its obligations thereunder; or (c) contesting the completeness or accuracy of the Official Statement or asserting that the Official Statement contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and to our knowledge there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in subparagraphs (a) through (c) of this Paragraph 4. 5. The Corporation is not in material breach of or default under any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Corporation is a party or to which the Corporation or any of its property or assets is otherwise subject, and no event has occurred or is continuing which with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; and the execution and delivery of the Corporation Documents and compliance with the provisions thereof by the Corporation, will not result in a violation of, a breach of, or a default under the articles of incorporation or bylaws of the Corporation or any indenture, mortgage, deed of trust, note agreement, or other agreement or instrument to which the Corporation is a party or by which it C-2 PFC1-161 or any of its property is bound, or any order of any court or other governmental body having jurisdiction of the Corporation. This letter is not to be used, circulated, quoted, or otherwise referred to for any purpose other than the offering of the Certificates and may not be relied upon other than by the addresses hereof without our express written permission. Respectfully submitted, C-3 PFC 1-162 EXHIBIT D CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A (FIRE STATION NO. 2) CERTIFICATE OF THE UNDERWRITER [TO COME FROM SPECIAL COUNSEL] Schedule PFC1-163 EXHIBIT F ASSIGNMENT AGREEMENT PFC 1-164 RECORDING REQUESTED BY: City of Newport Beach AND WHEN RECORDED MAIL TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attn: Brian P. Forbath, Esq. [Space above for Recorder's use.] 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 by and between NEWPORT BEACH PUBLIC FACILITIES CORPORATION and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Dated as of December 1, 2020 Relating to CITY OF NEWPORT BEACH CERTIFICATES OF PARTICIPATION 2020A (FIRE STATION NO. 2) NG-U9ZQVMF2/4820-6691-2965x2/022459-0033 PFC 1-165 ASSIGNMENT AGREEMENT This ASSIGNMENT AGREEMENT, dated as of December 1, 2020, by the NEWPORT BEACH PUBLIC FACILITIES CORPORATION, a 501(c)(4) nonprofit public benefit corporation duly organized and existing under and by virtue of the laws of the State of California (the "Corporation"), and accepted by THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized under the laws of the United States of America, as trustee under the Trust Agreement (defined below) (the "Trustee"); WITNESSETH. - WHEREAS, the Corporation and the City of Newport Beach, a chartered city 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 Lease/Purchase Agreement (the "Lease"), each dated as of the date hereof and recorded concurrently herewith, whereby, respectively, the City has agreed to lease certain real property of the City described in Exhibit A to the Site Lease and in Exhibit A hereto, including the existing improvements thereon (the "Leased Premises"), to the Corporation and the Corporation has agreed to lease back such Leased Premises to the City, as provided therein; and 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 the Leased Premises; and WHEREAS, the Corporation desires to assign absolutely, 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 and certain of its other rights, title and interest under the Lease as described herein; and WHEREAS, the Corporation desires to assign absolutely, without recourse, all of its rights to, under and pursuant to the Site Lease to the Trustee; and WHEREAS, in consideration of such absolute assignment and the execution and entering into of a Trust Agreement (the "Trust Agreement") dated 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 designated as the City of Newport Beach Certificates of Participation 2020A (the "Certificates") in an aggregate principal amount equal to the aggregate principal component of such Lease Payments; and WHEREAS, each party has determined that all acts conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with its 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 it is 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: NG-U9ZQVMF2/4820-6691-2965x2/022459-0033 PFC1-166 Section 1. Assignment. (a) Site Lease. The Corporation hereby transfers, assigns absolutely and sets over to the Trustee, for the benefit of the Owners (as defined in the Trust Agreement) of the Certificates and any Additional Certificates executed and delivered under the Trust Agreement, all of the Corporation's rights, title, and interest under the Site Lease. (b) Lease. The Corporation hereby transfers, assigns absolutely and sets over to the Trustee, for the benefit of the owners of the Certificates and any Additional Certificates executed and delivered under the Trust Agreement, all of the Corporation's rights, title and interest under the Lease (excepting only the Corporation's rights to indemnity and the payment of its fees and expenses under Sections 2.1(e), 4.11, 7.9, 7.14 and 9.4 of the Lease), including, without limitation, (1) the right to receive and collect all of the Lease Payments, Prepayments and Additional Payments (except to the extent payable to the Corporation) (as such terms are defined in the Trust Agreement) from the City under the Lease or the Trust Agreement, as applicable, (2) the right to receive and collect any proceeds of any insurance maintained thereunder, or any condemnation award rendered with respect to the Leased Premises, or of any lease of the Leased Premises 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 8.2(b) (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, Prepayments and Additional Payments and any other amounts required to be deposited in the Lease Payment Fund, the Prepayment Fund or the Net Proceeds Fund 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 Leased Premises upon events of default under the Lease, as provided in Section 9.2(a) and (b) of the Lease. Notwithstanding the foregoing, only owners of Certificates and Additional Certificates secured by Lease Payments (as set forth in a Supplemental Agreement) shall have any right, interest and security in the Lease Payments and Prepayments. (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 the Certificates and any Additional Certificates. Section 2. Acceptance. The Trustee hereby accepts the foregoing assignment for the benefit of the Owners of the Certificates and any Additional 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. The Assignment Agreement shall confer no rights and shall impose no obligations upon the Trustee beyond those expressly provided in the Trust Agreement. The Trustee does not warrant the accuracy of the recitals hereto. The Trustee shall not be responsible for any representations, covenants or warranties of the Corporation. The assignment hereunder is to the Trustee solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity. The Trustee is not responsible for any representations, warranties or covenants made by the assignor under the Lease or the Site Lease. OA NG-U9ZQVMF2/4820-6691-2965x2/022459-0033 PFC 1-167 Section 4. No Other Claim. The Corporation hereby represents and warrants that there are no present and outstanding claims on Lease Payments or any other moneys assigned by the Corporation to the Trustee hereunder. Section 5. Counterparts. This Assignment Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 6. Applicable Law. This Assignment Agreement shall be governed by and construed in accordance with the laws of the State of California. [REMAINDER OF PAGE INTENTIONALL Y LEFT BLANK J NG-U9ZQVMF2/4820-6691-2965v2/022459-0033 PFC 1-168 IN WITNESS WHEREOF, the parties hereto have executed and entered into the Assignment Agreement by their officers thereunto duly authorized as of the day and year first above written. NEWPORT BEACH PUBLIC FACILITIES CORPORATION Bv: Its: Chief Financial Officer ATTEST: Secretary Accepted by: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee BY: Its: Authorized Officer S-4 NG-U9ZQVMF2/4820-6691-2965x2/022459-0033 PFC 1-169 [Assignment Agreement Signature Pages Continued] APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: Aaron C. Harp, City Attorney S-5 NG-U9ZQVMF2/4820-6691-2965v2/022459-0033 PFC 1-170 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF ORANGE On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC NG-U9ZQVMF2/4820-6691-2965x2/022459-0033 PFC1-171 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC NG-U9ZQVMF2/4820-6691-2965x2/022459-0033 PFC 1-172 EXHIBIT A DESCRIPTION OF THE LEASED PREMISES Real property and improvements thereon in the City of Newport Beach, County of Orange, State of California, described as follows: A-1 NG-U9ZQVMF2/4820-6691-2965x2/022459-0033 PFC 1-173