HomeMy WebLinkAboutFile 2 of 3 - City of Huntington Beach Community Facilities . Ca
ED 03-29
City Council Meeting
December 15, 2003
Approve Community Facilities District 2003-1 Issuance
of up to $25 Million in Bonds (Huntington Center)
Adoption of City Council Resolution No. will approve the
following documents as listed in the Request for Council Action:
1 . Funding and Construction Agreement
2. Fiscal Agent Agreement
3. Purchase Contract
4. Parking and Reciprocal Easement Agreement and
Option to Purchase
5. The Operating Agreement
Council/Agency Meeting Held:
Deferred/Continued to:
❑ Approved ❑ Conditionally Approved ❑ Denied City Clerk's Signature
Council Meeting Date: December 15, 2003 Department ID Number: ED 03-29
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY: RAY SILVER, City Administrator
PREPARED BY: DAVIC C. BIGGS, Director of Economic Development
CLAY MARTIN, Director of Administrative Services
SUBJECT: Approve Community Facilities District 2003-1
Issuance of up to $25 Million in Bonds (Huntington Center)
Statement of issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: On October 2, 2000, the Redevelopment Agency of the City of
Huntington Beach entered into an Owner Participation Agreement (OPA) with Huntington
Center Associates, LLC for the redevelopment of Huntington Center. A component of the
financing for the project stipulates that the Developer and the Redevelopment Agency will
cooperate in the issuance of Community Facilities District (CFD) bonds to pay for the costs
associated with installing public improvements necessary for the project. The bonds are
supported by a special property tax. levy imposed on the owner of the property (Huntington
Center Associates, LLC). On February 3, 2003, the City established Community Facilities
District No. 2003-1 for that purpose. The actions recommended below are necessary to
issue up to $25 million in CFD bonds.
Funding Source: Funding for this CFD will come from bonds to be issued within the next
60 - 90 days. A special tax levy will be paid by Huntington Center Associates, LLC to pay the
bonds over the life of these bonds. Neither the City.nor the Redevelopment Agency has any
responsibility for the repayment of the bonds. The costs associated with the issuance of the
bonds are funded from the bonds.
Recommended Action: Motion to:
1. Adopt City Council Ordinance No. , Levying Special Taxes Within the City of
Huntington Beach Community Facilities District No. 2003-01 (Huntington Center).
2. Adopt City Council Resolution No. , Authorizing the Issuance of Special Tax
Bonds for the City of Huntington Beach Community Facilities District No. 2003-01
(Huntington Center) in an Aggregate Principal Amount not to Exceed $25,000,000 and
Approving Certain Documents and Taking Certain Other Actions in Connection
Therewith.
REQUEST FOR COUNCIL ACTION
MEETING DATE: December 15, 2003 DEPARTMENT ID NUMBER: ED 03-29
Alternative Actions : The City Council has the option of not approving the sale of bonds
for the Community Facilities District. Currently the Redevelopment Agency's obligation to
repay certain cash advances by the developer of Huntington Center (Bella Terra) accrues
interest at the developer cost of funds, not to exceed 8%. Upon issuance of the CFD bonds,
the interest rate on the Developer's Advance will be lowered. As such, the Redevelopment
Agency will benefit from the developer's ability to access a lower cost source of funds.
Analysis: Since entering into an Owner Participation Agreement with Huntington Center
Associates, LLC, on October 2, 2000, the City and the Redevelopment Agency have been
cooperating with the developer to secure a lower cost source of funds to finance the public
improvements associated with redeveloping the center. The City earlier this year formed a
Community Facilities District to provide the tax exempt financing for up to $30 million, thereby
reducing the Agency's cost of repaying the developer advance of up to $16,750,000. Without
the CFD, the Agency would pay an 8% interest rate on the pledged advance. With the CFD,
the interest rate would be adjusted downward by one-half of the difference between the CFD
interest rate and the 8%. For example, if the CFD interest rate were 6%, then one-half the
difference between 8% and 6% would result in reducing the rate paid by the Agency by 1%.
Moreover, a key purpose of the CFD is the financing of the parking structure within the
center. This structure will be owned and maintained by the City, but the maintenance and
obligation and operation will be delegated to the developer.
On January 6, 2003 City Council adopted Resolution No. 2003-3 (Resolution of Intention)
and Resolution No. 2003-4 (Resolution of Necessity) that initiated the formation of the
Community Facilities District 2003-1 (Huntington Center). This was completed with the
second reading of the ordinance on February 3, 2003. The actions recommended as part of
this item specifically approves the issuance of up to $25 million in CFD bonds. The attached
Ordinance and Resolution also authorizes the approval by the City Council of additional
documents. These documents are listed below and available for review in the City Clerk's
Office.
1. Funding and Construction Agreement;
2. Fiscal Agent Agreement;
3. Purchase Contract;
4. Reciprocal Easement Agreement; and
5. Operating Agreement.
Just after the first of the year, the City underwriter will offer the bonds for sale. Preliminary
Official Statement within 15 -30 days thereafter, the bonds will be sold with the transaction
closed.
Environmental Status: Not Applicable.
G:\Gus\HBMALL\CFD\RCABeIIaCFD.doc -2- 12/2/2003 8:20 AM
REQUEST FOR COUNCIL ACTION
MEETING DATE: December 15, 2003 DEPARTMENT ID NUMBER: ED 03-29
Attachment(s):
City Clerk's
Page Number No. Description
1. Ordinance No. of the City Council Levying Special
Taxes Within the City of Huntington Beach Community Facilities
District No. 2003-1 (Huntington Center).
2. Resolution No. of the City Council of the City of
Huntington Beach Authorizing the Issuance of Special Tax
Bonds for the City of Huntington Beach Community Facilities
District No. 2003-1 (Huntington Center) in an Aggregate Principal
Amount not to Exceed $25,000,000 and Approving Certain
Documents and Taking Certain Other Actions in Connection
Therewith.
3. Preliminary Official Statement.
4. Power Point Presentation.
5. List of Documents Available for Review in the City Clerk's Office.
RCA Author: Gus Duran X1529
G:\Gus\HBMALL\CFD\RCABeIIaCFD.doc -3- 12/2/2003 8:20 AM
FUNDING AND CONSTRUCTION AGREEMENT
Relating to
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
Between
THE CITY OF HUNTINGTON BEACH
and
HUNTINGTON CENTER ASSOCIATES,LLC
a Delaware limited liability company
dated as of
December 15,2003
FUNDING AND CONSTRUCTION AGREEMENT
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
This FUNDING AND CONSTRUCTION AGREEMENT(the"Agreement")is entered into as
ofthe 151h day of December,2003 by and between the CITY OF HUNTINGTON BEACH,a California
charter city (the "City"), and HUNTINGTON CENTER ASSOCIATES, L.L.C., a Delaware limited
liability company("Developer").
RECITALS
(A) Developer is in cooperation with the Redevelopment Agency of the City of Huntington
Beach(the "Agency")to improve that certain real property located on Edinger Avenue and comprised of
a shopping center commonly known as"Huntington Center"and more particularly described and depicted
in the legal description and map attached hereto as Exhibits"A"and"B,"respectively(the"Property"). The
Property consists of a total of approximately 46.86 acres of land area. Pursuant to that certain Owner
Participation Agreement entered into by and between Huntington Center Associates, LLC, a Delaware
limited liability company and the Agency and dated October 2,2000(the"OPA"),Developer,as successor
in interest to Huntington Center Associates,LLC,is contractually obligated under the OPA to improve the
Huntington Center and ancillary improvements on and adjacent to the Property(the "Development").
(B) The City,upon the request of Developer and pursuant to a request from the Agency under
the OPA has undertaken to establish a community facilities district pursuant to the provisions of Chapter
2.5 (commencing with § 53311) of Part 1 of Division 2 of Title 5 of the Government Code, commonly
known as the"Mello-Roos Community Facilities Act of 1982"the("Act"),and Chapter 3.56 of the City's
Municipal Code(the"Municipal Code")over and including the Property for the purpose of selling bonds
(the"Bonds")in an amount sufficient to pay for the acquisition of land and improvements thereon for public
P.VPUB\KAB\645932 1
use,the demolition and clearance of said land and improvements and the design, planning, engineering,
financing, installation, and construction of those certain public facilities that are generally described in
Exhibit "C" attached hereto (the 'Public Facilities"), which Public Facilities are necessary to the
development of the Property. Said community facilities district is known as "City of Huntington Beach
Community Facilities District No.2003-1 (Huntington Center)(the'District").
(C) Section 3.56.120 of the Municipal Code provides that a community facilities district may
finance the construction of facilities completed after the adoption of the resolution of formation establishing
the community facilities district if the facilities have been constructed as if they had been constructed under
the direction and supervision, or under the authority of, the local agency whose governing body is
conducting proceedings for the establishment of the District.
(D) The purpose of this Agreement is to provide for the design and the construction of the
Public Facilities,and the issuance and sale of the Bonds of the District to finance the acquisition of public
land and public improvements,the demolition and clearance of said land and improvements,and the design,
planning,engineering,financing,installation,and construction ofthe Public Facilities and expenses incidental
thereto.
AGREEMENTS
NOW, THEREFORE, in consideration of the preceding recitals and the mutual covenants
hereinafter contained,the parties agree as follows:
Section 1. Establishment of District. The City has initiated and prosecuted proceedings
pursuant to the Act and the Municipal Code for the establishment of the District. Such proceedings
included elections pursuant to Sections 53326 and 53353.5 of the Act on(i)the question ofthe issuance
of the Bonds for the District to finance the acquisition of public land and public improvements, the
demolition and clearance of said land and improvements, and the design, planning, engineering, and
RVPUF3\KAB\645932 2
financing and the installation and construction or acquisition ofthe Public Facilities,(ii)the question of the
annual levy of special taxes on those portions of the Property subject to the Special Taxes for the payment
of the principal of and interest on the Bonds of the District and the annual administrative expenses of the
City and the District in levying and collecting such special taxes,paying the principal and interest on such
Bonds and providing for the registration,exchange and transfer of such bonds,including the fees of fiscal
agents and paying agents, and any necessary replenishment of the reserve fund for such Bonds or
accumulation of funds for future bond payments,and(iii)the question of the establishment of an appropri-
ations limit for the District.
Section 2. Sale of Bonds. The City may proceed,using its reasonable best efforts,as herein-
after provided,with the sale of the Bonds for the District in an aggregate principal amount not to exceed
$30,000,000 and with a debt service amortization schedule of not more than thirty (30) years, or as
otherwise consistent with the terms of the OPA,for the purpose of raising an amount sufficient to pay for
the acquisition of public land and construction of public improvements,the demolition and clearance of said
land,and the design,planning,engineering,and financing,and the installation and construction or acquisition
of the Public Facilities. The timing of the issuance and sale of the Bonds,the aggregate principal amount
thereof,and the terms and conditions upon which they shall be sold shall be as set forth in this Agreement
and otherwise as determined by the City in its reasonable discretion. The Bonds may be sold in one or
more series in the reasonable discretion of the City and in consultation with the Developer. Not by way
of limitation of the foregoing, the timing of the issuance and sale of the Bonds in one or more series shall
be as soon as reasonably practicable,as determined by the City in consultation with Developer.
Section 3. Advance of Certain Expenses. Pursuant to Paragraph (0 of the Schedule of
Feasibility Gap Payments (Attachment No. 7) of the OPA, Developer shall pay and advance all of the
City's costs reasonably associated with the establishment of the District and the sale of the Bonds.
RVPUB\KAB\645932 3
Additionally,Developer has advanced the sum of$68,580 (the "Initial Deposit") for an appraisal of the
Property and market study,together with other necessary costs for the formation of the District including
a special tax consultant and all other expenditures in connection with the issuance of the Bonds,and such
amount shall be reimbursed to Developer pursuant to Section 5 hereof. Any costs to be paid or advanced
by the City may be reimbursed from the proceeds of the Bonds,which costs include the City's reasonable
out-of-pocket expenses,if any,associated with engineering services provided by City engineering staff and
outside engineering consultants which are normally charged in connection with the establishment of the
District and the determination of the sizing of the Bonds and the method of apportioning and levying the
special taxes on the Property to pay the principal of and interest on the Bonds, and reasonable travel
expenses of the City relating to the sale of the Bonds. Such costs of the City, together with the Initial
Deposit and any additional amount advanced by Developer in connection with the formation of the District,
the issuance of Bonds, the appraisal, and the market study shall be referred to herein "Reimbursable
Expenses." All of the Reimbursable Expenses paid or advanced by the City or Developer shall be
reimbursed to the City or Developer,as applicable, from the proceeds of the sale of the Bonds,as soon
after receipt of the proceeds of the Bonds as is reasonably possible.
The City shall keep records of all Reimbursable Expenses advanced by the City pursuant to this
Section 3 which records shall be available for inspection by Developer during regular business hours. The
City shall separately account for all expenses paid from the deposit of Developer and such records shall
be available for inspection by Developer during regular business hours. The sole source of funds for
reimbursement of any advance expenditure made by the City or Developer shall be the proceeds of the
Bonds; provided, that it is understood by the parties hereto that this Agreement is not intended to
supercede or replace the provisions of the OPA.
RVPUB\KAB\645932 4
Section 4. Tax Requirements. The timing of the sale of the Bonds,formation of the District,
the nature of the investments in which the proceeds of the Bonds shall be invested, the duration of such
investments,and the timing of the expenditure of such proceeds shall be as set forth in this Agreement and
the OPA, in accordance with the Funding Agreement, and otherwise as determined by the City in its
reasonable discretion in consultation with Developer;provided,that in all such matters City shall comply
with the requirements of and limitations prescribed by the provisions of Sections 103 and 141 through 150
of the Internal Revenue Code of 1986,as amended,and the implementing regulations of the United States
Department of the Treasury. The City shall not be required to take any such action which in the opinion of
the City's bond counsel could result in the Bonds being classified by the United States Department of the
Treasury as "arbitrage bonds"or which could otherwise result in the interest on the Bonds being included
in gross income for purposes of Federal income taxation. Should any change in or regulatory interpretation
of any such requirement or limitation which may occur after the date of this Agreement require or necessi-
tate, in the opinion of such bond counsel, any action on the part of the City in order to avoid such a
classification or loss of tax exemption, the City shall notwithstanding any provision of this Agreement,
forthwith take such action.
Section 5. Amounts to be Included in Bonds. To the extent economically feasible,the City
shall include in the aggregate principal amount of the Bonds an amount sufficient to fund the costs for
construction of the Public Facilities included in Exhibit C attached hereto,the reserve fund for the Bonds,
capitalized interest on the Bonds for such period,not in excess of 18 months,as the City,in consultation
withDeveloper,may determine is appropriate,the amount of the discount of the underwriter who purchases
the Bonds,the Reimbursable Expenses of Developer pursuant to this Agreement, and other typical and
reasonable out-of-pocket expenses incurred by the City, Agency or Developer in connection with the
issuance and sale of the Bonds,including bond counsel fees,disclosure counsel fees,legal fees,fees of the
RVpUB\KAB\645932 5
bank which will act as fiscal agent for the Bonds,fees and other costs of the appraisal and other fees and
costs normally incidental to the sale of Bonds. Subject to the City's right of review and approval of specific
costs as set forth in the next succeeding paragraph of this Section 5, the City shall also include in the
aggregate principal amount of the Bonds an amount sufficient to cover all of the following: (i) all of the
eligible costs of public facilities for which Developer is entitled to payment or reimbursement in accordance
with Paragraph(b)of the Schedule of Feasibility Gap Payments(Attachment No.7)of the OPA,including
the amount advanced for any appraisal of the Property; (ii) all City development and building permit,
application, plan checking, inspection and other fees and charges, by whatever name called, that are
attributable to the design,planning,engineering,installation,and construction of the Public Facilities that are
paid or payable by Developer out of the proceeds of the Bonds; and(iii) all other Developer costs and
expenses not included in clause(i)or(ii)that are reasonably determined by the City to equitably pay or
reimburse Developer for costs and expenses incurred by it which are related to the establishment of the
District, including the Reimbursable Expenses, and the design, planning, engineering, financing, and
installation and construction or acquisition of the Public Facilities,including the construction management
fee payable to Developer pursuant to Section 10 of this Agreement for the services to be provided by
Developer pursuant to Section 9 and costs and expenses of consultants,attorneys and engineers.
The City Administrator or his/her designee,on behalf of the City, shall have the right to reasonably
approve all of Developer's costs and expenses to be paid or reimbursed from proceeds of the Bonds
subject to the following: (i) to the extent that Developer incurs costs that are eligible for inclusion in the
principal amount of the Bonds together with other costs that are not eligible for inclusion in the principal
amount of the Bonds(for example,public facilities and other improvements constructed under the same
Construction Contract),the City will approve a fair allocation of eligible versus non-eligible costs;(ii)the
valuation of the property interests to be transferred by Developer for the Public Facilities has been
RVPUB\KAB\645932 6
computed based upon an appraisal prepared in accordance with the OPA and is set forth in Exhibit C
hereto,(iv)the City Administrator or his/her designee,on behalf of the City,shall approve or disapprove
Developer's submittals for cost approvals within fifteen (15) business days after receipt and, if any
submitted costs are disapproved,he/she shall specify in writing the reasons therefor;and(v)approval of
Developer's submittals shall not be unreasonably withheld or conditioned. Developer shall be entitled to
submit written requests to the City Administrator or his/her designee,on behalf of the City, for approval
of costs to be paid or reimbursed with proceeds of the Bond on a periodic basis,as costs are incurred but
not more frequently than monthly. Each such submittal shall be supported by adequate written
documentation to justify the submittal, including as applicable, copies of relevant contracts, invoices,
evidence of payment,and such other supporting information as the City may reasonably require.
Section 6. Disbursement of Bond Proceeds to Developer. Subject to the provisions of
Section 5 hereof,as soon as reasonably practicable after the sale of the Bonds,the City shall disburse or
cause to be disbursed to Developer,or its designee pursuant to Section 10 hereof,the portion of the Bond
proceeds payable for costs approved through such payment date. Subsequent disbursement shall be made
no more frequently than monthly.Developer's construction management fee payable from proceeds of the
Bonds pursuant to Section 10 of this Agreement shall be prorated monthly, based upon the number of
months in the estimated schedule for completion of construction of the "Developer-Managed Public
Facilities"identified in Section 8. Immediately upon receipt of the proceeds of the Bonds,the City shall
disburse or cause to be disbursed to Developer,or its designee, the portion of Developer's construction
management fee earned through that date;provided,however,that the City shall be entitled to withhold or
cause to be withheld from such payment an amount equal to ten percent (10%) of the amount then due,
with such retained amount to be paid to Developer, or its designee, upon satisfactory completion of
construction of the Developer-Managed Public Facilities,and the transfer of title of any public facilities or
RVPUB\KAB\645932 7
land and other improvements as set forth in Section 11 hereof. The portion of Developer's construction
management fee earned after the sale of the Bonds shall be paid monthly,subject to the same ten percent
(10%) withholding procedure. The City shall use its reasonable best efforts to review Developer
disbursement requests as expeditiously as reasonably possible. With ten(10)business days after City's
approval of such disbursement, City shall deliver an Officer's Certificate (as defined in the Fiscal Agent
Agreement dated as of December 15,2003,(the"Fiscal Agent Agreement')by and between the City and
U.S. Bank National Association, as fiscal agent (the "Fiscal Agent")) to the Fiscal Agent authorizing
payment to the Developer,its designee in writing,or if requested by Developer,the holder of any first in
priority lien holder on the property. A copy of such Officer's Certificate shall be delivered to Developer.
In no event shall the City have any obligation to pay or reimburse Developer or cause Developer
to be paid or reimbursed from any source of funds other than proceeds of the Bonds or additional bonds
available in the Improvement Fund(as defined in the Fiscal Agent Agreement). The City shall have no
responsibility or liability for the payment of any amount to any employee or subcontractor of Developer.
Section 7. Surplus Bond Proceeds. In the event that any surplus proceeds of the Bonds
remain in the Improvement Fund after all of the Developer-Managed Public Facilities have been completed
and accepted by the City, said surplus shall be applied, to debt service on the Bonds in the manner
provided in the Fiscal Agent Agreement. Interest earnings on funds deposited in the Improvement Fund
(as defined in the Fiscal Agent Agreement)shall be retained therein and used for such purposes.
Section 8. Design and Construction. (a)Developer shall cause the Public Facilities indicated
as "Public Facilities" on Exhibit C (the "Public Facilities") to be built by Developer to be expeditiously
designed. The Owner and its design engineer shall consult with the City's Public Works/Engineering
Department at regular intervals as prescribed by said department as design progresses. Upon completion
RVPUB\KAB\645932 8
of the design of each such Acquisition Public Facility to the reasonable satisfaction of the City and when
Developer has paid to the City all applicable plan checking and building permit fees,the City shall notify
Developer that the design of the Acquisition Public Facility is complete and acceptable to the City.
Developer has been authorized by the City to commence the design of the Public Facilities,and
the City has approved Developer's retention of Bomel Construction Company,Inc.as engineers to design
and construct a portion of the Public Facilities.
(b) City's Determination of Facilities to be Constructed by the Owner. The City may,but need
not, elect to permit Developer to proceed with the construction of such Public Facilities that have been
reviewed and approved by the City's Public Works Department prior to the completion of design of all of
the Public Facilities,and if the City elects to so proceed it shall notify Developer in writing as to the Public
Facilities which may then be constructed by Developer. As of the date of this Agreement, City and
Developer have agreed that Developer shall construct the Parking Structure and all other Public Facilities
listed on Exhibit C hereto. All Public Facilities which the City determines will be constructed by Developer
are referred to herein as "Developer Managed Public Facilities."
Section 9. ConstructionMana eg ment. The City and Developer have detemuned that because
of other construction activities of Developer which will be ongoing on and around the Property concur-
rently with the installation and construction of the Developer-Managed Public Facilities, which will
necessitate continuous coordination between Developer's contractor and the various subcontractors,it is
in the best interests ofthe City that the City retain Developer as agent of the City to manage the installation
and construction of all of the Developer-Managed Public Facilities. As construction manager and agent
ofthe City with respect to the construction of the Developer-Managed Public Facilities,Developer's duties
and responsibilities have been and shall be as follows:
RVPUB\KAB\645932 9
(a) Developer shall manage,as agent of the City,all aspects and phases of the installation and
construction of the Developer-Managed Public Facilities and shall act as the City's representative in all
dealings with the contractor and subcontractors who will install and construct the Developer-Managed
Public Facilities pursuant to contracts entered into by Developer and described below;provided,however,
that Developer's authority to,act as agent of the City shall be limited solely to the construction of the
Developer-Managed Public Facilities as set forth herein and that any change or modification to such
authority shall be agreed to by the City in writing.
(b) Developer has caused contracts for construction of the parking improvements to be bid
on September 5, 2002, and received five bids. From such bids Developer selected and entered into a
construction agreement with Bomel Construction Company,Inc.,pertaining to the parking structure and
adjacent improvements pursuant to that certain Standard Form of Agreement between Owner and
Design/Builder(AIA)document A 19 1-Electronic Format 1996 Edition,dated as of December 3,2002,
between Developer and Bomel Construction Company,Inc.(the"Public Parking Construction Contract").
Developer caused contracts for construction of certain additional Developer-Managed Public Facilities to
be bid on November 25, 2002, and four bids were received. From such bids Developer selected and
entered into with Bayley Construction Company that certain Standard Form of Agreement between Owner
and Design/Builder,AIA Document I I I-Electronic Format 1997 Edition,dated as of December 18,2002,
which relates to certain Developer-Managed Public Facilities(the "Initial Public Improvement Contract;"
and together with the Public Parking Construction Contract,the"Construction Contracts"). Developer has
represented to City that (i) the Construction Contracts were entered into by Developer prior to any
obligation on the part ofthe City to pay for the construction of the Public Facilities, (ii) procedures utilized
by Developer for selection of the contractors and entry into the Construction Contracts were generally
consistent with the City's policy for the construction of public facilities and the OPA, and (iii) the
RVPUB\KAB\645932 10
Construction Contracts provide for payment of prevailing wages for labor. Further,Developer represents
that because such Construction Contracts have been entered into and work on the construction of the
Developer-Managed Public Facilities has commenced,together with the overlapping and integrated nature
of the Developer-Managed Public Facilities and the private work being concurrently performed by or on
behalf of Developer on and adjacent to the Property, it is necessary to have Developer's contractors
perform the work in constructing and installing the Developer-Managed Public Facilities pursuant to the
Construction Contracts,and that it is therefore not feasible to have a contract or contracts for construction
and installation of the Developer-Managed Public Facilities publicly bid. The Construction Contracts shall
comply with the requirements of contracts described in (3) through (17) set forth in Exhibit D attached
hereto. In addition,Developer shall have the right to extend,modify,and approve change orders to the
Construction Contracts which may alter the scope of work in such Construction Contracts by no more than
25% with notice to the City and without obtaining City approval provided that no change to the plans and
specifications for any of the Developer-Managed Public Facilities shall be permitted unless approved by
the City in accordance with the City's nominal requirements for public improvement design review. Except
as described in the immediately preceding sentence for change orders, any Public Facilities to be funded
with proceeds ofthe Bonds and not described in the Construction Contracts as of February 3,2003,shall
be publicly bid and shall comply with the requirements of(1)through(17)set forth in Exhibit D attached
hereto. Any costs of the Public Facilities in excess of the amount available in the Improvement Fund,or
additional public facilities not otherwise listed herein and Facilities not otherwise provided in the proceeds
ofthe Bonds, will be paid by Developer unless City agrees to issue additional bonds pursuant to the Fiscal
Agent Agreement.
(c) Developer shall in cooperation with the City's Public Works Department schedule and
coordinate preconstruction meetings with Developer's contractor,and as a result thereof,shall develop in
RVPUB\KAB\645932 I 1
1
coordination with the Public Works Department schedules for completion of the construction and
installation of the Developer-Managed Public Facilities which shall be coordinated to the extent necessary
and desirable and permitted by the Construction Contract with schedules for the completion of other
construction work which Developer will have concurrently ongoing in connection with its Development.
(d) During construction and installation of the Developer-Managed Public Facilities and all
portions thereof,Developer shall act as representative of the City in coordinating with the contractor and
in delivering the City's instructions and requirements to Developer's contractor. As representative of the
City,Developer shall cooperate and consult with representatives of the City's Public Works Department
and the City's inspectors as reasonably required by the City or that department or the inspectors.
(e) Developer shall in coordination with the City's inspectors at all times keep the Public
Works Department advised of the progress of construction of the Developer-Managed Public Facilities.
(fl Developer shall make all necessary arrangements with its contractors to afford the City's
inspectors adequate access to job sites at all times required by the inspectors for purposes of performing
their inspection services.
(g) Developer shall be responsible for resolving any dispute with its contractors with regard
to the interpretation of the plans and specifications or contract documents, the progress of work, or the
adequacy of the contractor's performance;provided that,in perfomung such responsibility,Developer shall
consult with and act in accordance with the valid and reasonable directives of the City's inspectors or the
Director of the Public Works Department.
(h) In accordance with the second paragraph of Section 5 of this Agreement and in
consultation with the City's inspectors,Developer shall analyze and certify to the Public Works Depart-
ment the progress payment requests of its contractors,advising those departments as to whether or not the
contractor's estimate of the percentage of completion of the construction of the Developer-Managed
RVPUB\KAB\645932 12
Public Facilities is correct and of.the amount to be paid by the City to Developer or directly to its
contractor on the basis of each progress payment request.
(i) Upon completion of the construction and installation of the Developer-Managed Public
Facilities,or any portion thereof,Developer in consultation with the City's inspectors and representatives
of the Public Works Department,as appropriate,shall determine whether construction and installation of
the Developer-Managed Public Facilities or the portion thereof which is then completed has been
satisfactorily completed in accordance with the plans and specifications, and shall report to the Public
Works Department the results of such analysis and investigation;provided,however,that Developer has
no authority hereunder to accept completed work,approve plans or incur obligations on behalf of the City
other than as expressly set forth herein.
0) In accordance with the second paragraph of Section 5 of this Agreement,Developer,in
consultation with the City's inspectors, shall notify the City when the final payment is to be made to
Developer or directly to its contractor upon completion of the construction of the Developer-Managed
Public Facilities which the contractor is constructing.
Section 10. Staffing and Compensation for Construction Management. In performing its
construction management services pursuant to Section 9 hereof,Developer shall employ or designate and
make available for the performance of such services a qualified project manager who shall have experience
reasonably satisfactory to the City in the management of similar construction projects. For performing its
services as construction manager,Developer shall be entitled to reimbursement out of the proceeds of the
Bonds in an amount not to exceed four percent(4%) of the total amount of the Construction Contracts
payable to Developer, or its designee, Snyder Huntington Development, L.L.C. that is allocable to the
Developer-Managed Public Facilities (including change orders), with such amount to be disbursed to
Developer in accordance with Section 6 of this Agreement. Snyder Huntington Development,L.L.C.may
RVPUB\KAB\645932 13
hire a co-manager or additional project manager to assist it in performing its construction management
services,provided however,that no additional management fee will be provided from the proceeds of the
Bonds or any other funds of the City,Agency or District.
Section 11. Facilities to be Owned by the City.
(a) Conveyance of Land and Easements to City. Acceptable Title to all property on,
in or over which each Public Facility will be located,shall be deeded over to the City by way of grant deed,
quitclaim,or dedication of such property,or easement thereon,if such conveyance of interest is approved
by the City as being a sufficient interest therein to pen-nit the City to properly own, operate and maintain
such Public Facility located therein, thereon or thereover, and to permit Developer to perform its
obligations as set forth in this Agreement. Developer agrees to assist the City in obtaining such documents
as are required to obtain Acceptable Title. Completion of the transfer of title to land shall be accomplished
as soon as the conditions set forth herein have been satisfied,but in any event prior to the final payment for
the construction of the Public Facilities and shall be evidenced by recordation of the acceptance thereof
by the City Council or the designee thereof.
(b) Title Evidence. Upon the request of the City,Developer shall famish to the City
a preliminary title report for the land underlying the to Public Facilities not previously dedicated or otherwise
conveyed to the City, for review and approval at least fifteen(15) calendar days prior to the transfer of
Acceptable Title of the Public Facility to the City. The City shall approve the preliminary title report unless
it reveals a matter which, in the judgment of the City,could materially affect the City's use and enjoyment
of any part of the property or easement covered by the preliminary title report. In the event the City does
not approve the preliminary title report,the City shall not be obligated to accept title to such Public Facility
from Developer for the construction thereof until Developer has cured such objections to title to the
reasonable satisfaction of the City.
RVPUB\KAB\645932 14
(c) "Acceptable Title" means title to land or interest therein, in form reasonably
acceptable to the City Administrator,free and clear of all liens,taxes,assessments,leases,easements and
encumbrances,whether or not recorded,but subject to any exceptions reasonably determined by the City
Administrator as not interfering with the actual or intended use of the land or interest therein.
Notwithstanding the foregoing,an irrevocable offer of dedication may constitute land with an"Acceptable
Title" if. (i)such offer is necessary to satisfy a condition to a tentative or final parcel map,(ii)such offer is
in a form reasonably acceptable to the City Administrator, (iii) the City Administrator has no reason to
believe that such offer of deduction will not be accepted by the applicable public agency,and(iv)the City
Administrator commits in writing not to allow any liens to be imposed on such property prior to its
acceptance.
(d) Transfer of title of real property to the City shall be accomplished through an
escrow to be established with an escrow company mutually agreed to by the parties hereto and proper title
shall be delivered upon satisfaction of the escrow conditions and proper delivery of funds for the purchase
of such real property.
Section 12. Indemnification:Insurance. Developer shall protect,defend, indemnify and hold
harmless the City,the Agency and the District,and their officers,elected or appointed officials,employees,
agents and volunteers from and against any and all claims, actions, liability, damages, losses, expenses,
judgments, demands and defense costs, and consequential damage or liability of any kind or nature,
however caused,including those resulting from death or injury to Developer's employees and damage to
Developer's property,arising directly or indirectly out of the obligations or operations herein undertaken
by Developer and out of Developer's performance of its duties and responsibilities with respect to the
Construction Contracts and as Construction Manager hereunder(including any liability arising under the
California Public Contract Code with respect to satisfaction of public bidding requirements) caused in
RVPUB\KAB\645932 15
whole or in party by any negligent act or omission of Developer, any subcontractor, anyone directly or
indirectly employed by any of them or anyone for whose acts any of them may be liable,including but not
limited to concurrent active or passive negligence, except where caused by the active negligence, sole
negligence,or willful misconduct of City,Agency or District. Developer will conduct such defense at its
sole cost and expense, and the City, Agency or District shall approve selection of Developer's legal
counsel, which approval shall not be unreasonably withheld. This indemnity shall apply to all claims and
liability regardless of whether any insurance policies are applicable. The policy limits do not act as a
limitation upon the amount of indemnification to be provided by Developer.
To secure its indemnification obligation,Developer shall obtain and maintain throughout the period
of its construction management services a broad form commercial general liability policy of insurance,
including motor vehicle coverage,in a form and with coverages acceptable to the City,Agency and District,
having a single aggregate limit of liability as to all coverages provided thereby in the amount of$5,000,000,
and naming the City,the Agency,the District and their officers,elected and appointed officials,agents and
employees while acting in the scope of their duties as additional insureds. Developer shall provide to the
City,Agency and District a certified copy of the policy for such insurance or a certificate of such insurance
coverage in a form reasonably satisfactory to the City, Agency and District. Any such certificate of
insurance shall include an endorsement providing that the City, the Agency, the District, their officers,
elected and appointed officials,and employees,and to the extent insurance coverage for such purpose is
commercially available,their agents,are additional insureds under the commercial general liability policy,
and shall provide that the policy may only be canceled for nonpayment upon 10 days' advance written
notice for nonpayment,or for other matters upon 30 days'advance written notice to the City,Agency and
District. Under no circumstances shall such insurance contain a self-insured retention or a deductible or
any other similar form of limitation on the required coverage.
RVPUB\K"\645932 16
Developer shall also maintain throughout the period of its construction management services
workers'compensation insurance as required pursuant to California Labor Code Section 1861.Developer
acknowledges awareness of Section 3700 et seq. of the California Labor Code which requires every
employee to be insured against liability for worker's compensation;Developer covenants that it will comply,
or cause its contractors to comply, with such provisions prior to commencing performance of the work
hereunder. Developer shall obtain and furnish,or cause its contractors and subcontractors to obtain and
furnish,to City worker's compensation and employee's liability insurance in an amount of not less than the
State statutory limits. Developer,its contractors and sub-contractors,shall furnish to the City a waiver of
subrogation under the terms of the workers'compensation and employer's liability insurance.
Prior to commencing performance of the work hereunder,Developer shall furnish to City,Agency
and District, certificates of insurance subject to approval of the City Attorney, Agency Counsel and
Counsel to the District evidencing the foregoing insurance coverages as required by this Agreement; the
certificates shall:
l. provide the name and policy number of each carrier and policy;
2. state that the policy is currently in force;and
3. promise to provide that such policies will not be canceled or modified without thirty(30)
days'prior written notice of City.
Developer shall maintain the foregoing insurance coverages in force until the work under this
Agreement is fully completed and accepted by City.
The requirement for carrying the foregoing insurance coverages shall not derogate from the
Developer's defense,hold harmless and indemnification obligations as set forth under this Agreement. City,
Agency and District or their respective representatives shall at all times have the right to demand the original
R VPUB\KAB\645932 17
or a copy of all the policies of insurance. Developer shall pay, in a prompt and timely manner, the
premiums on all insurance hereinabove required.
Developer shall provide a separate copy of the additional insured endorsement to each of
Developer's insurance policies, naming City, Agency and District, their officers, elected and appointed
officials,employees,agents and volunteers as Additional Insureds,to the City Attorney,Agency Counsel
and Counsel to the District for approval prior to any payment hereunder.
Section 13. Independent Contractor. In performing its construction management services,
Developer shall be an independent contractor, and this Agreement shall not and does not create a joint
venture or partnership between the City and Developer. The City shall have no responsibility or liability
for the payment of any amount to any employee or subcontractor of Developer.
Section 14. Special Taxes. Following the sale of the Bonds,the City shall annually thereafter,
as appropriate,levy and collect special taxes on that portion of the Property subject to the Special Taxes,
in an amount sufficient to pay the principal and interest coming due on the Bonds in each year and shall levy
the Parking Structure Maintenance Special Tax,as defined in the Rate and Method of Apportionment of
Special Tax incorporated as Exhibit"B"to City Council Resolution No.2003-3 adopted January 6,2003
initiating proceedings to establish the District. Such special taxes shall be levied at the rate or rates and in
accordance with the Rate and Method of Apportionment of Special Tax.The City may include in the
amount of the annual levy of special taxes on the Property in any year an amount sufficient to replenish the
reserve fund for the Bonds,the fees associated with the administration of debt service on the Bonds,and
to pay the City's reasonable administrative expenses in connection with the levy and collection of such
Special Taxes and shall also levy for the maintenance and operation of the parking structure in the manner
and at the rates established in the Rate and Method of Apportionment of the Special Tax.
Section 15. Termination
RVpUB\KAB\645932 18
(a) No Bonds. If,for any reason,the City does not issue any of the Bonds for the District by
December 31,2004,this Agreement shall terminate and be null and void and of no further effect.
(b) Mutual Consent. This Agreement may be terminated by the mutual,written consent of the
City and Developer, in which event the City may let contracts for any remaining work related to the
Facilities not theretofore constructed by Developer hereunder, and use all or any poition of the monies in
the Improvement Fund to pay for same,and Developer shall have no claim or right to any further payments
for the Construction of the Public Facilities,except as otherwise may be provided in such written consent.
(c) City Election for Cause. The following events shall constitute grounds for the City,at its
option,to terminate this Agreement,without the consent of Developer:
(i) Developer shall voluntarily file for reorganization or other relief under any Federal
or State bankruptcy or insolvency.
(ii) Developer shall have any involuntary bankruptcy or insolvency action filed against
it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of the assets of
Developer,or shall suffer an attachment or levy of execution to be made against the property it owns within
the District unless,in any of such cases, such circumstance shall have been terminated or released within
120 days thereafter.
(iii) Developer shall abandon construction of the Facilities. Failure fora period of four
consecutive months to undertake substantial work related to the construction of the Public Facilities,other
than for a reason specified in Section 15(d) hereof, shall constitute a noninclusive example of such
abandonment.
(iv) Developer shall breach any material covenant or default in the performance of any
material obligation hereunder.
RVPUB\KAB\645932 19
(v) Developer shall transfer any of its rights or obligations under this Agreement without
the prior written consent of the City.
(vi) Developer shall have made any material misrepresentation or omission in any
written materials fizmished in connection with any preliminary official statement,official statement or bond
purchase contract used in connection with the sale of any series of the Bonds.
(vii) Developer,or any assignee of Developer shall at any time challenge the validity of
the District or any of the Bonds,or the levy of Special Taxes within the District,other than on the grounds
that such levy was not made in accordance with the terms of the Rate and Method of Apportionment of
the Special Taxes for the District.
If any such event occurs,the City shall give written notice of its knowledge thereof to Developer
(and any mortgage or trust deed beneficiary specified in writing by Developer to the City to receive such
notice)and Developer agrees to meet and confer with the City Administrator and other appropriate City
staff and consultants as to options available to assure timely completion of the Facilities. If City elects to
terminate this Agreement,the City shall first notify Developer(and any mortgagee or trust deed beneficiary
specified in writing by Developer to the City to receive such notice)of the grounds for such termination and
allow Developer a minimum of thirty (30) days to eliminate or mitigate to the satisfaction of the City
Administrator the grounds for such termination. Such period may be extended if Developer has
commenced and is proceeding with diligence to eliminate or mitigate such grounds for termination. If at the
end of such period(and any extension thereof while Developer is diligently eliminating or mitigating such
grounds for termination), as determined solely by the City, Developer has not eliminated or completely
mitigated such grounds,to the satisfaction of the City,the City may then terminate this Agreement.
Notwithstanding the foregoing, so long as any event listed in any of the clauses (i) through and
including(vii)above has occurred,notice of which has been given by the City to Developer,and such event
R VP UB\KAB\645932 20
has not been cured or otherwise eliminated by Developer, the City may in its discretion cease making
payments to Developer pursuant to Section 6 hereof.
(d) Force Majeure. Whenever performance is required of a party hereunder (other than
payments),that party shall use all due diligence and take all necessary measures in good faith to perform,
but if completion of performance is delayed by reasons of floods,earthquakes or other acts of God,war,
civil commotion,riots,strikes,picketing,or other labor disputes,damage to work in progress by casualty
governmental actions, including those of the City (provided that City's actions shall not excuse City
performance)or by other cause beyond the reasonable control of the party(financial inability excepted),
then the specified time for performance shall be extended by the amount of the delay actually so caused.
Section 16. Binding on Community Facilities District. The District shall automatically become
a party to this Agreement,and all provisions hereof which apply to the City shall also apply to the District.
The City Council of the City, acting as the legislative body of.the District, shall perform all parts of this
agreement which require performance on the part of the District.
Section 17. Assignment. Developer shall have the right without obtaining the City's approval
or consent to assign this Agreement and any right or duty of Developer hereunder to any permitted or
approved successor or assignee of Developer's interest to the Property in accordance with Sections 105
and 410 of the OPA. Otherwise, Developer shall not assign this Agreement or any right or obligations
hereunder without the express prior written approval of the City. As a condition of such approval,the City
may require reasonable proof of the financial responsibility and experience of a proposed assignee to
undertake and perform the duties and responsibilities of Developer under this Agreement. The City's
approval of an assignment of this Agreement and the rights and duties of Developer hereunder shall not be
unreasonably withheld,delayed,or conditioned.
RVPUB\KAB\645932 21
Section 18. Limited Liability ofCity. Developer agrees that any and all obligations of the City
arising out of or related to this Agreement are special and limited obligations of the City and the City's
obligations to make any payments hereunder are restricted entirely to the moneys, if any, in the
Improvement fund and from no other source. No member of the City Council, or City staff member,
employee or agent shall incur any liability hereunder to Developer or any other party in their individual
capacities by reason of their actions hereunder or execution hereof.
Section 19. Excess Costs. Developer agrees to pay all costs of the Public Facilities that it is
obligated to construct hereunder and under the OPA in excess of the moneys available therefor in the
Improvement Fund.
Section 20. Audit. The City Administrator and/or the Treasurer or other finance officer of the
City shall have the right,during normal business hours and upon the giving of two(2)business days prior
written notice to Developer,to review all books and records of Developer pertaining to costs and expenses
incurred by Developer in relation to any of the Public Facilities, and any bids taken or received for the
construction thereof or materials therefor.
Section 21. Attorneys' Fees. In the event that any action or suit is instituted by either party
against the other arising out of this Agreement,the party in whose favor final judgment shall be entered shall
be entitled to recover from the other party all costs and expense of suit,including reasonable attomeys'fees.
Section 22. Notices. Any notice, payment or instrument required or permitted by this
Agreement to be given or delivered to either party shall be deemed to have been received when personally
delivered,or transmitted by telecopy or facsimile transmission(which shall be immediately confirmed by
telephone and shall be followed by mailing an original of the same within twenty-four hours after such
transmission), or seventy-two hours following deposit of the same in any United States Post Office,
registered or certified mail,postage prepaid,addressed as follows:
RVPUB\KAB\645932 22
City,Agency or City of Huntington Beach
District 2000 Main Street
Huntington Beach,CA 92648
Attn: City Administrator, Director of Economic Development and
Director of Public Works
Developer: Huntington Center Associates,LLC
5757 Wilshire Blvd.,Penthouse 30
Los Angeles,CA 90036
Attn: Mike Wise -
with a copy to: Allen Matkins Leck Gamble&Mallory LLP
515 South Figueroa Street,#700
Los Angeles,CA 90071
Attn: Michael J.Kiely,Esq.
Construction
Manager: Snyder Huntington Development,L.L.C.
5757 Wilshire Blvd.,Penthouse 30
Los Angeles,CA 90036
Attn: Daniel J. Schneider
with a copy to: Allen Matkins Leck Gamble&Mallory LLP
515 South Figueroa Street,#700
Los Angeles,CA 90071
Attn: Michael J.Kiely,Esq.
Each party may change its address or addresses for delivery of notice by delivering written notice
of such change of address to the other party.
Section 23. Severability. If any part of this Agreement is held to be illegal or unenforceable by a
court of competent jurisdiction,the remainder of this Agreement shall be given effect to the fullest extent
possible.
Section 24. Other Ap-reements. The obligations of Developer hereunder shall be those of a party
hereto and not as an owner of the property in the District. Nothing herein shall be construed as affecting
the City's or Developer's rights,or duties to perform their respective obligations,under other agreements,
use regulations or subdivision requirements relating to the development of the lands in the District. This
RVPUB\KAB\645932 23
Agreement shall not confer any additional rights,or waive any rights given,by either party hereto under any
development or other agreement to which they are a party.
Section 25. Waiver Failure by a party to insist upon the strict performance of any of the
provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the
default of the other party, shall not constitute a waiver of such party's right to insist and demand strict
compliance by the other party with the terms of this Agreement thereafter.
Section 26. Merger. No other agreement, statement or promise made by any party or any
employee,officer or agent of any party with respect to any matters covered hereby that is not in writing and
signed by all the parties to this Agreement shall be binding.
Section 27. Parties in Interest. Nothing in this Agreement, expressed or implied, is intended
to or shall be construed to confer upon or to give to any person or entity other than the City and Developer
any rights, remedies or claims under or by reason of this Agreement or any covenants, conditions or
stipulations hereof;and all covenants,conditions,promises, and agreements in this Agreement contained
by or on behalf of the City or Developer shall be for the sole and exclusive benefit of the City and
Developer.
Section 28. Amendment. This Agreement may be amended, from time to time, by written
supplement hereto and executed by both the City and Developer.
Section 29. Count marts. This Agreement may be executed in counterparts, each of which
shall be deemed an original. .
Section 30. Prompt Action. All consents,approvals and determinations required of either the
City or Developer pursuant to this Agreement shall be promptly given or made, and shall not be
unreasonably withheld or conditioned.
RVPUB\KAB\645932 24
Section 31. General. This Agreement and the OPA contain the entire agreement between the
parties with respect to the matters herein provided for. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the parties. This Agreement shall be construed and governed
by the Constitution and laws of the State of California. The captions of the sections of this Agreement are
provided for convenience only,and shall not have any bearing on the interpretation of any section hereof.
RVPUB\KAB\645932 25
IN WITNESS WHEREOF,the parties have caused this agreement to be signed as of the date first
above written.
DEVELOPER
HUNTINGTON CENTER ASSOCIATES,LLC,
a Delaware limited liability company
By: Huntington Management Ent.,LLC,
a Delaware limited liability company,
Its Manager
By: BMLF/Huntington,LLC,
a Delaware limited liability company,
Its Manager
By.
Bryan Ezralow,Trustee of the
Bryan Ezralow 1994 Trust,
Its Manager
ATTEST: CITY OF HUNTINGTON BEACH
By:
City Clerk Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Administrator City Attorney
RVPUB\KAB1645932 26
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
That certain real property located in the City of Huntington Beach, County of Orange,
State of California,more particularly described as follows:
RVPUB\KAB\645932 A-1
FISCAL AGENT AGREEMENT
by and between the
CITY OF HUNTINGTON BEACH
and
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
Dated as of December 15,2003
Relating to
City of Huntington Beach
Community Facilities District No. 2003-1
(Huntington Center)
County of Orange
State of California
2004 Special Tax Bonds
RVPUB\KAB\645934
0
TABLE OF CONTENTS
Page(s)
ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . I
Section 1.02. Agreement for Benefit of Bondowners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE BONDS
Section 2.01. Principal Amount;Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.02. Terms of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.03. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.04. Form of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.05. Execution of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.06. Transfer of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.07. Exchange of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.08. Bond Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.09. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.10. Bonds Mutilated,Lost,Destroyed or Stolen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.11. Special Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.12. Issuance of Additional Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.13. Book-Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; IMPROVEMENT
FUND; SPECIAL TAX FUND; ADMINISTRATIVE EXPENSE FUND;
COSTS OF ISSUANCE FUND
Section 3.01. Issuance and Delivery of Bonds . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 24
Section 3.02. Application of Proceeds of Sale of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.03. Improvement Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
.Section 3.04. Special Tax Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.05. Administrative Expense Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.06. Costs of Issuance Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND;RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.02. Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.03. Reserve Fund . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . 30
RVPUB\KAB\645934 -i-
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.02. Special Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.03. Extension of Time for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.04. Against Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.05. Books and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.06. Protection of Security and Rights of Owners . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 33
Section 5.07. Collection of Special Tax Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.08. Levy of Special Taxes for Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.09. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.10. Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.11. Covenant to Foreclose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.12. Prepayment of Special Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.13. Calculation of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.14. Continuing Disclosure and Filing of Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.02. Rebate Fund;Rebate to the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.03. Liability of City . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.04. Employment of Agents by City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.02. Liability of Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.03. Information.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.04. Notice to Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.05. Compensation,Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.06. Books and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.02. Owners'Meetings . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.03. Procedure for Amendment with Written Consent of Owners . . . . . . . . . . . . . . . . . . . 43
Section 8.04. Disqualified Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.05. Effect of Supplemental Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments . . . . . . . . . . . . . . 44
RVPUB\KAB\645934 'lu'
Section 8.07. Amendatory Endorsement of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 45
Section 9.02. Successor is Deemed Included in All References to Predecessor. . . . . . . . . . . . . . . . 45
Section 9.03. Discharge of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Section 9.04. Execution of Documents and Proof of Ownership by Owners . . . . . . . . . . . . . . . . . . 46
Section 9.05. Waiver of Personal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.06. Notices to and Demands on City and Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.07. Partial Invalidity . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.08. Unclaimed Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.09. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.10. Conflict with Act or Municipal Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.11. Conclusive Evidence of Regularity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.12. Payment on Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Section 9.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
EXHIBIT A-FORM OF BOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B -FORM OF IMPROVEMENT FUND REQUISITIONS . . . . . . . . . . . . . . . . . . . . B-1
RVPUB\KAB\645934 -lv-
EXl II 31T C
PUBLIC FACILITIES
A. Developer Managed Public Facilities Cost Estimate
1. Edinger Avenue Improvements $ 3,400,000
2. Center Avenue Improvements 600,000
3. Design/Build Parking Structure 11,771,250
4. On-Site Public Utilities-Wet 1,200,000
5. Fire Sprinklers for Garage 400,000
6. Technical Services,Fees&Permits 880,000
7. Parking Garage Land Value 1,600,000
8. Police Substation Improvements 165,000
9. Relocation of existing utilities for Garage foundations 450,000
Total Costs $20,466,250
RVPUB\KAB\645932 C-1
EXIIIBIT D
PUBLIC CONTRACT REQUIREMENTS
(1) CONTRACTOR'S LICENSE/INVITATION TO BID
Developer shall specify the type of contractor's license required in both the plans and the invitation
for bids. Cal. Pub. Cont. Code § 3300. The contractor must include its license number in the bid
documents. Cal. Bus.&Prof.Code§ 7030.5. Developer,as City's agent,may exercise its discretion in
determining which license class is permitted for a particular project, subject to consultation with the
Contractor's License Board,to determine the validity of the license and what license category is required.
Developer hereby warrants that all contractors hired as of the effective date of this agreement were
properly licensed at the time it submitted its bid,prior to awarding a contract or prior to issuing a purchase
order. Cal. Bus. &Prof. Code § 7028.15(e).
(2) MAJOR SUBCONTRACTORS
Developer hereby wan-ants that the bid specifications or general conditions issued prior to entering
into the Construction Contracts required the bidder to list in its bid all its subcontractors who will perform
work in excess of one-half percent of the total bid or,in the case of streets or highways,one-half percent
or$10,000,whichever is greater. Cal. Pub. Cont. Code § 4104.
(3) DEBARRED CONTRACTORS AND SUBCONTRACTORS
Developer hereby warrants that the Construction Contracts contained a provision prohibiting work
by contractors or subcontractors who are ineligible pursuant to Labor Code sections 1777.1 and 1777.7.
Cal. Pub. Cont. Code § 6109. [The California Department of Industrial Relations publishes a list of
debarred contracts on the Internet at: www.dir.ca.gov/dIse/debar.htmI
<http://www.dir.ca.gov/dlse/debar.html>.]
(4) UNFAIR BUSINESS PRACTICE CLAIMS
Developer hereby wan-ants that the Construction Contracts contained a provision assigning unfair
business practices claims (Clayton Act and Cartwright Act) from the contractor to the City. Cal. Pub.
Cont. Code § 7103.5.
(5) TRENCHING REQUIREMENTS
Developer hereby warrants that the Construction Contracts contained a provision that where
trenching is more than four feet deep, the contractor shall notify Developer of hazardous materials,
subsurface or latent physical site conditions different from those indicated and unusual site conditions,set
forth the duties of Developer as to investigation thereof and specify how disputes must be addressed. Cal.
Pub. Cont. Code § 7104.
RVPUB\KAB\645932 D-I
(6) NON-COLLUSION AFFIDAVIT
Developer hereby warrants that the Construction Contracts contain a "noncollusion affidavit"
signed by the bidder in the statutory form. Cal. Pub. Cont. Code § 7106.
(7) RETENTION
Developer shall retain at least ten percent of the contract price. Cal. Pub. Cont. Code §9203.
After one-half of the work is completed and Developer determines satisfactory progress is being made to
complete the job,Developer may make the remaining payments in full.The retention shall be released(with
the exception of one hundred fifty percent of any disputed amount) within 60 days after the "date of
completion"of the work. Cal.Pub.Cont.Code§7107. Developer shall make progress payments within
30 days after receipt of an undisputed and properly submitted request. Cal.Pub.Cont.Code§20104.50.
(8) SECURITIES IN LIEU OF RETENTION
Developer hereby warrants that the Construction Contracts contain a statement that the contractor
may substitute securities in place of retained funds withheld by the City. Cal. Pub.Cont.Code§ 22300.
Alternatively, an escrow agreement, in the form prescribed by the code,may be used by the contractor.
(9) RESOLUTION OF CLAIMS
Developer hereby warrants that the Construction Contracts contain certain mediation and
arbitration provisions to claims of$375,000 or less.Cal.Pub.Cont.Code§§20104,20104.2,20104.4.
(10) PREVAILING WAGE LAW
The following provisions of the prevailing wage law are discussed in greater detail below in section
IV.13.8. of this handbook.
(a) Developer hereby warrants that the Construction Contracts contain a provision
specifying the general rate of per diem wages("prevailing wage") for each craft, classification or type of
worker needed to execute the contract or contain a statement that copies of the prevailing rate of per diem
wages are on file at Developer's principal office. Cal. Lab. Code § 1773.2. Developer must also cause
a copy of the wage rates to be posted at each job site. The Construction Contracts also require payment
of travel and subsistence payments as required by statute. Cal. Lab. Code § 1773.8.
(b) Developer hereby warrants that the Construction Contracts state the statutory
provisions for penalties for failure to pay prevailing wages and the state's wage and hour laws will be
enforced. Cal. Lab. Code § §1775, 1813.
(c) Developer hereby warrants that the Construction Contracts contain a provision
requiring compliance with the statutory requirements relating to certified copies of payroll records including
the maintenance of the records, their certification and their availability for inspection (Cal. Lab. Code §
RVPUB\KAB\645932 D-2
1776),the employment of apprentices. (Cal.Lab.Code§1777.5),and that eight hours labor constitutes
a legal day's work. (Cal. Lab. Code § 1810.)
(11) WORKER'S COMPENSATION
Developer hereby warrants that the Construction Contracts state the contractor must secure the
payment of worker's compensation to its employees as provided in Labor Code section 3700. Cal.Lab.
Code § 1860.
(12) BRAND OR TRADE NAMES
Developer hereby warrants that the Construction Contracts do not specify brand or trade names
except: (1) when at least two are listed (including California manufacturers, if known) and "or equal"
substitutions are permitted, or (2) when necessary to match existing items in use on a specific public
improvement,or(3) when a unique or novel product application is required,or(4)when only one brand
or trade name is known. Cal. Pub. Cont. Code § 3400.
(13) RELEASE OF CLAIMS
Developer hereby warrants that the Construction Contracts do not provide that acceptance of a
payment is a waiver of all claims,or which require submission of a release of all claims as a precondition
to payment. Cal. Pub. Cont. Code § 7100. However, Developer may require a release of claims for
undisputed payments. Cal. Civ. Code § 3262.
(14) LIQUIDATED DAMAGES
Developer hereby warrants that the Construction Contracts do not limit a contractor's damages
for delays caused by Developer to a time extension only. Cal. Pub. Cont. Code §7102.
(15) RESOLUTION OF CONTRACT DISPUTES
Developer hereby warrants that the Construction Contracts do not require construction contract
disputes to be decided by its agent or employee. Cal. Civ. Code § 1670.
(16) LIMITS ON INDEMNIFICATION
Developer hereby warrants that the Construction Contracts do not impose on the contractor
indemnification against the contractor's sole negligence or willful misconduct, or relieve Developer from
liability for its active negligence. Cal. Civ. Code §2782(b).
(17) ASSUMPTION OF RESPONSIBILITY FOR PLANS AND SPECIFICATIONS
Developer hereby warrants that the Construction Contracts do not require a contractor to assume
responsibility for the completeness and accuracy of architectural or engineering plans and specifications,
except on clearly designated design-build projects,and further,that the contractor reviewed the plans and
specifications and report any errors or omissions. Cal. Pub. Cont. Code §1104.
RVPUB\KAB\645932 D-3
FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT(the"Agreement")is dated as of December 15,
2003,by and between the City of Huntington Beach,a charter city(the "City"), for and on behalf of the
City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of
Orange, State of California (the "District"), and U.S. Bank National Association, a national banking
association duly organized and existing under the laws of the United States of America,as fiscal agent(the
"Fiscal Agent").
WITNESSETH:
WHEREAS,the City Council of the City(the"City Council")has established the District
pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010)of the Municipal Code
ofthe City(the"Municipal Code")and the provisions of the Mello-Roos Community Facilities Act of 1982,
as amended, Chapter 2.5 (commencing with Section 53311) of Part I of Division 2 of Title 5 of the
California Government Code(the"Act");and
WHEREAS,the District is authorized to incur bonded indebtedness and issue bonds in the
aggregate principal amount of$30,000,000 for the purpose of financing the construction and acquisition
of certain public facilities and the City Council has determined that it is necessary that bonds of the District
be issued and sold in the aggregate principal amount of$25,000,000 for the purpose of financing the
construction and acquisition of the public facilities which are hereinafter identified as the Project (the
'Bonds");and
WHEREAS, all things necessary to cause the Bonds, when executed by the City and
authenticated by the Fiscal Agent for the District and issued as in the Municipal Code, the Act, the
Resolution(as hereinafter defined) and this Agreement provided, to be legal, valid and binding special
obligations of the District in accordance with their terms,and all things necessary to cause the authorization,
execution and delivery of this Agreement and the authorization, execution, authentication and delivery of
the Bonds,subject to the terms hereof,have in all respects been duly authorized;
NOW,THEREFORE,in consideration of the covenants and provisions herein set forth
and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to the
provisions of the Municipal Code,the Act and the Resolution.
RVPUH\KAB\645934 '1'
Section 1.02. Agreement for Benefit ofBondowners. The provisions,covenants and agreements
herein set forth to be performed by or on behalf of the City and/or the District shall be for the equal benefit,
protection and security of the Owners. All of the Bonds, without regard to the time or times of their
issuance or maturity, shall be of equal rank without preference,priority or distinction of any of the Bonds
over any other thereof,except as expressly provided in or permitted by this Agreement. The Fiscal Agent
may become the owner of any of the Bonds with the same rights it would have if it were not Fiscal Agent.
Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this
Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any
certificate,opinion or other document herein mentioned,have the meanings herein specified. All references
herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or
subdivisions of this Agreement,and the words "herein," "hereof,""hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,Section or subdivision hereof.
"Act"means the Mello-Roos Community Facilities Act of 1982,as amended,Chapter 2.5
(commencing with Section 53311)of Part 1 of Division 2 of Title 5 of the California Government Code.
"Additional Bonds"means bonds-issued pursuant to Section 2.12 hereof.
"Administrative Expenses"means any or all of the following: the fees and expenses of the
Fiscal Agent(including any fees or expenses of its counsel), the expenses of the City in carrying out its
duties hereunder(including,but not limited to,the levying and collection of the Special Taxes)including the
fees and expenses of its counsel,an allocable share of the salaries of City staff directly related thereto and
a proportionate amount of City general administrative overhead related thereto,any amounts paid by the
City from its general funds pursuant to Section 6.02 hereof,the fees and expenses of the Financial Advisor,
and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the discharge
of their respective duties hereunder and,in the case of the City, in any way related to the administration
of the District.
"Administrative Expense Fund" means the fund by that name established by
Section 3.05(A)hereof.
"Agreement"means this Agreement,as it may be amended or supplemented from time to
time by any Supplemental Agreement adopted pursuant to the provisions hereof.
"Annual Debt Service"means,for each Bond Year,the sum of(i)the interest due on the
Outstanding Bonds in such Bond Year,assuming that the Outstanding Bonds are retired as scheduled,and
(ii)the principal amount of the Outstanding Bonds scheduled to be paid.
"Auditor"means the Auditor-Controller of the County of Orange.
RVPUB\KAB\645934 -2-
"Authorized Officer" means any officer or employee of the City authorized by the City
Council or by an Authorized Officer to undertake the action referenced in this Agreement as required to
be undertaken by an Authorized Officer.
'Bond Counsel' means Best Best& Krieger LLP, or any attorney or firm of attorneys
acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and
tax-exempt status of securities issued by public entities.
"Bond Fund"means the fund by that name established by Section 4.02(A)hereof.
"Bond Year"means the period beginning on the Closing Date and ending on September 1,
2004 and thereafter the period beginning on each September 2 and ending on the following September 1.
"Bonds" means, unless otherwise expressly provided, the City of Huntington Beach
CommunityFacilities District No.2003-1(Huntington Center)2004 Special Tax Bonds,authorized by and
at any time Outstanding pursuant to the Municipal Code,the Act and this Agreement.
"Business Day"means any day other than(i)a Saturday or a Sunday or(ii)a day on which
banking institutions in the State of California or in any state in which the Fiscal Agent has its Principal Office
are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Sub-account"means the sub-account by that name established in the
Interest Account in the Bond Fund by Section 4.02(A)hereof.
"City"means the City of Huntington Beach.
"Closing Date" means the date upon which there is an exchange of the Bonds for the
proceeds representing payment of the purchase price of the Bonds by the Original Purchaser.
"Code" means the Internal Revenue Code of 1986,as amended.
"Continuing Disclosure Agreement"means the Continuing Disclosure Certificate-Issuer
between the City and the Fiscal Agent,as Dissemination Agent thereunder,dated as of the Closing Date,
as originally executed and as it may be amended from time to time in accordance with the terms thereof.
"Costs of Issuance"means items of expense payable or reimbursable directly or indirectly
by the City and related to the formation of the District,authorization,sale and issuance of the Bonds,which
items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding
documents,including but not limited to the preliminary official statement and official statement regarding the
Bonds,closing costs,filing and recording fees,initial fees and charges of the Fiscal Agent including its first
annual administration fee and the fees of its counsel,expenses incurred by the City in connection with the
issuance of the Bonds and the establishment of the District, appraisal and other consultant fees, Bond
RVPUB\KAB\645934 -3-
(underwriter's)discount,legal fees and charges,including the fees of Bond Counsel,Disclosure Counsel,
Developer's Counsel and counsel to the Underwriter,Financial Advisor's fees,charges for authentication,
transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the
foregoing.
"Costs of Issuance Fund" means the fund by that name established by Section 3.06(A)
hereof.
"Debt Service"means the amount of interest and principal payable on the Bonds scheduled
to be paid during the period of computation,excluding amounts payable during such period which relate
to principal of the Bonds which are scheduled to be retired and paid before the beginning of such period.
"Defeasance Securities"means,for purposes of Section 9.03(C)hereof,the following:
(i) United States Treasury Certificates,Notes and Bonds(including State and Local
Government Series-"SLGs"); and
(ii) Pre-refunded municipal bonds rated"Aaa"by Moody's and"AAA"by Standard
& Poor's; provided, however, that if 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 United States
or United States guaranteed obligations,or"AAA"rated pre-refunded municipal bonds.
"District"means the City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center),County of Orange, State of California.
"Federal Securities"means any of the following which at the time of investment are legal
investments under the laws of the State of California for the moneys proposed to be invested therein:
(i) Cash; and
(ii) Direct general obligations of(including obligations issued or held in book entry form
on the books of the Department ofthe Treasury of the United States of America and CATS and TIGRS),
or obligations,the payment ofprincipal of and interest on which is unconditionally guaranteed by,the United
States of America.
"Fiscal Agent"means U.S.Bank National Association,the Fiscal Agent appointed by the
City,acting as an independent fiscal agent with the duties and powers herein provided,its successors and
assigns, and any other corporation or association which may at any time be substituted in its place, as
provided in Section 7.01 hereof.
"Fiscal Year"means the twelve-month period extending from October 1 in a calendar year
to September 30 of the succeeding year,both dates inclusive.
RVPUB\KAB\645934 -4-
"Improvement Fund"means the fund by that name established by Section 3.03(A)hereof.
"Independent Financial Consultant"means a firm of certified public accountants,a financial
consulting firm,which is not an employee of,or otherwise controlled by,the City.
"Information Services" means Financial Information,Inc.'s "Daily Called Bond Service,"
30 Montgomery Street, 1 Oth Floor,Jersey City,New Jersey 07302,Attention: Editor;Kenny Information
Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's
Investors Service,Inc.'s"Municipal and Government,"99 Church Street,8th Floor,New York,New York
10007, Attention: Municipal News Reports; Standard & Poor's Corporation's "Called Bond Record,"
25 Broadway, 3rd Floor,New York,New York 10004; and,in accordance with then current guidelines
of the Securities and Exchange Commission, such other services providing information with respect to
called bonds as the City may designate in an Officer's Certificate delivered to the Fiscal Agent.
"Interest Payment Dates" means March 1 and September 1 of each year, commencing
March 1,2004,until the maturity or redemption of all Outstanding Bonds.
"Investment Earnings"means all interest earned and any gains and losses on the investment
ofmoneys in any fund or account created by this Agreement excluding interest earned and gains and losses
on the investment of moneys in the Rebate Fund.
"Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond
Year after the calculation is made through the final maturity date of any Outstanding Bonds.
"Moody's" shall mean Moody's Investors Service, Inc., a national rating service with
offices in New York,New York.
"Municipal Code" means Chapter 3.56 (commencing with Section 3.56.010) of the
Municipal Code of the City.
"Officer's Certificate"means a written certificate ofthe City signed by an Authorized Officer
of the City.
"Ordinance"means any ordinance of the City or resolution of the City Council levying the
Special Taxes.
"Original Purchaser"means the first purchaser of the Bonds from the City.
"Outstanding,"when used as of any particular time with reference to the Bonds, means
(subject to the provisions of Section 8.04 hereof)all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent
for cancellation;
RVPUB\KAMW934 -5-
(ii) Bonds called for redemption which,for the reasons specified in Section 2.03(G)
hereof, are no longer entitled to any benefit under this Agreement other than the right to receive
payment of the redemption price therefor;
(in) Bonds paid or deemed to have been paid within the meaning of Section 9.03
hereof, and
(iv) Bonds in lieu of or in substitution for which other Bonds shall have been authorized,
executed,issued and delivered by the City and authenticated by the Fiscal Agent pursuant to this
Agreement or any Supplemental Agreement.
"Owner"means any person who shall be the registered owner of any Outstanding Bond.
"Permitted Investments"means:
(i) Federal Securities;
(ii) 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 itsel fl:
(a) Federal Intermediate Credit Bank
(b) Federal Land Bank
(c) Tennessee Valley Authority
(d) Government National Mortgage Association
(iii) Bonds,debentures,notes or other evidence of indebtedness issued or guaranteed
by any of the following non-full faith and credit United States government agencies:
(a) Federal Home Loan Bank
(b) Federal Home Loan Mortgage Corporation
(c) Federal National Mortgage Association
(d) Student Loan Marketing Association
(e) Small Business Administration
RVPUB\KAB\645934 -6-
(iv) Money market funds registered under the Federal Investment Company Act of
1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by
Standard&Poor's of AA.Am-G,AAA-m or AA-m and, if rated by Moody's,rated Aaa,Aal or Aa2
by Moody's with a minimum of$500 million in assets under management including funds for which the
Trustee or its affiliates provide investment or other advisory services;
(v) Certificates of deposit secured at all times by collateral described in clauses (i)
and/or(ii)above. Such certificates must be issued by commercial banks,savings and loan associations or
mutual savings banks of which the short-term obligations are rated A-1 or better and P1 or better by
Moody's or Standard&Poor's. The collateral must be held by a third party and the Fiscal Agent on
behalf of the Owners of the Bonds must have a perfected first security interest in the collateral;
(vi) Time deposits-certificates of deposit,which are fully insured by FDIC,including
BIF and SAIF,with banks with the rating of at least Al or P1 by Moody's or Standard&Poor's;
(vii) Investment agreements with domestic or foreign banks,insurance companies other
than a life or property casualty insurance company, or corporations the long-term debt or claims paying
ability of which or,in the case of a guaranteed corporation,the long-term debt of the guarantor,or,in the
case of a monoline financial guaranty insurance company,claims paying ability or financial strength,of the
guarantor is rated in at least the AA category by Standard&Poor's and Moody's;provided that,by the
terms of the investment agreement:
(a) interest payments are to be made to the Fiscal Agent at times and in
amounts as necessary to pay Debt Service on the Bonds (if the funds invested pursuant to the
investment agreement are from the Reserve Fund);
(b) the invested funds are available for withdrawal without penalty or premium,
upon not more than seven(7)days' prior notice;
(c) the investment agreement shall provide that it is the unconditional and
general obligation of,and is not subordinated to any other obligation of,the provider thereof;
(d) the City and the Fiscal Agent receive the opinion of domestic counsel
(which opinion shall be addressed to the City) that such investment agreement is legal,
valid, binding and enforceable upon the provider in accordance with its terms and of
foreign counsel (if applicable) in form and substance acceptable, and addressed to, the
City;
(e) the investment agreement shall provide that if during its term
(1) the provider's rating by either Standard&Poor's or Moody's falls
below"AA-"or"AA3",respectively,the provider shall,at its option,within ten(10)Business Days
RVPUB\KAB\645934 -7-
after the,provider's receipt of a written request from the fiscal Agent to satisfy the foregoing,either
(i) collateralize the investment agreement by delivering or transferring in accordance with the
applicable state and federal laws(other than by means of entries on the provider's books)to the
City,the Fiscal Agent or a third party acting solely as agent therefor(the"Holder of the Collateral")
collateral free and clear of any third-party.hens or claims,the market value of which collateral is
maintained at one hundred four percent(104%)of securities identified in clauses(i)and(ii)of this
definition;or(ii)assign the investment agreement and all of its obligations thereunder to, or enter
into a repurchase agreement or such other agreement with, a financial institution mutually
acceptable to the Provider and the City which is rated either in the first or second highest category
by Standard&Poor's and Moody's; and
(2) . the provider's rating by either Standard&Poor's or Moody's is
withdrawn or suspended or falls below "A-" or "AY, respectively, the provider must, at the
direction of the City or the Fiscal Agent,within ten(10) days of receipt of such direction,repay
the principal of and accrued but unpaid interest on the invested funds,in either case with no penalty
'or premium to the City or the Fiscal Agent;and
(fl the investment agreement shall provide and an opinion of counsel shall be
rendered,in the event collateral is required to be pledged by the provider under the terms of the
investment agreement at the time such collateral is delivered,that the Holder ofthe Collateral has
a perfected first priority security interest in the collateral,any substituted collateral and all proceeds
thereof(in the case of bearer securities,this shall mean the Holder of the Collateral is in possession
of such collateral);and
(g) the investment agreement shall provide that if during its term
(1) the provider shall default in its payment obligations,the provider's
obligations under the investment agreement shall,at the direction of the City or the Fiscal Agent,
be accelerated and amounts invested and accrued but unpaid interest thereon shall be paid to the
City or the Fiscal Agent,as appropriate; and
(2) the provider shall become insolvent, not pay its debts as they
become due,be declared or petition to be declared bankrupt,etc.,the provider's obligations shall
automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall
be paid to the City or the Fiscal Agent,as appropriate;
(viii) .Commercial paper rated,at the time ofpurchase,"Prime- 1"by Moody's and"A-
1 or better by Standard&Poor's having original maturity of not more than 270 days issued by a domestic
corporation having assets in excess of$500 million;
(ix) 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 them;
RVPUB\KAB\645934 -8-
(x) Federal funds or bankers acceptances with a maximum term of 180 days of any
bank which has an unsecured,uninsured and unguaranteed obligation rating of"Prime-1"or"A3"or better
by Moody's and"A-1" or better by Standard&Poor's;
(xi) Repurchase agreements which satisfy the following criteria:
(a) Repurchase agreements must be between the City or the Fiscal Agent and
a dealer bank or securities firm which is:
(1) A primary dealer on the Federal Reserve reporting dealer list which
is rated"A"or better by two of the following Standard&Poor's,Moody's,or Fitch; or
(2) A domestic bank or a domestic branch of a foreign bank rated"A"
or above by two of the following: Standard&Poor's,Moody's or Fitch; or
(3) Corporations the long-term debt or claims paying ability ofwhich,
or in the case of a guaranteed corporation,the long-term debt of the guarantor,or,in the case of
a monoline financial guaranty insurance company,claims paying ability or financial strength,is rated
in at least the double A category by Standard&Poor's and Moody's; and.
(b) The written agreement must include the following:
(1) Securities which are acceptable for transfer are,
(A) direct obligations of the United States government,or
(B) obligations of federal agencies backed by the full faith and
credit of the United States of America(or the Federal National Mortgage Association(FNMA)
or the Federal Home Loan Mortgage Corporation(FHLMC)),
(2) The collateral must be delivered to the Fiscal Agent(if the Fiscal
Agent is not supplying the collateral) or a third party acting as agent for the Fiscal Agent(if the
Fiscal Agent is supplying the collateral) before or simultaneous with payment (perfection by
possession of certificated securities),
(3) (A)The securities must be valued weekly,marked-to-market at
current market price plus accrued interest,and
(B) The value of the collateral must be at least equal to one
hundred four percent(104%)of the amount of money transferred by the Fiscal Agent to the dealer,
bank or security firm under the agreement plus accrued interest. If the value of the securities held
as collateral is reduced below one hundred four percent (104%) of the value of the amount of
money transferred by the Fiscal Agent,then additional acceptable securities and/or cash must be
provided as collateral to bring the value of the collateral to one hundred four percent (1040/o);
RVPUB\KAB\645934 -9-
provided,however,that if the securities used as collateral are those of FNMA or FHLMC,then
the value of the collateral must be at least equal to one hundred five percent(105%)of the amount
of money transferred by the Fiscal Agent;and
(c) A legal opinion must be delivered to the City and the Fiscal Agent that the
repurchase agreement meets the requirements of California law with respect to the investment of
public funds;and
(d) Should the provider's rating by either Standard&Poor's or Moody's be
withdrawn or suspended or fall below "A-" or "AY, respectively, the provider must, at the
direction of the City or the Fiscal Agent,within ten(10) days of receipt of such direction,repay
the principal of and accrued but unpaid interest on the invested funds,in either case with no penalty
or premium to the City or the Fiscal Agent;and
(xn) the Local Agency Investment Fund in the State Treasury of the State of California
as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code.
"Principal Office" means the principal corporate trust office of the Fiscal Agent in Los
Angeles, California or such other addresses may be specified in writing by the Fiscal Agent; provided,
however, that for purposes of the transfer, registration, exchange, payment and surrender of Bonds
"Principal Office"means the corporate trust office of the Fiscal Agent in St.Paul,Minnesota or such other
address as may be specified in writing by the Fiscal Agent.
"Proceeds,"when used with reference to the Bonds,means the aggregate principal amount
of the Bonds,plus accrued interest and premium,if any,less original issue discount,if any.
"Project"means the public facilities which are to be financed with the proceeds of the sale
of the Bonds as described in ResolutionNo.2003-10 adopted by the City Council on February 3,2003.
"Rebate Certificate"means the certificate delivered by the City upon the delivery of the
Bonds relating to Section 148 of the Code,or any functionally similar replacement certificate.
"Rebate Fund"means the fund by that name established by Section 6.02 hereof.
"Record Date"means the fifteenth(15th)day of the month next preceding the applicable
Interest Payment Date whether or not such day is a Business Day.
"Regulations" means the temporary and permanent regulations of the United States
Department of the Treasury promulgated under the Code.
"Representation Letter"means the representation letter which the City has delivered to The
Depository Trust Company("DTC")with respect to the utilization of the book-entry system maintained by
DTC for the issuance and registration of bonds.
RVPUB\KAB\645934 -1 0-
"Reserve Fund"means the fund by that name established by Section 4.03(A)hereof.
"Reserve Requirement"means,as of any date of calculation,the lesser of(i)ten percent
(10%)of the principal amount of the Bonds on the Closing Date, (ii)Maximum Annual Debt Service on
the Outstanding Bonds or(iii) 125 percent of average Annual Debt Service on the Outstanding Bonds,as
determined by the City.
"Resolution" means Resolution No. 2003-_ adopted by the City Council on
, 2003.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City , New York 11530, Fax (516) 227-4039 or-4190; Midwest Securities Trust Company,
Capital Structures - Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax (312)
663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street,
Philadelphia,Pennsylvania 19103,Attention:Bond Department,Tel-(215)496-5058;and,in accordance
with then current guidelines of the Securities and Exchange Commission,such other securities depositories
as the City may designate in an Officer's Certificate delivered to the Fiscal Agent.
"Special Taxes" or"Special Tax" means the special taxes levied by the City Council on
parcels of taxable property within the District pursuant to the Municipal Code,the Act,the Ordinance and
this Agreement,but excluding the Parking Structure Maintenance Tax,as defined in the Rate and Method
of Apportionment of the Special Tax,as Exhibit A to Resolution No.2003-10 of the City. .
"Special Tax Fund"means the fund by that name established by Section 3.04(A)hereof.
"Special Tax Prepayments"means amounts received by the City as prepayments of all or
a portion of the Special Tax obligation of a parcel of property in the District.
"Special Tax Prepayments Account"means the account by that name established by the
Fiscal Agent in the Bond Fund pursuant to Section 4.02(A)hereof.
"Special Tax Revenues"means the proceeds of the Special Taxes received by the City,
including any scheduled payments and any prepayments thereof, interest and penalties thereon and
proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special
Taxes in the amount of said lien and interest and penalties thereon.
"Standard & Poor's" shall mean Standard& Poor's Ratings Services, a division of The
McGraw-Hill Companies,Inc.,a national rating service with offices in New York,New York.
"Supplemental Agreement" means any supplemental or amendment to this Agreement
permitted pursuant to Section 8.01 hereof
RMP \KAW645934
ARTICLE II
THE BONDS
Section 2.01. Principal Amount. Designation. The Bonds in the aggregate principal amount of
$ are hereby authorized to be issued by the City for the District under and subject to the
terms of the Resolution,this Agreement,the Act,the Municipal Code and other applicable laws of the State
of California. The Bonds shall be designated the"City of Huntington Beach Community Facilities District
No.2003-1(Huntington Center)2003 Special Tax Bonds."The Bonds shall be issued in the form attached
hereto as Exhibit A.
Section 2.02. Terms of Bonds.
(A) The Bonds. The Bonds shall be issued as fully registered bonds,without coupons,
in the denominations of$5,000 or any integral multiple thereof. The Bonds shall be lettered and numbered
in a customary manner as determined by the Fiscal Agent. The Bonds shall be dated the Closing Date.
(B) Maturities. The Bonds shall mature and become payable on September 1 of each
year,as follows:
Maturity Dates Principal Interest
(September 1) Amounts Rates
(C) Interest. The Bonds shall bear interest at the rates set forth in subsection(B)above
payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day
year composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date
next preceding the date of authentication thereofunless(i)it is authenticated on an Interest Payment Date,
in which event it shall bear interest from such Interest Payment Date, or(ii)it is authenticated prior to an
Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment
Date,in which event it shall bear interest from such Interest Payment Date,or(iii)it is authenticated on or
RVPUB\KAB\645934 -12-
before the Record Date preceding the first Interest Payment Date,in which event it shall bear interest from
the Closing Date;provided,however,that if at the time of authentication of a Bond, interest is in default
thereon,such Bond shall bear interest from the Interest Payment Date to which interest has previously been
Paid or made available for payment thereon or from the Closing Date, if no interest has previously been
paid or made available for payment thereon.
(D) Method of Payment. Interest on the Bonds is payable by check of the Fiscal Agent
mailed by first class mail,postage prepaid,on each Interest Payment Date,to the registered Owner thereof
at such registered Owner's address as it appears on the registration books maintained by the Fiscal Agent
at the close of business on the Record Date preceding the Interest Payment Date. The principal of the
Bonds and any premium on the Bonds are payable in lawful money of the United States of America by
check of the Fiscal Agent upon surrender of such Bonds at the Principal Office of the Fiscal Agent;
provided,however,that at the written request of the Owner of at least$1,000,000 in aggregate principal
amount of Outstanding Bonds filed with the Fiscal Agent prior to any Record Date,interest on such Bonds
shall be paid to such Owner on each succeeding Interest Payment Date by wire transfer of immediately
available funds to an account in the United States of America designated in such written request. All Bonds
paid by the Fiscal Agent pursuant to this subsection shall be canceled by the Fiscal Agent.
(E) CUSIP IdentificationNumbers. "CUSIP"identification numbers shall be imprinted
on the Bonds,but such numbers shall not constitute a part of the contract evidenced by the Bonds. In
addition,failure on the part ofthe City or the Fiscal Agent to use such CUSIP numbers in any notice to the
Owners shall not constitute an event of default or any violation of the City's contract with the Owners and
shall not impair the effectiveness of any such notice.
Section 2.03. Redemption
(A) Optional Redemption The Bonds which mature on or after September 1,
are subject to redemption prior to their stated maturity dates on September 1, or any Interest
Payment Date thereafter, on a pro rata basis among maturities (and by lot within any one maturity), in
integral multiples of$5,000, at the option of the City from moneys derived by the City from any source
(including Special Tax Prepayments), at redemption prices (expressed as percentages of the principal
amounts of the Bonds to be redeemed),together with accrued interest to the date of redemption as follows:
Redemption Dates Redemption Price
(B) [intentionally omitted]
(C) Mandatory Sinking Fund Redemption
R VpUB\KAB\645934 -13-
The Outstanding Bonds maturing on September 1, are subj ect to mandatory
sinking fund redemption,in part,on September 1, .and on each September 1 thereafter to maturity,
by lot,at a redemption price equal to the principal amount thereof to be redeemed,together with accrued
interest to the date of redemption,without premium,and from sinking payments as follows:
Redemption Date
(September 1) Sinking Payment
The amounts in the foregoing schedules shall be reduced by the City pro rata among
redemption dates,in order to maintain substantially level Debt Service,as a result of any prior or partial
redemption of the Bonds pursuant to subsection(A)above.
(D) Purchase of Bonds. In lieu of payment at maturity or redemption under this
Section 2.03,moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of
Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such
purchase,at public or private sale as and when,and at such prices(including brokerage and other charges)
as such Officer's Certificate may provide,but in no event may Bonds be purchased at a price in excess of
the principal amount thereof,plus interest accrued to the date of purchase.
(E) Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written
notice of the City's intention to redeem Bonds not less than forty-five (45) days prior to the applicable
redemption date specifying the principal amounts and maturities of the Bonds to be redeemed.
(F) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of
any redemption to be mailed by first class mail,postage prepaid,at least thirty(30)days but not more than
sixty(60)days prior to the date fixed for redemption,to the Securities Depositories and to one or more
Information Services selected by an Authorized Officer, and to the respective registered Owners of any
Bonds designated for redemption,at their addresses appearing on the Bond registration books maintained
by the Fiscal Agent at its Principal Office; but such mailing shall not be a condition precedent to such
RV PUB\KAB\645934 -14-
redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the
validity of the proceedings for the redemption of such Bonds.
Such notice shall state the date of such notice,the date of issue of the Bonds,the place or
places of redemption,the redemption date,the redemption price and,if less than all of the then Outstanding
Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the
Bonds to be redeemed, by giving the individual CUSIP number and Bond number of each Bond to be
redeemed, or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be
redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state
as to any Bond called for redemption in part the portion of the principal of the Bond to be redeemed,shall
require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at
the said redemption price,and shall state that further interest on such Bonds will not accrue from and after
the redemption date. The cost of the mailing and publication of any such redemption notice shall be paid
by the District.
Upon the payment of the redemption price of Bonds being redeemed,each check or other
transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number
identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other
transfer.
In the event of an optional redemption pursuant to Section 2.03(A)the City shall transfer
or cause to be transferred to the Fiscal Agent for deposit in the Bond Fund moneys in an amount equal to
the redemption price of the Bonds being redeemed on or before the Interest Payment Date upon which
such Bonds are to be redeemed.
If less than all the Bonds Outstanding are to be redeemed,the portion of any Bond of a
denomination of more than$5,000 to be redeemed shall be in the principal amount of$5,000 or a multiple
thereof, and,in selecting portions of such Bonds for redemption, the Fiscal Agent shall treat each such
Bond as representing the number of Bonds of$5,000 denomination which is obtained by dividing the
principal amount of such Bond to be redeemed in part by$5,000.
Whenever provision is made in this Agreement for the redemption of less than all of the
Bonds of a maturity or any given portion thereof, the Fiscal Agent shall select the Bonds of such maturity
to be redeemed, from all Bonds of such maturity or such given portion thereof not previously called for
redemption,by lot within a maturity in any manner which the Fiscal Agent in its sole discretion shall deem
appropriate.
Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal
Agent shall authenticate and deliver to the Owner,at the expense of the District, a new Bond or Bonds,
of the same maturity,of authorized denominations in aggregate principal amount equal to the unredeemed
portion of the Bond or Bonds.
(G) Effect of Redemption From and after the date fixed for redemption, if funds
available for the payment of the redemption prices of the Bonds called for redemption shall have been
RVPUB\KAB\645934 -15-
deposited in the Bond Fund, such Bonds shall cease to be entitled to any benefit under this Agreement
other than the right to receive payment of the redemption price,and interest shall cease to accrue on the
Bonds to be redeemed on the redemption date specified in the notice of redemption.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section 2.03 shall
be canceled by the Fiscal Agent.
Section 2.04. FormofBonds. The Bonds,including the Fiscal Agent's certificate of authentication
and the assignment to appear thereon,shall be substantially in the form set forth in Exhibit A attached hereto
and by this reference incorporated herein,with necessary or appropriate variations,omissions and inser-
tions as permitted or required by this Agreement.
Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the District by the
facsimile signatures of the Mayor and City Clerk of the City,who are in office on the date of this Agreement
or at any time thereafter. If any officer whose signature appears on any Bond ceases to be such officer
before delivery of the Bond to the Owner,such signature shall nevertheless be as effective as if the officer
had remained in office until the delivery of the Bond to the Owner. Any Bond may be signed and attested
on behalf of the District by such persons as at the actual date of the execution of such Bond shall be the
proper officers of the City although at the nominal date of such Bond any such person shall not have been
such officer of the City.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the form
set forth in Exhibit A hereto manually executed and dated by the Fiscal Agent,shall be valid or obligatory
for any purpose or entitled to the.benefits of this Agreement, and such certificate of authentication of the
Fiscal Agent shall be conclusive evidence that such Bonds have been duly authenticated,registered and
delivered hereunder, and are entitled to the benefits of this Agreement.
Section 2.06. Transfer of Bonds. Any Bond may,in accordance with its terms, be transferred,
upon the books required to be kept pursuant to the provisions of Section 2.08 hereof, by the person in
whose name it is registered,in person or by his duly authorized attorney,upon surrender of suchBond for
cancellation at the Principal Office of the Fiscal Agent,accompanied by delivery of a duly executed written
instrument of transfer in a form acceptable to the Fiscal Agent. The cost for any services rendered or any
expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the District.
The Fiscal Agent shall collect from the Owner requesting transfer of a Bond any tax or other governmental
charge required to be paid with respect to such transfer.
Whenever any Bond or Bonds shall be surrendered for transfer,the City shall execute and
the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal amount.
No transfers of Bonds shall be required to be made (i) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with
respect to Bonds which have been selected for redemption.
RVPUB\KAB\645934 -16-
Section 2.07. Exchange ofBonds. Bonds may be exchanged at the Principal Office of the Fiscal
Agent only for a like aggregate principal amount of Bonds of authorized denominations and of the same
maturity and interest rate. The cost for any services rendered or any expense incurred by the Fiscal Agent
in connection with any such exchange shall be paid by the District. The Fiscal Agent shall collect from the
Owner requesting exchange of a Bond any tax or other governmental charge required to be paid with
respect to such exchange.
No exchanges of Bonds shall be required to be made (i) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with
respect to Bonds which have been selected for redemption.
Section 2.08. Bond Register. The Fiscal Agent shall keep,or cause to be kept, at its Principal
Office sufficient books for the registration and transfer of the Bonds which books shall show the series,
number,CUSIP identification number,date of issuance,amount,rate of interest and Owner of each Bond
and shall at all times be open to inspection by the City during regular business hours upon reasonable
notice;and,upon presentation for such purpose,the Fiscal Agent shall,under such reasonable regulations
as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the
ownership of the Bonds as hereinbefore provided.
Section 2.09. Temporar Bonds. The Bonds may be initially issued in temporary form
exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed,
lithographed or typewritten,shall be of such denominations as may be determined by the City, and may
contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary
Bond shall be executed by the City upon the same conditions and in substantially the same manner as the
definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without
delay and thereupon the temporary Bonds shall be surrendered,for cancellation,in exchange for the defini-
tive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall
designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary Bonds an
equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged,the
temporary Bonds shall be entitled to the same benefits under this Agreement as definitive Bonds
authenticated and delivered hereunder.
Section 2.10. Bonds Mutilated,Lost.Destroyed or Stolen If any Bond shall become mutilated,
the City,at the expense of the Owner of said Bond,shall execute,and the Fiscal Agent shall authenticate
and deliver, a replacement Bond of like tenor and principal amount in exchange and substitution for the
Bond so mutilated,but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated
Bond so surrendered to the Fiscal Agent shall be canceled and destroyed by the Fiscal Agent. If any Bond
shall be lost,destroyed or stolen,evidence of such loss,destruction or theft may be submitted to the Fiscal
Agent and,if such evidence be satisfactory to it and indemnity for the City and the Fiscal Agent satisfactory
to the Fiscal Agent shall be given,the City,at the expense of the Owner,shall execute,and the Fiscal Agent
shall authenticate and deliver, a replacement Bond of like tenor and principal amount in lieu of and in
substitution for the Bond so lost,destroyed or stolen. The City or Fiscal Agent may require payment of
a sum not exceeding the actual cost of preparing each replacement Bond delivered under this Section 2.10
RVPUB\KAB\645934 -17-
and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation,execution,
authentication and delivery thereof. Any Bond delivered under the provisions of this Section 2.10 in
replacement of any Bond alleged to be lost,destroyed or stolen shall constitute an original additional con-
tractual obligation of the District whether or not the Bond so alleged to be lost,destroyed or stolen is at any
time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this
Agreement with all other Bonds issued pursuant to this Agreement.
Section 2.11. Special Obligation All obligations of the City and the District under this Agreement
and the Bonds shall be special obligations of the City and the District,payable solely from the Special Tax
Revenues and the funds pledged therefor pursuant hereto. Neither the faith and credit nor the taxing power
of the City, the District (except to the limited extent set forth herein) or the State of California or any
political subdivision thereof is pledged to the payment of the Bonds.
Section 2.12. Issuance of Additional Bonds.The City may on behalf of the District at any time
after the issuance and delivery of the Bonds hereunder issue Additional Bonds payable from the Special
Taxes and secured by a lien and charge upon the Special Taxes equal to the lien and charge securing the
Outstanding Bonds theretofore issued hereunder,but only subject to the following specific conditions,which
are hereby made conditions precedent to the issuance of any such Additional Bonds.
(A) The City and the District shall be in compliance with all covenants set forth in the
Resolution and this Agreement,and a certificate of an Authorized Officer to that effect shall have
been filed with the Fiscal Agent.
(B) The issuance of such Additional Bonds shall have been duly authorized pursuant
to the Act and all applicable laws, and the issuance of such Additional Bonds shall have been
provided for by a Supplemental Agreement which shall specify the following:
(1) The purpose for which such Additional Bonds are to be issued and the
fund or funds into which the proceed thereof are to be deposited, including a provision
requiring the proceeds of such Additional Bonds to be applied solely for(i)the purpose
of aiding in financing the Project,including payment ofall costs incidental to or connected
with such financing,and/or(ii)the purpose of refunding any Bonds,including payment of
all costs incidental to or connected with such refunding to the extent permitted by law;
(2) The authorized principal amount of such Additional Bonds;
(3) The date and maturity date or dates of such Additional Bonds;provided
that(i)each maturity date shall be September 1 of each year such Additional Bonds are
due,(ii)all such Additional Bonds of like maturity shall be identical in all respects,except
as to number, and (iii) fixed serial maturities or mandatory sinking payments, or any
combinationthereof,shall be established to provide for the retirement of all such Additional
Bonds on or before their respective maturity dates;
RVPUB\KAB\645934 -18-
(4) The interest payment dates for such Additional Bonds; provided that
interest payment dates shall be on the same semiannual dates as the Interest Payment
Dates for the Bonds unless the City determines that interest payment dates other than those
for the Bonds will not adversely affect the interests of the owners of the Outstanding
Bonds.
(5) The denomination and method of numbering of such Additional Bonds;
(6) The redemption premiums, if any, and the redemption terms, if any, for
such Additional Bonds;
(7) The amount and due date of each mandatory sinldng payment,if any,for
such Additional Bonds;
(8) The amount,if any,to be deposited from the proceeds of such Additional
Bonds in any interest account;
(9) The amount,if any,to be deposited from the proceeds of such Additional
Bonds in a reserve fund;
(10) The form of such Additional Bonds;and
(11) Such other provisions as are necessary or appropriate and not inconsistent
with this Agreement.
(c) The Fiscal Agent shall have received the following documents, all of such
documents dated or certified, as the case may be, as of the date of delivery of such Additional
Bonds by the Fiscal Agent(unless the City shall accept any of such documents bearing a prior
date):
(1) A certified copy of the resolution authorizing the issuance of such
Additional Bonds and the Supplemental Agreement pursuant to which such Additional
Bonds are to be issued;
(2) An Officer's Certificate of the City on behalf of the District as to the
delivery of such Additional Bonds;
(3) An opinion of Bond Counsel to the effect that(a)the District has the right
and power under the Act to execute and deliver this Agreement and all Supplemental
Agreements thereto,and this Agreement and all such Supplemental Agreements have been
duly and lawfully approved, executed and delivered by the District, are in full force and
effect and are valid and binding upon the District and enforceable in accordance with their
temis (except as enforcement may be limited by bankruptcy, insolvency, reorganization
RVPUB\KAB\645934 -19-
and other similar laws relating to the enforcement of creditors' rights), and no other
authorization for this Agreement or such Supplemental Agreement is required; (b)this
Agreement and such Supplemental Agreement create the valid pledge which they purport.
to create of the of the Special Taxes as provided in this Agreement and such Supplemental
Agreement, subject to the application thereof to the purposes and on the conditions
permitted by this Agreement and such Supplemental Agreement; (c) such Additional
Bonds are valid and binding special obligations of the District,enforceable in accordance
with their terms (except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar laws relating to the enforcement of creditors' rights)and
the terms of this Agreement and all Supplemental Agreements thereto and entitled to the
benefits of this Agreement and all such Supplemental Agreements, and such Additional
Bonds have been duly and validly authorized and issued in accordance with the Act(or
other applicable laws)and this Agreement and all such Supplemental Agreements;and(d)
the issuance of the Additional Bonds will not adversely affect the exclusion from gross
income for federal income tax purposes of interest on the Bonds and, if then applicable,
the Bonds or the exemption from State of California personal income taxation of interest
on the Bonds;
(4) An Officer's Certificate of the City containing such statements as may be
reasonably necessary to show compliance with the requirements of this Agreement;
(5) A certificate of an Independent Financial Consultant certifying that the
maximum Special Tax that may be levied in any Fiscal Year by the District pursuant to the
Act and the applicable resolutions and Ordinances of the District is at least 1.10 times the
amount required to pay Debt Service during the Applicable Bond Year on all Outstanding
Bonds following the issuance of such Additional Bonds(excluding the Debt Service on any
amount held in escrow)and at least 75%of the rentable square feet on property subject
to the Special Tax shall be leased;
(6) Such further documents as are required by the provisions of this
Agreement and the Supplemental Agreement providing for the issuance of such Additional
Bonds;and
(7) A certificate of the appraiser providing the original appraisal for the Bonds
or a qualified MAI appraiser that the ratio of market value of land and improvements
subject to the Special Tax to the aggregate principal amount of all Outstanding Bonds
including the aggregate principal amount of such Additional Bonds(excluding any principal
amount held in escrow)is not less than three(3)to one(1).
Section 2.13. Book-Entrv. The Bonds shall be initially issued in the form of a single,.fully
registered Bond for each maturity(which may be typewritten). Upon initial issuance,the ownership of such
Bonds shall be registered in the name of the Nominee identified below as nominee of The Depository Trust
Company, New York,New York and its successors and assigns(the "Depository" or"DTC"). Except
RVPUB\KAB\645934 -20-
as hereinafter provided,all of the Outstanding Bonds shall be registered in the name of the nominee of the
Depository,which may be the Depository,as determined from time to time pursuant to this Section 2.13
(the"Nominee").
With respect to the Bonds registered in the name of the Nominee,neither the City nor the
Fiscal Agent shall have any responsibility or obligation to any broker-dealers, banks and other financial
institutions from time to time for which the Depository holds Bonds as securities depository (the
"Participant")or to any person on behalf of which such a Participant holds an interest in the Bonds. Without
limiting the immediately preceding sentence,neither the City nor the Fiscal Agent shall have any responsibil-
ity, liability or obligation whatsoever with respect to(i)the accuracy of the records of the Depository,the
Nominee, or any Participant with respect to any ownership interest in the Bonds, (ii)the delivery to any
Participant or any other person, other than an Owner of a Bond as shown in the registration books
maintained by the Fiscal Agent pursuant to Section 2.08 hereof(the "Registration Books"),of any notice
with respect to the Bonds,including any notice of redemption, (iii)the selection by the Depository and its
Participants of the beneficial interests in the Bonds to be redeemed in the event the City redeems the Bonds
in part, or (iv) the payment to any Participant or any other person, other than an Owner of a Bond as
shown in the Registration Books,of any amount with respect to principal of or interest on the Bonds. The
City and the Fiscal Agent may treat and consider conclusively the person in whose name each Bond is
registered as the holder and absolute Owner of such Bond for the purpose of payment of principal and
interest with respect to such Bond,for the purpose of giving notices of redemption,if applicable,and other
matters with respect to such Bond,for the purpose of registering transfers with respect to such Bond,and
for all other purposes whatsoever. The City shall pay all principal of and interest on the Bonds only to or
upon the order of the respective Owner of a Bond, as shown in the Registration Books, or his or her
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 of and interest on the Bonds to the
extent of the sum or sums so paid. No person other than an Owner of a Bond,as shown in the Registration
Books,shall receive a Bond evidencing the obligation of the City to make payments of principal and interest
pursuant to this Agreement. Upon delivery by the Depository to the Owners of the Bond,and the City of
written notice to the effect that the Depository has detern fined 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
Agreement shall refer to such nominee of the Depository.
In the event(i)the Depository detemunes not to continue to act as securities depository
for the Bonds, or (ii) the Depository shall no longer so act and gives notice to the City of such
determination, 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 Bond,per maturity,registered in the name
of such successor or substitute qualified securities depository or its nominee. If the City fails to identify
another qualified securities depository to replace the Depository, then the Bonds shall no longer be
restricted to being registered in the Registration Books in the name of the Nominee,but shall be registered
in whatever name or names Owners of the Bonds transferring or exchanging Bonds shall designate, in
accordance with the provisions of Sections 2.06 and 2.07 hereof, and the City shall prepare and deliver
Bonds to the Fiscal Agent for authentication and delivery to the Owners thereof for such purpose.
RVPUB\KAB\645934 -21-
In the event of a reduction in aggregate principal amount of Bonds Outstanding or an
advance refunding of part ofthe Bonds Outstanding,the Depository,in its discretion,(a)may request the
City to prepare and issue a new Bond or(b)may make an appropriate notation on a Bond indicating the
date and amounts of such reduction in principal,but in such event the Registration Books maintained by
the Fiscal Agent shall be conclusive as to what amounts are Outstanding with respect to the Bond,except
in the case of final maturity,in which case the Bond must be presented to the Fiscal Agent prior to payment.
Notwithstanding any other provision of this Agreement to the contrary,so long as any Bond
is registered in the name of the Nominee,all payments of principal and interest with respect to such Bond
and all notices with respect to such Bond shall be made and given, respectively, as provided in the
Representation Letter or as otherwise instructed by the Depository and acceptable to the City.
The initial Nominee shall be Cede&Co.,as Nominee of DTC.
ARTICLE III
ISSUANCE OF BONDS;APPLICATION OF PROCEEDS; IMPROVEMENT
FUND; SPECIAL TAX FUND;ADMINISTRATIVE EXPENSE FUND;
COSTS OF ISSUANCE FUND
Section 3.01. Issuance and Delivery of Bonds. At anytime after the execution of this Agreement,
the City may issue the Bonds for the District in the aggregate principal amounts set forth in Section 2.01
hereof and deliver the Bonds to the Original Purchaser. The Authorized Officers of the City are hereby
authorized and directed to deliver any and all documents and instruments necessary to cause the issuance
of the Bonds in accordance with the provisions of the Act, the Municipal Code, the Resolution and this
Agreement,to authorize the payment of Costs of Issuance by the Fiscal Agent from the proceeds of the
Bonds,and to do and cause to be done any and all acts and things necessary or convenient for delivery
of the Bonds to the Original Purchaser.
Section 3.02. Application of Proceeds of Sale of Bonds.
The Proceeds of the sale of the Bonds to the Original Purchaser shall be paid to the Fiscal
Agent,who shall forthwith set aside,pay over and deposit such Proceeds on the Closing Date as follows:
(A) Deposit in the Reserve Fund the amount of$ ;
(B) Deposit in the Capitalized Interest Sub-account in the Interest Account in the Bond
Fund the amount of$ representing capitalized interest on the Bonds through September 1,
(C) Deposit in the Costs of Issuance Fund the amount of$ ;
(D) Deposit in the Improvement Fund the amount of$ ;and
RVPUB\KAB\645934 -22-
(E) Deposit in the Administrative Expense Fund the amount of$
Section 3.03. Improvement Fund.
(A) Establishment of Improvement Fund. There is hereby established,as a separate
fund to be held by the Fiscal Agent,the"City of Huntington Beach Community Facilities District No.2003-
1 (Huntington Center)2004 Special Tax Bonds,Improvement Fund"to the credit of which deposits shall
be made as required by paragraph (D) of Section 3.02 and Section 4.03(D) hereof. Moneys in the
Improvement Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds,shall be
disbursed,except as otherwise provided in subsection(D)of this Section 3.03,for the payment or reim-
bursement associated with the costs of the design,acquisition and construction of the Project.
(B) Procedure for Disbursement. Disbursements from the Improvement Fund shall be
made by the Fiscal Agent upon receipt of an Officer's Certificate which shall be in the form attached hereto
as Exhibit B and shall:
(i) set forth the amount required to be disbursed,the purpose for which the
disbursement is to be made and the person to which the disbursement is to be paid;and
(ii) certify that no portion of the amount then being requested to be disbursed
was set forth in any Officer's Certificate previously filed with the Fiscal Agent requesting
disbursement, and that the amount being requested is an appropriate disbursement from
the Improvement Fund.
(C) Investment. Moneys in the Improvement Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the
Improvement Fund to be used for the purposes of such fund.
(D) Closing of Fund. Upon the filing of an Officer's Certificate stating that the
construction and acquisition of the Project has been completed and that all costs of the Project have been
paid or are not required to be paid from the Improvement Fund,and further stating that moneys on deposit
in the Improvement Fund are not needed to complete the Project or reimburse the cost thereof,the Fiscal
Agent shall transfer the amount,if any,remaining in the Improvement Fund to the Interest Account of the
Bond Fund to be used to pay the interest on the Bonds.
(E) Officer's Certificate. Upon receipt of an Officer's Certificate delivered pursuant
to this Section 3.03,the Fiscal Agent is authorized to act thereon without further inquiry and shall not be
responsible for the accuracy of the statements made in such Officer's Certificate or the application of the
funds disbursed pursuant thereto,and shall be absolutely protected and incur no liability in relying on such
Officer's Certificate.
RVPUB\KAB\645934 -23-
Section 3.04. Special Tax Fund.
(A) Establishment of Special Tax Fund. There is hereby established,as a separate fund
to be held by the Fiscal Agent,the "City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center), 2004 Special Tax Bonds, Special Tax Fund." The City shall remit to the Fiscal
Agent,not later than five(5)Business Days after receipt,all Special Tax Revenues received by the City,
and the Fiscal Agent shall deposit such amounts to the Special Tax Fund.Moneys in the Special Tax Fund
shall be held in trust by the Fiscal Agent for the benefit of the City and the Owners of the Bonds,shall be
disbursed as provided below and,pending disbursement,shall be subject to a lien in favor of the Owners
of the Bonds.
Notwithstanding the foregoing,any amounts received by the City which constitute Special
Tax Prepayments shall be transferred by the City immediately upon receipt to the Fiscal Agent for deposit
by the Fiscal Agent in the Special Tax Prepayments Account established pursuant to Section 4.02(A)
hereof.
(B) Disbursements.From time to time as needed to pay the obligations of the District,
but no later than the Business Day before each Interest Payment Date,the Fiscal Agent shall withdraw from
the Special Tax Fund and transfer the following amounts in the following order of priority(i)to the Bond
Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected
transfers from the Improvement Fund,the Reserve Fund and the Special Tax Prepayments Account to the
Bond Fund pursuant to Section 4.02(B), such that the amount in the Bond Fund equals the principal
(including any sinking payment), premium, if any, and interest due on the Bonds on the next Interest
Payment Date,and(ii)to the Reserve Fund an amount,taking into account amounts then on deposit in the
Reserve Fund,such that the amount in the Reserve Fund is equal to the Reserve Requirement.Amounts
then in the Special Tax Fund shall also be transferred from time to time by the Fiscal Agent,at the written
direction of the City,to the Administrative Expense Fund,but the City agrees that any such transfers shall
not exceed, in any Fiscal Year, the amount included in the Special Tax levy for such Fiscal Year for
Administrative Expenses.
(C) Investment. Moneys in the Special Tax Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Special Tax Fund to be
used for the purposes of such fund.
Section 3.05. Administrative Expense Fund.
(A) Establishment of Administrative Expense Fund. There is hereby established,as a
separate fund to be held by the Fiscal Agent,the"City of Huntington Beach Community Facilities District
No. 2003-1 (Huntington Center),2004 Special Tax Bonds, Administrative Expense Fund"to the credit
of which deposits shall be made as required by Section 3.02(E)and Section 3.04(B)hereof. Moneys in
the Administrative Expense Fund shall be held in trust by the Fiscal Agent for the benefit of the City,and
shall be disbursed as provided below.
RVPUB\KAB\645934 -24-
(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn
by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer's
Certificate stating the amount to be withdrawn,that such amount is to be used to pay an Administrative
Expense(or a Cost of Issuance)and the nature of such Administrative Expense(or Cost of Issuance).
(C) Investment. Moneys in the Administrative Expense Fund shall be invested and
deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal
Agent in the Administrative Expense Fund to be used for the purposes of such fund.
Section 3.06. Costs of Issuance Fund.
(A) Establishment of Costs of Issuance Fund. There is hereby established, as a
separate fund to be held by the Fiscal Agent,the"City of Huntington Beach Community Facilities District
No.2003-1(Huntington Center),2004 Special Tax Bonds,Costs of Issuance Fund"to the credit of which
a deposit shall be made as required by paragraph(C) of Section 3.02 hereof. Moneys in the Costs of
Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection(B)
of this Section for the payment or reimbursement of Costs of Issuance.
(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed to pay
Costs of Issuance,as set forth in a requisition containing respective amounts to be paid to the designated
payees,signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery
of the Bonds. The.Fiscal Agent shall pay all Costs of Issuance upon receipt of an invoice from any such
payee which requests payment in an amount which is less than or equal to the amount set forth with respect
to such payee in such requisition, or upon receipt of an Officer's Certificate requesting payment of a Cost
of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. The Fiscal
Agent shall maintain the Costs of Issuance Fund for a period of ninety(90)days from the Closing Date and
shall then transfer and deposit any moneys remaining therein,including any Investment Earnings thereon,
to the Improvement Fund for the purposes of such fund.
(C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited
in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the
Costs of Issuance Fund to be used for the purposes of such fund.
ARTICLE IV
SPECIAL TAX REVENUES;BOND FUND;RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues.
The Bonds shall be secured by a pledge of and lien upon(which shall be effected in the
manner and to the extent herein provided)all of the Special Tax Revenues and all moneys deposited in the
Bond Fund and all moneys deposited in the Reserve Fund and the Special Tax Fund. The Bonds shall be
equally secured by a pledge of and lien upon the Special Tax Revenues and such moneys without priority
for number,date of Bond, date of execution or date of delivery; and the payment of the interest on and
RVPUB\KAB\645934 -25-
principal of the Bonds and any premium upon the redemption of any thereof shall be and is secured by a
pledge of and lien upon the Special Tax Revenues and such moneys. The Special Tax Revenues and all
moneys deposited into such accounts are hereby dedicated in their entirety to the payment of the principal
of the Bonds, and interest and any premium on, the Bonds, as provided herein and in the Act and the
Municipal Code,until all of the Bonds have been paid and retired or until moneys or Defeasance Securities
have been set aside irrevocably for that purpose in accordance with Section 9.03 hereof.
Section 4.02. Bond Fund.
(A) Deposits. There is hereby established,as a separate fund to be held by the Fiscal
Agent,the"City of Huntington Beach Community Facilities District No.2003-1(Huntington Center),2004
Special Tax Bonds, Bond Fund" to the credit of which deposits shall be made as required by
Section 3.03(D), Section 3.04(B)and Section 4.03(D)hereof and any other provision of this Agreement
or the Act. There are hereby established in the Bond Fund,as separate accounts to be held by the Fiscal
Agent,the"Interest Account"and the'Principal Account." There is hereby also established in the Bond
Fund,as a separate account to be held by the Fiscal Agent,the"Special Tax Prepayments Account"to the
credit of which deposits shall be made as required by Section 3.04(A) hereof. There is hereby also
established in the Interest Account, as a separate sub-account to be held by the Fiscal Agent, the
"Capitalized Interest Sub-Account"to the credit of which a deposit shall be made as required by paragraph
(B) of Section 3.02 hereof. Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the
benefit of the Owners of the Bonds,shall be disbursed for the payment of the principal of,and interest and
any premium on,the Bonds as provided below,and,pending such disbursement,shall be subject to a lien
in favor of the Owners of the Bonds.
(B) Disbursements. On or before each Interest Payment Date,the Fiscal Agent shall
transfer from the Special Tax Fund and deposit into the following respective accounts in the Bond Fund,
the following amounts in the following order of priority, the requirements of each such account(including
the making up of any deficiencies in any such account resulting from lack of Special Tax Revenues sufficient
to make any earlier required deposit)at the time of deposit to be satisfied before any transfer is made to
any account subsequent in priority:
(1) Interest Account. On or before each Interest Payment Date, the Fiscal
Agent shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit
in the Interest Account to equal the amount of interest becoming due and payable on the Bonds on such
date(taking into account any expected transfers from the Improvement Fund,the Reserve Fund and the
Capitalized Interest Sub-account for any such date). No deposit need be made into the Interest Account
on any Interest Payment Date if the amount on deposit therein is at least equal to the interest becoming due
and payable on the Bonds on such date. All moneys in the Interest Account shall be used and withdrawn
by the Fiscal Agent solely for the purpose of paying the interest on the Bonds as it shall become due and
payable(including accrued interest on any Bonds redeemed prior to maturity). All amounts on deposit in
the Interest Account on the first day of any Bond Year,to the extent not required to pay any interest then
having become due and payable on the Outstanding Bonds shall be withdrawn therefrom by the Fiscal
Agent and transferred to the Special Tax Fund.
RVPUB\KAB\645934 -26-
(a) Capitalized Interest Sub-Account. On or before the Interest
Payment Dates which occur between the Closing Date and September 1, ,the Fiscal Agent
shall withdraw from the Capitalized Interest Sub-Account and transfer to the Interest Account the
amount which is necessary to cause the amount on deposit in the Interest Account to be equal to
the amount of Debt Service which is due and payable on the Outstanding Bonds on such Interest
Payment Date. The amount, if any, on deposit in the Capitalized Interest Sub-Account on
September 2, shall be withdrawn by the Fiscal Agent and transferred to the Special Tax
Fund and the Capitalized Interest Sub-Account shall be closed.
(2) Principal Account. On or before each Interest Payment Date,the Fiscal
Agent shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit
in the Principal Account to equal the principal amount of the Bonds becoming due and payable on such date
pursuant to Section 2.02 hereof,or the redemption price of the Bonds(consisting of the principal amount
thereof and any applicable redemption premium)required to be redeemed on such date pursuant to any
ofthe provisions of Section 2.03 hereof.All moneys in the Principal Account shall be used and withdrawn
by the Fiscal Agent solely for the purpose of(i)paying the principal of the Bonds at the maturity thereof,
or Q paying the principal of and premium(if any)on any Bonds upon the redemption thereof pursuant to
Section 2.03 hereof. All amounts on deposit in the Principal Account on the first day of any Bond Year,
to the extent not required to pay the principal of any Outstanding Bonds then having become due and
payable,shall be withdrawn therefrom and transferred to the Special Tax Fund.
On the first Business Day following each Interest Payment Date, the Fiscal Agent shall
transfer any moneys remaining on deposit in the Bond Fund, including the Interest Account (but not
including the Capitalized Interest Sub-Account)and the Principal Account,to the Special Tax Fund.
In the event that moneys on deposit in the Special Tax Fund will be insufficient on any
Interest Payment Date for the Fiscal Agent to deposit the required amounts in the Interest Account and the
Principal Account of the Bond Fund as provided above,the Fiscal Agent shall deposit the available funds
first to the Interest Account up to the full amount required to cause the aggregate amount on deposit therein
to equal the amount of interest becoming due and payable on the Bonds on the Interest Payment Date,and
shall then deposit the remaining available funds in the Special Tax Fund to the Principal Account up to the
full amount required to cause the aggregate amount on deposit therein to equal the amount, if any, of
principal becoming due and payable on the Bonds on the Interest Payment Date. If, after making such
deposits to the Interest Account and the Principal Account,and after transferring moneys from the Reserve
Fund to such accounts, as provided in Section 4.03(B) hereof, the amount on deposit in the Principal
Account is insufficient to pay the full amount ofthe principal of each of the Bonds which is to be redeemed
on the Interest Payment Date,the Fiscal Agent shall make a prorated payment of the principal of each of
such Bonds as specified in an Officer's Certificate provided to the Fiscal Agent.
(C) Special Tax Prepavments Account Deposits and Disbursements. Within five(5)
Business Days after receiving a Special Tax Prepayment the City shall deliver the amount thereof to the
Fiscal Agent, together with an Officer's Certificate notifying the Fiscal Agent that the amount being
delivered is a Special Tax Prepayment which is to be deposited in the Special Tax Prepayments Account.
RVPUB\KAB\645934 -27-
Upon receiving a Special Tax Prepayment from the City and such an Officer's Certificate,the Fiscal Agent
shall deposit the amount of the Special Tax Prepayment in the Special Tax Prepayments Account. Such
an Officer's Certificate may be combined with the Officer's Certificate which the City is required to deliver
to the Fiscal Agent pursuant to Section 4.03(F)hereof.Moneys on deposit in the Special Tax Prepayments
Account shall be transferred by the Fiscal Agent to the Principal Account on the next date for which notice
of the redemption of the Bonds can timely be given under Section 2.03(E) hereof and shall be used to
redeem the Bonds on the redemption date selected in accordance with Section 2.03(A)hereof. Pending
such transfer, the moneys on deposit in the Special Tax Prepayments Account shall be invested by the
Fiscal Agent as directed pursuant to an Officer's Certificate in Defeasance Obligations at such yield as
Bond Counsel may determine is necessary to preserve the exclusion of interest on the Bonds from gross
income for purposes of federal income taxation.
(D) Investment. Moneys in the Bond Fund, including all accounts therein, shall be
invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in
the Bond Fund,except to the extent they are required to be deposited by the Fiscal Agent in the Rebate
Fund in accordance with Section 6.02 hereof.
Section 4.03. Reserve Fund.
(A) Establishment of Fund. There is hereby established,as a separate account to be
held by the Fiscal Agent, the "City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center), 2004 Special Tax Bonds,Reserve Fund" to the credit of which a deposit shall be
made as required by paragraph (A) of Section 3.02 hereof, which deposit is equal to the Reserve
Requirement and to which deposits shall be made as provided in Section 3.04(B)hereof. Moneys in the
Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a
reserve for the payment of the principal of and interest and any premium on the Bonds and shall be subject
to alien in favor of the Owners of the Bonds.
(B) Use ofFund. Except as otherwise provided in this Section,all amounts on deposit
in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making
transfers to the Interest Account and the Principal Account of the Bond Fund in the event of any deficiency
at any time in either of such accounts of the amount then required for payment of the principal of and
interest and any premium on the Bonds or, in accordance.with the provisions of subsection (E) of this
Section 4.03, for the purpose of redeeming Bonds.
(C) Transfer Due to Deficiency in Interest and Principal Accounts. Whenever transfer
is made from the Reserve Fund to the Interest Account or the Principal Account due to a deficiency in
either such account,the Fiscal Agent shall provide written notice thereof to the City.
(D) Transfer of Excess of Reserve Requirement. Whenever,on any September 2, the
amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds therein
whichpursuant to Section 6.02 hereof must be rebated to the United States,exceeds the Reserve Require-
ment,the Fiscal Agent shall provide written notice to the City of the amount of the excess. Upon receiving
written direction from an Authorized Officer(upon which the Fiscal Agent may conclusively rely),the Fiscal
RVPUB\KAB\645934 -28-
Agent shall,subject to the requirements of Section 6.02 hereof,transfer an amount from the Reserve Fund
which will reduce the amount on deposit therein to an amount equal to the Reserve Requirement to the
Interest Account and the Principal Account,in the priority specified in Section 4.02(B)hereof,to be used
for the payment of the interest on and principal of the Bonds on the next succeeding Interest Payment Date
in accordance with Section 4.02 hereof.Notwithstanding the preceding provisions of this subsection(D),
prior to the closing of the Improvement Fund,as provided in Section 3.03(D)hereof,the Fiscal Agent shall
on the Business Day after each Interest Payment Date, transfer any such excess amount in the Reserve
Fund which constitutes Investment Earnings which are not then required to be rebated to the United States
(as provided in Section 6.04 hereof)to the Improvement Fund.
(E) Transfer When Balance Exceeds Outstanding,Bonds. Whenever the balance in
the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds,including interest
accrued to the date of payment or redemption and premium,if any,due upon redemption,the Fiscal Agent
shall,upon receiving written direction from an Authorized Officer,transfer the amount in the Reserve Fund
to the Interest Account and the Principal Account, in the priority specified in Section 4.02(B) hereof, to
be applied,on the next succeeding Interest Payment Date,to the payment and redemption,in accordance
with Section 2.03 and Section 4.02 hereof of all of the Outstanding Bonds. In the event that the amount
available to be so transferred from the Reserve Fund to the Interest Account and the Principal Account
exceeds the amount required to pay and redeem the Outstanding Bonds,the excess shall be transferred
to the City to be used for any lawful purpose of the City.
(F) TransferUpon Special Tax Prepayment.Whenever Special Taxes are prepaid and
Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A), a
proportionate amount in the Reserve Fund as specified in an Officer's Certificate provided to the Fiscal
Agent (determined on the basis of principal amount of Bonds which will remain outstanding) shall be
transferred on the Business Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be
applied to the redemption of the Bonds pursuant to Section 2.03(A).
(G) Investment. Moneys on deposit in the Reserve Fund shall be invested in Pemutted
Investments which do not have maturities extending beyond five (5) years; provided, however, if the
Reserve Fund is invested in an investment agreement(as defined in clause(vii)of the definition of Pemutted
Investments in Section 1.03 hereof)or a repurchase agreement(as defined in clause(ix)of such definition)
such agreement may have a maturity longer than five (5) years if the Fiscal Agent is authorized by the
provisions of such agreement to draw the full amount thereof,without penalty,if required for the purposes
of the Reserve Fund. The City shall cause the Permitted Investments, other than such investment
agreements,in which moneys on deposit in the Reserve Fund are invested to be valued at fair market value
and marked-to-market at least once in each Fiscal Year.
RVPUB\KAB\645934 -29-
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment. The City will punctually pay or cause to be paid the principal
of and interest and any premium on the Bonds when and as due in strict conformity with the terms of this
Agreement and any Supplemental Agreement to the extent that the Special Tax Revenues are available
therefor,and it will faithfully observe and perform all of the conditions,covenants and requirements of this
Agreement and all Supplemental Agreements and of the Bonds.
Section 5.02. Special Obligation The Bonds are special obligations of the City and the District
and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond
Fund,the Reserve Fund and the Special Tax Fund.
Section 5.03. Extension of Time for Payment. In order to prevent any accumulation of claims for
interest after maturity,the City shall not,directly or indirectly,extend or consent to the extension of the time
for the payment of any claim for interest on any of the Bonds and shall not,directly or indirectly,be a party
to the approval of any such arrangement by purchasing or funding said claims for interest or in any other
manner. In case any such claim for interest shall be extended or funded,whether or not with the consent
of the City,such claim for interest so extended or funded shall not be entitled,in case of default hereunder,
to the benefits of this Agreement,except subject to the prior payment in full of the principal of all of the
Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.
Section 5.04. Against Encumbrances. The City shall not encumber,pledge or place any charge
or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a
parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this
Agreement.
Section 5.05. Books and Accounts. The City shall keep, or cause to be kept,proper books of
record and accounts, separate from all other records and accounts of the City in which complete and
correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the
Administrative Expense Fund. Such books of record and accounts shall at all times during business hours,
upon reasonable notice,be subject to the inspection of the Owners of not less than ten percent(10%)of
the aggregate principal amount of the Bonds then Outstanding, or their representatives duly authorized in
writing.
Section 5.06. Protection of Security and Rights of Owners. The City will preserve and protect
the security of the Bonds and the rights of the Owners,and will warrant and defend their rights against all
claims and demands of all persons. From and after the delivery of any of the Bonds by the City,the Bonds
shall be incontestable by the City.
Section 5.07. Collection of Special Tax Revenues: The City shall comply with all requirements
of the Municipal Code and the Act,including the enactment of necessary Ordinances,so as to assure the
RVPUB\KAB\645934 "30"
timely collection of Special Tax Revenues,including without limitation,the enforcement of the payment or
collection of delinquent Special Taxes.
Not less than twenty(20)Business Days prior to each Interest Payment Date the Fiscal
Agent shall provide the Director of Administrative Services with a notice stating the amount then on deposit
in the Bond Fund and the Reserve Fund, and informing the City that the Special Taxes may need to be
levied pursuant to the Ordinance as necessary to provide for Annual Debt Service and Administrative
Expenses and replenishment(if necessary)of the Reserve Fund so that the balance therein is equal to the
Reserve Requirement. The receipt of or failure to receive such notice by the Treasurer shall in no way
affect the obligations of the Treasurer under the following two paragraphs,and the Fiscal Agent shall not
be responsible for any inability or failure to provide such notice.
The City shall effect the levy of the Special Taxes each Fiscal Year in accordance with the
Act and the Municipal Code by August 1 of each year(or such later date as may be authorized by the Act
and the Municipal Code or any amendment thereof) that the Bonds are Outstanding, such that the
computation of the levy is complete before the final date on which the Auditor will accept the transmission
of the Special Tax amounts for the parcels within the District,for inclusion on the tax roll for the Fiscal Year
then beginning. Upon the completion of the computation of the amounts of the levy of the Special Taxes,
the City shall prepare or cause to be prepared,and shall transmit to the Auditor,such data as the Auditor
requires to include the levy of the Special Taxes on the tax roll. Notwithstanding the preceding provisions
of this paragraph,the City Council may elect,as permitted by the Act,and the Municipal Code to collect
the Special Taxes to be levied for any Fiscal Year directly from the owners or lessees of the parcels of
taxable property upon which the Special Taxes are levied rather than by transmitting the Special Taxes to
the Auditor for collection on the tax roll;provided that,in such event,the City shall otherwise comply with
the provisions of this Section 5.07.
The Treasurer or the Treasurer's designee shall fix and levy the amount of Special Taxes
within the District required for the payment of principal and of interest on any outstanding Bonds of the
District becoming due and payable on the next Interest Payment Date, including any necessary
replenishment or expenditure of the Reserve Fund and an amount estimated to be sufficient to pay the
Administrative Expenses (including amounts necessary to discharge any obligation under Section 5.10)
during such year,taking into account the balances in such accounts,any transfer or expected transfer from
the Reserve Fund to the Bond Account pursuant to Section 4.03, and any balance or expected balance
in the Special Tax Fund available for such purpose. The Special Taxes so levied shall not exceed the
authorized amounts as provided in the proceedings pursuant to the Resolution of Formation.
The Special Taxes shall have the same priority and bear the same proportionate penalties
and interest after delinquency as do the ad valorem taxes on interests in real property.
The City will not, in collecting the Special Taxes or in processing any such judicial
foreclosure proceedings, exercise any authority which it has pursuant to Sections 53340, 53344.1,
53344.2,53356.1 and 53356.5 of the California Government Code in any manner which would materially
and adversely affect the interests of the Bondowners and,in particular,will not permit the tender of Bonds
RVPUB\KAB\645934 -31-
in full or partial payment of any Special Taxes except upon receipt of a certificate of an Independent
Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax
Revenues to pay the principal of and interest on the Bonds Outstanding following such tender.
Section 5.08. Levy of Special Taxes for Administrative Expenses. The City covenants that,to the
extent that it is legally permitted to do so, (a) it will levy the Special Taxes for the payment of the
Administrative Expenses which are expected to be incurred in each Fiscal Year,and(b)it will not initiate
proceedings under the Act to reduce the Maximum Special Tax rates (the "Maximum Rates") on then
existing property subject to Special Taxes below the amounts which are necessary to provide Special Tax
Revenues in an amount equal to one hundred ten percent(1101/o) of Maximum Annual Debt Service on
the Outstanding Bonds.
The City farther covenants that in the event an ordinance is adopted by initiative pursuant
to Section 3 of Article XIU C of the California Constitution,which purports to reduce or otherwise alter
the Maximum Rates,it will commence and pursue legal action seeking to preserve its ability to comply with
its covenant contained in the preceding paragraph.
Section 5:09. Further Assurances. The City will adopt,make,execute and deliver any and all such
finther ordinances,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 better assuring and
confirming unto the Owners of the Bonds of the rights and benefits provided in this Agreement.
Section 5.10. Tax Covenants. The City covenants that:
(A) It will not take any action or omit to take any action,which action or omission,if
reasonably expected on the date of the initial issuance and delivery ofthe Bonds,would have caused any
of the Bonds to be"arbitrage bonds"within the meaning of Section 103(b)and Section 148 of the Code;
(B) It will not take any action or omit to take any action,which action or omission,if
reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss of
exclusion from gross income for purposes of federal income taxation under Section 103(a)of the Code of
interest paid with respect to the Bonds;
(C) It will not take any action or omit to take any action,which action or omission,if
reasonably expected on the date of initial issuance and delivery of the Bonds,would have caused any of
the Bonds to be"private activity bonds"within the meaning of Section 141 of the Code;
(D) It will comply with the Rebate Certificate as a source of guidance for achieving
compliance with the Code;and
(E) In order to maintain the exclusion from gross income for purposes of federal income
taxation of interest paid with respect to the Bonds, it will comply with each applicable requirement of
Section 103 and Sections 141 through 150 of the Code.
RVPUB\KAB\645934 -32-
The covenants of the City contained in this Section 5.10 shall survive the payment,
redemption or defeasance of Bonds pursuant to Section 9.03 hereof.
Section 5.11. Covenant to Foreclose.Pursuant to Section 53356.1 of the Act,the City hereby
covenants with and for the benefit of the owners of the Bonds that it will order, and cause to be
commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless other
delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any
Special Tax or installment thereof not paid when due as provided in the following paragraph. The
Administrative Services Director shall notify the City Attorney of any such delinquency of which it is aware,
and the City Attorney shall commence,or cause to be commenced,such proceedings.
One(1)Business Day after each Interest Payment Date,the Treasurer or the Treasurer's
designee shall compare the amount of Special Taxes theretofore levied in the District to the amount of
Special Tax Revenues theretofore received by the City,and if the amount collected is less than 100%of
the amount of the Special Taxes to be collected for such installment of property taxes, then the City will
undertake and diligently prosecute foreclosure proceedings not later than thirty(30)days after each Interest
Payment Date in the manner prescribed in the Act to collect the amount of any delinquent Special Tax.
Section 5.12. Prel2nment of Special Taxes. The City shall cause all applications of owners of
property in the District to prepay and satisfy the Special Tax obligation for their property to be reviewed
by an Independent Financial Consultant and shall not accept any such prepayment unless such consultant
certifies in writing that following the acceptance of the proposed prepayment by the City and the
redemption of Bonds with such prepayment,the ratio of(i)the maximum amount of the Special Taxes that
maybe levied in the District following such prepayment to(ii)Maximum Annual Debt Service on the Bonds
which will remain Outstanding following such redemption(e.g., 1.10 to 1.0)will not be less than such ratio
as it existed prior to such prepayment.
Section 5.13. Continuing Disclosure and Filing of Reports. The City and the Fiscal Agent,as
Dissemination Agent, hereby covenant and agree that they will comply with and carry out all of the
provisions of the Continuing Disclosure Agreement which are specifically applicable to each of them. The
City further agrees to comply with and file those reports required under Sections 50075.1, 50075.3,
53359.5(b), 53410(d), and 53411 of the California Government Code not later than March 31 of each
year commencing March 31,2004.
RVPUB\KAB\645934 -33-
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds. Subject in all respects to the
provisions of Section 6.02 hereof,moneys in any fund or account created or established by this Agreement
and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed
pursuant to an Officer's Certificate filed with the Fiscal Agent at least two (2) Business Days in advance
of the making of such investments. In the absence of any such Officer's Certificate,the Fiscal Agent shall
invest any such moneys in Permitted Investments described in clause (iv) of the definition of Permitted
Investments in Section 1.03 hereof. The Fiscal Agent shall not have any responsibility for determining the
legality of any Permitted Investments. The Fiscal Agent shall have no obligation to pay additional interest
or maximize investment income on any funds held by it. Neither the City nor the Owners of the Bonds shall
have any claim of any kind against the Fiscal Agent in connection with investments properly made pursuant
to this Section 6.01. Obligations purchased as an investment of moneys in any fund or account shall be
deemed to be part of such fund or account, subject,however,to the requirements of this Agreement for
transfer of Investment Earnings in funds and accounts.
The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or
agent in the holding, acquisition or disposition of any investment. The Fiscal Agent shall not incur any
liability for losses arising from any investments made pursuant to this Section 6.01. For purposes of deter-
mining the amount on deposit in any fund or account held hereunder, all Permitted Investments or
investments credited to such fund or account shall be valued at the cost thereof(excluding accrued interest
and brokerage commissions,if any).
Subject in all respects to the provisions of Section 6.02 hereof,investments in any and all
funds and accounts may be commingled in a single fund for purposes of making,holding and disposing of
investments,notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds
or accounts of amounts received or held by the Fiscal Agent hereunder,provided that the Fiscal Agent shall
at all times account for such investments strictly in accordance with the funds and accounts to which they
are credited and otherwise as provided in this Agreement.
The Fiscal Agent shall sell at the highest price reasonably obtainable (provided that the
highest of any three bids received by the Fiscal Agent shall be deemed the highest price reasonably
obtainable),or present for redemption,any investment security whenever it shall be necessary to provide
moneys to meet any required payment,transfer,withdrawal or disbursement from the fund or account to
which such investment security is credited,and the Fiscal Agent shall not be liable or responsible for any
loss resulting from the acquisition or disposition of any such investment security in accordance herewith.
The City acknowledges that to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the City or the District the right to receive brokerage
confirmations of securities transactions as they occur,the City for itself and the District specifically waives
receipt of such confirmations to the extent permitted by law. The Fiscal Agent shall furnish the City
RVPUB\KAB\645934 -34-
periodic cash transaction statements which include detail for all investment transactions made by the Fiscal
Agent hereunder.
Moneys credited to any fund or account under this Agreement which are uninvested
pending disbursement or receipt of proper investment directions or as directed herein,may be deposited
to and held in a non-interest bearing demand deposit account established with the commercial banldng
department of the Fiscal Agent or any bank affiliated with the Fiscal Agent.
The Fiscal Agent may make any investments hereunder through its own bond or investment
department or trust investment department,or those of its parent or any affiliate.
Section 6.02. Rebate Fund:Rebate to the United States. There is hereby created,to be held by
the Fiscal Agent, as a separate fund distinct from all other funds and accounts held by the Fiscal Agent
under this Agreement, the Rebate Fund. The Fiscal Agent shall, in accordance with written directions
received from an Authorized Officer,deposit into the Rebate Fund moneys transferred by the City to the
Fiscal Agent pursuant to the Rebate Certificate or moneys transferred by the Fiscal Agent from the Reserve
Fund pursuant to Section 4.03(D). The Rebate Fund shall be held either uninvested or invested only in
Federal Securities at the written direction of the City. Moneys on deposit in the Rebate Fund shall be
applied only to payments made to the United States, to the extent such payments are required by the
Rebate Certificate. The Fiscal Agent shall, upon written request and direction of the City, make such
payments to the United States.
The Fiscal Agent's sole responsibilities under this Section 6.02 are to follow the written
instructions of the City pertaining hereto. The City shall be responsible for any fees and expenses incurred
by the Fiscal Agent pursuant to this Section 6.02.
The Fiscal Agent shall,upon written request and direction from the City,transfer to or upon
the order of the City any moneys on deposit in the Rebate Fund in excess of the amount,if any,required
to be maintained or held therein in accordance with the Rebate Certificate.
Section 6.03. Liability of City. The City shall not incur any responsibility in respect ofthe Bonds
or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds
assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties
hereunder, except for its own negligence or willful default. The City shall not be bound to ascertain or
inquire as to the performance or observance of any of the terms,conditions,covenants or agreements of
the Fiscal Agent herein or of any of the documents executed by the Fiscal Agent in connection with the
Bonds.
In the absence of bad faith,the City may conclusively rely,as to the truth of the statements
and the correctness of the opinions expressed therein,upon certificates or opinions furnished to the City
and confon Ling to the requirements of this Agreement. The City shall not be liable for any error of
judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts.
RVPUB\KAB\645934 -3 5-
No provision of this Agreement shall require the City to expend or risk its own general
funds or otherwise incur any financial liability(other than with respect to the Special Tax Revenues)in the
performance of any of its obligations hereunder,or in the exercise of and of its rights or powers,if it shall
have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
The City may rely and shall be protected in acting or refraining from acting upon any notice,
resolution,request,consent,order,certificate,report,warrant,Bond or other paper or document believed
by it to be genuine and to have been signed or presented by the proper party or proper parties. The City
may consult with counsel,who may be counsel to the City,with regard to legal questions,and the opinion
of such counsel shall be full and complete authorization and protection in respect of any action taken or
suffered by it hereunder in good faith and in accordance therewith.
Whenever in the administration of its duties under this Agreement the City shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder,such matter(unless other evidence in respect thereof be herein specifically prescribed)may,in
the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and
established by a certificate of the Fiscal Agent,and such certificate shall be full warranty to the City for any
action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the
faith thereof,but in its discretion the City may,in lieu thereof,accept other evidence of such matter or may
require such additional evidence as to it may seem reasonable.
Section 6.04. Employment of Agents by City. In order to perform its duties and obligations
hereunder,the City may employ such persons or entities as it deems necessary or advisable. The City shall
not be liable for any of the acts or omissions of such persons or entities employed by it in good faith
hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions,
calculations,determinations and directions of such persons or entities.
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Annointment of Fiscal Agent. U.S. Bank National Association is hereby appointed
Fiscal Agent, registrar and paying agent for the Bonds. The Fiscal Agent undertakes to perform such
duties,and only such duties, as are specifically set forth in this Agreement,and no implied covenants or
obligations shall be read into this Agreement against the Fiscal Agent.
Any company into which the Fiscal Agent may be merged or converted or with which it
may be consolidated or any company resulting from any merger, conversion or consolidation to which it
shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its
corporate trust business, provided such company shall be eligible under the following paragraph of this
Section 7.01,shall be the successor to the Fiscal Agent without the execution or filing of any paper or any
further act,anything herein to the contrary notwithstanding.
RVPUB\KAB\645934 -36-
The City may remove the Fiscal Agent initially appointed,and any successor thereto,and
may appoint a successor or successors thereto,but any such successor shall be a bank or trust company
having a combined capital(exclusive of borrowed capital)and surplus of at least$50,000,000,and subject
to supervision or examination by federal or state authority. If such bank or trust company publishes a
report of condition at least annually,pursuant to law or to the requirements of any supervising or examining
authority above referred to,then for the purposes of this Section 7.01,combined capital and surplus of such
bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by giving
to the Owners notice by mail of such resignation. Upon receiving notice of such resignation,the City shall
promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the
Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of this Section 7.01 within forty-five(45)days after the Fiscal Agent shall have given to the City
written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its
inability to act, the Fiscal Agent, at the expense of the City, or any Owner may apply to any court of
competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon,after such notice,
if any,as such court may deem proper,appoint a successor Fiscal Agent.
Section 7.02. Liabilityof Fiscal Agent. The recitals of facts,covenants and agreements herein and
in the Bonds contained shall be taken as statements,covenants and agreements of the City and the District,
and the Fiscal Agent assumes no responsibility for the correctness of the same, nor makes any
representations as to the validity or sufficiency of this Agreement or of the Bonds,nor shall the Fiscal Agent
incur any responsibility in respect thereof,other than in connection with the duties or obligations herein or
in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the
performance of its duties hereunder,except for its own negligence or wilful misconduct. The Fiscal Agent
assumes no responsibility or liability for any information,statement or recital in any offering memorandum
or other disclosure material prepared or distributed with respect to the issuance of the Bonds.
In the absence of bad faith,the Fiscal Agent may conclusively rely,as to the truth of the
statements and the correctness of the opinions expressed therein,upon certificates or opinions furnished
to the Fiscal Agent and conforming to the requirements of this Agreement. Except as provided above in
this paragraph,the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding,or in
not acting or not proceeding,in good faith,reasonably and in accordance with the terms of this Agreement,
upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other
paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted
or signed by the proper person or to have been prepared and furnished pursuant to any provision of this
Agreement,and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any
statements contained or matters referred to in any such instrument.
RVPUB\KAB\645934 -37-
The Fiscal Agent shall not be liable for any error of judgment made in good faith by the
Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own
funds or otherwise incur any financial liability in the perforniance of any of its duties hereunder, or in the
exercise of any of its rights or powers.
The Fiscal Agent shall not be responsible for accounting for,or paying to,any party to this
Agreement,including,but not limited to the City and the Owners,any returns on or benefit from funds held
for payment of unredeemed Bonds or outstanding checks and no calculation of the same shall affect,or
result in any offset against,fees due to the Fiscal Agent under this Agreement.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested
in it by this Agreement at the request or direction of any ofthe Owners pursuant to this Agreement unless
such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such request or direction.
The Fiscal Agent may become the owner of the Bonds with the same rights it would have
if it were not the Fiscal Agent.
All indemnification and releases from liability granted herein to the Fiscal Agent shall extend
to the directors,officers and employees of the Fiscal Agent.
Section 7.03. Information. The Fiscal Agent shall provide to the City such information relating to
the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall
reasonably request,including,but not limited to, statements reporting funds held and transactions by the
Fiscal Agent.
Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting
or refraining from acting upon any notice,resolution,request,consent,order,certificate,report,wan-ant,
Bond or other paper or document believed by it to be genuine and to have been signed or presented by
the proper party or proper parties. The Fiscal Agent may consult with counsel,who may be counsel to
the City,with regard to legal questions,and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by the Fiscal Agent hereunder in
good faith and in accordance therewith.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter(unless other evidence in respect thereof be herein specifically prescribed)may,in
the absence of willful misconduct on the part of the Fiscal Agent,be deemed to be conclusively proved and
established by a certificate of the City,and such certificate shall be full warranty to the Fiscal Agent for any
action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the
RVPUB\KAB\645934 -3 8-
faith thereof,but in its discretion the Fiscal Agent may,in lieu thereof,accept other evidence of such matter
or may require such additional evidence as to it may seem reasonable.
Section 7.05. Compensation.Indemnification. The City shall pay to the Fiscal Agent from time
to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement,and also
all reasonable expenses,charges,fees and other disbursements,including those of its attorneys,agents and
employees,incurred in and about the performance of its powers and duties under this Agreement,and the
Fiscal Agent shall have a first priority lien therefor on any funds at any time held by it in the Administrative
Expense Fund, and the Fiscal Agent shall pay and reimburse all expenses, charges, fees and other
disbursements,including those of its attorneys,agents and employees,incurred in connection therewith from
the funds held by it in the Administrative Expense Fund. The City further agrees,to the extent permitted
by applicable law,to indemnify and save the Fiscal Agent, its officers, employees, directors and agents,
harmless against any liabilities,costs,claims,expenses or charges of any kind whatsoever(including fees
and expenses of its attorneys)which it may incur in the exercise and performance of its powers and duties
hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this
Section 7.05 shall survive resignation or removal of the Fiscal Agent under this Agreement and payment
of the Bonds and discharge of this Agreement.
Section 7.06. Books and Accounts. The Fiscal Agent shall keep, or cause to be kept, proper
books of record and accounts, separate from all other records and accounts of the Fiscal Agent,in which
complete and correct entries shall be made of all transactions made by it to the expenditure of amounts
disbursed from the Bond Fund,the Special Tax Fund,the Administrative Expense Fund,the Reserve Fund
and the Costs of Issuance Fund. Such books of record and accounts shall,upon reasonable notice,at all
times during business hours be subject to the inspection of the City and the Owners of not less than ten per-
cent(101/o)of the aggregate principal amount of the Bonds then Outstanding,or their representatives duly
authorized in writing.
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted.
(A) This Agreement and the rights and obligations of the District and the City and of
the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant
to the affirmative vote at a meeting of the Owners,or with the written consent,without a meeting,of the
Owners of at least sixty percent(60%) in aggregate principal amount of the Bonds then Outstanding,
exclusive of Bonds disqualified as provided in Section 8.04 hereof. No such modificationor amendment
shall(i)extend the maturity of any Bond or the time for paying interest thereon,or otherwise alter or impair
the obligation of the City on behalf of the District to pay the principal of,and the interest and any premium
on, any Bond,without the express consent of the Owner of such Bond,or(ii)permit the creation of any
pledge ofor lien upon the Special Tax Revenues,or the moneys on deposit in the Bond Fund,the Reserve
Fund,or the Special Tax Fund, superior to or on a parity with the pledge and lien created for the benefit
of the Bonds (except as otherwise permitted by the Act, the Municipal Code, the laws of the State of
RVPUB\KAB\645934 -39-
California or this Agreement),(iii)reduce the percentage of Bonds required for the amendment hereof,or
(iv)reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon.
Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written
consent. The Fiscal Agent shall be furnished an opinion of counsel that any such Supplemental Agreement
entered into by the City and the Fiscal Agent complies with the provisions of this Section 8.01 and the
Fiscal Agent may conclusively rely on such opinion.
(B) This Agreement and the rights and obligations of the District and the City and the
Owners may also be modified or amended at any time by a Supplemental Agreement,without the consent
of any Owners,only to the extent permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the City in this Agreement
contained,other covenants and agreements thereafter to be observed,or to limit or surrender any right or
power herein reserved to or conferred upon the City;
(2) to make modifications not adversely affecting any Outstanding series of
Bonds of the District in any material respect;
(3) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provisions of this Agreement,or in regard to questions
arising under this Agreement,as the City and the Fiscal Agent may deem necessary or desirable and not
inconsistent with this Agreement,and which shall not adversely affect the rights of the Owners;or
(4) to make such additions, deletions or modifications as may be necessary
or desirable to assure compliance with Section 148 of the Code relating to required rebate of moneys to
the United States or otherwise as may be necessary to assure exclusion from gross income for federal
income tax purposes of interest on the Bonds or to conform with the Regulations.
(5) to provide for the issuance of Additional Bonds pursuant to Section 2.12
hereof.
Section 8.02. Owners'Meetings. The City may at any time call a meeting of the Owners. In such
event,the City is authorized to fix the time and place of any such meeting and to provide for the giving of
notice thereof and to fix and adopt rules and regulations for the conduct of the meeting.
Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the
Fiscal Agent may at any time enter into a Supplemental Agreement amending the provisions of the Bonds
or of this Agreement or any Supplemental Agreement,to the extent that such amendment is permitted by
Section 8.01(A) hereof, to take effect when and as provided in this Section 8.03. A copy of the
Supplemental Agreement,together with a request to Owners for their consent thereto,shall be mailed by
first class mail,postage prepaid,by the Fiscal Agent to each Owner of Bonds Outstanding,but failure to
mail copies of the Supplemental Agreement and request shall not affect the validity of the Supplemental
Agreement when assented to as in this Section provided.
RVPUB\KAB\645934 -40-
Such a Supplemental Agreement shall not become effective unless there shall be filed with
the Fiscal Agent the written consents of the Owners of at least sixty percent(601/o)in aggregate principal
amount of the Bonds then Outstanding(exclusive of Bonds disqualified as provided in Section 8.04)and
a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective
only if accompanied by proof of ownership of the Bonds for which such consent is given,which proof shall
be such as is permitted by Section 9.04 hereof. Any such consent shall be binding upon the Owner of the
Bonds 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 Fiscal Agent prior to the date when the notice hereinafter in this
Section provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to the
Supplemental Agreement,the City shall mail a notice to the Owners in the manner hereinbefore provided
in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental
Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective
as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the
Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the
Fiscal Agent. A record, consisting of the documents required by this Section 8.03 to be filed with the
Fiscal Agent,shall be proof of the matters therein stated until the contrary is proved. The Supplemental
Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such
notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise
hereinabove specifically provided in this Article VIII) upon the City, the District and the Owners of all
Bonds then Outstanding at the expiration of sixty(60)days after such filing,except in the event of a final
decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceed-
ing for such purpose commenced within such sixty(60)-day period.
Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the City,excepting any
pension or retirement fund,shall not be deemed Outstanding for the purpose of any vote,consent or other
action or any calculation of Outstanding Bonds provided for in this Article VIII,and shall not be entitled
to vote upon,consent to,or participate in any action provided for in this Article VIII.
Section 8.05. Effect of Supplemental Agreement. From and after the time any Supplemental
Agreement becomes effective pursuant to this Article VIII,this Agreement shall be deemed to be modified
and amended in accordance therewith, and the respective rights, duties and obligations under this
Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined,exercised and
enforced hereunder subject in all respects to such modifications and amendments, and all the terms and
conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions
of this Agreement for any and all purposes.
Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The City may
determine that Bonds issued and delivered after the effective date of any action taken as provided in this
Article VIII shall bear a notation,by endorsement or otherwise,in form approved by the City,as to such
action. In that case,upon demand of the Owner of any Bond Outstanding at such effective date and upon
RVPUB\KAB\645934 41-
presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office
as the City may select and designate for that purpose,a suitable notation shall be made on such Bond. The
City may determine that new Bonds,so modified as in the opinion of the City are necessary to conform to
such action, shall be prepared,executed and delivered. In that case,upon demand of the Owner of any
Bonds then Outstanding,such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent
without cost to any Owner,for like Bonds then Outstanding,upon surrender of such Bonds.
Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not
prevent any Owner from accepting any amendment as to the particular Bonds held by him,provided that
due notation thereof is made on such Bonds.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement,expressed or
implied,is intended to give to any person other than the City,the Fiscal Agent and the Owners,any right,
remedy or claim under or by reason of this Agreement. Any covenants, stipulations, promises or
agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive
benefit of the Owners and the Fiscal Agent.
Section 9.02. Successor is Deemed Included in All References to Predecessor. Whenever in this
Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to,
such reference shall be deemed to include the successors or assigns thereof, and all the covenants and
agreements in this Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure
to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 9.03. Discharge of A eement.
If the City shall pay and discharge the entire indebtedness on all Outstanding Bonds in any
one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of and interest and any
premium on all such Bonds,as and when the same become due and payable;
(B) by depositing with the Fiscal Agent,in trust, at or before maturity, an amount of
money which,together with the amounts then on deposit in the Bond Fund,the Special Tax Fund and the
Reserve Fund, is fully sufficient to pay all such Bonds, including all principal, interest and redemption
premiums,if any;or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash or non-callable
Defeasance Securities in such amount as the City shall determine,as confirmed by an Independent Financial
Consultant,will,together with the interest to accrue thereon and amounts then on deposit in the Bond Fund,
Special Tax Fund and the Reserve Fund,be fully sufficient to pay and discharge the indebtedness on all
P VPUB\KAB\645934 -42-
such Bonds(including all principal,interest and redemption premiums)at or before their respective maturity
dates;
and if such Bonds are to be redeemed prior to the maturity thereof,notice of such redemption shall have
been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made
for the giving of such notice,then,at the election of the City,and notwithstanding that any Bonds shall not
have been surrendered for payment,the pledge of the Special Tax Revenues and other funds provided for
in this Agreement and all other obligations of the City and the District under this Agreement with respect
to such Bonds shall cease and terminate,except the obligation of the City to pay or cause to be paid to the
Owners of such Bonds not so surrendered and paid all sums due thereon,the obligation of the City to pay
all amounts owing to the Fiscal Agent pursuant to Section 7.05 hereof, and the obligations of the City
pursuant to the covenants contained in Section 5.10 hereof, and thereafter Special Taxes shall not be
payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. The satisfaction
and discharge of this Agreement shall be without prejudice to the rights of the Fiscal Agent to charge and
be reimbursed by the City for the expenses which it shall thereafter incur in connection herewith.
Any funds held by the Fiscal Agent to pay and discharge the indebtedness on such Bonds,
upon payment of all fees and expenses of the Fiscal Agent,which are not required for such payments and
discharge,shall be paid over to the City.
Section 9.04. Execution of Documents and Proof of Ownership by Owners. Any request,
declaration or other instrument which this Agreement may require or permit to be executed by Owners may
be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their
attorneys appointed in writing.
Except as otherwise herein expressly provided,the fact and date of the execution by any
Owner or his attorney of such a request,declaration or other instrument, or of a writing appointing such
an attorney, may be proved by the certificate of any notary public or other officer authorized to take
acknowledgments of deeds to be recorded in the state in which he purports to act,that the person signing
such request,declaration or other instrument or writing acknowledged to him the execution thereof,or by
an affidavit of a witness of such execution,duly sworn to before such a notary public or other officer.
Except as otherwise herein expressly provided,the ownership of registered Bonds and the
amount, maturity, number and date of holding the same shall be proved by the registration books
maintained by the Fiscal Agent pursuant to Section 2.08 hereof.
Any request,declaration or other instrument or writing of the Owner of any Bond shall bind
all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal
Agent in good faith and in accordance therewith.
Section 9.05. Waiver of Personal Liability. No member,officer,agent or employee of the City
or the District shall be.individually or personally liable for the payment of the principal of,or interest or any
RVPUB\KAB\645934 -43-
premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or
employee from the performance of any official duty provided by law.
Section 9:06. Notices to and Demands on City and Fiscal Agent. Any notice or demand which
by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to
or on'the City may be given or served by being deposited postage prepaid (fast class, registered or
certified) in a post office letter box addressed (until another address is filed by the City with the Fiscal
Agent)as follows:
City of Huntington Beach
Administrative Services Department
P.O. Box 190
2000 Main Street
Huntington Beach,CA 92648
Any notice or demand which by any provision of this Agreement is required or permitted
to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited
postage prepaid (first class, registered or certified) in a post office letter box addressed (until another
address is filed by the Fiscal Agent with the City)as follows:
U.S.Bank National Association
633 West Fifth Street,241h Floor
Los Angeles,CA 90071
Attention: Corporate Trust Services
Reference: City of Huntington Beach CFD No. 2003-1
Section 9.07. Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this
Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or unenforceable,
such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby
declares that it would have executed and delivered this Agreement and each and every other section,
paragraph,sentence,clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irre-
spective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this
Agreement may be held illegal,invalid or unenforceable.
Section 9.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding,any
moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of,and the interest
and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the
payment of such principal,interest and premium have become payable, if such moneys were held by the
Fiscal Agent at such date,shall be paid by the Fiscal Agent to the City as its absolute property free from
any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the
Owners of such Bonds shall look only to the City for the payment of the principal of,and interest and any
premium on,their Bonds.
RVPUB\KAB\645934 -44-
Section 9.09. Applicable Law. This Agreement shall be governed by and enforced in accordance
with the laws of the State of California applicable to contracts made and performed in the State of
California.
Section 9.10. Conflict with Act or Municipal Code. In the event of a conflict between any
provision of this Agreement with any provision of the Act or Municipal Code as in effect on the Closing
Date, the provision of the Act or Municipal Code shall prevail over the conflicting provision of this
Agreement.
. Section 9.11. Conclusive Evidence of RegWarity. Bonds issued pursuant to this Agreement shall
constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance
and the levy of the Special Taxes.
Section 9.12. Payment on Business Day. In any case where the date of the payment of interest
or of principal(and premium,if any)of the Bonds or the date fixed for redemption is other than a Business
Day,the payment of interest or principal(and premium,if any)need not be made on such date but may be
made on the next succeeding day which is a Business Day with the same force and effect as if made on the
date required,and no interest shall accrue for the period from and after such date.
Section 9.13. Counterparts. This Agreement maybe executed in counterparts,each of which shall
be deemed an original.
RVPUB\KAB\645934 -45-
IN WITNESS WHEREOF,the City has caused this Agreement to be executed in its name
on behalf of the District and attested,and the Fiscal Agent,++has caused this Agreement to be executed
in its name,all as of ,2003.
CITY OF HUNTINGTON BEACH, for and on behalf
ofCITY OF HUNTINGTON BEACH COMMUNITY
FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER), COUNTY OF
ORANGE, STATE OF CALIFORNIA
ATTEST: By:
Mayor
By.
City Clerk
Reviewed and Approved as to Form:
By:
City Attorney
By.
City Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
By.
Authorized Officer
RVPUB\KAB\645934 -46-
EXHIBIT A
FORM OF BOND
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY(AS DEFINED IN THE FISCAL AGENT AGREEMENT)TO THE FISCAL AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND
AUTHENTICATED AND DELIVERED 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.
No. $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BOND
INTEREST RATE MATURITY DATE DATED DATE CUSIP NO.
92003
REGISTERED OWNER: CEDE&CO.
PRINCIPAL AMOUNT: DOLLARS
The City of Huntington Beach(the "City"), for and on behalf of The City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of
California(the'District"),for value received,hereby promises to pay,from the Special Taxes(as herein-
after defined)to be collected in the District or amounts in certain of the funds and accounts held under the
Agreement (as hereinafter defined) to the registered owner named above, or registered assigns, on the
RVPUB\KAB\645934 A-I
maturity date specified above,the principal amount specified above,and to pay interest on such principal
amount from the Dated Date above,or from the most recent interest payment date to which interest has
been paid or duly provided for,semiannually on March I and September 1,commencing March 1,2004
("Interest Payment Dates"),at the interest rate specified above,until the principal amount hereof is paid or
made available for payment. The principal of this Bond is payable by check to the registered owner hereof
in lawful money of the United States of America upon presentation and surrender of this Bond at the Princi-
pal Office of U.S.Bank National Association(the"Fiscal Agent"). Interest on this Bond shall be paid by
check of the Fiscal Agent mailed by first class mail,postage prepaid,on each Interest Payment Date to the
registered owner hereof as of the close of business on the fifteenth(15th)day of the month preceding the
month in which the Interest Payment Date occurs(the"Record Date")at such registered owner's address
as it appears on the registration books maintained by the Fiscal Agent; except that at the written request
ofthe owner of at least$1,000,000 in aggregate principal amount of outstanding Bonds filed with the Fiscal
Agent prior to the Record Date preceding any Interest Payment Date,interest on such Bonds shall be paid
to such owner on such Interest Payment Date by wire transfer of immediately available funds to an account
in the United States of America designated in such written request.
This Bond is one of a duly authorized issue of bonds approved by the qualified electors of
the District pursuant to Chapter 3.56 of the Municipal Code of the City (commencing with
Section 3.56.010) (the "Municipal Code") and the Mello-Roos Community Facilities Act of 1982, as
amended,Chapter 2.5(commencing with Section 53311)of Part 1 of Division 2 of Title 5 of the California
Government Code(the "Mello-Roos Act"), for the purpose,among others,of financing the construction
and acquisition of certain public facilities within and for the District, and is one of the series of Bonds
designated the"City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center)
2004 Special Tax Bonds" (the "Bonds"), in the aggregate principal amount of$ . The
issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by
the City Council of the City on October 20, 2003 (the "Resolution"), and the Fiscal Agent Agreement,
dated as of December 15, 2003, between the City and the Fiscal Agent (the "Agreement") and this
reference incorporates the Resolution and the Agreement herein,and by acceptance hereof the owner of
this Bond assents to the terms and conditions of the Resolution and the Agreement. The Resolution is
adopted under,the Agreement is executed under, this Bond is issued under, and all are to be construed
in accordance with,the laws of the State of California.
Pursuant to the Municipal Code,the Mello-Roos Act,the Agreement and the Resolution,
the principal of and interest on the Bonds are payable from the annual levy of Special Taxes authorized
under the Mello-Roos Act to be collected within the District(the"Special Taxes") and are secured by a
pledge of and first lien upon the revenues derived therefrom(the"Special Tax Revenues")and certain funds
held by the Fiscal Agent pursuant to the Agreement.
Interest on this Bond shall be payable from the Interest Payment Date next preceding the
date of its authentication,unless(i)it is authenticated on an Interest Payment Date,in which event it shall
bear interest from such Interest Payment Date,or(ii)it is authenticated prior to an Interest Payment Date
and after the close of business on the Record Date preceding such Interest Payment Date,in which event
it shall bear interest from such Interest Payment Date,or(iii) it is authenticated on or before the Record
RVPUB\KAB\645934 A-2
Date preceding the first Interest Payment Date, in which event it shall bear interest from the Dated Date
above;provided,however,that if at the time of authentication of this Bond,interest is in default hereon,this
Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made
available for payment hereon, or from the Dated Date above, if no interest has previously been paid or
made available for payment hereon.
Any tax for the payment hereof shall be limited to the Special Taxes,except to the extent
that provision for payment has been made by the City as may be permitted by law. The Bonds do not
constitute obligations of the City for which the City is obligated to levy or pledge,or has levied or pledged,
general or special taxation other than as described hereinabove.
The City has covenanted for the benefit of the owners of the Bonds that it will order,and
cause to be commenced judicial foreclosure proceedings against properties with delinquent Special Taxes
and diligently pursue to completion such foreclosure proceedings.
The Bonds maturing on or after September 1, are subject to redemption prior to
maturityon September 1, or on any Interest Payment Date thereafter,in integral multiples of$5,000,
on a pro rata basis among maturities(and by lot within any one maturity),at the following redemption prices
(expressed as percentages of the principal amounts of the Bonds to be redeemed)together with accrued
interest to the date of redemption as follows:
Redemption Dates Redemption Price
The outstanding Bonds maturing on September 1, are subject to mandatory sinking
payment redemption, in part, without premium, on September 1, and on each September 1
thereafter as provided in the Agreement.
Notice of redemption with respect to the Bonds to be redeemed shall be given to the
registered owners thereof,in the manner and to the extent provided in the Agreement.
From and after the date fixed for redemption, if funds available for the payment of the
redemption prices of the Bonds selected for redemption shall have been deposited in the Bond Fund,such
Bonds shall cease to be entitled to any benefit under the Agreement other than the right to receive payment
ofthe redemption price,and interest shall cease to accrue on the Bonds to be redeemed on the redemption
date specified in the notice of redemption.
This Bond shall be registered in the name of the owner hereof, as to both principal and
interest.
RVPUB\KAB\645934 A"3
Each registration and transfer of registration of this Bond shall be entered by the Fiscal
Agent in books kept by it for that purpose and authenticated by the manual signature of an authorized
signatory of the Fiscal Agent upon the certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be valid for any purpose unless made by the registered
owner or his duly authorized attorney,by execution of the form of assignment endorsed hereon,and authen-
ticated as herein provided, and the principal hereof and interest hereon shall be payable only to the
registered owner or to such owner's order.
The Fiscal Agent shall require the registered owner requesting transfer or exchange hereof
to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange.
The Agreement and the rights and obligations of the City and the District thereunder may
be modified or amended as set forth therein.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication hereon endorsed shall have been dated and manually signed on behalf of the Fiscal Agent.
IT IS HEREBY CERTIFIED,RECITED AND DECLARED that all acts,conditions and
things required by law to exist,happen and be performed precedent to and in the issuance of this Bond
have existed,happened and been performed in due time,form and manner as required by law.
RVPUB\KAB\645934 A-4
IN WITNESS WHEREOF, the City of Huntington Beach, for the City of Huntington
Beach Community Facilities District No.2003-1 (Huntington Center)thereof,has caused this Bond to be
dated as of the Dated Date above,and to be signed by the facsimile signature of the Mayor of the City and
countersigned by the facsimile signature of the City Clerk.
CITY OF HUNTINGTON BEACH for and on behalf
of THE CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO.2003-
1 (HUNTINGTON CENTER), COUNTY OF
ORANGE, STATE OF CALIFORNIA
ATTEST:
City Clerk of the Mayor of the City of Huntington Beach
City of Huntington Beach
RVPUB\KAB\645934 A-5
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-defined Agreement.
Dated: , 2003
Fiscal Agent
By:
Authorized Signatory
RVPUB\KAB\645934 A-6
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name,Address and Tax Identification or
Social Security Number of Assignee)
the within registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer said Bond on the books of the Fiscal
Agent,with full power of substitution in the premises.
Dated:
NOTE: The signature(s)on this assignment must
correspond with the name(s) as written on the
face of the within Bond in every particular without
alteration or enlargement or any change
whatsoever.
Signature Guaranteed:
NOTE: Signature(s) must be guaranteed
by an eligible guarantor.
RVPUB\KAB\645934 A-7
EXHIBIT B
FORM OF IMPROVEMENT FUND REQUISITION
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2003 SPECIAL TAX BONDS
REQUISITION NO._PERTAINING TO DISBURSEMENT
FROM IMPROVEMENT FUND
The undersigned hereby states and certifies:
(i) that he is the duly appointed, qualified and acting City Administrator of the City of
HuntingtonBeach(the"City")and as such he is an Authorized Representative of the City within the meaning
of the Fiscal Agent Agreement hereinafter defined;
(ii) that,pursuant to Section 3.03 of the Fiscal Agent Agreement dated as of December 15,
2003(the"Fiscal Agent Agreement"),between U.S.Bank National Association,as fiscal agent(the"Fiscal
Agent")and the City,the undersigned hereby requests the Fiscal Agent to disburse from the Improvement
Fund established under the Fiscal Agent Agreement to each of the payees designated on Exhibit A,
attached hereto and incorporated herein by this reference, the respective sums set forth opposite such
designation, in payment or reimbursement of previous payments of such costs, set forth in Exhibit A,
attached hereto;
(iii) no portion of the amount then being requested to be disbursed has been set forth in any
Officer's Certificate previously filed with the Fiscal Agent requesting disbursement, and that the amount
being requested is an appropriate disbursement from the Improvement Fund for the Project.
Date: CITY OF HUNTINGTON BEACH
By:
City Administrator
RVpUB\KAB\645934 B-1
EXHIBIT A
IMPROVEMENT COSTS
PAYEE AND ADDRESS DESCRIPTION AMOUNT
RVPUB\KAB\645934 B-2
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-01
(HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS
BOND PURCHASE AGREEMENT
2004
City Council
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Council Members:
UBS Financial Services Inc. (the "Underwriter"), acting not as a fiduciary or agent for you,
but on behalf of itself, offers to enter into this Bond Purchase Agreement with the City of Huntington
Beach(the"City")which, upon acceptance,will be binding upon the City,and the Underwriter. This
offer is made subject to its acceptance by the City on the date hereof, and it is subject to withdrawal
by the Underwriter upon notice delivered to the City at any time prior to the acceptance by the City.
Capitalized terms that are used in this offer and not otherwise defined herein shall have the respective
meanings ascribed to them in the Fiscal Agent Agreement, dated as of December 15, 2003,by and
between U.S. Bank National Association (the"Fiscal Agent")and the City(the"Fiscal Agent
Agreement").
1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions, and in reliance upon the representations,
warranties and agreements set forth herein,the Underwriter agrees to purchase from the City, and the
City agrees to sell to the Underwriter, all (but not less than all) of the City of Huntington Beach
Community Facilities District No. 2003-01 (Huntington Center) 2004 Special Tax Bonds (the
"Bonds")in the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated
the Closing Date (as hereinafter defined),bear interest from said date (payable semiannually on
March 1 and September 1 in each year, commencing March 1, 2004) at the rates per annum, and
mature on the dates and in the amounts set forth in Exhibit A hereto. The purchase price for the
Bonds shall be the amount specified as such in Exhibit A.
(b) The Bonds shall be substantially in the form described in, shall be issued and secured
under the provisions of, and shall be payable and be subject to redemption as provided in,the Fiscal
Agent Agreement.
(c) The Underwriter has previously distributed to potential purchasers of the Bonds the
Preliminary Official Statement for the Bonds, dated , 200_(which Preliminary
Official Statement, together with its cover page and all appendices thereto, is herein referred to as the
"Preliminary Official Statement"and which, as amended with the prior approval of the Underwriter
and executed by the City, will be referred to herein as the "Official Statement"). Such distribution of
I
DOCSOC\1002280v4\22173.0089
the Preliminary Official Statement by the Underwriter subsequent to its receipt of a certificate from
the City deeming the Preliminary Official Statement final for purposes of Rule 15c2-12 of the
Securities and Exchange Commission ("Rule 15c2-12"). The City hereby ratifies the use by the
Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and
distribute the Official Statement, the Fiscal Agent Agreement, the City Continuing Disclosure
Agreement, dated as of December 15, 2003,by and between the City and the Fiscal Agent, as
Dissemination Agent(the"City Continuing Disclosure Agreement"),this Bond Purchase Agreement,
any other documents or contracts to which the City is a party, and all information contained therein,
and all other documents, certificates and statements furnished by the City to the Underwriter in
connection with the transactions contemplated by this Bond Purchase Agreement, in connection with
the offer and sale of the Bonds by the Underwriter.
(d) At 8:00 A.M., local time in Huntington Beach, California, on , 2004, or
at such earlier time or date as shall be agreed upon by the Underwriter and the City(such time and
date being herein referred to as the "Closing Date"),the City will deliver(i)to The Depository Trust
Company or its agent the Bonds in definitive form(all Bonds being in book-entry form registered in
the name of Cede &Co. and having the CUSIP numbers assigned to them printed thereon), duly
executed by the officers of the City, as provided in the Fiscal Agent Agreement, and (ii)to the
Underwriter, at the Riverside, California offices of Best Best&Krieger LLP ("Bond Counsel")the
documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase
price of the Bonds in same day funds (such delivery and payment being herein referred to as the
"Closing").
(e) The Underwriter agrees to make a bona fide public offering of the Bonds at the initial
offering prices set forth in the Official Statement,which prices may be changed from time to time by
the Underwriter after such offering.
2. Representations, Warranties and Agreements of the City. The City represents,
warrants and covenants to and agrees with the Underwriter that:
(a) The City was duly organized and is validly existing as a municipal corporation under
the Constitution of the State of California and the Huntington Beach City Charter, has full legal right,
power, and authority(i) to execute, deliver and perform its obligations under this Bond Purchase
Agreement, the Fiscal Agent Agreement, the City Continuing Disclosure Agreement,the Funding
and Construction Agreement, dated as of December 15, 2003 (the"Funding and Construction
Agreement"),by and between the City and Huntington Center Associates, LLC (the "Landowner"),
the Operating Agreement for Huntington Center Parking Structure, dated as of December 15, 2003,
by and between the City and the Landowner(the "Operating Agreement") and the Parking and
Reciprocal Easement Agreement and Option to Purchase, dated as of December 15, 2003,by and
between the Landowner and the City(the"Reciprocal Easement Agreement"and,together with this
Bond Purchase Agreement,the Fiscal Agent Agreement, the City Continuing Disclosure Agreement,
the Funding and Construction Agreement and the Operating Agreement,the"City Agreements")and
to carry out all of the transactions contemplated by each of the City Agreements, (ii) to sell, issue and
deliver the Bonds to the Underwriter pursuant to the Fiscal Agent Agreement as provided herein and
(iii)to carry out, give effect to and consummate the transactions contemplated by the City
Agreements;
(b) The City Council of the City(the"City Council")has duly adopted a resolution(the
"Resolution of Formation") forming the City of Huntington Beach Community Facilities District
No. 2003-1 (Huntington Center) (the"Community Facilities District")and an ordinance authorizing
2
DOCS00 1002280v4\22173.0089
the levy of a special tax on the taxable property within the Community Facilities District(the
"Special Tax Ordinance")and all other ordinances and resolutions referred to in the Resolution of
Formation and the Special Tax Ordinance and has caused to be recorded in the real property records
of the County of Orange, as Document No. , a Notice of Special Tax Lien(the"Notice
of Special Tax Lien") (such ordinances and resolutions and Notice of Special Tax Lien being
collectively referred to herein as the"Formation Documents" and, together with the City Agreements
as the"City Documents").
(c) The City has complied, and at the Closing Date will be in compliance, in all material
respects,with the City Documents; and any immaterial compliance therewith by the City will not
impair the ability of the City to carry out, give effect to or consummate the transactions contemplated
by the foregoing; and after the date of issuance of the Bonds,the City will continue to comply with
the covenants of the City contained in the City Documents;
(d) The City Council has duly and validly: (i) taken or caused to be taken, all
proceedings necessary under the Constitution and laws of the State of California in order to form the
Community Facilities District, to authorize the levy of a special tax(the "Special Tax") on the
taxable property within the Community Facilities District pursuant to the Rate and Method of
Apportionment of Special Tax approved pursuant to the Resolution of Formation (the"Rate and
Method of Apportionment"), to cause the Special Tax to be secured by a continuing lien on each
parcel of Taxable Property(as defined in the Rate and Method of Apportionment)within the
Community Facilities District and to authorize the sale and issuance of the Bonds, (ii) authorized and
approved the execution and delivery of the City Documents, (iii) authorized the preparation and
delivery of the Preliminary Official Statement and the Official Statement, and(iv) authorized and
approved the performance by the City of its obligations contained in, and the taking of any and all
action as may be necessary to carry out, give effect to and consummate the transactions contemplated
by, each of the City Documents (including, without limitation, the collection of the Special Tax); and
the Community Facilities District has been validly formed, the Special Tax has been approved and its
levy authorized, and(assuming due authorization, execution and delivery by other parties thereto,
where necessary)the City Agreements and the Bonds will constitute the valid, legal and binding
obligations of the City enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency,reorganization, moratorium and other laws affecting the enforcement of creditors' rights
in general and to the application of equitable principles;
(e) The City is not in breach of or default under any applicable law or administrative rule
or regulation of the United States or the State of California, or of any department, division, agency or
instrumentality of either of them, or under any applicable court or administrative decree or order, or
under any loan agreement,note,resolution, indenture, contract, agreement or other instrument to
which the City is a party or is otherwise subject or bound, a consequence of which could be to
materially and adversely affect the performance by the City of its obligations under the City
Documents or the Bonds; and compliance with the provisions of each thereof will not conflict with or
constitute a breach of or default under any applicable law or administrative rule or regulation of the
United States or the State of California, or of any department, division, agency or instrumentality of
either of them, or under any applicable court or administrative decree or order,or a material breach'
of or default under any loan agreement, note, resolution, indenture, contract, agreement or other
instrument to which the City is a party or is otherwise subject or bound;
(f) Except for compliance with the"blue sky"or other states securities law filings, as to
which the City makes no representations, all approvals, consents, authorizations, elections and orders
3
DOCSOC\1002280v4\22173.0089
of or filings or registrations with any State governmental authority, board, agency or commission
having jurisdiction which would constitute a condition precedent to, or the absence of which would
materially adversely affect, the performance by the City of its obligations hereunder, or under the
City Documents or the Bonds,have been obtained and are in full force and effect;
(g) The Special Tax has been duly and lawfully authorized and may be levied and
collected under the laws of the State of California;and, when levied, the Special Tax will constitute a
valid and legally binding continuing lien on the properties on which it levied in accordance with the
Rate and Method of Apportionment;
(h) Until the date which is twenty-five(25) days after the"end of the underwriting
period" (as hereinafter defined), if any event shall occur of which the City becomes aware, as a result
of which it may be necessary to supplement the Official Statement in order to make the statements in
the Official Statement, in light of the circumstances existing at such time,not misleading,the City
shall forthwith notify the Underwriter of such event and shall cooperate fully in furnishing any
information available to it for any supplement to the Official Statement necessary so that the
statements therein, as so supplemented,will not be misleading in light of the circumstances existing
at such time; and the City shall promptly furnish to the Underwriter a reasonable number of copies of
such supplement(as used herein, the term "end of the underwriting period"means the later of such
time as(i)the City delivers the Bonds to the Underwriter, or(ii)the Underwriter does not retain,
directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the
public; and, unless the Underwriter delivers written notice to the contrary to the City prior to the
Closing specifying another date to be deemed the "end of the underwriting period," the "end of the
underwriting period" shall be deemed to be the Closing Date);
(i) The Fiscal Agent Agreement creates a valid pledge of the Special Taxes and the
moneys in Bond Fund and the moneys in the Reserve Fund established pursuant to the Fiscal Agent
Agreement, including the investments thereof, subject in all cases to the provisions of the Fiscal
Agent Agreement permitting the application thereof for the purposes and on the terms and conditions
set forth therein;
(j) Except as disclosed in the Official Statement,no action, suit,proceeding, inquiry or
investigation, at law or in equity,before or by any court, regulatory agency,public board or body is
pending or,to the knowledge of the City,threatened against the City(i)which would materially
adversely affect the ability of the City to perform its obligations under the City Documents or the
Bonds, or(ii) seeking to restrain or to enjoin: (A)the improvement of any of the property within the
Community Facilities District, (B)the issuance, sale or delivery of the Bonds, (C)the application of
the proceeds thereof in accordance with the Fiscal Agent Agreement or the Funding and Construction
Agreement, or(D) the collection or application of the Special Tax, or the pledge thereof, or in any
way contesting or affecting the validity or enforceability of the Bonds, the City Documents, any
planning, zoning, subdivision or building permit approval applicable to property within the
Community Facilities District any other instruments relating to the improvement of any of the
property within the Community Facilities District or any action contemplated by any of said
documents, or(iii) in any way contesting the completeness or accuracy of the Preliminary Official
Statement or the Official Statement or the powers or authority of the City with respect to the Bonds,
the City Documents, or any action of the City contemplated by any of said documents; nor is there
any action pending or, to the knowledge of the City, threatened against the City which alleges that
interest on the Bonds is not excludable from gross income for federal income tax purposes or is not
exempt from California personal income taxation;
4
DOCSOCU 002280v4\22173.0089
(k) The City will furnish such information, execute such instruments and take such other
action in cooperation with the Underwriter as the Underwriter may reasonably request in order for
the Underwriter to qualify the Bonds for offer and sale under the"Blue Sky" or other securities laws
and regulations of such states and other jurisdictions of the United States as the Underwriter may
designate;provided,however,the City shall not be required to register as a dealer or a broker of
securities or to consent to service of process in connection with any blue sky filing;
(1) Any certificate signed by any authorized official of the City authorized to do so shall
be deemed a representation and warranty to the Underwriter as to the statements made therein;
(m) The City will apply the proceeds of the Bonds and the Special Taxes in accordance
with the Fiscal Agent Agreement and the Funding and Construction Agreement and as described in
the Official Statement;
(n) The Official Statement(except the portion thereof entitled ["PROPERTY
OWNERSHIP AND DEVELOPMENT,"] as to which no view need be expressed) is, as of the date
thereof, and will be, as of the Closing Date, true, correct and complete in all material respects; and
the Official Statement(except the portion thereof mentioned above, as to which no view need be
expressed)does not, as of the date thereof, and will not, as of the Closing Date, 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; and
(o) The Preliminary Official Statement heretofore delivered to the Underwriter has been
deemed final by the City as of its date, except for the omission of such information as is permitted to
be omitted in accordance with paragraph (b)(1) of Rule 15c2-12. The City hereby covenants and
agrees that, within seven (7)business days from the date hereof, or(upon reasonable written notice
from the Underwriter)within sufficient time to accompany any confirmation requesting payment
from any customers of the Underwriter, the City shall cause a final printed form of the Official
Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter
and the City so that the Underwriter may comply with paragraph(b)(4) of Rule 15c2-12 and
Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter
to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the
Underwriter,to the accuracy in all material respects of the representations and warranties 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 and the statements of
the officers and other officials of the Landowner made in any certificates or other documents
furnished pursuant to the provisions hereof,to the performance by the City of its obligations to be
performed hereunder at or prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the City Documents and the Landowner Continuing Disclosure
Agreement(as hereinafter defined) shall be in full force and effect, and shall not have been amended,
modified or supplemented, except as may have been agreed to in writing by the Underwriter, and
there shall have been taken in connection therewith,with the issuance of the Bonds and with the
transactions contemplated thereby and by this Bond Purchase Agreement, all such actions as, in the
opinion of Bond Counsel, shall be necessary and appropriate;
5
DOC SOC\1002280v4\22173.0089
(b) Between the date hereof and the Closing Date,the market price or marketability of
the Bonds at the initial offering prices set forth in the Official Statement shall not have been
materially adversely affected, in the judgment of the Underwriter(evidenced by a written notice to
the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds)by
reason of any of the following:
(1) legislation introduced in or enacted(or resolution passed)by the Congress of
the United States of America or recommended to the Congress by the President of the United States,
the Department of the Treasury,the Internal Revenue Service, or any member of Congress, or
favorably reported for passage to either House of Congress by any committee of such House to
which such legislation had been referred for consideration or a decision rendered by a court
established under Article III of the Constitution of the United States of America or by the Tax Court
of the United States of America, or an order,ruling, regulation(final,temporary or proposed),press
release or other form of notice issued or made by or on behalf of the Treasury Department or the
Internal Revenue Service of the United States of America,with the purpose or effect, directly or
indirectly, of imposing federal income taxation upon the interest that would be received by the
holders of the Bonds beyond the extent to which such interest is subject to taxation as of the date
hereof;
(2) legislation introduced in or enacted(or resolution passed)by the Congress of
the United States of America, or an order, decree or injunction issued by any court of competent
jurisdiction, or an order,ruling,regulation(final, temporary or proposed),press release or other form
of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other
governmental agency having jurisdiction of the subject matter, to the effect that obligations of the
general character of the Bonds, or the Bonds,including any or all underlying arrangements, are not
exempt from registration under or other requirements of the Securities Act of 1933, as amended, or
that the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the
Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the
general character of the Bonds, or of the Bonds, including any or all underwriting arrangements, as
contemplated hereby or by the Official Statement or otherwise is or would be in violation of the
federal securities laws, rules or regulations as amended and then in effect;
(3) any amendment to the federal or California Constitution or action by any
federal or California court; legislative body,regulatory body or other authority materially adversely
affecting the tax status of the City, its property, income, securities (or interest thereon), the validity or
enforceability of the Special Tax or the ability of the City to construct or acquire the improvements
as contemplated by the City Documents or the Official Statement or the right of any owner of the
property within the Community Facilities District to improve and operate such property in the
manner described in the Official Statement;
(4) a general suspension of trading in securities on the New York Stock
Exchange or a general banking moratorium declared by federal of State or California officials
authorized to do so or an escalation of terrorist activities in this country or in our nation's military
activities or any other national calamity; or
(5) any event occurring, or information becoming known, which, in the judgment
of the Underwriter,makes untrue in any material respect any statement or information contained in
the Official Statement, or results in the Official Statement containing any untrue statement of a
material fact or omitting 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.
6
DOCS00 1002280v4\22173.0089
(c) On the Closing Date, the Underwriter shall have received counterpart originals or
certified copies of the following documents, in each case satisfactory in form and substance to the
Underwriter:
(1) The City Documents, together with a certificate dated as of the Closing Date
of the City Clerk to the effect that each such document is a true, correct and complete copy of the one
duly approved by the City Council;
(2) The Official Statement, duly executed by the City;
(3) The opinion of Bond Counsel, dated the Closing Date and addressed to the
City, in substantially the form attached to the Preliminary Official Statement as Appendix [C],and a
reliance letter from such firm, dated the Closing Date and addressed to the Underwriter, to the effect
that such approving opinion addressed to the City may be relied upon by the Underwriter to the same
extent as if such opinion was addressed to them;
(4) The supplemental opinion of Bond Counsel, dated the Closing Date and
addressed to the Underwriter,to the effect that(i)the City Agreements have been duly authorized,
executed and delivered by the City, and, assuming such agreements constitute valid and binding
obligations of the respective other parties thereto, constitute the legally valid and binding agreements
of the City enforceable in accordance with their terms, except as enforcement may be limited by
bankruptcy,moratorium, insolvency or other laws affecting creditor's rights or remedies and is
subject to general principles of equity and to the exercise of judicial discretion in appropriate cases;
GO the Bonds are not subject to the registration requirements of the Securities Act of 1933, as
amended, and the Fiscal Agent Agreement is exempt from qualification pursuant to the Trust
Indenture Act of 1939, as amended; and (iii)the statements contained in the Official Statement under
the captions ["THE BONDS," "SECURITY FOR THE BONDS," "LIMITATION OF LIABILITY,"
"TAX MATTERS," and"CONTINUING DISCLOSURE," and in Appendix C,] insofar as such
statements expressly summarize certain provisions of the Bonds,the Fiscal Agent Agreement,the
other City Agreements and the opinion of such firm concerning the exclusion from gross income for
federal income tax purposes and exemption from State of California personal income taxes of interest
on the Bonds, are accurate in all material respects;
(5) The opinion of Quint&Thimmig LLP ("Disclosure Counsel")dated the
Closing Date and addressed to the City and to the Underwriter, to the effect that,without having
undertaken to determine independently the accuracy or completeness of the statements contained in
the Official Statement,but on the basis of their participation in conferences with representatives of
the City,the Landowner,the Appraiser and others,and their examination of certain documents,
nothing has come to their attention which has led them to believe that the Official Statement contains
any untrue statement of a material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading(except that no opinion or belief need be expressed as to any financial statements or
other financial, statistical or engineering data or forecasts,numbers, charts, estimates,projections,
assumptions, or expressions of opinion, any information about valuation, appraisals, absorption,
archeological or environmental matters, or any information about The Depository Trust Company or
the book-entry-only system);
(6) A certificate, dated the Closing Date and signed by an authorized
representative of the City, ratifying the use and distribution by the Underwriter of the Preliminary
Official Statement and the Official Statement in connection with the offering and sale of the Bonds
7
DOCSOCU 002280v4\22173.0089
and certifying that(i)the representations and warranties of the City contained in Section 2 hereof are
true and correct in all material respects on and as of the Closing Date with the same effect as if made
on the Closing Date except that all references therein to the Preliminary Official Statement shall be
deemed to be references to the Official Statement; (ii) to the best of his or her knowledge, no event
has occurred since the date of the Official Statement affecting the matters contained therein which
should be disclosed in the Official Statement for the purposes for which it is to be used in order to
make the statements and information contained in the Official Statement not misleading in any
material respect, and the Bonds and the City Documents conform as to form and tenor to the
descriptions thereof contained in the Official Statement; and(iii)the City has complied with all the
agreements and satisfied all the conditions on its part to be performed or satisfied under the City
Documents and the Official Statement at or prior to the Closing Date;
(7) An opinion, dated the Closing Date and addressed to the Underwriter, of the
City Attorney, dated the Closing Date and addressed to the Underwriter,to the effect that(i)the City
was duly organized and is validly existing as a municipal corporation under the Constitution of the
State of California and the Huntington Beach City Charter, (ii)the City has full legal right,power,
and authority to execute and deliver the Funding and Construction Agreement,the Operating
Agreement and the Reciprocal Easement Agreement, (iii)the Funding and Construction Agreement,
the Operating Agreement and the Reciprocal Easement Agreement have been duly authorized,
executed, and delivered by the City and, assuming due authorization and execution thereof by the
Landowner,they constitute a valid and binding obligation of the City, enforceable in accordance with
their terms, subject to laws relating to bankruptcy,insolvency, or other laws affecting the
enforcement of creditors' rights generally and the application of equitable principles if equitable
remedies are sought, (iv)the City Council adopted the resolutions and ordinances forming the
Community Facilities District, confirming the Special Tax, approving the City Documents and
authorizing the sale and issuance of the Bonds at meetings of the City Council which were called,
held and conducted pursuant to law and with all public notice required by law and at which a quorum
was present and acting throughout, (v) to the best of such counsel's knowledge, after due inquiry,
there are no actions, suits,proceedings, inquiries, or investigations, at law or in equity,before or by
any court, governmental agency,public board, or body,pending or threatened against the City, for
which the City has been served,to restrain or enjoin the issuance of the Bonds, the collection or
application of the Special Tax, or the payment of principal of and interest on the Bonds, or in any
way contesting the validity of the Bonds or the City Documents, and(vi) to the best of such counsel's
knowledge,without conducting an independent investigation, the information contained in the
Official Statement(except for the financial statements and other financial, statistical or engineering
data or forecasts, numbers, charts, estimates,projections, assumptions, or expressions of opinion, any
information about valuation, appraisals, absorption, archeological or environmental matters, the
Appendices thereto, or any information about The Depository Trust Company or the book-entry-only
system, as to which no view need be expressed)is correct in all material respects and does not
contain any untrue or misleading statement of a material fact or omit 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;
(8) The Landowner Continuing Disclosure Agreement, dated as of December 15,
2003,by and between the Landowner and U.S. Bank National Association;
(9) A certificate of the Landowner, dated the Closing Date, in substantially the
form attached hereto as Exhibit B;
8
DOCS001002280v4\22173.0089
(10) An opinion or opinions of counsel to the Landowner, dated the Closing Date
and addressed to the Underwriter and the City,to the effect that, (i)the Landowner has been duly
formed and is validly existing and in good standing under the laws of the state of its organization,
and is qualified to do business in the State of California, and has the limited liability company power
and authority to own and improve its property in the Community Facilities District; (ii)the
Landowner has duly authorized all action necessary to be taken by it or on its behalf for(a)the
execution and delivery of the Landowner Continuing Disclosure Agreement, the Financing and
Construction Agreement,the Operating Agreement and the Reciprocal Easement Agreement and(b)
the carrying out, giving effect to, and consummation of the transactions contemplated by the
Landowner Continuing Disclosure Agreement,the Financing and Construction Agreement,the
Operating Agreement and the Reciprocal Easement Agreement; (iii)the Landowner Continuing
Disclosure Agreement,the Financing and Construction Agreement, the Operating Agreement and the
Reciprocal Easement Agreement have been duly and validly authorized, executed and delivered by
the Landowner and, except as otherwise expressly provided therein, have not been to the knowledge
such counsel amended,modified, or supplemented, and, assuming due authorization and execution
by any other applicable parties thereto, each constitutes a valid and binding obligation of the
Landowner, enforceable against the Landowner in accordance with its terms, subject to laws relating
to bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights generally and
the application of equitable principles if equitable remedies are sought; (iv) the execution and
delivery by the Landowner of the Landowner Continuing Disclosure Agreement,the Financing and
Construction Agreement,the Operating Agreement and the Reciprocal Easement Agreement and the
performance of its obligations thereunder do not and will not result in violation of any provision of,
or in default under, the Landowner's organizational documents; (v) except as described in the
Official Statement and except for governmental approvals and permits that are required to be
obtained in the ordinary course of property improvement, all actions necessary to be taken by the
Landowner have been taken, and no additional approval, authorization, consent, or other order of any
public City Council or body is legally required to allow the Landowner to enter into the Landowner
Continuing Disclosure Agreement, the Financing and Construction Agreement, the Operating
Agreement and the Reciprocal Easement Agreement; (vi) to such counsel's knowledge,based solely
upon a litigation search performed by or at the request of such counsel in State of California and
federal courts specified by such counsel and a certificate of the Landowner,there are no legal or
governmental actions,proceedings, inquiries, or investigations pending or threatened by
governmental authorities or to which the Landowner is a party or of which any property of the
Landowner is subject,which, if determined adversely to the Landowner,would individually or in the
aggregate (a)have a material adverse effect on the financial position or results of operations of the
Landowner or(b) otherwise materially and adversely affect the transactions contemplated by the
Official Statement to be engaged in by the Landowner; and(vii)based upon such counsel's
experience as counsel for the Landowner and on such counsel's review of and participation in the
drafting of the Official Statement, and without having undertaken to determine independently the
accuracy, completeness or fairness of the statements contained in the Official Statement,no facts
have come to such counsel's attention that would cause such counsel to believe that the statements
contained in the Official Statement relating to the property owned by the Landowner within the
Community Facilities District and the improvement of such property by the Landowner(except any
financial, statistical or engineering information, data or forecasts,numbers, charts, estimates,
projections, assumptions or expressions of opinion, including,without limitation, descriptions or
summaries of the Appraisal, included therein, as to which no view need be expressed) contain any
untrue statement of a material fact or omit any material fact necessary in order to make such
statements, in the light of the circumstances under which they were made,not misleading;
9
DOCS00 1002280v4\2217 3.0089
(11) A certificate, dated the Closing Date, of Psomas (the"Special Tax
Consultant")to the effect that(i)the Special Tax, if collected in the maximum amounts permitted
pursuant to the Rate and Method of Apportionment,will generate in each Fiscal Year at least 110%
of the debt service payable with respect to the Bonds in the calendar year that begins in such Fiscal
Year,based on such assumptions and qualifications as shall be acceptable to the City and the
Underwriter; (ii) [all information appearing in the Official Statement for which the Special Tax
Consultant is identified as being the source is true and correct as of the date of the Official Statement
and as of the Closing Date; and(iii)the statements concerning the Rate and Method of
Apportionment and the statistical and financial data set forth in the tables and discussion in the
Official Statement which were derived from information supplied by the Special Tax Consultant for
use in the Official Statement are true, correct and complete in all material respects and do 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 and no events or occurrences have been ascertained by the Special Tax Administrator
or have come to its attention that would substantially change such information set forth in the
Official Statement;
(12) A letter from Integra Realty Resources (the"Appraiser"), dated the Closing
Date and addressed to the City and the Underwriter,to the effect that the Appraiser has prepared the
appraisal report, dated as of November 17, 2003 (the"Appraisal") and that: (a) the Appraisal was
included in the Preliminary Official Statement and the Official Statement with its permission,
(b)neither the Appraisal nor the information in the Official Statement referring to it contains any
untrue statement of a material fact or omits to state a material fact necessary in order to make the
statements therein,in light of the circumstances under which they were made,not misleading, and
(c) no events or occurrences have been ascertained by the Appraiser or have come to the Appraiser's
attention that would materially change the opinion set forth in the Appraisal;
(13) A letter from Robert Charles Lesser&Co., LLC(the"Absorption
Consultant"), dated the Closing Date and addressed to the City and the Underwriter, to the effect that
the Absorption Consultant has prepared the report, dated as of October, 2003 (the"Absorption
Consultant's Report") and that: (a)the Absorption Consultant's Report was included in the
Preliminary Official Statement and the Official Statement with its permission, (b)neither the
Absorption Consultant's Report nor the information in the Official Statement referring to it contains
any untrue statement of a material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,not misleading, and(c)
no events or occurrences have been ascertained by the Absorption Consultant or have come to the
Absorption Consultant's attention that would materially change the opinion set forth in the
Absorption Consultant's Report;
(14) A certificate of the Fiscal Agent, dated the Closing Date, in form and
substance reasonably acceptable to the Underwriter;
(15) An opinion, dated the Closing Date and addressed to the Underwriter and the
City, of counsel to the Fiscal Agent in form and substance acceptable to the City and the
Underwriter;
(16) A letter, dated the Closing Date and addressed to the Underwriter of Stradling
Yocca Carlson &Rauth, a Professional Corporation in form and substance acceptable to the
Underwriter;
10
DOCSOCU 002280v4\22173.0089
(17) Evidence satisfactory to the Underwriter that no ad valorem taxes, special
taxes or Special Tax applicable to the property within the City are delinquent;
(18) Evidence satisfactory to the Underwriter that the Landowner has secured the
financing necessary to improve its property within the Community Facilities District as described in
the Official Statement; and
(19) Such additional legal opinions, certificates, instruments and other documents
as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the statements and information contained in the Preliminary Official
Statement and the Official Statement, of the City's representations and warranties contained herein,
and of the Landowner's representations and warranties set forth in its certificate hereto and the due
performance or satisfaction by the City at or prior to the Closing of all agreements then to be
performed and all conditions then to be satisfied by the City in connection with the transactions
contemplated hereby and by the Official Statement.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds contained in this Bond Purchase Agreement, or if
the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be
terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase
Agreement shall terminate and neither the Underwriter nor the City shall be under any further
obligation hereunder, except that the respective obligations of the City and the Underwriter set forth
in Section 5 and Section 6 hereof shall continue in full force and effect.
4. Conditions of the City's Oblijzations. The City's obligations hereunder are subject to
the Underwriter's performance of its obligations hereunder, and are also subject to the following
conditions:
(a) As of the Closing Date,no litigation shall be pending or, to the knowledge of the duly
authorized officer of the City executing the certificate referred to in Section 3(c)(6)hereof,
threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any
authority for or the validity of the Bonds or the City Documents or the existence or powers of the
City; and
(b) As of the Closing Date, the City shall receive the opinions referred to in
Section 3(c)(3) and(5)hereof.
5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth
herein:
(a) The Underwriter shall be under no obligation to pay, and the City shall pay or cause
to be paid(out of any legally available funds of the City) all expenses incident to the performance of
the City's obligations hereunder, including,but not limited to,the cost of preparing and delivering
the Bonds to DTC, the cost of preparation,printing, distributing and delivering of the Fiscal Agent
Agreement, the Preliminary Official Statement, the Official Statement and all other agreements and
documents contemplated hereby(and drafts of any thereof) in such reasonable quantities as requested
by the Underwriter; and the fees and disbursements of the Fiscal Agent, Bond Counsel, Disclosure
Counsel and any financial advisors, special tax consultants, appraisers, accountants, engineers or any
other experts or consultants the City retained in connection with the Bonds; and
11
DOC SOC\1002280v4\22173.0089
(b) The City shall be under no obligation to pay, and the Underwriter shall pay, any fees
of the California Debt and Investment Advisory Commission,the cost of preparation of any"blue
sky" or legal investment memoranda and this Bond Purchase Agreement; expenses to qualify the
Bonds for sale under any"blue sky" or other state securities laws; and all other expenses incurred by
the Underwriter in connection with its public offering and distribution of the Bonds (except those
specifically enumerated in paragraph(a)of this section), including the fees and disbursements of its
counsel and any advertising expenses.
6. Notices. Any notice or other communication to be given to the City under this Bond
Purchase Agreement may be given by delivering the same in writing to the City at the address shown
on page one hereof; and any notice or other communication to be given to the Underwriter under this
Bond Purchase Agreement may be given by delivering the same in writing to UBS Financial Services
Inc., 777 South Figueroa Street, 50th Floor, Los Angeles, California 90017.
7. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of
the City and the Underwriter(including its successors or assigns), and no other person shall acquire
or have any right hereunder or by virtue hereof.
8. Survival of Representations, Warranties and Agreements. The representations,
warranties and agreements of the City set forth in or made pursuant to this Bond Purchase Agreement
shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the
Closing and regardless of any investigations made by or on behalf of the Underwriter(or statements
as to the results of such investigations)concerning such representations and statements of the City
and regardless of delivery of and payment for the Bonds.
9. Effective. This Bond Purchase Agreement shall become effective and binding upon
the respective parties hereto upon the execution of the acceptance hereof by the City and shall be
valid and enforceable as of the time of such acceptance.
10. No Prior Agreements. This Bond Purchase Agreement supersedes and replaces all
prior negotiations, agreements and understandings between the parties hereto in relation to the sale of
Bonds for the City.
11. Governing Law. This Bond Purchase Agreement shall be governed by the laws of
the State of California.
12
DOCSOCU 002280v4\22173.0089
12. Counterparts. This Bond Purchase Agreement may be executed simultaneously in
several counterparts, each of which shall be an original and all of which shall constitute one and the
same instrument.
Very truly yours,
UBS FINANCIAL SERVICES INC.,
By:
Managing Director
By:
Vice President
ACCEPTED: 12003
CITY OF HUNTINGTON BEACH
By:
City Administrator
By:
Economic Development Director
13
DOCSOC\l 002280v4\22173.0089
EXHIBIT A
MATURITY SCHEDULE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-01
(HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS
Maturity Date
(September 1) Principal Amount Interest Rate Yield
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2023
2033
The purchase price of the Bonds shall be $ , which is the principal amount of
$ less original issue discount of $ and less Underwriter's discount of
A-1
DOCSOC\1002280v4\22173.0089
EXHIBIT B
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-01
(HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS
CERTIFICATE OF LANDOWNER
In connection with the issuance and sale of the above-captioned bonds, and pursuant to the
Bond Purchase Agreement, dated , 2004,by and between the City of Huntington Beach
and the Underwriter named therein (the"Bond Purchase Agreement"), each of the undersigned
hereby certify, represent, warrant and covenant, on behalf of Huntington Center Associates, LLC, a
Delaware limited liability company(the"Landowner")that:
1. The undersigned is, and at all pertinent times mentioned herein has been, an
authorized representative of the Landowner and is authorized to make this
certification on behalf of the Landowner.
2. Capitalized terms that are not defined herein shall have the meanings ascribed to
them in the Bond Purchase Agreement.
3. The Landowner is a duly organized and validly existing limited liability company in
good standing under the laws of the State of California.
4. The Landowner has full power and authority to execute, deliver, and perform its
obligations under the Landowner Continuing Disclosure Agreement, the Financing
and Construction Agreement, the Operating Agreement and the Reciprocal Easement
Agreement; and the Continuing Disclosure Agreement, the Financing and
Construction Agreement,the Operating Agreement and the Reciprocal Easement
Agreement have been duly authorized, executed, and delivered by the Landowner
and, assuming due authorization, execution and delivery by the other parties thereto,
as applicable, constitute legal, valid, and binding agreements of the Landowner,
enforceable against the Landowner in accordance with their respective terms, subject
to laws relating to bankruptcy, insolvency, or other laws affecting the enforcement of
creditors' rights generally and the application of equitable principles if equitable
remedies are sought.
5. The undersigned has reviewed the contents of the Preliminary Official Statement and
the contents of the Official Statement. The undersigned has reviewed the contents of
this Certificate and have conferred with our counsel for the purpose of discussing the
meaning of its contents.
6. All information concerning the Landowner, the property owned by the Landowner in
the Community Facilities District,and the improvement of such property by the
Landowner submitted by, or on behalf of,the Landowner to the Underwriter, the
City, or Disclosure Counsel in connection with the preparation of the Preliminary
Official Statement and the Official Statement,to the Appraiser in connection with
preparation of the Appraisal, and to the Special Tax Administrator in connection with
the Rate and Method of Apportionment was,to the best of our knowledge, true,
complete, and correct in all material respects.
B-I
DOC SOC\1002280v4\22173.0089
7. The statements relating to the Landowner, its property ownership and its proposed
improvement of the property within the Community Facilities District contained in
the Official Statement under the captions ["THE COMMUNITY FACILITIES
DISTRICT," "PROPERTY OWNERSHIP AND DEVELOPMENT" and"SPECIAL
RISK FACTORS"] do 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.
8. No proceedings are pending or, to the best knowledge of the undersigned, after due
inquiry, threatened in which the Landowner or any of its members may be
adjudicated as bankrupt or discharged from any and all of its debts or obligations or
granted an extension of time to pay its debts or a reorganization or readjustment of
the debts.
9. No action, suit,proceeding, inquiry, or investigation, at law or in equity,before or by
any court, regulatory agency,public board or body, is pending or,to the best
knowledge of the Landowner, threatened in any way seeking to restrain or to enjoin
the improvement of the property within the Community Facilities District.
10. None of the property owned by the Landowner within the Community Facilities
District is delinquent in the payment of any taxes or assessments.
11. The Landowner agrees to indemnify and hold harmless, to the extent permitted by
law,the City, the Underwriter and their officials, employees, and agents (each of the
City,the Underwriter and such entity and person being hereinafter called an
"Indemnified Party"), against any and all losses, claims, damages, or liabilities,joint
or several, to which such Indemnified Party may become subject under any statute or
at law or in equity or otherwise, 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 or are based upon any untrue statement or alleged
untrue statement of a material fact or the omission or alleged omission to state a
material fact necessary to make the statements in the Official Statement or in any
amendment or supplement to such information not misleading,but only to the extent
that such material fact relates to the Landowner, its property ownership and its
proposed improvement of the property within the Community Facilities District
under the captions ["THE COMMUNITY FACILITIES DISTRICT," "PROPERTY
OWNERSHIP AND DEVELOPMENT" and"SPECIAL RISK FACTORS"] in the
Official Statement or in any amendment or supplement to such information. This
indemnity provision shall not be construed as a limitation on any other liability which
the Landowner may otherwise have to any Indemnified Party,provided that in no
event shall the Landowner be obligated for double indemnification.
12. Promptly after receipt by any Indemnified Party of notice of any complaint or the
commencement of any action or proceeding in connection with any matter for which
the Landowner is obligated to indemnify an Indemnified Party as set forth in the
preceding paragraph,the Indemnified Party shall notify the Landowner in writing of
such complaint or of the commencement of such action or proceeding and, if the
Landowner so elects or is requested by the Indemnified Party, the Landowner shall
B-2
DOCSOC\l 002280v4\22173.0089
assume the defense of such action or proceeding, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of the fees
and disbursements of such counsel, in which event the Landowner shall not be
obligated to pay the reasonable fees and disbursements of separate counsel for the
Indemnified Party in such action. In the event,however, that an Indemnified Party's
legal counsel has determined that defenses may be available to an Indemnified Party
that are different from or in addition to those available to the Landowner or that there
is or could reasonably be expected to be a conflict of interest by reason of the
Landowner and an Indemnified Party having common counsel in any action or
proceeding, then the Indemnified Party may employ separate counsel to represent or
defend it in any such action or proceeding in which such Indemnified Party may
become involved or is named as defendant and the Landowner shall pay the
reasonable fees and disbursements of such separate counsel.
13. The Landowner is fully qualified by all necessary permits, licenses, and certifications,
to conduct its business as it is presently being conducted and, except as may be
required under blue sky or other securities laws of any state, and except for such
licenses, certificates, approvals, variances, and permits which may be necessary for
the construction and operation of the Landowner's project in the Community
Facilities District(the "Project"), there is no consent, approval, authorization, or other
order of, or filing with, or certification by, any regulatory authority having
jurisdiction over the Landowner except as such have been obtained and are in full
force and effect, for the consummation by the Landowner of the actions contemplated
to be consummated by the Landowner with respect to the Project under the Official
Statement.
14. To the best knowledge of the undersigned, after due inquiry, the Landowner is not in
violation of any provision of, or in default under, its organizational documents or any
material agreement, lease, or other contract, the violation of or default under which
would materially and adversely affect the Landowner's ability to own and improve its
project as described in the Official Statement or to pay Special Taxes for which it is
responsible.
15. The Landowner is not aware of any previous material failures to comply with any
previous undertaking with respect to the Securities and Exchange Commission Rule
15c2-12 to provide annual reports or notices of material events.
B-3
DOC SOC\1002280v4\22173.0089
16. The execution and delivery by the Landowner of the Continuing Disclosure
Agreement,the Financing and Construction Agreement, the Operating Agreement
and the Reciprocal Easement Agreement and the performance of its obligations
thereunder do not and will not result in violation of any provision of, or in default
under,the Landowner's organizational documents or any material agreement, lease,
or other contract to which the Landowner is a party or by which it or its properties are
bound.
Dated: [Closing Date]
HUNTINGTON CENTER ASSOCIATES, LLC, a
Delaware limited liability company
By: Huntington Management Ent., LLC, a Delaware
limited liability company, its Manager
By: BMLF/Huntington, LLC, a Delaware limited
liability company, its Manager
By:
Bryan Ezralow, Trustee of the Bryan Ezralow
1994 Trust, its Manager
B-4
DOCS001002280v4\22173.0089
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Allen Matkins Leck Gamble&Mallory LLP
515 South Figueroa Street,7th Floor'
Los Angeles, California 90071
Attn: Michael J. Kiely,Esq.
(Above Space for Recorder's Use Only)
PARKING AND
RECIPROCAL EASEMENT AGREEMENT
AND OPTION TO PURCHASE
This PARKING AND RECIPROCAL EASEMENT AGREEMENT AND OPTION TO
PURCHASE("Agreement")is made and entered into as of the 15`h day of December, 2003 (the
"Effective Date"),by and between HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware
limited liability company("Developer"), and the CITY OF HUNTINGTON BEACH,
CALIFORNIA,a California charter city("City").
RECITALS:
A. Developer is the fee owner of that certain parcel of real property located in the
City of Huntington Beach,County of Orange("County"), State of California("State")formerly
known as "Huntington Center" and recently renamed as "Bella Terra Mall", and more
particularly described on Exhibit "A" attached hereto (together with all improvements now or
hereafter located on such property,the "Retail Parcel"). Pursuant to that certain Owner
Participation Agreement dated as of October 2,2000,between Developer and the
Redevelopment Agency of the City of Huntington Beach, a public body,corporate and politic
(the "Agency"),Developer has agreed to redevelop Retail Parcel to include up to 800,000 square
feet of retail and entertainment uses.
B. Concurrently herewith, Developer has conveyed to City the fee interest in that
certain parcel of real property located in the City of Huntington Beach, County of Orange, State
of California,more particularly described on Exhibit "B",attached hereto(the "Parking
Parcel"). The Parking Parcel is currently improved with an asphalt surface parking lot and is
contiguous on all sides to the Retail Parcel.
C. Pursuant to the Mello-Roos Community Facilities Act of 1982, as amended,
Chapter 2.5 (commencing with Section 53311),Part 1,Division 2,Title 5 of the Government
Code of the State of California,the City on January 6,2003,adopted a Resolution of Intention to
form a community facilities district over and including the Retail Parcel designated "City of
Huntington Beach Community Facilities District No. 2003-1 (Huntington Center)" (the
"District")and a resolution of intention to issue bonds of the District for the purpose of
providing through the sale of bonds proceeds in an amount not to exceed$30,000,000 for the
604377.11/LA
J4008.002/12.1-03/mjk/rp
financing(the "CFD Financing")of the design,construction and acquisition of certain public
facilities,including a six-level parking structure on the Parking Structure Parcel containing
approximately 1,532 automobile parking spaces(the "Public Parking Structure")to be owned
by City and available for parking use by the public.
D. City desires to grant a temporary exclusive easement to Developer over the
Parking Parcel for the purpose of constructing the Public Parking Structure.
E. City and Developer desire to establish certain reciprocal and other easements
including,but not limited to,vehicular and pedestrian ingress and egress, utilities, subjacent and
lateral support, encroachment and other easements, including certain limited parking rights,
together with various other conditions and covenants,which are intended to burden and benefit
the Retail Parcel and the Parking Parcel,as the case may be.
F. In addition to the terms defined in the foregoing Recitals, the following defined
terms,when used in this Agreement, shall have the meaning set forth below:
(i) "Funding Agreement" means that certain Funding and Construction
Agreement Relating to City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center)dated as of December 15, 2003,between City and Developer.
(ii) "Force Majeure" shall mean any event or occurrence outside the
reasonable control of Developer and which Developer did not learn of in time to reasonably
avoid a delay in completion of construction of the Public Parking Structure including,but not
limited to: (1)a strike or labor stoppage; (2) delay resulting from inclement weather beyond that
which would reasonably be anticipated for the seasons during which the work on the Public
Parking Structure is continuing; (3)riot; (4)insurrection; (5)war; (6) governmental order or
decree; (7)unforeseen site conditions, including,without limitation,the presence of Hazardous
Substances in,on,around or under the Project site that could not have been discovered through
the exercise of reasonable due diligence prior to commencement of construction of the
Improvements on or within the Project.
(iii) "Hazardous Substances"means any chemical, substance, material,
object, condition,waste or combination thereof(i)the presence of which requires investigation
or remediation under any applicable statute,regulation, ordinance,order,action,policy or
common law; (ii)which is defined as a"hazardous waste", "hazardous substance", "hazardous
material',pollutant,toxic or contaminant under any statute,regulation,rule or ordinance or
amendments thereto of any governmental agencies having jurisdiction thereof; (iii)which is
toxic,explosive, corrosive, flammable, infectious,radioactive, carcinogenic, mutagenic,or
otherwise hazardous and is regulated by any governmental agencies having jurisdiction thereof;
or(iv)the presence of which on the Project causes or threatens to cause a nuisance or injury
upon the Project,to adjacent properties or to the environment or poses or threatens to pose a
hazard to the health or safety of persons on or about the Project.
(iv) "Improvements" shall mean and refer to any building or structure located
on the Parking Parcel or Retail Parcel.
W4377.1 MA
J4008-002/12-1-03/mjk/rp -2-
(v) "Mortgage" shall mean and refer to any mortgage, indenture of mortgage,
deed of trust(whether fee or leasehold), sale and leaseback transaction or assignment and
subleaseback transaction which covers all or any portion of the Retail Parcel,made by a
reputable third party bank or other institutional investor.
(vi) "Mortgagee" shall mean and refer to a mortgagee and/or a trustee and
beneficiary under a Mortgage and,to the extent applicable,a fee owner if the Retail Parcel is the
subject of a sale and leaseback transaction.
(vii) "Operating Agreement"means that certain Operating Agreement dated
as of December 15,2003,between the City and Developer,pursuant to which Developer has
undertaken certain of the obligations of the City hereunder.
(viii) "Parcel" or"Parcels",as the case may be, shall mean and refer to the
Retail Parcel and the Parking Parcel,or either of them,as applicable.
(ix) "Party" or"Parties", as the case may be, shall mean and refer to City and
Developer, or either of them,as applicable, and any party after the date hereof acquiring an
interest in or to the Retail Parcel and/or the Parking Parcel.
(x) "Permittees" shall mean and refer to each Party,the tenants of each Party,
and their respective officers,directors,employees, agents,contractors, subcontractors,
customers,visitors, invitees, licensees, utility suppliers and concessionaires entering such Party's
Parcel or such tenant's premises within such Parcel.
(xi) "Project"means,collectively,the Retail Parcel,the Parking Parcel and the
Public Parking Structure.
(xii) "Utility Facilities" shall mean all utility and service lines and systems
serving the Project or portions thereof, including sewers; ejector pumps; water pipes and
systems; intake and exhaust vents; gas pipes and systems; sprinkler pipes and systems;drainage
lines and systems;electrical power conduits, lines and wires; energy transfer stations and
substations;chillers;transformers;electrical panels;vaults; cable television lines;microwave
communication systems;telephone conduits, lines and wires; security lines and systems; any
utilities required for teleconferencing facilities; and other service or utility lines necessary or
convenient to operate the Project.
NOW,THEREFORE, for good and valuable consideration,the receipt and sufficiency of
which are hereby acknowledged, City and Developer hereby agree as follows:
1. CONSTRUCTION EASEMENT.
City hereby grants to Developer for the use by Developer and its Permittees a
temporary ingress,egress and general access easement(the "Construction Easement"),
appurtenant to and for the benefit of the Retail Parcel over,beneath and across the Parking Parcel
for the purpose of(a)constructing and installing the Public Parking Structure, including,without
limitation,all foundations,footings,columns,floors,Utility Facilities,directional signs,
hardware,painting, striping,lighting and other improvements comprising the Public Parking
604377.1 I/LA
)4008-002/12.1-03/mjWrp -3-
Structure(all of which construction shall comply with the provisions of Section 6 below), and
(b)vehicular and pedestrian ingress,egress and access by Developer and its Permittees for
purposes of such construction,and(c)parking of vehicles in connection with the construction
and project management of the construction of the Public Parking Structure,.and(d) if
applicable,performing the maintenance,repair and reconstruction obligations of the City as
contemplated hereunder, if the City fails to do so. The Construction Easement(other than the
easement in clause(d),which shall survive completion of the Public Parking Structure but shall
be effective only during periods when the Developer or its Permittees are performing the
applicable obligations of the City)shall terminate upon completion of the Public Parking
Structure(as determined by the issuance by the City(acting in its governmental capacity)of a
final certificate of occupancy for the Public Parking Structure and delivery to and acceptance by
the City(in its proprietary capacity) of the Public Parking Structure.
2. EASEMENT FOR DEVELOPER PARKING/EXCLUSIVE OFFSITE
PARKING REQUIREMENTS COVENANT.
(a) .Limited Easement for Developer Parking. City hereby grants to
Developer and its Permittees,including any valet parking services operators engaged by
Developer in connection with the operation of the Retail Parcel, and such operators employees
and contractors)an exclusive easement(the "Developer Private Parking Easement")over and
across the Parking Parcel and all levels of the Public Parking Structure for the purpose of
providing to Developer and its Permittees the exclusive right to use up to five percent(5%)of
the total parking spaces striped in the Public Parking Structure(the "Private Retail Spaces")for
so long as the Public Parking Structure exists. The Private Retail Spaces shall be located
generally on the upper-most portions of the Public Parking Structure at specific locations to be
reasonably agreed upon between City and Developer. Pursuant to the Developer Private Parking
Easement, Developer shall have the rights at its sole expense to(i)install signs designating the
Private Retail Spaces, (ii)segregate the Private Retail Spaces by partition, ropes,barricades or
other means provides such devices do not interfere with the orderly flow of traffic in the Private
Parking Structure by the City and its Permittees,and(iii)tow vehicles parked in such spaces that
are not invitees of Developer or its Permittees.
(b) Offsite Parking Requirements Covenant. Commencing upon completion
of the Public Parking Structure, City shall maintain not less than 1,400 parking spaces on a non-
exclusive basis for the use of the public, including,without limitation, Developer and its
Permittees and shall operate and maintain the Public Parking Facility as contemplated under this
Agreement. City acknowledges that the parking spaces in the Public Parking Structure shall be
counted towards the applicable legal onsite parking requirement of the improvements on and
comprising the Retail Parcel. Accordingly, City hereby covenants that it shall not enter into any
grant, conveyance, lease, license,occupancy agreement or parking agreement for spaces in the
Public Parking Structure, the effect of which would(i)make any space in the Public Parking
Structure unavailable for the use of the public, including,without limitation,Developer and its
Permittees,or(ii)permit any other property owner to use any such spaces to satisfy applicable
legal parking requirements of such other property. City shall not be responsible for providing
additional parking which is required by applicable legal requirements as a result of any change in
the use or density of the Retail Parcel.
604377.1 nA
J4008-002/12-1-03/mjk/rp -4-
3. EASEMENT FOR CITY INGRESS AND EGRESS TO STRUCTURE.
Developer hereby grants to City for the use of City and its Permittees a non-
exclusive permanent easement(the "City Access Easement"), appurtenant to and for the benefit
of the Parking Parcel,over and across all areas of the Retail Parcel designated from time to time
by Developer and regularly used for vehicular ingress,egress and access of the vehicles of
Developer and/or its Permittees,but specifically excluding any areas designated and exclusively
reserved for loading or emergency access, for the purpose of providing vehicular and pedestrian
ingress and egress to and from the Public Parking Structure to public streets adjacent to the
Project.
4. UTILITIES AND OTHER EASEMENTS.
(a) Developer Utility Easement. City hereby grants to Developer for the use
of Developer and its Permittees a non-exclusive permanent easement, appurtenant to and for the
benefit of the Retail Parcel, in,over,under and across the Parking Parcel (the "Developer Utility
Easement"), and any portion thereof,for the purpose of(i) installation,construction,operation,
maintenance, repair or replacement of the Developer's Utility Facilities,and(ii)ingress,egress
and access by vehicles and pedestrians to the Developer's Utility Facilities for the purposes
stated above;provided,however, in no event shall any portion of the Developer's Utility
Easement materially adversely affect or impair City's operation,use or enjoyment of the Parking
Parcel. Except as otherwise provided herein,Developer shall be solely responsible for the cost
of maintaining and servicing the Developer's Utility Facilities that serve Retail Parcel. As may
be reasonably required, Developer shall have the right to relocate the Developer's Utility
Facilities to a different location in the Parking Parcel;provided,however, (X)Developer shall be
solely responsible for any all costs incurred in connection with or as a result of such relocation,
(Y)there shall be no material interruption of power service or other utilities to the Parking Parcel
as a result of or in connection with the relocation of any utility lines or equipment,and(Z)there
shall be no material adverse effect on the City's operation,use and enjoyment of the Parking
Parcel. Developer shall use its reasonable good faith efforts to consult with the appropriate
utility company providing service to the Parking Parcel to reduce the amount of interruption of
service to City as a result of the re-location of utility lines and equipment, including, but not
limited to,performing such work at a time when the Public Parking Structure is least used by the
public, City and its Permittees.
(b) City Utility Easement. Developer hereby grants to City for the use of City
and its Permittees,in common with all others entitled to use the same,a non-exclusive
permanent easement,appurtenant to and for the benefit of the Public Parking Structure, in,over,
under and across the Retail Parcel (the "City Utility Easement")for the purpose of ingress to,
egress from, and the construction,installation,operation, maintenance,repair,removal,and
replacement of future public utilities necessary to service the Public Parking Structure;provided,
however,in no event shall any portion of the City Utilities Easement materially-adversely affect
or impair Developer's operation,use or enjoyment of the Retail Parcel.
(c) Easement for.Common Structural Support. Each Party hereby establishes
for the benefit of the other Party, appurtenant to and for the benefit of such other Party's Parcel
and burdening the burdened Party's Parcel,an easement on the first Party's Parcel (to the extent
604377.1 I/LA
J4008-002/12.1-03/mjk/rp -5-
reasonably necessary for the benefited Party's enjoyment or preservation of its Improvements
situated upon or adjacent to the burdened Party's Parcel)for the installation,construction,
restoration,replacement,modification,repair and maintenance of any: (a) separate or common
footings, girders,columns,braces, foundations,tieback systems and other standard support
elements as may be necessary for the structural support of any Improvements of the benefited
Party situated upon or adjacent to the burdened Party's Parcel,and(b)common walls shared by
burdened Party and benefited Party as may be necessary for the structural support and enclosure
of adjacent or subjacent Improvements of the benefited Party;provided that,at the request of
either burdened Party,the benefited Party shall prepare and record an instrument specifying the
exact locations of such footings, girders,columns,braces, foundations,common walls,tieback
systems and other standard support elements,and provided further that the manner of attachment
shall be designed in accordance with good construction and engineering practice in the manner
customary for such improvements.
(d) Easement for Lateral and Subjacent Support. Each Party hereby grants
and establishes for the use and benefit of the other Party, appurtenant to and for the benefit of
such other Party's Parcel and burdening the burdened Party's Parcel,an easement for lateral and
subjacent support of improvements(i)on the Parking Parcel, approved and constructed(or
reconstructed)pursuant to Section 6 below,and(ii)on the Retail Parcel,that are approved and
constructed pursuant to the requirements of and in accordance with plans and specifications
approved pursuant to,the OPA.
(e) Easement for Minor Encroachment. Each Party hereby grants and
establishes for the use and benefit of the other Party,appurtenant to and for the benefit of such
benefited Party's Parcel and burdening the burdened Party's Parcel,an easement for unintentional
minor encroachments onto the burdened Party's property or air rights which unintentional minor
encroachments exist or result from construction of any new,rebuilt,repaired or reconstructed
building or improvement;provided,however,that no such encroachment shall interfere,even
temporarily,with the operation or maintenance of the improvements on the burdened Party's
Parcel.
(f) Securi . Each Party hereby grants to the other Party, for the use and
benefit of such benefited Party and establishes for the benefit of and appurtenant to such
benefited Party's Parcels and burdening the burdened Party's Parcels,at no charge, a non-
exclusive easement over and upon the pedestrian ways and vehicular ways on the burdened
Party's Parcel for security purposes to include pedestrian and vehicular access over the burdened
Parcels by security personnel employed or engaged by the benefited Party.
5. [INTENTIONALLY OMITTED]
6. CONSTRUCTION OF PUBLIC PARKING STRUCTURE.
(a) Developer to Obtain Permits. Pursuant to the Funding Agreement,
Developer shall cause the Public Parking Structure to be constructed and shall obtain all
necessary permits, entitlements and other authorizations from the City(acting in its
governmental capacity)and any other governmental entity maintaining jurisdiction over the
Parking Parcel permitting Developer to construct the Public Parking Structure. In constructing
604377.11/LA
J4008-002/12.1-03/mjk/rp -6-
the Public Parking Structure,Developer shall comply with all applicable City ordinances,codes,
rules,regulations and applicable conditions of approval to the entitlements for the Public Parking
Structure and the Retail Parcel renovation as specified in the Funding Agreement. The review of
any such plans and specifications shall not constitute the assumption of any responsibility by, or
impose any liability upon, City as to the accuracy,efficacy, sufficiency or legality thereof.
. (b) Developer's Cost. Any and all construction or other improvement work
undertaken by Developer for purposes of constructing the Public Parking Structure as described
in the Funding Agreement shall be at the sole cost and expense of Developer(other than as
provided in the OPA and/or the Funding Agreement).
(c) Insurance. In connection with the construction and improvement work
contemplated herein,Developer shall maintain builder's all risk insurance with commercially
reasonable limits of coverage and deductibles,and commercial general liability insurance and in
accordance with this Agreement and the Funding Agreement. Developer covenants to keep the
Parking Parcel free and clear from and against any mechanic's and/or materialmen's liens or stop
notice which may be recorded against the Parking Parcel relating to Developer's construction or
improvement work referred to herein. Developer further agrees that it will undertake such
reasonable actions as may by necessary to cause any such mechanic's or materialmen's liens or
stop notice to be removed within sixty(60) days of receipt of notice that such lien or stop notice
has been attached to the Parking Parcel,including,but not limited to, bonding around any such
lien or stop notice in accordance with statute.
7. MAINTENANCE OF PUBLIC PARKING STRUCTURE.
(a) Covenant to Maintain Public Parking_Structure. City covenants and
warrants it will, solely from the proceeds of the Parking Structure Maintenance Special Tax
authorized to be levied in the District and from revenues, if any, from the operation of the Public
Parking Structure, (1)promptly pay prior to delinquency all real and personal property taxes
assessed against the Parking Parcel, and(2) operate,maintain or repair,or cause to be operated,
maintained and repaired,the Public Parking Structure in good order, condition and repair. The
Public Parking Structure shall remain open and accessible for parking and retrieval of vehicles
(at least)from 8:00 a.m. (or such earlier time that is at least two (2)hours before the tenants and
occupants of the Retail Parcel open for business)until 2:00 a.m. (or such later time that is at least
one(1)hour after all tenants and occupants of the Retail Center have closed for business), seven
days a week(including all holidays), and such additional hours as City may elect.
Notwithstanding the generality of the foregoing, City shall, solely from the proceeds of the
Parking Structure Maintenance Special Tax authorized to be levied in the District and from
revenues,if any,from the operation of the Public Parking Structure,maintain,repair and operate,
or cause to be maintained,repaired or operated the Public Parking Structure in accordance with
the practices generally prevailing in the operation of structured parking adjacent to other retail
facilities located in Southern California similar in character to those located on the Retail Parcel,
and shall at all times perform the following services as frequently as reasonably required for the
Public Parking Structure to satisfy such standard of operation and remain in good order,
condition and repair(the "Operating Standard"):
604377.11ILA
J4008.002/12-1.03/mjkhp -7-
i. Clean and maintain all surfaces of the Public Parking Structure and
keep such surfaces level and evenly covered with the type of surfacing material originally
installed thereon,or such substitute thereof as shall be equal thereto in quality, appearance and
durability;
ii. . Remove all papers, debris, filth and refuse from the Public Parking
Structure and wash or thoroughly sweep paved areas;
iii. Remove trash from trash receptacles and clean trash receptacles;
iv. Clean,maintain,repair and replace entrance,exit and directional
signs,traffic control signage,markers and lights into and within the Public Parking Structure;
V. Keep the parking areas, stairways, elevators and other portions of
the Public Parking Facility well-lit from dusk each day until dawn at least during the applicable
hours of operation set forth in 7(a) above,and clean,relamp and reballast all lighting fixtures;
vi. Maintain,repair and replace striping and curbing;
vii. Maintain and replace as necessary the landscaping surrounding the
Public Parking Structure;
viii. Maintain and repair the structure of the Public Parking Structure,
as needed(except as provided in Section 10(a);
ix. Repaint and refinish all painted and finished surfaces;
X. Clean,maintain and repair all stairs, stairwells and stairwell doors
within the Public Parking Structure;
xi. Clean,maintain,repair and operate all elevators;
xii. Maintain,repair and replace, if needed, all mechanical,electrical
and utility facilities and systems that are a part of or serve the Public Parking Structure,
including,without limitation, sprinkler and fire control systems,parking revenue control
equipment,parking access control equipment, security systems and equipment,mechanical
venting systems, lighting and emergency lighting systems,rollup doors and traffic barriers;
xiii. Make all repairs, improvements or alterations required to comply
with applicable laws;
xiv. Except to the extent maintained by a utility company,maintain the
Utility Facilities located within the Public Parking Structure,other than those which are owned
by Developer or are exclusively serving the Retail Parcel pursuant to the Developer's Utilities
Easement;
xv. Obtain and maintain the public liability insurance and
property/casualty insurance required by this Agreement; and
604377.11/LA
J4008.002/12.1.03/mjk/rp -g-
xvi. Provide,or cause to be provided,reasonable security services
within the Public Parking Structure.
Notwithstanding the foregoing, following completion of the Public Parking
Structure Developer shall be solely responsible for capital repairs and improvements thereto and
capital replacements therein,and shall maintain reasonably adequate capital reserves for such
purposes. Such capital reserve may be included within a capital reserve fund covering the
Project as whole. As used in the previous sentence,Developer shall be deemed to have
maintained adequate capital reserves during any time it is in compliance with the capital reserve
requirements set forth in any first in priority Mortgage(or in loan agreement or other documents
incorporated by reference into such Mortgage) encumbering the Retail Parcel.
(b) Covenant to Maintain Insurance. City hereby covenants and agrees to all
times maintain(i)commercial general liability insurance and(ii) "all-risk" casualty insurance in
connection with the ownership and operation of the Public Parking Structure. Except as may
otherwise be prohibited by law,Developer shall be named as an additional insured on all such
liability insurance policies and, solely for purposes of performing its obligations to reconstruct
the Public Parking Structure under Section 10(a)below,on such casualty insurance policy. Such
insurance shall(v)(with respect to liability insurance)include coverage for any accident
resulting in personal injury to or death of any person and consequential damages arising
therefrom in an amount not less than Five Million Dollars($5,000,000)per occurrence,and
excess limits under a commercial umbrella liability policy of not less than Twenty Five Million
Dollars($25,000,000)per occurrence; (w)(with respect to property/casualty insurance)include
comprehensive property damage insurance in an amount equal to the greater of(A)Twelve
Million Dollars($12,000,000),or(B)the full replacement value of the Public Parking Structure,
(x)shall be issued by a financially reasonable insurance company or companies having a rating
of not less than A-VIII in Best's Key Rating Guide, (y)shall provide that the same may not be
canceled without at least thirty(30)days prior written notice being given by the insurer to
Developer, and(z)shall contain a waiver of subrogation provision for the benefit of Developer
and the tenants of the Retail Parcel. City shall furnish to Developer evidence that such insurance
is in full force and effect.
(c) City Indemnity. Subject to Section 34 hereof, City shall indemnify and
hold Developer harmless from and against any claim(s), loss or other damage, including,but not
limited to,reasonable attorneys' fees and costs,arising out of the operation, use,maintenance,
repair or replacement of the Public Parking Structure by City or any party or person acting on
behalf or under the authority or control of City. Notwithstanding,the indemnity set forth above
shall not extend to any claims,loss or other damage arising out of or resulting from(i)the design
or construction of the Public Parking Structure, (ii) land conditions that existed prior to the
construction of the Public Parking Structure,or(iii)the operation,use,maintenance,repair or
replacement of the Public Parking Structure during any period in which Developer is acting as a
Qualified Operator.
(d) Developer Indemnity. Developer shall indemnify and hold the City
harmless from and against any claim(s), loss or other damage,including,but not limited to,
reasonable attorneys'fees and costs,arising out of the operation,use,maintenance,repair or
replacement of the Retail Parcel by Developer or any party or person acting on behalf or under
604377.1 MA
J4008-002/12-1-03/mjk/rp -9-
the authority or control of Developer. Notwithstanding,the indemnity set forth above shall not
extend to any claims,loss or other damage arising out of or resulting from the negligence or
willful misconduct of the City, or any party or person acting on behalf or under the authority or
control of City, in or around the Project.
(e) Right of Self-Help. In the event City shall fail in its duty to perform its
obligations under this Agreement(including Section 7, 9 and 10), including without limitation its
obligation, if any,to pay real property taxes assessed against the Parking Parcel,then Developer
or any Permittee of the Retail Parcel may give City written notice of such fact,and thereupon
City shall,within ten(10)working days of such notice,commence the performance of the
actions required and diligently pursue such actions to completion in a timely manner. Should
City fail to fulfill this duty after such notice, Developer or its designee shall have the right and
power,but not the obligation,to perform such actions and pay any necessary costs or expenses
and City shall promptly reimburse(subject to Section 34 hereof)Developer or its designee for
any costs or expenses paid by Developer or its designee or incurred in connection with
Developer's or its designee's performance of such actions.
(f) Assumption of Operation by Parking Operator. City shall have the right to
delegate all of the obligations under this Article 7 and Article 9 below to a "Qualified
Operator" (as defined below). As used herein,the term "Qualified Operator"means a person
or entity of good general reputation engaged in the business of management,maintenance and
operation of multi-level parking structures of similar type and similar or larger size in Southern
California,adhering to a standard of operation commensurate with the Operating Standard
established hereunder,with reasonably sufficient financial resources to adequately indemnify,
protect and defend Developer and City,taking into account the nature of the indemnities herein
and the potential risks thereunder. Developer or any Affiliate of Developer shall be deemed to
be a Qualified Operator in all circumstances. As used herein, "Affiliate of Developer"mean any
entity which controls, is controlled by, or is under common control with Developer,J.H. Snyder
Company,Jerry Snyder, Michael Wise or Bryan Ezralow. For the purposes of the preceding
sentence, "control" means the legal power and right to control the operations and business affairs
of the subject entity. Provided that such Qualified Operator expressly assumes the obligations of
the City hereunder pursuant to a written management agreement,including,without limitation,
City's operation, indemnification and insurance obligations hereunder, and agrees that Developer
shall be an express third party beneficiary of such assumption,Developer agrees to look solely to
the Qualified Operator with respect to any breach of the City's obligations hereunder during the
term of such management agreement. Without limiting the generality of the foregoing, if the
Qualified Operator(i)maintains the insurance required to be maintained hereunder and causes
Developer to be named as an additional insured thereunder,and(ii)does not seek to avoid
indemnification of Developer with respect to any claim made against Developer that would
otherwise be covered by City's indemnification of Developer hereunder,Developer shall not
make any demand,claim or cross claim against City with respect to such claim.
8. USE OF PUBLIC PARKING STRUCTURE. Except as provided in Section 2(a)
above with respect to the Private Retail Spaces,the Public Parking Structure will be used only
for daily public parking, and for no other use whatsoever. Notwithstanding the generality of the
foregoing, long term and leased parking are specifically prohibited. City shall be permitted to
charge parking fees in its sole discretion. Prior to setting initial fees or any increase thereafter,
604377.11/LA
]4008-002/12-1-03/mjk/rp -10-
City shall consult with Developer and obtain a written parking rate study of other publicly
accessible parking facilities in the vicinity of the Project illustrating the range of fees charged for
parking in such facilities prepared by a reputable consultant possessing knowledge and
experience commensurate with the needs of such study. If City elects to impose parking fees for
use of the Public Parking Facility,City shall establish a procedure for paid validation service to
facilitate payments of parking fees directly by Developer and/or other business owners on behalf
of individual users of the Public Parking Structure. At any time the Public Parking Structure is
not owned by City,the District or other public agency,then the right to charge parking fees shall
terminate and no fees may be charged to park in the Public Parking Structure.
9. MAINTENANCE OF EASEMENT AREAS. Notwithstanding anything herein to
the contrary, each Party shall maintain,or cause to be maintained,the easement area(s)within its
Parcel, in good order,condition and repair,without expense to the other Party, subject in any
event on the part of the City to Section 34 hereof. Without limiting the generality of the
foregoing,each Party shall observe the following minimum standards in connection with the
maintenance of the easement area(s)located on its respective Parcel:
(a) Maintain the surface of any driveway areas and sidewalks level, smooth
and evenly covered with the type of surfacing material originally installed thereon, or with such
substitute therefor as shall be in all respects equal to in quality,appearance and durability.
(b) Remove all papers,debris, filth and refuse from such easement areas and
wash or thoroughly sweep paved areas as required.
(c) Maintain such appropriate entrance,exit or directional signs, markers and
lights within such easement areas as shall be reasonably required or necessary and in accordance
with all applicable governmental rules and regulations.
(d) Clean,repair and maintain all lighting fixtures necessary to provide
adequate light for the easement area(s)and relamp and reballast such fixtures as needed.
(e) Repaint striping,markers,directional signs,et cetera,as necessary,to
maintain the same in a condition commensurate with the Operating Standard.
(f) Maintain landscaping as necessary to keep the easement area(s)and the
applicable Parcel in a condition commensurate with the Operating Standard.
(g) Maintain all signs thereof in a clean and orderly condition, including
relamping and repairs as may be required.
In the event a Party shall fail in its duty to maintain all or any part of any easement
area(s)located within such Party's Parcel,or a Party or its Permittees shall cause damage to any
portion of an easement area,whether on such Party's Parcel or the other Party's Parcel,due to any
intentional or unintentional misuse of such easement area(s)and such shall not be corrected by
the Party who caused such damage(the "Non-Performing Party"),then the other Party(the
"Performing Party")may give the Non-Performing Party written notice of such fact, and
thereupon the Non-Performing Party shall,within ten(10)working days of such notice,
commence the performance of the actions required and diligently pursue such actions to
604377.11/LA
J4008.002/12-1-03/mjk/rp -t t-
completion in a timely manner. Should the Non-Performing Party fail to fulfill this duty after
such notice, the Performing Party shall have the right and power,but not the obligation,to
perform such actions and the Non-Performing Party(subject,in the case of the City,to
Section 34 hereof)shall promptly reimburse the Performing Party for the cost of such work.
10. CASUALTY AND CONDEMNATION.
(a) Parking Structure Repair. In the event of any casualty to the Public
Parking Structure(including but not limited to acts of God,fire,earthquake,explosion or similar
occurrences)which results in damage or destruction to the Public Parking Structure(or any
portion thereof), Developer shall promptly restore, repair or rebuild such damaged portion to the
condition that existed immediately prior to the occurrence of such casualty pursuant to the
Construction Easement and the provisions of Article 6,proceeds of property/casualty insurance
for such damage shall be placed in a separate account held by the City and shall be made
available to Developer,or such contractor as may be agreed to by City and Developer,for the
purpose of reconstructing the Public Parking Structure on terms and conditions similar to those
in the Funding Agreement. Provided that City is in compliance with its insurance maintenance
obligations hereunder,and provided that the proceeds thereunder are available for the
reconstruction of the Public Parking Structure,Developer shall be responsible for all uninsured
costs of such reconstruction. To the extent that City was in default of-its obligations to maintain
insurance under this Agreement at the time of the destruction, then, subject to Section 34 hereof,
City shall be responsible for paying all costs of restoration,rebuilding and repair that would have
been covered by the insurance required to be maintained. All such restoration,repair and
rebuilding shall be performed in a good and workmanlike manner and shall conform to and
comply with, in all material respects, all applicable requirements, laws, codes,rules and
regulation of governmental agencies having jurisdiction thereof. Upon completion of
restoration,rebuilding and repair in accordance with the foregoing, excess insurance proceeds
shall be used by the City for the sole purpose of paying and redeeming Bonds of the District.
(b) Drivewa�Repair. In the event of any casualty to the easement areas
located on the Retail Parcel (including but not limited to acts of God, fire,earthquake, explosion
or similar occurrences)which results in damage or destruction to such easement areas(or any
portion thereof), Developer shall promptly restore,repair or rebuild such damaged portion to the
condition that existed immediately prior to the occurrence of such casualty, at its sole cost. All
such restoration,repair and rebuilding shall be performed in a good and workmanlike manner
and shall conform to and comply with, in all material respects,all applicable requirements, laws,
codes, rules and regulations of governmental agencies having jurisdiction thereof.
(c) Condemnation. In the event proceedings to take by eminent domain or
condemn the Parking Parcel or any portion thereof(including,without limitation,the Public
Parking Structure)are commenced(collectively,a "Taking"), City shall give immediate notice
thereof to Developer. In the event of a Taking,the Parties rights shall be as set forth below:
i. Complete Taking Prior to Commencement of Construction. If a
Taking occurs with respect to the whole of the Parking Parcel or if City shall grant a deed or
other instrument in lieu of such Taking prior to commencement of construction of the Public
Parking Structure prior to the issuance of bonds of the City for the District and prior to the
604377A 1/LA
J4008-002/12-1-03/mjk/rp -12-
commencement of construction of the Public Parking Structure, then Developer shall be entitled
to receive the entire award or payment in connection therewith(the "Proceeds"),except that City
shall have the right to file any separate claim available to City for(a)the Taking of any personal
property of City, (b)the Taking of the Land underlying the Parking Parcel, and
(c)reimbursement to City for any and all costs incurred as of such date relating to the
development of the Parking Parcel as contemplated hereunder, so long as such claim is payable
separately to City and does not diminish or otherwise adversely affect the Proceeds payable to
Developer hereunder.
ii. Partial Taking Prior to Commencement of Construction. In the
event of a partial Taking of the Parking Parcel prior to the issuance of bonds of the City for the
District and prior to commencement of construction of the Public Parking Structure,then City
shall deliver a quitclaim deed with respect to the Parking Parcel to Developer and assign to
Developer the right to receive all Proceeds in connection with such Taking(provided,however,
City shall have the right to file a separate claim for the matters which, in the case of the City,
shall include all amounts expended by the City in connection with construction of the Public
Parking Structure referred to in clause(i)(a)and (b) above), and upon delivery of such quitclaim
deed from City for recordation in the Official Records, City shall be relieved of any further
obligations under this Agreement.
iii. Complete Taking Following Issuance of the Bonds. If a Taking
occurs with respect to the whole of the Parking Parcel (including,without limitation,the Public
Parking Structure) or if City shall grant a deed or other instrument in lieu of such Taking at any
time after the issuance of bonds of the City for the District,then the Proceeds in connection
therewith shall be paid to the City,except that either Developer or City shall have the right to file
any separate claim available to such Party for any Taking of such Party's personal property and
fixtures belonging to such Party(including, in the case of Developer,Taking of Developer's right
to use the Private Retail Spaces), so long as such claim is payable separately to such Party.
Provided that Developer undertakes to promptly construct a replacement public parking structure
on another portion of the Retail Parcel or other real property in the vicinity of the Project
("Replacement Public Parking Structure"),the City's share of such condemnation proceeds
shall be placed in a separate account held by the City and shall be made available to Developer,
or such contractor as may be agreed to by City and Developer, for the purpose of constructing
the Replacement Public Parking Structure on terms and conditions similar to those in the
Funding Agreement. Provided that such condemnation proceeds are available for the
construction of the Replacement Public Parking Structure,Developer shall be responsible for all
uninsured costs of such construction. Upon completion of construction of the Replacement
Public Parking Structure in accordance with the foregoing,excess condemnation proceeds shall
be used by the City for the sole purpose of paying and redeeming Bonds of the District. Any
insurance proceeds remaining following completion of construction of the Replacement Public
Parking Structure in accordance with the foregoing and payment and redemption in full of the
Bonds of the District shall be the property of the City.
iv. Partial Taking,Following Issuance of the Bonds. If a Taking
occurs with respect to a portion of the Parking Parcel(including,without limitation,the Public
Parking Structure)that constitutes less than substantially all of the Public Parking Structure,or if
City shall grant a deed or other instrument in lieu of such Taking following the issuance of the
604377.1 MA
1400"2/12.1-03/mjldrp -13-
Bonds of the City for the District,then(A)Proceeds thereof shall be paid to City; (B)City's
obligation to provide the number of Private Retail Spaces set forth in Section 2(b)shall be
reduced to five percent(5%)of the remaining total number of spaces,and(C)either Developer
or City shall have the right to file any separate claim available to such Party for any Taking of
such Party's personal property and fixtures belonging to such Party(including, in the case of
Developer, Taking of Developer's right to use the Private Retail Spaces), so long as such claim is
payable separately to such Party. Provided that Developer undertakes to promptly construct a
Replacement Public Parking Structure,City's share of condemnation proceeds shall be placed in
a separate account held by the City and shall be made available to Developer,or such contractor
as may be agreed to by City and Developer, for the purpose of constructing the Replacement
Public Parking Structure on terms and conditions similar to those in the Funding Agreement.
Provided that such condemnation proceeds are available for the construction of the Replacement
Public Parking Structure,Developer shall be responsible for all costs of such construction in
excess of the amount of such condemnation proceeds. Upon completion of construction of the
Replacement Public Parking Structure in accordance with the foregoing,excess condemnation
proceeds shall be used by the City for the sole purpose of paying and redeeming Bonds of the
District. Any condemnation proceeds remaining following completion of construction of the
Replacement Public Parking Structure in accordance with the foregoing and payment and
redemption in full of the Bonds of the District shall be the property of the City.
11. DEVELOPER'S OPTION TO PURCHASE PUBLIC PARKING STRUCTURE
SITE.
(a) Grant of Option. In consideration of Developer's agreement to enter into
this Agreement, City hereby grants to Developer the exclusive right and option(the "Option")to
purchase the Parking Parcel for a purchase price equal to the fair market value of the Parking
Parcel at the time the option is exercised(the "Exercise Price")upon the terms and conditions
set forth more particularly set forth in this Section.
(b) _Conditions to Exercise of Option. Developer's right to exercise the Option
shall only be effective after the earliest to occur of the following(the "Exercise Date"): (i)the
date on which the CFD Financing has been fully paid and retired, or(ii) the date on which the
Public Parking Structure is no longer owned either by(A)City,or(B) other governmental entity.
(c) Determination of Fair Market Value of the Parking_Parcel. City and
Developer shall attempt in good faith to agree upon the Exercise Price. If Developer and City(or
City's successor-in-interest) fail to reach an agreement within ninety(90)days following the
Exercise Date(the "Outside Agreement Date"), then each Party shall submit to the other a
separate written determination of the fair market value of the Parking Parcel within ten(10)
business days after the Outside Agreement Date,and such determinations shall be submitted to
arbitration in accordance with the provisions below. The failure of City or Developer to submit a
written determination of the fair market value of the Parking Parcel within such ten(10)business
day period shall conclusively be deemed to be such Party's approval of the fair market value of
the Parking Right submitted within such ten(10)business day period by the other Party.
i. Developer and City shall each appoint one(1) arbitrator who shall
by profession be an independent real estate broker who shall have no ongoing relationship with
604377.1 ULA
J4009-002112-1-031miwrp -14-
either Party and who shall have been active over the five(5)year period ending on the date of
such appointment in the purchase and sale or financing of large retail projects in Orange County
or Los Angeles County. The determination of the arbitrators shall be limited solely to the issue
of whether City's or Developer's submitted fair market value of the Parking Parcel is the closer to
the actual fair market value of the Parking Parcel as determined by the arbitrators. Each
arbitrator shall be appointed within fifteen(15)days after the Outside Agreement Date.
ii. The two(2)arbitrators appointed shall, within fifteen(15)days of
the date of the appointment of the last appointed arbitrator, agree upon and appoint a third
arbitrator who shall be qualified under the same criteria set forth hereinabove for qualification of
the initial two(2)arbitrators.
iii. The three(3)arbitrators shall,within thirty(30)days of the
appointment of the third arbitrator, reach a decision as to which Party's submitted fair market
value of the Parking Parcel is closer to the actual fair market value of the Parking Parcel. The
three(3) arbitrators shall then select such closer determination as the fair market value of the
Parking Parcel and notify City and Developer thereof.
iv. The decision of the majority of the three (3)arbitrators shall be
binding upon City and Developer.
V. If either Party fails to appoint an arbitrator within the time period
specified above, the arbitrator appointed by one of them shall reach a decision, notify the Parties
thereof,and such arbitrator's decision shall be binding upon City and Developer.
vi. If the two(2)arbitrators fail to agree upon and appoint a third
arbitrator, within the time period provided above,then the Parties shall mutually select the third
arbitrator. If Developer and City are unable to agree upon the third arbitrator within ten(10)
days after the ten(10)day period described above,then either party may,upon at least five(5)
days'prior written notice to the other party,petition the Orange County Superior Court pursuant
to California Civil Code Section 1281.6,to appoint the third arbitrator. Following the
appointment of the third arbitrator,the panel of arbitrators shall within thirty(30)days thereafter
reach a decision as to which Party's submitted Fair market value of the Parking Parcel shall be
used as the Exercise Price and shall notify Developer and City thereof.
vii. The cost of the arbitrators and the arbitration proceeding shall be
paid by the party whose fair market value of the Parking Parcel was not selected by the
arbitrators.
(d) Closine. The closing of a purchase and sale of the Parking Parcel held
pursuant to this Section 11 shall be held through escrow within ninety(90) days following the
determination of the Exercise Price pursuant to Section I I(c)above. The Exercise Price for the
Parking Parcel shall be paid by Developer by delivering, at the closing through escrow,cash in
the amount of the Exercise Price. The Parking Parcel shall be conveyed free and clear of all
liens, encumbrances and other title matters other than those on title to the Parking Parcel as of
the date of acquisition thereof by the City or otherwise approved by Developer. The City shall
deliver to Developer,through escrow upon the closing, such grants deeds,bills of sale,
604377.1 ULA
J400M021 12-1-03rmjkhp -1 S-
assignments and other instruments of transfer and such evidence of due authorization,execution,
and delivery, and of the absence of any such liens,encumbrances and other title matters, as
Developer shall reasonably request. All costs associated with removing or curing unpermitted
title exceptions,and any legal fees incurred by the City shall be paid by the City. All escrow
charges,title premiums,recording fees, and other closing costs shall be paid by Developer.
12. DEVELOPER AS OPERATOR. During any period in which Developer or any
Affiliate of Developer is acting as operator of the Public Parking Structure, Developer waives
any right or remedy with respect to the breach by City of any obligation of City hereunder that
has been delegated to and assumed by Developer or such Affiliate of Developer.
13. DOMINANT AND SERVIENT TENEMENTS. Each easement and right granted
pursuant to the provisions of this Agreement is expressly for the benefit of the Retail Parcel or
the Parking Parcel, as the case may be,and the Parcel so benefited shall be the dominant
tenement and the Parcel upon which easement is located shall be the servient tenement.
Notwithstanding the preceding sentence,where only a portion of such Parcel is bound and
burdened,or benefited by a particular easement,only that portion so bound and burdened,or
benefited, as the case may be, shall be deemed to be the servient or dominant tenement, as the
case may be. Any easement granted pursuant to the provisions of this Agreement may be
abandoned or terminated only by an agreement in writing executed by the owners of the
dominant and servient tenements.
14. COVENANTS RUNNING WITH THE LAND. Each easement granted or
described herein,and every covenant of a Party contained herein, shall be deemed to be a
covenant running with the land,or in the alternative,an equitable servitude,affecting and
binding the servient tenement and successive owners thereof,and inuring to the benefit of the
dominant tenement and the successive owners thereof.
15. NO EASEMENT BY IMPLICATION, PREVENTION OF PRESCRIPTIVE
RIGHTS. Neither the execution of this Agreement or any instrument which may be executed in
connection herewith nor the granting of the easements described herein shall be deemed to grant
any other easement to any third party or to establish any easement by implication. The Parties to
this Agreement understand and agree that the only easements made and granted by the Parties
are those easements which are expressly made and granted by this Agreement. Each Party
hereby reserves the right to eject or cause the ejection from its Parcel any person not authorized,
empowered or privileged to use that Parcel. Further, each Party reserves the right to restrict
access to its Parcel for such reasonable period or periods of time as may be legally necessary to
prevent the acquisition of prescriptive rights by any person;provided,however, that prior to such
restriction of access the Party exercising that right shall give written notice to the other Party of
its intention to do so and shall coordinate such restriction of access with the other Party so that
no unreasonable interference with the operation of the other Party's Parcel shall occur. Nothing
contained herein shall be deemed to be a gift or dedication of any portion of either Parcel to the
general public or for the general public or for any public purpose whatsoever.
16. RECIPROCAL REPRESENTATIONS AND WARRANTIES. The following
constitute reciprocal representations and warranties of both City and Developer to the other
Party.
604377.1 ULA
J4008-002/12-1-03/mjWrp -16-
(a) Power. Each Party has the legal power,right and authority to enter into
this Agreement and the instruments referenced herein,and to consummate the transactions
contemplated hereby.
(b) Requisite Action. All requisite action(corporate,trust,partnership or
otherwise)has been taken by each Party in connection with the entering into this Agreement,the
instruments referenced herein,and the consummation of the transactions contemplated hereby.
Except as expressly described in this Agreement,no consent of any partner, shareholder,
creditor, investor,judicial or administrative body,governmental authority or other party is
required.
(c) Authori . The individuals executing this Agreement and the instruments
referenced herein on behalf of each Party and the partners,officers or trustees of such Party, if
any,have the legal power, right, and actual authority to bind such Party to the terms and
conditions hereof and thereof.
(d) Validi . This Agreement and all documents required hereby to be
executed by each Party are and shall be valid,legally binding obligations of and enforceable
against such Party in accordance with their terms,subject only to applicable bankruptcy,
insolvency,reorganization,moratorium laws or similar laws or equitable principles affecting or
limiting the rights of contracting parties generally.
17. LIMITATION ON PREPAYMENT OF SPECIAL TAX. Developer
acknowledges that the prepayment of the Special Tax(as defined in the Fiscal Agent Agreement)
prior to defeasance of the Bonds in full with respect to any sub-parcel within the Retail Parcel
may result in the expiration of the City's subsequent right to levy the Parking Structure
Maintenance Tax (as defined in the Operating Agreement) on such sub-parcel. Accordingly,
Developer agrees that,at all times prior to defeasance of the Bonds,neither it nor its successor or
assign with respect to any portion of the Project shall prepay the Special Tax with respect to any
portion of the Retail Parcel constituting less than the entire Retail Parcel,unless it provides the
City with reasonable assurances that the Parking Structure Maintenance Tax collectible from the
remainder of the Retail Parcel and the Parking Fund(as defined in the Operating Agreement),
will be sufficient to cover the reasonably estimated costs of operating and maintaining the Public
Parking Structure.
18. ATTORNEYS'FEES. In the event at any time during the term of this Agreement
any action or suit is brought by a Party against another Party hereunder by reason of any breach
of any of the covenants,agreements or provisions on the part of the other Party arising out of this
Agreement, then in that event the prevailing Party shall be entitled to have and recover of and
from the other party all costs and expenses of the action or suit,including actual attorneys'fees,
accounting and engineering fees, and any other professional fees resulting therefrom.
19. NOTICE TO PARTIES. All notices or other communications required or
permitted hereunder shall be in writing,and shall be personally delivered(including by means of
professional messenger or overnight courier service)or sent by fax showing confirmed receipt,
and shall be deemed received upon the date of receipt thereof.
604377.1 I/LA
J4008-002/12.1-03/mjk/rp -17-
To Developer: Huntington Center Associates,LLC
c/o J.H. Snyder Company
5757 Wilshire Boulevard,Penthouse 30
Los Angeles,California 90036
Attn: Mr. Michael Wise
Telephone: (323)857-5546
Facsimile: (323) 857-7042
With a copy to: Huntington Center Associates, LLC
c/o The Ezralow Company
23622 Calabasas Rd., Suite 100
Calabasas, CA 91302-1549
Attn:,Mr. Bryan Ezralow
Telephone: (818)223-3500
Facsimile: ((818)223-3536
and Allen Matkins Leck Gamble&Mallory LLP
515 S. Figueroa, Suite 700
Los Angeles, California 90071
Attn: Michael J. Kiely, Esq.
Telephone: (213)622-5555
Facsimile: (213)620-8816
To City: City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Attn: Director of Economic Development
Telephone: (714)536-5509
Facsimile: (714)375-5087
With copies to: City of Huntington Beach
2000 Main Street
Huntington Beach,California 92648
Attn: Scott F.Field,Esq.
Assistant City Attorney
Telephone: (714)536-5555
Facsimile: (714) 374-1590
Notice of change of address shall be given by written notice in the manner detailed in this
Section 19.
20. AMENDMENT. The provisions of this Agreement may be modified or amended,
in whole or in part,only with the consent of both Parties, by declaration in writing,executed and
acknowledged by all of the same,duly recorded in the Official Records of Orange County,
California(the "Official Records").
664377.1 I/LA
J4008-002/12.1-03/mjk/ry -18-
21. NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement are for
the exclusive benefit of the Parties, any Mortgagees and Permittees(as expressly provided
herein)of the Retail Parcel,and as to Section 34 for the intended benefit of the Agency, and of
their successors and assigns,and not for the benefit of any other party(ies),nor shall this
Agreement be deemed to have conferred any rights, express or implied,upon any other
party(ies). It is expressly understood and agreed that no modification or amendment, in whole or
in part, of this Agreement shall require any consent or approval of any third party(ies).
22. TERMINATION. Except as otherwise specifically provided in this Agreement,
the easements granted hereunder shall last in perpetuity,unless sooner terminated by written
agreement between the Parties which is recorded in the Official Records or until such earlier date
as the Developer exercises the option granted in Section 11.
23. ESTOPPEL CERTIFICATE. Each Party hereby severally covenants that upon
written request of the other Party, it will within twenty(20)days of such request,issue to such
other Party,or to any Mortgagee or any other party specified by such requesting Party, an
estoppel certificate stating: (i)whether the Party to whom the request has been directed knows
of any default under the Agreement,and if there are any known defaults, specifying the nature
thereof, (ii)whether to its knowledge the Agreement has been assigned, modified or amended in
any way(or if it has,then stating the nature thereof),and(iii)that to the Party's knowledge the
Agreement as of that date is in full force and effect. Such statement shall act as a waiver of any
claim by the Party furnishing it to the extent such claim is based upon facts contrary to those
asserted in the statement and to the extent the claim is asserted against a bona fide encumbrancer
or purchaser for value without knowledge of facts to the contrary of those contained in the
statement,and who has acted in reasonable reliance upon the statement. However, such
statement shall in no event subject the Party furnishing it to any liability whatsoever,
notwithstanding the negligence or other inadvertent failure of such Party to disclose correct
and/or relevant information.
24. NO PARTNERSHIP. Nothing contained in this Agreement, nor any acts of the
Parties, shall be deemed or construed to create any relationship of principal and agent, or of
partnership, or of joint venture, or of any association between the Parties.
25. PARTIAL INVALIDITY. If any term,provision or condition contained in this
Agreement or the application thereof to any person or circumstance shall, to any extent,be
invalid or unenforceable,the remainder of this Agreement,or the application of such term or
provision to persons or circumstances other than those as to which it is held invalid or
unenforceable,shall not be affected thereby, and each such term and provision of this Agreement
shall be valid and be enforced to the fullest extent permitted by law provided, however,if the
intent and purpose of the parties hereto is rendered unachievable due to such invalid term or
provision,then either party shall have the right to terminate this Agreement.
26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the successors and assigns of the Parties hereto. Notwithstanding
anything contained herein to the contrary, either Party may delegate all or any portion of its
respective rights and obligations under this Agreement to any third party, so long as such
assignee expressly assumes in writing the obligations of such delegating Party hereunder and
604377.11/LA
14008-002/12.1-03/mjk/rp -19-
such delegating Party remains principally liable for such assignee's performance under this
Agreement,except in the event that a Party sells its entire interest in its Parcel, in which case it
shall be relieved of any and all obligations under this Agreement from and after the time of
closing of any such sale provided such purchaser enters into an assumption agreement pursuant
to which such purchaser shall assume each of the assigning party's obligations hereunder.
27. MUTUAL COOPERATION. The parties recognize that, subject to the terms of
this Agreement,Developer retains the right to redevelop or further develop the Retail Parcel and
nothing in this Agreement is intended to limit or restrict such right so long as Developer is in
compliance with its obligations under this Agreement. The Parties agree that in the event
Developer elects to redevelop or further develop the Retail Parcel,then the Parties shall
cooperate with one another in all reasonable respects so as to allow for such development to
occur with minimal impact to the rights of the non-developing Party under this Agreement;
provided, however, in no event shall the non-developing Party be required to incur any material
cost or expense in connection with such cooperation. In the event(i)such development
cooperation causes City to incur additional costs and expenses with respect to the Public Parking
Structure and/or(ii)such development prevents City from fully realizing its rights under this
Agreement,then Developer shall reimburse City for any costs or expenses incurred by City as a
result of such development. Moreover,City agrees to reasonably cooperate with Developer's
construction and permanent lenders, including making such immaterial changes to this
Agreement which may be requested by Developer's construction and permanent lenders,so long
as such changes do not(i)increase City's obligations hereunder,or(ii) adversely effect or reduce
City's rights hereunder. With respect to those matters relating to the development of the Public
Parking Structure for which City's consent or approval is required, except where City is entitled
to withhold such consent or approval in its sole and absolute discretion, City agrees that it shall
exercise such consent or approval on a reasonable basis and with the understanding that the
Parties desire that the Project be a commercially viable project and that any bonds issued for the
District remain tax-exempt.
28. TIME OF ESSENCE. The Parties hereby acknowledge and agree that time is
strictly of the essence with respect to each and every term,condition,obligation and provision
hereof and that failure to timely perform any of the terns,conditions,obligations or provisions
hereof by either party shall constitute a material breach of and a non-curable(but waivable)
default under this Agreement by the party so failing to perform.
29. CONSTRUCTION. Headings at the beginning of each paragraph are solely for
the convenience of the Parties and are not a part of the Agreement. Whenever required by the
context of this Agreement,the singular shall include the plural and the masculine shall include
the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by
one of the parties,but rather as if both parties had prepared the same. Unless otherwise
indicated,all references to paragraphs and subparagraphs are to this Agreement. All exhibits
referred to in this Agreement are attached and incorporated by this reference. In the event the
date on which either Party is required to take any action under the terms of this Agreement is not
a business day,the action shall be taken on the next succeeding business day.
30. COUNTERPARTS. This Agreement may be executed in counterparts,each of
which shall be deemed an original,but all of which,together,shall constitute one and the same
604377.11/LA
14006-002/12-1-03/mjk/rp -20-
instrument. Signature pages may be detached from the counterparts and attached to a single
copy of this document to physically form one document.
31. GOVERNING LAW. The Parties acknowledge that this Agreement has been
negotiated and entered into in the State of California. The Parties expressly agree that this
Agreement shall be governed by, interpreted under,and construed and enforced in accordance
with the laws of the State of California.
32. NO EFFECT ON MORTGAGE. The Parties acknowledge and agree that any
default or breach by Developer of its obligations hereunder shall in no way defeat, affect,render
void or reduce in any way the rights of any Mortgagee of the Retail Parcel.
33. DISPUTE RESOLUTION.
(a) Any action or proceeding,whether in law or equity, to interpret or enforce
the provisions of this Agreement or to declare the rights and obligations of the parties hereto
shall be determined and conducted by the filing of a complaint in Orange County Superior Court
and immediate referral thereof to a reference with respect to all issues,whether fact or law, as
provided in California Code of Civil Procedure("CCP") Section 638(A). A referee shall be
selected in the manner set forth below. As provided for in CCP Section 645,any party may take
exception to and/or appeal from the decision of the referee in the same manner provided for
decisions of a court hearing a matter and rendering a judgment without a jury. Notwithstanding
anything to the contrary herein,each party shall have the right to seek temporary restraining
orders,preliminary injunctions and similar provisional and equitable relief in a court of
competent jurisdiction in the event of a material breach of the terms of this Agreement.
(b) The referee for any such reference shall be selected in the following
manner: the party initiating the proceeding("Initiating Party") shall nominate a proposed
referee from the Orange County Superior Court list of retired judges,who shall be independent
parties and shall so notify the other party of such choice. If the other party("Responding
Party")disagrees with the selection made by the Initiating Party,the parties shall endeavor to
agree upon another referee within ten(10)days ("Negotiation Period")following written notice
to the Responding Party from the Initiating Party of the Initiating Party's selection. In the
absence of an agreement between the parties within the Negotiation Period,the referee shall be
selected by the court in accordance with CCP Section 640.
(c) The referee's decision shall be made by application of statutory and
common law of the State of California,including without limitation the rules of evidence,to the
facts as found by the referee. The proceeding shall be transcribed by court reporter unless the
parties agree otherwise. The reference proceedings shall be held in Orange County,California
unless mutually agree otherwise. The cost of any fees or expenses incurred by the prevailing
party,including without limitation attorneys'fees, shall be included in the award to such
prevailing party.
(d) The parties shall have all rights of discovery in connection with the
reference proceedings as would be allowed and/or permitted in a case being heard under the
unlimited jurisdiction of the Orange County Superior Court.
604377.1 MA
J4008-002/12-1-03/mjk/rp -21-
34. LIABILITY OF CITY. Notwithstanding anything herein to the contrary, City
shall not have any liability or obligation of any kind under this Agreement in connection with
(i)the design or construction of the Public Parking Structure,(ii) land conditions that existed
prior to the construction of the Public Parking Structure,(iii)the operation,use, maintenance,
repair or replacement of the Public Parking Structure during any period in which Developer is
acting as a Qualified Operator,(iv)any failure by Developer to complete the Public Parking
Structure or otherwise make the Public Parking Structure available on or before any scheduled
date,or(v)any failure of the Public Parking Structure, as initially constructed by Developer,to
comply with any legal requirements relating to such construction. Notwithstanding anything
herein to the contrary,any and all monetary obligations of the City under this Agreement,
including,but not limited to, obligations pursuant to Sections I I(c)(vii)and 18 shall be payable
solely from any revenues derived by the City from the Public Parking Structure or from the
proceeds of the Parking Structure Maintenance Special Tax(after deduction for the costs of
collection and other administrative expenses) levied by the City on the District. In no event shall
the City's general fund be liable hereunder. Developer hereby waives and releases City from any
and all such liability or obligation. Developer shall indemnify and hold City, the Agency,and
their respective councilmembers,board members,commissioners,officers and employees
harmless from and against any claim(s),loss or other damage, including,but not limited to,
reasonable attorneys' fees and costs,arising out of or resulting from the matters described in
clauses(i)through(v)above.
[Signatures on following page]
W4377.1IILA
34008-002/12-1-03/mjk/rp -22-
IN WITNESS WHEREOF,the parties hereto have executed this Agreement as of the date
and year hereinabove written.
"Developer" HUNTINGTON CENTER ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: Huntington Management Ent., LLC,
a Delaware limited liability company,
its Manager
By: BMLF/Huntington, LLC,
a Delaware limited liability
company, its Manager
By:
Bryan Ezralow,Trustee of
the Bryan Ezralow 1994
Trust, its Manager
"City" CITY OF HUNTINGTON BEACH
By:
Mayor
ATTEST:
City Clerk
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Administrator City Attorney
604377.111LA
J4008.002/12-1-03/mjk/rp -23-
STATE OF )
ss.
COUNTY OF )
On ,before me, ,a Notary
Public in and for said state,personally appeared ,personally known
to me(or proved to me on the basis of satisfactory evidence)to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity,and that by his/her signature on the instrument,the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public in and for said State
604377.1 MA
J4008-002/12-1-03/mjk/rp -24-
STATE OF )
ss.
COUNTY OF )
On ,before me, ,a Notary
Public in and for said state,personally appeared ,personally known
to me(or proved to me on the basis of satisfactory evidence)to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity,and that by his/her signature on the instrument,the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public in and for said State
604377.1 I/LA
J4009-002/12-1-03/mjk/rp -25-
STATE OF_ )
ss.
COUNTY OF )
On ,before me, ,a Notary
Public in and for said state,personally appeared ,personally known
to me(or proved to me on the basis of satisfactory evidence)to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity,and that by his/her signature on the instrument, the person,or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public in and for said State
604377.11/LA
J4008-002/12-1-03/mjk/rp -26-
STATE OF )
ss.
COUNTY OF )
On ,before me, ,a Notary
Public in and for said state,personally appeared ,personally known
to me(or proved to me on the basis of satisfactory evidence)to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity,and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public in and for said State
604377.11/LA
]4008-002/12-1-03/mjk/hp -27-
STATE OF )
ss.
COUNTY OF )
On ,before me, , a Notary
Public in and for said state,personally appeared ,personally known
to me(or proved to me on the basis of satisfactory evidence)to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity,and that by his/her signature on the instrument,the person,or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public in and for said State
604377.11/LA
J4008-002/12.1-03/mjk/rp -28-
EXHIBIT "A"
LEGAL DESCRIPTION OF RETAIL PARCEL PROPERTY
Parcels 2 through 9 as shown on Parcel Map No. 86-200 filed in Book 255, pages 40-45,of
Parcel Maps in the Official Records of the County Recorder of Orange County, California,
EXCEPT those portions of Parcel A(being portions of said parcel 4 and 8)conveyed to the City
of Huntington Beach, a municipal corporation by deed recorded May 1, 1991 as Instrument No.
91-209426 of Official Records, AND FURTHER EXCEPTING [TO BE PROVIDED]
.11/LA
J4009-4008-002/12-1-03/mjk/rp EXHIBIT"A"
EXHIBIT "B"
LEGAL DESCRIPTION OF PARKING PARCEL PROPERTY
THAT CERTAIN PORTION OF Parcels_and shown on Parcel Map No. 86-200 filed in
Book 255,pages 40-45, of Parcel Maps in the Official Records of the County Recorder of
Orange County, California,more particularly described as follows:
[TO BE PROVIDED]
604377.11/LA
J4008-002/12-1-03/mjk/tp EXHIBIT"B"
LD 1018 SHEET 1 OF 2
02-100
LEGAL DESCRIPTION FOR
BELLA TERRA PARKING STRUCTURE
THE LAND BEING REFERRED TO HEREIN IS SITUATED IN THE CITY OF
HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA.
PARCEL "A"
BEING A PORTION OF PARCEL 2 AS SHOWN IN PARCEL MAP NO. 86-200,
RECORDED IN BOOK 255, PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF
ORANGE, DESCRIBED AS FOLLOWS:
BEGINNING AT THE EASTERLY TERMINUS OF THE NORTH LINE OF SAID
PARCEL 2, SHOWN AS "NORTH 89029'30" WEST 763.76 FEET" ON SAID
PARCEL MAP NO. 86-200, SAID POINT ALSO BEING ALONG THE
SOUTHERLY LINE OF THE SOUTHERN CALIFORNIA EDISON RIGHT OF
WAY (150.00 FEET IN WIDTH) PER GRANT DEED RECORDED IN BOOK
3675, PAGE 63 AND GRANT DEED RECORDED IN BOOK 3159, PAGE 483
BOTH OF OFFICIAL RECORDS; THENCE ALONG SAID LINE NORTH
89029'30" WEST A DISTANCE OF 67.51 FEET TO THE TRUE POINT OF
BEGINNING; THENCE DEPARTING SAID LINE SOUTH 00030'30" WEST A
DISTANCE OF 334.58 FEET; THENCE NORTH 89°29'30" WEST A DISTANCE
OF 135.12 FEET; THENCE SOUTH 70032'16" WEST A DISTANCE OF 4.39
FEET; NORTH 89029'30" WEST A DISTANCE OF 3.00 FEET; THENCE NORTH
00030'30" EAST A DISTANCE OF 126.75 FEET; THENCE NORTH 89°29'30"
WEST A DISTANCE OF 148.33 FEET; THENCE NORTH 00030'30" EAST A
DISTANCE OF 26.67 FEET; THENCE NORTH 89°29'30" WEST A DISTANCE
OF 109.65 FEET; THENCE SOUTH 75030'30" WEST A DISTANCE OF 9.34
FEET; THENCE NORTH 89°29'30" WEST A DISTANCE OF 7.25 FEET;
THENCE NORTH 00030'30" EAST A DISTANCE OF 185.08 FEET TO ABOVE
MENTIONED NORTH LINE; THENCE EASTERLY ALONG SAID LINE SOUTH
89029'30" EAST A DISTANCE OF 416.50 FEET TO THE TRUE POINT OF
BEGINNING.
CONTAINING AN AREA OF 2.33 ACRES MORE OR LESS.
CHRISTOPHER W. DANIELS
SHEET 2 OF 2
LD1018 - - - - - - - - - - - - - - - -
02-100 CENTER DRIVE
N89'29'30"W _ 534.08'
-
SOUTHERN CALIFORNIA EDISON RIGHT OF WAY T
BK. 3159,
PG 483 O.R. ) BK. 4519,
S'LY LINE OF THE N'LY 150' OF THE SOUTH 1/2 LO PG 491 O.R.
4 OF THE SOUTHEAST 1/4 OF SECTION 14
BK. 3675, PG. 63 O.R. - )
N89'29'30"W 763.76' _
416.50' 67.51'
T.P.O.B. P.O.B.
LO
- ao
L:; PARCEL "A" 00
2.33 AC = Lq
(
��- o ►' Lq
PARKING STRUCTURE
„ o
Z N00'30'30"E 1:=
L1 26.67'
N89'2 3'30"W o
L2 109.65' N89'29'30"W 148.33'
o ILA,
�— CI . .
o
� C.:
cc 'J•
\ ' o
M
0
M
0 4
z
VLN89'29'30"W
3
135.12'
P /1 "I
►-I /
LINE TABLE
LINE BEARING LENGTH
L1 N75'30'30"E 9.34
L2 N89'29'30"W 7.25
L3 N70'32'16"E 4.39
L4 N89'29'30"W 3.00
DATE: 09-24-03
Engineers/Planners/Surveyors EXHIBIT "B"
1920 MAIN STREET,SURE 850,IRVINE.CA 92614
® TEL(949)495-0777 FA%(949)48"779 SKETCH TO ACCOMPANY LEGAL DESCRIPTION
SCALE: 1" 80' 245E.WAR"SPRINGS ROAD,SUITE 111,LASVEGAS.NV99119
❑ TEL(702)86"604 FAx(702)9685695 FOR PARKING STRUCTURE
BELLA TERRA MALL HUNIINGTON BEACH, CA.
EXHIBIT B
STANDARDS OF MAINTENANCE
During the term of the Agreement and any extensions hereof;the Operator shall:
1. Clean and maintain all surfaces of the Public Parking Structure and keep such
surfaces level and evenly covered with the type of surfacing material originally installed
thereon, or such substitute thereof as shall be equal thereto in quality, appearance and
durability;
2. Remove all papers,debris,filth and refuse from the Public Parking Structure and
wash or thoroughly sweep paved areas;
3. Remove trash from trash receptacles and clean trash receptacles;
4. Clean, maintain, repair and replace entrance, exit and directional signs, traffic
control signage,markers and lights into and with the Public Parking Structure;
5. Keep the parking areas, stairways, elevators and other portions of the Public
Parking Structure well-lit from dusk each day until dawn at least during the applicable hours of
operation of the Public Parking Structure,and clean,relamp and reballast all lighting fixtures;
6. Maintain,repair and replace striping and curbing;
7. Maintain and replace as necessary the landscaping surrounding the Public
Parking Structure;
8. Maintain and repair the structure of the Public Parking Structure,as needed;
9. Repaint and refinish all painted and finished surfaces;
10. Clean, maintain and repair all stairs, stairwells and stairwell doors within the
Public Parking Structure;
11. Clean,maintain,repair and operate all elevators;
12. Maintain, repair and replace, if needed, all mechanical, electrical and utility
facilities and systems that are a part of or serve the Public Parking Structure,including,without
limitation, sprinkler and fire control systems, parking revenue control equipment, parking
access control equipment, security systems and equipment, mechanical venting systems,
lighting and emergency lighting systems,rollup doors and traffic barriers;
13. Making all repairs, improvements or alterations required to comply with
applicable laws;
RVPUB\KA&659574
C-1
14. Except to the extent maintained by a utility company, maintain the Utility
Facilities located within the Public Parking Structure, other than those which are owned by
Developer or are exclusively serving the Retail Parcel pursuant to the Developer Utilities
Easement;
15. Obtain and maintain the public liability insurance and property/casualty
insurance required in the Operating Agreement;and
16. Provide, or cause to be provided, reasonable security services within the Public
Parking Structure.
RVPUB\KA&659574
C-2
OPERATING AGREEMENT
FOR
HUNTINGTON CENTER PARKING STRUCTURE
THIS OPERATING AGREEMENT ("Agreement") is entered into as of December 15,
2003, between the CITY OF HUNTINGTON BEACH, a California charter city ("City"),
HUNTINGTON CENTER ASSOCIATES, L.L.C., a Delaware limited liability company
("Operator"), pursuant to a resolution adopted by the City Council of the City of Huntington
Beach at its meeting held on December 15,2003.
Recitals:
A. City will be the owner of a parking structure (the "Structure") to be constructed
on the site identified in Exhibit A hereto, which the City desires to utilize for public parking
purposes.
B. The Structure is being financed with bonds issued under the provisions of the
Mello-Roos Community Facilities Act of 1982, as amended, and Chapter 3.56 of the City's
Municipal Code,the interest on which is excluded from gross income under applicable Federal
tax law.
C. The City acquired the Structure subject to that certain Parking and Reciprocal
Easement Agreement and Option to Purchase,dated as of December 15,2003,and effective as of
its date of recordation (the"Reciprocal Easement Agreement").
D. City desires that Operator maintain and operate the structure consistent with the
Reciprocal Easement Agreement for the public purpose of the City to provide adequate public
parking and City and Operator wish to set forth their agreement as to the operation of the
Structure.
Agreement:
In consideration of the foregoing recitals and for other consideration the receipt and
sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows:
Section 1. Use. City authorizes Operator to operate the Structure, and Operator agrees
to use the Structure solely for the purpose of vehicular parking, and vehicular and pedestrian
ingress and egress, and for no other use or purpose. No portion of the Structure shall be used
for the sale of goods,wares,merchandise,services or other commercial purposes other than(a)
the display of advertising in, on, and about the Structure and (b) incidental uses such as pay
telephones and vending machines not occupying two percent (2%) or more of the floor area of
the Structure. Operator acknowledges that the use of the Structure is to provide adequate
public parking for the City. Operator acknowledges that no portion of the Structure,other than
the Private Retail Spaces (as defined in and designated pursuant to Section 2(a) of the
Reciprocal Easement Agreement), shall be reserved for parking by its employees or employees
of any other business. Operator shall make the Structure available to members of the general
RVPUB\KAB\659574
public, without preference or priority for any class of persons over any other class of persons
except as otherwise expressly provided herein. The Structure shall at all times be posted with
signs acceptable to the Operator and the City designating the Structure as"public parking."
Subject to the provisions of Section 19 of this Agreement,Operator shall(a)manage and
operate the Structure, (b) employ sufficient personnel for the operation of the Structure, (c)
maintain accounting records of all revenues and expenses related to the operation of the
Structure,and(d)periodically consult with the City regarding such operation. Operator agrees
to comply with all statutes, ordinances, rules, orders, regulations of federal, state, county and
city governments regulating the use by Operator of the Structure. Operator shall not use or
permit the use of the Structure in any manner that will create or tend to create a nuisance. The
hours of operation for the Structure shall be determined in Section 8 hereof and shall be
consistent with the purposes of the Reciprocal Easement Agreement.
The Operator acknowledges that the Structure shall be used for unrestricted free
parking,except for 5% of spaces as set forth in the Reciprocal Easement Agreement,and that the
City, in consultation with Operator, shall have the power to establish rates and charges for the
use of the Structure at a later date. In consideration of the foregoing, the Operator hereby
agrees to operate the structure in the manner described in Section 7(a) of the Reciprocal
Easement Agreement.
Section 2. Rates.Parking rates to be initially charged for the Structure shall be free. City
shall determine, from time to time, revisions to the rates to be charged for the Structure, in
consultation with the Operator and upon City's obtaining a parking rate study,which illustrates
the range of fees charged at competing parking facilities and shall advise the Operator in
writing of any changes to the Structure rates at least 30 days prior to the date any such change
becomes effective. Notwithstanding the foregoing,final determination of rates and charges for
the Structure shall be made by the City Council.
Section 3. Operator's Employees. All of Operator's employees and the employees of
any subcontractor of the Operator that operates the Structure as provided in Section 19 hereof,
shall, at all times while on duty at the Structure, wear standard uniforms, conduct themselves
with exemplary demeanor,be courteous and polite to the public and not engage in any raucous
or offensive conduct. The City shall be the sole judge, using reasonable discretion, as to
whether the conduct of the employees of Operator meets the requirements hereof and upon
notice from City of any non-conformity with these standards, Operator shall immediately take
all steps necessary to eliminate the condition complained of. Any laborers or employees
engaged by the Operator shall not be the employees of the City and the City shall in no any way
be liable for the payment of any wages or benefits to any such laborers or employees. Any such
laborers or employees shall in no way be third party beneficiaries of this Agreement.
Section 4. Operating Fee. City shall pay to Operator as its management fee for each
month of the term of this Agreement, a fee of$1,500.00, such amount to be increased on each
annual anniversary of the Commencement Date of this Agreement by a percentage increase
agreed to by he City and the Operator as reflective of the percentage increase during the
preceding year in the Consumer Price Index-Urban Wage Earners and Clerical Workers (Los
Angeles-Anaheim-Riverside, CA, All Items, Base 1982-84 = 100) as published by the United
RVPUB\KAB\659574
2
States Department of Labor, Bureau of Labor Statistics. In addition, City shall reimburse
Operator for those reasonable expenses and costs incurred by Operator in the performance of its
parking services ("Operating Expenses'). Such Operating Expenses shall include, without
limitation, the aggregate of: subcontractor fees and expenses, salaries and wages, health
insurance, uniforms, security guard service, supplies, signs, utilities, Structure maintenance,
public liability, garage keepers liability and other insurance (including but not limited to
insurance required by Section 10 of this Agreement and Section 7(b)'of the Reciprocal Easement
Agreement), and all other necessary and reasonable costs related to the provision of such
parking services by the Operator and/or any subcontractor thereof, provided, that such costs
are reasonable, and are not duplicative (in the event the Operator engages a subcontractor as
described in Section 19 hereof). Payroll taxes,workers' compensation insurance and sick leave
pay shall be reimbursed at the percentage of gross payroll as may be determined by the
Operator in accordance with applicable State and Federal laws. Operating Expenses shall not
include any of Operator's general overhead expense which shall include, but shall not be
limited to:
(a) Administrative and related costs and expenses incurred in the operation
of the Structure or the other operations of Operator, as they are incurred in the general
management of the affairs of Operator generally, including the monitoring of the
operation and management of Operator;
(b) Maintenance of the general books and records of Operator;
(c) Office supplies and equipment used by Operator which are not used
exclusively for the Structure;
(d) Postal,telephone and travel expense which are not directly related to the
management of the Structure;
(e) The cost of any managers or supervisors who are not employed at the
Structure on a full time basis;and
(f) Capital repairs required to be paid for by parties other than the City
pursuant to the Reciprocal Easement Agreement.
Within 30 days after the end of each month, Operator shall submit to City a reasonably
detailed written statement of the management fee earned and the Operating Expenses incurred
during the preceding month. lie City shall remit to Operator, within 30 days after City's
receipt of the statement,the amount invoiced on the statement. No delay in the delivery of such
written statement will affect the Operator's right to receive such amounts within 30 days of the
date such statement is actually delivered to the City. The management fee and all operating
expenses shall be payable solely from the Parking Fund, discussed in Section 5 below, and
proceeds of the "Parking Structure Maintenance Special Tax" collected from Community
Facilities District No. 2003-1 of the City of Huntington Beach (the "CFD") which have been
levied for the purpose of paying for the maintenance and operation of the Structure. No other
funds of the City shall be available to pay for the operation and maintenance of the Structure.
RVPUB\KAB\659574
3
Notwithstanding any other provision hereof,Operating Expenses shall not include,and
in no event shall the City be liable for payment of,any management fee of any subcontractor of
the Operator hereunder, but such limitation on liability of the City shall not prevent or in any
way restrict the Operator from using or assigning all or a portion of its management fee
described in the first sentence of this Section 4 for such purpose.
The City shall levy the Parking Structure Maintenance Tax on the taxable real property
within the CFD monthly, bi-monthly or semi-annually as determined by the Treasurer.
Section 5. Payment of Operating Revenues to City. Any revenues received by the
Operator in connection with the operations of the Structure(including any vending machine or
other incidental revenues, and any revenues from advertising or other promotions at the
Structure) shall be transferred by the Operator to the City as such funds are received, for
deposit in the"Parking Fund" to be established and maintained by the City for the benefit of the
City and the Operator. The Operator shall maintain records of all revenues so received, and
transferred to the City. The City shall maintain records of deposits to the Parking Fund.
Monies deposited in.the Parking Fund shall be applied first to the maintenance and operation of
the structure, second to the payment of cost of repairing and replacement of the Structure,and
third to the payment of the operating fee set forth in Section 4 hereof. City shall pay Operator
expenses billed solely from moneys deposited in the Parking Fund and such payment shall be
made 30 days from receipt of the invoice from the Operator. City shall provide Operator with
monthly statements showing income and expenses of the Parking Fund.
Section 6. Accounting and Budget Operator shall maintain, for a period of 36 months
from the date of mailing such statements to City, records of such gross revenues collected and
Operating Expenses disbursed in accordance with recognized accounting practices. Upon
reasonable notice to Operator, City or its designated agents may examine Operator's records
pertaining to the Structure,including amounts for maintenance.
Upon completion of the Structure and annually on each July 15 thereafter during the
term of this Agreement, Operator shall submit to City a proposed budget for the operation of
the Structure such proposed budget shall set forth the projected income, special taxes to be
levied and expenses to be incurred by Operator (the "Proposed Budget"). Each Proposed
Budget shall include both an annual aggregate budget for the structure and monthly budgets
for each calendar month during the applicable Fiscal year covered by the proposed Budget.
Each Proposed Budget shall be submitted in a form reasonably acceptable to City. Each
Proposed Budget shall be for planning and information purposes only and shall not be deemed
to be binding upon either Operator or City. Each such budget, prior to adoption and
implementation by Operator,shall require the written approval of City such approval not to be
unreasonably withheld or delayed. Any budget so approved by City shall become the budget
for the ensuing fiscal year and shall form the basis on which Operating Expenses are incurred in
that fiscal year. If the budget is not approved, then the budget effective the in the prior fiscal
year shall govern the operating costs of the Structure until a new budget is agreed upon by the
City and the Operator. The budget for any fiscal year may only be amended in writing,subject
to the written approval of City. Operator shall not incur any Operating Expenses which is in
excess of five percent(5%)of the annual amount allocated for that particular Operating Expense
line item in the budget, unless Operator has obtained the prior written approval of the City
RVPUB\KAB\659574
4
Administrator (or his designee), such approval not to be unreasonably withheld or delayed, or
such increased expenditure is otherwise authorized by this Agreement.
All financial statements submitted pursuant to the last sentence of Section 5 and this
Section 6 shall be certified as fairly representing the Structure's financial condition.
Section 7. Term of Agreement. This Agreement shall commence on the day the
Structure is cpen for parking by the general public and the City has issued a certificate of
occupancy (temporary or final) for the Structure (the "Commencement Date'), and shall
terminate on the earlier of(a)the date on which the City no longer owns the Structure,or(b)the
date which is fifteen(15)years after the Commencement Date.
Notwithstanding the foregoing, upon the termination of this Agreement, pursuant to
clause (b) above, the Developer irrevocably agrees to extend the term of this Agreement for an
additional fifteen years.
Section 8. Hours of Operation. Unless otherwise determined by the City in consultation
with Operator,and consistent with the Reciprocal Easement Agreement,the hours of operation
of the Structure shall be from 8 a.m. to 2 a.m. daily, and the City shall advise the Operator of
such hours and any change thereto.
Section 9. Indemnification. Operator expressly agrees to defend,protect,indemnify and
hold harmless the City and its officers, agents, elected and appointed officials, employees and
volunteers free and harmless from and against any and all claims, demands, damages,
expenses, losses,judgments or liability of any kind or nature whatsoever which City, and its
officers, agents,elected and appointed officials,employees and volunteers may sustain or incur
or which may be imposed upon them or any of them for injury to or death of persons or
damage to property arising out of or resulting from the alleged acts or omissions of Operator,
its officers, agents or employees or in any manner connected with this Agreement or with the
occupancy, use or misuse of the Structure by Operator, its officers, agents, employees,
subtenants or licensees, patrons or visitors; and Operator agrees to defend at its own cost,
expense and risk all claims or legal actions that may be instituted against either the City
(provided the City has timely tendered a request for a defense to Operator) and the Operator
agrees to pay any settlement entered into with Operator's consent and satisfy any final
judgment that may be rendered against the Operator or the City or any other party indemnified
by the Operator hereunder as a result of any injuries or damages which are alleged to have
resulted from or be connected with this Agreement or the occupancy or use of the Structure.
Notwithstanding the foregoing in no event shall the Operator or any such subcontractor
be obligated to indemnify the City for the City's intentional misconduct.
Section 10. Insurance.
A. Insurance. Prior to the first date on which the Structure is open for public parking,
Operator, or a subcontractor of Operator, shall procure and maintain insurance as set forth in
Section 7(b) of the Reciprocal Easement Agreement, which insurance shall be considered an
Operating Expense for purposes of Section 4 above, and shall remain in effect for the duration
RVPUB\KAB\659574
5
of this Agreement,including any extensions,renewals,or holding over thereof,from insurance
companies that are admitted to write insurance in the State of California or from authorized
nonadmitted insurers that have ratings of or equivalent to an A:VIII by A.M. Best Company.
Operator shall pay the premium on all insurance required herein in a prompt and timely
manner.
Operator acknowledges awareness of Section 3700 et seq. of the California Labor Code,
which requires every employer to be insured against liability for workers' compensation.
Operator covenants that it shall comply with such provisions prior to the commencement of this
Agreement. Operator shall obtain and furnish to City workers' compensation and employers'
liability insurance in amounts not less than the State statutory limits. Operator shall require all
sub-contractors to provide such workers' compensation and employers' liability insurance for
all of the sub-contractors' employees. Operator shall furnish to City a certificate of waiver of
subrogation under the terms of the workers' compensation and employers' liability insurance
and Operator shall similarly require all sub-contractors to waive subrogation.
The requirements hereunder for insurance coverage shall not diminish Operator's
obligations to defend,hold harmless and indemnify set forth in this Agreement.
B. Subcontractors. So long as a subcontractor of the Operator maintains insurance in
compliance with the provisions of this Section,the Operator shall not be required to obtain such
insurance (except to the extent required by applicable law, such as worker's compensation
insurance as described in Section 10.A.above).
C. Self-insurance and deductibles. Any self-insurance program, self-insured retention
or deductible must be reasonably approved separately in writing by City and shall protect the
City and its officials,employees,and agents in the same manner and to the same extent as they
would have been protected had the policy or policies not contained such self-insurance or
deductible provisions.
D. Cancellation: severability of interests: primary and noncontributing. Each insurance
required hereunder shall be endorsed to provide as follows: (i) that coverage shall not be
voided,canceled or changed by either party except after thirty(30) days prior written notice to
City, (ii) that the insurance shall apply separately to each insured against whom claim is made
or suit is brought, except with respect to the limits of the insurer's liability; and (iii) and that
coverage shall be primary and not contributing to any other insurance or self-insurance
maintained by City and its officials,employees,or agents.
E. Delivery of insurance documentation Prior to the commencement of public parking
in the Structure, Operator shall deliver to City certificates of insurance and the endorsements
required hereunder for approval as to sufficiency and form, including the certificates of
insurance and endorsements of any subcontractor to Operator. The certificates and
endorsements for each insurance policy shall contain the original signature of a person
authorized by that insurer to bind coverage on its behalf. In addition, Operator shall, at least
fifteen (15) days prior to expiration of such policies, furnish City with.evidence of renewals.
City reserves the right to require complete certified copies of all said policies at any time. City,
RVPUB\KAB\659574
6
or its representatives, shall have the right to demand the original or a copy of any or all of the
policies of insurance required in this Agreement.
F. No limitation of liability. Such insurance as required herein shall not be deemed to
limit Operator's liability relating to performance under this Agreement. The procuring of
insurance shall not be construed as a limitation on liability or as full performance of the
indemnification and hold harmless provisions of this Agreement. Operator understands and
agrees that, notwithstanding any insurance, Operator's obligation to defend, indemnify, and
hold City, and its officials, agents, and employees harmless hereunder is for the full and total
amount of any damage,injuries,loss,expense,costs,or liabilities caused by the condition of the
Structure or in any manner connected with or attributed to the acts or omissions of Operator,its
officers, employees, agents, or subcontractors, or the operations conducted by or on behalf of
Operator, or the Operator's use, misuse, or neglect of the Structure, all as more particularly
provided in Section 9 above.
G. Books and records. Operator agrees to make available to City all books,records,and
other information relating to the insurance coverage required by this Agreement during normal
business hours.
H. Amendments to the insurance provisions.
(1) Not more frequently than every year, if in the reasonable opinion of City's
Risk Manager or designee, based on practices in other publicly owned parking
structures at or adjacent to large retail facilities in Southern California, the amount or
scope of the foregoing insurance coverages is not adequate,Operator shall,to the extent
any additionally required coverage is available at commercially reasonable rates,amend
its insurance coverage and/or, if applicable, require its subcontractors to amend heir
insurance coverage,as reasonably required by City's Risk Manager or designee.
(2) Any modification or waiver of the insurance requirements herein shall be
made only with the written approval of the City's Risk Manager or designee.
Section 11. Assignment Operator covenants that it will not assign, transfer, convey,
sublet, sell, mortgage, pledge, or encumber this Agreement, the Structure or any part of it, or
any rights of Operator under this Agreement,whether voluntary or by operation of law,except
upon written consent of City which consent shall not be unreasonably withheld or delayed;
provided that no such consent shall be required for an assignment by the Operator to an entity
which is a successor to the"Developer" under(and as such term is defined in) the OPA.
Section 12. Surrender of Possession. Upon termination of this Agreement, any
improvements constructed or installed at the Structure shall become the property of the then
owner of the Structure,and Operator shall surrender to such owner the Structure in good order,
condition and repair except for ordinary wear and tear and casualty damage. Operator will be
required to remove all personal property prior to the termination of this Agreement unless
other arrangements are made with and approved by the then owner of the Structure. Operator
agrees that City will have, without prior notice, the right to sell or otherwise dispose of any
RVPUB\KAB\659574
7
personal property belonging to Operator which has been left at the Structure after Operator has
vacated the Structure.
Section 13. Defaults of Operator;Remedies Upon Default. Operator agrees that:
(a) If Operator shall be in default in the payment of any sum due from it to City
pursuant to this Agreement for ten(10)days after written demand shall have been made
therefor by City;or
(b) If Operator shall neglect, violate, be in default under, of fail to perform or
observe any of the other covenants, agreements, terms or conditions contained in this
Agreement on its part to be performed and shall not have remedied, or commenced
action which will promptly remedy same which action is thereafter diligently pursued,
within thirty (30) days after written notice thereof given by City, or if such violation or
default cannot reasonably be remedied in such period and Operator commences to cure
such default within such thirty (30) day period, such additional time as the City
determines is reasonably necessary to complete such remedy but not more than one
hundred twenty(120) days;or
(c) If the Operator shall fail to operate the premises for any forty-eight(48)hour
period;
then at the option of the City, (x) this Agreement and the term hereof shall, upon the date
specified in a written notice given by City to Operator setting forth the nature of such default
breach,matter,or condition,be terminated and City may recover possession of the Structure,or
(y) the City may keep this Agreement in effect and pursue all other legal remedies available to
City,including specific performance.
Section 14. Independent Contractor. It is expressly acknowledged that Operator shall
be an independent contractor with respect to all services performed under this Agreement and
Operator agrees to and accepts full and exclusive liability for the payment of any and all
contributions or taxes for social security, unemployment insurance, or old age retirement
benefits, pensions, or annuities now or later imposed under any state or federal law which are
measured by the wages,salaries,or other remuneration paid to persons employed by Operator
on work performed under the terms of this Agreement,and further agrees to obey all rules and
regulations which are now,or later may be,issued or promulgated under these respective laws
by any duly authorized state or federal officials; and Operator shall indemnify and save
harmless City from any such contributions or taxes or liability therefor.
Section 15. Maintenance and Security of Facility. Operator shall be responsible for the
maintenance of the Structure at a level consistent with the Standards of Maintenance in Exhibit
B hereto and the Reciprocal Easement Agreement. Operator shall also be responsible for
providing security upon or about the Structure and the premises through a subcontract with a
licensed security company (the City agrees to accept any security company selected by the
Operator in good faith that is providing security services for other improvements in the area of
the Structure). The security company and the contract shall be reasonably approved in writing
by City and the company so employed shall hold Operator and City harmless with respect to its
RVPUB\KAB\659574
8
a
activities. Operator shall be responsible for securing access to and from the facilities in
accordance with written operating policies and procedures to be mutually agreed upon from
time to time and be responsible for monitoring the security service contract as to hours worked
and level of service.
Section 16. Property Rights;Access to the Structure. No property rights in the Structure,
or right of possession thereof,is granted by this Agreement. However,and in accordance with
California Revenue and Taxation Code Section 107.6(a), the City advises the Operator that by
entering into this Agreement, a possessory interest subject to property taxes may be created,
and the Operator or other party in whom the possessory interest is vested may be subject to the
payment of property taxes levied on such interest. Notwithstanding the foregoing, it is the
intent of the City and the Operator that this Agreement shall in no way create a possessory
interest of the Operator in the Structure for purposes of possessory interest taxes under
California Revenue and Taxation Code Section 107.6(a) and that any interest conveyed
hereunder not be subject to any possessory interest, ad valorem or any other similar tax
imposed by the State or any other governmental entity.
The Operator agrees that any authorized representative of the City shall have the right
at all reasonable times to enter upon and to examine and inspect the Structure. The Operator
further agrees that any such authorized representative shall have such rights of access to the
Structure as may be reasonably necessary to cause the proper maintenance of the Structure in
the event of failure by the Operator to perform its obligations hereunder.
Section 17. Remedies Will Be Cumulative. All rights and remedies of City enumerated
will be cumulative and none will exclude any other right or remedy allowed by law. Likewise,
the exercise by City of any remedy provided or allowed by law will not be the exclusion of any
other remedy.
Section 18. Limitation of City Liability. Any and all monetary obligations of the City
under this Agreement shall be payable solely from any revenues derived by the City from the
Structure or from the proceeds of the Parking Structure Maintenance Special Tax. In no event
shall City's general fund be liable hereunder.
Section 19. Waiver. One or more waivers of any covenant, term or condition of this
Agreement by either party will not be construed by the other party as a waiver of subsequent
breach of the same covenant,term or condition. The consent or approval of either party to or of
any act by the other party of a nature requiring consent or approval will not be deemed to
waive or render unnecessary consent to or approval of any subsequent similar act.
Section 20. Subcontracts. Operator shall have the right to engage a subcontractor to
conduct the physical operation of the Structure. Any such entity shall be subject to the prior
written approval of the City, such approval not to be unreasonably withheld or delayed,
provided that the City may base its approval or denial,in part,on the financial condition of the
subcontractor in light of the provisions of the second paragraph of Section 10 hereof.
Section 21. Anti-Discrimination Operator agrees that this Agreement is made and
accepted on and subject to the following conditions: That there will be no discrimination
RVPUB\KAB\659574
9
against or segregation of any person or group of persons, on account of race, color, religion,
national origin, sex, sexual orientation, AIDS, AIDS-related condition, age, marital status,
disability or handicap, or Vietnam Era veteran status in the leasing, subleasing, transferring,
use,occupancy,hiring,employment,tenure or eryoyment of the Structure,nor will Operator or
any person claiming under or through it establish or permit any practice or practices of
discrimination or segregation with reference to the Structure.
Section 22. Attorneys' Fees. In the event that either party fails to comply with any of the
terms of this Agreement and the other party commences legal proceedings to enforce any of the
terms of this Agreement, the prevailing party in any such suit will receive from the other
attorneys' fees including applicable court costs.
Section 23. Notices. Any and all notices to be given under this Agreement or required
by law to be served on either of the parties may be given by first-class mail deposited in the
United States mail,postage prepaid,addressed as follows:
To City: City of Huntington Beach
P.O.Box 190
2900 Main Street
Huntington Beach,CA 92648
Attention:Economic Development Department
with a copy to: City of Huntington Beach
P.O.Box 190
2900 Main Street
Huntington Beach,CA 92648
Attention:City Attorney
To Operator: Huntington Center Associates LLC
5757 Wilshire Blvd.,Penthouse 30
Los Angeles,CA 90036
Attention:Mike Wise
With a copy to: Allen Matkins Leck Gamble&Mallory LLP
515 South Figueroa,7h Floor
Los Angeles,CA 90071-3398
Attn: Michael J. Kiely,Esq.
Any notices may be personally served on the party to be given notice. Any notice
served by means of the United States mail will be effective three business days from the date of
mailing.
Section 24. Execution.This Agreement may be simultaneously executed in any number
of counterparts, each of which when so executed shall be deemed to be an original, but all
together shall constitute but one and the same Agreement.
RVPUB\KAB\659574
10
Section 25. Validi . If any one or more of the terms,provisions,promises,covenants,
conditions or option provisions of this Agreement shall to any extent be adjudged invalid,
unenforceable, void or voidable for any reasons whatsoever by a court of competent
jurisdiction, each and all of the remaining terms, provisions, promises,covenants, conditions,
and option provisions of this Agreement shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
Section 26. Amendments. This Agreement may only be amended in writing executed
by both of the parties hereto.
RVPUB\KAB\659574
11
Section D. Entire Agreement. It is understood that there are no oral agreements
between the parties affecting this Agreement, and this Agreement supersedes and cancels any
and all previous negotiations and understanding, if any, between the parties and none will be
used to interpret or construe this Agreement.
OPERATOR:
HUNTINGTON CENTER ASSOCIATES, LLC,
a Delaware limited liability company
By: Huntington Management Ent., LLC,
a Delaware limited liability
company,
Its Manager
By: BMLF/Huntington, LLC,
a Delaware limited liability
company,
Its Manager
By:
Bryan Ezralow,
Trustee of the Bryan
Ezralow 1994 Trust,
Its Manager
ATTEST: CITY OF HUNTINGTON BEACH
By:
City Clerk Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Administrator City Attorney
RVPUB\KAB\659574
12
EXHIBIT B
STANDARDS OF MAINTENANCE
During the term of the Agreement and any extensions hereof;the Operator shall:
1. Clean and maintain all surfaces of the Public Parking Structure and keep such
surfaces level and evenly covered with the type of surfacing material originally installed
thereon, or such substitute thereof as shall be equal thereto in quality, appearance and
durability;
2. Remove all papers,debris,filth and refuse from the Public Parking Structure and
wash or thoroughly sweep paved areas;
3. Remove trash from trash receptacles and clean trash receptacles;
4. Clean, maintain, repair and replace entrance, exit and directional signs, traffic
control signage,markers and lights into and with the Public Parking Structure;
5. Keep the parking areas, stairways, elevators and other portions of the Public
Parking Structure well-lit from dusk each day until dawn at least during the applicable hours of
operation of the Public Parking Structure,and clean,relamp and reballast all lighting fixtures;
6. Maintain,repair and replace striping and curbing;
7. Maintain and replace as necessary the landscaping surrounding the Public
Parking Structure;
8. Maintain and repair the structure of the Public Parking Structure,as needed;
9. Repaint and refinish all painted and finished surfaces;
10. Clean, maintain and repair all stairs, stairwells and stairwell doors within the
Public Parking Structure;
11. Clean,maintain,repair and operate all elevators;
12. Maintain, repair and replace, if needed, all mechanical, electrical and utility
facilities and systems that are a part of or serve the Public Parking Structure,including,without
limitation, sprinkler and fire control systems, parking revenue control equipment, parking
access control equipment, security systems and equipment, mechanical venting systems,
lighting and emergency lighting systems,rollup doors and traffic barriers;
13. Making all repairs, improvements or alterations required to comply with
applicable laws;
RVPLJB\KAB\659574
C-1
14. Except to the extent maintained by a utility company, maintain the Utility
Facilities located within the Public Parking Structure, other than those which are owned by
Developer or are exclusively serving the Retail Parcel pursuant to the Developer Utilities
Easement;
15. Obtain and maintain the public liability insurance and property/casualty
insurance required in the Operating Agreement;and
16. Provide, or cause to be provided, reasonable security services within the Public
Parking Structure.
RVPUB\KAB\659574
C-2