HomeMy WebLinkAboutFRANCHISE TAX BOARD EXEMPTION APPLICATION - Civic Improvemen RDF25
CITY OF HUNTINGTON BEACH
CIVIC IMPROVEMENT CORPORATION
Franchise Tax Board Exemption Application
Under Revenue & Taxation Code §23701 u
Schedule of Transcript Documents
1. Franchise Tax Board Form 3500 - Exemption Application, together with evidence of
receipt by the Franchise Tax Board.
2. Determination Letter of the Franchise Tax Board.
no role in the financing except to provide a legal means to own and lease property and to
create and assign legal rights.
The certificates of participation referred to below are being delivered to finance the
acquisition by the Corporation, pursuant to the enclosed Acquisition Agreement and Grant
Deed, certain real property and the improvements existing thereon, which are located in
the City and which serve essential governmental functions of the City. The proceeds of
the sale of the certificates of participation have been deposited by the trustee bank into the
funds and accounts established under the enclosed Trust Agreement.
The Corporation has entered into a Lease Agreement with the City (a copy of which
is enclosed), whereby the Corporation leases the Project described in such Lease
Agreement to the City. The Project consists of the acquisition, construction, improvement
and equipping of a civic center complex, enabling the City to provide better services to the
residents of the City and surrounding areas. The Project will be operated and maintained
by the City.
The Corporation has assigned its rights to receive lease payments to the trustee
bank pursuant to the terms of an Assignment Agreement (a copy of which is enclosed).
The Corporation has assigned such rights to the trustee bank in order to enable the
trustee bank to execute and deliver the aforementioned certificates of participation.
. The proceeds of the certificates of participation will be administered by the trustee
bank pursuant to the terms of the enclosed Trust Agreement.
The Corporation will have no revenues, liabilities or activities except as described
above. The Corporation may undertake similar transactions in the future for other
improvements desired by City and such transactions may be on either a lease or sale
basis. These activities benefit and contribute to the City, enabling the City to avoid paying
fees and higher costs charged by leasing companies operating on a profit-making basis to
the detriment of the City.
Question 9(g)
Please see Question 9(f) above. Enclosed are copies of the Acquisition
Agreement, Grant Deed, Lease Agreement, Assignment Agreement and Trust Agreement
referenced in Question 9(f).
Question 9(h)
The Corporation has engaged in no activities which have been discontinued.
Question 9(i)
Copies of the Acquisition Agreement, Grant Deed, Lease Agreement, Assignment
Agreement and Trust Agreement referenced in Questions 9(f) and 9(g) above are
enclosed.
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Qugstion 90)
The Corporation does not sell or distribute any literature and the Corporation does
not advertise.
Question 9(k)
The Corporation is requesting an exemption under Revenue and Taxation Code
Section 23701 u as an organization operated for social welfare purposes. The
Corporation's assets are dedicated, pursuant to Section VI(B) of its Articles of
Incorporation and Section IV(2) of its Bylaws, in the event of its dissolution to the City, the
United States of America, the State of California, or any political subdivision thereof, or to
a nonprofit fund, foundation or corporation which is organized and operated exclusively for
charitable or social welfare purposes and which has established its tax-exempt status
under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended.
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tote of California
4ANCHISE TAX BOARD
750 Business Park Drive, Suite 214
&c• Pnto, California 95827-1702 ,
April 30, 1987 _ In reply refer to
344:PTS:jw
City of Huntington Beach Civic
Improvement Corporation
c/o Alicia M. Wentworth
2000 Hain Street
Huntington Beach, CA 92648
Corporate Number: 1537928
In a letter dated November 10, 1986, we determined that the City of
Huntington Beach Civic Improvement Corporation was an agency of the
city and therefore not subject to the California income or franchise
taxes.
"�wever, this department has now taken the position that this
aanization and all similar organizations cannot be considered to be
agencies or instrumentalities of government since arranging financing
to construct facilities for public agencies through issuing
•certificates of participation" is not normally a function of
government. The department further holds that such organizations would
not qualify for exemption from tax under Section 23701f or any other
subsection of Section 23701 of the California Revenue and Taxation
Code. Consequently, our original determination that your organization
is a public .body is hereby revoked.
Since the organization is already incorporated, it will be required to
iile Form 100, Corporation Franchise Tax Return, within 2 months and 15
days after the close of each annual accounting period and pay at least
the annual minimum franchise tax of $200.
Peter T. Shek, Tax Auditor
Exempts and Special Tax Unit
General Audit Section
Telephone (916) 369-4171
f - 4TON93 State of California
FRANCHISE TAX BOARD /- D/ /Vk1,'i/C--
"---ramento, California 95667
November 10, 1986 In reply refer to
344 :PTS: jv :d:344A
City of Huntington Beach Civic
Improvement Corporation
c/o Alicia M. Wentworth
2000 Main Street
Huntington Beach, CA 92648
Application for Exemption from Ta*
Corporate Number 1537928
We have reviewed the application for exemption from tax of the
above-named organization under Section 23701f of the Revenue and
Taxation Code.
Bayed on the information presented in the exemption application, we
have determined that the City of Huntington Beach Civic Improvement
Corporation is an agency of the City of Huntington Beach and is
operating for public purposes.
There is no provision in the California Revenue and Taxation Code that
authorizes the Franchise Tax Board to grant tax exemption to an
operation supported and controlled by the courts or a political
subdivision. In Housing Authority of Los Angeles County v. Dockweiler
14 C 2d, 437 ( 1939) , the court determined that public bodies are not
required to pay either income or franchise taxes since such taxes do
not apply to those agencies.
Therefore, we are taking no further action on your exemption
application other than to notify you of your organization 's status as
explained above. Please contact this office if there are any
questions.
J tr1
L
Peter T. Shek, Tax Auditor
Exempts and Special Tax Unit
General Audit Section
Telephone (916) 369-4171
R.V
nternal Revenue Service Department of the Treasury
District Director
AN23 �
P 0 Box 2350 Room 5137
Los Angeles, CA 90053
Employer Identification Numbers
33-0200536
Date: JAN. 16, 1987 Case Number:
956325017
CITY OF HUNTINGTON BEACH CIVIC Contact Persons
C/O CHARLES F ADAMS ESO KNIGHT, EARL
JONES HALL HILL S WHITE A PROF CORP Contact Telephone Number:
4 EMBARCAOERO CTR STE 1950 (213) 694-4553
SAN FRANCISO, CA 94111
Internal Revenue Code
Section 501(c) (4)
Accounting Period Endings
June 30
Form 990 Required:
Yes
Caveat Applies:
Yes
Dear Applicant:
Based on information supplied, and assuming your operations will be as
stated in your application for recognition of exemption, we have determined
you are exempt from Federal income tax under the provisions of the Internal
Revenue Code section indicated above.
Unless specifically excepted, you are liable for taxes under the Federal
Insurance Contributions Act (social security taxes) for each employee to whom
you pay $100 or more during a calendar year. And, unless excepted, you are
also liable for tax under the Federal Unemployment Tax Act for each employee
to whom you pay $50 or more during a calendar quarter if, during the current
or preceding calendar year, you had one or more employees at any time in each
of 20 calendar weeks or you paid wages of $19500 or more in any calendar
quarter. If you have any questions about excise, employment or other Federal
taxes, please address them to this office.
If your purposes, character, or method of operation change, please let us
know so we can consider the effect of the change on your exempt status. Also,
you should inform us of all changes in your name and address.
The heading of this letter indicates whether you must file Form
990, Return of Organisation Exempt from Income Tax. If Yes is indicated,
you are only required to file Form 990 if your gross receipts each year
are normally more than $25,000. If a return is required, it swat be
filed by the 15th day of the fifth month after the end of your wwwal
.accounting period. The law provides for a penalty of $10 a day, up to a
-maximum of $59000, «hen a return is filed late, unless there is reasonable
cause for the delay. This penalty may also be charged if a return la Shot
complete. So please make sure your return is complete before you file it.
You are not required to file Federal income_ tax returns unless you are
'• 'sub,ject to the tax on unrelated business income under section 511 of the
Letter 948(CG)
endorsement or otherwise, in form approved by the Trustee, as to such action. In that
case, upon demand of the Owner of any Certificate Outstanding at such effective date and
presentation of his Certificate for the purpose at the corporate trust office of the Trustee, a
suitable notation shall be made on such Certificate. The Trustee may determine that the
delivery of substitute Certificates, so modified as in the opinion of the Trustee is necessary
to conform to such Certificate Owners' action, which substitute Certificates shall thereupon
be prepared, executed and delivered. In that case, upon demand of the Owner of any
Certificate then Outstanding, such substitute Certificate shall be exchanged at the
corporate trust office of the Trustee, without cost to such Owner, for a Certificate of the
same character then Outstanding, upon surrender of such Outstanding Certificate.
Section 9.06. Amendatory Endorsement of Certificates. The provisions of this
Article IX shall not prevent any Certificate Owner from accepting any amendment as to the
particular Certificates held by him, provided that proper notation thereof is made on such
Certificates.
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ARTICLE X
COVENANTS; NOTICES
Section 10.01. Compliance With and Enforcement of Lease Agreement. The City
covenants and agrees with the Owners of the Certificates to perform all obligations and
duties imposed on it under the Lease Agreement. The Corporation covenants and agrees
with the Owners of the Certificates to perform all obligations and duties imposed on it
under the Lease Agreement.
The City will not do or permit anything to be done, or omit or refrain from doing
anything, in any case where any such act done or permitted to be done, or any such
omission of or refraining from action, would or might be an event of default under or a
ground for cancellation or termination of the Lease Agreement. .The Corporation and the
City, immediately upon receiving or giving any notice, communication or other document
in any way relating to or affecting their respective estates, or either of them, in the Project,
which may or can in any manner affect such estate of the City, will deliver the same, or a
copy thereof, to the Trustee.
Section 10.02. Observance of Laws and Regulations. The City will well and truly
keep, observe and perform all valid and lawful obligations or regulations now or hereafter
imposed on it by contract, or prescribed by any law of the United States, or of the State, or
by any officer, board or commission having jurisdiction or control, as a condition of the
continued enjoyment of any and every right, privilege or franchise now owned or hereafter
' acquired by the City, including its right to exist and carry on business as a municipal
corporation, to the end that such rights, privileges and franchises shall be maintained and
preserved, and shall not become abandoned, forfeited or in any manner impaired.
Section 10.03. Prosecution and Defense of Suits. The Corporation and the City
shall promptly, upon request of the Trustee or any Certificate Owner, from time to time
take such action as may be necessary or proper to remedy or cure any defect in or cloud
upon the title to the Project, whether now existing or hereafter developing and shall
prosecute all such suits, actions and other proceedings as may be appropriate for such
purpose and shall indemnify and save the Trustee and every Certificate Owner harmless
from all loss, cost, damage and expense, including attorneys' fees, which they or any of
them may incur by reason of any such defect, cloud, suit, action or proceeding.
Section 10.04. Recordation and Filing. The City shall record and file the Lease
Agreement, the Assignment Agreement and all such documents as may be required by
law (and shall take all further actions which may be necessary or be reasonably required-
by the Trustee), all in such manner, at such times and in such places as may be required
by law in order fully to preserve, protect and perfect the security of the Trustee and the
Certificate Owners.
Section 10.05. No Federal Guarantee. The Corporation and the City shall take no
action nor permit nor suffer any action to be taken if the result of the same would cause
the Lease Payments or the Certificates to be a federally guaranteed obligation within the
meaning of Section 103(h) of the Tax Code.
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Section 10.06. Further Assurances. The Corporation and the City will make,
execute and deliver any and all such further resolutions, instruments and assurances as
may be reasonably necessary or proper to carry out the intention or to facilitate the
performance of this Agreement and the Lease Agreement, and for the better assuring and
confirming unto the Owners of the Certificates the rights and benefits provided herein.
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ARTICLE XI
LIMITATION OF LIABILITY
Section 11.01. . Limited Liability of City. Except for the payment of Lease Payments
when due in accordance with the Lease Agreement and the performance of the other
covenants and agreements of the City contained in the Lease Agreement and herein, the
City shall have no pecuniary obligation or liability to any of the other parties or to the
Owners of the Certificates with respect to this Trust Agreement or the terms, execution,
delivery or transfer of the Certificates, or the. distribution of Lease Payments to the Owners
by the Trustee.
Section 11.02. No Liability for Trustee Performance. Neither the City nor the
Corporation shall have any obligation or liability to any of the other parties or to the
Owners of the Certificates with respect to the performance by the Trustee of any duty
imposed upon it under this Trust Agreement.
Section 11.03. Indemnification. The Corporation and the City agree to indemnify
and save the Trustee harmless from and against all claims, suits and actions and
expenses, including attorneys fees brought against it, or to which it is made a party, and
from all losses and damages suffered by it as a result thereof, where and to the extent
such claim, suit or action arises out of the actions of any other party to this Agreement
including but not limited to the ownership, operation or use of the Project by the City.
Such indemnification shall extend to claims, suits and actions brought against the Trustee
for failure to perform and carry out the duties specifically imposed upon and to be
performed by it pursuant to this Trust Agreement. In the event the Corporation or the City
is required to indemnify the Trustee as herein provided, the Corporation or the City shall
be subrogated to the rights of the Trustee to recover such losses or damages from any
other person or entity.
Section 11.04. Opinion of Counsel. Before being required to take any action, the
Trustee may require an opinion of Independent Counsel acceptable to the Trustee, which
opinion shall be made available to the other parties hereto upon request, which counsel
may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or
both, concerning the proposed action. If it does so in good faith, Trustee shall be
protected in relying thereon.
Section 11.05. Limitation of Rights to Parties and Certificate Owners. Nothing in
this Agreement or in the Certificates expressed or implied is intended or shall be
construed to give any person other than the City, the Corporation, the Trustee and the
Owners of the Certificates, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any covenant, condition or provision hereof; and all such
covenants, conditions and provisions are and shall be for the sole and exclusive benefit of
the City, the Corporation, the Trustee and said Owners.
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ARTICLE X11
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
Section 12.01. Assignment of Rights. Pursuant to the Assignment Agreement the
Corporation has transferred, assigned and set over to the Trustee all of the Corporation's
rights (but none of its obligations) in and to the Lease Agreement (excepting only the
Corporation's rights under Sections 5.8, 7.3 and 9.4 thereof), including without limitation all
of the Corporation's rights to exercise such rights and remedies conferred on the
Corporation pursuant to the Lease Agreement as may be necessary or convenient (i) to
enforce payment of the Lease Payments and any other amounts required to be deposited
in the Lease Payment Fund or the Insurance and Condemnation Award Fund, and (ii)
otherwise to exercise the Corporation's rights and take any action to protect the interests
of the Trustee or the Certificate Owners in an Event of Default.
Section 12.02. Remedies. If an Event of Default shall happen, then and in each
and every such case during the continuance of such Event of Default, the Trustee may,
and upon request of the Owners as provided in Article IX of the Lease Agreement shall,
exercise any and all remedies available pursuant to law or granted pursuant to the Lease
Agreement; provided, however, that notwithstanding anything herein or in the Lease
Agreement to the contrary, there shall be no right under any circumstances to accelerate
the maturities of the Certificates or otherwise to declare any Lease Payment not then in
default to be immediately due and payable.
Section 12.03. Application of Funds. All moneys received by the Trustee pursuant
to any right given or action taken under the provisions of this Article XII or Article IX of the
Lease Agreement shall be applied by the Trustee in the order following upon presentation
of the several Certificates, and the stamping thereon of the payment if only partially paid,
or upon the surrender thereof if fully paid -
First, to the payment of the costs and expenses of the Trustee and of the
Certificate Owners in declaring such Event of Default, including reasonable
compensation to its or their agents, attorneys and counsel;
Second, to the payment of the whole amount then owing and unpaid with
respect to the Certificates for principal and interest, with interest on the overdue
principal and installments of interest at the rate of twelve percent (12%) per annum
to the extent permitted by law (but such interest on overdue installments of interest
shall be paid only to the extent funds are available therefor following payment of
principal and interest and interest on overdue principal, as aforesaid), and in case
such moneys shall be insufficient to pay in full the whole amount so owing and
unpaid with respect to the Certificates, then to the payment of such principal and
interest without preference or priority of principal over interest, or of interest over
principal, or of any installment of interest over any other installment of interest,
ratably to the aggregate of such principal and interest.
Section 12.04. Institution. of Legal Proceedings. If one or more Events of Default
shall happen and be continuing, the Trustee in its discretion may, and upon the written
request of the Owners of a majority in principal amount of the Certificates then
Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to
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protect or enforce its rights or the rights of the Owners of Certificates by a suit in equity or
action at law, either for the specific performance of any covenant or agreement contained
herein, or in aid of the execution of any power herein granted, or by mandamus or other
appropriate proceeding for the enforcement of any other legal or equitable remedy as the
Trustee shall deem most effectual in support of any of its rights or duties hereunder.
Section 12.05. Non-waiver. Nothing in this Article XII or in any other provision of
this Agreement or in the Certificates, shall affect or impair the obligation of the City to pay
or prepay the Lease Payments in accordance with and subject to the terms and
provisions of the Lease Agreement, or affect or impair the right of action, which is also
absolute and unconditional, of the Certificate Owners to institute suit to enforce and collect
such payment. No delay or omission of the Trustee or of any Owner of any of the
Certificates to exercise any right or power arising upon the happening of any Event of
Default shall impair any such right or power or shall be construed to be a waiver of any
such Event of Default or an acquiescence therein, and every power and remedy given by
this Article XII to the Trustee or to the Owners of Certificates may be exercised from time
to time and as often as shall be deemed expedient by the Trustee or the Certificate
Owners.
Section 12.06. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any
other remedy, and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing, at law or in equity or by
statute or otherwise.
Section 12.07. Power of Trustee to Control Proceedings. In the event that the
Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial
proceedings or otherwise, pursuant to its duties hereunder, whether upon its own
discretion or upon the request of the Owners of a majority in principal amount of the
Certificates then Outstanding, it shall have full power, in the exercise of its discretion for
the best. interests of the Owners of the Certificates, with respect to the continuance,
discontinuance, withdrawal, compromise, settlement or other disposal of such action;
provided, however, that the Trustee shall not discontinue, withdraw, compromise or settle,
or otherwise dispose of any litigation pending at law or in equity, without the consent of a
majority in aggregate principal amount of the Certificates Outstanding.
Section 12.08. Limitation on Certificate Owners' Right to Sue. No Owner of any
Certificate issued hereunder shall have the right to institute any suit, action or proceeding
at law or in equity, for any remedy under or upon this Agreement, unless (a) such Owner
shall have previously given to the Trustee written notice of the occurrence of an Event of
Default hereunder; (b) the Owners of at least twenty-five percent (25%) in aggregate
principal amount of all the Certificates then Outstanding shall have made written request
upon the Trustee to exercise the powers hereinbefore granted or to institute such action,
suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request; and (d) the Trustee shall have refused or omitted to comply
with such request for a period of sixty (60) days after such written request shall have been
received by, and said tender of indemnity shall have been made to, the Trustee.
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Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of
Certificates of any remedy hereunder; it being understood and intended that no one or
more Owners of Certificates shall have any right in any manner whatever by his or their
action to enforce any right under this Agreement, except in the manner herein provided,
and that all proceedings at law .or in equity with respect to an Event of Default shall be
instituted, had and maintained in the manner herein provided and for the equal benefit of
all Owners of the Outstanding Certificates.
.The right of any Owner of any Certificate to receive payment of said Owner's
proportionate interest in the Lease Payments as the same become due, or to institute suit
for the enforcement of such payment, shall not be impaired or affected without the consent
of such Owner, notwithstanding the foregoing provisions of this Section or any other
provision of this Agreement.
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ARTICLE XIII
MISCELLANEOUS
Section 13.01. Defeasance. If and when all Outstanding Certificates shall be paid
and discharged 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 redemption premiums (if any) with respect to all Certificates
Outstanding, as and when the same become due and payable; or
(b) by depositing with the Trustee, under an escrow deposit and trust
agreement, security for the payment of Lease Payments as more particularly
described in Section 10.1 of the Lease Agreement, said security to be held
by the Trustee as agent for the City to be applied by the Trustee to pay or
prepay the Lease Payments as the same become due, pursuant to Section
10.1 of the Lease Agreement -
notwithstanding that any Certificates shall not have been surrendered for payment, all
obligations of the Corporation, the Trustee and the City with respect to all Outstanding
Certificates shall cease and terminate, except only the obligation of the Trustee to pay or
cause to be paid, from Lease Payments paid by or on behalf of the City from funds
deposited pursuant to paragraph (b) of this Section, to the Owners of the Certificates not
so surrendered and paid all sums due with respect thereto, and in the event of deposits
pursuant to paragraph (b), the Certificates shall continue to represent direct and
proportionate interests of the Owners thereof in Lease Payments under the Lease
Agreement.
Any funds held by the Trustee, at the time of one of the events described in
paragraphs (a) or (b) of this Section, which are not required for the payment to be made to
Owners, shall be paid over to the City.
Section 13.02. Records. The Trustee shall keep complete and accurate records
of all moneys received and disbursed under this Agreement, which shall be available for
inspection by the City, the Corporation, and any Owner, or the agent of any of them, at any
time during regular business hours upon reasonable notice.
Section 13.03. Notices. All written notices to be given under this Agreement shall
be given by mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time
to time. Notice shall be effective upon deposit in the United States mail, postage prepaid
or, in the case of personal delivery, upon delivery to the address set forth below:
If to the City: City Administrator
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
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If to the Corporation: Secretary
City of Huntington Beach
Civic Improvement Corporation
2000 Main Street
Huntington Beach, California 92648
If to the Trustee: Security Pacific National Bank
333 South Beaudry Avenue, 24th Floor
Los Angeles, California 90017
Attention: Corporate Services
Division W24-30
Section 13.04. Governing Law. This Agreement shall be construed and governed
in accordance with the laws of the State.
Section 13.05. Binding Effect; Successors. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and assigns.
Whenever in this Agreement either the Corporation, the City or the Trustee is named or
referred to, such reference shall be deemed to include the successors or assigns thereof,
and all the covenants and agreements in this Agreement contained by or on behalf of the
Corporation, the City or the Trustee shall bind and inure to the benefit of the respective
successors and assigns thereof whether so expressed or not.
Section 13.06. Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute
but one and the same agreement.
Section 13.07. Destruction of Cancelled Certificates. Whenever in this Agreement
provision is made for the surrender to or cancellation by the Trustee and the delivery to
the City of any Certificates, the Trustee may, upon the request of the City Representative,
in lieu of such cancellation and delivery, destroy such Certificates and deliver a certificate
of such destruction to the City.
Section 13.08. Headings. The headings or titles of the several Articles and
Sections hereof, and any table of contents appended to copies hereof, shall be solely for
convenience of reference and shall not affect the meaning, construction or effect of this
Agreement. All references herein to "Articles", "Sections", and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Agreement; and the words
"herein", "hereof', "hereunder" and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or subdivision hereof.
Section 13.09. Waiver of Notice. Whenever in this Agreement the giving of notice
by mail or otherwise is required, the giving of such notice may be waived in writing by the
person entitled to receive such notice and in any case the giving or receipt of such notice
shall not be a condition precedent to the validity of any action taken in reliance upon such
waiver.
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Section 13.10. Separability of Invalid Provisions. In case any one or more of the
provisions contained in this Agreement or in the Certificates shall for any reason be held
to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, and this Agreement
shall be construed as if such invalid or illegal or unenforceable provision had never been
contained herein. The parties hereto hereby declare that they would have entered into this
Agreement and each and every other section, paragraph, sentence, clause or phrase
hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the
fact that any one or more sections, paragraphs, sentences, clauses or phrases of this
Agreement may be held illegal, invalid or unenforceable.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
CITY OF HUNTINGTON BEACH CIVIC
IMPROVEMENT CORPORATION
By
President
(SEAL)
Attest-
By
Secretary
CITY OF HUNTINGTON BEACH
By
Mayor
(SEAL)
Attest:
By
City Clerk
SECURITY PACIFIC NATIONAL BANK,
as trustee
By
Title:�j�„�,,a'�' �' -,,.k.-y `tt b^k"
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EXHIBIT A
(FORM OF CERTIFICATE OF PARTICIPATION)
CERTIFICATE OF PARTICIPATION
(Civic Center Project)
Evidencing the Proportionate Interest of the Owner
Hereof in Lease Payments to be Made by the
CITY OF HUNTINGTON BEACH, CALIFORNIA
As the Rental of Certain Property Pursuant
to a Lease Agreement With the
City of Huntington Beach Civic Improvement Corporation
RATE OF INTEREST: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
July 15, 1986
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
THIS IS TO CERTIFY THAT the Registered Owner identified above, or registered
assigns, as the registered owner (the "Registered Owner") of this Certificate of
Participation (the "Certificate") is the owner of a proportionate interest in lease payments
payable under the Lease Agreement dated as of July 15, 1986, (the "Lease Agreement")
by and between the City of Huntington Beach Civic Improvement Corporation, a nonprofit
corporation duly organized and existing under the laws of the State of California (the
"Corporation"), and the City of Huntington Beach, a charter city and municipal corporation
duly organized and existing under the Constitution and laws of the State of California the
("City"), which Lease Payments and certain other rights and interests under the Lease
Agreement have been assigned to Security Pacific National Bank, as trustee (the
"Trustee"), having a corporate trust office in Los Angeles, California.
The Registered Owner of this Certificate is entitled to receive, subject to the terms
of the Lease Agreement, on the Maturity Date identified above, the Principal Amount
identified above, representing a portion of the Lease Payments designated as principal,
and to receive on February 1, 1986, and semiannually thereafter on February 1 and
August 1 of each year (the "Payment Dates") until payment in full of said principal, the
Registered Owner's proportionate share of the Lease Payments designated as interest
coming due during the interest period immediately preceding each of the Payment Dates;
provided that interest with respect hereto shall be payable from the Payment Date next
preceding the date of execution of this Certificate unless (i) this Certificate is executed on
a Payment Date, in which event interest shall be payable from such Payment Date, or (ii)
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this Certificate is executed after the close of business on the fifteenth (15th) day of the
month immediately preceding a Payment Date and prior to such Payment Date, in which
event interest shall be payable from such Payment Date, or (iii) unless this Certificate is
executed on or before January 15, 1987, in which event interest shall be payable from July
15, 1986. Said proportionate share of the Lease Payments designated as interest is the
result of the multiplication of the aforesaid portion of the Lease Payments designated as
the Principal Amount by the Rate of Interest per annum identified above. Said amounts
are payable in lawful money of the United States of America in the case of principal upon
presentation hereof at the corporate trust office of the Trustee, and in the case of interest
by check or draft mailed by the Trustee to the Registered Owner hereof at the address as
it appears on the registration books of the Trustee.
This Certificate has been executed and delivered by the Trustee pursuant to the
terms of a Trust Agreement by and among the Trustee, the Corporation and the City,
dated as of July 15, 1986 (the "Trust Agreement"). The City has certified that it is
authorized to enter into the Lease Agreement and the Trust Agreement under the
Constitution and laws of the State of California, for the purpose of leasing certain land and
public improvements from the Corporation. Reference is hereby made to the Lease
Agreement and the Trust Agreement (copies of which are on file at the corporate trust
office of the Trustee) for a description of the terms on which the Certificates are delivered,
the rights thereunder of the Registered Owners of the Certificates, the rights, duties and
immunities of the Trustee and the rights and obligations of the City under the Lease
Agreement, to all of the provisions of the Lease Agreement and the Trust Agreement the
Registered Owner of this Certificate, by acceptance hereof, assents and agrees.
`f IN WITNESS WHEREOF, this Certificate has been executed and delivered by
Security Pacific National Bank, as trustee, acting pursuant to the Trust Agreement.
Execution Date:
SECURITY PACIFIC NATIONAL BANK,
as Trustee
By
Authorized Officer
-40-
(FORM OF ASSIGNMENT)
For value received the undersigned do(es) hereby sell. assign and transfer unto
the within-mentioned registered Certificate and hereby
irrevocably constitute(s) and appoint(s) such person attorney, to transfer the same on the
books of the Trustee with full power of substitution in the premises.
Note: Signature(s) must be guaranteed by a Note: The signature(s) on this Assignment must
member firm of the New York Stock Exchange correspond with the name(s) as written on the
or a commercial bank or trust company. face of the within Certificate in every particular
without alteration or enlargement or any change
whatsoever.
(FORM OF REVERSE OF CERTIFICATE)
The City is obligated under the Lease Agreement to pay the Lease Payments from
any source of available funds. The obligation of the City to pay the Lease Payments does
not constitute an obligation of the City for which the City is obligated to levy or pledge any
form of taxation or for which the City has levied or pledged any form- of taxation. The
obligation of the City to pay Lease Payments does not constitute a debt of the City, the
State of California or any of its political subdivisions, and does not constitute an
indebtedness within the meaning of any constitutional or statutory debt limitation or
restriction.
To the extent and in the manner permitted by the terms of the Trust Agreement, the
provisions of the Trust Agreement may be amended by the parties thereto with the written
consent of the Registered Owners of at least sixty percent (60%) in aggregate principal
amount of the Certificates then outstanding, and may be amended without such consent
under certain circumstances; provided that no such amendment shall adversely affect the
interests of the Registered Owners of the Certificates or shall impair the right of any
Registered Owner to receive in any case such Registered Owner's proportionate share of
any Lease Payment in accordance with such Registered Owner's Certificate.
This Certificate is transferable by the Registered Owner hereof, in person or by his
attorney duly authorized in writing, at the corporate trust office of the Trustee, but only in
the manner, subject to the limitations and upon payment of the charges, if any, provided in
the Trust Agreement and upon surrender and cancellation of this Certificate. Upon such
transfer a new Certificate or Certificates, of authorized denomination or denominations, for
the same aggregate principal amount will be delivered to the transferee in exchange
herefor. The City, the Corporation and the Trustee may treat the Registered Owner hereof
as the absolute owner hereof for all purposes, whether or not this Certificate shall be
overdue, and the City, the Corporation and the Trustee shall not be affected by any notice
to the contrary.
The Certificates maturing on or prior to August 1, •1995, are not subject to optional
redemption prior to their respective stated maturities. The Certificates maturing on or after
August 1., 1996, are subject to optional redemption on any Payment Date on or after
-41-
August 1, 1995, in whole, or in part among maturities on a pro rata basis and by lot within
a maturity, from prepayments of the Lease Payments made at the option of the City
pursuant to the Lease Agreement, at a redemption price equal to the principal amount
thereof to be redeemed, together with accrued interest to the redemption date, plus a
premium (expressed as percentages of the principal amount of Certificates or portions
thereof to be redeemed) set forth in the following table:
Redemption Redemption
Dates Price
August 1, 1995 and February 1, 1996 2%
August 1, 1996 and February 1, 1997 1-1/2
August 1, 1997 and February 1, 1998 1
August 1, 1998 and February 1, 1999 1/2
August 1, 1999 and thereafter 0
The Certificates are subject to mandatory redemption on any Payment Date in
whole, or in part among maturities on a pro rata basis and by lot within a maturity, from the
net proceeds of insurance or condemnation credited towards the prepayment of the Lease
Payments by the City pursuant to the Lease Agreement, at a redemption price equal to the
principal amount thereof to be redeemed, together with accrued interest to the date fixed
f" for redemption, without premium. In the event that less than all of the remaining Lease
Payments are prepaid, the Trustee shall select Certificates for redemption from each
maturity on a pro rata basis and by lot within each maturity.
The Certificates maturity on August 1, 2007, are also subject to mandatory sinking
fund redemption on August 1 in each year on or after August 1, 2001, by lot, from the
principal components of the Lease Payments required to be paid by the City pursuant to
the Lease Agreement with respect to each such redemption date at a redemption price
equal to the principal amount thereof to be redeemed, together with accrued interest
thereon to the date fixed for redemption, without premium, as follows:
Redemption
Date Principal Amount
2001 $520,000
2002 560,000
2003 605,000
2004 650,000
2005 700,000
2006 755,000
2007 (Maturity) 815,000
The Certificates maturing on August 1, 2016, are also subject to mandatory sinking
fund redemption on August 1 in each year on or after August 1, 2001, by lot, from the
principal components of the Lease Payments required to be paid by the City pursuant to
the Lease Agreement with respect to each such redemption date at a redemption price
-42-
f equal to the principal amount thereof to be redeemed, together with accrued interest
thereon to the date fixed for redemption, without premium, as follows:
Redemption
Date Principal Amount
2008 $ 880,000
2009 950,000
2010 1,025,000
2011 1,110,000
2012 1,195,000
2013 1,290,000
2014 1,390,000
2015 1,505,000
2016 (Maturity) 1,620,000
As provided in the Trust Agreement, notice of redemption shall be mailed by first
class mail, not less than twenty-five (25) nor more than sixty (60) days before the
redemption date, to the Registered Owner of the Certificate to be redeemed, but neither
failure to receive such notice nor any defect in the notice so mailed shall affect the
sufficiency of the proceedings for redemption.
n 'If this Certificate is called for redemption and payment is duly provided therefor as
specified in the Trust Agreement, interest represented hereby shall cease to accrue from
and after the date fixed for redemption.
-43-
&359344
• 18019-13 JMNW:CFA.Ceg August 11.1NC0RDING REQUESTED Iff
FIRST AMERICAN TITLE INS. W.
gECOP.DED IN OFFICIAL RECORDS
WHEN RECORDED, RETURN TO: OF ORANGE COUNTY,CALIFORNIA
Charles F. Adams, Esq. EXEMPT -11 gAM AUG 13 '66
Jones Hall Hill & White
C16
Four Embarcadero Center, Suite 1950 Q. ne UN R
San Francisco, California 94111 o r.�
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE AND
SECTION 6103 OF THE CALIFORNIA GOVERNMENT CODE
1 ,4
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, made and entered into as of July 15, 1986, by
and between the CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT CORPORATION,
a nonprofit corporation duly organized and existing under the Nonprofit Public Benefit
Corporation Law of the State of California (the "Corporation") and SECURITY PACIFIC
NATIONAL BANK, a national banking association organized and existing under the laws of
the_United-States of America (the "Trustee"):
AIiNE5SETH:
In the joint and mutual exercise of their powers, in consideration of the mutual
covenants herein contained, and for other valuable consideration, the parties hereto recite
and agree as follows:
Section 1. Recitals.
(a) The Huntington Beach Public Facilities Corporation has heretofore issued its
Leasehold Mortgage Revenue Bonds, First Issue, dated as of January 15, 1972 (the "1972
Bonds") for the purpose of financing the acquisition and construction-of certain land and
improvements (the "Project') constituting the Civic Center of the City of Huntington Beach
(the "City") and has heretofore leased the Project to the City pursuant to the Lease and
Sublease dated as of January 15, 1972, by and between the City and said Corporation (the
"1972 Lease").
(b) The City has the option under the 1972 Lease to provide sufficient funds to
discharge the 1972 Bonds and thereupon to acquire all right, title and interest of the
Huntington Beach Public Facilities Corporation in and to the Project, and the City wishes
at this time to exercise such option.
(c) The City has agreed to sell all of its right, title and interest in the Project to the
Corporation pursuant to that certain Acquisition Agreement dated as of July 15, 1986, (the
86-3 9344
"Acquisition Agreement") by and between the City as seller and the Corporation as
purchaser, for the purpose of providing funds to enable the City to acquire certain land
located within the City and to construct thereon certain public parking improvements.
(d) The Corporation and the City have entered into an agreement entitled "Lease
Agreement" dated as of July 15, 1986, (the "Lease Agreement') whereby the Corporation
has agreed to lease to the City, and the City has agreed to lease from the Corporation the
Project in the manner and on the terms set forth in the Lease Agreement, which terms
include, without limitation, the obligation of the City to pay certain lease payments to the
Corporation under and pursuant to Section 4.4 of the Lease Agreement (the "Lease
Payments"), in consideration of the City's use and enjoyment of the Project under the
Lease Agreement.
(e) Under the Section 3.1 of the Lease Agreement, the Corporation is required to
cause to be deposited with the Trustee, certain sums of money to be credited, held and
applied in accordance with Section 3.1 of the Lease Agreement and with a Trust
Agreement dated as of July 15, 1986, (the "Trust Agreement") by and among the
Corporation, the City and the Trustee, for the purpose of financing the acquisition of the
Project by the Corporation from the City pursuant to the Acquisition Agreement. For the
purpose of obtaining such moneys, the Corporation is willing to convey to certain persons
(the "Owners") proportionate interests in the Lease Payments, such proportionate
interests to be evidenced by certificates of participation therein (the "Certificates"). In
order to make such proportionate interests marketable on terms acceptable to the
Corporation, the Corporation is willing to assign and transfer its rights under the Lease
` Agreement to the Trustee for the benefit of the Owners of the Certificates. Concurrently
with the delivery of this Agreement, the Trustee, is executing and delivering Certificates in
an aggregate face amount of Twenty Million Dollars ($20,000,000) to Stone & Youngberg
for resale to the Owners. The proceeds of such sale are anticipated to be sufficient to
permit the Corporation to make the deposits required under Section 3.1 of the Lease
Agreement.
(f) Each of the parties has authority to enter into this Assignment Agreement, and
has taken all actions necessary to authorize its officers to execute it.
Section 2. Assignment.
The Corporation hereby transfers, assigns and sets over to the Trustee, for the
benefit of the Owners of Certificates executed and delivered under the Trust Agreement,
all of the Corporation's rights (but none of its obligations) under the Lease Agreement
(excepting only the Corporation's rights under Sections 5.8, 7.3 and 9.4 of the Lease
Agreement), including without limitation (1) the right to receive and collect all of the Lease
Payments from the City under the Lease Agreement, (2) the right to receive and collect
any proceeds of any insurance maintained thereunder, of any condemnation award
rendered with respect to the Projects, and (3) the right to exercise such rights and
remedies conferred on the Corporation pursuant to the Lease Agreement as may be
necessary or convenient (i) to enforce payment of the Lease Payments and any other
amounts required to be deposited in the Lease Payment Fund or the Insurance and
Condemnation Fund established under the Trust Agreement, or (ii) otherwise to protect the
interests of the Owners in the event of a default by the City under the Lease Agreement.
All rights assigned by the Corporation shall be administered by the Trustee in accordance
-2-
8&-359344
with the provisions of the Trust Agreement and for the equal and proportionate benefit of
the Owners of Certificates.
Section 3. Acceptance.
The Trustee hereby accepts the assignments made herein for the purpose of
securing, equally and proportionately, the payments due pursuant to the Lease Agreement
and Trust Agreement to, and the rights under the Lease Agreement and Trust Agreement
of, the Owners of the Certificates delivered pursuant to the Trust Agreement, all subject to
the provisions of the Trust Agreement.
Section 4. Conditions.
This Assignment Agreement shall confer no rights or impose no duties upon the
Trustee beyond those expressly provided in the Lease Agreement and Trust Agreement.
Section 5. Execution in Counterparts.
This Assignment Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the same
instrument.
i
.3_
- 86-3f59344
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by
their officers thereunto duly authorized as of the day and year first written above.
CITY OF HUNTINGTON BEACH
CIVIC IMPROVEMENT CORPORATION — AS ASSIGWR
President
(SEAL of the
COHPOi iATiON)
Attest:
By
Secretary
SECURITY PACIFIC NATIONAL BANK,
as Trustee
By:
Title:
-4-
86-3S344
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by
their officers thereunto duly authorized as of the day and year first written above.
CITY OF HUNTINGTON BEACH
CIVIC IMPROVEMENT CORPORATION - As Am=
By
President
(SEAL of the
CORPORATION)
Attest:
By
Secretary
SECURITY PACIFIC NATIONAL BANK,
- as Trustee
Title: -f rv�t D f(,'c�-�( 4c i [c.,t
i
-4-
86:3%344
STATE OF CALIFORNIA )
ss.
COUNTY OF SAN FRANCISCO )
On this 8th day of August, the year 1986, before me, Sally K. Danekas, the
undersigned, a notary public, personally appeared Robert P. Mandic. Jr. and Alicia M.
Wentworth, personally known to me (Q proved to me on the basis of satisfactory
evidence) to be the persons who executed this instrument as the President and Secretary,
respectively, of the City of Huntington Beach Civic Improvement Corporation, and
acknowledged to me that the City of Huntington Beach Civic Improvement Corporation
executed it.
WITNESS my hand and official seal.
_ Y 0FF1CLAL SEAS
SALLY K. DANEKAS By:
NOTARY v1C.CALIF ,1A Notary Public in an for said State
CITY AND COUNTY Of SAN FBANUSCO
My CC-E-0,11 Auq 2? 1969
My commission expires: August 22, 1989
(SEAL)
.5-
STATE OF CALIFORNIA ) 86:3%344
ss.
COUNTY OF LOS ANGELES )
On this 8th day of August, the year 1986, before me Aclro C-+.�a�2alez the
undersigned, a notary public, personally appeared 6.,M%1 personally known to
me (Qr proved to me on the basis of satisfactory evidence) to be the person who executed
this instrument as—jcu (:Ri•ce'1 of the Security Pacific National Bank, and acknowledged
to me that Security Pacific National Bank executed it.
WITNESS my hand and official
4 _ __
OD'•. OFFICIAL SEAL
ADRIANA G GONLIFOR ar Public in and for said Sta e
NOTARY PUBLIC-CALIFORNIA Y
LOS ANGELES COUNTY
MY COMM. EXP. JULY 14,1989
My commission expires-
(SE A L)
•6-
8 --33g
344
a
EXHIBIT A
The land, together with the buildings and improvements located on the following-
described real property:
Legal Description:
BLOCKS 1903# 20DI AND 2D02 OF TRACT NO. 129 AS SHOWN ON A MAP
RECORDED IN BOOK 9# PAGE 13 OF MISCELLANEOUS MAPS# RECORDS OF
ORANGE COUNTY, CALIFORNIA# TOGETHER WITH PARK STREET, UNION
AVENUE, AND THE ALLEYS IN SAID BLOCKS, AS SHOWN ON SAID MAP
AND AS VACATED 1N THAT CERTAIN MRESOLUTION NO. 3415N OF THE
CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH# A CERTIFIED COPY
OF WHICH WAS RECORDED JANUARY 6# 1972 1N BOOK 99569 PAGE 649
OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM, ALL OIL# GAS# ASPHALT AND ASPHALTUM, AND
OTHER HYDROCARBONS AND ALL OTHER MINERALS, WHETHER SIMILAR OR
DISSIMILAR TO THOSE SPECIFIEDo LYING BELOW 500 FEET UNDER THE
SURFACE OF SUCH REAL PROPERTY WITHIN OR THAT MAY BE PRODUCED
�► FROM SAID PROPERTY# WITHOUT# HOWEVER, ANY RIGHT TO USE THE
SURFACE OF SAID PROPERTY OR SOD FEET UNDER THE SURFACE THEREOF
FOR ANY PURPOSE WHATSOEVER.
r
GLENDA F. BELL
PROJECT COORDINATOR
FOUR EMBARCADERO CENTER
SUITE 1860
JONES HALL HILL dz WHITE. SANFRANCISCO 94111
A PROFESSIONAL LAW CORPORATION (415)301-5780
i
•SENDER:Complete items 1 and 2 when additional services are desired,and complete items 3 an(.
Put your address in the"RETURN TO"space on the reverse side.Failure to do this will prevent this
' card from being returned to you.The return receipt fee will R10 ou the name of the Person
delivered to and the date of delive . or additionaleea the o lowing services are available.Consult
postmaster for fees and check box(as)for additional service(s)requested.
cy
1. how to whom delivered,date,and addressee's address. 2. ❑ Restricted Delivery.
f-
3.Article Addressed to: 4.Article Number
Type of Service:
r
❑ egistered El Insured
ertif'ad ❑ COD
C/t / J Express Mail
Always obtain signature of addressee or
agent and DATE DELIVERED.
�-. 5.Signature—Addressee 8.Addressee's Address(ONLY if
requested and fee paid)
Q
I
f y�ry� I
t %te �elin- 33U 7 i, e��.1986 DOMESTIC RETURN RECEIPT
-O STATES POSTAL SERVICE
OFFICIAL BUSINESS
SENDER INSTRUCTIONS
i your name,eddross,andZlPCode
the space below.
' 0 Complete items 1,2,3,and 4 on s.t:
the reverse. LLS.MAIL
i' e Attach to front of article if space
permits,otherwise affix to back of
I i article.
•Endorse article"Return Receipt PENALTY FOR PRIVATE
- — Requested"adjacent to number. USE,I;=
RETURN Print Sender's name,address,and ZIP Code in the space below.
TO
r
-DO NOT USE THESE SPACES Exemption
CALIFORNIA FORM
Serial 3500
Amountt Remitted p p l i c a t i o n
ary organization filing application for exemption from California corporation franchise tax or income tax must fumish the information and data specified and pay the
"Required a25.00 Application Fee." If the organization fails to comply with these requirements, the application will be denied.
RBTC Section 26451.3 provides that his application,together with any supporting documents,shall be open to public inspection if the exemption is granted. Upon
request of the organization, public disclosure of such documents may be withheld if such disclosure would adversely affect the organization or national defense.
1 Name of organization Federal Employer Identification Number
City of Huntington Beach Civic Improvement Corporation 33-0200536
Mailing address Telephone number
2000 Main Street (714) 536-5227
City State ZIP Code
Huntington Beach California 92648
2 Name of representative to be contacted regarding additional requirements or information Telephone number
Ms. Alicia Wentworth (714) 536-5227
Representative's mailing address
c/o City of Huntington Beach, 2000 Main Street
City State ZIP.Code
Huntington Beach California 92648
3a Enter California Revenue and Taxation Code section under which exemption is claimed. (See Section 23701)... U
Fb Primary activity of organization: Enable City of Huntington Beach to finance public works.
4a What is form of organization? ® Incorporated ❑ Now being incorporated ❑ Unincorporated association ❑ Trust
1 Date organized 08/04/86
b tf incorporated, furnish the followingg information:
1 Date incorporated 07/29/86 2 California Corporate No. 1537928
3 If incorporated in another state, identify the state n/d
x Sa Has this organization or its predecessor previously applied for exemption? ® Yes ❑ No
E b If"Yes,"check the appropriate box(es)and enter either"Granted"or"Denied"and also enter the date the exemption was"Granted"or"Denied"
after the box(es) checked. Granted 11/10/86
® California Revoked Date 04/30/87 ® FederalGranted Date 01 16 87:0 Other State Date
a c Fumish copies of any determination letters received.6a Has organization filed Federal Income tax returns? ❑ Yes M-1 o
b If "Yes," state type of returns and years filed.
7 Annual Accounting Period. (Must end on last day of the month). dune 30
8a Are you a new organization? If "No,"attach a statement indicating the name of your predecessor(s), the period during which it was in Yes No
existence, and the reasons for its termination .......................................................:............ X
b Are you a membership organization? If"Yes,"attach a statement which explains fully the qualifications for members, the different
classes of membership, the number of members in each class, and the voting rights and privileges accorded each class ............ X
c Have you made, or do you plan to make, any distribution of your property or surplus to officers or members? If"yes,"attach a -
statement containing full details .............................................................................. X
i d Will any of the incorporators share any facilities with the organization? If"Yes,"attach a detailed explanation ................... X
e Will any property be rented, purchased, or transferred in any way from any of the incorporators? If "Yes,"attach a detailed
explanation ................:. , .. ......................................+............................... X
f Will any promoter, incorporator,founder, or member be employed by the organization? If"lies,"furnish complete details, including
duties, responsibilities, qualifications, and compensation ............................................................ X
g Will any member of the Board of Directors be compensated for services other than services performed as a board member, e.g. officer,
and/or employee? If "Yes," Iumish the name(s) of the director(s), and the amount(s) of compensation for each. Also list the names of
the other directors, indicating their blood or marriage relationship, if any, to the compensated director(s) X
......................
Do Not Send Cash. Allow 60 Days for Processing
Under penalties of perjury, 1 declare that 1 have examined this application, including accompanying schedules and,
statements and to the best of my knowledge and belief, it is true, correct and complete.
Secretary
»� TE SIGNATURE OF OFFICER OR REPRESENTATIVE TITLE
Huntington Beach, CA [Versions of this form prior to 1986 are obsolete and should not be used,please destroy.]
PLACE SIGNED
Form 3SOO 1986 Side 1
I
f
9 Attach the following applicable items requested or the application will not be processed.
a If incorporated, a copy of your endorsed articles of incorporation and all subsequent amendments; if now being incorporated, proposed articles must
be submitted to the Secretary of State with application; if not incorporated, a copy of your constitution, articles of association, declaration of trust,
or other documents setting forth your aims and purposes which is signed by the principal officers or trustees.
b A copy of your bylaws, proposed bylaws, or other code of regulations.
c Complete statements of receipts and expenditures, assets and liabilities for each accounting period that you were in existence and for which
exemption is desired. Organizations that have not commenced operations or have been operating less than one year,see item"d"below.
d Organizations newly formed, or just commencing operations must attach a proposed budget showing expected income by source and areas of
expenditures for the first year of operation. The budget is required before the application will be processed and should be based upon your must
reasonable expectations.
e A statement (in your own words) stating the specific purposes for which the organization was formed. (Do not quote the Articles of Incorporation or
bylaws for this purpose.)
1 A statement which describes in detail the programs and activities which are presently conducted, or will be conducted by the organization, and how
they will accomplish the specific purposes of the organization.
g A statement explaining in detail each fund-raising activity and each business enterprise you have engaged in, or plan to engage in (accompanied by
copies of all agreements, if any),with other parties for the conduct of each fund-raising activity or business enterprise.
h A statement which explains fully any specific activities that the organization has engaged in or sponsored and which have been discontinued. Give
dates of commencement and termination and the reasons for discontinuance.
i A copy of each lease, if any, in which you are the lessee or lessor of property(real, personal, gas, oil, or mineral), or in which you own an interest
under such lease, together with copies of all agreements with other parties for development of the property.
Samples of any literature which the organization sells or distributes and samples of any organizational advertising.
It In addition to the items above, one of the items from 10 through 22 (shown below) must be completed by most organizations according to the
section under which tax exemption is being claimed. If you are claiming an exemption under a section indicated on items 10 through 22, circle that
item number and furnish the information and/or documents requested for that type of organization.
10 If you are claiming exemption as a Labor, Agricultural, or Horticultural organization under RUC Section 23701a, submit an explanation
of any services to be performed for your members. Cooperative organizations applying for exemption under RUG Section 23701a must submit a copy of
the Federal exemption letter showing exemption under IRC Section 501(c)(5).
11 a If you are claiming exemption as a Fraternal Beneficiary Society,etc., as described In RUC Section 23701b, or a Fraternal
Society described in R&TC Section 237011,state whether the organization operates, or plans to operate, under the lodge system or for the
exclusive benefit of the members of an organization so operating. Operating under the system means carrying on activities under a form of
organization that comprises local branches, which are largely self-governing, called lodges, chapters or the like and chartered by a parent
organization.
b In the case of a Subordinate or Local Lodge,etc.,attach a certificate signed by the secretary of the parent organization, under the seal of
that organization, certifying that the Subordinate Lodge is a duly consititued body operating under the jurisdiction of the parent body.
c 1n the case of a Parent or Grand Lodge,attach a statement showing (1)the number of subordinate lodges in active operation, and(2)whether
periodic meetings are actually held.
d For R&TC Section 23701b organizations only,attach a statement describing the types of benefits(life,sick, accident, or other benefits)
paid,or to be paid, to members.
12 If you are claiming exemption as a cemetery company or corporation chartered solely for burial purposes,as described In R&TC
Section 23701c:
a Attach the following statements and/or documents:
1 Complete copy of sales contract or other document involved in acquisition of cemetery property by the organization.
2 Complete copy of any contract you may have which designates an agent to sell your cemetery lots.
3 Names of officers and directors of your organization from the date of incorporation to the present date and show the period for which each held
office.
4 Appraised value of cemetery property as of the date acquired. The appraisal should be obtained from sources other than the parties in interest.
b Do you have or do you plan to have a perpetual care fund? ❑ Yes ❑ No
If"Yes,"fumish copy of Federal exemption letter, copy of the fund agreement; and a statement explaining the nature of such fund(cash, securities,
unsold land, etc.), the manner in which the fund is or will be administered, the specific purposes for which the fund is to be used, and the name(s)
of the person(s) administering the fund.
c Do you operate a crematorium? ❑ Yes ❑ No
Side 2 Form 3500 1986
13 If you are claiming exemption as a Religious, Charitable, Sclentlfic, Literary,or Educational organization under R&TC Section
23701d, answer questions"a"through"e". Attach a statement explaining all "Yes"answers in"a"through"d".
Yes No
a Did you receive,or do you expect to receive, 10 percent or more of your assets from any organization or group of affiliated organizations
(affiliated through stockholding, common ownership, or otherwise), any individual, or members of a family group(brother or sister whether
whole or half blood, spouse, ancestor, or lineal descendant)? ..........................................................
b Are you now, have you ever been, or do you plan to be engaged in, carrying on propaganda, or otherwise advocating or opposing pending
or proposed legislation (this includes dissemination of such information to the general public by you while representing the
organization)?........................................................................................:.....
c Do you participate, plan to participate, or intervene in(including the publishing or distributing of statements)any political campaign on
behalf of, or in opposition to, any candidate for public office?..........................................................
d Do you hold, or plan to hold, 10 percent or more of any class of stock or 10 percent or more of the total combined voting power of stock
in any corporation?.......... ..............................................................................
e If claiming exemption as a Church, attach statement including the following:
1 Has a permanent place of worship been established? At what address? Who is the legal owner of this property? Describe the physical
characteristics of your church buildings. Explain to what extent these buildings are used for purposes other than religious worship.
2 Does your organization have a regular congregation or conduct religious services on a regular basis? How many members do you have?
Where and how often are religious services held?
3 Furnish information regarding the religious background and formal religious training of the religious leaders. Furnish a copy of the
religious leader's certificate of ordination.
4 What amount of your annual gross income will be received from incorporators, ministers, officers, directors or their families?
5 What amount of the organization's proposed expenditures will be used for the personal living expenses of the individuals mentioned in
item (4) above.
6 How many hours per week will the religious or spiritual leader devote to organizational activities? Will this person engage in
employment unrelated to the activities of the organization? If so, indicate the number of hours per week and describe the employment
activity.
7 Please list all the officers, directors, trustees, etc., of the organization and describe their qualifications for such office. Are any of the
officers or directors related by blood or marriage? If yes, explain.
8 Will any founder, member or officer:
a Take a vow of poverty?
b Transfer personal assets to this organization such as a home, automobile, furnishings, business or recreational assets, etc., which will
be made available for the personal use of the donor(s)?
c Assign or donate income to the organization which will be used in part or whole to be paid to the donor(s) as salary, stipend or
living allowance (such as food, medical expenses, clothing, insurance, etc.)?
14 If you are claiming exemption as a Business League, Chamber of Commerce,etc., under RUC Section 23701e, state whether you
perform, or plan to perform, particular services for members, shareholders, or others, such as furnishing credit reports, collection accounts, inspecting
products, conducting advertising, purchasing merchandise, or other similar undertakings. O Yes O No. If"Yes," attach a detailed statement,
including income realized and expenses incurred, regarding such activities. If engaged in advertising, attach samples of material.
15 If you are claiming exemption as a Local Association of Employees, under R&TC Section 23701f,attach a statement giving names and
addresses of employers whose employees are eligible for membership in the association. If employees of more than one plant or office of the same
employer are eligible for membership,give the address of each such plant or office.
16 If you are claiming exemption as a Social and Recreational organization under RUC Section 23701g, answer the following questions
and fumish the information requested.
Yes No
a Do you solicit, or do you plan to solicit, public patronage of your facilities by advertisement or otherwise? If"Yes,"attach sample copies
of such advertisements or other solicitations .......................................................................
b Are nonmembers, other than bona fide guests of members, permitted, or will they be permitted, to use the club facilities, or participate in
or attend, any functions or activities conducted by the organization? If"Yes,"attach a statement describing the functions or activities in
which nonmembers have participated, or will participate; or to which they have been admitted, or will be admitted. If nonmembers have
participated in, or been admitted to, any functions or activities, state the amount received from nonmembers. Provide a schedule in the
statement detailing the expenses attributable to such nonmembers, the expenses attributable to such functions, and the disposition made
of net profits, if any, derived from the functions.....................................................................
c Do you rent or lease, or do you plan to rent or lease, any part of the dub's property to others? If"Yes,"attach a statement indicating
the reason for such action, or proposed action, and the amount received, or to be received. Also attach copies of the rental
agreements or leases.........................................................................................
d Have you, or will you,derive any income from nonmembers not explained above? If"Yes,"furnish a statement separating the member
and nonmember income for the past three years and a proposed budget separating member and nonmember income for the next period
ofoperation... . ............................................................................................
e State total number of club members. If you have different classes of membership, explain dues and privileges of each class.
Form 3500 1986 side 3
r
17 If you are claiming exemption as a Title Holding Corporation under R&TC Section 23701h,answer the following questions and furnish the
information requested.
a Attach a statement giving the complete names and addresses of organizations for which title to property is held, the number of shares of capital
stock held, and whether shares of stock have ever been held by persons other than such organizations. If stock was so held, include the years held
and the total number of shares of each class of stock.
b State whether the annual income (less expenses) is or will be turned over to the organization for which title to property is held. Explain what
disposition will be made of income which will not be turned over to the organization.
c Enclose a copy of an exemption letter(Federal or California) for each organization for which property will be held. If property will be held for
brganization(s) located in California, a California exemption letter must be furnished.
18 If you are claiming exemption as a Voluntary Employees' Beneficiary organization under R&TC Section 237011, furnish a copy of the
Federal determination letter showing exemption under IRC Section 501(c)(9).
19 If exemption is claimed as a Management Company under R&TC Section 23701m,fumish evidence and date that the corporation was
registered as a Management Company under Section 5 of the Federal Investment Act of 1940 (15 U.S.C.A. - §80a-8).
Date
20 It you are claiming exemption as a Supplemental Unemployment Compensation Trust under R&TC Section 23701n,attach a copy of
the supplemental unemployment benefit plan and appurtenant agreements and a copy of the Federal determination letter.
21 If exemption is claimed as a Group Legal Services Plan under R&TC Section 23701% furnish a copy of the Federal determination letter
showing exemption under IRC Section 501(c)(20).
22 If you are claiming exemption as a Homeowners Association under R&TC Section 23701t, answer the following questions and furnish the
information requested. Attach a supplemental schedule if needed.
a Will any of the individual units/lots owned by the organizatim or its members be occupied for other than personal residential purposes? If"Yes,"
answer the following:
1 What percentage of the units/lots will be used for nonresidential purposes?
2 If the organization is claiming exemption as a condominium management association, indicate square footage of all units and square footage
devoted to residential purposes.
3 What percentage of the organization's total gross income will be derived from dues, fees, or assessments from nonresidential members?
b Will this organization own, maintain or operate a mutual water company, well, electrical generating facility or other utility? If"Yes,"describe in
detail and answer the following:
1 Are your members/shareholders the actual users of the utility, or simply investors?
2 Is this organization furnishing utilities to residential homes, commercial businesses (including agricultural enterprises)or both? If both, indicate
what percent of this organization's total income will be derived from sale of utilities for nonresidential usage.
3 How are members/shareholders assessed for utilities usage?Are they assessed equally, according to square footage/acreage, metered, etc.?
c Furnish a copy of the Declaration of Covenants, Conditions and Restrictions, if applicable.
d Will any of the units/lots be rented by a person, or series of persons, for a period of less than 30 days for more than half of the associations
taxable year? If"Yes,"what percentage?
e Provide the date the association became active and details of these activities.
f Provide the date the first unit was sold.
Side 4 Form 3500 1986 96 41053
18019-13 JHHW:GFB GFB3502
CALIFORNIA FORM FTB 3500
EXEMPTION APPLICATION
CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT CORPORATION
2000 Main Street
Huntington Beach, California 92648
Question 9(a1
Articles of Incorporation are attached.
Question 9 b
Bylaws are attached.
(Question 9Uc
Please see Question 9(d) below.
Question 9 d
The Corporation has not and will not receive funds and does not expect to have any
source or need of financial support. The proceeds of the certificates of participation
referred to below have been used by the trustee bank to (a) acquire and construct the
Project (as hereinafter defined), (b) provide for the payment of interest on the lease
payments during the acquisition/construction period, (c) provide a reasonably required
reserve fund, and (d) pay the costs incurred by the City of Huntington Beach, California
(the "City") in connection with the preparation and delivery of the enclosed agreements
and the certificates of participation.
The Corporation is not obligated to pay any portion of the lease payments or any
expenses incurred by the City in connection with the execution and delivery by the City of
the agreements referenced herein. The Corporation has assigned its rights to receive
lease payments to the trustee bank in order to enable the trustee bank to execute and
deliver the certificates of participation. The proceeds of the certificates of participation
referred to herein ($19,669,347.08) were deposited by the trustee bank into the funds
established under the enclosed Trust Agreement as follows:
$18,632,377.00 Deposited into the Acquisition Fund
120,000.00 Deposited into the Costs of Issuance Fund
797,623.00 Deposited into the Reserve Fund
119,623.00 Deposited into the Interest Account (representing
accrued interest from July 1, 1986 to August 7,
1986)
$19,669,347.08 TOTAL certificate of participation proceeds
The Corporation's budget for the first, second and third tax years is as follows:
-0- Estimated Receipts
-0- Estimated Expenditures
The Corporation is not, at this time, proposing to enter into any financing of the type
described below or otherwise. However, if the City so requests that the Corporation
participate in such a financing, in order to avoid paying fees and higher costs charged by
leasing companies which operate on a profit-making basis to the detriment of the City, the
Corporation would participate in such financing at the request of the City. The Corporation
would not, however, receive any funds for services performed or for any other purpose.
The Corporation's primary purpose is to enable the City to finance, through the execution
and delivery of the certificates of participation by the trustee bank referred to herein, the
acquisition, construction and improvement of certain real and personal property, to be
used by the City for the benefit of the public.
Question 9(ej
The Corporation was formed for the specific and primary purpose of rendering
financial assistance to the City, through the execution and delivery by the trustee bank of
the certificates of participation referred to herein, by financing, refinancing, acquiring,
constructing, improving, leasing, selling or otherwise conveying real or personal property
to the City.
Question 9(0
In particular, the Corporation will acquire, improve, construct and install and lease
land, buildings and equipment to the City and has assigned its rights to receive payment of
lease rentals to a trustee bank which has delivered certificates of participation
representing proportionate interests in such payments to investors who have paid the
capitalized value of the future lease payments to the trustee bank. The trustee bank has
used the proceeds of the sale of the certificates to (a) pay the costs of acquiring the
Projects, (b) provide for the payment of interest on the lease payments during the
acquisition/construction period, (c) provide a reasonably required reserve fund, and (d)
pay the costs incurred by the City in connection with the preparation and delivery of the
agreements mentioned herein and the certificates of participation. The Corporation has
-2-
-2-
CITY OF HUNTINGTON BEACH CIVIC
Internal Revenue Code. If you are subject to this tax, you must file an
income tax return on Form 990-T, Exempt Organization Business Incoas Tax
Return. In this letter we are not determining whether any of your present or
proposed activities are unrelated trade or business as defined in Code section
513.
You need an employer identification number even if you have no
employees. If an employer identification'nuaber was not entered on your
application, a number will be assigned to you and you will be advised of it.
Please use that number on all returns you file and in all correspondence with
the Internal Revenue Service.
Because this letter could help resolve any questions about your exempt
statue, you should keep it in your permanent records.
If the heading of this letter indicates that a caveat applies, the caveat
below or on the enclosure is an integral part of this letter.
If you have any questions, plesae contact the person whose name and
f telephone. number are shown in the heading of this letter.
t
Sincerely your ,
Zz-
Frederick C. Neilsen
District Director
t
'- Letter 948(CG)
CITY OF HUNTINGTON BEACH CIVIC
Contributions are deductible by the donor if made in accordance with
section 170(c) (1) of the Internal Revenue Code.
Letter 946(CG)
N'
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alale
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Ca ifornia
X. OFFICE OF THE SECRETARY OF STATE
I, MARCH FONG EU, Secretary of State of the State
of California, hereby certify:
That the annexed transcript was prepared by and in this
office from the record on file, of which it purports to be a
copy, and that it is full, true and correct.
IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California this
FIguo
•!AN 0 ,5 wan
5 .4
«�f� �VREKA -��
t ,Y
W
_ Q Secretary at State
.
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(
NAP
SEC/STATE FORM CE-109 (REV.4.78)
&) 33121
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IM
6 rEu sR'r_•a14Lzzy
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of v Waft 4*C$amij
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z ARTIag!j DEE It sa Zr1 E `Jul r f
ava rom ru
CnY Gi:HUffnNGTON BEACH CNIC IMPROVEMENT CORPORA T ION
Tl:a name of this Corporation i$ C:_ of Huntington to.^. Beach Civic (rt roverne;t;
p y g p
(a) This Corporation is a nonprofit pub5c benefit corporation and is not
icY the priva;? czin of arty „,c•rSon. it is organized under the Norproft Fut:ir,
Semi':Corporation law for public purposes.
- tt r -
(b) The specific and psi rar}•purposes of tt:is C—nrpo:ation are:
• f. To render financial ass:stancv to tic Ciy c:
H!lriu^�toit fi93Ch, California, a po`tica.t z tiZd; ision of the
Slade of C2siioir'ia. (herein tiornetirnc:s referred to as the
r "City", bf financing, acquiring, Constructing, improving.
leering and seGinrg buiidirgs, 5uilding improv_nterts.
eysta;;•2rt_ uu:iJes, landscaoir.- and oln6r puoicd .-
icrprov2rnents, lands. and any cti-er real or pers;unal propery -
for':Ere Levelit of residents of t:te Cr'i and _ irrounding a.eas. �
2. To acquire by pvc'-aLz2 or ot:'eriiise res( CW
rscnal property or any ir,ttros! tlrerain: to co nstruc- ,
i reevns3tct. modify, add to, i.,,prOje of Ctlre:rvi59 SCCurO or
R exuip land. buildings, structure, v imi;yovements and (try b
sale,laase.sublease, gift or otherrrisa)make any part or all 0:
any such reai or persm.J" property available to or for ft
benefimit of the public, the City or nny-.one or more departments. `{ :
currisst ne or agencies c:t:te
3. To promote the eornmoin good and genera( we' re. r
of the City of Hun'Jngtor, Beach, Cal4arnia. and the inhabitants s
r and 6at�-rremental or oftxsr ent-prises in Me City and the
surrounding territorfea by providing iho real and personal
property as herelnabov:r dexrib,,vd.
4
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ti
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4. To borrow the necessary funds to pay the cost of
'- financing, acquiring. consirucr ng, replacing, establishing improving, maintaining, equipping and operating such
properties and facilities for the herein described purposes.the ( t4yr
1 indebtedness for which borrowed money may, but need not,
,ttt be evidenced by securities of the Corporation of any kind or
character issued at any one or more times, which may be64
x either unsecured or secured by any mortgage, trust deed, ai
pledge, encumbrance or other tien upon any part of or all oft °%
the properties and assets at any time then or thereafter owned
or acquired b this Corporation.
q Y Po
5. To conduct its businass and affairs so that the City K ;
will have a beneficial interest in the Corporation. ; ;
6. To receive limited or conditional gifts or grants in :.'`•`
trust inner-yb(u. or by way of testamentary devises. bequests
or grants in trust or otherwise. funds of a'.l kinds including i ,;,•z`s t °:
w kf r y,
+ property, both real. oersonat and mixed• whether principal or
income, tangible or intan ib'4a. present or future, vested or
contingent, in order to carry on the purposes of the
r
t Corporation.
.,
fit.
- .fit_ G yyV•
The name and address in the State of California of this Corporation's initial agent
_F.. for service of process is:
GAIL HUTTON
' City At'om!�y �.►;` `:l ' }S' *' '
2000 Main Street
Huntington Beach,CaGfomia 92648 'S
..,+ (714 -5555
1536 �•:�;3:4;�"� ..�a}s�:' -.
The toiicwing n po shall constihrte the initial Director
named ra.•n h actor of the Corporation:
La
{ Iritia!Cirgctor fir` �Ne t
3 s r+
3. Names Rddr ;-.,;•sc';r� �•"•'s+;.,.�,'1^,rT
iJack Kelly Wo nia Cfly of Huntington Beach s.?
2000 Main Street
Y Huntington Beach.Califomia 9264a IKx 't {
u. ttr •2• F'��Sriyk�,�
ytetr� ti r�' C'!` .F.as p +�--s'.,- -F r R s �r4 -y h -. , �.- - -o �__4
..•'b¢� �'T{.r•.4�...,lMtiT4 _ fl�� v�T'� � -rr'`'1H ��;t$. �� �� _ 4 g.•_
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5•'}�.Y`�a t: gygeoyi•n.7• Y+ � - g 7�'R.' y,'� -, -- _ _ .<.,- __ ° _ :' .. -.. ...
;a-- j S"'• 't{-.T. ppryt ,Iy.'YT" d '�Ftj•.t.- - "�^ - _ .. �.-
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1
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The Director of this Corporation shall be of such number• and shall hold office for
such term,as may be specified in the Bylaws of this Corporation.
V.
(a) This Corporation is organized and operated rated exclusively for socialsr
� 9
welfare purposes within the meaning of Section 501(c)(4)of the Internal Revenue Code.
(b) Notwithstanding any other provision of these Articles, the Corporation .;.-:•_
shall not carry on any other activities not parrniued to be carried on by the Corporation
exempt from federal income tax under Section 501(c)(4)of the Internal Revenue Code-
VI. `
The property of this Corporation is irrevocably dedicated to social welfare purposes
and no part of the net income or assets of this :�orpo►ation shall ever inure to the benefit of
any director,otficur or member thereof or to the benefit of any private person.
j V1L i _ �;
No substantial part of the activities of this Corporation shall con3isl of carrying c+n '- z
l propaganda, or otherwise attempting to influence legislation.and We Corporation shall not
participate or intervene in.any political campaign(including the publishing or distribution of
j
stateme7!s)on behalf of any candidate for poetical office.
(a) During the continuance of this Corporation, it may distribute any of its
t assets to the City of Huntington Beach, California. If for any reason the City is unable or
unwi5ing to accept the assets of the Corporation, said assets will be distributed to the
United States of America, the State of California, or any political subdivision thereof, to a hY#r
nonprofit fund, fourtCation or corporation which is orgachizzed aad operated exclusively fer
charitable or socia: welfare purposes and which has established its tax-exempt status
under Section 541(c)(21 o-. 50i(c)(41 of thc.:nternat`Reve:ius Code of 1954. as amendrrd.
f (b) Upon the dissolution or winding up of this Corporation, its assets `;
remaining after payment of. or provisior, matte for the payment of, all debts and liabilities
of the Corporation, shall be distributed t., thu Ci!y of Hur.t'xtgton Beach. Calitornia. If for
r any reason the City.of Huntington Beach i;unable or unwrilling to accept the assets of the
r.. Corporation, said assets wi:i be distributed to the United States of America, the State of
has` California. or any political subdivision thereof, or to a nonprofit fund, foundation or
corporation which Is organized and operated excluslvety for charitable or social woo are
+ r: purposes and which has established its tax-exempt Ca(us under Section 501(cx3) or
r 501(cx4)of the Internal Revenu,?Coda of 1954,as anrw.tod. '
No proposed amendment tD these Arbc:o Lit Incorporation Shan be effective It It Is
disapprove:! by the City Council of the City ct Fha>tington Beach. California, within thirty
(301 days of receipt by the City Clerk on behdf of the City Council of notice of such
proposed aurcarldmont.
+ � k tidy »its' -vs a
.sue '�;.,. �-_.,. _ ,-•--ti: _ - _ +.�!m!�.��r^- __ � �� ' �•
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V
IN WITNESS WHEREOF• the undersigned, tieing the person hersinabove named
as persons constituting the initial Board of Directors of this Corporation, have executed
these Articles of Incorporation,this 25th day of July . 1986.
yyy4 'rR]
JAT° iLY
F ti We hereby declare that vre are the persons who executed the foregoing Articles of
ti Incorporation,which execution is our aci and dazed. ' �,i�.a X, �;
..�., ,
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14'•�T,�.._-_.lv-r-Hi�tY+..•+i'-a�,v...aa_3.. ac::..ifs�T:_:'rR'€�_r.-•v.•y:_t__ " .+�.��!....� -..-_..-_1 .- -,.-. .. T'._ rs...�-...�+... ._k -_t��... _ _ _ _-
+ 18019-13 JHHW:GFB GFB1018
l ;t
BYLAWS
OF
CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT CORPORATION
ARTICLE I
Offices and Seal
Section 1. Offices. The principal office of the Corporation for the
transaction of business shall be City Hall , 200 Main Street, Huntington Beach,
California 92648. The Board of Directors may, however, fix and change from
time to time the principal office from one location to another by noting the
change of address in the minutes of the meeting of the Board of Directors at
which the address was fixed or changed. The fixing or changing of such
address shall not be deemed an amendment to these Bylaws.
Section 2. Seal . The Corporation shall have a seal , consisting of two
(2) Concentric circles with the words "City of Huntington Beach Civic
Improvement Corporation," with the date of incorporation of this Corporation.
ARTICLE II
Directors
Section 1. Powers. Subject to the limitations of the Articles of
Incorporation of this Corporation, the terms of these Bylaws, and the laws of
the State of California, the powers of this Corporation shall be vested in and
exercised by and its property controlled and its affairs conducted by the
Board of Directors.
Section 2. Number. The Corporation shall have seven (7) Directors.
Directors are collectively to be known as the Board of Directors. The number
of Directors may be changed by a Bylaw or amendment thereof duly adopted by
the Board of Directors.
Section 3. Selection, Tenure of Office and Vacancies. The members of
the City Council of the City of Huntington Beach, California (the "City")
shall constitute the Board of Directors of the Corporation, and each member of
the City Council of the City shall be and remain a member of the Board of
Directors of the Corporation for so long as such member remains a member of
the City Council of the City. .
Section 4. Compensation. Directors shall serve without compensation but
each Director may be reimbursed his or her necessary and actual expenses,
including travel incident to his services as Director, pursuant to resolution
of the Board of Directors. Any Director may elect, however, to decline said
reimbursement.
Section 5. Organization Meetings. Immediately following the annual
meeting of the Board of Directors or any special meeting of the Board of
Directors at which Directors shall have been elected, the Directors shall meet
for the purpose of organizing the Board, the election of officers and the
transaction of such business as may come before the meeting. Pending such
organization meeting, all officers of the Corporation shall hold over, except
any officer required by law or these Bylaws to be a Director and who does not
qualify as a Director. A Director elected at such meeting of the Board of
Directors shall forthwith become a member of the Board of Directors for
purposes of such organization.
In the event such an organizational meeting shall not be held immediately
following such meeting of the Board of Directors, it shall thereafter be held
at the next regular meeting or at a special meeting and notice thereof shall
be given in the manner provided in Section 9 of this Article for notice of
special meetings.
Section 6. Regular and Organizational Meetings. Regular meetings of the
Board of Directors shall be held at such time as the Board may fix by
resolution from time to time; provided, however, that at least one regular
meeting shall be held each year and such meetings shall , in all respects,
conform to provisions of the Ralph M. Brown Act, being Sections 54950 through
54961 of the Government Code of the State of California (the "Brown Act") .
No notice of any organizational meeting of the Board of Directors, held
immediately following the annual meeting of the Board of Directors or on or
after any special meeting of the Board of Directors shall have been elected,
need be given; provided, that if such an organizational meeting is not held
immediately following such meeting of the Board of Directors, then notice
thereof shall be given in a manner provided in Section 9 of this Article, in
the same manner as notice of special meetings.
Section 7. Special Meetings. Special meetings of the Board of Directors
shall be called, noticed and held in accordance with the provisions of Section
54956 of the Brown Act.
Section 8. Quorum. A quorum shall consist of a majority of the members
of the Board of Directors unless a greater number is expressly required by
statute, by the Articles of Incorporation of this Corporation, or by these
Bylaws. Every act or decision done or made by a majority of the Directors
present at a meeting duly held at which a quorum is present, shall be the act
of the Board of Directors.
Section 9. Order of Business. The order of business at the regular
meeting of the Board of Directors and, so far as possible, at all other
meetings of the Board of Directors, shall be essentially as follows, except as
otherwise determined by the Directors at such meeting:
(a) Report on the number of Directors present in person in order
to determine the existence of a quorum.
(b) Reading of the notice of the meeting and proof of the delivery
or mailing thereof, or the waiver or waivers of notice of the
meeting then filed, as the case may be.
-2-
(c) Reading of unapproved minutes of previous meetings of the
Board of Directors and the taking of action with respect to
approval thereof.
(d) Presentation and consideration of reports of officers and
committees.
(e) Election of Directors.
(f) Unfinished business.
(g) New business.
(h) Adjournment.
Section 10. Resignation and Removal of Directors. Any Director of this
Corporation may resign at any time by giving written notice to the President
or to the Board of Directors; provided, however, in the event . of such
resignation, such Director' s position shall remain vacant until a new City
Council member is elected to fill such Director' s position as City Council
member. Such resignation shall take effect at the time specified therein,
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective. Any Director may be removed by
the Board of Directors at any regular meeting or at any special meeting of the
Board of Directors, the notice of which, among other things, indicates that
the removal of one or more Directors identified therein shall be considered at
such meeting by reason of such Directors' (1) unexcused absence for four
consecutive meetings of the. Board of Directors, or (2) commission of any act
which tends to discredit the Corporation.
Section 11. Nonliability for Debts. The private property of the
Directors shall be exempt from execution or other liability for any debts,
liabilities or obligations of the Corporation and no Director shall be liable
or responsible for any debts, liabilities or obligations of the Corporation.
Section 12. Indemnity by Corporation for Litigation Expenses of
Officer, Director or Employee. Should any Director, officer or employee of*
the Corporation be sued, either alone or with others, because he is or was a
director, officer or employee of the Corporation, in any proceeding arising
out of his alleged misfeasance or nonfeasance in the performance of his duties
or out of any alleged wrongful act against the Corporation or by the
Corporation, indemnity for his reasonable expenses, including attorneys' fees
incurred in the defense of the proceedings, may be assessed against the
Corporation, its receiver, or its director by the court in the same or a
separate proceeding if the person sued acted in good faith and in a manner
such person reasonably believed to be in the best interests of the Corporation
and, in the case of a criminal proceeding, had no reasonable cause to believe
the conduct of such person was unlawful . The amount of such indemnity shall
be so much of the expenses, including attorneys' fees, incurred in the defense
of the proceeding, as the court determines and finds to be reasonable.
-3-
ARTICLE III
Officers
Section 1. Officers. The officers of -the Corporation shall be a
President, a Vice President, a Secretary and such other officers as the Board
of Directors may appoint. When the duties do not conflict, one person, other
than the President, may hold more than one of these offices. The Corporation
may also have, at the discretion of the Board of Directors, one or more
additional Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. In addition to such officers, the City Administrator of
the City shall act ex officio as the Executive Director of the Corporation,
and the Director of Finance of the City shall act ex officio as the Treasurer
of the Corporation.
Section 2. Election of Officers. The officers of the Corporation
(other than the Treasurer and the Executive Director) shall be chosen by and
shall serve at the pleasure of the Board of Directors and each shall hold
office until any such officer shall resign or shall be removed or- otherwise
disqualified to serve or any successor shall be elected and qualified to
serve.
Section 3. Subordinate Officers. The Board of Directors may elect or
authorize the appointment of such other officers than those hereinabove
mentioned as the business of the Corporation may require, each of whom shall
hold office for such period, have such authority and perform such duties as
are provided in these Bylaws, or as the Board of Directors from time to time
may authorize or determine.
Section 4. Removal of Officers. Any officer may be removed, either
with or without cause, by a majority of the Directors then in office at any
regular or special meeting of the Board, or, except in the case of an officer
chosen by the Board of Directors, by any officers upon whom such power of
removal may be conferred by the Board of Directors. Should a vacancy occur in
any office as a result of death, resignation,. removal , disqualification or any
other cause, the Board of Directors may delegate the powers and duties of such
office to any officers or to any Directors until such time as a successor for
said office has been elected and appointed.
Section 5. President. The President shall preside at all meetings of
the Board of Directors and exercise and perform such other powers and duties
as may be from time to time assigned to him by the Board of Directors or be
prescribed by the Bylaws.
The President shall also be the chief corporate officer of the
Corporation and shall , subject to the control of the Board of Directors, have
general. supervision, direction and control of the business and officers of the
Corporation. He shall preside at all meetings of the Board of Directors. He
shall be ex officio member of all standing committees, and shall have the
general powers and duties of management usually vested in the office of
President of a corporation and shall have such other powers and duties as may
be prescribed by the Board of Directors or by these Bylaws.
-4-
Section 6. Vice President. In the absence or disability of the
President, the Vice President, or the Vice Presidents in order of their ranks
as fixed by the Board of Directors, or if not ranked, the Vice President
designated by the Board of Directors, shall perform all the duties of the
President and when so acting shall have all the powers of and be subject to
all of the restrictions upon the President. The Vice Presidents shall have
such other powers and perform such other duties as may from time to time he
prescribed for them, respectively, by the Board of Directors or by these
Bylaws.
Section 7. Secretary. The Secretary shall keep or cause to be kept a
book of minutes at the principal office or at such other place as the Board of
Directors may order, of all meetings of the Directors, with the time and place
of holding, whether regular or special , and if special , how authorized, the
notice thereof given, the names of those present at Directors' meetings and
the proceedings thereof. The Secretary shall give or cause to be given notice
of all meetings of the Board of Directors of the Corporation, shall keep the
corporate records in safe custody and shall have such other powers and perform
such other duties as may be prescribed- by the Board of Directors -or these
Bylaws.
Section 8. Treasurer. The Treasurer shall keep and maintain or cause
to be kept and maintained adequate and correct amounts of its assets,
liabilities, receipts, disbursements, gains and losses. The books of account
shall at all times be open to inspection by any Director. The Treasurer shall
deposit all monies and other valuables in the name and to the credit of the
Corporation in such depositories as may be designated by the Directors. He
shall disburse the funds of the Corporation as shall be ordered by the Board
of Directors, shall render to the President and the Directors whenever they
shall request it,. an account of all of his transactions as Treasurer and of
the financial condition of the Corporation, shall take proper vouchers for all
disbursements of the funds of the Corporation, and shall have such other
powers and perform such other duties as may be prescribed by the Board of
Directors or by these Bylaws.
Section 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries and the Assistant Treasurers in the order of their
seniority as specified by the Directors shall , in the absence or disability of
the Secretary or the Treasurer, respectively, perform the duties and exercise
the powers of the Secretary or Treasurer and shall perform such duties as the
Board of Directors shall prescribe.
ARTICLE IV
Objects and Purposes
Section 1. Nature of Objects and. Purposes. The business of this
Corporation is to be operated and conducted in the promotion of its objects
and purposes as set forth in Article II of its Articles of Incorporation.
Section 2. Dissolution. The Corporation may be dissolved by vote of
the Directors, or by the action of the Board of Directors in accordance with
the provisions of California law. Upon the dissolution or winding up of this
-5-
Corporation, and after payment or provision for payment, all debts and
liabilities, the assets of this Corporation shall be distributed to the City.
If for any reason the City is •unable or unwilling to accept the assets of the
Corporation, said assets will be distributed to the Federal Government; to a
state or local government for public purposes; or to a nonprofit fund,
foundation, or corporation which is organized and operated for charitable
purposes and which has established its tax-exempt status under Section
501(c)(3) or 501(c) (4) of the Internal Revenue Code of 1954, as amended.
Section 3. Merger. The Corporation may merge with other corporations
organized solely for nonprofit purposes, qualified and exempt from Federal
taxation pursuant to Section 501(c) (3) or 501(c) (4) of the Internal Revenue
Code of 1954, as amended, and from State taxation, upon compliance with the
provisions of California law relating to merger and consolidation.
ARTICLE V
General Provisions
Section 1. Payment of Money, Signatures. All checks, drafts or other
orders for payment of money, notes or other evidences of indebtedness issued
in the name of or payable to the Corporation and any and all securities owned
by or held by the Corporation requiring signature for transfer shall be signed
or endorsed by such person or persons and in such manner as from time to time
shall be determined by the Board of Directors.
Section 2. Execution of Contracts. The Board of Directors, except as
in the Bylaws otherwise provided, may authorize any officer or officers, agent
or agents, to enter into any contract or execute any contract or execute any
instrument in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances and unless so authorized by
the Board of Directors, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or in any amount.
Section 3. Fiscal Year. The fiscal year of the Corporation shall
commence on the 1st day of July of each year and shall end on the 30th day of
June of the next succeeding year.
Section 4. Annual Audit. The affairs and financial condition of the
Corporation shall be audited annually at the end of each fiscal year
commencing with fiscal year 1985-1986 by an independent certified public
accountant selected by the Board of Directors and a written report of such
audit and appropriate financial statements shall be submitted to the Board of
Directors prior to the next regular meeting of the Board of Directors of the
Corporation following the completion of such audit. Additional audits may be
authorized as considered necessary or desirable by the Board of Directors.
-6-
ARTICLE VI
Exempt Activities
Notwithstanding any other provisions of these Bylaws, no Director,
officer, employee or representative of this Corporation shall take any action
or carry on any activity by or on behalf of the Corporation not permitted to
be taken or carried on by an organization exempt under Section 501(c) (3) or
501(c) (4) of the Internal Revenue Code of 1954, as amended, and the
Regulations promulgated thereunder as they now exist or as they may hereafter
be amended.
ARTICLE VII
Amendment to Bylaws
These Bylaws may be amended by majority vote of the Board of Directors.
ADOPTED by the Board of Directors of the City of Huntington Beach Civic
Improvement Corporation on August 4, 1986.
C'-7
By
Secretary
r
-7-
SECRETARY'S CERTIFICATE
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of the City of
Huntington Beach Civic Improvement Corporation, a California nonprofit public
benefit corporation; and
2. That the foregoing Bylaws constitute a full , true and correct copy
of the Bylaws of said Corporation in full force and effect as of the date
hereof.
IN WITNESS WHEREOF, I have hereunto subscribed my name this -y' day of
1986.
By eg��'
Secretary
�A
d
The foregoing instrument is a correct
COPY of the original on file in this office.
Attest
City Clerk and Ex-officio Clerk of the City
Council of the City of Huntington Beach,
Califor ia..
By
Deputy
-8-
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, dated as of July 15, 1986,. by and
between the CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT
CORPORATION, a nonprofit corporation duly organized and existing under the
Nonprofit Public Benefit Corporation Law of the State of California (the
"Corporation"), and the CITY OF HUNTINGTON BEACH, a charter city and
municipal corporation duly organized and existing under the Constitution and laws of
the State of California (the "City"),
WITNESSETH:
WHEREAS, the Huntington Beach Public Facilities Corporation has heretofore
issued its Leasehold Mortgage Revenue Bonds, First Issue, dated as of January 15,
1972 (the "1972 Bonds") for the purpose of financing the acquisition and
construction of certain land and improvements (the "Project") constituting the Civic
Center of the City and has heretofore leased the Project to the City pursuant to the
Lease and Sublease dated as of January 15, 1972, by and between the City and
said Corporation (the "1972 Lease"); and
WHEREAS, the City has the option under the 1972 Lease to provide sufficient
funds to discharge the 1972 Bonds and thereupon to acquire all right, title and
interest of the Huntington Beach Public Facilities Corporation in and to the Project,
and the City wishes at this time to exercise such option.
WHEREAS, the Corporation wishes to acquire the Project from the City for the
purpose of providing funds to enable the City to acquire and construct public
improvements and related land; and
WHEREAS, to pay the costs acquiring the Project from the City, the
Corporation proposes to lease the Project back to the City pursuant to that certain
Lease Agreement of even date herewith between the Corporation and the City (the
"Lease Agreement"), and to assign its right to receive lease payments under said
Lease Agreement to Security Pacific National Bank as trustee (the "Trustee") under
a Trust Agreement of even date herewith among the Corporation, the City and the
Trustee, pursuant to which the Trustee has agreed to execute and deliver the
$20,000,000 aggregate principal amount of certificates of participation (the
"Certificates") representing proportionate rights to receive such lease payments;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants hereinafter contained, the parties hereto hereby agree as follows:
r
Section 1. Acquisition of Project. The City hereby grants, conveys and sells
to the Corporation all right, title and interest of the City in and to the Project and the
Corporation hereby acquires all of the right, title and interest of the City in and to the
Project.
Section 2. Acquisition Price. In consideration of the acquisition by the
Corporation of the City's right, title and interest in the Project pursuant to Section 1,
the Corporation hereby agrees to pay to the City, as the purchase price therefor, the
amount of Eighteen Million Six Hundred Thirty Two Thousand Three Hundred
Seventy-Seven Dollars ($18,632.377). The Corporation and the City hereby agree
that said purchase price is not in excess of the fair market value of the Project, and
constitutes fair and adequate consideration for the interests of the City in the
Project. Said purchase price shall be paid by the Corporation to the City on the date
of execution and delivery of the Certificates, and shall be paid from amounts
deposited with the Trustee for such purpose from the proceeds of sale of the
Certificates. All costs and expenses incurred in connection with the transfer of title
to the Corporation shall be paid by the City.
Section 3. Use of Proceeds. The parties hereby agree that the acquisition by
the Corporation of the City's right, title and interest in the Project pursuant to Section
1 serves the public purposes of the City by providing funds to enable the City to
finance the acquisition and construction of public improvements, including land, and
that the City reasonably expects to complete such acquisition and construction
within three years from the date of execution and delivery of this Agreement.
t
-2-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, all as of the date
first above written.
CITY OF HUNTINGTON BEACH
CIVIC IMPROVEMENT CORPORATION
B h ,
Y
President
(SEAL of the
CORPORATION)
Attest:
By
Secretary
CITY OF HUNTINGTON BEACH
By
Mayor
(SEAL of
the CITY)
Attest:
By arm=
City Clerk
-3-
RSD8039 / 18019-13 86-M9342
pECORDING REQUESTED BY
FAT AMERICAN TITLE INS. CO.
wECORDED IN OFFOAL RECORDS
OF ORANGE COUNTY.CALIFORNIA
AFTER RECORDATION PLEASE RETURN TO: •11 §5AM AUG 13 '86
Jones Hall Hill & .White, cin
A Professional Law Corporation 5��Four Embarcadero Center, Suite 1950
San Francisco, California 94111
Attention: Charles F. Adams, Esq.
Above for Recorder's Use Only
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO
SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE AND SECTION 6103 OF
THE CALIFORNIA GUVth11MEN'1 CUUE
n 23 -03?
1\ GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the City of
Huntington Beach, a charter city and municipal corporation duly organized and
existing under the Constitution and laws of the State of California (the
"City"), hereby GRANTS and CONVEYS all of its right, title and interest in and
E tb the real property, together with all buildings and improvements situated
thereon, described on Exhibit "A" attached hereto and incorporated herein,
"4 located in the City of Huntington Brach, County of Orange, State of California,
to the City of Huntington Beach Civic Improvement Corporation, a nonprofit,
public benefit corporation, duly organized and existing under the laws of the
State of California.
Dated: August 13, 1986 CITAobert-FraMil'
TING N B CH
By
(SEAL of the CITY)
Deputy City Administrator
ACKNOWLEDGED & ACCEPTED:
CITY OF HUNTINGTON BEACH
CIVIC IMPRO ENT CORPORATION
By
Ch rles W. 7hci .-t
Executive 6irector
t
g5►:359342
STATE OF CALIFORNIA )
ss.
COUNTY OF SAN FRANCISCO )
On this 8th day of August, the year 1986, before me, Sally K. Danekas, the
undersigned, a notary public, personally appeared Robert Franz, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed this instrument as the Deputy City Administrator of the City of
Huntington Beach and acknowledged to me that the City of Huntington Beach
executed it.
LANDC0ijN7v
IAL SE By
K. OANf"S Notary u4blin and for said State
NOUC.CA�ORNIA
• CITY OF SAN FU!t;;ISCDMy P-n,Aug 77 I06; -
My commission expires:
August 22, 1989
(SEAL)
86:35934Z
STATE OF CALIFORNIA )
ss.
COUNTY OF SAN FRANCISCO )
On this 8th day of August, the year 1986, before me, Sally K. Danekas, the
undersigned, a notary public, personally appeared Charles W. Thompson,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person who executed this instrument as the President and Secretary,
respectively, of the City of Huntington Beach Civic Improvement Corporation, and
acknowledged to me that the City of Huntington Beach Civic Improvement
Corporation executed it.
WITNESS my hand and c.fficial seal .
OFFICIAL s
SALLY K. OANEKAEKA S By: �lJ
�'p�•�T7. NOTARY KMLIC•CALFORNIA Notary Public in a d for said State
-: CITY M COUNTY of sAN FIUNCISCO
M,CoT�J.Piml Aug 71 1981;
My commission expires:
August 22, 198922, 1989
f
860 359342
EXHIBIT A
The land, together with the buildings and improvements located on the following-
described real property:
Legal Description:
BLOCKS 1903, 2001 AND 2002 OF TRACT NO. 12, AS SHOWN ON A MAP
RECORDED IN BOOK 9, PAGE 13 OF MISCELLANEOUS MAPS, RECORDS OF
ORANGE COUNTY, CALIFORNIA, TOGETHER WITH PARK STREET, UN10N
AVENUEo AND THE ALLEYS IN SAID BLOCKS, AS SHOWN ON SAID MAP
AND AS VACATED 1N THAT CERTAIN NRESOLUTION NO. 34150 OF THE
CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH, A CERTIFIED COPY
OF WHICH WAS RECORDED JANUARY bP 1972 IN BOOK 9956, PAGE 849
OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM# ALL OIL, GAS9 ASPHALT AND ASPHALTUM, AND
OTHER HYDROCARBONS AND ALL OTHER MINERALS, WHETHER SIMILAR OR
DISSIMILAR TO THOSE SPECIFIED, LYING BELOW SDO FEET UNDER THE
SURFACE . OF SUCH REAL PROPERTY WITHIN OR THAT MAY BE PRODUCED
FROM SAID PROPERTYv WITHOUT, HOWEVER9 ANY RIGHT TO USE THE
SURFACE OF SAID PROPERTY OR 500 FEET UNDER THE SURFACE THEREOF
FOR ANY PURPOSE WHATSOEVER.
OL
86:359342
RSD8040 / 18019-13
1
CERTIFICATES OF PARTICIPATION
(Civic Center Project)
Evidencing Proportionate Interests of the
Owners Thereof in Lease Payments to be Made by the
CITY OF HUNTINGTON BEACH
(California)
As the Rental for Certain Property
Pursuant to a Lease Agreement with the
CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT CORPORATION
CERTIFICATE OF ACCEPTANCE OF GRANT DEED
The undersigned hereby state and certify:
(i) that he is the duly appointed, qualified and acting Executive
Director of the City of Huntington Beach Civic Improvement Corporation, a
nonprofit, public benefit corporation, duly organized and existing under
the laws of the State of California (the "Corporation"), and as such, is
familiar with the facts herein certified and is authorized and qualified
to execute and deliver this certificate;
(ii) that the .interest in real. -property conveyed by that certain
grant deed dated August 13, 1986, from the City of Huntington Beach (the
"City") to the Corporation, is hereby accepted by the undersigned on
behalf and by order of the Corporation pursuant to authority conferred by
Resolution No. 86-6, entitled "Resolution of the Board of Directors of the
City of Huntington Beach Civic Improvement Corporation Approving Purchase
and leaseback of Civic Center Land and Improvements with the City of
Huntington Beach, Approving and Authorizing Execution of Related
Acquisition Agreement, Lease Agreement, Assignment Agreement and Trust
Agreement, Approving Official Statement and Sale of Not to Exceed
$20,000,000 Certificates of Participation, and Approving Related Documents
and Official Action", adopted by the Board of Directors of the Corporation
on August .4, 1986, and the Corporation, as grantee, consents to
recordation thereof by its duly authorized officer.
Dated: August 13, 1986
CITY OF HUNTINGTON BEACH
CIVIC IMP NT CORPORATION
or
BY
C arles W. Thompson
Executive Director
STATE OF CALIFORNIA , 88-359342
ss.
COUNTY OF SAN FRANCISCO )
1
On this 8th day of August, the year 1986, before me, Sally K. Danekas, the
undersigned, a notary public, personally appeared Charles W. Thompson
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed this instrument as the Executive
Director of the City of Huntington Beach Civic Improvement Corporation,
and acknowledged to me that the City of Huntington Beach Civic Improvement
Corporation executed it.
WITNESS my hand and official seal.
OFFICIAL SEAL By
SALLY K. DANEKAS Notary 4ubic in and for said State
NOTARY PLISUC•CALIFORMA
CITY AND COUNTY OF SAN FRANCISCO
M,C-- Eap+m,Aug 77 tQEC
My commission expires:
August 22, 1989
(SEAL)
. 85a359342
EXHIBIT A
The land, together with the buildings and improvements located on the
following-described real property:
Legal Description:
BLOCKS 1903, 2001 AND 2002 OF TRACT NO. 121 AS SHOWN ON A MAP
RECORDED IN BOOK 91 PAGE 13 OF MISCELLANEOUS MAPS, RECORDS OF
ORANGE COUNTY, CALIFORNIA# TOGETHER WITH PARK STREET, UNION
AVENUE, AND THE ALLEYS IN SAID BLOCKS, AS SHOWN ON SAID MAP
AND AS VACATED IN THAT CERTAIN ORESOLUTION NO. 34150 OF THE
CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH, A CERTIFIED: COPY
OF WHICH WAS RECORDED JANUARY 69 1972 IN BOOK 9956, PAGE 649
OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM, ALL O1L, GAS, ASPHALT AND ASPHALTUM, AND
OTHER HYDROCARBONS AND ALL OTHER MINERALS, WHETHER SIMILAR OR
DISSIMILAR TO THOSE SPECIFIED, LYING BELOW 50.0 FEET UNDER THE
SURFACE OF SUCH .REALPROPERTY WITHIN OR THAT MAY BE PRODUCED
FROM SAID PROPERTY, WITHOUT, HOWEVER, ANY RIGHT TO USE THE
SURFACE OF SAID PROPERTY OR 500 FEET UNDER THE SURFACE THEREOF
FOR ANY PURPOSE WHATSOEVER.
18019-13 JHHW CFA:dtd August 12.1986 F6397
LEASE AGREEMENT
Dated as of July 15, 1986
by and between
CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT CORPORATION,
as lessor
Y and the
CITY OF HUNTINGTON BEACH, as lessee
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), dated for convenience as of July 15,
1986, by and between the CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT
CORPORATION, a nonprofit corporation duly organized and existing under the Nonprofit
Public Benefit Corporation Law of the State of California, as lessor (the "Corporation"),
and the CITY OF HUNTINGTON BEACH, a charter city and municipal corporation duly
organized and existing under the constitution and laws of said State, as lessee (the "City");
WITNESSETH:
WHEREAS, the Huntington Beach Public Facilities Corporation has heretofore
issued its Leasehold Mortgage Revenue Bonds, First Issue, dated as of January 15, 1972
(the "1972 Bonds") for the purpose of financing the acquisition and construction of certain
land and improvements constituting the Civic Center of the City (the "Project"), and has
heretofore leased the Project to the City pursuant to the Lease and Sublease dated as of
January 15, 1972, by and between the City and said Corporation (the "1972 Lease"); and
WHEREAS, the City has the option under the 1972 Lease to provide sufficient funds
to discharge the 1972 Bonds and thereupon to acquire all right, title and interest of the
Huntington Beach Public Facilities Corporation in and to the Project, and the City has
exercised such option as of the date of execution and delivery hereof; and
WHEREAS, the City has agreed to sell all of its right, title and interest in the Project
to the Corporation pursuant to that certain Acquisition Agreement dated as of July 15,
1986, (the "Acquisition Agreement") by and between the City as seller and the Corporation
as purchaser; and
WHEREAS, in order to provide funds to acquire the Project, the Corporation has
proposed to lease the Project to the City, and the City is authorized pursuant to the
Constitution and laws of the State of California to enter into leasehold agreements for such
purposes;
NOW, THEREFORE, in consideration of the above premises and of the mutual
covenants hereinafter contained and for other good and valuable consideration, the parties
hereto agree as follows:
ARTICLE I
a
DEFINITIONS AND EXHIBITS
Section 1.1. Definitions. All capitalized terms used in this Lease Agreement shall
have the respective meanings given such terms in the Trust Agreement. In addition,
unless the context otherwise requires, the terms defined in this Section 1.1 shall for all
purposes of this Lease Agreement have the meanings herein specified.
"Lease Payment Date" means the fifteenth (15th) day of July and January in each
year during the Term of this Lease, commencing January 15, 1987.
"Permitted Encumbrances" means, as of any particular time: (a) liens for general
ad valorem taxes and for assessments, if any, not then delinquent or which the City may,
pursuant to provisions of Article V hereof, permit to remain unpaid; (b) the Assignment
Agreement; (c) this Lease Agreement; (d) any right or claim of any mechanic, laborer,
materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (e)
easements, rights of way, mineral rights, drilling rights and other rights, reservations,
covenants, conditions or restrictions which exist of record as of the Closing Date and
which the City certifies in writing will not materially impair the use of the Project site; and (f)
easements, rights of way, mineral rights, drilling rights and other rights, reservations,
covenants, conditions or restrictions established following the Closing Date and to which
the Corporation and the City consent in writing.
"Project" means the land described more fully in Exhibit A attached hereto and by
this reference incorporated herein, together with all of the improvements, facilities and
other real property situated on such land as of the Closing Date, constituting the civic
center of the City. In the event the City shall at any time exercise its option to exclude any
land from this Lease pursuant to Section 5.11, the term "Project" shall thereafter exclude
such land and all improvements, facilities and other real property situated on such land.
In the event the City shall at any time exercise its option to finance additional
improvements and facilities on the Site from the proceeds of any additional certificates of
participation executed and delivered pursuant to Section 2.12 of the Trust Agreement, the
term "Project" shall thereafter include all such improvements and facilities.
"Rental Period" means each twelve-month period during the Term of this Lease
commencing on August 2 in any year and ending on August 1 in the next succeeding year;
except that the first Rental Period during the Term of this Lease shall commence on the
Closing Date and end on August 1, 1987.
"Term of this Lease" or "Term" means the time during which this Lease is in
effect, as provided for in Section 4.2.
"Trust Agreement" means the agreement entitled "Trust Agreement" and dated as
of July 15, 1986, by and among the Trustee, the Corporation and the City, together with
any duly authorized and executed amendments thereto.
Section 1.2. Exhibits. The following Exhibits are attached to, and by reference
made a part of, this Lease:
-2-
Exhibit A: The description of the Project site.
4
Exhibit B: The schedule of Lease Payments to be paid by the City hereunder,
showing the date and amount of each such Lease Payment.
-3-
ARTICLE 11
f
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City. The City
represents, covenants and warrants to the Corporation as follows:
(a) Due Organization and Existence. The City is a charter city and
municipal corporation duly organized and existing under the constitution and
laws of the State.
(b) Authorization. The laws of the State authorize the City to enter
into this Lease Agreement, the Acquisition Agreement and the Trust
Agreement and to enter into the transactions contemplated by and to carry
out its obligations under all of the aforesaid Agreements, and the City has
duly authorized and executed all of the aforesaid Agreements.
(c) No Violations. Neither the execution and delivery of this Lease
Agreement, the Acquisition Agreement or the Trust Agreement, nor the
fulfillment of or compliance with the terms and conditions hereof or thereof,
nor the consummation of the transactions contemplated hereby or thereby,
conflicts with or results in a breach of the terms, conditions or provisions of
any restriction or any agreement or instrument to which the City is now a
party or by which the City is bound, or constitutes a default under any of the
foregoing, or results in the creation or imposition of any lien, charge or
encumbrances whatsoever upon any of the property or assets of the City or
upon the Project, except Permitted Encumbrances.
(d) Execution and Delivery. The City has duly authorized and
executed this Lease Agreement in accordance with the laws of the State.
(e) Tax Covenants. The City will not use the proceeds of the
Certificates (i) for facilities which would cause the obligations of the City
hereunder to become "industrial development bonds" within the meaning of
Section 103(b)(2) of the Tax Code, assuming that the applicable limitation in
said Section is ten percent (10%) rather than twenty-five percent (25%); or
(ii) which would cause the obligations of the City hereunder to become
"arbitrage bonds" within the meaning of Section 103(c) of the Tax Code; or
(iii) which would cause the obligations of the City hereunder to become
"consumer loan bonds" within the meaning of Section 103(o) of the Tax
Code.
Section 2.2. Representations, Covenants and Warranties of Corporation. The
Corporation represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence. The Corporation is a nonprofit
corporation organized and existing under and by virtue of the Nonprofit
Public Benefit Corporation Law of the State; has power to enter into this
Lease Agreement, the Acquisition Agreement, the Assignment Agreement
and the Trust Agreement; is possessed of full power to own and hold,
-4-
i improve and equip real and personal property, and to lease and sell the
same; and has duly authorized the execution and delivery of all of the
aforesaid Agreements.
(b) No Encumbrances. The Corporation will not pledge the Lease
Payments or other amounts derived from the Project and from its other
rights under this Lease Agreement, and will not mortgage or encumber the
Project, except as provided under the terms of this Lease Agreement and
the Trust Agreement.
(c) No Violations. Neither the execution and delivery of this Lease
Agreement, the Acquisition Agreement, the Assignment Agreement or the
Trust Agreement, nor the fulfillment of or compliance with the terms and
conditions hereof or thereof, nor the consummation of the transactions
contemplated hereby or thereby, conflicts with or results in a breach of the
terms, conditions or provisions of any restriction or any agreement or
instrument to which the Corporation is now a party or by which the
Corporation is bound, or constitutes a default under any of the foregoing, or
results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of the Corporation, or upon
the Project, except Permitted Encumbrances.
(d) No Assignments. Except as provided herein, the Corporation will
not assign this Lease Agreement, its right to receive Lease Payments from
the City, or its duties and obligations hereunder to any other person, firm or
corporation so as to impair or violate the representations, covenants and
warranties contained in this Section 2.2.
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ARTICLE IH
i
DEPOSIT OF MONEYS; ACQUISITION OF THE PROJECT
Section 3.1. Deposit of Moneys. On the Closing Date, the Corporation shall cause
to be deposited with the Trustee the proceeds of sale of the Certificates. Pursuant to
Section 3.01 of the Trust Agreement, the Reserve Requirement shall be deposited with the
Trustee in the Reserve Fund, a portion of the first Lease Payment payable by the City
hereunder shall be deposited with the Trustee in the Lease Payment Fund, an amount
sufficient to pay the estimated Costs of Issuance shall be deposited in the Costs of
Issuance Fund, and the remaining balance of said amount shall be transferred to the
Trustee for deposit in the Acquisition Fund.
Section 3.2. Acquisition of the Project. The Corporation agrees to acquire the
Project on the Closing Date pursuant to and in accordance with the Acquisition
Agreement.
Section 3.3. Payment of Acquisition Costs. Payment of the Acquisition Costs shall
be made from the moneys deposited with the Trustee in the Acquisition Fund as provided
in Section 3.1 hereof, which shall be disbursed for this purpose in accordance and upon
compliance with Article III of the Trust Agreement.
Section 3.4. Unexpended Proceeds. In accordance with Section 3.04 of the Trust
Agreement, all excess moneys remaining in the Acquisition Fund and not required for
payment of Acquisition Costs shall at the written request of the Corporation Representative
filed with the Trustee be transferred by the Trustee to the Lease Payment Fund and
applied to pay the Lease Payments as the same become due and payable.
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ARTICLE IV
AGREEMENT TO LEASE; TERMINATION OF
THIS LEASE; LEASE PAYMENTS
Section 4.1. Lease. The Corporation hereby leases the Project to the City, and the
City hereby leases the Project from the Corporation, upon the terms and conditions set
forth in this Lease.
Section 4.2. Term of Agreement. The Term of this Lease shall commence on the
date hereof, and shall end on August 1, 2016, unless such term is extended as hereinafter
provided. If on August 1, 2016, the Trust Agreement shall not be discharged by its terms,
or if the Lease Payments payable hereunder shall have been abated at any time and for
any reason, then the Term of this Lease shall be extended until the Trust Agreement shall
be discharged by its terms, but not beyond August 1, 2026. If prior to August 1, 2016, the
Trust Agreement shall be discharged by its terms, the Term of this Lease shall thereupon
end.
Section 4.3. Possession. The City agrees to take possession of the Project
hereunder on the Closing Date, and the first Lease Payment shall be the Lease Payment
the Lease Payment Date of which is January 15, 1987.
Secfiion 4.4. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Articles VI and X, the City
agrees to pay to the Corporation, its successors and assigns, as rental for the use and
occupancy of the Project during each Rental Period, the Lease Payments (denominated
into components of principal and interest) in the respective amounts specified in Exhibit A,
to be due and payable on the respective dates specified in Exhibit A, and to be deposited
with the Trustee on the Lease Payment Date immediately preceding each such date. Any
amount held in the Lease Payment Fund on any Lease Payment Date (other than amounts
resulting from the prepayment of the Lease Payments in part but not in whole pursuant to
Article X and other than amounts required for payment of past due principal or interest
represented by any Certificates not presented for payment) shall be credited towards the
Lease Payment then due and payable; and no Lease Payment need be made on any
Lease Payment Date if the amounts then held in the Lease Payment Fund are at least
equal to the Lease Payment then required to be paid. The Lease Payments payable in
any Rental Period shall be for the use of the Project for such Rental Period.
(b) Effect of Prepayment. In the event that the City prepays all remaining
Lease Payments in full pursuant to Article X, the City's obligations under this Lease shall
thereupon cease and terminate, including but not limited to the City's obligation to pay
Lease Payments under this Section 4.4; subject however, to the provisions of Section 10.1
in the case of prepayment by application of a security deposit. In the event that the City
prepays the Lease Payments in part but not in whole pursuant to Article X, the principal
components of the remaining Lease Payments shall be reduced on a pro rata basis in
integral multiples of $5,000 and the interest component of each remaining Lease Payment
shall be reduced by the aggregate corresponding amount of interest which would
otherwise be payable with respect to the Certificates thereby redeemed pursuant to
Section 4.01 of the Trust Agreement.
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(c) Rate on Overdue Payments. In the event the City should fail to make
' any of the payments required in this Section 4.4, the payment in default shall continue as
an obligation of the City until the amount in default shall have been fully paid, and the City
agrees to pay the same with interest thereon, to the extent permitted by law, from the date
of default to the date of payment at the rate of twelve percent (12%) per annum.
(d) Fair Rental Value. The Lease Payments for each Rental Period shall
constitute the total rental for the Project for each Rental Period, and shall be paid by the
City in each Rental Period for and in consideration of the right of the use and occupancy
of, and the continued quiet use and enjoyment of the Project during each Rental Period.
The parties hereto have agreed and determined that the total Lease Payments represent
the fair rental value of the Project. In making such determination, consideration has been
given to the appraised value of the the Project, other obligations of the parties under this
Lease, the uses and purposes which may be served by the Project and the benefits
therefrom which will accrue to the City and the general public.
(e) Budget and Appropriation. The City covenants to take such action as
may be necessary to include all Lease Payments due hereunder in each of its budgets
during the Term of this Lease and to make the necessary annual appropriations for all
such Lease Payments. During the Term of this Lease, the City will furnish to the Trustee
copies of each final budget of the City within thirty (30) days after the adoption thereof.
The covenants on the part of the City herein contained shall be deemed to be and shall be
construed to be duties imposed by law and it shall be the duty of each and every public
official of the City to take such action and do such things as are required by law in the
performance of the official duty of such officials to enable the City to carry out and perform
the covenants and agreements in this Lease agreed to be carried out and performed by
the City.
(f) Assignment. The City understands and agrees that all Lease Payments
have been assigned by the Corporation to the Trustee in trust, pursuant to the Assignment
Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents to
such assignment. The Corporation hereby directs the City, and the City hereby agrees to
pay to the Trustee at the corporate trust office of the Trustee in Los Angeles, California, all
payments payable by the City pursuant to this Section 4.4 and all amounts payable by the
City pursuant to Article X.
Section 4.5. Quiet Enjoyment. During the Term of this Lease, the Corporation shall
provide the City with quiet use and enjoyment of the Project, and the City shall during such
Term peaceably and quietly have and hold and enjoy the Project, without suit, trouble or
hindrance from the Corporation, except as expressly set fortMin this Lease Agreement.
The Corporation will, at the request of the City and at the City's cost, join in any legal
action in which the City asserts its right to such possession and enjoyment to the extent
the Corporation may lawfully do so. Notwithstanding the foregoing, the Corporation shall
have the right to inspect the Project as provided in Section 7.2.
Section 4.6. Title. During the Term of this Lease, the Corporation shall hold title to
the Project and any and all additions which comprise fixtures, repairs, replacements or
modifications to the Project,- except for those fixtures, repairs, replacements or
modifications which are added to the Project by the City at its own expense and which
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may be removed without damaging the Project and except for any items added to the
Project by the City pursuant to Section 5.9.
If the City prepays the Lease Payments in full pursuant to Article X or makes the
security deposit permitted by Section 10.1, or pays all Lease Payments during the Term of
this Lease as the same become due and payable, all right, title and interest of the
Corporation in and to the Project shall be transferred to and vested in the City. The
Corporation agrees to take any and all steps and execute and record any and all
documents reasonably required by the City to consummate any such transfer of title.
Section 4.7. Additional Payments. In addition to the Lease Payments, as additional
rent hereunder, the City shall pay when due all costs and expenses incurred by the
Corporation to comply with the provisions of the Trust Agreement, including without
limitation all Costs of Issuance (to the extent not paid from amounts on deposit in the
Construction Fund), compensation due to the Trustee and all costs and expenses of
auditors, engineers and accountants.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term
of this Lease, as part of the consideration for the rental of the Project, all improvement,
repair and maintenance of the Project shall be the responsibility of the City, and the City
shall pay for or otherwise arrange for the payment of all utility services supplied to the
Project, which may include, without limitation, janitor service, security, power, gas,
telephone, light, heating, water and all other utility services, and shall pay for or otherwise
arrange for the payment of the cost of the repair and replacement of the Project resulting
from ordinary wear and tear or want of care on the part of the City or any assignee or
sublessee thereof. In exchange for the Lease Payments herein provided. the Corporation
agrees to provide only the Project, as hereinbefore more specifically set forth. The City
waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but
such waiver shall not limit any of the rights of the City under the terms of this Lease.
The City shall also pay or cause to be paid all taxes and assessments of any type
or nature, if any, charged to the Corporation or the City affecting the Project or the
respective interests or estates therein; provided that with respect to special assessments
or other governmental charges that may lawfully be paid in installments over a period of
years, the City shall be obligated to pay only such installments as are required to be paid
during the Term of this Lease as and when the same become due.
The City may, at the City's expense and in its name, in good faith contest any such
taxes, assessments, utility and other charges and, in the event of any such contest, may
permit the taxes, assessments or other charges so contested to remain unpaid during the
period of such contest and any appeal therefrom unless the Corporation shall notify the
City that, in the opinion of Independent Counsel, by nonpayment of any such items, the
interest of the Corporation in the Project will be materially endangered or the Project or
any part thereof will be subject to loss or forfeiture, in which event the City shall promptly
pay such taxes, assessments or charges or provide the Corporation with full security
against any loss which may result from nonpayment, in form satisfactory to the
Corporation and the Trustee.
Section 5.2. Modification of Project. The City shall, at its own expense, have the
right to remodel the Project or to make additions, modifications and improvements to the
Project. All additions, modifications and improvements to the Project, but not any
additional buildings or improvements shall thereafter comprise part of the Project and be
subject to the provisions of this Lease Agreement. Such additions, modifications and
improvements shall not in any way damage the Project or cause it to be used for
purposes other than those authorized under the provisions of state and federal law; and
the Project, upon completion of any additions, modifications and improvements made
thereto pursuant to this Section, shall be of a value which is not substantially less than the
value of the Project immediately prior to the making of such additions, modifications and
improvements. The City will not permit any mechanic's or other lien to be established or
remain against the Project for labor or materials furnished in connection with any
remodeling, additions, modifications, improvements, repairs, renewals or replacements
s made by the City pursuant to this Section; provided that if any such lien is established and
the City shall first notify or cause to be notified the Corporation of the City's intention to do
so, the City may in good faith contest any lien filed or established against the Project, and
in such event may permit the items so contested to remain undischarged and unsatisfied
during the period of such contest and any appeal therefrom and shall provide the
Corporation with full security against any loss or forfeiture which might arise from the
nonpayment of any such item, in form satisfactory to the Corporation. The Corporation will
cooperate fully in any such contest, upon the request and at the expense of the City.
Section 5.3. Public Liability and Property Damage Insurance. The City shall
maintain or cause to be maintained, throughout the Term of this Lease, but only if and to
the extent available at reasonable cost from reputable insurers, a standard comprehensive
general insurance policy or policies in protection of the Corporation, City, and their
respective members, officers, agents and employees. Said policy or policies shall
provide for indemnification of said parties against direct or contingent loss or liability for
damages for bodily and personal injury, death or property damage occasioned by reason
of the operation of the Project. Said policy or policies shall provide coverage in the
minimum liability limits of $1,000,000 for personal injury or death of each person and
$3,000,000 for personal injury or deaths of two or more persons in each accident or event
(subject to a deductible of not to exceed $250.000). and in a minimum amount of $150,000
(subject to a deductible of not to exceed $75,000) for damage to property resulting from
each accident or event. Such public liability and property damage insurance may,
however, be in the form of a single limit policy in the amount of $3,000,000 covering all
such risks. Such liability insurance may be maintained as part of or in conjunction with
any other liability insurance coverage carried by the City, and may be maintained in whole
or in part in the form of self-insurance by the City. The Net Proceeds of such liability
insurance shall be applied toward extinguishment or satisfaction of the liability with respect
to which the Net Proceeds of such insurance shall have been paid.
Section 5.4. Fire and Extended Coverage Insurance. The City shall procure and
maintain, or cause to be procured and maintained, throughout the Term of this Lease, but
only if and to the extent available at a reasonable cost from reputable insurers, insurance
against loss or damage to any structures constituting any part of the Project by fire and
lightning, with extended coverage and vandalism and malicious mischief insurance. Said
extended coverage insurance shall, as nearly as practicable, cover loss or damage by
explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are
normally covered by such insurance. Such insurance shall be in an amount equal to the
greater of (a) one hundred percent (100%) of the replacement cost of the Project, or (b)
the aggregate principal amount of the Outstanding Certificates. Such insurance may be
subject to deductible clauses of not to exceed $500,000 for any one loss. Such insurance
may be maintained as part of or in conjunction with any other fire and extended coverage
insurance carried by the City and may be maintained in whole or in part in the form of self-
insurance by the City. The Net Proceeds of such insurance shall be applied as provided
in Section 6.2(a).
Section 5.5. Rental Interruption Insurance. The City shall procure, and maintain
through the Term of this Lease, rental interruption or use and occupancy insurance to
cover loss, total or partial, of at least twelve months of rental with respect to the Project
improvements as a result of any of the hazards covered in the insurance required by
Section 5.4 hereof, in the maximum amount of coverage which is available at a
! reasonable cost from reputable insurers (provided that such amount shall not be required
to exceed the maximum annual Lease Payments payable in the current or any future
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Fiscal Year). The Net Proceeds of such insurance shall be paid to the Trustee and
deposited in the Lease Payment Fund, and shall be credited towards the payment of the
Lease Payments in the order in which such Lease Payments come due and payable.
Section 5.6. Title Insurance. The Corporation shall provide, at its own expense, on
or before the Closing Date, a CLTA title insurance policy in form satisfactory to the Trustee
and in the amount of not less than the aggregate principal amount of the Certificates,
insuring the City's leasehold estate in the Project, subject only to Permitted
Encumbrances. All Net Proceeds received under any of said policies shall be deposited
with the Trustee in the Lease Payment Fund and shall be credited towards the prepayment
of the Lease Payments pursuant to Section 10.3.
Section 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance
required by Sections 5.4, 5.5 and 5.6 hereof shall provide that all proceeds thereunder
shall be payable to the Trustee and applied as provided in Section 6.2. All policies of
insurance required by this Lease insurance shall be in form satisfactory to the Trustee.
The City shall pay or cause to be paid when due the premiums for all insurance policies
required by this Lease. All such policies shall provide that the Trustee shall be given thirty
(30) days' notice of each expiration, any intended cancellation thereof or reduction of the
coverage provided thereby. The Trustee shall not be responsible for the sufficiency of any
insurance herein required and shall be fully protected in accepting payment on account of
such insurance or any adjustment, compromise or settlement of any loss agreed to by the
Trustee. The City shall cause to be delivered to the Trustee, on or before July 1 in each
year during the Term hereof, evidence satisfactory to the Trustee that the insurance
policies required by this Lease are in full force and effect.
Section 5.8. Advances. If the City shall fail to perform any of its obligations under
this Article the Corporation may, but shall not be obligated to. take such action as may be
necessary to cure such failure, including the advancement of money, and the City shall be
obligated to repay all such advances as soon as possible, with interest at the rate of
twelve percent (12%) per annum from the date of the advance to the date of repayment.
Section 5.9. Installation of City's Equipment. The City may at any time and from
time to time, in its sole discretion and at its own expense, install or permit to be installed
other items of equipment or other personal property in or upon the Project . All such
items shall remain the sole property of the City, in which neither the Corporation nor the
Trustee shall have any interest, and may be modified or removed by the City at any time
provided that the City shall repair and restore any and all damage to the Project resulting
from the installation, modification or removal of any such items. Nothing in this Lease
shall prevent the City from purchasing or leasing items to be installed pursuant to this
Section under a lease or conditional sale agreement, or subject to a vendor's lien or
security agreement, as security for the unpaid portion of the purchase price thereof,
provided that no such lien or security interest shall attach to any part of the Project.
Section 5.10. Liens. The City shall not, directly or indirectly, create, incur, assume
or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with
respect to the Project, other than the respective rights of the Corporation and the City as
herein provided and other than Permitted Encumbrances. Except as expressly provided
in this Article, the City shall promptly, at its own expense, take such action as may be
necessary to duly discharge or remove any such mortgage, pledge, lien, charge,
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encumbrance or claim, for which it is responsible, if the same shall arise at any time. The
City shall reimburse the Corporation for any expense incurred by it in order to discharge
or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
Section 5.11. Removal of Property From Lease. The City shall have, and is
hereby granted, the option at any time and from time to time during the Term of this Lease
to remove from this Lease any land and all improvements, facilities and property situated
thereon; provided that (a) no facilities and improvements (other than parking facilities)
used by the City for civic center purposes are located on such land as of the date of such
removal, and (b) the City shall satisfy all of the following requirements which are hereby
declared to be conditions precedent to such removal:
(1) The City shall file with the Corporation and the Trustee an
amended Exhibit A to this Lease Agreement which deletes the legal
description of such land;
(2) The City shall cause to be recorded in the Office of the Orange
County Recorder a copy of this Lease Agreement containing such amended
Exhibit A, or a memorandum of this Lease Agreement reflecting such
amendment to Exhibit A; and
(3) The City shall file with the Corporation and the Trustee an
appraisal by a qualified appraiser selected by the City in its sole discretion,
stating that the appraised value of the Project, excluding such land and any
improvements thereon, at least equals the original aggregate principal
amount of the Certificates.
f
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ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
USE OF NET PROCEEDS
Section 6.1. Eminent Domain. If all of the Project shall be taken permanently
under the power of eminent domain or sold to a government threatening to exercise the
power of eminent domain, the Term of this Lease shall cease as of the day possession
shall be so taken. If less than all of the Project shall be taken permanently, or if all of the
Project or any part thereof shall be taken temporarily, under the power of eminent domain,
(1) this Lease shall continue in full force and effect and shall not be terminated by virtue of
such taking and the parties waive the benefit of any law to the contrary, and (2) there shall
be a partial abatement of Lease Payments as a result of the application of the Net
Proceeds of any eminent domain award to the prepayment of the Lease Payments
hereunder, on a pro rata basis and in an amount to be agreed upon by the City and the
Corporation such that the resulting Lease Payments represent fair consideration for the
use and occupancy of the remaining usable portion of the Project .
Section 6.2. Application of Net Proceeds.
(a) From Insurance Award. The Net Proceeds of any insurance award
resulting from any damage to or destruction of the Project by fire or other casualty shall be
paid by the City to the Trustee, as assignee of the Corporation under the Assignment
Agreement, and deposited in the Insurance and Condemnation Fund by the Trustee and
applied as set forth in Section 6.01 of the Trust Agreement.
(b) From Eminent Domain Award. The Net Proceeds of any eminent
domain award resulting from any event described in Section 6.1 hereof shall be paid by
the City to the Trustee, as assignee of the Corporation under the Assignment Agreement,
and deposited in the Insurance and Condemnation Award Fund and applied as set forth in
Section 6.02 of the Trust Agreement.
Section 6.3. Abatement of Rental in the Event of Damage or Destruction. The
amount of Lease Payments shall be abated, during any period in which by reason of
damage or destruction (other than by eminent domain which is hereinbefore provided for)
there is substantial interference with the use and occupancy by the City of the Project
(other than any portions of the Project described in Section 5.2) or any portion thereof.
The amount of such abatement shall be agreed upon by the City and the Corporation such
that the resulting Lease Payments represent fair consideration for the use and occupancy
of the portions of the Project not damaged or destroyed. Such abatement shall continue
for the period commencing with such damage or destruction and ending with the
substantial completion of the work of repair or reconstruction. In the event of any such
damage or destruction, this Lease shall continue in full force and effect and the City
waives any right to terminate this Lease by virtue of any such damage and destruction.
Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this
Section 6.3 to the extent that the proceeds of rental interruption insurance or amounts in
the Reserve Fund are available to pay Lease Payments which would otherwise be abated
under this Section 6.3, it being hereby declared that such proceeds and amounts
constitute special funds for the payment of the Lease Payments.
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ARTICLE VII
DISCLAIMER OF WARRANTIES; ACCESS
Section 7.1. Disclaimer of Warranties. The Corporation makes no warranty or
representation, either express or implied, as to the value, design, condition, merchantibility
or fitness for any particular purpose or fitness for the use contemplated by the City of the
Project, or any other representation or warranty with respect to the Project. In no event
shall the Corporation be liable for incidental, indirect, special or consequential damages,
in connection with or arising out of this Lease Agreement, the Acquisition Agreement or
the Trust Agreement for the existence, furnishing, functioning or City's use of the Project.
Section 7.2. Access to the Project. The City agrees that the Corporation and any
Corporation Representative, and the Corporation's successors or assigns, shall have the
right at all reasonable times to enter upon and to examine and inspect the Project. The
City further agrees that the Corporation, any Corporation Representative, and the
Corporation's successors or assigns shall have such rights of access to the Project as
may be reasonably necessary to cause the proper maintenance of the Project in the event
of failure by the City to perform its obligations hereunder.
Section 7.3. Release and Indemnification Covenants. The City shall and hereby
agrees to indemnify and save the Corporation and its officers, agents, successors and
assigns harmless from and against all claims, losses and damages, including legal fees
and expenses, arising out of (a) the use, maintenance, condition or management of, or
from any work or thing done on the Project by the City, (b) any breach or default on the
part of the City in the performance of any of its obligations under this Lease, (c) any act or
negligence of the City or of any of its agents, contractors, servants, employees or
licensees with respect to the Project, or (d) any act or negligence of any sublessee of the
City with respect to the Project. No indemnification is made under this Section or
elsewhere in this Lease for willful misconduct, negligence, or breach of duty under this
Lease Agreement by the Corporation, its officers, agents, employees, successors or
assigns.
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ARTICLE Vlll
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1. Assignment by the Corporation. The Corporation's rights under this
Lease, including the right to receive and enforce payment of the Lease Payments to be
made by the City under this Lease, have been assigned to the Trustee pursuant to the
Assignment Agreement, to which assignment the City hereby consents.
Section 8.2. Assignment and Subleasing by the City. This Lease Agreement may
not be assigned by the City. The City may further sublease the Project or any portion
thereof, but only with the written consent of the Corporation and subject to all of the
following conditions:
(a) This Lease Agreement and the obligation of the City to make
Lease Payments hereunder shall remain obligations of the City; and
(b) The City shall, within thirty (30) days after the delivery thereof,
furnish or cause to be furnished to the Corporation and the Trustee a true
and complete copy of such sublease: and
(c) No such sublease by the City shall cause the Project to be used
for a purpose other than as may be authorized under the provisions of the
laws of the State; and
(d) The City shall furnish the Corporation and the Trustee with a
written opinion of Bond Counsel stating that such sublease does not cause
the interest components of the Lease Payments to become subject to
federal or State personal income taxes.
Section 8.3. Amendment of Lease Agreement. (a) Amendment for Additional
Financing. This Lease may be amended by the parties hereto at any time during the Term
of this Lease, without the prior written consent of the Trustee or the Owners of the
Certificates, for the purpose of providing for the acquisition, construction or improvement
of additional improvements to the Site; provided, however, that (1) no Event of Default shall
have occurred and be continuing, (2) an executed copy of any such amendment shall be
filed with the Trustee promptly following the execution and delivery thereof by the City and
the Corporation, and (3) additional certificates of participation meeting the requirements of
Section 2.12 of the Trust Agreement shall be executed and delivered evidencing the
proportionate interests of the owners thereof in such additional Lease Payments, pursuant
to an amendment to the Trust Agreement or a new agreement an executed copy of which
shall be filed with the Trustee promptly following the execution and delivery thereof by the
parties thereto.
(b) Generally. Except as provided in subsection (a) of this Section, without the
prior written consent of the Trustee the City will not alter, modify or cancel, or agree or
consent to alter, modify or cancel this Lease Agreement, excepting only such alteration or
modification as may be permitted by Article X of the Trust Agreement.
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined. The following shall be "events of default"
under this Lease and the terms "events of default" and "default" shall mean, whenever
they are used in this Lease, any one or more of the following events:
(a) Failure by the City to pay any Lease Payment or other payment
required to be paid hereunder at the time specified herein, and the
continuation of such failure for a period of ten (10) days.
(b) Failure by the City to observe and perform any covenant,
condition or agreement on its part to be observed or performed, other than
as referred to in clause (i) of this Section, for a period of thirty (30) days after
written notice specifying such failure and requesting that it be remedied has
been given to the City by the Corporation, the Trustee, or the Owners of not
less than five percent (5%) in aggregate principal amount of Certificates
then outstanding; provided, however, if the failure stated in the notice can be
corrected, but not within the applicable period, the Corporation, the Trustee
and such Owners shall not unreasonably withhold their consent to an
extension of such time if corrective action is instituted by the City within the
applicable period and diligently pursued until the default is corrected.
(c) The filing by the City of a voluntary petition in bankruptcy, or
failure by the City promptly to lift any execution, garnishment or attachment,
or adjudication of the City as a bankrupt, or assignment by the City for the
benefit of creditors, or the entry by the City into an agreement of composition
with creditors, or the approval by a court of competent jurisdiction of a
petition applicable to the City in any proceedings instituted under the
provisions of the Federal Bankruptcy Act, as amended, or under any similar
acts which may hereafter be enacted.
Section 9.2. Remedies on Default. Whenever any event of default referred to in
Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the
Corporation to exercise any and all remedies available pursuant to law or granted
pursuant to this Lease; provided, however, that notwithstanding anything herein or in the
Trust Agreement to the contrary, there shall be no right under any circumstances to
accelerate the Lease Payments or otherwise declare any Lease Payments not then in
default to be immediately due and payable. Each and every covenant hereof to be kept
and performed by the City is expressly made a condition and upon the breach thereof the
Corporation may exercise any and all rights of entry and re-entry upon the Project , and
also, at its option, with or without such entry, may terminate this Lease; provided, that no
such termination shall be effected either by operation of law or acts of the parties hereto,
except only in the manner herein expressly provided. In the event of such default and
notwithstanding any re-entry by the Corporation, the City shall, as herein expressly
provided, continue to remain liable for the payment of the Lease Payments and�or
damages for breach of this Lease and the performance of all conditions herein contained
and, in any event such rent and/or damages shall be payable to the Corporation at the
time and in the manner as herein provided, to wit:
-17-
(a) In the event the Corporation does not elect to terminate this Lease in the
manner hereinafter provided for in subparagraph (b) hereof, the City agrees to and shall
remain liable for the payment of all Lease Payments and the performance of all conditions
herein contained and shall reimburse the Corporation for any deficiency arising out of the
re-leasing of the Project, or, in the event the Corporation is unable to re-lease the Project,
then for the full amount of all Lease Payments to the end of the Term of this Lease, but
said Lease Payments and-or deficiency shall be payable only at the same time and in the
same manner as hereinabove provided for the payment of Lease Payments hereunder,
notwithstanding such entry or re-entry by the Corporation or any suit in unlawful detainer,
or otherwise, brought by the Corporation for the purpose of effecting such re-entry or
obtaining possession of the Project or the exercise of any other remedy by the
Corporation. The City hereby irrevocably appoints the Corporation as the agent and
attorney-in-fact of the City to enter upon and re-lease the Project in the event of default by
the City in the performance of any covenants herein contained to be performed by the City
and to remove all personal property whatsoever situated upon the Project to place such
property in storage or other suitable place in the County of Orange, for the account of and
at the expense of the City, and the City hereby exempts and agrees to save harmless the
Corporation from any costs, loss or damage whatsoever arising or occasioned by any
such entry upon and re-leasing of the Project and the removal and storage of such
property by the Corporation or its duly authorized agents in accordance with the provisions
herein contained. The City hereby waives any and all claims for damages caused or
which may be caused by the Corporation in re-entering and taking possession of the
Project as herein provided and all claims for damages that may result from the destruction
of or injury to the Project and all claims for damages to or loss of any property belonging
to the City that may be in or upon the Project. The City agrees that the terms of this Lease
constitute full and sufficient notice of the right of the Corporation to re-lease the Project in
the event of such re-entry without effecting a surrender of this Lease, and further agrees
that no acts of the Corporation in effecting such re-leasing shall constitute a surrender or
termination of this Lease irrespective of the term for which such re-leasing is made or the
terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the
event of such default by the City the right to terminate this Agreement shall vest in the
Corporation to be effected in the sole and exclusive manner hereinafter provided for in
subparagraph (b) hereof. The City further waives the right to.any rental obtained by the
Corporation in excess of the Lease Payments and hereby conveys and releases such
excess to the Corporation as compensation to the Corporation for its services in re-
leasing the Project.
(b) In an event of default hereunder, the Corporation at its option may
terminate this Lease and re-lease all or any portion of the Project. In the event of the
termination of this Lease by the Corporation at its option and in the manner hereinafter
provided on account of default by the City (and notwithstanding any re-entry upon the
Project by the Corporation in any manner whatsoever or the re-leasing of the Project), the
City nevertheless agrees to pay to the Corporation all costs, loss or damages howsoever
arising or occurring payable at the same time and in the same manner as is herein
provided in the case of payment of Lease Payments. Any surplus received by the
Corporation from such re-leasing shall be credited towards the Lease Payments next
coming due and payable. Neither notice to pay rent or to deliver up possession of the
premises given pursuant to law nor any proceeding in unlawful detainer taken by the
Corporation shall of itself operate to terminate this Lease, and no termination of this Lease
on account of default by the City shall be or become effective by operation of law, or
-18-
otherwise, unless and until the Corporation shall have given written notice to the City of the
election on the part of the Corporation to terminate this Lease. The City covenants and
agrees that no surrender of the Project and/or of the remainder of the Term hereof or any
termination of this Lease shall be valid in any manner or for any purpose whatsoever
unless stated or accepted by the Corporation by such written notice.
Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved
to the Corporation is intended to be exclusive and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Lease or now or hereafter
existing at law or in equity. No delay or omission to exercise any right or power accruing
upon any default shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the Corporation to exercise any remedy
reserved to it in this Article IX it shall not be necessary to give any notice, other than such
notice as may be required in this Article IX or by law.
Section 9-4- Agreement to Pay Attorneys' Fees and Expenses. In the event either
party to this Lease should default under any of the provisions hereof and the nondefaulting
party should employ attorneys or incur other expenses for the collection of moneys or the
enforcement or performance or observance of any obligation or agreement on the part of
the defaulting party herein contained, the defaulting party agrees that it will on demand
therefor pay to the nondefaulting party the reasonable fees of such attorneys and such
other expenses so incurred by the nondefaulting party.
Section 9.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Lease should be breached by either party and thereafter
waived by the other party, such waiver shall be limited to the particular breach so waived
and shall not be deemed to waive any other breach hereunder.
Section 9.6. Application of Proceeds. All net proceeds received from the re-lease
or other disposition of the Project under this Article IX, and all other amounts derived by
the Corporation or the Trustee as a result of an event of default hereunder, shall be
transferred to the Trustee promptly upon receipt thereof and shall be deposited by the
Trustee in the Lease Payment Fund to be applied to the Lease Payments in order of
payment date.
Section 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and
remedies as are given to the Corporation under this Article IX have been assigned by the
Corporation to the Trustee under the Trust Agreement, to which assignment the City
hereby consents. Such rights and remedies shall be exercised by the Trustee and the
Owners of the Certificates as provided in the Trust Agreement.
-19-
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
Section 10.1. Security Deposit. Notwithstanding any other provision of this Lease
Agreement, the City may on any date secure the payment of Lease Payments by a deposit
with the Trustee of: (a) an amount of cash which, together with amounts on deposit in the
Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, is
sufficient to pay all unpaid Lease Payments, including the principal and interest
components thereof, in accordance with the Lease Payment schedule set forth in Exhibit
A, or (b) Federal Securities together with cash, if required, in such amount as will, in the
opinion of an independent certified public accountant, together with interest to accrue
thereon and, if required, all or a portion of moneys or Federal Securities then on deposit in
the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund,
be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment
dates or on any purchase option date as set forth in Section 10.2, as the City shall instruct
at the time of said deposit. In the event of a security deposit pursuant to this Section, all
qobligations of the City under'this Lease Agreement, and all security provided by this
Lease Agreement for said obligations, shall cease and terminate, excepting only the
obligation of the City to make, or cause to be made, Lease Payments from such security
deposit, and title to the Project shall vest in the City on the date of said deposit
automatically and without further action by the City or the Corporation. Said security
deposit shall be deemed to be and shall constitute a special fund for the payment of
Lease Payments in accordance with the provisions of this Lease Agreement.
Section 10.2. Optional Prepayment. The City may exercise its option to prepay the
principal components of the Lease Payments in whole or in part in any integral multiple of
$5,000, on any Lease Payment Date on or after July 15, 1994, by paying a prepayment
price equal to the aggregate principal components of the Lease Payments to be prepaid,
together with the interest component of the Lease Payment required to be paid on such
date and together with a prepayment penalty equal to the aggregate premium required to
be paid upon the corresponding redemption of the Certificates pursuant to Section 4.01(a)
of the Trust Agreement. Such prepayment price shall be deposited by the Trustee in the
Lease Payment Fund to be applied to the redemption of Certificates pursuant to Section
4.01(a) of the Trust Agreement. The City shall give the Trustee notice of its intention to
exercise its option not less than sixty (60) days in advance of the date of exercise.
Section 10.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain. The City shall be obligated to prepay the Lease Payments in whole or in part on
any Lease Payment Date, from and to the extent of any Net Proceeds of insurance award
or condemnation award with respect to the Project theretofore deposited in the Lease
Payment Fund for such purpose pursuant to Article VI hereof and Article VI of the Trust
Agreement. The City and the Corporation hereby agree that such Net Proceeds, to the
extent remaining after payment of any delinquent Lease Payments, shall be credited
towards the City's obligations under this Section 10.3.
Section 10.4. Credit for Amounts on Deposit. In the event of prepayment of the
principal components of the Lease Payments in full under this Article X, such that the
Trust Agreement shall be discharged by its terms as a result of such prepayment, at the
-20-
election of the City all amounts then on deposit in the Lease Payment Fund or the Reserve
Fund may be credited towards the amounts then required to be so prepaid.
-21-
ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices. All notices, certificates or other communications hereunder
shall be sufficiently given and shall be deemed to have been received 48 hours after
deposit in the United States mail in registered or certified form with postage fully prepaid:
If to the City: City Administrator
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
If to the Corporation: Secretary
City of Huntington Beach
Civic Improvement Corporation
2000 Main Street
Huntington Beach, California 92648
If to the Trustee: Security Pacific National Bank
333 South Beaudry Avenue, 24th Floor
Los Angeles, California 90017
Attention: Corporate Services
Division W24-30
The Corporation and the City, by notice given hereunder, may designate different
addresses to which subsequent notices, certificates or other communications will be sent.
Section 11.2. Binding Effect. This Lease shall inure to the benefit of and shall be
binding upon the Corporation and the City and their respective successors and assigns.
Section 11.3. Severabifity. In the event any provision of this Lease shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 11.4. Net-net-net Lease. This Lease shall be deemed and construed to be
a "net-net-net lease" and the City hereby agrees that the Lease Payments shall be an
absolute net return to the Corporation, free and clear of any expenses, charges or set-offs
whatsoever.
Section 11.5. Further Assurances and Corrective Instruments. the Corporation
and the City agree that they will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and such
further instruments as may reasonably be required for correcting any inadequate or
incorrect description of the Project hereby leased or intended so to be or for carrying out
the expressed intention of this Lease.
-22-
Section 11.6. Execution in Counterparts. This Lease may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one
and the same instrument.
Section 11.7. Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State.
Section 11.8. Corporation and City Representatives. Whenever under the
provisions of this Lease the approval of the Corporation or the City is required, or the
Corporation or the City is required to take some action at the request of the other, such
approval or such request shall be given for the Corporation by a Corporation
Representative and for the City by a City Representative,.and any party hereto shall be
authorized to rely upon any such approval or request.
Section 11.9. Captions. The captions or headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of any
provisions or Section of this Lease Agreement.
-23-
IN WITNESS WHEREOF, the Corporation has caused this Lease to be executed in
its corporate name by its duly authorized officer and sealed with its corporate seal; and
the City has caused this Lease to be executed in its name by its duly authorized officers
and sealed with its corporate seal, as of the date first above written.
CITY OF HUNTINGTON BEACH CIVIC
IMPROVEMENT CORPORATION,
as Lessor
By
President
(SEAL
Attest:
00,
By:
Secretary
CITY OF HUNTINGTON BEACH,
as Lessee
By
Mayor
(SEAL)
Attest:
By
City Clerk
-24-
EXHIBIT A
DESCRIPTION OF PROJECT SITE
BLOCKS 1903; 2001 AND 2002 OF TRACT NO. 121 AS SHOWN ON A MAP
RECORDED IN BOOK 9, PAGE 13 OF MISCELLANEOUS MAPS, RECORDS OF
ORANGE COUNTY, CALIFORNIA, TOGETHER WITH PARK STREET, UNION
AVENUE, AND THE ALLEYS IN SAID BLOCKS, AS SHOWN ON SAID MAP
AND AS VACATED IN THAT CERTAIN "RESOLUTION NO. 3415" OF THE
CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH, A CERTIFIED COPY
OF WHICH WAS RECORDED JANUARY 6, 1972 1N BOOK 9956, PAGE 649
OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM, ALL OIL, GAS, ASPHALT AND ASPHALTUM, AND
OTHER HYDROCARBONS AND ALL OTHER MINERALS, WHETHER SIMILAR OR
DISSIMILAR TO THOSE SPECIFIED, LYING BELOW 500 FEET UNDER THE
SURFACE OF SUCH REAL PROPERTY WITHIN OR THAT MAY BE PRODUCED
FROM SAID PROPERTY, WITHOUT, HOWEVER, ANY RIGHT TO USE THE
SURFACE OF SAID PROPERTY OR 500 FEET UNDER THE SURFACE THEREOF
FQR ANY PURPOSE WHATSOEVER .
-25-
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
Lease Payment Interest Principal Lease
Date Component Component Payment
February 1, 1987 $835,429.58* $ -0- $ 835,429.58
August 1, 1987 767,231.25 170,000.00 937,231.25
February 1, 1988 763,193.75 -0- 763,193.75
August 1, 1988 763,193.75 220,000.00 983,193.75
February 1, 1989 757,418.75 -0- 757,418.75
August 1, 1989 757,418.75 230,000.00 987,418.75
February 1, 1990 750,806.25 -0- 750,806.25
August 1, 1990 750,806.25 245,000.00 995,806.25
February 1, 1991 743,456.25 -0- 743,456.25
August 1, 1991 743,456.25 260,000.00 1,003,456.25
February 1, 1992 735,331.25 -01 735,331.25
August 1, 1992 735,331.25 275,000.00 1,010,331.25
February 1, 1993 726,393.75 -0- 726,393.75
August 1, 1993 726,393.75 295,000.00 1,021,393.75
February 1, 1994 716,437.50 -0- 716,437.50
August 1, 1994 716,437.50 315,000.00 1,031,437.50
February 1, 1995 705,412.50 -0- 705,412.50
August 1, 1995 705,412.50 335,000.00 1,040,412.50
February 1, 1996 693,352.50 -0- 693,352.50
August 1, 1996 693.352.50 360,000.00 1,053,352.50
February 1, 1997 680,212.50 -0- 680,212.50
August 1, 1997 680,212.50 385,000.00 1,065,212.50
February 1, 1998 665,967.50 -0- 665,967.50
August 1, 1998 665,967.50 415,000.00 1,080,967.50
February 1, 1999 650,405.00 -0- 650,405.00
August 1, 1999 650,405.00 445,000.00 1,095,405.00
February 1, 2000 633,495.00 -0- 633,495.00
August 1, 2000 633,495.00 480,000.00 1,113,495.00
February 1, 2001 615,015.00 -0- 615,015.00
August 1, 2001 615,015.00 520,000.00 1,135,015.00
February 1, 2002 594,475.00 -0- 594,475.00
August 1, 2002 594,475.00 560,000.00 1,154,475.00
February 1, 2003 572,355.00 -0- 572,355.00
August 1, 2003 572,355.00 605,000.00 1,177,355.00
* A portion of the first Lease Payment in the amount of $119,347.08 is payable on the
Closing Date pursuant to Section 3.1.
-26-
Lease Payment Interest Principal Lease
Date Component` Component Payment
February 1, 2004 $548,457.50 $ -0- $ 548,457.50
August 1, 2004 548,457.50 650,000.00 1,198,457.50
February 1, 2005 522,782.50 -0- 522,782.50
August 1, 2005 522,782.50 700,000.00 1,222,782.50
February 1, 2006 495,132.50 -0- 495,132.50
August 1, 2006 495,132.50 755,000.00 1,250,132.50
February 1, 2007 465,310.00 -0- 465,310.00
August 1, 2007 465,310.00 815,000.00 1,280,310.00
February 1, 2008 433,117.50 -0- 433,117.50
August 1, 2008 433,117.50 880,000.00 1,313,117.50
February 1, 2009 398,357.50 -0- 398,357.50
August 1, 2009 398,357.50 950,000.00 1,348,357.50
February 1, 2010 360,832.50 -0- 360,832.50
August 1, 2010 360,832.50 1,025,000.00 1,385,832.50
February 1, 2011 320,345.00 -0- 320,345.00
August 1, 2011 320,345.00 1,110,000.00 1,430,345.00
February 1, 2012 276,500.00 -0- 276,500.00
August 1, 2012 276,500.00. 1,195,000.00 1,471,500.00
February 1, 2013 229,297.50 -0- 229,297.50
.August 1, 2013 229,297.50 1,290,000.00 1,519,297.50
February 1, 2014 178,342.50 -0- 178,342.50
August 1, 2014 178,342.50 1,390,000.00 1,568,342.50
February 1, 2015 123,437.50 -0- 123,437.50
August 1, 2015 123,437.50 1,505,000.00 1,628,437.50
February 1, 2016 63,990.00 -0- 63,990.00
August 1, 2016 63,990.00 1,620,000.00 1,683,990.00
-27-
18019-13 JHHW CFA:dtd August t3.t986 F6402
TRUST AGREEMENT
Dated as of July 15, 1986
by and among
SECURITY PACIFIC NATIONAL BANK,
as Trustee,
CITY OF HUNTINGTON BEACH CIVIC IMPROVEMENT CORPORATION
and the
CITY OF HUNTINGTON BEACH
t
F6402.TOC
TABLE OF CONTENTS
Paae
ARTICLE I
DEFINITIONS
Section 1.01. Definitions............................................................................................ 2
Section 1.02. Authorization ........................................................................................ 6
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization ........................................................................................ 7
Section 2.03. Maturities; Interest Rates .................................................................... 7
Section 2.04. Form of Certificates; Interest.............................................................. 8
Section2.05. Form..................................................................................................... 8
Section2.06. Execution ............................................................................................. 8
Section 2.07. Transfer and Exchange.................... .................. 8
Section 2.08. Certificates Mutilated, Lost, Destroyed or Stolen ...............................8
Section2.09. Payment............................................................................................... 9
Section 2.10. Execution of Documents and Proof of Ownership............................. 9
Section 2.11. Registration Books .............................................................................. 10
Section 2.12. Delivery of Additional Certificates....................................................... 10
ARTICLE III
DISPOSITION OF PROCEEDS; ACQUISITION FUND,
RESERVE FUND AND COSTS OF ISSUANCE FUND
Section 3.01. Application of Proceeds...................................................................... 12
Section3.02. Reserve Fund...................................................................................... 12
Section 3.03. Costs of Issuance Fund ...................................................................... 12
Section 3.04. Acquisition Fund............................................... ..................... 13
ARTICLE IV
REDEMPTION OF CERTIFICATES
Section4.01. Redemption.......................................................................................... 14
Section 4.02. Selection of Certificates for Redemption ............................................15
Section 4.03. Notice of Redemption ..........................................................................16
(i)
Page
Section 4.04. Partial Redemption of Certificate........................................................ 16
Section 4.05. Effect of Notice of Redemption........................................................... 16
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease Agreement........................................ 17
Section 5.02. Establishment of Lease Payment Fund.............................................. 17
Section5.03. Deposits............................................................................................... 17
Section 5.04. Application of Moneys......................................................................... 17
Section5.05. Surplus................................................................................................. 17
ARTICLE VI
INSURANCE AND CONDEMNATION FUND;
INSURANCE; EMINENT DOMAIN
Section 6.01. Establishment of Insurance and Condemnation Fund;
Application of Net Proceeds of Insurance Award................... 18
Section 6.02. Application of Net Proceeds of Eminent Domain Award................... 18
Section 6.03. Cooperation ..................
ARTICLE VII
MONEYS IN FUNDS
Section 7.01. Held in Trust........................................................................................ 20
Section 7.02. Investments Authorized....................................................................... 20
Section7.03. Accounting..........................:................................................................ 20
Section 7.04. Allocation of Earnings ......................................................................... 20
Section 7.05. Valuation and Disposition of Investments........................................... 20
Section 7.06. Investment in Accordance with Instructions .......................................20
ARTICLE Vill
THE TRUSTEE
Section 8.01. Compensation of the Trustee ..............................................................22
Section 8.02. Removal of Trustee............................................................................. 22
Section 8.03. Appointment of Agent.......................................................................... 22
Section 8.04. Merger or Consolidation ..................................................................... 22
Section 8.05. Protection and Rights of the Trustee.................................................. 23
(ii)
Paae
ARTICLE IX
MODIFICATION OR AMENDMENT OF AGREEMENTS
Section 9.01. Amendments Permitted....................................................................... 26
Section 9.02. Procedure for Amendment with Written Consent of
Certificate Owners .................................................................... 26
Section 9.03. Disqualified Certificates .......................................................................27
Section 9.04. Effect of Supplemental Agreement..................................................... 27
Section 9.05. Endorsement or Replacement of Certificates Delivered
After Amendments .................................................................... 27
Section 9.06. Amendatory Endorsement of Certificates ...........................................28
ARTICLE X
COVENANTS; NOTICES
Section 10.01. Compliance With and Enforcement of Lease
Agreement .................................................................................29
Section 10.02. Observance of Laws and Regulations............................................... 29
Section 10.03. Prosecution and Defense of Suits.................................................... 29
Section 10.04. Recordation and Filing ...................................................................... 29
-Section 10.05. No Federal Guarantee ...................................................................... 29
Section 10.06. Further Assurances........................................................................... 30
ARTICLE XI
LIMITATION OF LIABILITY
Section 11.01. Limited Liability of City ..................... 31
........................................
Section 11.02. No Liability for Trustee Performance................................................ 31
Section 11.03. Indemnification ...................................................................................31
Section 11.04. Opinion of Counsel............................................................................ 31
Section 11.05. Limitation of Rights to Parties and Certificate Owners .................... 31
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
Section 12.01. Assignment of Rights..................................................................... 32
Section 12.02. Remedies ...........................................................................................32
Section 12.03. Application of Funds ..........................................................................32
Section 12.04. Institution of Legal Proceedings........................................................ 32
Section 12.05. Non-waiver......................................................................................... 33
Section 12.06. Remedies Not Exclusive................................................................... 33
Section 12.07. Power of Trustee to Control Proceedings........................................ 33
Section 12.08. Limitation on Certificate Owners' Right to Sue................................. 33
(iii)
Paae
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Defeasance ........................................................................................35
Section13.02. Records ............................................................................................. 35
Section13.03. Notices............................................................................................... 35
Section13.04. Governing Law................................................................................... 36
Section 13.05. Binding Effect; Successors............................................................... 36
Section 13.06. Execution in Counterparts................................................................. 36
Section 13.07. Destruction of Cancelled Certificates............................................... 36
Section13.08. Headings ............................................................................................36
Section 13.09. Waiver of Notice................................................................................ 36
Section 13.10. Separability of Invalid Provisions...................................................... 37
(iv)
TRUST AGREEMENT
THIS TRUST AGREEMENT, made and entered into as of July 15, 1986, by and
among SECURITY PACIFIC NATIONAL BANK, a national banking association organized
and existing under the laws of the United States of America (the "Trustee"), the CITY OF
HUNTINGTON BEACH CIVIC IMPROVEMENT CORPORATION, a nonprofit corporation
duly organized and existing under the Nonprofit Public Benefit Corporation Law of the State
of California (the "Corporation"), and the CITY OF HUNTINGTON BEACH, a charter city
and municipal corporation duly organized and existing under the constitution and laws of
the State of California (the "City");
WITNESSETH:
WHEREAS, the Huntington Beach Public Facilities Corporation has heretofore
issued its Leasehold Mortgage Revenue Bonds, First Issue, dated as of January 15, 1972
(the "1972 Bonds") for the purpose of financing the acquisition and construction of certain
land and improvements constituting the Civic Center of the City (the "Project"), and has
heretofore leased the Project to the City pursuant to the Lease and Sublease dated as of
January 15, 1972, by and between the City and said Corporation (the "1972 Lease"); and
WHEREAS, the City has the option under the 1972 Lease to provide sufficient funds
to discharge the 1972 Bonds and thereupon to acquire all right, title and interest of the
Huntington Beach Public Facilities Corporation in and to the Project, and the City wishes
at this time to exercise such option; and
WHEREAS, the City has agreed to sell all of its right, title and interest in the Project
to the Corporation pursuant to that certain Acquisition Agreement dated as of July 15,
1986, (the "Acquisition Agreement") by and between the City as seller and the Corporation
as purchaser; and
WHEREAS, for the purpose of obtaining the moneys required to finance the
acquisition of the Project pursuant to the Acquisition Agreement, the Corporation has
agreed to assign and transfer certain of its rights under said Lease Agreement to the
Trustee, and in consideration of such assignment and the execution of this Trust
Agreement, the Trustee has agreed to execute and deliver Certificates of Participation
(Civic Center Project) each evidencing a proportionate interest in the Lease Payments
made by the City under the Lease Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined
in this Section 1.01 shall, for all purposes of this Trust Agreement, have the meanings
herein specified. In addition, any terms defined in the Lease Agreement and not otherwise
defined herein shall have the respective meanings given such terms in the Lease
Agreement.
"Acquisition Agreement" means the Acquisition Agreement, dated as of July 15,
1986, by and between the Corporation and the City, together with any duly authorized and
executed amendments thereto.
"Acquisition Costs" means the price to be paid by the Corporation to the City to
acquire all right, title and interest of the City in and to the Project pursuant to the
Acquisition Agreement.
"Acquisition Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.04.
"Assignment Agreement" means the Assignment Agreement, dated as of July 15,
1986, by and between the Corporation and the Trustee, together with any duly authorized
and executed amendments thereto.
"Bond Counsel" means any attorney or firm of attorneys of nationally recognized
expertise with respect to legal matters relating to obligations the interest on which is
exempt from federal income taxation pursuant to Section 103 of the Tax Code.
"Business Day" means a day of the week on which the Trustee is not required or
authorized to remain closed and on which the New York Stock Exchange is open.
"Certificates" means the $20,000,000 aggregate principal amount of Certificates of
Participation (Civic Center Project) executed and delivered pursuant hereto, together with
any additional certificates of participation executed and delivered pursuant to Section 2.12.
"C means the City of Huntington Beach, a charter city and municipal
corporation organized and existing under and by virtue of the constitution and laws of the
State.
"City Representative" means the City Administrator or a Deputy City Administrator
or any other person authorized by resolution of the City Council of the City to act on behalf
of the City under or with respect to this Trust Agreement and the Lease Agreement.
"Closing Date" means the day when the Certificates, duly executed by the Trustee,
are delivered to the Original Purchaser.
"Corporation" means the City of Huntington Beach Civic Improvement Corporation,
a nonprofit corporation duly organized and existing under the Nonprofit Public Benefit
Corporation Law of the State, its successors and assigns.
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i "Corporation Representative" means the Executive Director or Chief Financial
Officer of the Corporation, or any other person authorized by resolution of the Board of
Directors of the Corporation to act on behalf of the Corporation under or with respect to
this Trust Agreement and the Lease Agreement.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the City or the Corporation relating to the execution, sale and delivery of
the Certificates, including but not limited to settlement costs, printing costs, reproduction
and binding costs, initial fees and charges of the Trustee, financing discounts, legal fees
and charges, bond insurance or title, insurance fees and charges, financial and other
professional consultant fees, costs of rating agencies for credit ratings, fees for execution,
transportation and safekeeping of the Certificates and charges and fees in connection with
the foregoing.
"Costs of Issuance Fund" means the fund by that name established and held by
the Trustee pursuant to Section 3.03.
"Event of Default" means an event of default under the Lease Agreement, as
defined in Section 9.1 thereof.
"Federal Securities" means any of the following which are noncallable and which at
the time of investment are legal investments under the laws of the State for the moneys
proposed to be invested therein:
(a) direct general obligations of (including obligations issued or held
in book entry form on the books of the Department of the Treasury of the
United States of America), or obligations the payment of principal of and
interest on which are directly or indirectly guaranteed by, the United States
of America; or
(b) any of the following obligations of the following agencies of the
United States of America: (i) direct obligations of the Export-Import Bank; (ii)
certificates of beneficial ownership issued by the Farmers Home
Administration; (iii) participation certificates issued by the General Services
Administration; (iv) mortgage-backed bonds or pass-through obligations
issued and guaranteed by the Government National Mortgage Association;
(v) project notes issued by the United States Department of Housing and
Urban Development; and (vi) public housing notes and bonds guaranteed by
the United States of America.
"Fiscal Year" means each.twelve-month period beginning on July 1 of any year
and ending on June 30 of the succeeding year, or any other twelve-month period hereafter
adopted by the City as its official fiscal year period.
"Independent Counsel" means an attorney duly admitted to the practice of law
before the highest court of the state in which such attorney maintains an office and who is
not an employee of the Corporation, the Trustee or the City.
"Insurance and Condemnation Fund" means the fund by that name established and
held by the Trustee pursuant to Section 6.01.
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"Lease Agreement" means the Lease Agreement dated as of July 15, 1986, by and
between the Corporation as lessor and the City as lessee, together with any further duly
authorized and executed amendments thereto.
"Lease Payments" means all payments required to be paid by the City pursuant to
Section 4.4 of the Lease Agreement, including any prepayment thereof pursuant to Article
X of the Lease Agreement, and any payments described in Section 2.12(a) with respect to
any additional certificates of participation.
"Lease Payment Fund" means the fund by that name established and held by the
Trustee pursuant to Section 5.02.
"Net Proceeds" means any insurance proceeds or condemnation award paid with
respect to the Project, to the extent remaining after payment therefrom of all expenses
incurred in the collection thereof.
"Original Purchaser" means Stone & Youngberg, as original purchaser of the
Certificates.
"Owner" or "Certificate Owner", when used with respect to a Certificate means the
person in whose name the ownership of such Certificate shall be registered.
"Payment Date" means February 1, 1987, and the first day of each February and
August thereafter so long as any Certificates are Outstanding hereunder.
"Permitted Investments" means any of the following which at the time of investment
are legal investments under the laws of the State for the moneys proposed to be invested
therein:
(a) Federal Securities;
(b) Any of the following obligations of federal agencies not
guaranteed by the United States of America: (i) debentures issued by the
Federal Housing Administration; (ii) participation certificates or senior debt
obligations of the Federal Home Loan Mortgage Corporation or Farm Credit
Banks (consisting of Federal Land Banks, Federal Intermediate Credit
Banks, or Banks for Cooperatives); (iii) mortgage-backed securities or
senior debt obligations of the Federal National Mortgage Association; or (iv)
credit-backed or senior debt obligations of the Student Loan Marketing
Association.
(c) interest-bearing demand or time deposits (including certificates of
deposit) in federal or State chartered savings and loan associations or in
federal or State banks (including the Trustee), provided that: (i) in the case
of a savings and loan association, such demand or time deposits shall be
fully insured by the Federal Savings and Loan Insurance Corporation, or the
unsecured obligations of such savings and loan association shall be rated A
or better by Moody's; and (ii) in the case of a bank, such demand or time
deposits shall be fully insured by the Federal Deposit Insurance Corporation,
or the unsecured obligations of such bank (or the unsecured obligations of
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the parent bank holding company of which such bank is the lead bank) shall
be rated A or better by Moody's;
(d) obligations issued by any corporation organized and operating
within the United States of America having assets in excess of $500,000,
which obligations are rated A or better by Moody's;
(e) money market funds which are rated in the highest rating
category by Moody's, or units of a taxable government money market
portfolio composed of obligations guaranteed by the full faith and credit of
the United States of America; and
(f) obligations of the State or any political subdivision thereof the
interest on which is exempt from federal income taxation pursuant to Section
103 of the Tax Code, and which are rated A or better by Moody's.
"Record Date" means the close of business on the fifteenth (15th) day of the month
preceding each Payment Date, whether or not such fifteenth day is a Business Day.
"Registration Books" means the records maintained by the Trustee pursuant to
Section 2.11 for registration and transfer of ownership of the Certificates.
"Reserve Fund" means the fund established and held by the Trustee pursuant to
Section 3.02.
"Reserve Requirement" means, as of the date of calculation, an amount equal to
the maximum aggregate amount of the Lease Payments payable in the current or any
future Fiscal Year, taking into account the effect of any scheduled prepayments on the
amount of future Lease Payments. The initial Reserve Requirement hereunder is the
amount of $1,772.661.
"State" means the State of California.
"Tax Code" means the Internal Revenue Code of 1954, as amended, or any
federal statutes enacted in lieu of the Internal Revenue Code of 1954. Any reference
herein to a provision of the Tax Code shall include all applicable regulations of the United
States Department of the Treasury promulgated with respect to such provision.
"Term of the Lease Agreement" means the time during which the Lease
Agreement is in effect, as provided in Section 4.2 of the Lease Agreement.
"Trust Agreement" or "Agreement" means this Trust Agreement, together with any
amendments or supplements hereto permitted to be made hereunder.
"Trustee" means Security Pacific National Bank, a national banking association
organized under the laws of the United States of America or any successor thereto acting
as Trustee pursuant to this Trust Agreement.
"Written Request of the Lily" means an instrument in writing signed by the City
Representative.
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Section 1.02. Authorization. Each of the parties hereby represents and warrants
that it has full legal authority and is duly empowered to enter into this Agreement, and has
taken all actions necessary to authorize the execution of this Agreement by the officers
and persons signing it.
4
I
6
ARTICLE 11
r
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization. The Trustee is hereby authorized and directed upon
written request from the Corporation to prepare, execute and deliver to the Original
Purchaser, Certificates of Participation (Civic Center Project) in an aggregate principal
amount of Twenty Million Dollars ($20,000,000) evidencing proportionate ownership
interests in the Lease Payments.
Section 2.02. Date. Each Certificate shall be dated as of the date of its execution
(except that each Certificate delivered to the Original Purchaser shall be dated as of July
15, 1986), and interest with respect thereto shall be payable from the Payment Date next
preceding the date of execution thereof, unless: (a) it is executed as of a Payment Date, in
which event interest represented thereby shall be payable from such Payment Date; or (b)
it is executed after a Record Date and before the following Payment Date, in which event
interest represented thereby shall be payable from such Payment Date; or (c) it is
executed on or before January 15, 1987, in which event interest represented thereby shall
be payable from July 15, 1986; provided, however, that if, as of the date of any Certificate,
interest represented by such Certificate is in default, interest represented by such
Certificate shall be payable from the Payment Date to which interest represented thereby
has previously been paid or made available for payment.
Section 2.03. Maturities; Interest Rates. The Certificates shall mature on August 1
in each of the respective years, and in the respective amounts, and interest thereon shall
be computed at the respective rates, as follows:
Maturity Date Principal Interest
(August 1 L Amount Rate
1987 $ 170,000 4.75%
1988 220,000 5.25
1989 230,000 5.75
1990 245,000 6.00
1991 260,000 6.25
1992 275,000 6.50
1993 295,000 6.75
1994 315,000 7.00
1995 335,000 7.20
1996 360,000 7.30
1997 385,000 7.40
1998 415,000 7.50
1999 445,000 7.60
2000 480,000 7.70
2007 4,605,000 7.90
2016 10,965,000 9.90
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Section 2.04. Form of Certificates; Interest. The Certificates shall be delivered in
the form of fully registered Certificates without coupons in the denomination of $5,000 or
any integral multiple thereof, except that no Certificate may have principal maturing in
more than one year. The Certificates shall be assigned such alphabetical and numerical
designation as shall be determined by the Trustee.
Interest represented by the Certificates shall be payable on each Payment Date to
and including the date of maturity or redemption, whichever is earlier, as provided in
Section 2.09. Said interest shall represent the portion of Lease Payments designated as
interest and coming due and payable on each Payment Date. The proportionate share of
the portion of Lease Payments designated as interest represented by any Certificate shall
be computed by multiplying the portion of Lease Payments designated as principal
represented by such Certificate by the rate of interest applicable to such Certificate (on the
basis of a 360-day year of twelve 30-day months).
Section 2.05. Form. The Certificates shall be substantially in the form set forth in
Exhibit A attached hereto and by this reference incorporated herein.
Section 2.06. Execution. The Certificates shall be executed by and in the name of
the Trustee by the manual signature of an authorized officer of the Trustee. If any officer
whose signature appears on any Certificate ceases to be such officer before the date of
delivery of such Certificate, such signature shall nevertheless be as effective as if the
officer had remained in office until such date. Any Certificate may be executed on behalf
of the Trustee by such person as at the actual date of the execution of such Certificate
shall be the proper officer of the Trustee.
Section 2.07. Transfer and Exchange.
(a) Transfer of Certificates. The registration of any Certificate may, in
accordance with its terms, be transferred upon the Registration Books by the person in
whose name it is registered, in person or by his duly authorized attorney, upon surrender
of such Certificate for cancellation at the corporate trust office of the Trustee,
accompanied by delivery of a written instrument of transfer in a form approved by the
Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for
registration of transfer, the Trustee shall execute and deliver a new Certificate or
Certificates of the same maturity and aggregate principal amount, in any authorized
denominations.
(b) Exchange of Certificates. Certificates may be exchanged at the
corporate trust office of the Trustee, for a like aggregate principal amount of Certificates of
other authorized denominations of the same maturity. The City shall pay any costs of the
Trustee incurred in connection with such exchange, except that the Trustee may require
the payment by the Certificate Owner requesting such exchange of any tax or other
governmental charge required to be paid with respect to such exchange.
Section 2.08. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate
shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall
execute and deliver a new Certificate of like tenor and maturity in exchange and
substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the
Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be
-8-
cancelled by it and redelivered to, or upon the order of, the City. If any Certificate shall be
lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to
the Trustee, and, if such evidence is satisfactory to the Trustee and, if an indemnity
satisfactory to the Trustee shall be given, the Trustee, at the expense of the Certificate
Owner, shall execute and deliver a new Certificate of like tenor and maturity and
numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so
lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each
new Certificate delivered under this Section 2.08 and of the expenses which may be
incurred by the Trustee in carrying out the duties under this Section 2.08. Any Certificate
issued under the provisions of this Section 2.08 in lieu of any Certificate alleged to be lost,
destroyed or stolen shall be equally and proportionately entitled to the benefits of this
Agreement with all other Certificates secured by this Agreement. The Trustee shall not be
required to treat both the original Certificate and any replacement Certificate as being
Outstanding for the purpose of determining the principal amount of Certificates which may
be executed and delivered hereunder or for the purpose of determining any.percentage of
Certificates Outstanding hereunder, but both the original and replacement Certificate shall
be treated as one and the same. Notwithstanding any other provision of this Section 2.08.
in lieu of delivering a new Certificate in exchange for a Certificate which has been
mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make
payment with respect to such Certificate upon receipt of indemnity satisfactory to the
Trustee.
Section 2.09. Payment. Payment of interest due with respect to any Certificate on
any Payment Date shall be made to the person appearing on the Registration Books as
the Owner thereof as of the Record Date immediately preceding such Payment Date, such
interest to be paid by check or draft mailed to such Owner at his address as it appears on
the Registration Books. The principal and premium (if any) represented by the Certificates
at maturity or upon prior redemption shall be payable in lawful money of the United States
of America upon surrender at the corporate trust office of the Trustee.
Section 2.10. Execution of Documents and Proof of Ownership. Any request,
direction, consent, revocation of consent, or other instrument in writing required or
permitted by this Agreement to be signed or executed by Certificate Owners may be in any
number of concurrent instruments of similar tenor, and may be signed or executed by
such Owners in person or by their attorneys or agents appointed by an instrument in
writing for that purpose. Proof of the execution of any such instrument, or of any
instrument appointing any such attorney or agent, and of the ownership of Certificates shall
be sufficient for any purpose of this Agreement (except as otherwise herein provided), if
made in the following manner:
(a) The fact and date of the execution by any Owner or his attorney
or agent of any such instrument and of any instrument appointing any such
attorney or agent, may be proved by a certificate, which shall be
acknowledged or verified, of an officer of any bank or trust company located
within the United States of America, or of any notary public, or other officer
authorized to take acknowledgements of deeds to be recorded in such
jurisdictions, that the persons signing such instruments acknowledged
before him the execution thereof. Where any such instrument is executed
by an officer of a corporation or association or a member of a partnership
-9-
on behalf of such corporation, association or partnership, such certificate
shall also constitute sufficient proof of his authority.
(b) The fact of the ownership of Certificates by any person and the
amount, the maturity and the numbers of such Certificates and the date of
his holding the same shall be proved by the Registration Books.
Nothing contained in this Article II shall be construed as limiting the Trustee to such
proof, it being intended that the Trustee may accept any other evidence of the matters
herein stated which the Trustee may deem sufficient. Any request or consent of the
Owner of any Certificate shall bind every future Owner of the same Certificate in respect of
anything done or suffered to be done by the Trustee in pursuance of such request or
consent.
Section 2.11. Registration Books. The Trustee shall keep or cause'to be kept, at
its corporate trust office, sufficient records for the registration and registration of transfer of
the Certificates, which shall at all reasonable times be open to inspection by the City and
the Corporation during regular business hours with reasonable prior notice; and, upon
presentation for such purpose, the Trustee shall, under such reasonable regulations as it
may prescribe, register or transfer or cause to be registered or transferred, on the
Registration Books, Certificates as hereinbefore provided.
.Section 2.12. Delivery of Additional Certificates. In addition to the Certificates
herein authorized to be executed and delivered, the parties hereto may enter into an
agreement supplemental hereto for the purpose of authorizing the execution and delivery
of additional certificates of participation, subject to the following specific conditions which
are hereby made conditions precedent to the execution and delivery of such additional
certificates of participation:
(a) The City and the Corporation shall have entered into an
agreement amendatory of or supplemental to the Lease Agreement pursuant
to and in accordance with Section 8.3(a) of the Lease Agreement, pursuant
to which the City is obligated to pay additional lease payments, which shall
thereupon become Lease Payments for all purposes of this Trust
Agreement.
(b) The Corporation and the Trustee shall have entered into an
assignment agreement whereby the Corporation assigns to the Trustee all of
its right to receive additional lease payments under and pursuant to the
agreement described in (a) above.
(c) Interest represented by such additional certificates of
participation shall only be payable on February 1 and August 1, and
principal represented by such additional certificates of participation shall
only be payable on August 1 in any year.
(d) Such supplemental agreement shall provide that the proceeds of
sale of such certificates of participation shall be either (i) deposited in a
construction fund to be disbursed solely to pay the costs of acquiring,
constructing and improving improvements, facilities and other real property
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on the site of the Project, or (ii) paid to the City as an additional payment of
the purchase price of the Project pursuant to the Acquisition Agreement.
(e) There shall have been filed with the Trustee an opinion of Bond
Counsel stating that the issuance of such additional certificates of
participation will not adversely affect the exemption from federal income
taxation of interest represented by the Certificates.
Such additional certificates of participation shall represent undivided ownership
interests of the owners thereof in the additional lease payments required to be paid by the
City pursuant to the agreement described in (a) above and in the Lease Payments, without
preference, priority or distinction as to payment or otherwise of any of the Certificates or
such additional certificates of participation over any of the others by reason of the number
or date thereof or the time of sale, execution and delivery thereof, or otherwise for any
reason or cause whatsoever, except as expressly provided herein.
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ARTICLE III
DISPOSITION OF PROCEEDS; ACQUISITION FUND,
RESERVE.FUND AND COSTS OF ISSUANCE FUND
Section 3.01. Application of Proceeds. The proceeds received by the Trustee
from the sale of the Certificates shall forthwith be set aside by the Trustee in the following
respective funds and accounts and in the following order of priority:
(a) The Trustee shall deposit in the Lease Payment Fund an amount
equal to the portion of the Lease Payment which represents accrued interest
due and payable on the Closing Date by the City under the Lease
Agreement.
(b) The Trustee shall deposit in the Reserve Fund an amount which,
together with other amounts transferred to the Trustee for such purpose on
the Closing Date, equals the amount of $1,752,442.78.
(c) The Trustee shall deposit in the Costs of Issuance Fund an
amount equal to $120,000.
(d) The Trustee shall deposit the remainder of said proceeds in the
Acquisition Fund.
Section 3.02. Reserve Fund. The Trustee shall establish a special fund
designated as the "Reserve Fund" to be held by the Trustee in trust for the benefit of the
City and the Owners of the Certificates, and applied solely as provided herein. The
Trustee shall deposit in the Reserve Fund the amount of $1,752.442.78 pursuant to
Section 3.01(b). Earnings on the investment of such deposit shall be retained in the
Reserve Fund until the amount on deposit therein equals the Reserve Requirement.
Moneys in the Reserve Fund shall be held in trust as a reserve for the payment when due
of the Lease Payments on behalf of the City. At least semiannually on or prior to each
Lease Payment Date, the Trustee shall transfer any moneys in the Reserve Fund in
excess of the.Reserve Requirement to the Lease Payment Fund. If on any Payment Date
the moneys available in the Lease Payment Fund do not equal the amount of the principal
and interest and redemption premiums (if any) represented by the Certificates then coming
due and payable, the Trustee shall apply the moneys available in the Reserve Fund to
make delinquent Lease Payments on behalf of the City by transferring the amount
necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent
Lease Payment or portion thereof with respect to which moneys-have been advanced from
the Reserve Fund, such Lease Payment or portion thereof shall be deposited in the
Reserve Fund to the extent of such advance. Any amounts remaining in the Reserve
Fund on the date of payment in full or provision for such payment as provided in Section
13.01 of all Outstanding Certificates shall be withdrawn by the Trustee and at the Written
Request of the City applied towards such payment or paid to the City.
Section 3.03. Costs of Issuance Fund. The Trustee shall establish a special fund
designated as the "Costs of Issuance Fund"; shall keep such fund separate and apart
from all other funds and moneys held by it; and shall administer such fund as provided
herein. There shall be deposited in the Costs of issuance Fund a portion of the proceeds
-12-
of sale of the Certificates pursuant to Section 3.01(c), and any other funds from time to
time deposited with the Trustee for such purpose. The moneys in the Costs of Issuance
` Fund shall be disbursed to pay the Costs of Issuance from time to time-upon the receipt of
Written Requests of the City setting forth the amounts to be disbursed for payment or
reimbursement of Costs of Issuance and the name and address of the person or persons
to whom said amounts are to be disbursed, stating that the amounts to be disbursed are
for Costs of Issuance properly chargeable to the Costs of Issuance Fund. Any amounts
remaining in the Costs of Issuance Fund on the date ninety (90) days after the Closing
Date shall be withdrawn therefrom by the Trustee and deposited in the Acquisition Fund.
Section 3.04. Acquisition Fund. The Trustee shall establish a special fund
designated as the "Acquisition Fund"; shall keep such fund separate and apart from all
other funds and moneys held by it; and shall administer such fund as provided herein.
There shall be deposited in the Acquisition Fund a portion of the proceeds of sale of the
Certificates pursuant to Section 3.01(d). The Trustee shall disburse moneys in the
Acquisition Fund upon receipt by the Trustee of a requisition signed by the Corporation
Representative which requests disbursement of the moneys in the Acquisition Fund to pay
the Acquisition Costs, and the Trustee shall be conclusively entitled to rely upon such
requisition. All moneys remaining in the Acquisition Fund and not required for payment of
Acquisition Costs shall at the written request of the Corporation Representative filed with
the Trustee be transferred by the Trustee to the Lease Payment Fund and applied to pay
the Lease Payments as the same become due and payable.
r7rnn,
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ARTICLE IV
REDEMPTION OF CERTIFICATES
Section 4.01. Redemption.
(a) Optional Redemption. The Certificates maturing on or before August 1,
1995, are not subject to optional redemption prior to their respective stated maturities.
The Certificates maturing on or after August 1, 1996, are subject to optional redemption on
any Payment Date on or after August 1, 1995, in whole or in part, from prepayments of the
Lease Payments made at the option of the City pursuant to Section 10.2 of the Lease
Agreement, at a redemption price equal to the principal amount thereof to be redeemed
together with accrued interest to the redemption date plus a premium (expressed as
percentages of the principal amount of Certificates or portions thereof to be redeemed) set
forth in the following table, together with accrued interest to the date fixed for redemption:
Redemption Redemption
Dates Premium
August 1, 1995 and February 1, 1996 2%
August 1, 1996 and February 1, 1997 1-1 l2%
August 1, 1997 and February 1, 1998 1%
August 1, 1998 and February 1, 1999 1 i2%
August 1, 1999 and thereafter 0%
(b) Redemption From Net Proceeds of Insurance and Condemnation. The
Certificates are also subject to redemption on any Payment Date, in whole or in part, from
the Net Proceeds of insurance or condemnation with respect to the Project, which Net
Proceeds are deposited in the Lease Payment Fund and credited towards the prepayment
of the Lease Payments made by the City pursuant to Section 10.3 of the Lease
Agreement, at a redemption price equal to the principal amount of the Certificates to be
redeemed, together with accrued interest to the date fixed for redemption, without
premium.
(c) Mandatory Sinking Fund Redemption. The Certificates maturing on
August 1, 2007, are subject to mandatory sinking fund redemption on August 1 in each
year commencing August 1, 2001, from the principal components of the Lease Payments
required to be paid by the City pursuant to the Lease Agreement with respect to each "
such redemption date, at a redemption price equal to the principal amount thereof to be
redeemed, together with accrued interest thereon to the date fixed for redemption, without
premium, as follows:
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Principal Amount
Redemption of Certificates
Date to be Redeemed
2001 $520,000
2002 560,000
2003 605,000
2004 650,000
2005 700,000
2006 755,000
2007 (Maturity) 815,000
The Certificates maturing on August 1, 2016, are subject to mandatory sinking fund
redemption on August 1 in each year commencing August 1, 2008, from the principal
components of the Lease Payments required to be paid by the City pursuant to the Lease
Agreement with respect to each such redemption date, at a redemption price equal to the
principal amount thereof to be redeemed, together with accrued interest thereon to the
date fixed for redemption, without premium, as follows:
Principal Amount
Redemption of Certificates
Date to be Redeemed
2008 $ 880,000
2009 950,000
2010 1,025,000
2011 1,110,000
2012 1,195,000
2013 1,290,000
2014 1,390,000
2015 1,505,000
2016 (Maturity) 1,620,000
In the event that the Trustee shall redeem Certificates in part but not in whole
pursuant to subsections (a) or (b) of this Section 4.01, the amount of the Certificates to be
redeemed in each subsequent year pursuant to this subsection (c) shall be reduced to
correspond to the principal components of the Lease Payments prevailing following such
redemption, determined as set forth in Section 4.4(b) of the Lease Agreement.
Section 4.02. Selection of Certificates for Redemption. Whenever provision is
made in this Agreement for the redemption of Certificates and less than all Outstanding
Certificates are called for redemption, the Trustee shall select Certificates for redemption
from the Outstanding Certificates not previously called for redemption, among maturities
on a pro rata basis in integral multiples of $5,000 and by lot within a maturity in any
manner deemed fair by the Trustee. For the purposes of such selection, Certificates shall
be deemed to be composed of $5,000 portions, and any such portion may be separately
redeemed. The Trustee shall promptly notify the City and the Corporation in writing of the
Certificates so selected for redemption.
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Section 4.03. Notice of Redemption. When redemption is authorized or required
pursuant to Section 4.01, the Trustee shall give notice of the redemption of the
Certificates. Such notice shall specify: (a) that the Certificates or a designated portion
thereof are to be redeemed, (b) the date of redemption, and (c) the place or places where
the redemption will be made. Such notice shall further state that on the specified date
there shall become due and payable upon each Certificate, the principal and premium, if
any, together with interest accrued to said date, and that from and after such date interest
represented thereby shall cease to accrue and be payable.
Notice of such redemption shall be mailed by first class mail to the respective
Owners of Certificates designated for redemption at their addresses appearing on the
Registration Books, at least twenty-five (25) days but not more than sixty (60) days prior to
the redemption date, which notice shall, in addition to setting forth the above information,
set forth, in the case of each Certificate called only in part, the portion of the principal
thereof which is to be redeemed: provided that neither failure to receive such notice so
mailed nor any defect in any notice so mailed shall affect the sufficiency of the
proceedings for the redemption of such Certificates.
Section 4.04. Partial Redemption of Certificate. Upon surrender of any Certificate
redeemed in part only, the Trustee shall execute, authenticate and deliver to the Owner
thereof, at the expense of the City, a new Certificate or Certificates of authorized
denominations equal in aggregate principal amount to the unredeemed portion of the
Certificate surrendered and of the same interest rate and the same maturity.
Section 4.05. Effect of Notice of Redemption. Notice having been given as
aforesaid, and moneys for the redemption (including any applicable premium), having
been set aside in the Lease Payment Fund, the Certificates shall become due and
payable on said date of redemption, and, upon presentation and surrender thereof at the
corporate trust office of the Trustee, said Certificates shall be paid at the unpaid principal
amount (or applicable portion thereof) with respect thereto, together with any applicable
premium.
If, on said date of redemption, moneys for the redemption of all the Certificates to
be redeemed, shall be held by the Trustee so as to be available therefor on such date of
redemption, and, if notice of redemption thereof shall have been given as aforesaid, then,
from and after said date of redemption, interest represented by said Certificates shall
cease to accrue and become payable. All moneys held by or on behalf of the Trustee for
the redemption of Certificates shall be held in trust for the account of the Owners of the
Certificates so to be redeemed.
All Certificates paid at maturity or redeemed prior to maturity pursuant to the
provisions of this Article IV shall be cancelled upon surrender thereof and delivered to the
City.
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ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease Agreement. The Corporation has in
the Assignment Agreement transferred, assigned and set over to the Trustee certain of its
rights under the Lease Agreement, including but not limited to all of the Corporation's
rights to receive and collect all of the Lease Payments and all other amounts required to
be deposited in the Lease Payment Fund pursuant to the Lease Agreement or pursuant
hereto. All Lease Payments and such other amounts to which the Corporation may at any
time be entitled shall be paid directly to the Trustee, and all of the Lease Payments
collected or received by the Corporation shall be deemed to be held and to have been
collected or received by the Corporation as the agent of the Trustee, and if received by
the Corporation at any time shall be deposited by the Corporation with the Trustee within
one Business Day after the receipt thereof, and all such Lease Payments and such other
amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease
Payment Fund (except as provided in Section 3.02).
Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish
a special fund designated as the "Lease Payment Fund". All moneys at any time
deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee on
behalf of the City and credited towards payment of the Lease Payments when due and
payable under the Lease Agreement. So long as any Certificates are Outstanding,
moneys on deposit in the Lease Payment Fund shall be used and applied by the Trustee
'+ as hereinafter set forth.
Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all
Lease Payments received by the Trustee (except as provided in Section 3.02), including
any moneys required to be deposited therein pursuant to the Lease Agreement or
pursuant to this Agreement, and including any other moneys required to be credited
towards payment of the Lease Payments.
Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund shall
be used and withdrawn by the Trustee solely for the purpose of paying the principal,
interest and redemption premiums (if any) with respect to the Certificates as the same
shall become due and payable, in accordance with the provisions of Article II and Article
IV.
Section 5.05. Surplus. Any surplus remaining in the Lease Payment Fund, after
redemption and payment of all Certificates, including premiums and accrued interest (if
any) and payment of any applicable fees to the Trustee, or provision for such redemption
or payment having been made to the satisfaction of the Trustee, shall be withdrawn by the
Trustee and remitted to the City.
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ARTICLE VI
INSURANCE AND CONDEMNATION FUND;
INSURANCE; EMINENT DOMAIN
Section 6.01. Establishment of Insurance and Condemnation Fund; Application of
Net Proceeds of Insurance Award. Any Net Proceeds of insurance against accident to or
destruction of any structure constituting any part of the Project collected by the City in the
event of any such accident or destruction shall be paid to the Trustee by the City pursuant
to Section 6.2(a) of the Lease Agreement and deposited by the Trustee promptly upon
receipt thereof in a special fund designated as the "Insurance and Condemnation Fund".
If the City determines and notifies the Trustee in writing of its determination, within ninety
(90) days following the date of such deposit, that the replacement, repair, restoration,
modification or improvement of such Project is not economically feasible or in the best
interest of the City, then such Net Proceeds shall be promptly transferred by the Trustee to
the Lease Payment Fund and applied to the prepayment of Lease Payments pursuant to
Section 10.3 of the Lease Agreement. All Net Proceeds deposited in the Insurance and
Condemnation Fund and not so transferred to the Lease Payment Fund shall be applied to
the prompt replacement, repair, restoration, modification or improvement of the damaged
or destroyed portions of such Project by the City, upon receipt of Written Requests of the
City stating with respect to each payment to be made (i) the name and address of the
person, firm or corporation to whom payment is due, (ii) the amount to be paid and (iii) that
each obligation mentioned therein has been properly incurred, is a proper charge against
the Insurance and Condemnation Fund, has not been the basis of any previous
withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied
by a bill or a statement of account for such obligation. Any balance of the Net Proceeds
remaining after such work has been completed shall be paid to the City.
Section 6.02. Application of Net Proceeds of Eminent Domain Award. If all or any
part of the Project shall be taken by eminent domain proceedings (or sold to a government
threatening to exercise the power of eminent domain) the Net Proceeds therefrom shall be
deposited with the Trustee in the Insurance and Condemnation Fund pursuant to Section
6.2(b) of the Lease Agreement and shall be applied and disbursed by the Trustee as
follows:
(a) If the City notifies the Trustee in writing of its determination that (i)
such eminent domain proceedings have not materially affected the operation
of the Project or the ability of the City to meet any of its obligations under this
Lease Agreement, and (ii) that such Net Proceeds are not needed for repair,
rehabilitation or replacement of the Project, the Trusted—shall transfer such
proceeds to the Lease Payment Fund to be credited towards payment of the
Lease Payments as they become due.
(b) If the City notifies the Trustee of its determination that (i) such
eminent domain proceedings have not materially affected the operation of
the Project or the ability of the City to meet any of its obligations under this
Lease Agreement, and (ii) such Net Proceeds are needed for repair,
rehabilitation or replacement of the Project, the Trustee shall pay to the City,
or to its order, from said Net Proceeds such amounts as the City may
expend for such repair, rehabilitation or replacement, upon the filing of
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requisitions of the City Representative in the form and containing the
provisions set forth in Section 6.01.
(c) If (i) less than all of the Project shall have been taken in such
eminent domain proceedings (or sold to a government threatening to
exercise the power of eminent domain), and if the City notifies the Trustee in
writing of its determination that such eminent domain proceedings have
materially affected the operation of the Project or the ability of the City to
meet any of its obligations under this Lease Agreement or (ii) all of the
Project shall have been taken in such eminent domain proceedings, then
the Trustee shall transfer such proceeds to the Lease Payment Fund to be
credited toward the prepayment of the Lease Payments and the redemption
of the Certificates pursuant to Section 4.01(b).
Section 6.03. Cooperation. The Corporation and the Trustee shall cooperate fully
with the City at the expense of the City in filing any proof of loss with respect to any
insurance policy maintained pursuant to Article V of the Lease Agreement and in the
prosecution or defense of any prospective or pending condemnation proceeding with
respect to the Project or any portion thereof.
C
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ARTICLE VII
MONEYS IN FUNDS
Section 7.01. Held in Trust. The moneys and investments held by the Trustee
under this Trust Agreement are irrevocably held in trust for the benefit of the City and the
Owners of the Certificates, and for the purposes herein specified, and such moneys, and
any income or interest earned thereon, shall be expended only .as provided in this
Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of
any creditor of the Corporation, the Trustee or the City or the Owner of any Certificates.
Section 7.02. Investments Authorized. Upon the Written Request of the City filed
with the Trustee from time to time, and only upon such written order moneys held by the
Trustee in any fund or account hereunder shall be invested and reinvested by the Trustee
in Permitted Investments selected and specified by the City. Such investments, if
registrable, shall be registered in the name of the Trustee, as trustee, and shall be held by
the Trustee. The Trustee may purchase or sell to itself or any affiliate, as principal or
agent, investments authorized by this Section. Such investments and reinvestments shall
be made giving full consideration to the time at which funds are required to be available.
The Trustee may act as purchaser or agent in the making or disposing of any investment.
Section 7.03. Accounting. The Trustee shall furnish to the City, not less than
monthly, an accounting of all investments made by the Trustee. The Trustee shall not be
responsible or liable for any loss suffered in connection with any investment of funds made
"= by it in accordance with Section 7.02.
1
Section 7.04. Allocation of Earnings. Any income, profit or loss on such
investments shall be deposited in or charged to the respective funds from which such
investments were made.
Section 7.05. Valuation and Disposition of Investments. For the purpose of
determining the amount in any fund, the Trustee shall value all Permitted Investments in
such fund at the cost thereof (excluding accrued interest thereon and any commissions
incurred in connection with the acquisition thereof). The Trustee may sell at the best price
obtainable, or present for redemption, any Permitted Investment so purchased by the
Trustee whenever it shall be necessary in order to provide moneys to meet any required
payment, transfer, withdrawal or disbursement from the fund to which such Permitted
Investment is credited, and the Trustee shall not be liable or responsible for any loss
resulting from any such sale.
Section 7.06. Investment in Accordance with Instructions. All moneys held by the
Trustee in any of the funds or accounts established pursuant to this Trust Agreement shall
be invested only in accordance with written instructions executed by the City
Representative. Such instructions may be general or specific and may be limited to a
defined period or may be specified to apply throughout the Term of the Lease Agreement
unless amended or revoked: In the event that written instructions executed by the City
Representative are not provided as to all or any such moneys, such moneys shall be
invested by the Trustee in Permitted Investments selected by the Trustee which mature not
later than the date on which the Trustee estimates such moneys will be required for the
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purposes hereof, and which earn the maximum rate of interest reasonably available to the
Trustee for investments of such maturity.
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ARTICLE Vlll
THE TRUSTEE
Section 8.01. Compensation of the Trustee. The City shall from time to time, as
agreed upon between the City and the Trustee. pay to the Trustee reasonable
compensation for its services. and shall reimburse the Trustee for all its advances and
expenditures, including but not limited to advances to, and fees and expenses of,
independent appraisers, accountants, consultants, counsel, agents and attorneys-at-law or
other experts employed by it in the exercise and performance of its powers and duties
hereunder.
Section 8.02. Removal of Trustee. The City and the Corporation may by written
agreement between themselves, or the Owners of a majority in aggregate principal
amount of all Certificates Outstanding may by written request, at any time and for any
reason, remove the Trustee and any successor thereto, and shall thereupon appoint a
successor or successors thereto. Any such successor shall be a bank or trust company
in good standing doing business and having an office in the State, duly authorized to
exercise trust powers and subject to examination by federal or State authority having a
combined capital (exclusive of borrowed capital) and surplus of at least Five Hundred
Million Dollars ($500,000,000). If such bank or trust company publishes a report of
condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of this Section the combined
capital and surplus of such bank or trust company shall be deemed to be its combined
� = capital and surplus as set forth in its most recent report of conditions so published.
The Trustee may at any time resign by giving written notice to the City and the
Corporation and by giving to the Certificate Owners notice by mailing such notice to the
registered owners of the Certificates. Upon receiving such notice of resignation, the City
shall promptly appoint a successor Trustee by an instrument in writing; provided, however,
that in the event that the City does not appoint a successor Trustee within thirty (30) days
following receipt of such notice of resignation, the resigning Trustee may petition the
appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee shall become effective
upon acceptance of appointment by the successor Trustee.
Section 8.03. Appointment of Agent. The Trustee may appoint an agent to
exercise any of the powers, rights or remedies granted to the Trustee under this Trust
Agreement, and to hold title to property or to take any other action which may be desirable
or necessary.
Section 8.04. Merger or Consolidation. Any company into which the Trustee may
be merged or converted, or with which it may be consolidated, or any company resulting
from any merger, conversion or consolidation to which it shall be a party, or any company
to which the Trustee may sell or transfer all or substantially all of its corporate trust
business (provided that such company shall be eligible under Section 8.02) shall be the
successor to the Trustee without the execution or filing of any paper or further act,
anything herein to the contrary notwithstanding.
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Section 8.05. Protection and Rights of the Trustee. The Trustee shall be protected
and shall incur no liability in acting or proceeding in good faith upon any resolution, notice,
telegram, request, consent, waiver, certificate, statement, affidavit, voucher, bond,
requisition, opinion or other paper or document which it shall in good faith believe to be
genuine and to have been passed or signed by the proper board or person or to have
been prepared and furnished pursuant to any of the provisions of this Trust Agreement,
and the Trustee shall be under no duty to make any investigation or inquiry as to any
statements contained or matters referred to in any such instrument, but may accept and
rely upon the same as conclusive evidence of the truth and accuracy of such statements.
The Trustee shall not be bound to recognize any person as an Owner of any Certificate or
to take any action at his request unless such person shall appear as Owner on the
Registration Books kept by the Trustee pursuant to the provisions of this Trust Agreement.
The Trustee may consult with counsel, who may be counsel to the Corporation, with
regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it hereunder in
good faith in accordance therewith.
Whenever in the administration of its duties under this Trust Agreement, the Trustee
shall deem it necessary or desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matter (unless other evidence in respect thereof
be herein specifically prescribed), shall be deemed to be conclusively proved and
established by the certificate of the City Representative or the Corporation Representative
and such certificate shall be full warranty to the Trustee for any action taken or suffered
under the provisions of this Trust Agreement upon the faith thereof, but in its discretion the
Trustee may, in lieu thereof, accept other evidence of such matter or may require such
additional evidence as to it may seem reasonable.
The Trustee may become the Owner of the Certificates with the same rights it
would have if it were not the Trustee; may acquire and dispose of other bonds or
evidences of indebtedness of the City with the same rights it would have if it were not the
Trustee; and may act as a depositary for and permit any of its officers or directors to act
as a member of, or in any other capacity with respect to, any committee formed to protect
the rights of Owners of Certificates, whether or not such committee shall represent the
Owners of the majority in principal amount of the Certificates then Outstanding.
The recitals, statements and representations by the City and the Corporation
contained in this Trust Agreement or in the Certificates shall be taken and construed as
made by and on the part of the City and the Corporation, as the case may be, and not by
the Trustee, and the Trustee does not assume, and shall not have, any responsibility or
obligation for the correctness of any thereof.
The Trustee may execute any of the trusts or powers hereof and perform the duties
required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled
to advice of counsel concerning all matters of trust and its duty hereunder, and the
Trustee shall not be answerable for the default or misconduct of any such attorney, agent,
or receiver selected by it with reasonable care. The Trustee shall not be answerable for
the exercise of any discretion or power under this Trust Agreement or for anything
whatever in connection with the funds and accounts established hereunder, except only for
its own gross negligence or willful misconduct.
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The permissive right of the Trustee to do things enumerated in this Trust
` Agreement shall not be construed to be a duty and no implied duties or obligations shall
be read into this Trust Agreement against the Trustee. The Trustee agrees to perform
such duties, and only such duties as are set forth in this Trust Agreement.
The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Owners of not less than a
majority in aggregate principal amount of the Certificates at the time Outstanding relating
to the time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee under this Trust
Agreement.
The Trustee shall not be liable for any action taken by it in good faith and believed
by it to be authorized or within the discretion or rights or powers conferred upon it by this
Trust Agreement.
The Trustee shall not be deemed to have knowledge of any Default or Event of
Default hereunder unless and until it shall have actual knowledge thereof, or shall have
received written notice thereof, at its corporate trust office. Except as otherwise expressly
provided herein, the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or agreements
herein or of any of the documents executed in connection with the Certificates, or as to the
existence of a Default or Event of Default thereunder. The Trustee shall not be
responsible for the validity or effectiveness of any collateral given to or held by it.
The Trustee shall not have any duty or obligation to manage, maintain, control, use,
sell, dispose of, re-lease, dismantle, store, transport or otherwise deal with the Project or
any component part thereof, or otherwise to take or refrain from taking any action under or
in connection with this Agreement, the .Lease Agreement or any other documents
contemplated hereby or thereby except as expressly required by the terms of this
Agreement, the Lease Agreement or any other agreement contemplated hereby or
thereby.
No provision in this Agreement or in the Lease Agreement or any other writing
hereunder or thereunder shall require the Trustee in its individual capacity to expend or
risk funds or otherwise incur any financial liability in the performance of its or the Trustee's
rights or powers hereunder.
In accepting the trusts hereby created, the Trustee acts solely as trustee for the
benefit of the Certificate Owners and not its individual capacity,-and all persons, including,
without limitation, the City and the Corporation, having any claim against the Trustee by
reason of the transactions contemplated hereby shall look only to the funds and accounts
held by the Trustee hereunder for the payment or satisfaction thereof except as otherwise
provided herein.
All payments to be made by the Trustee under and pursuant to this Agreement
shall be made only to the extent that the Trustee shall have received sufficient income and
proceeds in accordance with the terms of this Agreement.
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Under no circumstances shalt the Trustee be liable in its individual capacity for the
obligations evidenced by the Certificates.
The Trustee shall have no obligation or responsibility for providing information to
the Owners of the Certificates concerning the investment character of the Certificates, for
the sufficiency of any Lease Payments or other moneys required to be paid to it under the
Lease Agreement or the actions or representations of any other party to this Agreement.
The Trustee shall have no duty to see to the payment or discharge of any tax,
assessment or other governmental charge or any lien of any kind owing with respect to,
assessed or levied against, the Project or any part thereof.
Before taking any action hereunder the Trustee may require that a satisfactory
indemnity bond or other indemnity satisfactory to the Trustee be furnished for the
reimbursement of all expenses to which it may be put and to protect it against all liability,
except liability which is adjudicated to have resulted from its negligence or willful
misconduct.
The Trustee makes no warranty or representation, either express or implied, as to
the title, value, design, compliance with specifications or with legal requirements, quality,
durability, operation, condition, merchantability or fitness for any particular purpose or
fitness for the use contemplated by the City of the Project or any portion thereof, or any
other representation or warranty with respect to the Project or any portion thereof. In no
event shall the Trustee be liable for incidental, indirect, special or consequential damages,
in connection with or arising out of the Lease Agreement or the Trust Agreement for the
existence, furnishing, functioning or City's use of the Project.
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ARTICLE IX
MODIFICATION OR AMENDMENT OF AGREEMENTS
Section 9.01. Amendments Permitted. This Agreement and the rights and
obligations of the Owners of the Certificates and the Lease Agreement and the rights and
obligations of the parties thereto, may be modified or amended at any time by a
supplemental agreement which shall become effective when the written consents of the
Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates
then Outstanding, exclusive of Certificates disqualified as provided in Section 9.03, shall
have been filed with the Trustee. No such modification or amendment shall (1) extend or
have the effect of extending the fixed maturity of any Certificate or reducing the interest
rate with respect thereto or extending the time of payment of interest, or reducing the
amount of principal thereof or reducing any premium payable upon the redemption
thereof, without the express consent of the Owner of such Certificate, or (2) reduce or
have the effect of reducing the percentage of Certificates required for the affirmative vote
or written consent to an amendment or modification of the Lease Agreement, or (3) modify
any of the rights or obligations of the Trustee without its written assent thereto. Any such
supplemental agreement shall become effective as provided in Section 9.02.
This Agreement and the rights and obligations of the Owners of the Certificates and
the Lease Agreement and the rights and obligations of the respective parties thereto, may
be modified or amended at any time by a supplemental agreement, without the consent of
any such Owners, but only to the extent permitted by law and only (1) to add to the
covenants and agreements of any party, other covenants to be observed, or to surrender
any right or power herein or therein reserved to the City, (2) to cure, correct or supplement
any ambiguous or defective provision contained herein or therein, (3) in regard to
questions arising hereunder or thereunder, as the parties hereto or thereto may deem
necessary or desirable and which shall not adversely affect the interests of the Owners of
the Certificates, (4) to modify the legal description of the Project site to conform to the
requirements of title insurance or otherwise to add or delete property descriptions to
reflect accurately the description of the parcels intended to be included therein, or (5) to
provide for the execution and delivery of additional certificates of participation pursuant to
and in accordance with Section 2.12. Any such supplemental agreement shall become
effective upon execution and delivery by the parties hereto or thereto as the case may be.
Section 9.02. Procedure for Amendment with Written Consent of Certificate
Owners. This Agreement and the Lease Agreement may be amended by supplemental
agreement as provided in this Section 9.02 in the event the consent of the Owners of the
Certificates is required pursuant to Section 9.01. A copy of such supplemental
agreement, together with a request to the Certificate Owners for their consent thereto, shall
be mailed by the Trustee to each Owner of a Certificate at his address as set forth on the
Registration Books, but failure to receive copies of such supplemental agreement and
request shall not affect the validity of the supplemental agreement when assented to as in
this Section provided.
Such supplemental agreement shall not become effective unless there shall be
filed with the Trustee the written consents of the Owners of sixty percent (60%) in
aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates
disqualified as provided in Section 9.03) and a notice shall have been mailed as
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hereinafter in this Section provided. Each such consent shall be effective only if
accompanied by proof of ownership of the Certificates for which such consent is given,
which proof shall be such as is permitted by Section 2.10. Any such consent shall be
binding upon the Owner of the Certificate giving such consent and on any subsequent
Owner (whether or not such subsequent Owner has notice thereof) unless such consent is
revoked in writing by the Owner giving such consent or a subsequent Owner by filing such
revocation with the Trustee prior to the date when the notice hereinafter in this Section
provided for has been mailed.
After the Owners of the required percentage of Certificates shall have filed their
consents to such supplemental agreement, the Trustee shall mail a notice to the Owners
of the Certificates in the manner hereinbefore provided .in this Section for the mailing of
such supplemental agreement of the notice of adoption thereof, stating in substance that
such supplemental agreement has been consented to by the Owners of the required
percentage of Certificates and will be effective as provided in this Section (but failure to
receive copies of said notice shall not affect the validity of such supplemental agreement
or consents thereto). A record, consisting of the papers required by this Section to be
filed with the Trustee, shall be conclusive proof of the matters therein stated. Such
supplemental agreement shall become effective upon the mailing of such last-mentioned
notice, and such supplemental agreement shall be deemed conclusively binding upon the
parties hereto and the Owners of all Certificates at the expiration of sixty (60) days after
such mailing, except in the event of a final decree of a court of competent jurisdiction
setting aside such consent in a legal action or equitable proceeding for such purpose
commenced within such sixty (60) day period.
Section 9.03. Disqualified Certificates. Certificates owned or held by or for the
account of the City or by any person directly or indirectly controlling or controlled by, or
under direct or indirect common control with the City (except any Certificates held in any
pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote,
.consent, waiver or other action or any calculation of Outstanding Certificates provided for
in this Agreement, and shall not be entitled to vote upon, consent to, or take any other
action provided for in this Agreement.
Section 9.04. Effect of Supplemental Agreement. From and after the time any
supplemental agreement becomes effective pursuant to this Article IX, this Agreement or
the Lease Agreement, as the case may be, shall be deemed to be modified and amended
in accordance therewith, the respective rights, duties and obligations of the parties hereto
or thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modification and amendment, and all the terms and conditions of any supplemental
agreement shall be deemed to be part of the terms and conditions of this Agreement or
the Lease Agreement, as the case may be, for any and all purposes.
The Trustee may require each Certificate Owner, before his consent provided for in
this Article IX shall be deemed effective, to reveal whether the Certificates as to which
such consent is given are disqualified as provided in Section 9.03.
Section 9.05. Endorsement or Replacement of Certificates Delivered After
Amendments. The Trustee may determine that Certificates delivered after the effective
date of any action taken as provided in this Article IX shall bear a notation, by
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