conclusively determined by the City’s municipal advis or. The underwriter’s discount shall not exceed 0.275% if the Refunding Certificates are sold in a negotiated underwriting.
Section 3. Official Statement. If it is determined that the Refunding Certificates should be sold in a negotiated public offering, the City Council hereby directs the Finance Director to work with the City Attorney, municipal advisor and special counsel /disclosure counsel to prepare a form of Official Statement describing the Refunding Certificates and containing material in formation relating to the City and the Refunding Certificates, the preliminary form of which will be submitted to the City Council for approval for distribution by the underwriter of the Refunding Certificates to persons and institutions interested in purchasing the Refunding Certificates.
Section 4. Authorization to Obtain Municipal Bond Insurance . The City Council hereby authorizes an Authorized Officer to determine whether the Refunding Certificates are eligible for municipal bond insurance and reser ve fund insurance and, if so, whether it is in the best interests of the City to obtain such insurance or surety bond. An Authorized Officer is hereby authorized to execute a commitment for such insurance or surety bond and to take all actions required to implement the delivery of such municipal bond insurance policy or surety bond.
Section 5. Appointment of Professionals . The following professionals are hereby appointed to provide services relating to the Bonds: Jones Hall, A Professional Law Corporation, as special counsel and disclosure counsel ; NHA Advisors, LLC., as municipal advisor; and The Bank of New York Mellon Trust Company, N.A. as trustee and escrow agent.
The Finance Director is authorized to select an independent certified public accountant to provide escrow verification services. An Authorized Officer is hereby authorized to execute agreements for services with such professionals relating to the Refunding Certificates in substantially the forms presented at this meeting.
Section 6. Official Actions. The Authorized Officers, the City Clerk, and all other officers of the City, are authorized and directed in the name and on behalf of the City to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution, including termination agreements intended to terminate the documents related to the 2014 Lease Payments and the 2015 Lease Payments and an escrow deposit and trust agreement for the 2014 Lease Payments in substantially the form of the Escrow Deposit and Trust Agreement for the 2015 Lease Payments and the 2015 Certificates . Whenever in this resolution any officer of the City is directed to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable.
Section 7. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.
ATTACHMENT II
HAYWARD, IN COUNCIL, HAYWARD, CALIFORNIA _______________________, 2023.
ADOPTED BY THE FOLLOWING VOTE:
AYES: COUNCIL MEMBERS:
MAYOR:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ATTEST:
City Clerk of the City of Hayward
APPROVED AS TO FORM:
_________________________________________
City Attorney of the City of Hayward
ATTACHMENT II
EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by the City’s municipal advisor, which has been represented by such party to have been provided in good faith:
(A) True Interest Cost with respect to the Refunding Certificates: 2.96%.
(B) Finance Charge with respect to the Refunding Certificates (Sum of all fees paid to third parties): $397,470.
(C) Net Proceeds to be Received from the sale of the Refunding Certificates (net of finance charges, reserves and capitalized interest, if any): $47,141,475.
(D) Total Payment Amount Through Maturity: $55,693,111.
The foregoing estimates constitute good faith estimates only based on a refinancing of the 2014 Lease Payments and the 2015 Lease Payments. The principal amount of the Refunding Certificates, the true interest cost of the Refunding Certificates, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Refunding Certificates being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Refunding Certificates sold being different from the estimated amount used for purposes of such estimates, (c) the actual amortization of the Refunding Certificates being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Refunding Certificates being different than those estimated for purposes of such estimates, (e) other market conditions, (f) alterations i n the City’s financing plan, or a combination of such factors and (g) the treatment of the interest with respect to the Refunding Certificates under federal tax law. The actual date of sale of the Refunding Certificates and the actual principal amount of Refunding Certificates sold will be determined by the City based on the timing of the need for proceeds of the Refunding Certificates and other factors. The actual interest rates borne by the Refunding Certificates will depend on market interest rates at the time of sale thereof.
The actual amortization of the Refunding Certificates will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City.
ATTACHMENT III
HAYWARD CITY COUNCIL
RESOLUTION NO. 23-______
Introduced by Council Member
RESOLUTION OF THE BOARD OF DIRECTORS OF THE HAYWARD PUBLIC
FINANCING AUTHORITY AUTHORIZING DELIVERY AND SALE OF REFUNDING CERTIFICATES OF PARTICIPATION TO REFINANCE OUTSTANDING 2014 LEASE PAYMENTS AND 2015 LEASE PAYMENTS, AND APPROVING RELATED
DOCUMENTS AND ACTIONS
WHEREAS, the Hayward Public Financing Authority was established by the City of Hayward (the “City”) and the former Redevelopment Agency of the City of Hayward (the “Agency”) pursuant to a Joint Exercise of Powers Agreement, dated as of May 1, 1989; and
WHEREAS, the City previously entered into a Lease Agreement dated as of August 1, 2014 (the “2014 Lease”), with the Public Property Financing Corporation of California (the “Corporation”), for the purpose of financing a new Fire Station No. 7 and a Firehouse Health Clinic to be located at the same site as Fire Station No. 7 (the “2014 Project”), un der which the City agreed to pay semiannual lease payments (the “2014 Lease Payments”) to the Corporation for use and occupancy of a Police Station, located at 300 West Winton Avenue in the City (the “2014 Leased Property”); and
WHEREAS, the Corporation assigned its right to receive the 2014 Lease Payments to Umpqua Bank (“Umpqua Bank”) pursuant to an Assignment Agreement, dated as of August 1, 2014 (the “2014 Assignment Agreement”); and
WHEREAS, Section 10.2 of the 2014 Lease provides that the City may prepay the 2014 Lease Payments on any date on and after August 1, 2019, subject to providing 45 days’ prior written notice to the Corporation and Umpqua Bank, in an amount equal to the principal amount of the 2014 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium after August 1, 2022; and
WHEREAS, Section 10.1 of the 2014 Lease authorizes the City to establish a security deposit for prepayment of the 2014 Lease Payments, after which all obligations of the City under the 2014 Lease shall cease and terminate, except for the obligation to pay the 2014 Lease Payments from the security deposit; and
WHEREAS, the Authority and the City previously ente red into a Lease Agreement, dated as of August 1, 2015 (the "2015 Lease"), for the purpose of financing acquisition and construction of a number of capital improvements, including, but not limited to, (i) a new library and community learning center, (ii) i mprovements to existing fire stations and (iii) complete street rehabilitation and slurry seal repairs (collectively, the “2015 Project”), under which the City agreed to pay semiannual lease payments (the “2015 Lease Payments”) to the
ATTACHMENT III
Authority for use and occupancy of certain of the City’s fire stations and a library and community learning center (the “2015 Leased Property”); and
WHEREAS, the Authority assigned its rights to receive the 2015 Lease Payments to The Bank of New York Mellon Trust Company, N.A . (the “2015 Trustee”), pursuant to an Assignment Agreement, dated as of October 1, 2015 (the “2015 Assignment Agreement”); and
WHEREAS, pursuant to a Trust Agreement, dated as of October 1, 2015 (the “2015 Trust Agreement”), the 2015 Trustee caused to be executed and delivered the $67,535,000 City of Hayward 2015 Certificates of Participation (Capital Projects) (the “2015 Certificates”), which evidence direct, undivided fractional ownership interests in the 2015 Lease Payments; and
WHEREAS, Section 9.2 of the 2015 Lease provides that the City may prepay the 2015 Lease Payments on November 1 2023, in an amount equal to the principal component of the 2015 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium; and
WHEREAS, Section 9.1 of the 2015 Lease authorizes the City to establish a security deposit for prepayment of the 2015 Lease Payments in amount sufficient to prepay the 2015 Lease Payments, after which all obligations of the City under the 2015 Lease shall cease and terminate, except for the obligation to pay the 2015 Lease Payments from the security deposit; and
WHEREAS, under Section 3.01 of the 2015 Trust Agreement, the 2015 Certificates are subject to prepayment on November 1, 2023, and any date thereafter, without premium; and
WHEREAS, the City has notified the Authority that, in order to take advantage of favorable interest rates prevailing in the municipal bond market, the City wishes at this time to provide for the refinancing of the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates from the proceeds of 2023 Refunding Certificates of Participation ( Lease Refinancing), (the “Refunding Certificates”); and
WHEREAS, the Refunding Certificates will be executed and delivered u nder a Trust Agreement (the “Trust Agreement”), among The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), the Authority and the City; and
WHEREAS, the Refunding Certificates will represent direct, undivided fractional ownership interests in lease payments (the “Lease Payments”) to be made by the City to the Authority under a Lease Agreement (the “Lease Agreement”) for use and occupancy of certain real property and improvements (the “Leased Property”); and
WHEREAS, to accommodate t he Lease Agreement, the City and the Authority will simultaneously enter into a Site and Facilities Lease (the “Site Lease”), under which the City
ATTACHMENT III
will lease the Leased Property to the Authority, and the Authority will agree to make a one - time lease payment from proceeds of the Refunding Certificates; and
WHEREAS, the lease payment made by the Authority to the City shall be used to prepay the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates, and to pay the financing costs; and
WHEREAS, the City will enter into an Escrow Deposit and Trust Agreement with the 2015 Trustee to establish a security deposit for the prepayment of the 2015 Lease Payments and the 2015 Certificates; and
WHEREAS, the City Council has authorized and directed staff, without further authorization or approval by the City Council, to determine whether the Refunding Certificates should be sold to an underwriter in a public offering or privately placed with a financial institution to be identified by staff, with such determination to be based upon staff’s conclusion, subject to compliance of the sale with the parameters established by the City Council, that the method of sale selected by staff will be most beneficial to the City;
WHEREAS, in furtherance of the public purposes of the Authority, the Board of Directors hereby finds that it is necessary and convenient to provide assistance to the City with the proposed refinancing, and wishes at this time to authorize and a pprove all proceedings for the refinancing of the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates, the delivery and sale of the Refunding Certificates for such purpose, and the documents specified below, subject to staff returning to the Board of Directors of the Authority for final approval of a Preliminary Official Statement and a purchase agreement among the City, the Authority and the underwriter of the Refunding Certificates, if the City determines to proceed with a public offeri ng (no further approvals being required for a private placement of the Refunding Certificates with a financial institution); and
WHEREAS, in accordance with Government Code Section 5852.1, the Board of Directors has obtained and wishes to disclose the information set forth in Exhibit A hereto.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Hayward Public Financing Authority as follows:
Section 1. Approval of Refinancing Plan and Related Docume nts. The Board of Directors hereby approves the refinancing plan outlined above. To that end, the Board of Directors hereby approves each of the following financing documents in substantially the respective forms on file with the Secretary, together with any changes therein or additions thereto approved by the Executive Director, Secretary or the Treasurer (each, an “Authorized Officer”):
Site Lease, between the City as lessor and the Authority as lessee, whereby the City leases the Leased Property to the Authority.
ATTACHMENT III
Lease Agreement, between the Authority as lessor and the City as lessee, whereby the Authority leases the Leased Property back to the City in consideration of the payment by the City of semiannual lease payments.
Trust Agreement, among the City, the Authority and the Trustee, whereby the Trustee agrees to execute and deliver the Refunding Certificates.
The Executive Director (or designee of the Executive Director) is hereby authorized and directed on behalf of the Authority to e xecute the final form of each of the foregoing documents, and the Secretary is hereby authorized and directed to attest to the final form of each of the foregoing documents. Execution of each of the foregoing documents by the Executive Director (or designee of the Executive Director) shall be conclusive evidence of the approval of any changes therein or additions thereto by an Authorized Officer.
Section 2. Sale of Refunding Certificates. The City Council has authorized and directed the Finance Director, following consultation with the City Attorney, NHA Advisors, LLC (the City’s municipal advisor) and Jones Hall, A Professional Law Corporation (the City’s special counsel), to determine whether selling the Refunding Certificates to an underwriter in a negotiated public offering or selling the Refunding Certificates in a private placement to one or more financial institutions to be selected by the Finance Director will be more beneficial to the City. The City Council has chosen BofA Securities, Inc. to act as underwriter if the Refunding Certificates are sold in a negotiated public offering and placement agent if the Refunding Certificates are privately placed; BofA Securities, Inc. was selected by the City following a competitive process.
The Board of Directors hereby directs the Treasurer to work with the City Attorney, municipal advisor and special counsel to prepare a form of purchase agreement for execution by the Authority in connection with a negotiated public offering and to submit the agreement to the Board of Directors for approval if the City determines to sell the Refunding Certificates in a negotiated public offering.
The Refunding Certificates shall be sold at such price and sha ll bear interest at such rates as shall produce (a) an aggregate minimum net present value savings to the City of at least 3% of the principal component of the 2014 Lease Payments and the 2015 Lease Payments and (b) positive net present value savings for e ach of the 2014 Lease Payments and the 2015 Lease Payments (when calculated separately), as such savings shall be verified and conclusively determined by the City’s municipal advisor. The underwriter’s discount shall not exceed 0.275% if the Refunding Certificates are sold in a negotiated underwriting.
Section 3. Official Statement . If it is determined that the Refunding Certificates should be sold in a negotiated public offering , the Board of Directors hereby directs the Treasurer to work with the City Attorney, municipal advisor and special counsel/disclosure counsel to prepare a form of Official Statement describing the Refunding Certificates and containing material information relating to the Authority and the Refunding Certificates, the preliminary form of which will be submitted to the Board of Directors for approval for
ATTACHMENT III
distribution by the underwriter of the Refunding Certificates to persons and institutions interested in purchasing the Refunding Certificates.
Section 4. Official Actions. The Executive Director, the Treasurer, the Secretary, and all other officers of the Authority, are authorized and directed in the name and on behalf of the Authority to make any and all assignm ents, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agree ments and documents approved under this Resolution, including termination agreements intended to terminate the documents related to the 2014 Lease Payments and the 2015 Lease Payments , any agreements related to municipal bond insurance or reserve fund insurance, if requested by the City, and an escrow deposit and trust agreement if special counsel determines that the Authority should be a party to such an agreement . Whenever in this resolution any officer of the Authority is directed to execute or counters ign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable.
Section 5. Effect ive Date. This Resolution shall take effect from and after the date of its passage and adoption.
HAYWARD, IN COUNCIL, HAYWARD, CALIFORNIA _______________________, 2023.
ADOPTED BY THE FOLLOWING VOTE:
AYES: COUNCIL MEMBERS:
MAYOR:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ATTEST:
City Clerk of the City of Hayward
APPROVED AS TO FORM:
_________________________________________
City Attorney of the City of Hayward
ATTACHMENT III
EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by the City’s municipal advisor, which has been represented by such party to have been provided in good faith:
(A) True Interest Cost with respect to the Refunding Certificates: 2.96%.
(B) Finance Charge with respect to the Refunding Certificates (Sum of all fees paid to third parties): $397,470.
(C) Net Proceeds to be Received from the sale of the Refunding Certificates (net of finance charges, reserves and capitalized interest, if any): $47,141,475.
(D) Total Payment Amount Through Maturity: $55,693,111.
The foregoing estimates constitute good faith estimates only based on a refinancing of the 2014 Lease Payments and the 2015 Lease Payments. The principal amount of the Refunding Certificates, the true interest cost of the Refunding Certificates, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimat es due to (a) the actual date of the sale of the Refunding Certificates being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Refunding Certificates sold being different from the estimated amount used for purposes of such estimates, (c) the actual amortization of the Refunding Certificates being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Refunding Certificates being different than those estimated for purposes of such estimates, (e) other market conditions, (f) alterations in the City’s financing plan, or a combination of such factors and (g) the treatment of the interest with respect to the Refunding Certificates under federal tax law. The actual date of sale of the Refunding Certificates and the actual principal amount of Refunding Certificates sold will be determined by the City based on the timing of the need for proceeds of the Refunding Certificates and other fac tors. The actual interest rates borne by the Refunding Certificates will depend on market interest rates at the time of sale thereof.
The actual amortization of the Refunding Certificates will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City.
ATTACHMENT IV
TRUST AGREEMENT
Dated as of _____ 1, 2023
among
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as trustee
HAYWARD PUBLIC FINANCING AUTHORITY
and the
CITY OF HAYWARD
Relating to
_________
City of Hayward
2023 Refunding Certificates of Participation
(Lease Refinancing)
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TABLE OF CONTENTS
ARTICLE I
Definitions; Rules of Construction
SECTION 1.01. Definitions ................................ ................................ ................................ ......... 3 SECTION 1.02. Authorization ................................ ................................ ................................ ..... 3 SECTION 1.03. Interpretation ................................ ................................ ................................ ..... 3
ARTICLE II
The Certificates of Participation
SECTION 2.01. Authorization ................................ ................................ ................................ ...... 3 SECTION 2.02. Date ................................ ................................ ................................ ................... 3 SECTION 2.03. Terms of Certificates ................................ ................................ .......................... 4 SECTION 2.04. Fully Registered Form; Interest ................................ ................................ .......... 4 SECTION 2.05. Book Entry System ................................ ................................ ............................ 4 SECTION 2.06. Form and Execution of Certificates ................................ ................................ .... 6 SECTION 2.07. Transfer and Exchange ................................ ................................ ..................... 6 SECTION 2.08. Certificates Mutilated, Lost, Destroyed or Stolen ................................ ............... 7 SECTION 2.09. Payment ................................ ................................ ................................ ............ 7 SECTION 2.10. Execution of Documents and Proof of Ownership ................................ .............. 7 SECTION 2.11. Registration Books ................................ ................................ ............................. 8
ARTICLE III
Prepayment of Certificates
SECTION 3.01. Prepayment ................................ ................................ ................................ ....... 8 SECTION 3.02. Selection of Certificates for Prepayment ................................ ............................ 9 SECTION 3.03. Notice of Prepayment ................................ ................................ ........................ 9 SECTION 3.04. Partial Prepayment of Certificates ................................ ................................ .... 10 SECTION 3.05. Effect of Notice of Prepayment ................................ ................................ ........ 11 SECTION 3.06. Purchase of Certificates ................................ ................................ ................... 11
ARTICLE IV
Disposition of Proceeds of Sale
SECTION 4.01. Application of Proceeds ................................ ................................ ................... 12 SECTION 4.02. Reserve Fund ................................ ................................ ................................ .. 12 SECTION 4.03. Establishment and Application of Costs of Issuance Fund ............................... 13
ARTICLE V
Lease Payments; Lease Payment Fund
SECTION 5.01. Assignment of Rights in Lease ................................ ................................ ........ 13 SECTION 5.02. Establishment of Lease Payment Fund ................................ ............................ 13 SECTION 5.03. Deposits ................................ ................................ ................................ .......... 14 SECTION 5.04. Application of Moneys ................................ ................................ ...................... 14 SECTION 5.05. Surplus ................................ ................................ ................................ ............ 14
ARTICLE VI
Insurance and Condemnation Fund
SECTION 6.01. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award ................................ ................................ ........... 14 SECTION 6.02. Deposit and Application of Net Proceeds of Eminent Domain Award ............... 15
ARTICLE VII
Moneys in Funds; Investments
SECTION 7.01. Held in Trust ................................ ................................ ................................ .... 16 SECTION 7.02. Investments Authorized ................................ ................................ ................... 16 SECTION 7.03. Accounting ................................ ................................ ................................ ....... 17 SECTION 7.04. Allocation of Earnings ................................ ................................ ...................... 17
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SECTION 7.05. Valuation and Disposition of Investments ................................ ........................ 17 SECTION 7.06. Investments at Fair Market Value ................................ ................................ .... 17
ARTICLE VIII
The Trustee
SECTION 8.01. Appointment of Trustee ................................ ................................ ................... 18 SECTION 8.02. Acceptance of Trusts ................................ ................................ ....................... 18 SECTION 8.03. Fees, Charges and Expenses of Trustee ................................ ......................... 22 SECTION 8.04. Notice to Certificate Owners of Default ................................ ............................ 22 SECTION 8.05. Removal of Trustee ................................ ................................ ......................... 23 SECTION 8.06. Resignation by Trustee ................................ ................................ .................... 23 SECTION 8.07. Appointment of Successor Trustee ................................ ................................ .. 23 SECTION 8.08. Merger or Consolidation ................................ ................................ .................. 23 SECTION 8.09. Concerning any Successor Trustee ................................ ................................ . 23 SECTION 8.10. Non-Liability of Trustee ................................ ................................ .................... 24 SECTION 8.11. Actions Through Agents................................ ................................ ................... 24 SECTION 8.12. Nature of Trust Engagement ................................ ................................ ............ 24
ARTICLE IX
Modification or Amendment
SECTION 9.01. Amendments Permitted ................................ ................................ ................... 25 SECTION 9.02. Procedure for Amendment with Written Consent of Certificate Owners ........... 25 SECTION 9.03. Effect of Supplemental Agreement ................................ ................................ .. 26 SECTION 9.04. Endorsement or Replacement of Certificates Delivered After Amendments ..... 26 SECTION 9.05. Amendatory Endorsement of Certificates ................................ ......................... 27 SECTION 9.06. Opinion of Counsel ................................ ................................ .......................... 27 SECTION 9.07. Notice to Rating Agencies ................................ ................................ ................ 27
ARTICLE X
Other Covenants
SECTION 10.01. Compliance With and Enforcement of Lease ................................ ................. 27 SECTION 10.02. Observance of Laws and Regulations ................................ ............................ 27 SECTION 10.03. Prosecution and Defense of Suits ................................ ................................ .. 27 SECTION 10.04. Recordation and Filing ................................ ................................ ................... 28 SECTION 10.05. Continuing Disclosure ................................ ................................ .................... 28 SECTION 10.06. Further Assurances ................................ ................................ ....................... 28 SECTION 10.07. Provisions Relating to the 2023 Insurance Policy and the 2023 Reserve Policy ................................ ................................ ................................ ............... 28
ARTICLE XI
Limitation of Liability
SECTION 11.01. Limited Liability of City ................................ ................................ ................... 28 SECTION 11.02. No Liability of the Authority for Trustee Performance ................................ ..... 28 SECTION 11.03. Indemnification of Trustee ................................ ................................ .............. 29 SECTION 11.04. Opinion of Counsel ................................ ................................ ........................ 29 SECTION 11.05. Limitation of Rights to Parties and Certificate Owners ................................ ... 29
ARTICLE XII
Events of Default and Remedies
SECTION 12.01. Assignment of Rights ................................ ................................ ..................... 30 SECTION 12.02. Events of Default Defined ................................ ................................ .............. 30 SECTION 12.03. Remedies ................................ ................................ ................................ ...... 30 SECTION 12.04. Application of Funds ................................ ................................ ...................... 30 SECTION 12.05. Institution of Legal Proceedings ................................ ................................ ..... 31 SECTION 12.06. Non-waiver ................................ ................................ ................................ .... 31 SECTION 12.07. Remedies Not Exclusive ................................ ................................ ................ 31
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SECTION 12.08. Power of Trustee to Control Proceedings ................................ ...................... 32 SECTION 12.09. Limitation on Certificate Owners' Right to Sue ................................ ............... 32 SECTION 12.10. Possession of Certificates by Trustee Not Required ................................ ...... 32
ARTICLE XIII
Discharge; Administrative Provisions
SECTION 13.01. Discharge Hereof ................................ ................................ ........................... 32 SECTION 13.02. Records ................................ ................................ ................................ ......... 33 SECTION 13.03. Notices ................................ ................................ ................................ .......... 34 SECTION 13.04. Disqualified Certificates ................................ ................................ ................. 34 SECTION 13.05. Payment of Certificates After Discharge of Trust Agreement ......................... 34 SECTION 13.06. Governing Law ................................ ................................ .............................. 35 SECTION 13.07. Binding Effect; Successors ................................ ................................ ............ 35 SECTION 13.08. Authority and City Representatives ................................ ................................ 35 SECTION 13.09. Execution in Counterparts ................................ ................................ ............. 35 SECTION 13.10. Delivery of Canceled Certificates ................................ ................................ ... 35 SECTION 13.11. Headings ................................ ................................ ................................ ....... 35 SECTION 13.12. Waiver of Notice ................................ ................................ ............................ 35 SECTION 13.13. Separability of Invalid Provisions ................................ ................................ ... 35
APPENDIX A DEFINED TERMS
APPENDIX B FORM OF CERTIFICATE OF PARTICIPATION
APPENDIX C COSTS OF ISSUANCE FUND - REQUISITION FORM
[APPENDIX D PROVISIONS RELATING TO 2023 INSURANCE POLICY] [APPENDIX E PROVISIONS RELATING TO 2023 RESERVE POLICY]
TRUST AGREEMENT
This Trust Agreement (this “Trust Agreement”), dated as of _____ 1, 2023, is among The Bank of New York Mellon Trust Company, N.A. , a national banking association duly organized and existing under the laws of the United States of America, as tr ustee (the “Trustee”), the HAYWARD PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority (the “Authority”), and the CITY OF HAYWARD, a chartered city and municipal corporation duly organized and existing under the laws of the State of California (the “City”).
B A C K G R O U N D :
1. The City previously entered into a Lease Agreement dated as of August 1, 2014 (the “2014 Lease”), with the Public Property Financing Corporation of California (the “Corporation”), for the purpose of financing a new Fire Station No. 7 and a Firehouse Health Clinic to be located at the same site as Fire Station No. 7 (the “2014 Project”), under which the City agreed to pay semiannual lease payments (the “2014 Lease Payments”) to the Corporation for use and occupancy of a Police Station, located at 300 West Winton Avenue in the City (the “2014 Leased Property”).
2. The Corporation assigned its right to receive the 2014 Lease Payments to Umpqua Bank (“Umpqua Bank”) pursuant to an Assignment Agreement, dated as of August 1, 2014 ( the “2014 Assignment Agreement”).
3. Section 10.2 of the 2014 Lease provides that the City may prepay the 2014 Lease Payments on any date on and after August 1, 2019, subject to providing 45 days’ prior written notice to the Corporation and Umpqua Bank, i n an amount equal to the principal amount of the 2014 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium after August 1, 2022.
4. Section 10.1 of the 2014 Lease authorizes the City to establish a security deposit for prepayment of the 2014 Lease Payments, after which all obligations of the City under the 2014 Lease shall cease and terminate, except for the obligation to pay the 2014 Lease Payments from the security deposit.
5. The Authority and the Cit y previously entered into a Lease Agreement, dated as of August 1, 2015 (the "2015 Lease"), for the purpose of financing acquisition and construction of a number of capital improvements, including, but not limited to, (i) a new library and community learning center, (ii) improvements to existing fire stations and (iii) complete street rehabilitation and slurry seal repairs (collectively, the “2015 Project”), under which the City agreed to pay semiannual lease payments (the “2015 Lease Payments”) to the Authority for use and occupancy of certain of the City’s fire stations and a library and community learning center (the “2015 Leased Property”).
6. The Authority assigned its rights to receive the 2015 Lease Payments to The Bank of New York Mellon Trust Company, N.A. (the “2015 Trustee”), pursuant to an Assignment Agreement, dated as of October 1, 2015 (the “2015 Assignment Agreement”).
7. Pursuant to a Trust Agreement, dated as of October 1, 2015 (the “2015 Trust Agreement”), the 2015 Trustee caused to be executed and delivered the $67,535,000 City of
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Hayward 2015 Certificates of Participation (Capital Projects) (the “2015 Certificates”), which evidence direct, undivided fractional ownership interests in the 2015 Lease Payments.
8. Section 9.2 of the 20 15 Lease provides that the City may prepay the 2015 Lease Payments on November 1 2023, in an amount equal to the principal component of the 2015 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium.
9. Section 9.1 of the 2015 Lease authorizes the City to establish a security deposit for prepayment of the 2015 Lease Payments in amount sufficient to prepay the 2015 Lease Payments, after which all obligations of the City under the 2015 Lease shall cease and terminate, except for the obligation to pay the 2015 Lease Payments from the security deposit.
10. Under Section 3.01 of the 2015 Trust Agreement, the 2015 Certificates are subject to prepayment on November 1, 2023, and any date thereafter, without premium.
11. In order to take advantage of favorable interest rates prevailing in the municipal bond market, the City wishes at this time to provide for the refinancing of the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates.
12. The Board of Directors of the Authority has determined that the public convenience and necessity require assisting the City with refinancing the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates.
13. In order to provide funds to refinance the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates , (a) the City and the Authority will enter into a Site and Facilities Lease, dated as of _____ 1, 2023 (the “Site and Facilities Lease”), pursuant to which the City will lease certain real property described therein and the improvements thereon (the “Leased Property”) to the Authority , (b) the Authority and the City will enter into a Lease Agreement, dated as of _____ 1, 2023 (the “Lease Agreement”), pursuant to which the Authority will lease the Leased Property to the City in consideration for certain semi-annual lease payments to be made by the City and (c) the City will cause execution and delivery of the 2023 Refunding Certificates of Participation (Lease Refinancing) (the “Certificates”).
14. The Authority has agreed to assign its right to receive such lease payments to The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), under an Assignment Agreement, dated as of _____ 1, 2023 (the “Assignment Agreement ”), by and between the Authority and the Trustee, and in consideration of such assignment the Trustee will execute and deliver the Certificates, each evidencing a direct, undivided fractional interest in such lease payments, in accordance with this Trust Agreement, by and among the City, the Authority and the Trustee.
15. The City is authorized to enter into a lease-leaseback arrangement with the Authority under Section 37350 of the California Government Code.
A G R E E M E N T :
In consideration of the foregoing and the material covenants hereinafter contained, the City, the Authority and the Trustee formally covenant, agree and bind themselves as follows:
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms defined in Appendix A attached to this Trust Agreement have the respective meanings specified in Appendix A when used in this Trust Agreement.
SECTION 1.02. Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement, and has taken all actions necessary to authorize the execution hereof by the officers and persons signing it.
SECTION 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and includes the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.
(c) All references herein to “A rticles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
SECTION 2.01. Authorization. The Trustee is hereby authorized and directed upon written request from the Authority to register, execute and deliver to the Original Purchaser, Certificates in the aggregate principal amount of _________. The Certificates evidence dir ect, undivided fractional ownership interests of the Owners thereof in the Lease Payments.
SECTION 2.02. Date. Each Certificate shall be dated as of the date of its execution and interest represented thereby shall be payable from the Interest Payment Date next preceding the date of execution thereof, unless:
(a) it is executed following a Record Date and on or before the next succeeding Interest Payment Date, in which event interest represented thereby shall be payable from such Interest Payment Date,
(b) it is executed on or before the first Record Date, in which event interest represented thereby shall be payable from the Closing Date, or
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(c) as of the date of any Certificate, interest represented by such Certificate is in default, in which event interest represented thereby shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to such Certificate.
SECTION 2.03. Terms of Certificates. Principal represented by the Certificates is payable on November 1 in each of the respective years and in the respective amounts, and interest represented thereby is computed at the respective rates, as follows:
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
______________
T Term Certificate.
SECTION 2.04. Fully Registered Form; Interest. The Certificates will be delivered in the form of fully registered Certificates without coupons in the authorized denominations of $5,000 or any integral multiple thereof, except that no Certificate shall represent principal payable in more than one year. The Trustee shall assign the Certificates such alphabetical and numerical designation as the Trustee deems appropriate.
Interest represented by the Certificates is payable on each Interest Payment Date to and including the date of maturity or prepayment, whichever is earlier, as provided in Section 2.09.
Said interest represents the portion of Lease Payments designated as interest and coming due on each of the respective Interest Payment Dates. The share of the portion of Lease Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Lease Payments designated as principal represented by such Certificate by the rate of interest represented by such Certificate (on the bas is of a 360 -day year consisting of twelve 30 -day months).
SECTION 2.05. Book Entry System.
(a) Original Delivery. The Certificates will be initially delivered in the form of a separate single fully registered Certificate (which may be typewritten) for each maturity of the Certificates.
Upon initial delivery, the ownership of each such Certificate will be registered on the Registration
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Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Certificates shall be registered in the name of the Nominee on the Registration Books.
With respect to Certificates the ownership of which is registered in the name of the Nominee, the City and the Trustee have no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Depository System Participant holds an interest in the Certificates. Without limiting the generality of the immediately preceding sentence, the City and the Trustee have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any Depository System Participant or any other person, other than a Certificate Owner as shown in the Registration Books, of any notice with respect to the Certificates, including any notice of prepayment, (iii) the selection by the Depository of the beneficial interests in the Certificates to be prepaid if the City elects to prepay the Certificates in part, (iv) the payment to any Depository System Participant or any other person, other than a Certificate Owner as shown in the Registration Books, of any amount with respect to principal, premium, if any, or interest represented by the Certificates or (v) any consent given or other action taken by the Depository as Owner of the Certificates. The City and the Trustee may treat and consider the person in whose name each Certificate is registered as the absolute owner of such Certificate for the purpose of payment of principal, premium, if any, and interest represented by such Certificate, for the purpose of giving notices of prepayment and other matters with respect to such Certificate, for the purpose of registering transfers of ownership of such Certificate, and for all other purposes whatsoever. The Trustee shall pay the principal, interest and premium, if any, represented by the Certificates only to the respectiv e Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal, interest and premium, if any, represented by the Cert ificates to the extent of the sum or sums so paid. No person other than a Certificate Owner may receive a Certificate evidencing the obligation of the City to make payments of principal, interest and premium, if any, under this Trust Agreement.
Upon delivery by the Depository to the Nominee of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the C ity shall promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Certificates for the Depository’s book - entry system, the City shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the Certificates. The execution and delivery of su ch letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the City or the Trustee any obligation whatsoever with respect to persons having interests in the Certificates other than the Certificate Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the City in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the City may take any other actions, not inconsistent with this Trust Agreement, to qualify the Certificates for the Depository’s book-entry program.
(c) Transfers Outside Book-Entry System. If either (i) the Depository determines not to continue to act as Depository for the Certificates, or (ii) the City determines to terminate the Depository as such, then the City shall thereupon discontinue the book -entry system with such Depository. In such event, the Depository shall cooperate with the City and the Trustee in the execution and delivery of replacement Certificates by providing the Trustee with a list showing the interests of the Depository System Participants in the Certificates, and by surrendering the
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Certificates, registered in the name of the Nominee, to the Trustee on or before the date such replacement Certificates are to be executed and delivered. The Depository, by accepting delivery of the Certificates, agrees to be bound by the provisions of this subsection (c). If, p rior to the termination of the Depository acting as such, the City fails to identify another Securities Depository to replace the Depository, then the Certificates shall no longer be required to be registered in the Registration Books in the name of the No minee, but shall be registered in whatever name or names the Owners transferring or exchanging Certificates shall designate, in accordance with the provisions hereof.
If the City determines that it is in the best interests of the beneficial owners of the Certificates that they be able to obtain certificated Certificates, the City may notify the Depository System Participants of the availability of such certificated Certificates through the Depository. In such event, the Trustee will execute, transfer and exchange Certificates as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the City shall cooperate with the Depository in taking appropriate action (y) to make available one or more separate certificates evidencing the Certificates to any Depository System Participant having Certificates credited to its account with the Depository, or (z) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such Certificates, all at the City’s expense.
(d) Payments to the Nominee . Notwithstanding any other provision of this Trust Agreement to the contrary, so long as any Certificate is registered in the name of the Nominee, all payments with respect to principa l, interest and premium, if any, represented by such Certificate and all notices with respect to such Certificate shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository.
SECTION 2.06. Form and Execution of Certificates. The Certificates shall be substantially in the form set forth in Appendix B attached hereto and by this reference incorporated herein. The Trustee shall execute the Certificates with the manual signature of an authorized signatory of the Trustee. If any person whose signature appears on any Certificate ceases to be an authorized signatory before the date of delivery of said Cer tificate, such signature shall nevertheless be as effective as if such person had remained an authorized signatory until such date.
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 duly authorized attorney, upon surrender of such Certificate for cancellation at the Office of the Trustee, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, manually executed. Whenever any Certificate or Certificates shall be surrendered for registration of transfer, the Trustee shall execute and deliver a new Certificate or Certificates representing the same maturity, interest rate and aggregate principal amount, in any authorized denominations. The Trustee shall require the Certificate Owner to pay all costs of the Trustee incurred in connection with any such transfer and any tax or other governmental charge required to be paid with respect to such transfer.
(b) Exchange of Certificates. Certificates may be exchanged at the Office of the Trustee, for a like aggregate principal amount of Certificates representing other authorized denominations of the same interest rate and maturity. The City shall pay all costs of the Trustee incurred in connection with any such exchange, except that the Trustee shall require the payment by the
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Certificate Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
(c) Limitations on Transfer or Exchange. The Trustee may refuse to transfer or exchange either (i) any Certificate during the pe riod established by the Trustee for the selection of Certificates for prepayment, or (ii) any Certificate which the Trustee has selected for prepayment in whole or in part under the provisions of Section 3.02.
SECTION 2.08. Certificates Mutilated, Lost, Destroyed or Stolen . If any Certificate is mutilated, the Trustee, at the expense of the Owner of such Certificate, shall execute and deliver a new Certificate of like principa l amount, interest rate and maturity in replacement for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated.
The Trustee shall cancel and destroy every mutilated Certificate so surrendered to it and shall deliver a certificate of destruction to the City at the request of the City. If any Certificate is lost, destroyed or stolen, evidence of such loss, destruction or theft must be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and if an indemnity satisfactory to the Trustee is given, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new Certificate of like principal amount, interest rate and maturity and numbered as the Trustee shall determine in lieu of and in replacement for the Certificate so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each replacement 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 delivered under the provisions of this Section 2.08 in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally entitled to the benefits of this Trust Agreement with all other Certificates secured by this Trust Agreement. The Trustee is not 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 m ay 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 replacement 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 and the City.
SECTION 2.09. Payment. Payment of interest represented by any Certificate on any Interest Payment Date shall be made to the person appearing on the Registration Books as the Owner thereof as of the close of business on the Record Date immediately preceding such Interest Payment Date, such interest to be paid by check mailed on the applicable Interest Payment Date to such Owner, by first class mail postage prepaid, at such Owner’s address as it appears on the Registration Books. At the written request of the Owner of Certificates in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee prior to the Record Date preceding any Interest Payment Date, t he Trustee shall pay interest represented by such Certificates coming due and payable on such Interest Payment Date by wire transfer in immediately available funds to such account in the United States as is specified in such written request. The principal , interest and prepayment premium, if any, represented by any Certificate at maturity or upon prepayment are payable in lawful money of the United States of America upon surrender of such Certificate at the 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 Trust Agreement to be signed or executed by Certificate Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their
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attorneys or agents appointed by an instrument in writing for that purpose, or by any b ank, trust company or other depository for such Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Trust Agreement (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or any Owner’s attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of 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 such person’s holding the same shall be proved by the Registration Books.
Nothing in this Section 2.10 limits 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 binds every future Owner of the same Certificate in respect of anything done or suffered to be done by the Trustee under such request or consent.
SECTION 2.11. Registration Books. The Trustee shall keep or cause to be kept 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 Authority upon prior notice, during regular business hours; 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.
ARTICLE III
PREPAYMENT OF CERTIFICATES
SECTION 3.01. Prepayment.
(a) Optional Prepayment. The Certific ates maturing on or before November 1, _____, are not subject to optional prepayment before their respective stated maturities. The Certificates maturing on or after November 1, _____, are subject to prepayment prior to their respective stated maturities, at the option of the City, in whole, or in part among maturities on such basis as designated by the City and by lot within any one maturity, on November 1, ______, or on any date thereafter, upon 45 days’ prior written notice to the Trustee and payment of a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest to the date fixed for prepayment, without premium.
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(b) Extraordinary Mandatory Prepayment From Net Proceeds of Insurance or Condemnation. The Certificates are subject to mandatory prepayment, in whole, on any Business Day, or in part on any Interest Payment Date among maturities on a pro rata basis and by lot within a maturity, from the Net Proceeds of insurance or eminent domain proceedings credited towards the prepayment of the Lease Payments under Section 9.3 of the Lease and Article VI, at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest represented thereby to the date fixed for prepayment, without premium.
(c) Sinking Fund Prepayment . The Term Certificates are also subject to mandatory sinking fund prepayment by lot on November 1 in each year as s et forth in the following table s, from the principal components of the Lease Payments required to be paid with respect to each of such dates, at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest represented thereby to the prepayment date, without premium, as follows:
Term Certificates Maturing
November 1, _____
Sinking Fund
Prepayment Date
(November 1)_
Principal Amount
To Be Prepaid_
Notwithstanding the foregoing provisions of this subsection (c), if some but not all of the Term Certificates are prepaid under subsections (a) and (b) of this Section 3.01, the aggregate principal amount of the Term Certificates to be prepaid in each year thereafter under this subsection (c) shall be reduced by the aggregate principal amount of Term Certificates so prepaid, to be allocated among sinking fund installments on a pro rata basis in integral multiples of $5,000 such that the resulting amount of principal represented by the Term Certificates subject to prepayment on any date under this subsection (c) is equal to the aggregate principal components of the Lease Payments coming due and payable on such date. In such instance the City shall provide the Trustee with a revised sinking fund schedule.
SECTION 3.02. Selection of Certificates for Prepayment. Whenever provision is made in this Trust Agreement for the prepayment of Certificates and less than all Outstanding Certificates of any maturity are called for prepayment, the Trustee shall select Certificates of such maturi ty for prepayment by lot. For the purposes of such selection, Certificates shall be deemed to be composed of $5,000 portions, and any such portion may be separately prepaid. The Trustee shall promptly notify the City and the Authority in writing of the C ertificates or portions thereof so selected for prepayment.
SECTION 3.03. Notice of Prepayment. When prepayment is authorized or required under Section 3.01(a) or 3.01(b), the Trustee shall give notice of the prepayment of the Certificates on behalf and at the expense of the City. Such notice must:
(a) state the prepayment date and prepayment price;
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(b) state the numbers or maturities of the Certificates to be prepaid, if less than all of the then Outstanding Certificates are to be called for prepayment;
(c) if a Certificate is to be prepaid only in part, identify the portion of the Certificate which is to be prepaid;
(d) require that such Certificates be surrendered on the prepayment date at the Office of the Trustee for prepayment at said prepayment price;
(e) state that interest represented by the Certificates will not accrue from and after the prepayment date; and
(f) state that on the prepayment date the principal and premium, if any, represented by each Certificate will become due and payable, together with accrued interest represented thereby to the prepayment date, and that from and after such date interest represented thereby ceases to accrue and be payable; and
(g) in the case of any prepayment of Certificates under Section 3.01(a), the notice may provide that the proposed prepayment is conditional upon the availability of funds and that the City has the right to rescind the notice as provided below.
The Trustee has no liability for any designation of the CUSIP numbers of the Certificates to be prepaid, and neither the failure to identify the CUSIP numbers of the Certificates to be prepaid nor any incorrect designation of such CUSIP numbers will affect the sufficiency of the proceedings for the prepayment of such Certificates or the cessation of accrual of interest represented thereby from and after the date fixed for prepayment.
The Trustee shall mail notice of prepayment by first class mail with postage prepaid, to the Securities Depositories and to the Municipal Securities Rulemaking Board, and to the Owners of Certificates designated for prepayment at their respective addresses appearing on the Registration Books, at least 20 days but not more than 60 days prior to the prepayment date.
Neither the failure to receive any such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the prepayment of such Certificates or the cessation of accrual of interest represented thereby from and after the date fixed for prepayment.
The City has the right to rescind any notice of the optional prepayment of Certificates under Section 3.01(a) by written notice to the Trustee on or prior to the dated fixed for prepayment.
Any notice of optional prepayment shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for prepayment for the payment in full of the Certificates then called for prepayment, and such cancellation shall not constitute an Event of Default. The City and the Trustee have no liability to the Owners or any other party related to or arising from such rescission of prepayment. The Trustee shall mail notice of such rescission of prepayment to the respective Owners of the Certificates designated for p repayment at their respective addresses appearing on the Registration Books, and to the Securities Depositories and the Municipal Securities Rulemaking Board.
SECTION 3.04. Partial Prepayment of Certificates . Upon surrender of any Certificate prepaid in part only, the Trustee shall execute and deliver to the Owner thereof, at the expense of the City, a new Certificate or Certificates of authorized denominations equal in aggregate
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principal amount to the unprepaid portion of the Certificate surrendered and of the same interest rate and the same maturity.
SECTION 3.05. Effect of Notice of Prepayment. Moneys for the prepayment (including the interest to the applicable date of prepayment) of Certificates having been set aside in the Lease Payment Fund, the Certificates shall become due and payable on the date of such prepayment, and, upon presentation and surrender thereof at the Office of the Trustee, said Certificates shall be paid at the unpaid principal amount (or applicable portion thereof) represented thereby plus interest accrued and unpaid to said date of prepayment.
If, on said date of prepayme nt, moneys for the prepayment of all the Certificates to be prepaid, together with interest represented thereby to said date of prepayment, shall be held by the Trustee so as to be available therefor on such date of prepayment, then, from and after said date of prepayment, interest represented by the Certificates shall cease to accrue and become payable. All moneys held by the Trustee for the prepayment of Certificates shall be held in trust for the account of the Owners of the Certificates so to be prepaid, and shall be held by the Trustee in cash uninvested.
All Certificates paid at maturity or prepaid prior to maturity under the provisions of this Article III shall be canceled upon surrender thereof.
SECTION 3.06. Purchase of Certificates. In lieu of prepayment of Certificates as provided in this Article III, amounts held by the Trustee for such prepayment may, at the written request of the City Representative received by the Trustee at least 75 da ys prior to the selection of Certificates for prepayment, be applied by the Trustee to the purchase of Certificates at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the City may in its di scretion direct, but not to exceed the prepayment price which would be payable if such Certificates were prepaid.
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ARTICLE IV
DISPOSITION OF PROCEEDS OF SALE
SECTION 4.01. Application of Proceeds.
(a) On the Closing Date, the Trustee will receive net proceeds from the sale of the Certificates of $_____, which is equal to:
(i) the purchase price of the Certificates in the amount of $_______ (representing the aggregate principal amount of the Certificates (_________), plus net original issue premium ($_______), less an underwriter’s discount ($______)), less
[(ii) the 2023 Reserve Policy premium ($_____), which the Underwriter will wire directly to the 2023 Bond Insurer, and]
[(iii) the 2023 Insurance Policy premium ($_______), which the Underwriter will wire directly to the 2023 Bond Insurer.]
(b) The Trustee will deposit the net proceeds in the Proceeds Fund, which the Trustee will establish, maintain and hold in trust, and shall further deposit or transfer the amounts in the Proceeds Fund as follows:
(i) with respect to the 2014 Lease Payments, the Trustee shall transfer the amount of $____ to Umpqua Bank on t he Closing Date, according to wire instructions provided by the City to the Trustee,
(ii) with respect to the 2015 Lease Payments and the 2015 Certificates, the Trustee shall transfer the amount of $ ________ to the Escrow Agent for deposit into the Escrow Fund established pursuant to the Escrow Agreement; and
(iii) the Trustee shall transfer or deposit the net proceeds in the Costs of Issuance Fund.
]In addition, the Trustee shall credit the 2023 Reserve Policy to the Reserve Fun d in satisfaction of the Reserve Requirement upon delivery of the Certificates.]
The Trustee shall close the Proceeds Fund after making the foregoing deposits and transfers. The Trustee may establish and maintain for so long as is necessary one or more temporary funds and accounts under this Trust Agreement, including but not limited to a temporary fund for holding the proceeds of the Certificates.
]SECTION 4.02. Reserve Fund. The Trustee shall establish, maintain and hold in a trust a separate fund designated as the “Reserve Fund.” The Trustee shall hold the Reserve Fund in trust for the benefit of the City and the Owners of the Certificates. The Reserve Requirement for the Certificates shall be satisfie d by the delivery of the 2023 Reserve Policy by the 2023 Bond
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Insurer to the Trustee on the Closing Date. The Trustee shall draw on the 2023 Reserve Policy in accordance with its terms and conditions and the terms of this Trust Agreement.
The amounts available under the 2023 Reserve Policy shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Lease Payment Account, in the event of any deficiency at any time in such account.
The Trustee shall comply with all document ation relating to the 2023 Reserve Policy as shall be required to maintain the 2023 Reserve Policy in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under this Section 4.02.
The City shall have no obligation to replace the 2023 Reserve Policy or to fund the Reserve Fund with cash or any other security if, at any time that the Certificates are Outstanding, amounts are not available under the 2023 Reserve Policy or if any ratings of the 2023 Bond Insurer are lowered or terminated.]
SECTION 4.03. Establishment and Application of Costs of Issuance Fund . The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Costs of Issuance Fund.” The Trustee shall disburse moneys in the Costs of Issuance Fund to pay the Costs of Issuance upon submission of written requisitions executed by a City R epresentative in substantially the form of Appendix C stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. The Trustee shall not be responsible for the truth or accuracy of such requisitions, may rely conclusively thereon and shall be under no duty to investigate or verify any statements made therein. On December 1, 2023 , the Trustee shall withdraw all remaining moneys in the C osts of Issuance Fund and transfer such moneys into the Lease Payment Fund, and the Trustee shall thereupon close the Costs of Issuance Fund.
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
SECTION 5.01. Assignment of Rights in Lease . Under the Assignment Agreement, the Authority has transferred, assigned and set over to the Trustee for the benefit of the Owners of the Certificates certain of its rights under (i) the Lease, including but not limited to all of the Authority’s rights to receive and collect all of the Lease Payments on the Lease Payment Date and all other amounts required to be deposited in the Lease Payment Fund, and (ii) the Site and Facilities Lease. The City shall pay to the Trustee all Lease Payments and other amounts which have been assigned to the Trustee under the Assignment Agreement. Any Lease Payments collected or received by the Authority shall be deemed to be held and to have been collected or received by the Authority as the agent of the Trustee, and the Authority shall immediately transfer all such Lease Payments and other amounts to the Trustee.
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 in trust for the benefit of the City and the Owners of the Certificates. So long as any Certificates are Outstanding, neither the City
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nor the Authority has any beneficial right or interest in the Lease Payment Fund, or the moneys deposited therein, except only as provided in this Trust Agreement, and the Trustee shall apply the Lease Payment Fund solely as set forth in this Trust Agreement.
SECTION 5.03. Deposits. The Trustee shall deposit all Lease Payments received by it in the Lease Payment Fund, including any moneys received by the Trustee for deposit therein under Section 5.01 or under Article VI hereof, or Article IX of the Lease, and any other moneys required to be deposited therein under the Lease or under this Trust Agreement.
SECTION 5.04. Application of Moneys . The Trustee shall apply amounts in the Lease Payment Fund solely for the purpose of paying the principal, interest and prepayment premiums (if any) represented by the Certificates as the same become due and payable, including payments upon redemption of t he Bonds in whole or in part, in accordance with the provisions hereof. If there are insufficient amounts in the Lease Payment Fund to pay the principal, interest and prepayment premiums on any Interest Payment Date, the Trustee shall transfer amounts in the Reserve Fund in the amount of such insufficiency.
SECTION 5.05. Surplus. Any surplus remaining in the Lease Payment Fund, after prepayment and payment of all Certificates, including premiums and accrued interest (if any) and payment of any applicable fees and expenses to the Trustee, or provision for such prepayment or payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and remitted to the City.
ARTICLE VI
INSURANCE AND CONDEMNATION FUND
SECTION 6.01. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award. Any Net Proceeds of insurance collected by the City in the event of accident to or destruction of any component of the Leased Property shall be paid to the Trustee under Section 6.1 of the Lease and deposited by the Trustee promptly upon receipt thereof in a special fund designated as the “Insurance and Condemnation Fund” which the Trustee shall thereupon establish. If the City determines and notifies the Trustee in writing of its determination, within 45 days following the date of such deposit, that the replacement, repair, restoration, modification or improvement of the Leased Property is not economically feasible or in the best interests 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 under Section 9.3 of the Lease and the corresponding prepayment of Certificates under Section 3.01(b), which prepayment shall be made on the first Interest Payment Date for which notice of prepayment can be timely given. Notwithstanding the foregoing provisions of this Section 6.01, the determination of the City to apply Net Proceeds to the prepayment of Certificates is subject to the following:
(a) if the Leased Property is damaged or destroyed in full, such Net Proceeds may be transferred to the Lease Payment F und to be used to prepay Outstanding Certificates only if such Net Proceeds, together with other available moneys, are sufficient to cause the corresponding prepayment of all Lease Payments allocable to the Leased Property; and
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(b) if the Leased Property is damaged or destroyed in part but not in whole, such Net Proceeds may be transferred to the Lease Payment Fund to be used to prepay Outstanding Certificates only if the Lease Payments which result after the corresponding abatement thereof under Section 6 .3 of the Lease are sufficient to pay the full amount of principal and interest represented by the Certificates which remain Outstanding after such prepayment.
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 the Leased Property by the City, upon receipt of written requisitions of the City stating with respect to each payment to be made (a) the name and address of the person, firm or corporation to whom payment is due, (b) the amount to be paid and (c) 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. Any balance of the Net Proceeds remaining after the City shall file a written certificate with the Trustee stating that such work has been completed shall, after payment of all amounts then due and owing to the Trustee hereunder, be paid to the City.
Notwithstanding any other provision of this Section 6.01 or the Lease, the Trustee shall pay to the City all moneys in the Insurance and Condemnation Fund upon the Trustee’s receipt of a written notice executed by a City Representative which states that, pursuant to Section 4.6 of the Lease, the City has substituted other real property for the Leased Property that was damaged or destroyed and that there will be no abatement of the Lease Payments as a result of such damage or destruction.
SECTION 6.02. Deposit and Application of Net Proceeds of Eminent Domain Award. If all or any part of the Leased Property is 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, under Section 6.1 of the Lease, and shall be applied and disbursed by the Trustee as follows:
(a) If the City gives written notice to the Trustee of its determination that (i) such eminent domain proceedings have not m aterially affected the interest of the City in the Leased Property or the ability of the City to meet any of its financial obligations under the Lease, and (ii) that such proceeds are not needed for repair, replacement or rehabilitation of the Leased Property, the Trustee shall transfer such proceeds to the Lease Payment Fund to be credited towards the payment of the Lease Payments as they become due and payable.
(b) If the City gives written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the interest of the City in the Leased Property or the ability of the City to meet any of its financial obligations under the Lease, and (ii) such proceeds are needed for repair, replacement or rehabilitation of the Leased Property, the Trustee shall pay to the City, or to its order, from said proceeds such amounts as the City may expend for the repair or rehabilitation of the Leased Property, upon the filing of requisitions of the City Representative meeting the requirements of Section
6.01. - 16 -
(c) If (i) less than all of the Leased Property is taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City gives written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the interest of the City in the Leased Property or the ability of the City to meet any of its financial obligations under the Lease, or (ii) all of the Leased Property is 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 under Section 9.3 of the Lease and applied to the corresponding prepayment of Certificates under Section 3.01(b), which prepayment shall be made on the first Interest Payment Date for which notice of prepayment can be timely given.
In making any such determination whether to repair, replace or rehabilitate the Leased Property under this Section 6.02, the City may obtain, but is not required to obtain, at its expense, the report of an independent engineer or other independent professional consultant, a copy of which must be filed with the Trustee. Additionally, any such determination shall be ma de within 45 days of the date the funds are deposited with the Trustee. Any such determination by the City is final.
ARTICLE VII
MONEYS IN FUNDS; INVESTMENTS
SECTION 7.01. Held in Trust. The moneys and Permitted 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 solely for the purposes herein specified, and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Trust Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Authority, the Trustee, the City or the Owner of any Certificates.
SECTION 7.02. Investments Authorized. Upon the written request of a City Representative filed with the Trustee from time to time, moneys held by the Trustee in a ny fund or account hereunder shall be invested and reinvested by the Trustee in Permitted Investments which mature not later than the date such moneys are required or estimated by the City to be required to be expended hereunder. In the absence of any wri tten request of the City directing the investment of uninvested moneys held by the Trustee hereunder, the Trustee shall invest such moneys in Permitted Investments described in clause (e) of the definition thereof; provided, however, that any such investme nt shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written request of the City specifying a specific money market fund and, if no such written request of the City is so received, the Trustee shall hold such moneys uninvested . Such investments, if registrable, shall be registered in the name of the Trustee, as trustee or in the name of its nominee, and shall be held by the Trustee.
The Trustee may purchase or sell to itself o r any affiliate, as principal or agent, investments authorized by this Section 7.02. 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 a gent in the making or disposing of any investment. Whenever in this Trust Agreement any moneys are required to be transferred by the City to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. For purpos es of
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acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder.
The Trustee is not responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this Section 7.02.
SECTION 7.03. Accounting. The Trustee shall furnish the City with periodic cash transaction statements at least monthly which include detail for all investment transactions effected by the Trustee or brokers selected by the City. Upon the City’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The City further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.
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 value of Permitted Investments credited to such fund shall be valued by the Trustee at least quarterly at the market value thereof. The Trustee may sell or present for prepayment, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any such Permitted Investment. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grants the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.
SECTION 7.06. Investments at Fair Market Value. Except as otherwise provided in the following sentence, the City covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Trust Agreement, or otherwise containing gross proceeds of the Certificates (within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Trust Agreement or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code shall be valued at their present value (within the meaning of section 148 of the Code).
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ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Appointment of Trustee. The Bank of New York Mellon Trust Company, N.A., is hereby appointed Trustee by the Authority and the City for the pu rpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Trust Agreement. The Authority and the City agree that they will maintain a Trustee having a corporate trust office in the State of California and having a combined capital and surplus (or whose related bank holding company has a combined capital and surplus) of at least $75,000,000, and which shall be subject to supervision or examination by Federal or state authority, so long as any Certificates are Outstanding. If such bank, national banking association or trust company publishes a report of condition at least annually under law or to the requirements of any supervising or examining authority above referred to the n for the purpose of this Section
8.01 the combined capital and surplus of such, national banking association , bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The City and the Authority covenant that they will maintain a Trustee qualified under the provisions of the foregoing provisions of this Section 8.01, so long as any Certificates are Outstanding.
The Trustee is hereby authorized to pay or prepay the Certi ficates when duly presented as provided herein for payment at maturity, or on prepayment, or on purchase by the Trustee as directed by the City prior to maturity in accordance with Section 3.06, and to cancel all Certificates upon payment thereof. The Tru stee shall keep accurate records of all funds administered by it and of all Certificates paid and discharged. The Trustee shall be compensated for its services rendered under the provisions of this Trust Agreement.
SECTION 8.02. Acceptance of Trusts . The Trustee hereby accepts the express trusts imposed upon it by this Trust Agreement, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Trust Agreement. In c ase an Event of Default has occurred (which has not been cured or waived) the Trustee may exercise such of the rights and powers vested in it by this Trust Agreement, and shall use the same degree of care and skill in their exercise, as a responsible corpo rate trustee would exercise or use under the circumstances.
(b) No provision in this Trust Agreement requires the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in t he exercise of any of its rights or powers, if repayment of such funds or adequate indemnity against such risk or liability is not in the conclusive opinion of the Trustee satisfactorily assured to it.
(c) The Trustee is not responsible or liable for any recital herein, or in the Certificates, or for any of the supplements thereto or instruments of further
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assurance, or for the validity or sufficiency of the security for the Certificates executed and delivered hereunder or intended to be secured hereby and the Trustee shall not be bound at any time to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Authority or the City under the Lease. The Trustee is not responsible or liable for any l oss suffered in connection with any investment of funds made by it in accordance with Article VII.
(d) The Trustee is not accountable for the use of any Certificates delivered hereunder. The Trustee may become the Owner of Certificates with the same rights which it would have if not the Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the City with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Certificates, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Certificates then Outstanding.
(e) The Trustee shall be protected in acting upon any notice, request, requisition, consent, certificate, order, affidavit, letter, telegram, direction, facsimile transmission, electronic mail or other paper or document believed by the trust officer responsible for the administrative of the trusts created hereunder to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith under this Trust Agreement upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Certificate, shall be conclusive and binding upon all future Owners of the same Certifi cate and upon Certificates delivered in exchange therefor or in place thereof. The Trustee is not bound to recognize any person as an Owner of any Certificate or to take any action at such person’s request unless such Certificate shall be deposited with t he Trustee or satisfactory evidence of the ownership of such Certificate shall be furnished to the Trustee.
(f) As to the existence or non -existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed by a Authority Representative or a City Representative as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default of which the Trustee has been given notice or is deemed to have notice, as provided in Section 8.02(h), shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further eviden ce deemed by it to be necessary or advisable, but shall in no case be bound to secure the same. The Trustee may accept a certificate of a Authority Representative or a City Representative to the effect that an authorization in the form therein set forth h as been adopted by the Authority or the City, as the case may be, as conclusive evidence that such authorization has been duly adopted, and is in full force and effect.
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(g) The permissive right of the Trustee to do things enumerated in this Trust Agreement may not be construed as a duty and the Trustee is not answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee extend to its officers, directors, employees and agents.
(h) The Trustee is not required to take notice or be deemed to have notice of any Event of Default hereunder except failure by the City to make any of the Lease Payments to the Trustee required to be made by the City under the Lease or failure by the Authority or the City to file with the Trustee any document required by this Trust Agreement or the Lease to be so filed subsequent to the delivery of the Certificates, unless the Trustee shall be specifically notified in writing of such default by the Authority, the City or the Owners of at least 25% in aggregate principal amount of Certificates then Outstanding. All notices or other instruments required by this Trust Agreement to be delivered to the Trustee must, in order to be effective, be delivered at the Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, have the right (but not any duty) fully to inspect the Leased Property, including all books, papers and records of the Authority or the City pertaining to the Leased Property and the Certificates, and to take such memoranda fro m and with regard thereto as may be desired.
(j) The Trustee is not required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises.
(k) Notwithstanding anything elsewhere in this Trus t Agreement with respect to the execution of any Certificates, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Trust Agreement, the Trustee has the right, but is not required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action, which may be deemed desirable by the Trustee for the purpose of establish ing the right of the Authority or the City to the execution of any Certificates, the withdrawal of any cash, or the taking of any other action by the Trustee.
(l) Before taking any action referred to in Section 12.03 and this Article at the direction of the Certificate Owners, the Trustee may require that a satisfactory indemnity bond be furnished by the Certificate Owners, or any of them, for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liabilit y which is adjudicated to have resulted from its negligence or willful misconduct in connection with any such action.
(m) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by
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law. The Trustee has no liability for interest on any moneys received hereunder except such as may be agreed upon, other than interest derived from investments made or required to be made under Section 7.02.
(n) The Trustee is not responsible for the sufficiency of the Lease, its right to receive moneys under the Lease, or the value of or title to the Leased Property.
(o) The Trustee is not 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 a majority in aggregate principal amount of the Outstanding Certificates relating to the time, method and place of conducting any proce eding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Trust Agreement.
(p) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or th rough attorneys, agents, or receivers and the Trustee is not responsible for any misconduct or negligence on the part of any attorney, agent, or receiver appointed with due care. The Trustee shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder and shall be protected in any action taken or suffered by it hereunder in reliance on such advice.
(q) The Trustee is not liable for any error of judgment made in good faith, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(r) The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable ca uses beyond its control and without its fault or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyon d the control of the Trustee.
(s) The Trustee agrees to accept and act upon instructions or directions pursuant to this Trust Agreement sent by unsecured e -mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that , the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City elects to give the Trustee e -mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee
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acts upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding the fact that such instructions conflict or are inconsistent with a subsequent written instruction.
The City agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.
(t) Whenever in the administration of the trusts imposed upon it by 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) may be deemed to be conclusively proved and established by a certificate of the City, which shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Trust Agreement in reliance upon such certificate, but in its discretion the Trustee may (but shall have no duty to), in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable.
(u) The Trustee shall have no responsibility or liability with respect to any information, statements or recital in any offering memorandum or othe r disclosure material prepared or distributed with respect to the execution and delivery of the Certificates.
(v) The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct.
(w) The Trustee shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.
SECTION 8.03. Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement by the City for reasonable fees for its services rendered hereunder and all advances, agent and counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. The Trustee has a first lien with right of payment prior to payment on account of principal, premium, if any, and interest represented by any Certificate upon the amounts held hereunder for the foregoing fees, charges and expenses incurred by it respectively. The Trustee shall be entitled to interest on all moneys advanced by it in the performance of its duties hereunder at the maximum legal rate allowable.
SECTION 8.04. Notice to Certificate Owners of Default . If an Event of Default occurs of which the Trustee has been given or is deemed to have notice, as provided in Section 8.02(h), then the Trustee shall promptly give written notice thereof by first class mail, postage prepaid, to the Owner of each Outstanding Certificate, unless such Event of Default has been cured before the giving of such notice; provided, however that unless such Event of Default consists of the failure by the City to make any Lease Payment when due, the Trustee may elect not to give such notice to the Certificate Owners if and so long as the Trustee in good faith determines that it is in the best interests of the Certificate Owners not to give such notice.
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SECTION 8.05. Removal of Trustee. The City may remove the Trustee at any time, unless an Event of Default has occurred and is continuing, and shall remove the Trustee (a) if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority in aggregate principal amount of the Certificates then Outstanding (or their attorneys duly authorized in writing) or (b) if at any time the Trustee ceases to be eligible in accordance with Section 8.01, or shall become incapable of acting, or shall b e adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. In each case such removal shall be accomplished by the giving of 30 days’ prior written notice of such removal by the City to the Trustee, whereupon the City shall appoint a successor Trustee in accordance with Section 8.07. However, no removal shall become effective until a successor Trustee has been appointed.
SECTION 8.06. Resignation by Trustee. The Trustee and any successor Trustee may at any time resign by giving written notice by registered or certified mail to the City. Upon receiving such notice of resignation, the City shall promptly appoint a successor Trustee in accordance with Section 8.07. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the City shall mail notice thereof to the Certificate Owners at their respective addresses set forth on the Registration Books. However, no resignation shall become ef fective until a successor Trustee has been appointed.
SECTION 8.07. Appointment of Successor Trustee. If the Trustee resigns or is removed under Sections 8.06 or 8.05, respectively, the City shall promptly appoint a successor Trustee. If the City for any reason whatsoever fails to appoint a successor Trustee within 30 days following the delivery to the Trustee of the instrument described in Section 8.05 or within 30 days following the receipt of notice by the City under Section 8.06, the Trustee may apply to any federal or state court for the appointment of a successor Trustee meeting the requirements of Section 8.01. Any such successor Trustee appointed by such court will become the successor T rustee hereunder notwithstanding any action by the City purporting to appoint a successor Trustee following the expiration of such 30-day period.
SECTION 8.08. Merger or Consolidation . Any company or ass ociation 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 or association to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company or association shall be eligible under Section 8.01, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.
SECTION 8.09. Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority and the City an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligation s of its predecessors; but such predecessor shall, nevertheless, on the written request of the City, or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predec essor hereunder; and every predecessor Trustee shall deliver all
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securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the City be required by any successor Trustee for more fully and certainly v esting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the City. The resignation of an y Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article VIII, shall be filed or recorded by the successor Trustee in each recording office where the Assignment Agreement has been filed or recorded.
SECTION 8.10. Non-Liability of Trustee. The recitals, statements and representations by the City and the Authority 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 Authority, as the case may be, and not by the Trustee, and the Trustee has no responsibility, obligation or liability for the correctness of any thereof.
The Trustee makes no representation or warranty, express or implied as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City or the Authority of the Leased Property. In no event shall the Trustee be liable for special or consequential damages in connection with or arising from the Lease for the existence, furnishing or use of the Leased Property.
The Trustee is not: (a) responsible for the sufficiency or enforceability of the Lease or the assignment under the Assignment Agreement of its rights to receive Lease Payments; (b) deemed to have knowledge of any Event of Default unless and until it has received written notice thereof or, with respect to Section 8.1(a) of the Lease, has actual knowledge thereof or except as provided in Section 8.02(h); or (c) accountable for the use or application by the City or the Authority of any funds which the Trustee has released under this Trust Agreement.
SECTION 8.11. Actions Through Agents. 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 is not answerable for the default or misconduct of any such attorney, agent, or receiver selected by it with reasonable care. The Trustee is not 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 negligence or willful misconduct.
SECTION 8.12. Nature of Trust Engagement . The Trustee undertakes to perform such duties and only such duties as are expressly and specifically set forth in the Trust Agreement and no implied covenants or obligations whatsoever shall be read into the Trust Agreement against the Trustee. In accepting the trusts hereby created, the Trustee acts solely as Trustee and not in its individual capacity. All persons, including without limit ation the Owners, the City and the Authority having any claim against the Trustee arising from the Trust Agreement shall look only to the funds and accounts hereunder for payment except as otherwise provided herein; provided, however, that nothing in this sentence is intended or shall be construed to apply to, or limit the source of payment of, claims against the Trustee arising from the negligence or willful misconduct of the Trustee. Under no circumstances shall the Trustee be liable in its individual ca pacity for payment of the obligations represented by the Certificates.
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ARTICLE IX
MODIFICATION OR AMENDMENT
SECTION 9.01. Amendments Permitted . This Trust Agreement and the rights and obligations of the Owners of the Certificates may be modified or amended at any time by a supplemental agreement which shall become effective when the written consents of the Owners of a majority in aggregate p rincipal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 13.04, has been filed with the Trustee. No such modification or amendment may (a) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate represented thereby or extending the time of payment of interest, or reducing the amount of principal represented thereby or reducing any premium payable upon the prepayment thereof, without the express con sent of the Owner of such Certificate, or (b) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification hereof, or (c) 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 Trust Agreement and the rights and obligations of the Owners of the Certificates may be modified or amended at any time by a supplemental agreement, without the consent of any Certificate Owners, but only to the extent permitted by law and only:
(a) to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power herein reserved to the Authority or the City (provided, however that no right or power may be surrendered by the Authority to the extent that such right or power has been assigned by the Authority to the Trustee pursuant to the Assignment Agreement),
(b) to cure, correct or supplement any ambiguous or defective provision contained herein,
(c) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of the portion of lease payments designated as and comprising interest and received by owners of the Certificates,
(d) in regard to questions arising hereunder, as the parties hereto or thereto may deem necessary or desirable and which shall not, in the opinion of Bond Counsel, material ly adversely affect the interests of the Owners of the Certificates, or
(e) to conform to any amendments of the Lease which are permitted to be made under Section 7.5 thereof.
Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto.
SECTION 9.02. Procedure for Amendment with Written Consent of Certificate Owners. If the consents of the Owners of the Certificates are required to any amendment hereof under Section 9.01, such amendment shall be required to comply with the provisions of this Section
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9.02. A copy of such supplemental agreement, together with a request to the Certificate Owners for their consent theret o, shall be mailed by the Trustee to each Owner of a Certificate at such Owner’s address as set forth on the Registration Books, but failure to mail copies of such supplemental agreement and request shall not affect the validity of the supplemental agreement when assented to as provided in this Section.
Such supplemental agreement may not become effective unless there shall be filed with the Trustee the written consents of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 13.04) and a notice has been mailed as hereinafter provided in this Section. Each such consent shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.10. 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 thereo f) 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 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 mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A record, consisting of the papers required by this Section to be filed with the Trustee, shall be 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 60 days after such f iling, 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 60 day period.
SECTION 9.03. Effect of Supplemental Agreement . From and after the time any supplemental agreement becomes effective under this Article IX, this Trust Agreement shall be deemed to be modified and amended in accordance therewith, the respective r ights, duties and obligations of the parties hereto, and the rights of the affected Certificate Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Trust Agreement for any and all purposes.
SECTION 9.04. 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 endorsement or otherwise, in form approved by the Trustee, as to such action. In that case, upon demand on the Owner of any Certificate Outstanding at such effective date and presentation of such Owner’s Certificate for the purpose at the Office of the Trustee, a su itable 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 is necessary or desirable, which substitute Certificates shall thereupon be prepared, executed and delivered. In that case, upon demand on the Owner of any Certificate then Outstanding, such substitute Certificate shall
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be exchanged at the 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 9.05. 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.
SECTION 9.06. Opinion of Counsel. Prior to executing any supplemental Trust Agreement, the Trustee shall be furnished an opinion of counsel, upon which it may conclusively rely to the effect that all conditions precedent to the execution of such supplemental Trust Agreement under this Trust Agreement have been satisfied and such supplemental Trust Agreement is authorized and permitted under this Trust Agreement.
SECTION 9.07. Notice to Rating Agencies . The City shall send copies of any proposed amendment or modification hereof to each rating agency which then maintains a rating on the Certificates, at least 10 days prior to the effective date of any such amendment or modification.
ARTICLE X
OTHER COVENANTS
SECTION 10.01. Compliance With and Enforcement of Lease . The City covenants to perform all obligations and duties imposed on it under the Lease. The Authority covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease.
The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of the Lease by the Authority thereunder. The Authority and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Leased Property, 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 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 of California, 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 public agency, 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 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 Leased Property, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpos e and shall indemnify and save the Trustee and every Certificate Owner harmless from all loss, cost, damage and expense, including
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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 or a memorandum thereof, the Site and Facilities Lease, 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. Continuing Disclosure. The City shall comply with and carry out all of the provisions of the Continuing Disclosure Certificate . Notwithstanding any other provi sion of this Trust Agreement, failure of the City to comply with such Continuing Disclosure Certificate does not constitute an Event of Default; except that any Participating Underwriter (as such term is defined in such Continuing Disclosure Certificate) o r any Owner or beneficial owner of the Certificates may take such actions as may be necessary and appropriate to compel performance by the City of its obligations under this Section, including seeking mandate or specific performance by court order.
SECTION 10.06. Further Assurances. The Authority 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 Trust Agreement and the Lease, and for the better assuring and confirming unto the Owners of the Certificates the rights and benefits provided herein.
[SECTION 10.07. Provisions Relating to the 2023 Insurance Policy and the 2023 Reserve Policy. So long as the 2023 Insurance Policy remains in effect, the City and the Trustee shall comply with al l of the terms and provisions set forth in Appendix D relating to the 2023 Bond Insurer and the 2023 Insurance Policy as if such provisions were set forth directly in this Trust Agreement.
So long as the 2023 Reserve Policy remains in effect, the City and the Trustee shall comply with all of the terms and provisions set forth in Appendix E relating to the 2023 Bond Insurer and the 2023 Reserve Policy as if such provisions were set forth directly in this Trust Agreement.]
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 and the performance of the other covenants and agreements of the City contained in the Lease and this Trust Agreement, the City has 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, except as expressly set forth herein.
SECTION 11.02. No Liability of the Authority for Trustee Performance. Neither the City nor the Authority has any obligation or liability to any of the other parties or to the Owners of the
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Certificates with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement.
SECTION 11.03. Indemnification of Trustee . The Authority and the City shall indemnify and save the Tr ustee, its directors, officers, agents and employees harmless from and against (whether or not litigated) all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of any of the following:
(a) the use, maintenance, condition or management of, or from any work or thing done on, the Leased Property by the Authority or the City,
(b) any breach or default on the part of the Authority or the City in the performance of any of their respective obligations under this Trust Agreement and any other agreement made and entered into for purposes of the Leased Property,
(c) any act of negligence of the Authority or the City or of any of their respective agents, contractors, servants, employees, licensees with respect to the Leased Property,
(d) any act of negligence of any assignee of, or purchaser from the Authority or the City or of any of its or their respective agents, contractors, servants, employees or licensees with respect to the Leased Property,
(e) the application of the proceeds of the Certificates,
(f) the actions of any other party, including but not limited to the ownership, operation or use of or the Leased Property by the Authority or the City, or
(g) the Trustee’s exercise and performance of its powers and duties hereunder.
No indemnification is made under this Section 11.03 or elsewhere in this Trust Agreement for willful misconduct, negligence under this Trust Agreement by the Trustee, its officers, agents, employees, successors or assigns. The Authority’s and the City’s obligations hereunder and Section 8.03 hereof will remain valid and binding notwithstanding maturity and payment or discharge of the Certificates and notwithstanding any resignation or removal of the Trustee.
SECTION 11.04. Opinion of Counsel. Before being required to take any action, the Trustee may, at the expense of the City, require an opinion of counsel acceptable to the Trustee, or an opinion of Bond Counsel acceptable to the Trustee, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, Trustee shall be absolutely protected in relying on any such opinion or certificate obtained by the Trustee.
SECTION 11.05. Limitation of Rights to Parties and Certificate Owners . Nothing in this Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Authority, the Trustee and the Owners of the Certificates, any legal or equitable right, remedy or claim under or in respect of this Trust Agreement or any covenant, condition or provision hereof; and all such covenants, conditions and provisions are and shall be for the sole and excl usive benefit of the City, the Authority, the Trustee and said Owners.
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ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
SECTION 12.01. Assignment of Rights. Under the Assignment Agreement the Authority has transferred, assigned and set over to the Trustee certain of the Authority’s rights in and to the Lease (excepting only the Authority ’s rights under Sections 4.4, 5.10, 7.3 and 8.4 thereo f), including without limitation all of the Authority ’s rights to exercise such rights and remedies conferred on the Authority under the Lease as may be necessary or convenient (a) 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, and (b) otherwise to exercise the Authority’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. Events of Default Defined. As provided in Section 8.1 of the Lease, any one or more of the following events constitutes an Event of Default:
(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified in the Lease.
(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed in the Lease or in this Trust Agreement, other than as r eferred to in the preceding subsection (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Trustee; provided, however , that if in the reasonable opi nion of the City the failure stated in the notice can be corrected, but not within such 30 -day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such 30 -day period and thereafter diligently and in good faith cures the failure in a reasonable period of time.
(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 Code, as amended, or under any similar acts which may hereafter be enacted.
SECTION 12.03. Remedies. If an Event of Default happens, then and in each and every such case during the continuance of such Event of Default (subject to the provisions of Appendix D hereto and the rights of the 2023 Insurer), the Trustee may, or at the written direction of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding the Trustee shall, exercise any and all remedies available under law or granted under the Lease; provided, however, that notwithstanding anything herein or in the Lease to the contrary, there shall be no right under any circumstances to accelerate the maturities of the Certificates or otherwise to declare any Lease Payment not then in default to be immediately due and payable.
SECTION 12.04. Application of Funds. All moneys received by the Trustee under any right given or action taken under the provisions of this Article XII or Article VIII of the Lease shall be
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applied by the Trustee in th e 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 fees, costs and expenses of the Trustee in declaring such Event of Default and in taking any remedial action with respect thereto, including reasonable compensation to its agents, attorneys and counsel, and including such other necessary costs relating to the administration of the foregoing and to events l eading up thereto and to any other fees and expenses incurred in and about the performance of its powers and duties under this Trust Agreement.
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 set forth in Section 4.3(c) of the Lease (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.
Third, to the payment of all amounts owed the 2023 Insurer.
SECTION 12.05. Institution of Legal Proceedings. If one or more Events of Default occur and are continuing, the Trustee in its discretion may, or upo n the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners 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 othe r legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder.
SECTION 12.06. Non-waiver. Nothing in this Article XII or in any other provision of this Trust Agreement or in the Certificates, affects or impairs the obligation of the City, which is absolute and unconditional, to pay or prepay the Lease Payments as provided in the Lease. No delay or omission of the Trustee or any Certificate Owner 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 the Certificate Owners may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Certificate Owners.
SECTION 12.07. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or 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.
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SECTION 12.08. Power of Trustee to Control Proceedings . If the Trustee, upon the happening of an Event of Default, takes any action, by judicial proceedings or otherwise, under its duties hereunder, whether upon its own discretion or upon the direction of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, it has 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, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been f iled with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Certificates opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
SECTION 12.09. Limitation on Certificate Owners’ Right to Sue . No Owner of any Certificate delivered hereunder may institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner has previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the Owners of a majority in aggregate principal amount of all the Certificates then Outstanding have re quested the Trustee in writing to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners have tendered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee has refused or omitted to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Certificates of any remedy hereunder; it being understood and intended that no on e or more Owners of Certificates has any right in any manner whatever by its or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Def ault shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates.
SECTION 12.10. Possession of Certificates by Trustee Not Required . All rights and remedies granted to or exercisable by the Trustee hereunder or under the Lease may be exercised by the Trustee without possession of any of the Certificates or the production thereof at the trial or other proceeding relative thereto, and any suit, action or proceeding instituted by the Trustee hereunder or under the Lease shall be brought in its name for the benefit of the Owners of such Certificates, subject to the provisions of this Trust Agreement.
ARTICLE XIII
DISCHARGE; ADMINISTRATIVE PROVISIONS
SECTION 13.01. Discharge Hereof . If and when the obligations represented by any 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, interest and prepayment premiums (if any) represented by such Certificates Outstanding, as and when the same become due and payable, or
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(b) by depositing with the Trustee or any other fiduciary, under an escrow deposit and trust agreement, security for the payment of Lease Payments relating to such Certificates as more particularly described in Section 9.1 of the Lease, said security to be held by the Trustee on behalf of the City to be applied by the Trustee or by such other fiduciary to pay or prepay such Lease Payments as the same become due, under Section 9.1 of the Lease,
then notwithstanding that such Certificates have not been surrendered for payment, all rights hereunder of the Owners of such Certificates and all obligations of the Authority, the Trustee and the City with respect to such Certificates shall cease and terminate, except only the obligations of the Authority and the City under Section 11.03 and the obligations of the Trustee under Sections
2.07 and 2.08, and the obligation of the Trustee to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from funds deposited under paragraph (b) of this Section, to the Owners of such Certificates not so surrendered and paid all sums represented thereby when due and in the event of deposits under paragraph (b), and such Certificates shall continue to represent direct, undivided fractional interests of the Owners thereof in the Lease Payments to be paid by or on behalf of the City from funds deposited under paragraph (b) of this Section.
Any funds held by the Trustee, at the time of discharge of the obligations represented by all Outstanding Certificates as a result 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, upon payment in full of all fees and expenses of the Trustee (including attorneys’ fees) then due and all amounts owed the 2023 Insurer, 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 Trust Agreement in accordance with its records retention policies, which shall be available for inspection by the City, the Authority and any Owner, or the agent of any of them, at any reasonable time during regular business hours upon prior notice.
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SECTION 13.03. Notices. Any notice, request, complaint, demand or other communication under this Trust Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunica tion, (b) 72 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City, the Trustee may, by written notice to the other partie s, from time to time modify the address or number to which communications are to be given hereunder.
If to the City or the
Authority:
City of Hayward
777 B Street, 2nd Floor
Hayward, California 94541
Attn: Finance Director
Fax: 510-583-3600
If to the Trustee:
The Bank of New York Mellon Trust Company, N.A.
Attn: Corporate Trust Department
100 Pine Street, Suite 3150
San Francisco, CA 94111
Fax: 415-399-1647
X
If to the 2023 Bond Insurer:
See Appendix D of the Trust Agreement
SECTION 13.04. Disqualified Certificates . In determining whether the Owners of the requisite aggregate principal amount of Certificates have concurred in any demand, request, direction, consent or waiver under this Trust Agreement, Certificates which are owned or held by or for the account of the City (but excluding Certificates held in any employees’ retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Certificates which the Trustee knows to be so owned or held shall be disregarded. Upon request of the Trustee, the City and the Authority shall specify in a certificate to the Trustee those Certificates disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate.
SECTION 13.05. Payment of Certificates After Discharge of Trust Agreement .
Notwithstanding any provisions of this Trust Agreement, but subject to any applicable laws of the State of California relating to the escheat of funds or property, any moneys held by the Trustee in trust for the payment of the principal or interest represented by any Certificates and remaining unclaimed for 2 years after the principal represented by all of the Certificates has become due and payable (whether at maturity or upon call for prepayment or by acceleration as provided in this Trust Agreement), if such moneys were so held at such date, or 2 years after the date of deposit of such moneys if deposited after said date when all of the Cer tificates became due and payable, shall be repaid to the City free from the trusts created by this Trust Agreement, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such mon eys to the City as aforesaid, the Trustee shall (at the request of and at the cost of the City) mail, by first class mail postage prepaid, to the Owners of
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Certificates which have not yet been paid, at the respective addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Certificates so payable and not presented and with respect to the provisions relating to the repayment to the City of the moneys held for the payment thereof.
SECTION 13.06. Governing Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State of California.
SECTION 13.07. Binding Effect; Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Whenever in this Trust Agreement either the Authority, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Trust Agreement contained by or on behalf of the Authority, the City or the Trustee shall bind and inure to the benefit of the respec tive successors and assigns thereof whether so expressed or not.
SECTION 13.08. Authority and City Representatives. Whenever under the provisions of this Trust Agreement the Authority or the City is required or permitted to take some action, including but not limited to the giving of any approval or the execution of some request, direction or other instrument, such action shall be made on behalf of the Authority by a Authority Representative and on behalf of the City by a City Representative, and any party hereto shall be fully authorized to rely upon any such action by a Authority Representative or a City Representative.
SECTION 13.09. Execution in Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement.
SECTION 13.10. Delivery of Canceled Certificates . Whenever in this Trust Agreement provision is made for the surrender to or cancellation by the Trustee of any Certificates, the Trustee shall cancel and destroy such Certificates and shall deliver a cer tificate of destruction with respect thereto to the City.
SECTION 13.11. Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be sole ly for convenience of reference and shall not affect the meaning, construction or effect of this Trust Agreement.
SECTION 13.12. Waiver of Notice. Whenever in this Trust Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice are not conditions precedent to the validity of any action taken in reliance upon such waiver.
SECTION 13.13. Separability of Invalid Provisions . In case any one or more of the provisions contained in this Trust Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Trust Agreement, and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.
The Authority and the City hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or more
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sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid or unenforceable.
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IN WITNESS WHEREOF, the parties have executed this Trust Agreement as of the date and year first above written.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By
Authorized Officer
HAYWARD PUBLIC FINANCING AUTHORITY
By
Executive Director
Attest:
Secretary
CITY OF HAYWARD
By
City Manager
Attest:
City Clerk
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APPENDIX A
DEFINED TERMS
Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms defined in this Appendix A have the respective meanings given them in this Appendix when used in this Trust Agreement and when used in the Lease Agreement.
“Additional Payments” means the amounts payable by the City under Section 4.4 of the Lease.
“Assignment Agreement” means the Assignment Agreement, dated as of _____ 1, 2023, between the Authority as assignor and the Trustee as assignee, as originally executed or as thereafter amended under any duly authorized and executed amendments thereto.
“Authority” means the Ha yward Public Financing Authority, a joint exercise of powers authority.
“Authority Representative ” means the President, Vice President, Executive Director, Treasurer or Secretary of the Authority, or any other person authorized by the Board of Directors of the Authority to act on behalf of the Authority under or with respect to this Trust Agreement.
“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income under Sect ion 103 of the Code.
“Business Day” means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State of California, or in any state in which any Office of the Trustee is located.
“Certificates” means t he _________ aggregate principal amount of 2023 Refunding Certificates of Participation (Lease Refinancing ), executed and delivered and at any time Outstanding hereunder.
“City” means the City of Hayward, a chartered city and municipal corporation duly organized and existing under the Constitution of the State of California.
“City Representative ” means the Mayor, Vice Mayor, the City Manager, the Finance Director, 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 the Lease and this Trust Agreement.
“Closing Date” means ______, 2023, the day when the Certificates, duly executed by the Trustee, are delivered to the Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of delivery of the Lease Agreement or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of delivery of the Lease Agreement, together with applicable proposed, temporary an d final regulations promulgated, and applicable official public guidance published, under the Code.
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“Continuing Disclosure Certificate ” means that certain Continuing Disclosure Certificate executed by the City as of the Closing Date, as originally execute d and as it may be amended from time to time in accordance with its terms.
“Costs of Issuance ” means all items of expense directly or indirectly payable by or reimbursable to the City or the Authority relating to the execution and delivery of the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of the Trustee (which shall include legal fees and the first annual administration fee of the Trustee) , financing discounts, legal fees and charges, 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 any charges and fees in connection with the foregoing.
“Costs of Issuance Fund ” means the fund by that name established and held by the Trustee under Section 4.03.
“Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository under Section 2.05.
“Depository System Participant ” means any participant in the Depository’s book -entry system.
“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Escrow Agent ” means The Bank of New York Mellon Trust Company, N.A. and its successors and assigns as escrow agent under the Escrow Agreement.
“Escrow Agreement” means the Escrow Deposit and Trust Agreement dated as of the Closing Date, between the City and the Escrow Agent, relating to the payment and prepayment of the 2015 Lease Payments and the 2015 Certificates.
“Event of Default” means an event of default under the Lease, as defined in Section 8.1 thereof.
"Fair Market Value " means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other inv estment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security --State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not own more than a 10% beneficial interest therein if the return paid by the fund is without regard to the source of the investment. To the e xtent required by the applicable regulations under the Code, the term “investment” will include a hedge.
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“Federal Securities ” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), the payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America; and (b) any obligations the principal of and inte rest on which are unconditionally guaranteed by the United States of America.
“Fiscal Year” means the twelve-month period beginning on July 1 of any year and ending on June 30 of the next succeeding year, or any other twelve-month period by the City as its fiscal year under written notice filed with the Trustee.
“Insurance and Condemnation Fund” means the fund by that name to be established and held by the Trustee under Section 6.01.
“Interest Payment Date ” means each May 1 and November 1 , commencing _____ 1, 20__, to and including the final date of maturity of the Certificates.
“Lease” means the Lease Agreement dated as of _____ 1, 2023, between the Authority as lessor and the City as lessee, as originally executed or as thereafter amended under any duly authorized and executed amendments and supplements thereto.
“Lease Payment Date ” means, with respect to any Interest Payment Date, the 6th Business Day preceding such Interest Payment Date.
“Lease Payment Fund” means the fund by that name established and held by the Trustee under Section 5.02.
“Lease Payments” means all payments required to be paid by the City under Section 4.3(a) of the Lease, including any prepayment thereof under Article IX of the Lease.
“Leased Property ” means all of the land and all of the buildings, improvements and facilities thereon, which is more particularly described in Appendix A attached to the Lease.
Leased Property does not include personal property located in the Leased Property. If the City exercises its option under Section 4.6 of the Lease with respect to the substitution of property or its option under Section 4.7 of the Lease Agreement with respect to the release of property, the term “Leased Property” will thereupon be modified accordingly.
“Net Proceeds” means any insurance proceeds or eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers), paid with respect to the Leased Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. For avoidance of doubt, the definition of Leased Property excludes personal property and, therefore, Net Proceeds does not include insurance proceeds or eminent domain award related to personal property.
“Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the Depository designated under Section 2.05(a).
“Office” means the corporate trust office of the Trustee in San Francisco, California, or such other or additional offices as the Trustee may designate in writing to the Authority from time to time as the corporate trust office for purposes of this Trust Agreement, except that with respect
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to presentation of Certificates for payment o r for registration of transfer and exchange thereof, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted.
“Original Purchaser” means _________, as original purchaser of the Certificates upon the negotiated public sale thereof.
“Outstanding”, when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 13.05) all Certificates theretofore executed and delivered by the Trustee under this Trust Agreement except (a) Certificates theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Certificates deemed to have been paid under Section 13.01; and (c) Certificates in lieu of or in exchange for which other Certificates has been executed and delivered by the Trustee under Section 2.08.
“Owner”, when used with respect to a Certificate, means the person in whose name the ownership of such Certificate shall be registered on the Registration Books.
“Permitted Encumbrances” means, as of any time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under Article V of the Lease; (b) the Site and Facilities Lease, the Lease and the Assignment Agreement; (c) any right or claim of any mechanic, laborer, materialman, supplier or vendor which is secured by a lien on the Leased Property; (d) the exceptions disclosed in the title insurance policy with respect to the Leased Propert y issued as of the Closing Date by Stewart Title Company of California, Inc. (or its affiliate); and (e) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record and which the City certifies in writing will not materially impair the use of the Leased Property for its intended purposes.
“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein, but only to the extent that the same are acquired at Fair Market Value:
(a) Federal Securities;
(b) obligations of any federal agency which either (i) represent full faith and credit of the United States of America, or (ii) are rated “AA” or better by S&P;
(c) U.S. dollar denominated deposit accounts federal funds and banker’s acceptances with domestic commercial banks, which may include the Trustee, its parent holding company, if any, and their affiliates, which have a rating on their short term certificates of deposit on the date of purchase of “A” or better by S&P, maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank or which are collateralized by Federal Securities for amounts in excess of FDIC insurance;
(d) commercial paper which is rated at the time of purchase in the single highest classification, “A-1+” or better by S&P, and which matures not more than 270 calendar days after the date of purchase;
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(e) investments in a money market mutual fund, including those of an affiliate of the Trustee, rated in the highest short-term rating category by S&P, including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee or such holding company provide investment advisory or other management services but excluding funds with a floating net asset value;
(f) investment agreements with financial institutions whose long -term general credit rating is A or better from S&P, by the terms of which the Trustee may withdraw funds if such rating falls below “A”; and
(g) the Local Agency Investment Fund which is admini stered by the California Treasurer for the investment of funds belonging to local agencies within the State of California, provided for investment of funds held by the Trustee, the Trustee is entitled to make investments and withdrawals in its own name as Trustee; and
(h) shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the California Government Code which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the California Government Code, as it may be amended, including but not limited to the California Asset Management Program (CAMP).
“Proceeds Fund” means the fund by that name established and held by the Trustee under Section 4.01.
“Record Date” means the clo se of business on the 1st day of the month in which each Interest Payment Date occurs, whether or not such 1st day is a Business Day.
“Registration Books” means the records maintained by the Trustee under Section 2.11 for the registration of the ownership and transfer of ownership of the Certificates.
“Rental Period” means each period during the Term of the Lease commencing on and including October 16 in each year and extending to and including the next succeeding October 15, except that the first Rental Period begins on the Closing Date and ends on October 15, 20__.
“Reserve Fund” means the fund by that name established and held by the Trustee under Section 4.02.
“Reserve Requirement” means $___________.
“Securities Depositories” means DTC; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City designates in written notice filed with the Trustee.
“Site and Facilities Lease” means the Site and Facilities Lease dated as of _____ 1, 2023, between the City as lessor and the Authority as lessee of the Leased Property, as originally executed or as thereafter amended under any duly authorized and executed amendments and supplements thereto.
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“S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns.
“Term Certificates” means the Certificates maturing on November 1, _______.
“Term of the Lease ” means the time during which the Lease is in effect, as provided in Section 4.2 thereof.
“Trust Agreement” means this Trust Agreement, as originally executed or as thereafter amended under any amendments or supplements hereto which are permitted to be made hereunder.
“Trustee” means The Bank of New York Mellon Trust Company, N.A. , or any successor thereto acting as trustee hereunder.
[“2023 Bond Insurer” means _________, as issuer of the 2023 Insurance Policy and the 2023 Reserve Policy.]
["2023 Insurance Policy" means the insurance policy issued by the 2023 Bond Insurer (___) guaranteeing the scheduled payment of principal of and interest with respect to the Certificates when due.]
["2023 Reserve Policy" means the municipal bond debt service reserve insurance policy (_________) relating to the Certificates issued by the 2023 Bond Insurer.]
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APPENDIX B
FORM OF CERTIFICATE OF PARTICIPATION
No. R-______ ***$______***
2023 CERTIFICATE OF PARTICIPATION
(2014 and 2015 Leases)
Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the
CITY OF HAYWARD
RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP:
____% November 1, _____ ______ 2023
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 (this “Certificate”) is the owner of a direct, undivided fractional interest in Lease Payments (the “Lease Payments”) payable under a Lease Agreement dated as of _____ 1, 2023 (the “Lease”), between the Hayward Public Financing Authority, a joint exercise of powers authority (the “Authority”) and the City of Hayward, a chartered city and municipal corporation duly organized and existing under the laws of the State of California (the “City”), which Lease Payments and certain other rights and interests under the Lease have been assigned to The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), having a corporate trust office in San Francisco, California or such other place as designated by the Trustee (the “Office”), or such other or additional offices as the Trustee may designate from time to time as the corporate trust office.
The Registered Owner of this Certificate is entitled to receive, subject to the terms of the Lease, on the Maturity Date identified above, or any earlier prepayment date, the Principal Amount identified above representing a direct, undivided frac tional share of the portion of the Lease Payments designated as principal, and to receive on each May 1 and November 1 , commencing ______ 1, 20__ (the “Interest Payment Dates”) until payment in full of said principal, the Registered Owner’s direct, undivided fractional share of the Lease Payments designated as interest coming due during the period immediately preceding each of the Interest Payment Dates.
Interest represented hereby shall be payable from the Interest Payment Date next preceding the date of execution of this Certificate unless (a) this Certificate is executed on an Interest Payment Date, in which event interest shall be payable from such Interest Payment Date, or (b) unless this Certificate is executed on or before _____ 15, 20__, in which event interest is payable from the Dated Date identified above. The Registered Owner’s share of the portion of the Lease Payments designated as interest is the result of the multiplication of the aforesaid share
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of the portion of the Lease Payments designated as principal by the Rate of Interest per annum identified above, calculated on the basis of a 360 -day year comprised of twelve 30-day months.
Principal represented hereby is payable in lawful money of the United States of America, upon presentation and surrender hereof at the Office of the Trustee, and interest represented hereby is payable by check mailed by first class mail by the Trustee on each In terest Payment Date to the Registered Owner at such Owner’s address as it appears on the registration books of the Trustee as of the close of business on the 1st day of the month in which the Interest Payment Date occurs.
This Certificate has been executed and delivered by the Trustee under the terms of a Trust Agreement dated as of _____ 1, 2023, among the Trustee, the Authority and the City (the “Trust Agreement”). The City has certified that it is authorized to enter into the Lease and the Trust Agreement under the laws of the State of California, for the purpose of leasing certain real property (the “Leased Property”) used for the municipal purposes of the City. Reference is hereby made to the Lease and the Trust Agreement (copies of which are on file at the Office of the Trustee) for a description of the terms on which the Certificates are delivered, the rights thereunder of the owners of the Certificates, the rights, duties and immunities of the Trustee and the rights and obligations of the City under the Lease, to all of the provisions of the Lease and the Trust Agreement the Registered Owner of this Certificate, by acceptance hereof, assents and agrees.
The City is obligated under the Lease to pay the Lease Payments for the Leased Property from any source of available funds, subject to certain exceptions as set forth in the Lease. As more fully described in the Lease, the Lease Payments are subject to abatement during any period in which by reason of damage or destruction to the Leased Property in whole or in part, or by reason of eminent domain proceedings with respect to the Leased Property in whole or in part, there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof; such abatement sha ll be in an amount agreed upon by the City and the Authority such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining portions of the Leased Property. 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 the Lease Payments does not constit ute a debt of the City, the State of California or any of its political subdivisions, and does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.
The Certificates maturing on or before November 1 , ____, are not subject to optional prepayment before their respective stated maturities. The Certificates maturing on or after November 1, ___, are subject to prepayment prior to their respective stated maturities, at the option of the City, in whole, or in part among maturities on such basis as designated by the City and by lot within any one maturity, on November 1 , _____, or on any date thereafter, upon payment of a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest to the date fixed for prepayment, without premium.
The Certificates maturing on November 1, ____, are also subject to mandatory sinking fund prepayment by lot on November 1 in each of the years and in the respective principal amounts as set forth in the following table, in each case from the principal components of the Lease Payments required to be paid with respect to each of such dates, at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest represented thereby to the prepayment date, without premium, as follows:
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Term Certificates Maturing
November 1, ______
Sinking Fund
Prepayment Date
(November 1)_
Principal Amount
To Be Prepaid_
The Certificates are subject to mandatory prepayment, in whole, on any business day, or in part on any Interest Payment Date among maturities on a pro rata basis and by lot within a maturity, from certain proceeds of insurance or eminent domain proceedings credited towards the prepayment of the Lease Payments under the Lease and the Trust Agreement, at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest represented thereby to the date fixed for prepayment, without premium.
As provided in the Trust Agreement, the Trustee shall mail notice of prepayment of the Certificates by first class mail, postage prepaid, not less than 20 nor more than 60 days before the prepayment date, to the registered owners of the Certificates to be prepaid, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for prepayment or the cessation of accrual of interest represented th ereby. If this Certificate is called for prepayment 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 prepayment.
This Certificate is transferabl e by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Office of the Trustee or such other place as designated by 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, representing the same aggregate principal amount and represen ting the same rate of interest, will be delivered to the transferee in exchange herefor. The City, the Authority 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 Authority and the Trustee shall not be affected by any notice to the contrary.
The Trustee is not required to register the transfer or exchange of any Certificate during the period in which the Trustee is selecting certificates for prepayment or any Certificate selected for prepayment.
To the extent and in the manner permitted by th e terms of the Trust Agreement, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the owners of a majority 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 extend the fixed maturity of any Certificate or reduce the interest or principal represented thereby, without the express consent of the owner of such Certificate.
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The Trustee has no obligation or liability to the owners of the Certificate to make any payment of the interest, principal or premium (if any) represented by the Certificates, other than as provided in the Trust Agreement from the Lease Payments and amounts credited thereto received or held by the Trustee. The recitals herein shall be taken as statements of the Authority and the City and not of the Trustee. The Trustee has executed this Certificate solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity.
Unless this Certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”) to the Trustee for registration of transfer, exchange or payment, and any Certific ate executed and delivered is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
IN WITNESS WHEREOF, this Certificate has been executed and delivered by The Bank of New York Mellon Trust Company, N.A., as Trustee, acting under the Trust Agreement.
Execution Date:
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:
Authorized Officer
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FORM OF ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within registered Certificate and hereby irrevocably constitute(s) and appoint(s) _______________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor institution (banks, stockbrokers, saving and loan associations and credit unions with membership in an
approved signature medallion program) pursuant to
Securities and Exchange Commission Rule 17Ad-15.
Note: The signature(s) on this Assignment must correspond with the name(s) as written o n the face of the within Certificate in every particular without alteration or enlargement or any change whatsoever.
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STATEMENT OF INSURANCE
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APPENDIX C
COSTS OF ISSUANCE FUND -- REQUISITION FORM
WRITTEN REQUISITION NO. FOR
DISBURSEMENT FROM THE COSTS OF ISSUANCE FUND
The undersigned hereby states and certifies that:
(i) The undersigned is a City Representative as defined in the Trust Agreement, dated as of _____ 1, 2023 (the “Trust Agreement”), related to the _________ City of Hayward 2023 Refunding Certificates of Participation (Lease Refinancing), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same;
(ii) under Section 4.03 of the Trust Agreement, you are hereby requested, in your capacity as trustee under the Trust Agreement (“Trustee”), to disburse this date, from the Costs of Issuance Fund established under the Trust Agreement, to the payees set forth on Exhibit A attached hereto and by this reference incorporated herein, at the addresses identified thereon, the amount set forth opposite such payee for payment or reimbursement of Costs of Issuance;
(iii) each item of cost identified herein has been properly incurred, constitutes payment of Costs of Issuance, has not been the basis of any previous disbursement and the payment of such cost is a proper charge against the Costs of Issuance Fund;
(iv) attached hereto is an invoice for each disbursement to be made under this Requisition; and
(v) all disbursements shall be made by check or wire transfer in accordance with the payment instructions set forth on Exhibit A and the Trustee has no responsibility to verify or authenticate such payment instructions or the authority under which they were given.
Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Trust Agreement.
Dated: ___, 20__ CITY OF HAYWARD
By
Finance Director
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EXHIBIT A
COSTS OF ISSUANCE DISBURSEMENTS
Payee Name and Address Purpose of Obligation Amount *
* Invoiced amount shall be paid as long as it is equal to or less than amount shown in this column.
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APPENDIX D
PROVISIONS RELATING TO THE 2023 Insurance POLICY
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APPENDIX E
PROVISIONS RELATING TO THE 2023 Reserve POLICY
ATTACHMENT V
LEASE AGREEMENT
Dated as of ________ 1, 2023
between the
HAYWARD PUBLIC FINANCING AUTHORITY
as lessor
and the
CITY OF HAYWARD
as lessee
Relating to
$________
City of Hayward
2023 Refunding Certificates of Participation
(Lease Refinancing)
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TABLE OF CONTENTS
ARTICLE I
Definitions; Rules of Interpretation
SECTION 1.1. Definitions ......................................................................................................................... 3 SECTION 1.2. Interpretation ..................................................................................................................... 3
ARTICLE II
Covenants, Representations and Warranties
SECTION 2.1. Covenants, Representations and Warranties of the City .................................................. 3 SECTION 2.2. Covenants, Representations and Warranties of the Authority .......................................... 4
ARTICLE III
Deposit and Application of Funds
SECTION 3.1. Deposit of Moneys ............................................................................................................ 6
ARTICLE IV
LEASE PAYMENTS; SUBSTITUTION AND RELEASE OF
PROPERTY
SECTION 4.1. Lease of Leased Property................................................................................................. 6 SECTION 4.2. Term .................................................................................................................................. 6 SECTION 4.3. Lease Payments ............................................................................................................... 6 SECTION 4.4. Additional Payments ......................................................................................................... 8 SECTION 4.5. Title ................................................................................................................................... 8 SECTION 4.6. Substitution of Property ..................................................................................................... 8 SECTION 4.7. Release of Property .......................................................................................................... 9 SECTION 4.8. No Merger ....................................................................................................................... 10
ARTICLE V
Maintenance, Taxes, Insurance and Other Matters
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments ............................................................ 11 SECTION 5.2. Modification of Leased Property ..................................................................................... 11 SECTION 5.3. Public Liability and Property Damage Insurance ............................................................ 12 SECTION 5.4. Casualty Insurance ......................................................................................................... 12 SECTION 5.5. Rental Interruption Insurance ......................................................................................... 12 SECTION 5.6. Recordation Hereof; Title Insurance ............................................................................... 13 SECTION 5.7. Insurance Net Proceeds; Form of Policies ..................................................................... 13 SECTION 5.8. Installation of City’s Personal Property ........................................................................... 13 SECTION 5.9. Liens................................................................................................................................ 13 SECTION 5.10. Advances ...................................................................................................................... 14 SECTION 5.11. Provisions Relating to the 2023 Insurance Policy ........................................................ 14
ARTICLE VI
Damage, Destruction and Eminent Domain; Use of Net Proceeds SECTION 6.1. Application of Net Proceeds ........................................................................................... 14 SECTION 6.2. Termination or Abatement Due to Eminent Domain ....................................................... 14 SECTION 6.3. Abatement Due to Damage or Destruction ..................................................................... 14
ARTICLE VII
Other Covenants
SECTION 7.1. Disclaimer of Warranties ................................................................................................. 15 SECTION 7.2. Access to the Leased Property ....................................................................................... 15 SECTION 7.3. Release and Indemnification Covenants ........................................................................ 15 SECTION 7.4. Assignment and Subleasing by the City ......................................................................... 16 SECTION 7.5. Amendment of Lease Agreement ................................................................................... 16 SECTION 7.6. Tax Covenants ................................................................................................................ 17
ARTICLE VIII
Events of Default and Remedies
SECTION 8.1. Events of Default Defined ............................................................................................... 18 SECTION 8.2. Remedies on Default ...................................................................................................... 18
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SECTION 8.3. No Remedy Exclusive ..................................................................................................... 20 SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses ......................................................... 20 SECTION 8.5. No Additional Waiver Implied by One Waiver ................................................................. 20 SECTION 8.6. Application of Proceeds .................................................................................................. 21 SECTION 8.7. Trustee and Certificate Owners to Exercise Rights ........................................................ 21
ARTICLE IX
Prepayment of Lease Payments
SECTION 9.1. Security Deposit .............................................................................................................. 21 SECTION 9.2. Optional Prepayment ...................................................................................................... 21 SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain ............. 22 SECTION 9.4. Credit for Amounts on Deposit ........................................................................................ 22
ARTICLE X
Miscellaneous
SECTION 10.1. Notices .......................................................................................................................... 23 SECTION 10.2. Binding Effect ................................................................................................................ 23 SECTION 10.3. Severability ................................................................................................................... 23 SECTION 10.4. Net-net-net Lease ......................................................................................................... 23 SECTION 10.5. Third Party Beneficiary .................................................................................................. 23 SECTION 10.6. Further Assurances and Corrective Instruments .......................................................... 23 SECTION 10.7. Execution in Counterparts. ........................................................................................... 24 SECTION 10.8. Applicable Law .............................................................................................................. 24 SECTION 10.9. Corporation and City Representatives .......................................................................... 24 SECTION 10.10. Captions ...................................................................................................................... 24
APPENDIX A Description of the Leased Property
APPENDIX B Schedule of Lease Payments
APPENDIX C [Provisions Relating to the 2023 Insurance Policy]
LEASE AGREEMENT
This LEASE AGREEMENT (this “Lease”), dated as of ________ 1, 2023, is between the HAYWARD PUBLIC FINANCING AUTHORITY , a joint exercise of powers authority (the “Corporation”), and the CITY OF HAYWARD, a chartered city and municipal corporation duly organized and existing under the Constitution of the State of California (the “City”).
B A C K G R O U N D :
1. The City previously entered into a Lease Agreement dated as of August 1, 2014 (the “2014 Lease”), with the Public Property Financing Corporation of California (the “Corporation”), for the purpose of financing a new Fire Station No. 7 and a Firehouse Health Clinic to be located at the same site as Fire Station No. 7 (the “2014 Pro ject”), under which the City agreed to pay semiannual lease payments (the “2014 Lease Payments”) to the Corporation for use and occupancy of a Police Station, located at 300 West Winton Avenue in the City (the “2014 Leased Property”).
2. The Corporation assigned its right to receive the 2014 Lease Payments to Umpqua Bank (“Umpqua Bank”) pursuant to an Assignment Agreement, dated as of August 1, 2014 (the “2014 Assignment Agreement”).
3. Section 10.2 of the 2014 Lease provides that the City m ay prepay the 2014 Lease Payments on any date on and after August 1, 2019, subject to providing 45 days’ prior written notice to the Corporation and Umpqua Bank, in an amount equal to the principal amount of the 2014 Lease Payments to be prepaid, plus accr ued interest to the prepayment date, without a prepayment premium after August 1, 2022.
4. Section 10.1 of the 2014 Lease authorizes the City to establish a security deposit for prepayment of the 2014 Lease Payments, after which all obligations of the Cit y under the 2014 Lease shall cease and terminate, except for the obligation to pay the 2014 Lease Payments from the security deposit.
5. The Authority and the City previously entered into a Lease Agreement, dated as of August 1, 2015 (the "2015 Lease"), for the purpose of financing acquisition and construction of a number of capital improvements, including, but not limited to, (i) a new library and community learning center, (ii) improvements to existing fire stations and (iii) complete street rehabilitati on and slurry seal repairs (collectively, the “2015 Project”), under which the City agreed to pay semiannual lease payments (the “2015 Lease Payments”) to the Authority for use and occupancy of certain of the City’s fire stations and a library and community learning center (the “2015 Leased Property”).
6. The Authority assigned its rights to receive the 2015 Lease Payments to The Bank of New York Mellon Trust Company, N.A. (the “2015 Trustee”), pursuant to an Assignment Agreement, dated as of October 1, 2015 (the “2015 Assignment Agreement”).
7. Pursuant to a Trust Agreement, dated as of October 1, 2015 (the “2015 Trust Agreement”), the 2015 Trustee caused to be executed and delivered the $67,535,000 City of Hayward 2015 Certificates of Participation (Capital Projects) (the “2015 Certificates”), which evidence direct, undivided fractional ownership interests in the 2015 Lease Payments.
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8. Section 9.2 of the 2015 Lease provides that the City may prepay the 2015 Lease Payments on November 1 2023, in an amount equal to the principal component of the 2015 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium.
9. Section 9.1 of the 2015 Lease authorizes the City to establish a security deposit for prepayment of the 2015 Lease Payments in amount sufficient to p repay the 2015 Lease Payments, after which all obligations of the City under the 2015 Lease shall cease and terminate, except for the obligation to pay the 2015 Lease Payments from the security deposit.
10. Under Section 3.01 of the 2015 Trust Agreement, the 2015 Certificates are subject to prepayment on November 1, 2023, and any date thereafter, without premium.
11. In order to take advantage of favorable interest rates prevailing in the municipal bond market, the City wishes at this time to provide for the refinancing of the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates.
12. In order to provide funds to refinance the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates , (a) the City and the Authority will enter into a Site and Facilities Lease, dated as of ________ 1, 2023 (the “Site and Facilities Lease”), pursuant to which the City will lease certain real property more particularly described on Exhibit A and the improvements thereon (the “Leased Property”) to the Authority, (b) the Authority and the City will enter into this Lease, pursuant to which the Authority will lease the Leased Property to the City in consideration for certain semi-annual lease payments to be made by the City and (c) the City will cause execution and delivery of the 2023 Refunding Certificates of Participation (Lease Refinancing) (the “Certificates”).
13. The Authority has agreed to assign its right to receive such lease payments to The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), under an Assignment Agreement, dated as of ________ 1, 2023 (the “Assignment Agreement”), by and between the Authority and the Trustee, and in consideration of such assignment the Trustee will execute and deliver the Certificates, each evidencing a direct, undivided fractional interest in such lease payments, in accordance with a Trust Agreement (the “Trust Agreement”), by and among the City, the Authority and the Trustee.
14. The Site and Facilities Lease and the Assignment Agreement are being recorded in the real property records of Alameda County concurrently with a memorandum of this Lease.
15. The City is authorized to enter into a lease-leaseback arrangement with the Authority under Section 37350 of the California Government Code.
A G R E E M E N T :
In consideration of the foregoing and the material covenants hereinafter contained, the City and the Authority formally covenant, agree and bind themselves as follows:
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ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Lease have the respective meanings specified in the recitals hereof and in Appendix A to the Trust Agreement.
SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Lease; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Authority as of the Closing Date:
(a) Due Organization and Existence. The City is a chartered city and municipal corporation duly organized and validly existing under the Constitution of the State of California, has full legal right, power and authority under the laws of the State of California to enter into this Lease, the Site and Facilities Lease and the Trust Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the City has duly authorized the execution and delivery of this Lease, the Site and Facilities Lease and the Trust Agreement.
(b) Due Execution. The representatives of the City executing this Lease, the Site and Facilities Lease and the Trust Agreement have been fully authorized to execute the same under a resolution duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations . This Lease, the Site and Facilities Lease and the Trust Agreement have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding agreements of the City enforceable against the City in accordance with their respective terms.
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(d) No Conflicts. The execution and delivery of this Lease, the Site and Facilities Lease and the Trust Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not confl ict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site and Facilities Lease and the Trust Agreement or the financial condition, assets, properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of t he voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Lease, the Site and Facilities Lease and the Trust Agreement, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before o r by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Lease, the Site and Facilities Lease or the Trust Agreement, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site and Facilities Lease or the Trust Agreement or the financial conditions, assets, properties or operations of the City.
SECTION 2.2. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the City as of the Closing Date:
(a) Due Organization and Existence. The Authority is a California joint exercise of powers authority duly organized and existing under the laws of the State of California, has full legal right, power and authority to enter into this Lease, the Site and Facilities Lease , the Trust Agreement and the Assignment Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the Authority has duly authorized
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the execution and delivery of this Lease, the Site and Facilities Lease , the Trust Agreement and the Assignment Agreement.
(b) Due Execution. The representatives of the Authority executing this Lease, the Site and Facilities Lease , t he Trust Agreement and the Assignment Agreement are fully authorized to execute the same under official action taken by the Board of Directors of the Authority.
(c) Valid, Binding and Enforceable Obligations . This Lease, the Site and Facilities Lease, the Trust Agreement and the Assignment Agreement have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Lease, the Site and Facilities Lease, the Trust Agreement and the Assignment Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable cou rt or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation o r imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority , which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site and Facilities Lease, the Trust Agreement and the Assignment Agreement or the financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority , and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection wi th the execution and delivery of this Lease, the Site and Facilities Lease, the Trust Agreement or the Assignment Agreement, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Lease, the Site and Facilities Lease, the Trust Agreement or the Assignment Agreement, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order
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or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site and Facilities Lease, the Trust Agreement or the Assignment Agreement or the financial conditions, assets, properties or operations of the Authority.
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS
SECTION 3.1. Deposit of Moneys. On the Closing Date, the Authority shall cause the proceeds of sale of the Certificates to be deposited with the Trustee. Under Section 4.01 of the Trust Agreement, from the proceeds of sale of the Certificates (i) the estimated amount of the Costs of Issuance will be deposited into the Costs of Issuance Fund and (ii) the balance of such proceeds will be used to refinance the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates as set forth herein and in the Trust Agreement.
[update to reflect any insurance policy or reserve policy]
ARTICLE IV
LEASE PAYMENTS;
SUBSTITUTION AND RELEASE OF PROPERTY
SECTION 4.1. Lease of Leased Property. The Authority hereby leases the Leased Property to the City, and the City hereby leases the Leased Property from the Authority, upon the terms and conditions set forth in this Lease.
SECTION 4.2. Term. The Term of this Lease commences on the date of execution and delivery hereof and ends on the date on which the Trust Agreement is discharged under Section
13.01 thereof, but under any circumstances not later than October 15, 20__. The provisions of this Section 4.2 are subject to the provisions of Section 4.6 relating to the substitution of property, the provisions of Section 4.7 relating to the release of property, and the provisions of Section 6.2 relating to the taking in eminent domain of the Leased Property or any portion thereof as well as the provisions of paragraph 1 of Appendix C. The City may not terminate this Lease as a remedy for a default by the Authority.
SECTION 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the provisions of Article IX, the City agrees to pay to the Authority , its successors and assigns, the Lease Payments (denominated into components of principal and interest) in t he respective amounts specified in Appendix B attached hereto and by this reference incorporated herein, to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in Appendix B, and to be deposited by the City
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with the Trustee on each of the Lease Payment Dates specified in such Appendix B. 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 under Article IX and other than amounts required for payment of past due principal or interest represented by any Certificates not presented for payment) will be credited towards the Lease Payment then required to be paid; and no Lease Payment need be deposited with the Trustee 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 deposited with the Trustee. The Lease Payments pa yable in any Rental Period are for the use of the Leased Property during such Rental Period.
(b) Effect of Prepayment. If the City prepays all Lease Payments in full under Sections
9.2 or 9.3, and if the City has paid all Additional Payments then due and payable, the City’s obligations under this Section will thereupon cease and terminate. If the City prepays the Lease Payments in part but not in whole under Sections 9.2 or 9.3, the principal components of the remaining Lease Payments will be reduced in integral multiples of $5,000 among Lease Payment Dates on a basis which corresponds to the principal maturities of the Certificates which are prepaid thereby; and the interest component of each remaining Lease Payment will be reduced by the aggregate corre sponding amount of interest which would otherwise be payable with respect to the Certificates thereby prepaid under Sections 3.01(a) or 3.01(b) of the Trust Agreement, as the case may be. The City will provide a revised Appendix B to the Trustee.
(c) Rate on Overdue Payments. If the City fails to make any of the payments required in this Section 4.3, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment at the highest rate of interest represented by any Outstanding Certificate.
(d) Fair Rental Value. The Lease Payments and Additional Payments coming due and payable during each Rental P eriod constitute the total rental for the Leased Property for such Rental Period, and the City will pay the Lease Payments and Additional Payments 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 Leased Property during each Rental Period. The Authority and the City have agreed and determined that the total Lease Payments represent the fair rental value of the Leased Property. In making that determination, consideratio n has been given to the estimated fair market value of the Leased Property as of the Closing Date, other obligations of the City and the Authority under this Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.
(e) Source of Payments; Budget and Appropriation . The Lease Payments are payable from any source of legally available funds of the City, subject to the provisions of Articles VI and IX.
The City cov enants to take such action as may be necessary to include all estimated Lease Payments and all estimated Additional Payment s due hereunder in each of its final approved budgets. The City further covenants to make all necessary appropriations (including any supplemental appropriations) from any source of legally available funds of the City for the full amount of Lease Payments and Additional Payments which come due and payable during the period covered by each such budget. The covenants on the part of the City contained herein are duties imposed by law and it is 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
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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 acknowledges that certain of the Authority’s rights under the Site and Facilities Lease and this Lease (including the payment of all Lease Payments) have been assigned by the Authority to the Trustee in trust under the Assignment Agreement, for the benefit of the Owners of the Certificates, and the City consents to such assignment. The Authority directs the City, and the City agrees to pay to the Trustee at its Office, all payments payable by the City under this Section 4.3 and all amounts payable by the City under Article IX.
SECTION 4.4. Additional Payments. In addition to the Lease Payments, the City shall pay when due, as additional rental for the Leased Property hereunder, (a) all costs and expenses incurred by the City hereunder or under the Trust Agreement, or incurred by the Authority 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 Costs of Issuance Fund), (b) annual compensation due to the Trustee and all of its reasonable costs and expenses (including amounts payable to the Trustee by virtue of indemnification) payable as a result of the performance of and compliance with its duties under the Trust Agreement , (c) [confirm: the amounts, costs and expenses payable by the City to the Reserve Insurer under or in connection with the 2023 Reserve Policy, including Policy Costs (as defined in the 2023 Reserve Policy), all in accordance with the terms and conditions of such 2023 Reserve Policy, the Trust Agreement and the Reserve Fund Agreement,] (d) all reasonable costs and expenses of attorneys, auditors, engineers and accountants engaged by the Authority or the Trustee in connection with the Leased Property or the performance of their duties hereunder or under the Trust Agreement and (e) [confirm: all amounts owed to the 2023 Bond Insurer in connection with the 2023 Insurance Policy or 2023 Reserve Policy].
SECTION 4.5. Title. At all times during the Term of this Lease, the City will hold fee simple title to the Leased Property, subject to the Site and Facilities Lease and other Permitted Encumbrances, including all additions which comprise fixtures, repairs, replacements or modifications thereto, and subject to the provisions of Section 5.2.
Upon the termination of this Lease (other than under Section 8.2(b) hereof), all right, title and interest of the Authority in and to the Leased Property will be transferred to and vested in the City. Upon the payment in full of all Lease Payments allocable to the Leased Property, or upon the deposit by the City of security for such Lease Payments as provided in Section 9.1, all right, title and interest of the Authority in and to the Leased Property will be transferred to and vested in the City. The Authority 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 4.6. Substitution of Property. The City has, and is hereby granted, the option at any time and from time to time to substitute other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the “Former Property”), provided that the City must satisfy all of the fol lowing requirements which are hereby declared to be conditions precedent to such substitution:
(a) No Event of Default has occurred and is continuing.
(b) The City has filed with the Authority and the Trustee, and caused to be recorded in the office of t he Alameda County Recorder sufficient memorialization of, (i) an amendment hereof which adds to Appendix A
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hereto a description of such Substitute Property and deletes therefrom the description of such Former Property, and (ii) appropriate amendments to the Site and Facilities Lease and Assignment Agreement that adds thereto a description of such Substitute Property and deletes therefrom the description of such Former Property.
(c) The City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate hereunder in such Substitute Property, subject only to Permitted Encumbrances, in an amount at least equal to the estimated fair market value thereof;
(d) The City has certified in writing to the Authority and the Trustee that such Substitute Property serves the municipal purposes of the City and constitutes property which the City is permitted to lease under the laws of the State of California, and has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City.
(e) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made herein or in the Trust Agreement.
(f) The City has filed with the Authority and the Trustee a certificate to the effect that the fair market value and the fair rental value of the Substitute Property and any other property that will be subject to this Lease and the Site and Facilities Lease are at least equal to the outstanding principal amount of the Certificates, and that the useful life of the Substitute Property at least equals the remaining term of this Lease.
(g) The City has provided the Trustee with an opinion of nationally recognized bond counsel to the effect that such substitution will not, in and of itself, cause the interest on the Certificates to be included in gross income for federal income tax purposes.
(h) The City has mailed written notice of such substitution to each rating agency which then maintains a rating on the Certificates.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property.
The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such substitution.
The Authority and the City will execute, deliver and cause to be recorded all documents required to discharge this Lease , the Site and Facilities Lease and the Assignment Agreement against the Former Property, and to cause the Substitute Property to become subject to all of the terms and conditions of this Lease, the Site and Facilities Lease and the Assignment Agreement.
SECTION 4.7. Release of Property. The City has the option at any time and from time to time to release any portion of the Leased Property from this Lease and the Site and Facilities
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Lease (the “Released Property”) provided that the City has satisfied all of the following requirements which are hereby declared to be conditions precedent to such release:
(a) No Event of Default has occurred and is continuing.
(b) The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the Alameda County Recorder sufficient memorialization of , (i) an amendment here of that removes the Released Property from this Lease , and (ii) appropriate amendments to the Site and Facilities Lease and Assignment Agreement that removes therefrom the description of the Released Property.
(c) The City has certified in writing to the Authority and the Trustee that the fair market value of the property which remains subject to this Lease and the Site and Facilities Lease following such removal is at least equal to the outstanding principal amount of the Certificates, and the fair renta l value of the property which remains subject to this Lease and the Site and Facilities Lease following such removal is at least equal to the Lease Payments thereafter coming due and payable hereunder.
(d) The City has provided the Trustee with an opinion of nationally recognized bond counsel to the effect that such release will not, in and of itself, cause the interest on the Certificates to be included in gross income for federal income tax purposes.
(e) The City has mailed written notice of such remova l to each rating agency which then maintains a rating on the Certificates.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release.
The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge this Lease, the Site and Facilities Lease and the Assignment Agreement of record against the Released Property.
SECTION 4.8. No Merger. It is the express intention of the Authority and the City that this Lease and the obligations of the parties hereunder are separate and distinct from the Site and Facilities Lease and the obligations of the parties thereunder, and that during the term of the Site and Facilities Lease and this Lease no merger of title or interest may occur or be deemed to occur as a result of the respective positions of the Authority and the City thereunder and hereunder.
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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 Leased Property, all improvement, repair and maintenance of the Leased Property are the sole responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Leased Property, which may include, without limitation, janitor service, securit y, 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 Leased Property 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 Authority agrees to provide only the Leased Property, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of this Lease.
The City will also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Leased Property 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 is 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 Authority notifies the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Leased Property will be materially endangered or the Leased Property 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 Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Trustee.
SECTION 5.2. Modification of Leased Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Leased Property or any portion thereof.
All additions, modifications and improvements to the Leased Property will thereafter comprise part of the Leased Property and become subject to the provisions of this Lease. Such additions, modifications and improvements may not in any way damage the Leased Property, or cause the Leased Property to be used for purposes other than those authorized under the provisions of state and federal law; and the Leased Property, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements. The City will not permit any lien to be established or remain against the Leased Property for labor or materi als furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City under this Section; provided that if any such lien is established and the City first notifies the Authority of the City’s intention to do so, the City may in good faith contest any lien filed or established against
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the Leased Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any app eal therefrom and shall provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority . The Authority 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 will maintain or cause to be maintained, throughout the Term of this Lease, comprehensive general insurance in protection of the Authority, the City and their respective members, officers, agents, employees and assigns. Such insurance must 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 Leased Property. Such insurance must provide coverage in such liability limits and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of a program of self -insurance by the City, or in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City shall apply the proceeds of such insurance toward extinguishment or satisfaction of the liability with respect to which the net proceeds are paid.
SECTION 5.4. Casualty Insurance. The City will procure and maintain, or cause to be procured and maintained, at all times throughout the Term of this Lease, casualty insurance against loss or damage to the insured buildings, facilities and other improvements constituting any part of the Leased Property, in an amount that is expressly designated as coverage for the Leased Property and at least equal to the greater of (a) the replacement value of such buildings, facilities and improvements, or (b) the aggregate principal amount of the Outstanding Certificates.
Such insurance must, as nearly as practicable, cover loss or damage by fire, explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. The City shall not be obligated to purchase earthquake or flood coverage as part of such insurance. Such insurance may be subject to such deductibles as the City deems prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The property and casualty insurance provided pursuant to this Section 5.4 (i) shall be provided pursuant to a policy that is specific to the Leased Property and pro vides coverage solely for the Leased Property or (ii) if provided pursuant to a policy that covers more than just the Leased Property, shall include a rider or endorsement to such policy that (A) provides that the coverage for the Leased Property under the policy shall never be less than the amount required by this Section 5.4 and that any payments under the policy in respect of other property covered by the policy shall not have the effect of reducing the coverage provided by the policy for the Leased Property and (B) meets the other conditions of this Section 5.4 and Section 5.7. The City shall apply the Net Proceeds of such insurance as provided in Section 6.1.
SECTION 5.5. Rental Interruption Insurance. The City will procure and maintain, or cause to be procured and maintained, at all times throughout the Term of this Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the buildings, facilities and other improvements constituting any part of the Leased Property, as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount at least equal to the maximum Lease Payments coming due and payable during any two co nsecutive Fiscal Years during the remaining Term of this Lease. Such insurance may be maintained as part of or in
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conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self -insurance. The Net Proceeds of such insurance, if any, shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable. The provider of such insurance shall be rated at least “A” by A.M. Best & Company.
SECTION 5.6. Recordation Hereof; Title Insurance. The City will, at its expense, cause the Site and Facilities Lease, the Assignment Agreement and this Lease (or a memorandum thereof in form and substance approved by Bond Counsel) to be recorded in the office of the Alameda County Recorder on or before the Closing Date. Concurrent with such recordation, the City shall obtain a CLTA title insurance policy insu ring the City’s leasehold estate in the Leased Property hereunder, in an amount at least equal to the aggregate principal amount of the Certificates. All Net Proceeds received under such title insurance policy will be deposited with the Trustee in the Lease Payment Fund and credited towards the prepayment of the Lease Payments under Section
9.3. SECTION 5.7. Insurance Net Proceeds; Form of Policies . Each policy of insurance maintained under Sections 5.4, 5.5 and 5.6 must name the Trustee as loss payee so as to provide that all proceeds thereunder are payable to the Trustee. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. If commercially available, each such policies shall provide that the Trustee is given 30 days’ notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee is not responsible for the sufficiency, adequacy or amount of any insurance or self - insurance herein required and is fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. Annually not later than January 15 in each year during the Term hereof, the City must furnish or cause to be furnished to the Trustee a certificate stating that the City has complied with Sections 5.3, 5.4, 5.5, 5.6 and 5.7 hereof. The Trustee is entitled to rely on any such certificate as to the City’s compliance with these provisions, and the Trustee has no further duties in that regard.
SECTION 5.8. Installation of City’s Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Leased Property. All such items will remain the sole property of the City, in which neither the Authority nor the Trustee has any interest, and may be modified or removed by the City at any time, provided that the City must repair and restore any and all damage to the Leased Property resulting from the installation, modification or removal of any such items. Nothing in this Lease prevents the City from purchasing or leasing items to be installed under 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 attaches to any part of the Leased Property.
SECTION 5.9. Liens. The City may not, directly or indirectly, create, incur, assume or suffer to exist any mor tgage, pledge, lien, charge, encumbrance or claim on or with respect to the Leased Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Trustee do not materially and adversely affect the lease hold estate in the Leased Property hereunder. Except as expressly provided in this Article, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the
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same shall arise at any time. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
SECTION 5.10. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may take any necessary action to cure the failure, including the advancement of money, and the City shall repay all such advances as additional rental hereunder, with interest at the rate set forth in Section 4.3©.
[CONFIRM: SECTION 5.11. Provisions Relating to the 2023 Insurance Policy . So long as the 2023 Insurance Policy remains in effect, the City shall comply with all of the terms and provisions set forth in Appendix C relating to the 2023 Bond Insurer and the 2023 Insurance Policy as if such provisions were set forth directly in this Lease.]
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
USE OF NET PROCEEDS
SECTION 6.1. Application of Net Proceeds . The Net Proceeds of any insurance award resulting from any damage to or destruction of the Leased Property by fire or other casualty shall be paid to the Trustee, as assignee of the Authority under the Assignment Agre ement, and deposited in the Insurance and Condemnation Fund to be applied as set forth in Section 6.01 of the Trust Agreement. The Net Proceeds of any eminent domain award with respect to the Leased Property resulting from any event described in Section 6.2 shall be paid by the City to the Trustee and deposited in the Insurance and Condemnation Fund to be applied as set forth in Section 6.02 of the Trust Agreement. For avoidance of doubt, the definition of Leased Property excludes personal property and, therefore, Net Proceeds does not include insurance proceeds or eminent domain award related to personal property.
SECTION 6.2. Termination or Abatement Due to Eminent Domain. If the Leased Property is 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 will cease with respect thereto as of the day possession is so taken. If less tha n all of the Leased Property is taken permanently, or if the Leased Property is taken temporarily, under the power of eminent domain, (a) this Lease will continue in full force and effect with respect thereto and will not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there will be a partial abatement of Lease Payments allocated thereto, in an amount to be determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property.
SECTION 6.3. Abatement Due to Damage or Destruction. The amount of Lease Payments will 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 Leas ed Property or any portion thereof. The amount of such abatement shall be determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of the Leased Property that are available for use and occupancy. Such abatement shall continue for the period commencing with such
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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 th e proceeds of hazard insurance, or rental interruption insurance, 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 a special fund for the payment of the Lease Payments.
ARTICLE VII
OTHER COVENANTS
SECTION 7.1. Disclaimer of Warranties. THE AUTHORITY AND THE TRUSTEE MAKE
NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS
TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF
THE LEASED PROPERTY OR ANY PORTION THEREOF, OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE AUTHORITY IS NOT A
MANUFACTURER OF ANY PORTION OF THE LEASED PROPERTY OR A DEALER THEREIN,
THAT THE CITY LEASES THE LEASED PROPERTY AS-IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no event shall the Authority or the Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease or the Trust Agreement for the existence, furnishing, functioning or the City’s use of the Leased Property.
SECTION 7.2. Access to the Leased Property. The City agrees that the Authority and any Corporation Representative, and the Authority’s successors or assigns, may at all reasonable times enter upon and to examine and inspect the Leased Property or any part thereof. The Authority and any Corporation Representative have such rights of access to the Leased Property or any component thereof as may be reasonably necessary to cause the proper maintenance of the Leased Property in the event of failure by the City to perform its obligations hereunder; provided, however, that neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.
SECTION 7.3. Release and Indemnification Covenants . The City shall indemnify the Authority, and the Trustee and their respective officers, agents, successors and assigns against all claims, losses and damages, including legal fees and expenses, arising out of any of the following:
(a) the use, maintenance, condition or management of, or from any work or thing done on the Leased Property 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,
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(c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employ ees or licensees with respect to the Leased Property, or
(d) any intentional misconduct or negligence of any sublessee of the City with respect to the Leased Property.
No indemnification is made under this Section or elsewhere in this Lease for willful misconduct or negligence under this Lease by the Authority , the Trustee, or their respective officers, agents, employees, successors or assigns.
SECTION 7.4. Assignment and Subleasing by the City. After the date of recordation of this Lease, the City may sublease the Leased Property, or any portion thereof, subject to all of the following conditions:
(a) This Lease and the obligation of the City to make Lease Payments hereunder must remain obligations of the City.
(b) The City must, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease.
(c) No such sublease by the City may cause the Leased Property to be used for a purpose which is not authorized under the provisions of the laws of the State of California.
SECTION 7.5. Amendment of Lease Agreement. The Authority and the City may at an y time amend or modify any of the provisions of this Lease, but only: (a) with the prior written consents of the Owners of a majority in aggregate principal amount of the Outstanding Certificates; or (b) without the consent of the Trustee or any of the Certificate Owners, and only if such amendment or modification is for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Lease, other covenants and agreements thereafter to be observed, or to l imit or surrender any rights or power herein reserved to or conferred upon the City,
(ii) to cure any ambiguity, or to cure, correct or supplement any defective provision contained herein, for the purpose of conforming to the original intention of the City and the Authority,
(iii) to amend the description of any component of the Leased Property to reflect accurately the property originally intended to be included therein, or to effectuate any substitution of property as permitted by Section 4.6 or any release of property as permitted by Section 4.7,
(iv) to obligate the City to pay additional amounts of rental hereunder for the use and occupancy of the Leased Property or any portion thereof, but only if (A) such additional amounts of rental are pledged or assigned for the payment of any bonds, notes, leases or other obligations the proceeds of which are applied to finance or refinance public improvements of the City, and (B) the City has filed with the Tr ustee written evidence that the amendments made
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under this subsection ( iv) will not of themselves cause a reduction or withdrawal of any rating then assigned to the Certificates,
(v) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest with respect to the Certificates, or
(vi) in any other respect whatsoever as the Authority and the City deem necessary or desirable, provided that, in the opinion of Bond Counsel, s uch modifications or amendments do not materially adversely affect the interests of the Owners of the Certificates.
The City must obtain and cause to be filed with the Trustee an opinion of Bond Counsel with respect to any amendment or modification hereof , stating that all conditions precedent to such amendment as set forth in this Section 7.5 have been satisfied. Promptly following the effective date of any amendment or modification under this Section, the City must mail written notice thereof to each rating agency which then maintains a rating on the Certificates.
SECTION 7.6. Tax Covenants.
(a) Private Activity Bond Limitation . The City will assure that the proceeds of the Certificates are not so used as to cause th e obligations of the City under this Lease to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code.
(b) Federal Guarantee Prohibition. The City will not take any action or permit or suffer any action to be taken if the result of such action would be to cause any of the obligations of the City under this Lease to be "federally guaranteed" within the meaning of section 149(b) of the Code.
(c) Rebate Requirement . The City will take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Certificates and this Lease.
(d) No Arbitrage. The City will not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Certificates which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of delivery of this Lease would have caused any of the obligations of the City under this Lease to be "arbitrage bonds" within the meaning of section 148 of the Code.
(e) Maintenance of Tax-Exemption. The City will take all actions necessary to assure the exclusion of interest with respect to the Certificates from the gross income of the Owners of the Certificates to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of delivery of this Lease.
(f) Record Retention. The City will retain its records of all accounting and monitoring it carries out with respect to the Certificates for at least 3 years after the Certificates
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mature or are redeemed (whichever is earlier); however, if the Certificates are redeemed and refunded, the City will retain its records of accounting and monitoring at least 3 years after the earlier of the maturity or redemption of the last obligation in the series of obligations that refunded the Certificates.
(g) Compliance with Tax Certificate. The City will comply with the provisions of the tax certificate and the use of proceeds certificate to be delivered with respect to the Certificates, which are incorporated herein as if fully set forth herein. The covenants of this Section will survive payment in full or defeasance of the Certificates.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Each of the following events constitutes an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder in full at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed herein or in the Trust Agreement, other than as referred to in the preceding subsection (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority, or the Trustee; provided, however, that if the City notifies the Authority and the Trustee that in its reasonable opinion the failure stated in the notice can be corrected, but not within such 30 day period , the failure will not constitute an Event of Default if the City commences to cure the failure within such 30 day period and thereafter diligently and in good faith cures such failure in a reasonable period of time.
(c) The filing by the City of a volunt ary 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 c omposition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.
Any Event of Default described in the preceding clause (a) will give rise to the exercise of remedies with respect to all of the Leased Property, and the City shall not have the right to allocate its Lease Payment to a particular portion of the Leased Property.
SECTION 8.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Authority may, subject to the provisions of the Trust Agreement and the rights of the 2023 Bond Insurer thereunder, exercise any and all remedies available under law or granted under this Lease. Notwithstanding anything herein or in the Trust Agreement to the contrary ,
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there is 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 ma de a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; provided, that no termination of this Lease shall be effected either by operation of law or acts of the parties hereto, except only in the manner he rein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise each and every one of the following remedies, subject in all respects to the limitations set forth in Section 8.3:
(a) Enforcement of Payments Without Termination . If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subsection (b) of this Section, the City agrees to remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and shall reimburse the Authority for any deficiency arising out of the re - leasing of the Leased Property, or, if the Authority is unable to re-lease the Leased Property, 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 Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Leased Property or the exercise of any other remedy by the Authority.
The City hereby irrevocably appoints the Authority as the agent and attorney- in-fact of the City to enter upon and re -lease the Leased Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Leased Property, to place such property in storage or other suitable place in the County of Alameda for the account of and at the expense of the City, and the City hereby agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re -leasing of the Leased Property and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained.
The City agrees that the terms of this Lease cons titute full and sufficient notice of the right of the Authority to re-lease the Leased Property in the event of such re -entry without effecting a surrender of this Lease, and further agrees that no acts of the Authority in effecting such re-leasing constitute a surrender or termination of this Lease irrespective of the term for which such re-leasing is made or the terms and conditions of such re -leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subsection (b) of this Section. The City agrees to surrender and quit possession of the Leased Property upon demand of the Authority for th e purpose of enabling the Leased Property to be re-let under this paragraph. Any rental obtained by the Authority in excess of the unpaid Lease Payments shall be deposited with the Trustee in the Lease Payment Fund, to be applied as a credit against future Lease Payments.
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(b) Termination of Lease . If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease and re-lease all or any portion of the Leased Property. The Trustee shall provide the City with a reasonable period of time to remove its personal property in connection with a termination of this Lease and a re-lease of all or any portion of the Leased Property. If the Authority terminates this Lease at its o ption and in the manner hereinafter provided on account of default by the City (and notwithstanding any re -entry upon the Leased Property by the Authority in any manner whatsoever or the re -leasing of the Leased Property), the City nevertheless agrees to p ay to the Authority 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 and Additional Payments. Any surplus received by the Authority from such re - leasing shall be deposited in the Lease Payment Fund. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority has given written notice to the City of the election on the part of the Authority to terminate this Lease. The City agrees that no surrender of the Leased Property, 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 Authority by such written notice.
(c) Proceedings at Law or In Equity. If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder.
SECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy is cumulative and 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 the occurrence of any Event of 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 Authority to exercise any remedy reserved to it in this Article VIII it is not necessary to give any notice, other than such notice as may be required in this Article VIII or by law.
SECTION 8.4. Agreement to Pay Attorneys’ Fees and Expenses . If either party to this Lease defaults under any of the provisions hereof and the non-defaulting party employs attorneys or incurs other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agr eement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the non -defaulting party the reasonable fees of such attorneys and such other expenses so incurred by the non -defaulting party.
SECTION 8.5. No Additional Waiver Implied by One Waiver. If any agreement contained in this Lease is breached by either party and thereafter waived by the other party, such waiver
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will be limited to the particular breach so waived and will not constitute a waiver of any other breach hereunder.
SECTION 8.6. Application of Proceeds. All net proceeds received from the re-lease of the Leased Property under this Article VIII, and all other amounts derived by the Authority or the Trustee as a result of the occurrence of an Event of Default, shall be paid to the Trustee and applied in accordance with Section 12.04 of the Trust Agreement.
SECTION 8.7. Trustee and Certificate Owners to Exercise Rights . Such rights and remedies as are given to the Authority under this Article VIII have been assigned by the Authority to the Trustee under the Assignment Agreement for the benefit of the Certificate Owners, to which assignment the City hereby consents. The Trustee and the Certificate Owners shall exercise such rights as provided in the Trust Agreement.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of this Lease, the City may on any date secure the payment of the Lease Payments in whole or in part by depositing with the Trustee an amount of cash which, together with other available amounts on deposit in the funds and accounts established under the Trust Agreement, is either (a) sufficient to pay such Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Appendix B, or (b) invested in whole or in part in non-callable Federal Securities in such amount as will, in the opinion of an independent certified public accountant, (which opinion must be addressed and delivered to the Trustee), together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay such Lease Payments when due under Section 4.3(a) as the City instructs at the time of said deposit.
If the City posts a security deposit under this Section with respect to all unpaid Lease Payments and if the City has paid or caused to be paid all Additional Payments then due and payable [(including all Policy Costs and other amounts owed the 2023 Bond Insurer )], and notwithstanding the provisions of Section 4.2, (a) all obligations of the City under this Lease, and all security provided by this Lease for said obligations, will thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be made all of the Lease Payments from such security deposit, and (b) under Section 4.6, title to the Leased Property will vest in the City on the date of said deposit automatically and without further action by the City or the Authority.
Said security deposit constitutes a special fund for the payment of Lease Payments in accordance with the provisions of this Lease.
[CONFIRM] SECTION 9.2. 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 date on or after October 15, 20__, 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, without prepayment premium.
Such prepayment price shall be deposited by the Trustee upon receipt in the Lease Payment Fund, to be applied to the prepayment of Certificates under Section 3.01(a) of the Trust
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Agreement. The City shall give the Trustee written notice of its intention to exercise its option not less than 45 days in advance of the date of exercise.
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City is obligated to prepay the principal components of the Lease Payments, i n whole on any date or in part on any Interest Payment Date, from and to the extent of any Net Proceeds of insurance award or eminent domain award with respect to the Leased Property theretofore deposited in the Lease Payment Fund for such purpose under Ar ticle VI hereof and Article VI of the Trust Agreement. The City and the Authority 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 Sect ion 9.3. Such prepayment price shall be deposited by the Trustee in the Lease Payment Fund to be applied to the prepayment of Certificates under Section 3.01(b) of the Trust Agreement.
SECTION 9.4. Credit for Amounts on Deposit. If the City prepays the principal components of the Lease Payments in full under Sections 9.2 or 9.3, such that the Trust Agreement is discharged by its terms as a result of such prepayment, at the written election of the City filed with the Trustee any or all amounts then on deposit in the Lease Payment Fund will be credited towards the amounts then required to be so prepaid.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other communication under this Lease may be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice is effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 72 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City and the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the City or the
Authority:
City of Hayward
777 B Street, 2nd Floor
Hayward, California 94541
Attn: Finance Director
Fax: 510-583-3600
If to the Trustee:
The Bank of New York Mellon Trust Company, N.A.
Attn: Corporate Trust Department
100 Pine Street, Suite 3150
San Francisco, CA 94111
Fax: 415-399-1647
If to the 2023 Bond Insurer:
See Appendix D of the Trust Agreement
SECTION 10.2. Binding Effect. This Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns.
SECTION 10.3. Severability. If any provision of this Lease is held invalid or unenforceable by any court of competent jurisdiction, such holding does not invalidate or render unenforceable any other provision hereof.
SECTION 10.4. Net-net-net Lease. This Lease is a “net-net-net lease” and the City hereby agrees that the Lease Payments are an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.
SECTION 10.5. Third Party Beneficiary. The Trustee is made a party beneficiary hereunder with all rights of a third party beneficiary and the Trustee may enforce any right, remedy, or claim conferred, given or granted hereunder. The 2023 Bond Insurer shall be a third party beneficiary hereof.
SECTION 10.6. Further Assurances and Corrective Instruments . The Authority and the City shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased
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Property hereby leased or intended so to be or for carrying out the expressed intenti on of this Lease.
SECTION 10.7. 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 10.8. Applicable Law. This Lease is governed by and construed in accordance with the laws of the State of California.
SECTION 10.9. Corporation and City Representatives. Whenever under the provisions of this Lease the approval of the Authority or the City is required, or the Authority 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 Authority by an 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 10.10. 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 sections of this Lease.
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be executed in their respective names by their duly authorized officers, all as of the date first above written.
HAYWARD PUBLIC FINANCING AUTHORITY, as
Lessor
By
Executive Director
Attest:
Secretary
CITY OF HAYWARD, as Lessee
By
City Manager
Attest:
City Clerk
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APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The property constituting the Leased Property consists of the land located in the City of Hayward, County of Alameda, State of California, which is described as follows, including all buildings, improvements and facilities at any time situated thereon:
B-1
APPENDIX B
SCHEDULE OF LEASE PAYMENTS
Interest Payment Date* Principal Component Interest Component Aggregate Lease Payment
* Lease Payments are due no later than the 15th calendar day prior to the corresponding Interest Payment Date.
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APPENDIX C
PROVISIONS RELATING TO THE 2023 INSURANCE POLICY
ATTACHMENT VI
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Christopher K. Lynch, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE.
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
SITE AND FACILITIES LEASE
This SITE AND FACILITIES LEASE (this “Site Lease”), dated for convenience as of ______ 1, 2023, is between the CITY OF HAYWARD, a chartered city and municipal corporation duly organized and existing under the laws of the State of California, as lessor (the “City”), and the HAYWARD PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority (the “Authority”);
B A C K G R O U N D :
1. The City previously entered into a Lease Agreement dated as of August 1, 2014 (the “2014 Lease”), with the Public Property Financing Corporation of California (the “Corporation”), for the purpose of financing a new Fire Station No. 7 and a Firehouse Health Clinic to be located at the same site as Fire Station No. 7 (the “2014 Project”), under which the City agreed to pay semiannual lease payments (the “2014 Lease Payments”) to the Corporation for use and occupancy of a Police Station, located at 300 West Winton Avenue in the City (the “2014 Leased Property”).
2. The Corporation assigned its right to receive the 2014 Lease Payments to Umpqua Bank (“Umpqua Bank”) pursuant to an Assignment Agreement, dated as of August 1, 2014 (the “2014 Assignment Agreement”).
3. Section 10.2 of the 2014 Lease provides that the City may prepay the 2014 Lease Payments on any date on and after August 1, 2019, subject to providing 45 days’ prior written notice to the Corporation and Umpqua Bank, in an amount equal to the princip al amount of the 2014 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium after August 1, 2022.
4. Section 10.1 of the 2014 Lease authorizes the City to establish a security deposit for prepayment of the 2014 Lease Payments, after which all obligations of the City under the 2014
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Lease shall cease and terminate, except for the obligation to pay the 2014 Lease Payments from the security deposit.
5. The Authority and the City previously entered into a Leas e Agreement, dated as of August 1, 2015 (the "2015 Lease"), for the purpose of financing acquisition and construction of a number of capital improvements, including, but not limited to, (i) a new library and community learning center, (ii) improvements to existing fire stations and (iii) complete street rehabilitation and slurry seal repairs (collectively, the “2015 Project”), under which the City agreed to pay semiannual lease payments (the “2015 Lease Payments”) to the Authority for use and occupancy of certain of the City’s fire stations and a library and community learning center (the “2015 Leased Property”).
6. The Authority assigned its rights to receive the 2015 Lease Payments to The Bank of New York Mellon Trust Company, N.A. (the “2015 Trustee”), p ursuant to an Assignment Agreement, dated as of October 1, 2015 (the “2015 Assignment Agreement”).
7. Pursuant to a Trust Agreement, dated as of October 1, 2015 (the “2015 Trust Agreement”), the 2015 Trustee caused to be executed and delivered the $67,535 ,000 City of Hayward 2015 Certificates of Participation (Capital Projects) (the “2015 Certificates”), which evidence direct, undivided fractional ownership interests in the 2015 Lease Payments.
8. Section 9.2 of the 2015 Lease provides that the City may p repay the 2015 Lease Payments on November 1 2023, in an amount equal to the principal component of the 2015 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium.
9. Section 9.1 of the 2015 Lease authoriz es the City to establish a security deposit for prepayment of the 2015 Lease Payments in amount sufficient to prepay the 2015 Lease Payments, after which all obligations of the City under the 2015 Lease shall cease and terminate, except for the obligation to pay the 2015 Lease Payments from the security deposit.
10. Under Section 3.01 of the 2015 Trust Agreement, the 2015 Certificates are subject to prepayment on November 1, 2023, and any date thereafter, without premium.
11. In order to take advantage of favorable interest rates prevailing in the municipal bond market, the City wishes at this time to provide for the refinancing of the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates.
12. The Board of Directors of the Authority has determined that the public convenience and necessity require assisting the City with refinancing the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates.
13. In order to provide funds to refinance the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates, (a) the City and the Authority will enter into this Site Lease, pursuant to which the City will lease certain real property more particularly described on Appendix A and the improvements thereon (the “Leased Property”) to the Authority, (b) the Authority and the City will enter into a Lease Agreement, dated as of ______ 1, 2023 (the “Lease”), pursuant to which the Authority will lease the Leased Property to the City in consideration for certain semi - annual lease payments to be made by the City and (c) the City will cause execution and delivery of the 2023 Refunding Certificates of Participation (Lease Refinancing) (the “Certificates”).
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14. The Authority has agreed to assign its right to receive such lease payments to The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), under an Assignment Agreement, dated as of ______ 1, 2023 (the “Assignment Agreement”), by and between the Authority and the Trustee, and in consideration of such assignment the Trustee will execute and deliver the Certificates, each evidencing a direct, undivided fractional interest in such lease payments, in accordance with a Trust Agreement (the “Trust Agreement”), by and among the City, the Authority and the Trustee.
15. A memorandum of the Lease and the Assignment Agreement are being recorded in the real property records of Alameda County concurrently with this Site Lease.
16. The City is authorized to enter into a lease-leaseback arrangement with the Authority under Section 37350 of the California Government Code.
A G R E E M E N T :
In consideration of the foregoing and the material covenants hereinafter contained, the City and the Authority formally covenant, agree and bind themselves as follows:
SECTION 1. Lease of Leased Property. The City hereby leases to the Authority, and the Authority hereby leases from the City, the Leased Property as described more fully in Appendix A hereto, on the terms and conditions hereinafter set forth.
SECTION 2. Term; Possession. The term of this Site Lease commences, and the Authority becomes entitled to possession of the Leased Property, as of the date of recordation hereof. This Site Lease ends, and the right of the Authority hereunder to possession of the Leased Property thereupon ceases, on the date on which all of the outstanding Certificates are paid in full, or provision is made for such payment in accordance with the Trust Agreement, and the Trust Agreement has been discharged under Section 13.01 thereof, but under any circumstances not later than October 15, _____.
SECTION 3. Rental. The Authority shall pay to the City as and for rental of the Leased Property hereunder, from the proceeds of sale of the Certificates, the amount of $________ to be paid on or before the date of execution and delivery hereof. In accordance with the Lease and the Trust Agreement the City shall cause the amount so paid to it to be applied to prepay the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Cer tificates. In addition to such payment, the Authority shall cause a portion of the proceeds of sale of the Certificates to be applied to make the deposit required under the Trust Agreement into the Costs of Issuance Fund and to cause to be paid all related underwriting, financing and other costs of issuance of the Certificates.
SECTION 4. Leaseback to City. The purpose for which the City agrees to lease the Leased Property to the Authority hereunder is to enable the City to refinance the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates from the rental payment made to it by the Authority under Section 3. The Authority hereby agrees to lease the Leased Property back to the City under the Lease.
SECTION 5. Assignments and Subleases. Unless the City is in default under the Lease, the Authority may not assign its rights under this Site Lease or sublet all or any portion of the
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Leased Property, except as provided in the Lease, without the prior written consent of the City2023 Bond Insurer.
SECTION 6. Right of Entry . The City reserves the right for any of its duly authorized representatives to enter upon the Leased Property, or any portion thereof, at any reasonable time to inspect the same or to make any repairs, improvements o r changes necessary for the preservation thereof.
SECTION 7. Termination. The Authority agrees, upon the termination of this Site Lease, to quit and surrender the Leased Property in the same good order and condition as the Leased Property was in at the time of commencement of the term hereof, reasonable wear and tear excepted, and agrees that all buildings, improvements and structures then existing upon the Leased Property will remain thereon and title thereto will vest thereupon in the City for no additional consideration.
SECTION 8. Default. If the Authority is in default in the performance of any obligation on its part to be performed under the terms of this Site Lease, which default continues for 30 days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site Lease and of the Lease shall be deemed to occur as a result thereof and this Site Lease may not be terminated by the City as a remedy for such default. Notwithstanding the foregoing, so long as the Lease remains in effect, the City shall continue to pay the Lease Payments to the Trustee.
SECTION 9. Amendments. The Authority and the City may at any time amend or modify any of the provisions of this Site Lease, but only: (a) with the prior written consents of the Owners of a majority in aggregate principal amount of the Outstanding Certificates and the 2023 Bond Insurer; or (b) without the consent of the Trustee or any of the Certificate Owners, and only if such amendment or modification is for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City or the Authority contained in this Site Lease, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City or the Authority (provided, however that no right or power may be surrendered by the Authority to the extent that such right or power has been assigned by the Authority to the Trustee pursuant to the Assignment Agreement),
(ii) to cure any ambiguity, or to cure, correct or supplement any defective provision contained herein, for the purpose of conforming to the original intention of the City and the Authority,
(iii) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest with respect to the Certificates,
(iv) to amend the description of any component of the Leased Property to reflect accurately the property originally intended to be included therein, or to effectuate any substitution of property as permitted by Section 4.6 of the Lease or any release or property as permitted by Section 4.7 of the Lease,
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(v) in any other res pect whatsoever as the Authority and the City deem necessary or desirable, provided that, in the opinion of Bond Counsel, such modifications or amendments do not materially adversely affect the interests of the Owners of the Certificates.
The City must obtain and cause to be filed with the Trustee an opinion of Bond Counsel with respect to any amendment or modification hereof, stating that all conditions precedent to such amendment as set forth in this Section have been satisfied. Promptly following the effective date of any amendment or modification under this Section, the City must mail written notice thereof to each rating agency which then maintains a rating on the Certificates.
SECTION 10. Quiet Enjoyment. The Authority at all times during the term of this Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Property, subject to the provisions of the Lease and subject only to Permitted Encumbrances.
SECTION 11. Waiver of Personal Liability. All liabilities under this Site Lease on the part of the Authority are solely corporate liabilities of the Authority as a nonprofit corporation, and the City hereby releases each and every member and officer of the Authority of and from any personal or individual liability under this Site Lease. No member or officer of the Authority or its governing board is at any time or under any circumstances individually or personally liable under this Site Lease for anything done or omitted to be done by the Authority hereunder.
SECTION 12. Taxes. The City will pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Property and any improvements thereon.
SECTION 13. Eminent Domain. If the whole or any part of the Leased Property, or any improvements thereon, are taken by eminent domain proceedings, the interest of the Authority will be the aggregate amount of the then unpaid principal components of the Lease Payments payable under the Lease and the balance of the award, if any, will be paid to the City. The City hereby waives any and all rights that it has or may hereafter have to acquire the interest of the Authority in and to the Leased Property through the eminent domain powers of the City.
SECTION 14. Partial Invalidity. If any one or more of the terms, provisions, covenants or conditions of this Site Lease are to any extent declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of com petent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site Lease will be affected thereby, and each provision of this Site Lease will be valid and enforceable to the fullest extent permitted by law. The Authority and the City each hereby declares that it would have entered into this Site Lease and each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that any one or m ore Sections, paragraphs, sentences, clauses or phrases of this Site Lease may be held illegal, invalid or unenforceable.
SECTION 15. Notices . Any notice, request, complaint, demand or other communication under this Site Lease must be given by first cla ss mail or personal delivery to the party entitled thereto at its address set forth below, or by telecopy, telex or other form of telecommunication, at its number set forth below. Notice will be effective either (a) upon transmission by telecopy, telex or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The City, the
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Authority and the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the City or the
Authority:
City of Hayward
777 B Street, 2nd Floor
Hayward, California 94541
Attn: Finance Director
Fax: 510-583-3600
If to the Trustee:
The Bank of New York Mellon Trust Company, N.A.
Attn: Corporate Trust Department
100 Pine Street, Suite 3150
San Francisco, CA 94111
Fax: 415-399-1647
X
If to the 2023 Bond Insurer:
See Appendix D of the Trust Agreement
SECTION 16. Governing Law. This Site Lease is governed by the laws of the State of California.
SECTION 17. Third Party Beneficiary. The Trustee is hereby made a third party beneficiary hereunder with all rights of a third party beneficiary and the Trustee may enforce any right, remedy, or claim conferred, given or granted hereunder. [The 2023 Bond Insurer shall be a third party beneficiary hereof.]
SECTION 18. Binding Effect. This Site Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein.
SECTION 20. Section Headings . All section headings contained herein are for convenience of reference only and are not intended to define or limit th e scope of any provision of this Site Lease.
SECTION 21. Execution in Counterparts. This Site Lease may be executed in any number of counterparts, each of which is an original but all together constitute one and the same instrument. It is also agreed t hat separate counterparts of this Site Lease may be separately executed by the Authority and the City, all with the same force and effect as though the same counterpart had been executed by both the Authority and the City.
SECTION 22. Defined Terms. All capitalized terms used herein and not otherwise defined have the respective meanings given those terms in the Trust Agreement.
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IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease to be executed by their respective officers thereun to duly authorized, all as of the day and year first above written.
CITY OF HAYWARD, as lessor
By
City Manager
Attest:
City Clerk
HAYWARD PUBLIC FINANCING
AUTHORITY, as lessee
By
Executive Director
Attest:
Secretary
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APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The property constituting the Leased Property consists of the land located in the City of Hayward, County of Alameda, State of California, which is described as follows, including all buildings, improvements and facilities at any time situated thereon:
ATTACHMENT VII
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Christopher K. Lynch, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE.
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this “Assignment Agreement"), made and entered into as of _____ 1, 2023 , is between the HAYWARD PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).
SECTION 1. Recitals.
1. The City of Hayward (the “City”) previously entered into a Lease Agreement dated as of August 1, 2014 (the “2014 Lease”), with the Public Property Financing Corporation of California (the “Corporation”), for the purpose of financing a new Fire Station No. 7 and a Firehouse Health Clinic to be located at the same site as Fire Station No . 7 (the “2014 Project”), under which the City agreed to pay semiannual lease payments (the “2014 Lease Payments”) to the Corporation for use and occupancy of a Police Station, located at 300 West Winton Avenue in the City (the “2014 Leased Property”).
2. The Corporation assigned its right to receive the 2014 Lease Payments to Umpqua Bank (“Umpqua Bank”) pursuant to an Assignment Agreement, dated as of August 1, 2014 (the “2014 Assignment Agreement”).
3. Section 10.2 of the 2014 Lease provides that the Ci ty may prepay the 2014 Lease Payments on any date on and after August 1, 2019, subject to providing 45 days’ prior written notice to the Corporation and Umpqua Bank, in an amount equal to the principal amount of the 2014 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium after August 1, 2022.
4. Section 10.1 of the 2014 Lease authorizes the City to establish a security deposit for prepayment of the 2014 Lease Payments, after which all obligations of the City under the 2014 Lease shall cease and terminate, except for the obligation to pay the 2014 Lease Payments from the security deposit.
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5. The Authority and the City previously entered into a Lease Agreement, dated as of August 1, 2015 (the "2015 Lease"), for the purpose of financing acquisition and construction of a number of capital improvements, including, but not limited to, (i) a new library and community learning center, (ii) improvements to existing fire stations and (iii) complete street rehabili tation and slurry seal repairs (collectively, the “2015 Project”), under which the City agreed to pay semiannual lease payments (the “2015 Lease Payments”) to the Authority for use and occupancy of certain of the City’s fire stations and a library and community learning center (the “2015 Leased Property”).
6. The Authority assigned its rights to receive the 2015 Lease Payments to The Bank of New York Mellon Trust Company, N.A. (the “2015 Trustee”), pursuant to an Assignment Agreement, dated as of October 1, 2015 (the “2015 Assignment Agreement”).
7. Pursuant to a Trust Agreement, dated as of October 1, 2015 (the “2015 Trust Agreement”), the 2015 Trustee caused to be executed and delivered the $67,535,000 City of Hayward 2015 Certificates of Participation ( Capital Projects) (the “2015 Certificates”), which evidence direct, undivided fractional ownership interests in the 2015 Lease Payments.
8. Section 9.2 of the 2015 Lease provides that the City may prepay the 2015 Lease Payments on November 1 2023, in an amount equal to the principal component of the 2015 Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium.
9. Section 9.1 of the 2015 Lease authorizes the City to establish a security deposit for prepayment of the 2015 Lease Payments in amount sufficient to prepay the 2015 Lease Payments, after which all obligations of the City under the 2015 Lease shall cease and terminate, except for the obligation to pay the 2015 Lease Payments from the security deposit.
10. Under Section 3.01 of the 2015 Trust Agreement, the 2015 Certificates are subject to prepayment on November 1, 2023, and any date thereafter, without premium.
11. In order to take advantage of favorable interest rates prevailing in the municipal bond market, the City wishes at this time to provide for the refinancing of the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates.
12. The Board of Directors of the Authority has determined that the public convenience and necessity requi re assisting the City with refinancing the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates.
13. In order to provide funds to refinance the 2014 Lease Payments, the 2015 Lease Payments and the 2015 Certificates , (a) the City and the Authority will enter into a Site and Facilities Lease, dated as of _____ 1, 2023 (the “Site and Facilities Lease”), pursuant to which the City will lease certain real property more particularly described on Appendix A and the improvements thereon (the “Leased Property”) to the Authority, (b) the Authority and the City will enter into a Lease Agreement, dated as of _____ 1, 2023 (the “Lease”), pursuant to which the Authority will lease the Leased Property to the City in consideration for certain semi-annual lease payments to be made by the City and (c) the City will cause execution and delivery of the 2023 Refunding Certificates of Participation (Lease Refinancing) (the “Certificates”).
14. The Authority has agreed to assign its right to receive such lease payments to the Trustee under this Assignment Agreement, and in consideration of such assignment the Trustee -3-
will execute and deliver the Certificates, each evidencing a direct, undivided fractional interest in such lease payments, in accordance with a Trust Agreement (the “Trust Agreement”), by and among the City, the Authority and the Trustee.
15. The Site and Facilities Lease and this Assignment Agreement are being recorded concurrently with a memorandum of the Lease.
16. The City is authorized to enter into a lease-leaseback arrangement with the Authority under Section 37350 of the California Government Code.
SECTION 2. Assignment. The Authority hereby transfers, assigns and sets over to the Trustee, for th e benefit of the Owners of all Certificates which are executed, delivered and Outstanding under the Trust Agreement, all of the Authority’s rights under the Site and Facilities Lease and the Lease (excepting only the Authority’s rights under Sections 4.4, 5.10, 7.3 and 8.4 of the Lease), including without limitation (a) the right to receive and collect all of the Lease Payments from the City under the Lease, (b) the right to receive and collect any proceeds of any insurance maintained thereunder with respec t to the Leased Property, or any eminent domain award (or proceeds of sale under threat of eminent domain) paid with respect to the Leased Property, and (c) the right to exercise such rights and remedies conferred on the Authority under the Lease 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. All rights assigned by the Authority shall be administered by the Trustee in accordance with the provisions of the Trust Agreement and for the benefit of the Owners of Certificat es. Such assignment shall be absolute and irrevocable, and shall be without recourse to the Authority.
SECTION 3. Acceptance. The Trustee hereby accepts the assignments made herein for the purpose of securing the payments due under the Lease and Trust Agreement to, and the rights under the Lease and Trust Agreement of, the Owners of the Certificates which are executed, delivered and Outstanding under the Trust Agreement, all subject to the provisions of the Trust Agreement. The recitals contained herein are those of the Authority and not of the Trustee, and the Trustee assumes no responsibility for the correctness thereof.
SECTION 4. Conditions. This Assignment Agreement shall confer no rights or impose no duties upon the Trustee beyond those expressly provided in the Trust Agreement.
SECTION 5. Execution in Counterparts. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same agreement. It is also agreed that separate counterparts of this Assignment Agreement may be separately executed by the Trustee and the Authority, both with the same force and effect as though the same counterpart had been executed by the Trustee and the Authority.
SECTION 6. Defined Terms. All capitalized terms used in this Assignment Agreement and not otherwise defined have the respective meanings given those terms in the Trust Agreement.
SECTION 7. Binding Effect. This Assignment Agreement inures to the benefit of and binds the Authority and the Trustee, and their respective successors and assigns, subject, however, to the limitations contained herein.
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SECTION 8. Governing Law . This Assignment Agreement shall be construed in accordance with and governed by the Constitution and laws of the State of California.
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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.
HAYWARD PUBLIC FINANCING AUTHORITY, as
Lessor
By
Treasurer
ATTEST:
By: ___________________________
Secretary
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By
Authorized Officer
A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The property constituting the Leased Property consists of the land located in the City of El Cerrito, Alameda County, State of California, which is described as follows, including all buildings, improvements and facilities at any time situated thereon:
ATTACHMENT VIII
B-1
ESCROW DEPOSIT AND TRUST AGREEMENT
Relating to
$67,535,000
City of Hayward
2015 Certificates of Participation (Capital Projects)
This ESCROW DEPOSIT AND TRUST AGREEMENT (this “ Agreement”), dated as of _______ 1, 2023 , is between the CITY OF HAYWARD, a chartered city and municipal corporation organized and existing under the laws of the State of California (the “ City”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, acting as escrow agent for the Prior Certificates described below (the “Escrow Agent”) and as successor trustee (the “Prior Trustee”) for the Prior Certificates.
B A C K G R O U N D :
1. The Hayward Public Financing Authority (the “ Authority") and the City previously entered into a Lease Agreement, dated as of August 1, 2015 (the " Prior Lease"), for the purpose of financing acquisition and construction of a number of capital improvements, including, but not limited to, (i) a new library and c ommunity learning center, (ii) improvements to existing fire stations and (iii) complete street rehabilitation and slurry seal repairs, under which the City agreed to pay semiannual lease payments (the “Prior Lease Payments”) to the Authority for use and occupancy of certain of the City’s fire stations and a library and community learning center (the “Prior Leased Property”).
2. The Authority assigned its rights to receive the Prior Lease Payments to Prior Trustee, pursuant to an Assignment Agreement, dated as of October 1, 2015 (the “ Prior Assignment Agreement”).
3. Pursuant to a Trust Agreement, dated as of October 1, 2015 (the “Prior Trust Agreement”), the Prior Trustee caused to be executed and delivered the $67,535,000 City of Hayward 2015 Certificates of Participation (Capital Projects) (the “Prior Certificates”), which evidence direct, undivided fractional ownership interests in the Prior Lease Payments.
4. Section 9.2 of the Prior Lease provides that the City may prepay the Prior Lease Payments on November 1 2023, in an amount equal to the principal component of the Prior Lease Payments to be prepaid, plus accrued interest to the prepayment date, without a prepayment premium.
5. Section 9.1 of the Prior Lease authorizes the City to establish a security deposit for prepayment of the Prior Lease Payments in amount sufficient to prepay the Prior Lease Payments, after which all obligations of the City under the Prior Lease shall cease and terminate, except for the obligation to pay the Prior Lease Payments from the security deposit; and
2 6. Under Section 3.01 of the Prior Trust Agreement , the Prior Certificates are subject to prepayment on November 1, 2023, and any date thereafter, without premium; and
7. In order to take advantage of prevailing bond market conditions, the City wishes to refinance the Prior Lease Payments and to cause a redemption of the Prior Certificates.
8. To that end, the City has proposed to lease certain real property to the Authority in consideration of the payment by the Corporation of an upfront rental payment that is sufficient to provide funds to refinance the Prior Certificates.
9. In order to raise funds for such purpose, and pursuant to a Trust Agreement, dated as of _____ 1, 2023 (the “Refunding Trust Agreement”), the City proposes to cause execution and delivery of its City of Hayward 2023 Refunding Certificates of Participation (Lease Refinancing) (the “Refunding Certificates”).
10. The City wishes to appoint the Escrow Agent for the purpose of establishing an irrevocable escrow fund to be funded, invested, held and administered for the purpose of providing for the payment and prepayment of the Prior Lease Payments and the Prior Certificates, and to provide certain directions to the Prior Trustee with respect to the Prior Certificates.
11. As a result of the deposit and investment of funds in accordance with this Agreement, the City shall have established a security deposit for the Prior Lease Payments in accordance with Section 9.1 of the Prior Lease and Section 13.01 of the Prior Trust Agreement.
A G R E E M E N T :
In consideration of the premises and the material covenants contained herein, the City and The Bank of New York Mellon Trust Company, N.A., as Escrow Agent and Prior Trustee, hereby agree as follows:
SECTION 1. Appointment of Escrow Agent; Establishment of Escrow Fund . The City hereby appoint s the Escrow Agent to act as escrow agent for purposes of administering the funds required to defease , pay and prepay the Prior Lease Payments and the Prior Certificates in accordance with the Prior Lease and the Prior Trust Agreement. The Escrow Agent is directed to establish an escrow fund (the “ Escrow Fund”) to be held by the Escrow Agent in trust as an irrevocable escrow securing the payment of the Prior Certificates as set forth below. All cash in the Escrow Fund is hereby irrevocably pledged as a special fund for the payment of the principal of and interest and premium (if any) with respect to the Prior Certificates in accordance with the Prior Trust Agreement.
If at any time the Escrow Agent receives actual knowledge that the cash in the Escrow Fund will not be sufficient to make any payment required by Section 4 in respect of the Prior Certificates, the Escrow Agent shall notify the City of such fact and the City shall immediately cure such deficiency from any source of legally available funds. The Escrow Agent has no liability for any such insufficiency.
3 SECTION 2. Deposit and Investment of Amounts in Escrow Fund . On _______, 2023 (the “ Closing Date”), the City, pursuant to the Refunding Trust Agreement , will cause to be transferred to the Escrow Agent for deposit into the Escrow Fund the amount of $__________ in immediately available funds, to be derived from the proceeds of the Refunding Certificates.
In addition, the City hereby directs the Prior Trustee to transfer to the Escrow Agent for deposit into the Escrow Fund the amount of $______, to be derived from moneys in the Reserve Fund ($____) and the Lease Payment Fund ($___) established and held by the Prior Trustee under the Prior Trust Agreement that are available as a result of the defeasance of the Prior Certificates.
On the Closing Date, the Escrow Agent shall invest $_________ of the amounts deposited in the Escrow Fund in the federal securities listed on Exhibit D; the federal securities listed on Exhibit D are non-callable “Federal Securities” as defined in the Prior Lease. The Escrow Agent shall hold the remaining $_____ in cash, uninvested.
At the written direction of the City, the Escrow Agent shall invest and reinvest any proceeds received from any of the Federal Securities acquired pursuant to this Section 2 (the “Original Federal Securities ”), and the cash originally deposited into the Escrow Fund, for a period ending not later than the d ate on which such proceeds or cash are required for the purposes specified in Section 3 and maturing in an amount at least equal to their purchase price, in Federal Securities; provided, however, that with respect to any such reinvestment, such written directions of the City shall be accompanied by an opinion of a certified public accountant as to the sufficiency of the amounts in the Escrow Fund following any such reinvestment and an opinion of bond counsel that investment in accordance with such direction s will not affect, for Federal income tax purposes, the exemption from Federal income taxes of the interest with respect to the Prior Certificates or, if applicable, the Refunding Certificates. In the event that the City shall fail to file any such written directions with the Escrow Agent concerning the reinvestment of any such proceeds, such proceeds shall be held uninvested by the Escrow Agent.
The City may at any time direct the Escrow Agent to substitute noncallable Federal Securities for any or all the Federal Securities then deposited in the Escrow Fund, provided that any such direction and substitution shall be accompanied by an opinion of a certified public accountant as to the sufficiency of the amounts in the Escrow Fund following any such substitution and, further, to be accompanied by an opinion of bond counsel that investment in accordance with such directions will not affect, for Federal income tax purposes, the exemption from Federal income taxes of the interest with respect to the Prior Certificates or, if applicable, the Refunding Certificates. In the event that, following any such substitution of Federal Securities pursuant to this Section 2, there is an amount of moneys or Federal Securities in excess of an amount sufficient to make the payments required by Section 3 hereof, such excess shall be transferred to the Prior Trustee, for deposit into the Lease Payment Fund for the Refunding Certificates.
SECTION 3. Application of Amounts in Escrow Fund. The Escrow Agent is hereby instructed to withdraw from the Escrow Fund and transfer to the Prior Trustee an amount required to pay the principal of and interest and prepayment premium (if any) with respect to the Prior Certificates, in accordance with the schedule attached as Exhibit A hereto.
4 Following the payment and prepayment of the Prior Certificates in full, the Escrow Agent shall transfer any amounts remaining on deposit in the Escrow Fund to The Bank of New York Mellon Trust Company, N.A. , as trustee for the Refunding Certificates, for deposit in the Lease Payment Fund established under the Refunding Trust Agreement, to be applied to pay interest next coming due and payable with respect to the Refunding Certificates.
SECTION 4. Irrevocable Election to Prepay Prior Certificates; Defeasance Notice.
The City has irrevocably elected to pay and prepay all of the outstanding Prior Certificates on the date set forth in Exhibit A, in accordance with the provisions of th e Prior Trust Agreement. Pursuant to a written directi on of the Authority, the Prior Trustee shall give notice of the prepayment of the Prior Certificates in accordance with the requirements of the Prior Trust Agreement, at the expense of the City, using the form set forth in Exhibit B.
The City hereby direct s the Prior Trustee to file on the Closing Date the notice attached as Exhibit C on the Municipal Securities Rulemaking Board’s EMMA system. The sole remedy for failure to file such notice on EMMA shall be an action by the holders of the Prior Certificates in mandamus for specific performance or similar remedy to compel performance.
SECTION 5. Compensation to Escrow Agent. The City shall pay the Escrow Agent full compensation for its services under this Agreement, including out-of-pocket costs such as publication costs, redemption expenses, legal fees and other costs and expenses relating hereto. Under no circumstances shall amounts deposited in or credited to the Escrow Fund be deemed to be available for said purposes. The Escrow Agent has no lien upon or right of set off against the cash at any time on deposit in the Escrow Fund.
SECTION 6. Immunities and Liability of Escrow Agent . The Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement and no implied duties, covenants or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not have any liability hereunder except to the extent of its negligence or willful misconduct. In no event shall the Escrow Agent be liable for any special, indirect or consequential damages. The Escrow Agent shall not be liable for any loss from any investment made by it in accordance with the terms of this Agreement. The Escrow Agent may consult with legal counsel of its own choice and the Escrow Agent shall not be liable for any action taken or not taken by it in good faith in reliance upon the opinion or advice of such counsel. The Escrow Agent shall not be liable for the recitals or representations contained in this Agreement and shall not be responsible for the validity of this Agreement, the sufficiency of the Escrow Fund or the moneys and securities to pay the principal, interest and redemption premium (if any) with respect to the Prior Certificates.
Whenever in the administration of this Agreement the Escrow Agent deems it necessary or desirable that a matter be proved or established prior to taking or not taking any action, such matter may be deemed to be conclusively proved and established by a certificate of an authorized representative of the City and shall be full protection for any action taken or not taken by the Escrow Agent in good faith reliance thereon.
The Escrow Agent may conclusively rely as to the truth and accuracy of the statements and correctness of any opinions or calculations provided to it in connection 5 with this Agreement and shall be protected in acting, or refraining from acting, upon any notice, instruction, request, certificate, document, opinion or other writing furnished to the Escrow Agent in connection with this Agreement and believed by the Escrow Agent to be signed by the proper party, and it need not investigate any fact or matter stated therein.
None of the provisions of this Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder. The Escrow Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care.
The Escrow Agent may at any time resign by giving 30 days written notice of resignation to the City and the Authority. Upon receiving such notice of resignation, the City and the Authority shall promptly appoint a successor and, upon the acceptance by the successor of such appointment, release the resigning Escrow Agent from its obligations hereunder by written instrument, a copy of which instrument shall be delivered to the resigning Escrow Agent and the successor. If no successor shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor.
Any bank, corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any bank, corporation or association resulting from any merger, conversion or consolidation to which the Escrow Agent shall be a party, or any bank, corporation or association succeeding to all or substantially all of the corporate trust business of the Escrow Agent shall be the successor of the Escrow Agent hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except on the part of any of the parties hereto where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.
The City shall indemnify, defend and hold harmless the Escrow Agent and its officers, directors, employees, representatives and agents, from and against and reimburse the Escrow Agent for any and all claims, obligations, liabilities, losses, damages, actions, suits, judgments, reasonable costs and expenses (including reasonable attorneys’ and agents’ fees and expenses) of whatever kind or nature regardless of their merit, demanded, asserted or claimed against the Escrow Agent directly or indirectly relating to, or arising from, claims against the Escrow Agent by reason of its participation in the transactions contemplated hereby except to the extent caused by the Escrow Agent’s negligence or willful misconduct. The provisions of the foregoing sentence shall survive the termination of this Agreement or the earlier resignation or removal of the Escrow Agent.
The Escrow Agent agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured e-mail (provided, that for purposes of this Agreement, an e -mail does not constitute a notice, request or other communication hereunder but rather the portable document format or similar attachment attached to such e-mail shall constitute a n otice, request or other communication hereunder), facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Escrow Agent shall have received an incumbency certificate listing persons designated to give such instruct ions or directions and containing specimen signatures of such 6 designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City elects to give the Escrow Agent e-mail or facsimile instructions (or instructions by a similar electronic method) and the Escrow Agent in its discretion elects to act upon such instructions, the Escrow Agent ’s understanding of such instructions shall be deemed controlling. The Escrow Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Escrow Agent’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The City agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Escrow Agent , including without limitation the risk of the Escrow Agent acting on unauthorized instructions, and the risk of interception and misuse by third parties.
The Escrow Agent shall furnish the City periodic cash transaction statements which include detail for all investment transactions effected by the Escrow Agent or brokers selected by the City. Upon the Ci ty’s election, such statements will be delivered via the Escrow Agent’s online service and upon electing such service, paper statements will be provided upon request. The City waives the right to receive brokerage confirmations of security transactions effected by the Escrow Agent as they occur, to the extent permitted by law. The City further understands that trade confirmations for securities transactions effected by the Escrow Agent will be available upon request and at no additional cost and other tra de confirmations may be obtained from the applicable broker.
SECTION 7. Termination of Agreement. Upon payment in full of the principal of and interest and redemption premium (if any) on the Prior Certificates and all fees, expense and charges of the Escrow Agent as described above, this Agreement shall terminate and the Escrow Agent shall be discharged from any further obligation or responsibility hereunder.
SECTION 8. 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 instrument.
7 SECTION 9. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
CITY OF HAYWARD
By:
City Manager
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Escrow
Agent and as Prior Trustee
By
Authorized Officer
ACKNOWLEDGED AND CONSENTED TO:
HAYWARD PUBLIC FINANCING
AUTHORITY
By:
Executive Director
ATTEST:
By
Secretary
A-1
EXHIBIT A
ESCROW REQUIREMENTS
Payment
Date
Interest
Payment
Principal
Payment
Principal
Prepaid
Total
Payment
11/1/23
B-1
EXHIBIT B
FORM OF PREPAYMENT NOTICE
$67,535,000
City of Hayward
2015 Certificates of Participation
(Capital Projects)
Original Date of Issuance: October 14, 2015
NOTICE IS HEREBY GIVEN, by the City of Hayward (the “City”) that the captioned certificates of participation (the “2015 Certificates”) have been called for prepayment under and within the meaning of the Trust Agreement, dated as of October 1, 2015 (the “2015 Trust Agreement”), on [November 1, 2023 ] (the “ Prepayment Date”), at a prepayment price equal to the par amount thereof together with accrued interest thereon to the Prepayment Date, without premium (the “Prepayment Price”).
The 2015 Certificates to be prepaid on the Prepayment Date consist of the following:
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
CUSIP†
2024 $3,710,000 4.000% KP1
2025 3,855,000 4.000 KQ9
2026 4,010,000 3.000 KR7
2027 4,130,000 3.000 KS5
2028 4,255,000 3.000 KT3
2029 4,380,000 3.125 KU0
2030 4,520,000 3.250 KV8
2031 4,665,000 3.250 KW6
2032 4,820,000 5.000 KX4
2033 5,060,000 5.000 KY2
2034 5,310,000 3.500 KZ9
†: Base CUSIP 421209
On the Prepayment Date, the Prepayment Price will become due and payable upon each 2015 Certificate called for prepayment and interest with respect thereto will cease to accrue from and after the Prepayment Date.
The CUSIP number of the 2015 Certificates has been assigned by an independent service and is included in this notice solely for the convenience of the Owners and neither The Bank of New York Mellon Trust Company, N.A. , as trustee for the 2015 Certificates (the “2015 Trustee”), the City or the Authority shall be liable for any inaccuracies in such numbers.
Payment of the Prepayment Price of the 2015 Certificates called for prepayment will become due and payable on the Prepayment Date upon presentation and surrender thereof in the following manner:
[to come]
B-2
[payment/surrender information to come from BNY]
IMPORTANT NOTICE
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the “Act”), 28% will be withheld if tax identification number is not properly certified.
Dated: _________, 2023
THE BANK OF NEW YORK
MELLON TRUST COMPANY , N.A.,
as 2015 Trustee
C-1
EXHIBIT C
FORM OF NOTICE OF DEFEASANCE
$67,535,000
City of Hayward
2015 Certificates of Participation
(Capital Projects)
Original Date of Issuance: October 14, 2015
NOTICE IS HEREBY GIVEN, by the City of Hayward (the “ City”) that the captioned certificates of participation (the “2015 Certificates”) have been defeased and discharged under and within the meaning of the Trust Agreement, dated as of October 1, 2015, relating to the 2015 Certificates (the “2015 Trust Agreement”). Funds for the payment of the principal and interest due with respect to the 2015 Certificates on [November 1, 2023 ] and to pay and prepay the 2015 Certificates maturing on and after November 1, 2023 have been deposited with The Bank of New York Mellon Trust Company, N.A. , as Escrow Agent , and the sufficiency of the funds and investments for the purpose of paying the principal of and interest on the 2015 Certificates has been verified by an independent certified public accountant.
The City has irrevocably elected to prepay on [November 1, 2023] all of the outstanding 2015 Certificates maturing on and after November 1, 2024, (the “Prepayment Date”) , at a Prepayment Price equal to the par amount thereof together with accrued interest thereon to the Prepayment Date, without premium.
As a con sequence of the foregoing actions and in accordance with the 2015 Trust Agreement, all obligations of The Bank of New York Mellon Trust Company, N.A. , as successor trustee for the 2015 Certificates and the City with respect to the 2015 Certificates has ceased and terminated, except the obligation to use moneys set aside in escrow as described above and, if necessary, from other legally available funds of the City.
The outstanding 2015 Certificates consist of the following:
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
CUSIP†
2023 $3,530,000 5.000% KN6
2024 3,710,000 4.000 KP1
2025 3,855,000 4.000 KQ9
2026 4,010,000 3.000 KR7
2027 4,130,000 3.000 KS5
2028 4,255,000 3.000 KT3
2029 4,380,000 3.125 KU0
2030 4,520,000 3.250 KV8
2031 4,665,000 3.250 KW6
2032 4,820,000 5.000 KX4
2033 5,060,000 5.000 KY2
2034 5,310,000 3.500 KZ9
†: Base CUSIP 421209
C-2
The CUSIP number of the 2015 Certificates has been assigned by an independent service and is included in this notice solely for the convenience of the Owners and neither The Bank of New York Mellon Trust Company, N.A., as trustee for the 2015 Certificates nor the City shall be liable for any inaccuracies in such numbers.
Please call Bondholder Services at _________ with any questions.
Dated: ________ THE BANK OF NEW YORK
MELLON TRUST COMPANY, N.A.
as Escrow Agent
D-1
EXHIBIT D
DESCRIPTION OF NONCALLABLE FEDERAL SECURITIES
Type
Maturity
Date
Par
Amount
Rate
Cost
ATTACHMENT IX