APPENDIX A
GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION
RELATING TO THE CITY AND THE COUNTY
The following information concerning the City of Ridgecrest and Kern County is included only for the purpose of supplying general information regarding the City and the County. The Certificates are not a debt of the County, the State or any of its political subdivisions, and none of the County, the State nor any of their political subdivisions, except for the City, are liable therefor.
Although reasonable efforts have been made to include up-to-date information in this Appendix A, some of the information is not current due to delays in reporting of information by various sources. It should not be assumed that the trends indicated by the following data would continue beyond the specific periods reflected herein.
The City
The City of Ridgecrest (the “City”), incorporated in 1963, is located in the southern portion of the Indian Wells Valley in the northeast corner of Kern County (the “County”). The City is the third most populous city in the County. The City is surrounded by four mountain ranges; the Sierra Nevada on the west, the Coso on the north, the Argus Range on the east, and the El Paso on the south. The City is approximately an hour and quarter from the Lancaster/Palmdale area and approximately two hours from both Bakersfield and San Bernardino, the two nearest urban areas. During the 1950s and 1960s, the City evolved as a support community to the China Lake Naval Ordinance Test Station, providing housing and vital services for employees and contractors.
The County
The County has sometimes been referred to as “The Golden Empire,” because of its history of gold, oil, and agricultural production. Located at the southern end of California’s Central Valley, the County consistently ranks among the top five most-productive agricultural counties in the United States and is one of the nation’s leading petroleum-producing counties. There is also a strong aviation, space, and military presence, such as Edwards Air Force Base, the China Lake Naval Air Weapons Station, and the Mojave Air and Space Port. Because of its unique geographical positioning, the County has also become the distribution center for some of the world’s largest companies. The County is host to a major freeway system, providing access to California’s central coast, Arizona, Nevada, and Utah. The County seat (and largest city) is Bakersfield.
Appendix A
Population
The table below summarizes population of the City, the County, and the State for the last five years. The City’s 2024 population is approximately 27,940.
CITY OF RIDGECREST, KERN COUNTY, and CALIFORNIA
Population
Year
City of
Ridgecrest
Kern
County
State of
California
2019 29,112 907,065 39,605,361
2020 29,422 916,828 39,648,938
2021 28,014 904,179 39,286,510
2022 28,083 908,107 39,078,674
2023 27,885 907,476 38,940,231
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2010-23, with 2020 Census Benchmark.
Appendix A
Employment
The following table summarizes historical employment and unemployment for the County, the State and the United States:
KERN COUNTY, CALIFORNIA, and UNITED STATES
Civilian Labor Force, Employment, and Unemployment
(Annual Averages)
Unemployment
Year Area Labor Force Employment Unemployment Rate (1)
2018 Kern County 387,000 356,100 30,900 8.0
California 19,398,200 18,582,800 815,400 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2019 Kern County 391,000 360,800 30,200 7.7
California 19,411,600 18,627,400 784,200 4.0
United States 163,539,000 157,538,000 6,001,000 3.7
2020 Kern County 383,800 335,700 48,100 12.5
California 18,821,200 16,913,100 1,908,100 10.1
United States 160,742,000 147,795,000 12,947,000 8.1
2021 Kern County 384,000 345,400 38,600 10.0
California 18,923,200 17,541,900 1,381,200 7.3
United States 161,204,000 152,581,000 8,623,000 5.3
2022(2) Kern County 391,700 364,600 27,200 6.9
California 19,252,000 18,440,900 811,100 4.2
United States 164,287,000 158,291,000 5,996,000 3.6
Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010-22, and US Department of Labor.
(1) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures available in this table.
(2) Latest available full-year data.
Appendix A
Major Employers
The table below sets forth a list of major employers in the City in 2023.
CITY OF RIDGECREST
2023 Major Employers
Percentage of Total
Rank Employer Employees City Employment
1 Naval Air Weapons Station China Lake 5,669 40.78%
2 Ridgecrest Regional Hospital 900 6.47
3 Sierra Sands Unified School District 654 4.71
4 Searles Valley Minerals 590 4.24
5 Walmart Supercenter 301 2.17
6 Cerro Coso Community College 176 1.27
7 Albertson’s Inc. 171 1.23
8 City of Ridgecrest 135 0.97
9 Alta One Federal Credit Union 120 0.86
10 Home Depot 106 0.76
Total 8,822 63.47
Total City Labor Force 13,000
Source: City of Ridgecrest 2023 ACFR.
Appendix A
The table below sets forth a list of major employers in the County in 2023.
KERN COUNTY
2023 Major Employers
Employer Name Location Industry
Adventist Health Bakersfield Bakersfield Hospitals
Bolthouse Farms Bakersfield Agricultural Consultants
California Correctional Instn Tehachapi State Govt-Correctional Institutions Chevron Corp Bakersfield Management Services
Community Action Partnership Bakersfield Community Centers Dignity Health Mercy Downtown Bakersfield Hospitals
Edwards Air Force Base Edwards Military Bases
Ensign United States Drilling Bakersfield Energy Management Systems & Products Foster Care Human Svc Bakersfield Foster Care
Frito-Lay Inc Bakersfield Potato Chip Factories (mfrs)
Grimmway Farms Arvin Fruits & Vegetables-Growers & Shippers Kern County Human Svc Dept Bakersfield Government Offices-County Marko Zaninovich Inc McFarland Fruits & Vegetables-Growers & Shippers Memorial Hospital Bakersfield Bakersfield Hospitals
Nabors Completion-Production Bakersfield Oil Field Service Nasa/Armstrong Flight Research Edwards Alternative Fuels Naval Air Warfare Ctr Ridgecrest Military Bases
Paramount Farms Huller 4 Lost Hills Farms
Ridgecrest Regional Hospital Ridgecrest Hospitals
Sierra Sands Unified Sch Dist Ridgecrest School Districts Sun Pacific Bakersfield Fruits & Vegetables-Growers & Shippers US Naval Air Weapons Station Ridgecrest Federal Government-National Security Vasinda Investments Inc Bakersfield Home Health Service Wasco State Prison Fire Dept Wasco State Govt-Correctional Institutions Wonderful Citrus LLC Delano Citrus Growers
Source: America’s Labor Market Information System (ALMIS) Employer Database, 2024 1st Edition.
Economic Development Activity
• The City is planning on a +$100 million wastewater utility upgrade that will increase capacity for continued buildout of the City
• NAWS China Lake $3.87B earthquake recovery rebuild is on schedule and nearing completion estimated in 2025 • Multiple Fiber Optic suppliers are installing within the City boundary with a 100% city-wide goal • VEN (casual dining) and a new Bakery are all open or expected to open FY 2024-25 • Ross and Five Below chains recently began tenant improvements expecting completion by end of calendar year 2025
• The Oasis at China Lake project grand opening in September 2023 includes Frosty Peaks (frozen yogurt), the Habit Grill (2024 completion) and Phase II beginning in FY25 will include an arcade, bowling alley, and a miniature golf course
Appendix A
• A New Holiday Inn Express (103 keys, opened early 2023) & Towne Place Suites (96 keys, slated to open in 2025) • EV Charge Park and Coffee estimated completion in 2025 • Economic Development Activity for City focused around the historic downtown area Construction Activity
The following table reflects the five-year history of building permit valuation for the City and the County:
CITY OF RIDGECREST
Building Permits and Valuation
(Dollars in Thousands)
2018 2019 2020 2021 2022(1)
Permit Valuation:
New Single-family $ 9,642 $ 7,211 $13,131 $10,211 $ 4,044 New Multi-family 0 708 0 2,366 716
Res. Alterations/Additions 516 410 521 338 506
Total Residential 10,158 8,330 13,652 12,915 5,266
Total Nonresidential 4,147 2,024 7,811 3,289 42,669
Total All Building $14,305 $10,354 $21,463 $16,204 $47,934 New Dwelling Units:
Single Family 69 51 91 78 36
Multiple Family 0 6 0 82 8
Total 69 57 91 160 44
KERN COUNTY
Building Permits and Valuation
(Dollars in Thousands)
2018 2019 2020 2021 2022(2)
Permit Valuation:
New Single-family $ 425,996 $521,228 $ 543,419 $422,169 294,357 New Multi-family 43,680 36,336 79,037 22,654 30,179
Res. Alterations/Additions 29,974 29,902 34,493 39,048 37,948 Total Residential 499,620 587,466 656,949 483,871 362,484 Total Nonresidential 570,621 363,047 409,932 409,783 447,100 Total All Building $1,070,241 $950,513 $1,066,881 $893,654 809,584 New Dwelling Units:
Single Family 1,894 2,260 2,272 1,928 1,408
Multiple Family 346 659 460 339 430
Total 2,240 2,949 2,732 2,267 1,838
Source: Construction Industry Research Board: “Building Permit Summary.” Note: Columns may not sum to totals due to independent rounding. (1) Latest available full year data.
Appendix A
Household Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, State and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the median household effective buying income for the City, the County, the State and the nation for the past five years.
CITY OF RIDGECREST, KERN COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
Median Household Effective Buying Income
2018 2019 2020 2021 2022
City of Ridgecrest 50,395 49,748 53,693 65,941 66,001
Kern County 44,937 45,789 46,320 54,336 55,410
California 62,637 65,870 67,956 77,058 77,175
United States 52,841 55,303 56,790 64,448 65,326
Source: Nielsen, Inc.
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Appendix B
APPENDIX B
ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
The Auditor was not requested to consent to the inclusion of its report in this Appendix B and it has not undertaken to update financial statements included in this Appendix B. No opinion is expressed by the Auditor with respect to any event subsequent to its report.
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Appendix C
APPENDIX C
INVESTMENT POLICY OF THE CITY
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Appendix D
APPENDIX D
FORM OF SPECIAL COUNSEL OPINION
[Closing Date]
City Council of the
City of Ridgecrest
100 West California Avenue
Ridgecrest, California 93555
OPINION: $______* Certificates of Participation (2024 Aquatics Facility Financing Project) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the City of Ridgecrest, as the Rental for Certain Property Pursuant to a Lease Agreement with the Public Property Financing Corporation of California Members of the City Council:
We have acted as Special Counsel to the City of Ridgecrest (the “City”) in connection with the execution and delivery of $_________* aggregate principal amount of the Certificates of Participation (2024 Aquatics Facility Financing Project) (the “Certificates”) evidencing direct, undivided fractional interests of the owners thereof in lease payments (the “Lease Payments”) to be made by the City as the rental for certain property pursuant to a lease agreement, dated as of February 1, 2025, (the “Lease Agreement”), with the Public Property Financing Corporation of California (the “Corporation”), which right to receive such Lease Payments has been assigned by the Corporation to U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), pursuant to the Assignment Agreement, dated as of February 1, 2025, by and between the Trustee and the Corporation. The Certificates have been executed by the Trustee pursuant to the terms of the Trust Agreement, dated as of February 1, 2025 (the “Trust Agreement”), by and among the City, the Corporation and the Trustee.
In connection with our representation we have examined a certified copy of the proceedings relating to the Certificates. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigations.
Based upon the foregoing and after examination of such questions of law as we have deemed relevant in the circumstances, but subject to the limitations set forth herein, we are of the opinion that:
1. The proceedings show lawful authority for the execution and delivery by the City of the Lease Agreement and the Trust Agreement under the laws of the State of California (the “State”) now in force, the Lease Agreement and the Trust Agreement have been duly authorized, executed and delivered by the City, and, assuming due authorization, execution and delivery by the Trustee and the Corporation, as appropriate, are valid and binding obligations of the City enforceable against the City in accordance with their respective terms.
2. The Certificates, assuming due execution and delivery by the Trustee, are entitled to the benefits of the Trust Agreement.
3. The obligation of the City to make the Lease Payments is an enforceable obligation of the City and does not constitute a debt of the City, or of the State or of any political subdivision thereof in contravention of any * Preliminary, subject to change.
Appendix D
constitutional or statutory debt limit or restriction, and does not constitute an obligation 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.
4. Under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, the portion of each Lease Payment constituting interest with respect to the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals; however, it should be noted that with respect to applicable corporations as defined in section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), interest (and original issue discount) with respect to the Certificates might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed on such corporations.
5. The portion of each Lease Payment constituting interest is exempt from State personal income tax.
6. The amount by which a Certificate owner’s original basis for determining loss on sale or exchange in the applicable Certificate (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable premium, which must be amortized under section 171 of the Code; such amortizable premium reduces the Certificate owner’s basis in the applicable Certificate (and the amount of tax-exempt interest received with respect thereto), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Certificate premium may result in a Certificate owner realizing a taxable gain when a Certificate is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Certificates to the owner. Purchasers of the Certificates should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Certificate premium.
The opinions expressed herein as to the exclusion from gross income of the portion of each Lease Payment constituting interest with respect to the Certificates are based upon certain representations of fact and certifications made by the City and others and are subject to the condition that the City complies with all requirements of the Code that must be satisfied subsequent to the execution and delivery of the Certificates to assure that such portion of each Lease Payment constituting interest with respect to the Certificates will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the portion of each Lease Payment with respect to the Certificates constituting interest to be included in gross income for federal income tax purposes retroactive to the date of execution and delivery of the Certificates. The City has covenanted to comply with all such requirements.
The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement with respect to the Certificates terminates on the date of their execution and delivery. The Trust Agreement, the Lease Agreement and the Tax Certificate relating to the Certificates permit certain actions to be taken or to be omitted if a favorable opinion of Special Counsel is provided with respect thereto. No opinion is expressed herein as to the effect on the exclusion from gross income of the portion of each Lease Payment constituting interest with respect to the Certificates for federal income tax purposes with respect to any Certificate if any such action is taken or omitted based upon the opinion or advice of counsel other than us. Other than expressly stated herein, we express no other opinion regarding tax consequences with respect to the Certificates.
The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Trust Agreement and the Lease Agreement are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State.
Appendix D
Our opinion is limited to matters governed by the laws of the State and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
We express no opinion herein as to the accuracy, completeness or sufficiency of the official statement relating to the Certificates or other offering material relating to the Certificates and expressly disclaim any duty to advise the owners of the Certificates with respect to matters contained in such official statement.
Respectfully submitted,
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Appendix E
APPENDIX E
SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS
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Appendix F
APPENDIX F
DTC’S BOOK-ENTRY ONLY SYSTEM
The information in this Appendix F, concerning The Depository Trust Company, New York, New York (“DTC”), and DTC’s book-entry system, has been furnished by DTC for use in official statements and the City takes no responsibility for the completeness or accuracy thereof. The City cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest or principal with respect to the Certificates, (b) certificates representing ownership interest in or other confirmation of ownership interest in the Certificates, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Certificates, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix F. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC. Information Furnished by DTC Regarding its Book-Entry Only System
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Certificates (as used in this Appendix F, the “Securities”). The Securities will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Security certificate will be issued for each maturity of the Securities, in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC is rated AA+ by Standard & Poor’s. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
Appendix F
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit the notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the paying agent or bond trustee, on payable date in accordance with their respective holdings shown on DTC’s records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the paying agent or bond trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the paying agent or bond trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or the paying agent or bond trustee. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.
Appendix G
APPENDIX G
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate”) is executed and delivered by the CITY OF RIDGECREST (the “City”) in connection with the execution and delivery of $_________* Certificates of Participation (2024 Aquatics Facility Financing Project) (the “Certificates”). The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of February 1, 2025, by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the City and the Public Property Financing Corporation of California (the “Trust Agreement”). Pursuant to Section 11.08 of the Trust Agreement, the City covenants and agree as follows:
Section 1. Definitions. In addition to the definitions set forth above and in the Trust Agreement which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 1, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the date that is nine months after the end of the City’s fiscal year (currently March 31 based on the City’s fiscal year end of June 30). “Dissemination Agent” shall mean, initially, RSG, Inc., or any successor Dissemination Agent designed in writing by the City, and which has been filed with the then current Dissemination Agent a written acceptance of such designation.
“Fiscal Year” means any twelve–month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve–month period selected and designated by the City as its official fiscal year period under a Certificate of the City filed with the Trustee. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the final official statement executed by the City in connection with the issuance of the Certificates.
“Participating Underwriter” means Hilltop Securities Inc., the original underwriter of the Certificates. “Rule” means Rule 15c2–12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time. “Significant Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Certificates and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2– 12(b)(5). * Preliminary, subject to change.
Appendix G
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2025, with the report for fiscal year 2023-24 provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City in a timely manner shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then–applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for Annual Reports provided for in Section 3 above, financial information and operating data with respect to the City for preceding fiscal year, as follows:
(i) Table 5—General Fund Tax Revenues by Source;
(ii) Table 7—Assessed Valuations;
(iii) Table 11—Largest Local Secured Property Tax Payers; and (iv) Table 12—Other Revenue Sources.
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
Appendix G
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Significant Events with respect to the Certificates:
(i) Principal and interest payment delinquencies;
(ii) Non–payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
(vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of the securities, if material; (xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person; (xiii) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material; (xv) The incurrence of a financial obligation of the City or other obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City or other obligated person, any of which affect security holders, if material; and (xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City or other obligated person, any of which reflect financial difficulties.
Appendix G
(b) The City shall or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Significant Event. Notwithstanding the foregoing, notice of Significant Events described in subsection (a)(viii) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Certificates under the Trust Agreement. (c) The City acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a) (xv) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. The City intends that the words used in paragraphs (xv) and (xvi) and the definition of “financial obligation” to have the meanings ascribed thereto in the Rule.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City or an obligated person in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City or an obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the City shall give notice of such termination in the same manner as for a Significant Event under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4, 5(a), 5(b) or 5(c), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Certificates, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Certificates, after considering any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the Certificates in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Certificates.
Appendix G
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
The Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations hereunder.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Significant Event under Section 5(b).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Significant Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Significant Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Significant Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) Article VIII of the Trust Agreement is hereby made applicable to this Disclosure Certificate as if this Disclosure Certificate were (solely for this purpose) contained in the Trust Agreement. The Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee thereunder. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Appendix G
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Certificates and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Date: [Closing Date]
CITY OF RIDGECREST
By
City Manager
ACKNOWLEDGED:
RSG, INC., as Dissemination Agent
By
Authorized Officer
Appendix G
EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligor: City of Ridgecrest
Name of Issue: Certificates of Participation (2024 Aquatics Facility Financing Project) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be made by the City of Ridgecrest, as the Rental for Certain Property Pursuant to a Lease Agreement with the Public Property Financing Corporation of California Date of Issuance: [Closing Date]
NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with respect to the above-named Issue as required by the Continuing Disclosure Certificate, dated [Closing Date], furnished by the Obligor in connection with the Issue. The Obligor anticipates that the Annual Report will be filed by _________________.
Date: ________________
RSG, INC., as Dissemination Agent
By
Authorized Officer
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Appendix H
APPENDIX H
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
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MUNICIPAL BOND
INSURANCE POLICY
ISSUER: [NAME OF ISSUER] Policy No: _____
MEMBER: [NAME OF MEMBER]
BONDS: $__________ in aggregate principal Effective Date: _________ amount of [NAME OF TRANSACTION]
[and maturing on]
Risk Premium: $__________
Member Surplus Contribution: $ _________
Total Insurance Payment: $_________
BUILD AMERICA MUTUAL ASSURANCE COMPANY (“BAM”), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the “Trustee”) or paying agent (the “Paying Agent”) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.
On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner’s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner’s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner’s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment.
Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. “Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer’s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. “Due for Payment” means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. “Nonpayment” means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. “Nonpayment” shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. “Notice” means delivery to BAM of a notice of claim and certificate, by certified mail, email or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. “Owner” means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that “Owner” shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.
BAM may appoint a fiscal agent (the “Insurer’s Fiscal Agent”) for purposes of this Policy by giving written notice to the Trustee, the Paying Agent, the Member and the Issuer specifying the name and notice address of the Insurer’s Fiscal Agent. From and after the date of receipt of such notice by the Trustee, the Paying Agent, the Member or the Issuer (a) copies of all notices required to be delivered to BAM pursuant to this Policy shall be simultaneously delivered to the Insurer’s Fiscal Agent and to BAM and shall not be deemed received until received by both and (b) all payments required to be made by BAM under this Policy may be made directly by BAM or by the Insurer’s Fiscal Agent on behalf of BAM. The Insurer’s Fiscal Agent is the agent of BAM only, and the Insurer’s Fiscal Agent shall in no event be liable to the Trustee, Paying Agent or any Owner for any act of the Insurer’s Fiscal Agent or any failure of BAM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.
To the fullest extent permitted by applicable law, BAM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to BAM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy may not be canceled or revoked.
This Policy sets forth in full the undertaking of BAM and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity.
THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT MUTUAL LIABILITY FOR ASSESSMENT.
In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMPANY has caused this Policy to be executed on its behalf by its Authorized Officer.
BUILD AMERICA MUTUAL ASSURANCE COMPANY
By: _______________________________________
Authorized Officer
Notices (Unless Otherwise Specified by BAM)
Email:
[email protected]
Address:
200 Liberty Street, 27th floor
New York, New York 10281
Telecopy:
212-962-1524 (attention: Claims)
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Stradling Yocca Carlson & Rauth LLP 03/01/24
05/21/24
08/04/24
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10/04/24
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12/20/24
DEBT SERVICE RESERVE AGREEMENT
DEBT SERVICE RESERVE AGREEMENT, dated as of February 1, 2025 (the “Agreement”), by and between the CITY OF RIDGECREST (the “City”) and BUILD AMERICA MUTUAL ASSURANCE COMPANY (“BAM”).
In consideration of the issuance by BAM of its Municipal Bond Debt Service Reserve Insurance Policy No. 2025R___ (the “Reserve Policy”) with respect to the $_____ Certificates of Participation (2025 Aquatics Facility Financing Project) (the “Certificates”) evidencing direct, undivided fractional interests of the owners thereof in lease payments to be made by the City, as the rental for certain property pursuant to a lease agreement with the Public Property Financing Corporation of California (the “Corporation”) delivered under the Trust Agreement, dated as of February 1, 2025 (the “Trust Agreement”), by and among the City, Corporation and U.S. Bank Trust Company, National Association, as trustee (the “Trust Agreement”), which Certificates are payable from lease payments of the City under the Lease Agreement dated as of February 1, 2025 (the “Lease Agreement”), by and between the Corporation and the City and the other revenue and collateral described in the Trust Agreement, and the payment to BAM of the premium for the Reserve Policy, the City and BAM hereby covenant and agree as follows:
1. The City shall repay BAM any draws under the Reserve Policy and pay all Administrative Expenses (as defined below) incurred by BAM. Interest shall accrue and be payable on such draws and expenses from the date of payment by BAM at the Late Payment Rate. “Late Payment Rate” means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 5%, and (ii) the then applicable highest rate of interest with respect to the Certificates and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate, the Prime Rate shall be the prime or base-lending rate of such national bank as BAM shall designate.
2. Repayment of draws and payment of Administrative Expenses and the interest accrued thereon at the Late Payment Rate (collectively, “Policy Costs”) shall commence in the first month following each draw and each such monthly payment shall be in an amount at least equal to 1/12th of the aggregate of Policy Costs related to such draw; provided, however, that all such payments shall be due prior to termination of the Lease Agreement. Amounts in respect of Policy Costs paid to BAM shall be credited first to interest due, then to the expenses due and then to principal due.
3. As and to the extent that payments are made to BAM on account of principal due, the coverage under the Reserve Policy will be reinstated by a like amount, subject to the terms of the Reserve Policy.
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4. All cash and investments in the debt service reserve fund or account securing the Certificates (the “Reserve Fund”) shall be transferred to the debt service fund for payment of debt service with respect to the Certificates before any drawing may be made on the Reserve Policy or on any alternative credit instrument. Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all alternative credit instruments (including the Reserve Policy) on which there is available coverage shall be made on a pro rata basis (calculated by reference to available coverage under each such alternative credit instrument) after applying available cash and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to alternative credit instruments shall be made on a prorata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, “available coverage” means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw.
5. Draws on the Reserve Policy may only be used to make payments with respect to the Certificates (and for the avoidance of doubt, not any other obligations of the City, whether issued on parity with the Lease Agreement, or otherwise).
6. If the City shall fail to pay any Policy Costs in accordance with the requirements of the Lease Agreement and this Agreement, BAM shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Lease Agreement and the Trust Agreement, other than (i) acceleration of the maturity of the Certificates or (ii) remedies which would adversely affect owners of the Certificates.
7. The Lease Agreement and the Trust Agreement shall not be discharged until all Policy Costs owing to BAM shall have been paid in full. The City’s obligation to pay such amounts shall expressly survive payment in full of the Certificates.
8. In order to secure the City’s payment obligations with respect to the Policy Costs, there is hereby granted and perfected in favor of BAM a security interest (subordinate only to that of the owners of the Certificates) in all revenues and collateral pledged as security for the payment obligations of the City under the Lease Agreement.
9. The City shall direct the Trustee to ascertain the necessity for a claim upon the Reserve Policy in accordance with the provisions of paragraph 4 hereof and to provide notice to BAM in accordance with the terms of the Reserve Policy at least five business days prior to each date upon which interest or principal is due with respect to the Certificates. Where deposits are required to be made by the City with the Trustee to the debt service fund for the Certificates more often than semi-annually, the Trustee shall give notice to BAM of any failure of the City to make timely payment in full of such deposits within two business days of the date due.
10. The City agrees unconditionally that it will pay or reimburse BAM on demand any and all reasonable charges, fees, costs, losses, liabilities and expenses that BAM may pay or incur, including, but not limited to, fees and expenses of BAM’s agents, attorneys, accountants, consultants, appraisers and auditors and reasonable costs of investigations, in connection with the administration (including waivers and consents, if any), enforcement, defense, exercise or preservation of any rights and remedies in respect of this Agreement, the Trust Agreement and any other document executed in connection with the Certificates (“Administrative Expenses”).
For purposes of the foregoing, costs and expenses shall include a reasonable allocation of compensation and overhead attributable to the time of employees of BAM spent in connection with the actions described in the preceding sentence. The City agrees that failure to pay any Administrative Costs on a timely basis will result in the accrual of interest on the unpaid amount -3-
at the Late Payment Rate, compounded semi-annually, from the date that payment is first due to BAM until the date BAM is paid in full.
11. The obligation of the City to pay all amounts due under this Agreement shall be an absolute and unconditional obligation of the City and will be paid or performed strictly in accordance with this Agreement.
12. So long as a default or event of default has occurred and is continuing under this Agreement, the Trust Agreement or any other document executed in connection with the Certificates, the City shall not be eligible for a dividend or any other economic benefit under BAM’s organizational documents.
13. The Reserve Policy shall terminate on the earlier to occur of June 1, 2034, and the date the Certificates are no longer outstanding under the Trust Agreement.
14. Any amendment, supplement, modification to, or waiver of, the Trust Agreement and Lease Agreement that requires the consent of owners of the Certificates or adversely affects the rights or interests of BAM shall be subject to the prior written consent of BAM.
15. The City shall fully observe, perform, and fulfill each of the provisions, covenants and agreements (as each of those provisions, covenants and agreements may be amended, supplemented, modified or waived with, if required, the prior written consent of BAM) of the Lease Agreement applicable to it, with each of such provisions, covenants and agreements being expressly incorporated into this Agreement by reference solely for the benefit of BAM as if set forth directly herein.
16. Notices and Other Information to be given to BAM.
a. The City will provide, or cause the Trustee to provide, BAM with all notices and other information it is obligated to provide (i) under its Continuing Disclosure Certificate and (ii) to the owners of the Certificates or the Trustee under the Trust Agreement or any other document executed in connection with the Certificates. b. In addition, the City shall provide, or cause the Trustee to provide, BAM with the following notices and other information: (i) notice of any draw upon the Reserve Fund within two (2) business days after knowledge thereof, other than in connection with withdrawals of amounts in excess of the Reserve Requirement; and (ii) notice of the advance refunding or optional redemption of any of the Certificates, including the principal amount, maturities and CUSIP numbers thereof within thirty (30) days of posting to EMMA.
c. BAM shall be entitled to receive such additional information as it may reasonably request.
17. Notices to BAM shall be sent to the following address (or such other address as BAM may designate in writing): Build America Mutual Assurance Company, 200 Liberty Street, 27th Floor, New York, NY 10281, Attention: Surveillance, Re: Policy No. 2024R____, Telephone: (212) 235-2500, Telecopier: (212) 962-1710, Email: [email protected]; with a copy of such notice or other communication sent to the attention of the General Counsel at the same address and at [email protected] or at Telecopier: (212) 962-1524.
18. The City agrees that any disclosure document or other document relating to the execution, delivery and sale of the Certificates shall not contain any reference to BAM or the -4-
Reserve Policy, except as may be approved by BAM; provided, however, BAM acknowledges that it has been provided with a copy of the Official Statement dated November 15, 2024, and hereby approves of the references to BAM contained therein.
19. If any one or more of the agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such agreements, provisions or terms shall be deemed severable from the remaining agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. In the event of any conflict in the terms of this Agreement and the Trust Agreement, the terms of this Agreement shall control.
20. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.
21. This Agreement may be executed in counterparts, each of which alone and all of which together shall be deemed one original Agreement.
22. This Agreement and the rights and obligations of the parties to the Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California.
IN WITNESS WHEREOF, each of the parties hereto has duly executed and delivered this Agreement as of the date first above written.
CITY OF RIDGECREST
By
Ronald Strand
City Manager
BUILD AMERICA MUTUAL ASSURANCE
COMPANY
By
Name
Title
Stradling Yocca Carlson & Rauth LLP 03/01/24
05/21/24
08/04/24
08/26/24
10/04/24
11/18/24
12/20/24
18035.03
AFTER RECORDATION PLEASE RETURN TO:
Stradling Yocca Carlson & Rauth LLP
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Attention: Brian D. Quint, 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 FACILITY LEASE
Dated as of February 1, 2025
by and between the
CITY OF RIDGECREST, as Lessor
and the
PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA, as Lessee (2024 Aquatics Facility Financing Project)
SITE AND FACILITY LEASE
THIS SITE AND FACILITY LEASE (this “Site and Facility Lease”), dated as of February 1, 2025, is by and between the CITY OF RIDGECREST, a municipal corporation and general law city duly organized and existing under and by virtue of the laws of the State of California, as lessor (the “City”), and the PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA, a nonprofit public benefit corporation organized and existing under the laws of the State of California, as lessee (the “Corporation”); WITNESSETH:
WHEREAS, the Corporation intends to assist the City to finance the cost of constructing and equipping a new aquatics facility (the “Project”), by leasing certain land and improvements to The City pursuant to a Lease Agreement, dated as of February 1, 2025, a memorandum of which is recorded concurrently herewith (the “Lease Agreement”); and WHEREAS, The City proposes to enter into this Site and Facility Lease with the Corporation as a material consideration for the Corporation’s agreement to lease such land and improvements to The City;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED, as follows:
Section 1. Definitions. Capitalized terms used, but not otherwise defined, in this Site and Facility Lease shall have the meanings ascribed to them in the Lease Agreement.
Section 2. Site and Facility Lease. The City hereby leases to the Corporation and the Corporation hereby leases from The City, on the terms and conditions hereinafter set forth, those certain parcels of real property situated in Kern County, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (collectively, the “Site”), and those certain improvements located on the Site, more particularly described in Exhibit B attached hereto and made a part hereof (collectively, the “Facility” and, with the Site, the “Property”). By virtue of the 2018 Site and Facility Lease and the 2018 Lease Agreement, the lease of the Civic Center portion of the Property pursuant to this Site and Facility Lease is effectively a sub-sublease.
Section 3. Term. The term of this Site and Facility Lease shall commence on the Closing Date, and shall end on June 1, 2034, unless the Term of the Lease Agreement is extended as hereinafter provided. If, on June 1, 2034, the Trust Agreement shall not be discharged by its terms or if the Lease Payments or Additional Payments, if any, payable under the Lease Agreement shall have been abated at any time and for any reason, then the term of this Site and Facility Lease shall be extended without the need to execute any amendment to this Section 3 until there has been deposited with the Trustee an amount sufficient to pay all obligations due under the Lease Agreement, but in no event shall the term of this Site and Facility Lease extend beyond June 1, 2044. If, prior to June 1, 2034, the Trust Agreement shall be discharged by its terms, the term of this Site and Facility Lease shall thereupon end.
Notwithstanding the foregoing, the term of this Site and Facility Lease shall not end so long as any amounts are owed to the Municipal Bond Insurer with respect to the Municipal Bond Insurance Policy or the Reserve Policy (as such capitalized terms are defined in the Lease Agreement).
Section 4. Advance Rental Payment. The City agrees to lease the Site and the Facility to the Corporation in consideration of the payment by the Corporation of an advance rental -2-
payment of _________________ dollars ($_____). The City and the Corporation agree that by reason of the sale of the Certificates and deposit of proceeds pursuant to the provisions of the Trust Agreement, dated as of February 1, 2025, by and among The City, the Corporation and U.S. Bank Trust Company, National Association, as trustee thereunder (the “Trust Agreement”), the advance rental payment referenced in the preceding sentence shall be deemed to have been paid.
Section 5. Purpose. The Corporation shall use the Site and the Facility solely for the purpose of leasing the Site and the Facility to The City pursuant to the Lease Agreement and for such purposes as may be incidental thereto; provided, however, that in the event of default by The City under the Lease Agreement, the Corporation and its assigns may exercise the remedies provided in the Lease Agreement.
Section 6. City’s Interest in the Site and the Facility. The City covenants that it is the owner in fee of the Site and the Facility.
Section 7. Assignments and Subleases. Unless The City shall be in default under the Lease Agreement, the Corporation may not assign its rights under this Site and Facility Lease or sublet the Site or the Facility, except as provided in the Lease Agreement, without the prior written consent of the District and the Municipal Bond Insurer.
Section 8. Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Site and the Facility at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof.
Section 9. Termination. The Corporation agrees, upon the termination of this Site and Facility Lease, to quit and surrender the Site and the Facility in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements and structures existing upon the Site at the time of the termination of this Site and Facility Lease shall remain thereon and title thereto shall vest in The City.
Section 10. Default. In the event the Corporation shall be in default in the performance of any obligation on its part to be performed under the terms of this Site and Facility Lease, which default continues for thirty (30) days following notice and demand for correction thereof to the Corporation, The City may exercise any and all remedies granted by law, except that no merger of this Site and Facility Lease and of the Lease Agreement shall be deemed to occur as a result thereof and The City shall have no right to terminate this Site and Facility Lease as a remedy for such default; provided, however, that so long as any Certificates are Outstanding and unpaid in accordance with the terms thereof, the Lease Payments assigned by the Corporation to the Trustee under the Assignment Agreement shall continue to be paid to the Trustee.
Section 11. Quiet Enjoyment. The Corporation, at all times during the term of this Site and Facility Lease, shall peaceably and quietly have, hold and enjoy all of the Site subject to the provisions of the Lease Agreement and the Trust Agreement.
Section 12. Waiver of Personal Liability. All liabilities under this Site and Facility Lease on the part of the Corporation are solely liabilities of the Corporation and The City hereby releases each and every, member, director, officer, employee and agent of the Corporation of and from any personal or individual liability under this Site and Facility Lease. No member, director, officer, employee or agent of the Corporation shall at any time or under any circumstances be individually or personally liable under this Site and Facility Lease for anything done or omitted to be done by the Corporation hereunder. -3-
Section 13. Taxes. All assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Site and the Facility (including both land and improvements) will be paid in accordance with the Lease Agreement.
Section 14. Eminent Domain. In the event the whole or any part of the Site or the Facility thereon is taken by eminent domain proceedings, the interest of the Corporation shall be recognized and is hereby determined to be the amount of then unpaid Certificates including the unpaid principal and interest with respect to any then outstanding Certificates and, subject to the provisions of the Lease Agreement and payment of all amounts owed to the Municipal Bond Insurer, the balance of the award, if any, shall be paid to The City.
Section 15. Use of the Proceeds. The City and the Corporation hereby agree that the lease to the Corporation of The City’s right and interest in the Site and the Facility pursuant to Section 2 serves the public purposes of The City by providing funds to enable The City to finance the 2024 Project.
Section 16. Partial Invalidity. If any one or more of the terms, provisions, covenants or conditions of this Site and Facility Lease shall, to any extent, be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding, order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site and Facility Lease shall be affected thereby, and each provision of this Site and Facility Lease shall be valid and enforceable to the fullest extent permitted by law.
Section 17. Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered mail, return receipt requested, postage prepaid, and, if to the City, addressed to The City in care of the City Manager, City of Ridgecrest, 100 West California Avenue, Ridgecrest, CA 93555, or if to the Corporation, addressed to the Corporation in care of the Secretary, Public Property Financing Corporation of California, 2945 Townsgate Road, Suite 200, Westlake Village, CA 91361, if to the Municipal Bond Insurer, addressed to Build America Mutual Assurance Company, 200 Liberty Street, 27th Floor, New York, NY 10281, Attention: Surveillance, Re: Policy No. 2024B____/Reserve Policy No. 2024R___, or to such other addresses as the respective parties may from time to time designate by notice in writing.
Section 18. Municipal Bond Insurer as Third Party Beneficiary. To the extent that this Site and Facility Lease confers upon or give or grant to the Municipal Bond Insurer any right, remedy or claim under or by reason of the Trust Agreement or the Lease Agreement, the Municipal Bond Insurer is explicitly recognized as being a third party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder.
Section 19. Binding Effect. This Site and Facility Lease shall inure to the benefit of and shall be binding upon The City and the Corporation and their respective successors and assigns.
Section 20. Amendment. This Site and Facility Lease may not be amended except as permitted under Section 10.01 of the Trust Agreement.
Section 21. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site and Facility Lease.
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Section 22. Applicable Law. This Site and Facility Lease shall be governed by and construed in accordance with the laws of the State of California.
Section 23. Execution in Counterparts. This Site and Facility Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument.
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S-1
[Signature page to Site and Facility Lease]
IN WITNESS WHEREOF, The City and the Corporation have caused this Site and Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.
CITY OF RIDGECREST
By
Ronald Strand
City Manager
PUBLIC PROPERTY FINANCING
CORPORATION OF CALIFORNIA
By
Stefan A. Morton
Treasurer
[NOTARY ACKNOWLEDGMENTS TO BE ATTACHED]
Exhibit A
EXHIBIT A
DESCRIPTION OF THE SITE
The land referred to herein is situated in the State of California, County of Kern and described as follows:
Civic Center Complex Site
A PARCEL LOCATED IN THE NORTH HALF OF THE NORTHEAST QUARTER OF SECTION 4, TOWNSHIP 27 SOUTH, RANGE 40 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE CITY OF RIDGECREST, COUNTY OF KERN, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID SECTION 4; THENCE ON THE EAST SECTION LINE OF SAID SECTION 4, SOUTH 0° 52' 10" WEST 280.024 FEET; THENCE NORTH 89° 52' 50" WEST 275.024 FEET TO THE NORTHWEST CORNER OF TRACT 1846, BEING THE TRUE POINT OF BEGINNING; THENCE FROM SAID TRUE POINT OF BEGINNING SOUTH 0° 52' 18" WEST 830.78 FEET; THENCE SOUTH 45° 22' 33" WEST 14.26 FEET; THENCE SOUTH 89° 52' 46" WEST 1013.15 FEET; THENCE NORTH 0° 54' 00" EAST 780.84 FEET TO A POINT 340 FEET SOUTH OF THE NORTH SECTION LINE OF SAID SECTION 4; THENCE PARALLELING SAID NORTH SECTION LINE OF SAID SECTION 4, NORTH 89° 53' 00" EAST 298.20 FEET; THENCE PARALELLING THE EAST SECTION LINE OF SAID SECTION 4, NORTH 0° 52' 18" EAST 60.01 FEET TO A POINT 280 FEET SOUTH OF SAID NORTH SECTION LINE OF SAID SECTION 4; THENCE PARALLELING SAID NORTH SECTION LINE OF SAID SECTION 4, NORTH 89° 53' 00" EAST 724.56 FEET, MORE OR LESS, TO THE TRUE POINT OF BEGINNING.
EXCEPTING THEREFROM ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, MINERALS
AND WATER WITHIN OR UNDERLYING SAID LAND, PROVIDED, HOWEVER, GRANTOR HEREIN,
THEIR SUCCESSORS AND ASSIGNS, SHALL NOT CONDUCT DRILLING OR OTHER OPERATIONS
UPON THE SURFACE OF SAID LAND, BUT NOTHING HEREIN CONTAINED SHALL BE DEEMED
TO PREVENT SAID GRANTOR, THEIR SUCCESSORS AND ASSIGNS, FROM EXTRACTING OR
CATURING SAID OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES, MINERALS
AND WATER FROM SAID LAND BY DRILLING ON ADJACENT OR NEIGHBORING LANDS AT A DEPTH OF 100 FEET OR MORE BELOW THE SURFACE OF SAID LAND, AS RESERVED IN DEED BY
KERR-MC GEE CHEMICAL CORPORATION, A DELAWARE CORPORATION, RECORDED DECEMBER 6, 1988 IN BOOK 6187 PAGE 2384 OF OFFICIAL RECORDS, DOCUMENT NO. 64323.
APN: 478-010-07
Exhibit B
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Facility consists of the City’s Civic Center Complex.
The Civic Center Complex is located on a portion of the Site at 100 West California Avenue, Ridgecrest, California, and includes the following improvements:
City Hall. The Ridgecrest City Hall, completed in late-1989, is a two story, 41,600 square foot building that houses all of the City’s departments plus the City Council Chambers.
Community Center/Meeting Complex/Recreation Complex. The Community Center, also competed in late1989, contains 40,300 square feet with assembly spaces, public building spaces, a full-service kitchen, an aerobics room, handball courts, basketball courts, craft rooms, day care facilities and offices.
Stradling Yocca Carlson & Rauth LLP 03/01/24
05/21/24
08/04/24
08/26/24
10/04/24
11/18/24
12/20/24
TRUST AGREEMENT
Dated as of February 1, 2025
by and among
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee, the
PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA
and the
CITY OF RIDGECREST
(2025 Aquatics Facility Financing Project)
-iTABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions ..................................................................................................................................................................2 Section 1.02. Authorization .............................................................................................................................................................2 Section 1.03. Interpretation .............................................................................................................................................................2 Section 1.04. Exhibits .......................................................................................................................................................................2
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization .............................................................................................................................................................3 Section 2.02. Date; Payment of Interest .........................................................................................................................................3 Section 2.03. Maturity; Interest Rates; Percentages .....................................................................................................................3 Section 2.04. Interest ........................................................................................................................................................................3 Section 2.05. Forms ...........................................................................................................................................................................4 Section 2.06. Execution ....................................................................................................................................................................4 Section 2.07. Application of Proceeds ...........................................................................................................................................4 Section 2.08. Transfer and Exchange .............................................................................................................................................4 Section 2.09. Certificates Mutilated, Lost, Destroyed or Stolen .................................................................................................5 Section 2.10. Payment ......................................................................................................................................................................5 Section 2.11. Execution of Documents and Proof of Ownership ...............................................................................................6 Section 2.12. Registration Books ....................................................................................................................................................6 Section 2.13. CUSIP Numbers ........................................................................................................................................................6 Section 2.14. Use of Depository ......................................................................................................................................................6
ARTICLE III
ESTABLISHMENT AND DISBURSEMENT OF DELIVERY COSTS FUND AND THE PROJECT FUND Section 3.01. Delivery Costs Fund .................................................................................................................................................9 Section 3.02. Payment of Delivery Costs ......................................................................................................................................9 Section 3.03. Project Fund ...............................................................................................................................................................9 Section 3.04. Payment of Project Costs ..........................................................................................................................................9
ARTICLE IV
REDEMPTION OF CERTIFICATES
Section 4.01. Redemption ..............................................................................................................................................................11 Section 4.02. Selection of Certificates for Redemption .............................................................................................................11 Section 4.03. Notice of Redemption .............................................................................................................................................11 Section 4.04. Partial Redemption of Certificate .........................................................................................................................12 Section 4.05. Purchase of Certificates ..........................................................................................................................................12
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease Agreement .........................................................................................................14 Section 5.02. Establishment of Lease Payment Fund ................................................................................................................14 Section 5.03. Deposits ....................................................................................................................................................................14 Section 5.04. Application of Moneys ...........................................................................................................................................14 Section 5.05. Surplus ......................................................................................................................................................................14
ARTICLE VI
RESERVE FUND
Section 6.01. Establishment of Reserve Fund .............................................................................................................................15 Section 6.02. Deposits ....................................................................................................................................................................15 Section 6.03. Transfers of Excess ..................................................................................................................................................15 Section 6.04. Application in Event of Deficiency in the Lease Payment Fund ......................................................................15 Section 6.05. Transfer to Make All Lease Payments ..................................................................................................................16 -iiARTICLE VII
INSURANCE AND CONDEMNATION FUND; INSURANCE; EMINENT DOMAIN; TITLE INSURANCE Section 7.01. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award ..............................................................................................................................................................18 Section 7.02. Application of Net Proceeds of Eminent Domain Award ................................................................................19 Section 7.03. Application of Net Proceeds of Title Insurance Award ....................................................................................19 Section 7.04. Cooperation ..............................................................................................................................................................19
ARTICLE VIII
MONEYS IN FUNDS; INVESTMENT
Section 8.01. Held in Trust ............................................................................................................................................................21 Section 8.02. Investments Authorized .........................................................................................................................................21 Section 8.03. Accounting ...............................................................................................................................................................21 Section 8.04. Allocation of Earnings ............................................................................................................................................22 Section 8.05. Acquisition, Disposition and Valuation of Investments ...................................................................................22
ARTICLE IX
THE TRUSTEE
Section 9.01. Appointment of Trustee .........................................................................................................................................23 Section 9.02. Acceptance of Trusts ...............................................................................................................................................23 Section 9.03. Fees, Charges and Expenses of Trustee ...............................................................................................................27 Section 9.04. Notice to Owners of Default ..................................................................................................................................28 Section 9.05. Intervention by Trustee ..........................................................................................................................................28 Section 9.06. Removal of Trustee .................................................................................................................................................28 Section 9.07. Resignation by Trustee ...........................................................................................................................................28 Section 9.08. Appointment of Successor Trustee .......................................................................................................................28 Section 9.09. Merger or Consolidation ........................................................................................................................................28 Section 9.10. Concerning any Successor Trustee .......................................................................................................................29
ARTICLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
Section 10.01. Amendments Permitted .......................................................................................................................................30 Section 10.02. Procedure for Amendment with Written Consent of Owners .......................................................................31 Section 10.03. Disqualified Certificates .......................................................................................................................................31 Section 10.04. Effect of Supplemental Agreement .....................................................................................................................32 Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments ..............................................32 Section 10.06. Amendatory Endorsement of Certificates .........................................................................................................32
ARTICLE XI
COVENANTS
Section 11.01. Compliance with and Enforcement of Lease Agreement ................................................................................33 Section 11.02. Observance of Laws and Regulations ................................................................................................................33 Section 11.03. Prosecution and Defense of Suits ........................................................................................................................33 Section 11.04. Recordation and Filing .........................................................................................................................................33 Section 11.05. Budgets ...................................................................................................................................................................33 Section 11.06. Further Assurances ...............................................................................................................................................34 Section 11.07. Satisfaction of Conditions Precedent ..................................................................................................................34 Section 11.08. Continuing Disclosure ..........................................................................................................................................34
ARTICLE XII
LIMITATION OF LIABILITY
Section 12.01. Limited Liability of City .......................................................................................................................................35 Section 12.02. No Liability of City or Corporation for Trustee Performance ........................................................................35 Section 12.03. Indemnification of Trustee ...................................................................................................................................35 Section 12.04. Limitation of Rights to Parties and Owners ......................................................................................................36 -iiiARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS
Section 13.01. Assignment of Rights ............................................................................................................................................37 Section 13.02. Remedies ................................................................................................................................................................37 Section 13.03. Application of Funds ............................................................................................................................................37 Section 13.04. Institution of Legal Proceedings .........................................................................................................................38 Section 13.05. Non-waiver ............................................................................................................................................................38 Section 13.06. Remedies Not Exclusive. ......................................................................................................................................38 Section 13.07. Power of Trustee to Control Proceedings ..........................................................................................................38 Section 13.08. Limitation on Owners’ Right to Sue ...................................................................................................................39 Section 13.09. Parties Interested Herein ......................................................................................................................................39
ARTICLE XIV
PROVISIONS RELATING TO THE MUNICIPAL BOND INSURER AND THE MUNICIPAL BOND
INSURANCE POLICY
Section 14.01. Notices and Other Information ...........................................................................................................................40 Section 14.02. Defeasance ..............................................................................................................................................................40 Section 14.03. Trustee-Related Provisions ..................................................................................................................................41 Section 14.04. Amendments and Supplements ..........................................................................................................................41 Section 14.05. The Municipal Bond Insurer as Third Party Beneficiary .................................................................................42 Section 14.06. Control Rights of the Municipal Bond Insurer .................................................................................................42 Section 14.07. Consent Rights of the Municipal Bond Insurer ................................................................................................43 Section 14.08. Payment Procedures Under the Municipal Bond Insurance Policy ..............................................................43 Section 14.09. Additional Payments ............................................................................................................................................45
ARTICLE XV
MISCELLANEOUS
Section 15.01. Defeasance ..............................................................................................................................................................46 Section 15.02. Records ...................................................................................................................................................................47 Section 15.03. Notices ....................................................................................................................................................................47 Section 15.04. Governing Law ......................................................................................................................................................47 Section 15.05. Binding Effect; Successors ....................................................................................................................................47 Section 15.06. Execution in Counterparts ...................................................................................................................................48 Section 15.07. Destruction of Canceled Certificates ..................................................................................................................48 Section 15.08. Headings .................................................................................................................................................................48 Section 15.09. Waiver of Notice ....................................................................................................................................................48 Section 15.10. Payments Due on Other than Business Day .....................................................................................................48 Section 15.11. Payment of Unclaimed Moneys ..........................................................................................................................48 Section 15.12. U.S.A. Patriot Act ..................................................................................................................................................48 Section 15.13. Waiver of Jury Trial ..............................................................................................................................................49 Section 15.12. Separability of Invalid Provisions .......................................................................................................................49 EXHIBIT A: DEFINITIONS
EXHIBIT B: FORM OF THE CERTIFICATES
EXHIBIT C: DESCRIPTION OF THE PROJECT
TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of February 1, 2025, by and among U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”), the PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA, a nonprofit public benefit corporation organized and existing under the laws of the State of California (the “Corporation”), and the CITY OF RIDGECREST, a municipal corporation and general law city, organized and existing under the laws of the State of California (the “City”); WITNESSETH:
WHEREAS, the City and the Corporation have entered into a lease agreement, dated as of the date hereof (the “Lease Agreement”), whereby the Corporation has agreed to lease certain real property and improvements (collectively, the “Property”) to the City and the City has agreed to lease the Property from the Corporation;
WHEREAS, for the purpose of obtaining the moneys required to be deposited by it with the Trustee all for the purpose of enabling the City to finance the cost of constructing and equipping a new aquatics facility (the “Project”), the Corporation proposes to assign and transfer certain of its rights under the Lease Agreement to the Trustee, and the Trustee has agreed to execute and deliver certificates of participation, each evidencing a direct, fractional interest in lease payments made by the City under the Lease Agreement (the “Certificates”), to provide the moneys required herein to be deposited by the Corporation; and WHEREAS, the proceeds of the Certificates, together with other available moneys, will be applied by the City to (a) finance the Project, and (b) pay costs incurred in connection with the execution, delivery and sale of the Certificates, including to pay the premiums for the municipal bond insurance policy and the reserve fund municipal bond insurance policy to be issued by Build America Mutual Assurance Company;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions . The terms defined in Exhibit A attached hereto and by this reference incorporated herein, as used and capitalized herein, shall, for all purposes of this Trust Agreement, have the meanings ascribed to them in said Exhibit A unless the context clearly requires some other meaning.
Section 1.02. Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement and has taken all actions necessary to authorize the execution of this Trust Agreement by the officers and persons signing it.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean 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 shall 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 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.
Section 1.04. Exhibits. The following exhibits are attached to, and by reference made a part of, this Trust Agreement:
EXHIBIT A: DEFINITIONS
EXHIBIT B: FORM OF THE CERTIFICATES
EXHIBIT C: DESCRIPTION OF THE PROJECT
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ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization. The Trustee is hereby authorized and directed upon written request from the Corporation to execute and deliver, to the Original Purchaser identified in such written request, Certificates in an aggregate principal amount of ______________ dollars ($_____) evidencing direct, undivided fractional interests of the Owners thereof in the Lease Payments. In no event shall such Certificates be deemed an obligation, liability or debt of the Trustee.
Section 2.02. Date; Payment of Interest. Each Certificate shall be dated as of the Closing Date. Interest with respect thereto shall be payable from the Interest Payment Date next preceding the date of execution thereof, unless: (i) it is executed as of an Interest Payment Date, in which event interest with respect thereto shall be payable from such Interest Payment Date; or (ii) it is executed after a Regular Record Date and before the following Interest Payment Date, in which event interest with respect thereto shall be payable from such Interest Payment Date; or (iii) it is executed on or before May 15, 2025, in which event interest with respect thereto shall be payable from the Closing Date; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to any Outstanding Certificates, interest represented by such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding Certificates. Payment of defaulted interest shall be paid by wire or check mailed to the Owners as of a special record date to be fixed by the Trustee, notice of which shall be given to the Owners not less than ten (10) days prior to such special record date.
Section 2.03. Maturity; Interest Rates; Percentages.
(a) Maturity; Interest Rates. The Certificates shall mature on June 1 in each of the respective years, and in the respective amounts, except that no Certificate may have principal maturing in more than one year, and interest represented thereby shall be computed at the respective rates, as follows:
Maturity Date Principal Interest
(June 1) Amount Rate
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
(b) Payments with Respect to Certificates Equal to Total Lease Payments. The total principal and interest due with respect to all Certificates shall not exceed the total Lease Payments due under the Lease Agreement.
Section 2.04. Interest. Interest represented by the Certificates shall be payable on each Interest Payment Date to and including the date of maturity or redemption, whichever is earlier, as provided in Section 2.10 hereof. Said interest shall represent the portion of Lease -4-
Payments designated as interest and coming due during the six-month period preceding each Interest Payment Date. The portion of Lease Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Lease Payments designated as principal with respect to such Certificate by the rate of interest applicable to such Certificate (on the basis of a 360-day year of twelve 30-day months).
Section 2.05. Forms. The Certificates shall be delivered in the form of fully registered Certificates without coupons in the denomination of $5,000 or any integral multiple thereof. The Certificates shall be numbered consecutively, beginning with R-1. The Certificates shall be substantially in the form set forth in Exhibit B attached hereto and by this reference incorporated herein.
Section 2.06. Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of an authorized officer or signatory of the Trustee. If any officer or signatory whose signature appears on any Certificate ceases to be such officer or signatory before the date of delivery of said Certificate, such signature shall nevertheless be as effective as if the officer or signatory had remained in office until such date.
Section 2.07. Application of Proceeds. The net proceeds received by the Trustee from the sale of the Certificates in the aggregate amount of $__________, being the face amount of the Certificates ($_____.00), less an underwriter’s discount of $_________, plus an original issue premium of $_________, less $_________ paid by the Underwriter as an accommodation to the City to the Municipal Bond Insurer being the premium for the Municipal Bond Insurance Policy, less $___________ paid by the Underwriter as an accommodation to the City to the Municipal Bond Insurer being the premium for the Reserve Policy, shall forthwith be deposited by the Trustee in a temporary fund called the Proceeds Fund which the Trustee shall establish, maintain and hold in trust, and which shall be disbursed in full on the Closing Date (whereupon said temporary fund shall be closed) in the following respective funds:
(a) The Trustee shall deposit in the Delivery Costs Fund an amount equal to $_________, and
(b) The Trustee shall deposit in the Project Fund an amount equal to $__________.
Section 2.08. Transfer and Exchange.
(a) Transfer of Certificates. The registration of any Certificate may, in accordance with its terms, be transferred upon the Registration Books by the person in whose name it is registered, in person or by his attorney duly authorized in writing upon surrender of such Certificate for cancellation at the Designated Corporate Trust Office, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for registration of transfer, the Trustee shall execute and deliver a new Certificate or Certificates for like aggregate principal amount in authorized denominations. the City shall pay any costs of the Trustee incurred in connection with such transfer, except that the Trustee may require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. The Trustee shall not be required to transfer (i) any Certificates or portion thereof during the period between the date fifteen (15) days prior to the date of selection of Certificates for redemption and such date of selection, or (ii) any Certificates selected for redemption. (b) Exchange of Certificates. Certificates may be exchanged, upon surrender thereof, at the Designated Corporate Trust Office for a like aggregate principal amount of Certificates of other authorized denominations of the same maturity. Whenever any Certificate or Certificates shall -5-
be surrendered for exchange, the Trustee shall execute and deliver a new Certificate or Certificates for like aggregate principal amount in authorized denominations. the City shall pay any costs of the Trustee incurred in connection with such exchange, except that the Trustee may require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to exchange (i) any Certificate or any portion thereof during the period between the date fifteen (15) days prior to the date of selection of Certificates for redemption and such date of selection, or (ii) any Certificate selected for redemption.
(c) Information to Trustee. Prior to any transfer of the Certificates outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system), the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under section 6045 of the Code. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
Section 2.09. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute and deliver a new Certificate of like tenor, maturity and amount in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be canceled by it and destroyed with a certificate of destruction furnished to the City, upon its request. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft shall be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and if an indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Owner, shall execute and deliver a new Certificate of like tenor, maturity and amount and numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment by the City of the expenses which may be incurred by the Trustee in carrying out the duties under this Section 2.09. Any Certificate executed and delivered under the provisions of this Section 2.09 in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and fractionally entitled to the benefits of this Trust Agreement with all other Certificates secured by this Trust Agreement. The Trustee shall not be required to treat both the original Certificate and any replacement Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and replacement Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section 2.09, in lieu of delivering a new Certificate to replace a Certificate which has been mutilated, lost, destroyed or stolen, and which has matured or has been called for redemption, the Trustee may make payment with respect to such Certificate upon receipt of the aforementioned indemnity.
Section 2.10. Payment. Payment of interest due with respect to 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 Regular Record Date immediately preceding such Interest Payment Date, such interest to be paid by check mailed on the Interest Payment Date by first class mail to such Owner at his address as it appears on the Registration Books as of such Regular Record Date or, upon written request filed with the Trustee prior to the Regular Record Date by an Owner of at least $1,000,000 in aggregate principal amount of Certificates, by wire transfer in immediately available funds to an account in the United States designated by such Owner in such written request. Any such written request shall remain in effect until rescinded in writing by the Owner. The principal and redemption price with respect to the Certificates at maturity or -6-
upon prior redemption shall be payable by check denominated in lawful money of the United States of America upon surrender of the Certificates at the Designated Corporate Trust Office.
Section 2.11. 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 Owners may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Owners in person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Trust Agreement (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, stating that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority.
(b) The fact of the ownership of Certificates by any person and the amount, the maturity and the numbers of such Certificates and the date of his holding the same shall be proved by the Registration Books.
Any request or consent of the Owner of any Certificate shall bind every future Owner of the same Certificate in respect of anything done or suffered to be done by the Trustee pursuant to such request or consent.
Section 2.12. Registration Books. The Trustee shall keep or cause to be kept, at its Designated Corporate Trust Office, sufficient records for the registration and registration of transfer of the Certificates, which shall at all reasonable times be open to inspection by the City and the Corporation during regular business hours on any Business Day with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration Books, Certificates as hereinbefore provided.
Section 2.13. CUSIP Numbers. The Trustee, the City and the Corporation shall not be liable for any defect or inaccuracy in the CUSIP number that appears on any Certificate or in any redemption notice. The Trustee may, in its discretion, include in any redemption notice a statement to the effect that the CUSIP numbers on the Certificates have been assigned by an independent service and are included in such notice solely for the convenience of the Owners and that neither the Trustee, the City nor the Corporation shall be liable for any inaccuracies in such numbers.
Section 2.14. Use of Depository. Notwithstanding any provision of this Trust Agreement to the contrary:
(a) The Certificates shall be initially executed, delivered and registered in the name of “Cede & Co.,” as nominee of The Depository Trust Company, the depository designated by the Original Purchaser, and shall be evidenced by one Certificate maturing on each of the maturity -7-
dates set forth in Section 2.03 hereof to be in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such Certificates, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of The Depository Trust Company or its nominee, or of any substitute depository designated pursuant to paragraph (ii) of this subsection (a) (“substitute depository”); provided that any successor of The Depository Trust Company or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it;
(ii) to any substitute depository designated in a written request of the City, upon (A) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository or (B) a determination by the City that The Depository Trust Company or its successor is no longer able to carry out its functions as depository; provided that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or
(iii) to any person as provided below, upon (A) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository or (B) a determination by the City that The Depository Trust Company or its successor is no longer able to carry out its functions as depository; provided that no substitute depository which is not objected to by the City and the Trustee can be obtained.
(b) In the case of any transfer pursuant to paragraph (i) or paragraph (ii) of subsection (a) of this Section 2.14, upon receipt of all Outstanding Certificates by the Trustee, together with a written request of a City Representative to the Trustee, a single new Certificate shall be executed and delivered for each maturity of such Certificate then outstanding, registered in the name of such successor or such substitute depository or their nominees, as the case may be, all as specified in such written request of a City Representative. In the case of any transfer pursuant to paragraph (iii) of subsection (a) of this Section 2.14, upon receipt of all Outstanding Certificates by the Trustee together with a written request of a City Representative, new Certificates shall be executed and delivered in such denominations and registered in the names of such persons as are requested in a written request of the City provided the Trustee shall not be required to deliver such new Certificates within a period less than sixty (60) days from the date of receipt of such a written request of a City Representative. (c) In the case of partial redemption or an advance refunding of any Certificates evidencing all of the principal maturing in a particular year, The Depository Trust Company shall, at the City’s expense, deliver the Certificates to the Trustee for cancellation and reregistration to reflect the amounts of such reduction in principal. (d) the City and the Trustee shall be entitled to treat the person in whose name any Certificate is registered as the absolute Owner thereof for all purposes of this Trust Agreement and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the City and the City and the Trustee shall have no responsibility for the accuracy of any records maintained by DTC or any participant in DTC or transmitting payments to, communication with, notifying or otherwise dealing with any beneficial owners of the Certificates. Neither the City nor the Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including The Depository Trust Company or its successor (or substitute depository or its successor), except for the registered owner of any Certificate.
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(e) So long as all outstanding Certificates are registered in the name of Cede & Co. or its registered assign, the City and the Trustee shall reasonably cooperate with Cede & Co., as sole registered Owner, or its registered assign in effecting payment of the principal and interest due with respect to the Certificates by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due, in accordance with the Letter of Representations between DTC and the City. (f) So long as all Outstanding Certificates are registered in the name of Cede & Co. or its registered assigns (hereinafter, for purposes of this paragraph (f), the “Owner”):
(i) All notices and payments addressed to the Owners shall contain the Certificates’ CUSIP number.
(ii) Notices to the Owner shall be forwarded in the manner set forth in the form of DTC’s standard form blanket issuer letter of representations executed by the City and received and accepted by DTC.
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ARTICLE III
ESTABLISHMENT AND DISBURSEMENT OF DELIVERY COSTS FUND AND
THE PROJECT FUND
Section 3.01. Delivery Costs Fund. The Trustee shall establish a special fund designated as the “Delivery Costs Fund;” shall keep such fund separate and apart from all other funds and moneys held by it; and shall administer such fund as provided herein. There shall be deposited in the Delivery Costs Fund the proceeds of sale of the Certificates required to be deposited therein pursuant to Section 2.07(b) hereof and any other funds from time to time deposited with the Trustee for such purpose and identified in writing to the Trustee.
Section 3.02. Payment of Delivery Costs. The moneys in the Delivery Costs Fund shall be disbursed by the Trustee to pay the Delivery Costs.
(a) The Trustee shall disburse moneys in the Delivery Costs Fund only upon a receipt of a sequentially numbered requisition, signed by a City Representative, setting forth the amounts to be disbursed for payment or reimbursement of Delivery Costs and the name and address of the person or persons to whom said amounts are to be disbursed, stating that the amounts to be disbursed are for Delivery Costs properly chargeable to the Delivery Costs Fund. (b) The Trustee shall be responsible for the safekeeping and investment (in accordance with Section 8.02 hereof) of the moneys held in the Delivery Costs Fund and the payment thereof in accordance with this Section 3.02, but 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.
(c) Upon written notice from a City Representative that all Delivery Costs have been paid, but in no event later than February 27, 2025, the Trustee shall transfer any moneys then remaining in the Delivery Costs Fund to the Project Fund and applied for the purposes thereof, the Delivery Costs Fund shall be closed, the Trustee shall no longer be obligated to make payments for Delivery Costs and all further Delivery Costs shall be paid by the City.
Section 3.03. Project Fund. The Trustee shall establish a special fund designated as the “Project Fund,” shall keep such fund separate and apart from all other funds and moneys held by it; and shall administer such fund as provided herein. There shall be deposited in the Project Fund from the proceeds of the Certificates the amount required to be deposited therein pursuant to Section 2.07(c) hereof, together with any other amounts from time to time deposited with the Trustee for such purpose as may be identified in writing to the Trustee.
Section 3.04. Payment of Project Costs. Amounts in the Project Fund shall be disbursed for Project Costs. Disbursements from the Project Fund shall be made by the Trustee upon receipt of a sequentially numbered requisition requesting disbursement executed by a City Representative. Each such requisition shall:
(a) set forth the amounts to be disbursed for payment or reimbursement of previous payments of Project Costs and the person or persons to whom said amounts are to be disbursed; (b) state that the amounts to be disbursed constitute Project Costs, that said amounts are required to be disbursed pursuant to a contract entered into therefor by or on behalf of the City, or were necessarily and reasonably incurred, and that said amounts are not being paid in advance of the time, if any, fixed for payment;
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(c) state that no amount set forth in the requisition was included in any requisition requesting disbursement previously filed with the Trustee pursuant to this Section 3.04; and (d) state that there has been compliance with Section 5.11 of the Lease Agreement relating to the private use limitation and the private loan limitation.
The Trustee shall be responsible for the safekeeping and investment (in accordance with Section 8.02 hereof) of the moneys held in the Project Fund and the payment thereof in accordance with this Section 3.04, but 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.
Upon the filing with the Trustee of a Written Certificate of the City stating that the Project has been completed, the Trustee shall withdraw any remaining amounts then on deposit in the Project Fund and, at the direction of the City, either (i) transfer such amounts to the Lease Payment Fund and applied to the payment of interest with respect to the Certificates, or (ii) apply such amount to the redemption of Certificate in accordance with this Trust Agreement and, in either case, the Project Fund shall be closed and the Trustee shall no longer be obligated to make payments for Project Costs.
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ARTICLE IV
REDEMPTION OF CERTIFICATES
Section 4.01. Redemption.
(a) Optional Redemption. The Certificates maturing on or before June 1, ____, are not subject to optional redemption prior to maturity. The Certificates maturing on and after June 1, ____, are subject to optional redemption in whole or in part on any date in such order of maturity as shall be designated by the City (or, if the City shall fail to so designate the order of redemption, in pro rata among maturities) and by lot within a maturity, on or after June 1, ____, at a redemption price equal to the principal amount of the Certificates to be redeemed, together with accrued interest, without premium, to the date fixed for redemption, from the proceeds of the optional prepayment of Lease Payments made by the City pursuant to the Lease Agreement. (b) Redemption from Net Proceeds of Insurance, Title Insurance, Condemnation or Eminent Domain Award. The Certificates are subject to mandatory redemption in whole or in part on any date from the Net Proceeds of an insurance, title insurance, condemnation, or eminent domain award to the extent credited towards the prepayment of the Lease Payments by the City pursuant to Section 10.3 of the Lease Agreement, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium.
Section 4.02. Selection of Certificates for Redemption. Whenever provision is made in this Trust Agreement for the redemption of Certificates and less than all Outstanding Certificates within a maturity are to be redeemed, Certificates of that maturity shall be selected for redemption in accordance with the rules of the Securities Depositories. For the purposes of such selection, Certificates shall be deemed to be composed of $5,000 portions and any such portion may be separately redeemed. Upon the occurrence of an optional redemption in part, the selection of Insured Certificates to be redeemed shall be subject to the approval of the Municipal Bond Insurer.
Section 4.03. Notice of Redemption. the City shall be required to give the Trustee written notice of its intention to redeem Certificates at least thirty (30) days prior to the date fixed for redemption unless the Trustee otherwise agrees to a shorter period for such notice. Unless waived in writing by any Owner of a Certificate to be redeemed, notice of any such redemption shall be given by the Trustee on behalf and at the expense of the City, by mailing a copy of a redemption notice by first class mail, postage prepaid, at least twenty (20) days and not more than sixty (60) days prior to the date fixed for redemption to such Owner of the Certificate or Certificates to be redeemed at the address shown on the Registration Books maintained by the Trustee or at such other address as is furnished in writing by such Owner to the Trustee; provided, however, that neither the failure to receive such notice nor any defect in any notice shall affect the sufficiency of the proceedings for the redemption of the Certificates.
All notices of redemption shall be dated and shall state: (i) the redemption date; (ii) the redemption price; (iii) if less than all Outstanding Certificates of a maturity are to be redeemed, the Certificate numbers (and, in the case of partial redemption, the respective principal amounts) of the Certificates to be redeemed; (iv) that on the redemption date the redemption price will become due and payable upon each such Certificate or portion thereof called for redemption and that interest with respect thereto shall cease to accrue from and after said date; (v) the place where such Certificates are to be surrendered for payment of the redemption price, which place of payment shall be the Designated Corporate Trust Office; (vi) the CUSIP numbers -12-
of all Certificates being redeemed; (vii) the original date of execution and delivery of the Certificates; (viii) the rate of interest payable with respect to each maturity of Certificates being redeemed; (ix) the maturity date of each Certificate being redeemed; and (x) any other descriptive information needed to identify accurately the Certificates being redeemed.
Notwithstanding the foregoing, in the case of any optional redemption of the Certificates under Section 4.01(a), the notice of redemption shall state that the redemption is conditioned upon receipt by the Trustee of sufficient moneys to redeem the Certificates on the scheduled redemption date, and that the optional redemption shall not occur if, by no later than the scheduled redemption date, sufficient moneys to redeem the Certificates have not been deposited with the Trustee. In the event that the Trustee does not receive sufficient funds by the scheduled optional redemption date to so redeem the Certificates to be optionally redeemed, such event shall not constitute an Event of Default; the Trustee shall send written notice to the Owners, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the Certificates for which notice of optional redemption was given shall remain Outstanding for all purposes of this Trust Agreement.
Notice of redemption having been given as aforesaid and the deposit of the redemption price having been made by the City, the Certificates or portions of Certificates so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date interest with respect to such Certificates or portions of Certificates shall cease to be payable. Upon surrender of such Certificates for redemption in accordance with said notice, such Certificates shall be paid by the Trustee at the redemption price. Upon the payment of the redemption price of Certificates being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Certificates being redeemed with the proceeds of such check or other transfer, to the extent possible. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Certificates which have been redeemed shall be canceled by the Trustee, shall not be redelivered and shall be destroyed pursuant to Section 13.07.
In addition to the foregoing notice to the Owners, notice shall also be given by the Trustee, by telecopy or other electronic transmission, registered, certified or overnight mail, to all Securities Depositories and to an Information Service which shall state the information set forth above, but no defect in said notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption.
The Trustee shall have no responsibility for a defect in the CUSIP number that appears on any Certificate or in the redemption notice. The redemption notice may provide that the CUSIP numbers have been assigned by an independent service and are included in the notice solely for the convenience of Owners and that the Trustee and the City shall not be liable in any way for inaccuracies in said numbers.
Section 4.04. Partial Redemption of Certificate. Upon surrender of any Certificate redeemed in part only, the Trustee shall execute and deliver to the Owner thereof a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Certificate surrendered and of the same interest rate and the same maturity.
Section 4.05. Purchase of Certificates. In lieu of redemption of Certificates as provided in this Article IV, amounts held by the Trustee for such redemption may also be used on any Interest Payment Date, upon receipt by the Trustee at least ninety (90) days prior to the next -13-
scheduled Interest Payment Date of the written request of a City Representative, for 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 discretion direct. Such purchases may be affected through the investment department of the Trustee or of an affiliate of the Trustee. The aggregate principal amount of Certificates of the same maturity purchased in lieu of redemption pursuant to this Section 4.05 shall not exceed the aggregate principal amount of Certificates of such maturity which would otherwise be subject to such redemption. The exercise of any provision of this Trust Agreement which permits the purchase of Insured Certificates in lieu of redemption shall require prior written approval of the Municipal Bond Insurer wherein any Insured Certificate so purchased is not extinguished. Remaining moneys, if any, shall be deposited in the Lease Payment Fund. All Certificates purchased in lieu of redemption shall be canceled by the Trustee.
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ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease Agreement. The Corporation has, in the Assignment Agreement, transferred, assigned and set over to the Trustee certain of its rights but none of its obligations set forth in the Lease Agreement, including but not limited to all of the Corporation’s rights to receive and collect Lease Payments and all other amounts required to be deposited in the Lease Payment Fund pursuant to the Lease Agreement or pursuant hereto. All Lease Payments and such other amounts to which the Corporation may at any time be entitled shall be paid directly to the Trustee and all of the Lease Payments collected or received by the Corporation shall be deemed to be held and to have been collected or received by the Corporation as the agent of the Trustee, and if received by the Corporation at any time shall be deposited by the Corporation with the Trustee within one Business Day after the receipt thereof, and all such Lease Payments and such other amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund (except as provided in Section
7.04 hereof).
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 Owners of the Certificates. So long as any Certificates are Outstanding, neither the City nor the Corporation shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited therein, except only as provided in this Trust Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth.
Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all Lease Payments received by the Trustee (except as provided in Section 7.04 hereof), including any moneys received by the Trustee for deposit therein pursuant to Sections 4.01, 5.01 or Article VI hereof, or Article IX of the Lease Agreement, and any other moneys required to be deposited therein pursuant to the Lease Agreement or pursuant to this Trust Agreement.
Section 5.04. Application of Moneys. Subject to Section 12.03 hereof, all amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal and interest with respect to the Certificates as the same shall become due and payable in accordance with the provisions of Article II and Article IV hereof.
Section 5.05. Surplus. Any surplus remaining in the Lease Payment Fund after redemption and/or payment of all Certificates, including accrued interest (if any) and payment of any applicable fees and expenses to the Trustee, or provision for such redemption or payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and remitted to the City.
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ARTICLE VI
RESERVE FUND
Section 6.01. Establishment of Reserve Fund. The Trustee shall establish a special fund designated as the “Reserve Fund.” All moneys, equal to the Reserve Requirement, at any time on deposit in the Reserve Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates and applied solely as provided herein.
Section 6.02. Deposits. In lieu of a cash deposit to the Reserve Fund the Reserve Policy shall be delivered to the Trustee on the Closing Date. The prior written consent of the Municipal Bond Insurer shall be a condition precedent to the deposit of any credit instrument (other than the Reserve Policy) provided in lieu of a cash deposit into the Reserve Fund. Notwithstanding anything to the contrary set forth in this Trust Agreement, amounts on deposit in the Reserve Fund shall be applied solely to the payment of principal and interest due with respect to the Certificates. Draws on the Reserve Policy may only be used to make payments with respect to the Certificates and, for the avoidance of doubt, not any other obligations of the City, whether issues on parity with the Certificates, or otherwise).
Section 6.03. Transfers of Excess. The Trustee shall, on or before each April 1 and October 1, value investments in the Reserve Fund at market value and transfer any moneys in the Reserve Fund then in excess of the Reserve Requirement in accordance with Section 8.04; provided, however, that the Trustee shall not liquidate an investment to make such transfer of excess unless so directed in writing by a City Representative.
Section 6.04. Application in Event of Deficiency in the Lease Payment Fund. (a) If, on any Interest Payment Date, the moneys available in the Lease Payment Fund do not equal the amount of the principal, interest and redemption premium (if any) with respect to the Certificates then coming due and payable, the Trustee shall apply the moneys available in the Reserve Fund to make delinquent Lease Payments by transferring the amount necessary for this purpose to the Lease Payment Fund or shall draw on the Reserve Policy and apply amounts received from such draw to make delinquent Lease Payments by transferring the amount necessary for this purpose to the Lease Payment Fund. To the extent there is cash or investments on deposit in the Reserve Fund, such cash or investments shall be applied first before there is any draw on the Reserve Policy or any other Qualified Reserve Fund Credit Instrument credited to the Reserve Fund in lieu of cash. Payment of any Reserve Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Qualified Reserve Fund Credit Instruments (including the Reserve Policy) on which there is available coverage shall be made on a pro rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Reserve Policy Costs and reimbursement of amounts with respect to other Qualified Reserve Fund Credit Instruments shall be made on a pro rata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, “available coverage” means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund or there has been a draw on the Reserve Policy, such Lease Payment shall be deposited in the Reserve Fund to the extent of such advance and first applied to reimburse a draw on the Reserve Policy and then to replenish any cash drawn therefrom.
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(b) The Trustee shall ascertain the necessity for a claim upon the Reserve Policy and to provide notice to the Municipal Bond Insurer in accordance with the terms of the Reserve Policy at least five (5) business days prior to each date upon which interest or principal is due with respect to the Certificates.
(c) The City agrees to repay any draws under the Reserve Policy and pay all related reasonable expenses incurred by the Municipal Bond Insurer. Interest shall accrue and be payable on such draws and expenses from the date of payment by the Municipal Bond Insurer at the Late Payment Rate. “Late Payment Rate” means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 5%, and (ii) the then applicable highest rate of interest on the Certificates and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates.
The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the Municipal Bond Insurer shall specify.
(d) Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, “Reserve Policy Costs”) shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Reserve Policy Costs related to such draw. (e) Amounts in respect of Reserve Policy Costs paid to the Municipal Bond Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the Municipal Bond Insurer on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy.
(f) If the City shall fail to pay any Reserve Policy Costs in accordance with the requirements of this Section 5.06, the Municipal Bond Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under this Trust Agreement, other than (i) acceleration of the maturity of the Certificates, or (ii) remedies which would adversely affect Owners.
(g) Neither this Trust Agreement nor the Lease Agreement shall be discharged until all amounts due to the Municipal Bond Insurer shall have been paid in full. The City’s obligation to pay such amounts shall expressly survive payment in full of the Certificates. (h) In order to secure the City’s payment obligations with respect to Reserve Policy Costs, there is hereby granted and perfected in favor of the Municipal Bond Insurer a security interest (subordinate only to that of the owners of the Certificates) in all Lease Payments pledged as security for the Certificates.
(i) The Reserve Policy shall expire upon the earlier of the date the Certificates are no longer outstanding and the final maturity date of the Certificates.
Section 6.05. Transfer To Make All Lease Payments. If, on any Interest Payment Date, the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding amounts required for payment of principal and interest with respect to Certificates not presented for payment) are sufficient to pay all Outstanding Certificates, including all principal and interest, -17-
the Trustee shall transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease Payments, and such moneys shall be distributed to the Owners of Certificates in accordance with Article II and IV of this Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates and all amounts due the Municipal Bond Insurer and the Trustee hereunder, or upon provision for such payment as provided in Section 15.01, shall be withdrawn by the Trustee and paid to the City.
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ARTICLE VII
INSURANCE AND CONDEMNATION FUND; INSURANCE;
EMINENT DOMAIN; TITLE INSURANCE
Section 7.01. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award.
(a) Any Net Proceeds of insurance against damage to or destruction of any part of the Property collected by the City in the event of any such damage or destruction shall be paid to the Trustee by the City pursuant to Section 6.2(a) of the Lease Agreement and deposited by the Trustee promptly upon receipt thereof in a special fund designated as the “Insurance and Condemnation Fund” to be established by the Trustee when deposits are required to be made therein.
(b) Within ninety (90) days following the date of such deposit, the City shall determine and notify the Trustee in writing of its determination either (i) that the replacement, repair, restoration, modification or improvement of the Property is not economically feasible or in the best interest of the City, or (ii) that all or a portion of such Net Proceeds are to be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property.
(c) In the event the City’s determination is as set forth in clause (i) of paragraph (b) above, such Net Proceeds shall be promptly transferred by the Trustee to the Lease Payment Fund, applied to the prepayment of Lease Payments pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates as provided in Section 4.01(b) hereof; provided, however, that in the event of damage or destruction of the Property in full, such Net Proceeds may be transferred to the Lease Payment Fund only if sufficient, together with other moneys available therefor, to cause the prepayment of the principal components of all unpaid Lease Payments pursuant to Section 10.3 of the Lease Agreement, otherwise such Net Proceeds shall be applied to the replacement, repair, restoration, modification or improvement of the Property; provided further, however, that in the event of damage or destruction of the Property in part, such Net Proceeds may be transferred to the Lease Payment Fund and applied to the prepayment of Lease Payments only if the resulting Lease Payments represent fair consideration for the remaining portions of the Property, evidenced by a certificate signed by a City Representative and a Corporation Representative.
(d) In the event the City’s determination is as set forth in clause (ii) of paragraph (b) above, Net Proceeds deposited in the Insurance and Condemnation Fund shall be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property by the City, and disbursed by the Trustee upon receipt of requisitions signed by a City Representative stating with respect to each payment to be made (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid and (iv) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance and Condemnation Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied by a bill or a statement of account for such obligation. The Trustee shall not be responsible for the representations made in such requisitions and may conclusively rely thereon and shall be under no duty to investigate or verify any statements made therein or review any supporting documentation accompanying such requisition. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to the City. -19-
Section 7.02. Application of Net Proceeds of Eminent Domain Award. If all or any part of the Property shall be taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain), the Net Proceeds therefrom shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to Section 6.2(b) of the Lease Agreement and shall be applied and disbursed by the Trustee as follows:
(a) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement, and (ii) such proceeds are not needed for repair or rehabilitation of the Property, the City shall so certify to the Trustee and the Trustee, at the City’s written request, shall transfer such proceeds to the Lease Payment Fund to be credited towards the prepayment of the Lease Payments pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates in the manner provided in Section 4.01(b) hereof. (b) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement, and (ii) such proceeds are needed for repair, rehabilitation or replacement of the Property, the City shall so certify to the Trustee and the Trustee, at the City’s written request, shall pay to the City, or to its order, from said proceeds such amounts as the City may expend for such repair or rehabilitation, upon the filing with the Trustee of requisitions of the City Representative in the form and containing the provisions set forth in Section 7.01. The Trustee shall not be responsible for the representations made in such requisitions and may conclusively rely thereon and shall be under no duty to investigate or verify any statements made therein. (c) If (i) less than all of the Property shall have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City has given written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement or (ii) all of the Property shall have been taken in such eminent domain proceedings, then the Trustee shall transfer such proceeds to the Lease Payment Fund to be credited toward the prepayment of the Lease Payments pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates in the manner provided in 4.01(b) hereof. (d) In making any determination under this Section 7.02, the City may, but shall not be required to, obtain at its expense, the report of an independent engineer or other independent professional consultant, a copy of which shall be filed with the Trustee. Any such determination by the City shall be final.
Section 7.03. Application of Net Proceeds of Title Insurance Award. The Net Proceeds from a title insurance award shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to Section 6.2(c) of the Lease Agreement and shall be transferred to the Lease Payment Fund to be credited towards the prepayment of Lease Payments required to be paid pursuant to Section 10.3 of the Lease Agreement and applied to the redemption of Certificates in the manner provided in Section 4.01(b).
Section 7.04. Cooperation. The Corporation and the Trustee shall cooperate fully with the City, at the expense of the City, in filing any proof of loss with respect to any insurance policy maintained pursuant to Article V of the Lease Agreement and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Property -20-
or any portion thereof. Neither the Trustee nor the Corporation shall be obligated to join in such action if it believes it will be exposed to liability or has not been indemnified to its satisfaction from any loss, liability or expense including, but not limited to, reasonable attorneys' fees and expenses.
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ARTICLE VIII
MONEYS IN FUNDS; INVESTMENT
Section 8.01. Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement are irrevocably held in trust for the benefit of the Owners of the Certificates and for the purposes herein specified and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Trust Agreement and shall not (except as set forth in Section 8.03 hereof) be subject to levy, attachment or lien by or for the benefit of any creditor of the Corporation, the Trustee, the City or any Owner of Certificates.
Section 8.02. Investments Authorized. Moneys held by the Trustee hereunder shall, upon written order of a City Representative filed with the trustee at least two Business Days in advance of the making of such investments, be invested and reinvested by the Trustee in Permitted Investments. The Trustee may deem all investments directed by a City Representative as Permitted Investments without independent investigation thereof. If a City Representative shall fail to so direct investments, the Trustee shall hold such moneys uninvested. Such investments, if registrable, shall be registered in the name of and held by the Trustee or its nominee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section 8.02. Such investments and reinvestments shall be made considering the time at which funds are required to be available. The Trustee may act as principal or agent in the making or disposing of any investment and make or dispose of any investment through its investment department or that of an affiliate and shall be entitled to its customary fees therefor. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section 8.02, to deal with itself (in its individual capacity) or with one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account. The Trustee may rely on the investment directions of the City Representative as to both the suitability and legality of the directed investments. The Trustee shall have no liability for any loss, fees, taxes or other charges in connection with any investment or liquidation of an investment hereunder. Ratings of Permitted Investments referred to herein shall be determined at the time of purchase of such Permitted Investments and without regard to rating subcategories. The Trustee shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of such Permitted Investments or the responsibility to validate the ratings of Permitted Investments prior to the initial purchase.
Unless otherwise consented to by the Municipal Bond Insurer, so long as any Insured Certificates remain outstanding or any amounts are owed to the Municipal Bond Insurer by the City, the City shall not enter into any interest rate exchange agreement, cap, collar, floor, ceiling or other agreement or instrument involving reciprocal payment obligations between the City and a counterparty based on interest rates applied to a notional amount of principal.
Section 8.03. Accounting. The Trustee shall furnish to the City, at least monthly, an accounting which may be in the form of its customary accounting statements of all investments made by the Trustee or by brokers selected by the City; provided that the Trustee shall not be obligated to deliver an accounting for any fund or account that (a) has a balance of $0.00 and (b) has not had any activity since the last reporting date. 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 Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 8.02 hereof. the City acknowledges that, to the extent that regulations of the Comptroller of the Currency or other applicable regulatory agency grant the City the right to receive -22-
brokerage confirmations of security transactions effected by the Trustee as they occur, the City waives receipt of such confirmations. 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 8.04. Allocation of Earnings. Unless and until otherwise directed by the City to the Trustee in writing, all interest or income received by the Trustee on investment of the Lease Payment Fund shall be retained in the Lease Payment Fund. Amounts retained or deposited in the Lease Payment Fund pursuant to this Section 8.04 shall be applied as a credit against the Lease Payment due by the City pursuant to the Lease Agreement on the Lease Payment Date following the date of deposit. All interest received by the Trustee on investment of the Reserve Fund shall be retained in the Reserve Fund in the event that amounts on deposit in the Reserve Fund are less than the Reserve Requirement. Reserve Fund investments may not have maturities extending beyond five years, except for the Reserve Policy and investment agreements or repurchase agreements approved by the Municipal Bond Insurer. In the event that amounts then on deposit in the Reserve Fund on the valuation date described in Section
8.03 hereof equal or exceed the Reserve Requirement, such excess shall be transferred to the Lease Payment Fund. Transfers to the Lease Payment Fund from the Reserve Fund shall be made by the Trustee on or prior to each April 1 and October 1. All interest or income in the Delivery Costs Fund shall be retained in the Delivery Costs Fund until the Delivery Costs Fund is closed pursuant to Section 3.02 hereof. All interest or income in the Project Fund shall be retained in the Project Fund until the Project Fund is closed pursuant to Section 3.04 hereof.
Section 8.05. Acquisition, Disposition and Valuation of Investments. 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 at their market value. In determining market value of Permitted Investments, the Trustee may use, and rely conclusively and without liability upon, any generally recognized securities pricing service (including brokers and dealers in securities) available to it, including those within the accounting system utilized by the Trustee with respect to the Certificates. -23-
ARTICLE IX
THE TRUSTEE
Section 9.01. Appointment of Trustee. U.S. Bank Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America with a Designated Corporate Trust Office in Denver, Colorado, is hereby appointed Trustee, registrar and paying agent by the Corporation and the City for the purpose 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 Corporation and the City agree that they will maintain a Trustee which shall be a corporation or association organized under the laws of any state, the United States of America, or the District of Columbia, authorized under such laws to exercise corporate trust powers, which shall have (or, in the case of a bank or trust company included in a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least fifty million dollars ($50,000,000), subject to supervision or examination by federal or State authority, so long as any Certificates are Outstanding and acceptable to the Municipal Bond Insurer. If such corporation or association publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to then for the purpose of this Section 9.01, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 9.01, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.07.
The Trustee is hereby authorized to pay the Certificates when duly presented for payment at maturity, or on redemption, or on purchase by the Trustee prior to maturity in accordance with Section 4.05 hereof, and to cancel all Certificates upon payment thereof. The Trustee shall keep records in accordance with corporate trust industry standards of all funds administered by it and of all Certificates paid and discharged.
Section 9.02. Acceptance of Trusts. The Trustee hereby accepts the 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 and no implied duties or obligations shall be read into this Trust Agreement against the Trustee. In case 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 prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(b) No provision in this Trust Agreement shall require 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 the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.
(c) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder either directly or by or through attorneys, receivers or agents and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder and shall -24-
be absolutely protected in relying thereon. The Trustee shall not be responsible for the misconduct of such persons selected by it with reasonable care. (d) The Trustee shall not be responsible for any recital herein, in the Assignment Agreement or in the Certificates, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Certificates delivered hereunder or intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Corporation or the City under the Lease Agreement.
(e) The Trustee shall not be accountable for the use of any Certificates delivered hereunder or the proceeds thereof. The Trustee, in its individual or any other capacity, may become the Owner or pledgee of Certificates secured hereby with the same rights which it would have if it were 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 principal amount of the Certificates then Outstanding.
(f) In the absence of bad faith on its part, the Trustee shall be protected in acting or refraining from acting upon any notice, request, consent, requisition, certificate, order, affidavit, facsimile, letter, telegram or other paper or document believed by it to be genuine 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 pursuant to 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 Certificate and upon Certificates executed and delivered in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Certificate or to take any action at his request unless such person is the registered owner as shown on the Registration Books.
(g) 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 Corporation 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, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient. The Trustee may accept a certificate of a Corporation Representative or a City Representative to the effect that an authorization in the form therein set forth has been adopted by the Corporation 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. (h) The permissive right of the Trustee to do things enumerated in this Trust Agreement shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees, affiliates and agents. (i) The Trustee shall not be 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 pursuant to the Lease Agreement or failure by the Corporation or the City to file with the Trustee any document required by this Trust Agreement or a Lease Agreement to be so filed on a date certain subsequent to the delivery of the -25-
Certificates, unless the Trustee shall be specifically notified in writing of such default by the Corporation, the City or by the Owners of at least five percent (5%) in aggregate principal amount of Certificates then Outstanding and 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 Designated Corporate Trust Office, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default except as aforesaid. (j) The Trustee shall not be 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 Trust 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 shall have the right, but shall not be 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, deemed desirable by the Trustee for the purpose of establishing the right of the City to the withdrawal of any cash, or the taking of any other action by the Trustee.
(l) 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 law. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of moneys made by it in accordance with Article VII of this Trust Agreement. (m) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of a majority in aggregate principal amount of the Outstanding Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Trust Agreement. (n) Before taking any action under Article XII hereof or this Section 9.02 at the request or direction of the Owners or the Municipal Bond Insurer, the Trustee may require payment or reimbursement of its reasonable fees and expenses, including reasonable fees and expenses of counsel and receipt of an indemnity satisfactory to it from the Owners or the Municipal Bond Insurer to protect it against all liability, except liability which is adjudicated to have resulted from its own negligence or willful misconduct in connection with any action so taken. Before being required to take any action, the Trustee may require an opinion of Independent Counsel acceptable to the Trustee, which opinion shall be made available to the other parties hereto upon request, which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, the Trustee shall be absolutely protected in relying thereon. (o) Under no circumstances shall the Trustee be liable for the obligations evidenced by the Certificates.
(p) The Trustee shall not be accountable for the use or application by the City or the Corporation or any other party of any funds which the Trustee has released in accordance with the terms of this Trust Agreement.
(q) The Trustee has no obligation or duty to insure compliance by the City with the Code.
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(r) The Trustee makes no representation or warranty, express or implied, as to the title, value, design, compliance with specifications or legal or environmental requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City or the Corporation of the Property. In no event shall the Trustee be liable for incidental, indirect, special, punitive or consequential damages in connection with or arising from the Lease Agreement or this Trust Agreement for the existence, furnishing or use of the Property.
(s) The Trustee makes no representations as to the validity or sufficiency of the Certificates and shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Certificates assigned to or imposed upon it. The Trustee shall not be responsible for the validity or sufficiency of the Lease Agreement or the assignment under the Assignment Agreement. The Trustee shall not be liable for the sufficiency or collection of any Lease Payments or other moneys required to be paid to it under the Lease Agreement (except as provided in this Trust Agreement), its right to receive moneys pursuant to the Lease Agreement, or the value of or title to the premises upon which the Property is located or the Property. The Trustee makes no representations and shall have no responsibility for any official statement or other offering material prepared or distributed with respect to the Certificates.
(t) In accepting the trust hereby created the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons, including without limitation the Owners and the City or the Corporation having any claim against the Trustee arising from this Trust Agreement shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein.
(u) The Trustee is authorized and directed to execute the Assignment Agreement in its capacity as Trustee hereunder.
(v) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Trust Agreement and delivered using Electronic Means (“Electronic Means” means the following communications methods: email, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Corporation and/or the City, as applicable, shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Corporation and/or the City, as applicable, whenever a person is to be added or deleted from the listing. If the Corporation and/or the City, as applicable, elects to give the Trustee Instructions using Electronic Means and the Trustee elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Corporation and the City understand and agree that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Corporation and the City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Corporation, the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Corporation and/or the City, as applicable. 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 such directions conflict or are inconsistent with a -27-
subsequent written instruction. The Corporation and the City agree: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions 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; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Corporation and/or the City, as applicable; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
(w) In acting or omitting to act pursuant to the Lease Agreement, the Site and Facility Lease or any other document contemplated or executed in connection herewith, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Trust Agreement and the Lease Agreement, including, but not limited to, this Article VIII. (x) The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.
(y) The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. (z) The Trustee may consult with counsel, who may be counsel of or to the City or the Corporation, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
(aa) 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, and such certificate 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 the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.
Section 9.03. Fees, Charges and Expenses of Trustee. the City shall pay and reimburse the Trustee for such fees for its services rendered hereunder as shall be agreed upon in writing and under the Assignment Agreement and all advances and expenditures, including but not limited to, advances to and reasonable fees and expenses of independent appraisers, accountants, consultants, counsel, agents and attorneys or other experts employed by the Trustee in connection with such services and the Trustee shall, in the Event of Default, have a first and prior lien on the funds held hereunder to secure the same. The Trustee’s rights hereunder, including its rights under Section 11.03 hereof, shall survive its resignation or removal and final payment of the Certificates. When the Trustee incurs expenses or renders services after the occurrence of an Event of Default, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law. -28-
Section 9.04. Notice to Owners of Default. If an Event of Default occurs of which the Trustee has been given or is deemed to have notice pursuant to Section 9.02(i) hereof, then the Trustee shall, within ninety (90) days of the occurrence thereof, give written notice thereof at the expense of the City by first class mail, postage prepaid, to the Owner of each Certificate, unless such Event of Default shall have 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 if and so long as the Trustee in good faith determines that it is in the best interests of the Owners not to give such notice.
Section 9.05. Intervention by Trustee. In any judicial proceeding to which the Corporation or the City is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of the Certificates, the Trustee may intervene on behalf of the Owners and shall do so if requested in writing by the Municipal Bond Insurer or the Owners of at least twenty-five percent (25%) of the aggregate principal amount of Certificates then Outstanding and the Municipal Bond Insurer, provided the Trustee shall have no duty to take such action unless it has received payment or reimbursement and has been indemnified to its satisfaction as provided in Section 9.02(n) hereof against all risk or liability arising from such action.
Section 9.06. Removal of Trustee. Upon thirty (30) days’ notice, the City (so long as no Event of Default shall have occurred and be continuing) or the Owners of at least a majority of the aggregate principal amount of Certificates then Outstanding may, with the consent of the Corporation, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee and the Corporation, and may appoint a successor or successors thereto; provided that any such successor shall be a corporation or association meeting the requirements set forth in Section 9.01 hereof.
Section 9.07. Resignation by Trustee. The Trustee and any successor Trustee may, at any time, resign by giving thirty (30) days’ written notice by registered or certified mail to the City, the Corporation and the Municipal Bond Insurer.
Section 9.08. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 9.06 or 9.07 hereof, the City shall promptly appoint a successor Trustee. In the event the City shall, for any reason whatsoever, fail to appoint a successor Trustee within thirty (30) days following the delivery to the Trustee of the instrument described in Section 9.06 hereof or within thirty (30) days following the receipt of notice by the City pursuant to Section 9.07 hereof, the Trustee may apply to a court of competent jurisdiction at the expense of the City, for the appointment of a successor Trustee meeting the requirements of Section 9.01 hereof. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the City purporting to appoint a successor Trustee following the expiration of such thirty (30) day period. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee.
Section 9.09. Merger or Consolidation. Any company or association into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company 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 9.01 hereof, 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 -29-
matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.
Section 9.10. Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its or his predecessor and also the Corporation 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 obligations 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 predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Upon such acceptance, the City shall mail, by first class mail, postage prepaid, or cause the mailing of, notice thereof to the Owners at their respective addresses set forth on the Registration Books. Should any instrument in writing from the City be required by any successor Trustee for more fully and certainly vesting 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 any 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 shall have been filed or recorded. -30-
ARTICLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
Section 10.01. Amendments Permitted. This Trust Agreement and the rights and obligations of the Owners of the Certificates, the Lease Agreement and the rights and obligations of the parties thereto, the Site and Facility Lease and the rights and obligations of the parties thereto and the Assignment Agreement and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consent of the Municipal Bond Insurer and at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding or, if the Municipal Bond Insurer is in breach of its obligations under the Municipal Bond Insurance Policy, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 10.03 hereof, shall have been filed with the Trustee. No such modification or amendment shall (1) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof, without the express consent of the Owner of such Certificate and the Municipal Bond Insurer; or (2) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of a Lease Agreement; or (3) modify any of the rights or obligations of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective as provided in Section 10.02 hereof.
This Trust Agreement and the rights and obligations of the Owners of the Certificates and the Lease Agreement and the rights and obligations of the respective parties thereto, and the Assignment Agreement and the rights and obligations of the parties thereto, may (with the prior written consent of the Municipal Bond Insurer) be modified or amended at any time by a supplemental agreement, without the consent of any such Owners, but only to the extent permitted by law and only (1) to add to the covenants and agreements of the Corporation or the City; (2) to cure, correct or supplement any ambiguous or defective provision contained herein or therein and which shall not, in the opinion of nationally recognized bond counsel, materially adversely affect the interests of the Owners of the Certificates; (3) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which shall not, in the opinion of nationally recognized bond counsel, materially adversely affect the interests of the Owners of the Certificates; (4) to make such additions, deletions or modifications as may be necessary or appropriate in the opinion of bond counsel to assure the exclusion from gross income for federal income tax purposes of the interest component of Lease Payments and the interest payable with respect to the Certificates; (5) to add to the rights of the Trustee; or (6) to maintain the rating or ratings assigned to the Certificates. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto, as the case may be.
This Trust Agreement and the Lease Agreement may not be modified or amended at any time by a supplemental agreement which would modify any of the rights and obligations of the Trustee without its written assent thereto.
The Trustee shall receive an opinion of Independent Counsel that any amendment entered into hereunder complies with the provisions of this Article IX and the Trustee may rely conclusively on such opinion.
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Section 10.02. Procedure for Amendment with Written Consent of Owners. This Trust Agreement and the Lease Agreement may be amended by supplemental agreement as provided in this Section 10.02 in the event the consent of the Owners of the Certificates is required pursuant to Section 10.01 hereof. A copy of such supplemental agreement (or a summary thereof), together with a request to the Owners for their consent thereto, shall be mailed by first class mail, postage prepaid, by the Trustee at the expense of the City, to each Owner of a Certificate at his 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 in this Section 10.02 provided.
Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consent of the Municipal Bond Insurer or, if the Municipal Bond Insurer is in breach of its obligations under the Municipal Bond Insurance Policy, the Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 10.03 hereof) and a notice shall have been mailed as hereinafter in this Section 10.02 provided. Each such consent shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.11 hereof. Any such consent shall be binding upon the Owner of the Certificate giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in the following paragraph of this Section 10.02 provided for has been mailed.
After the Municipal Bond Insurer and the Owners of the required percentage of Certificates shall have filed their consents to such supplemental agreement, the Trustee shall mail by first class mail, postage prepaid, a notice at the expense of the City, to the Municipal Bond Insurer and the Owners of the Certificates in the manner hereinbefore provided in this Section 10.02 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 Municipal Bond Insurer and the Owners of the required percentage of Certificates and will be effective as provided in this Section 10.02 (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 10.02 to be filed with the Trustee, shall be conclusive proof of the matters therein stated. Such supplemental agreement shall become effective upon the mailing of such last-mentioned notice, and such supplemental agreement shall be deemed conclusively binding upon the parties hereto and the Owners of all Certificates at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60) day period.
Section 10.03. Disqualified Certificates. Certificates owned or held by or for the account of the City or by any person directly or indirectly controlled or controlled by, or under direct or indirect common control with the City (except any Certificates held in any pension or retirement fund) shall not be deemed Outstanding (unless all such Certificates are owned or held, in which case all such Certificates shall be deemed Outstanding) for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Trust Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Trust Agreement; provided, however, that the Trustee shall not be liable for determining whether Certificates are owned or held by the City or any such other person unless such Certificates are registered in the name of the City on the Registration Books. -32-
Section 10.04. Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article IX, this Trust Agreement or a Lease Agreement, as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Trust Agreement or a Lease Agreement, as the case may be, for any and all purposes.
Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments. the City 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 City, as to such action. In that case, upon demand of the Owner of any Certificate Outstanding at such effective date and presentation of his Certificate for such purpose at the Designated Corporate Trust Office, a suitable notation shall be made on such Certificate. the City may determine that the delivery of substitute Certificates, so modified as in the opinion of the City is necessary to conform to such Owners’ action, is necessary and such substitute Certificates shall thereupon be prepared, executed and delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such substitute Certificate shall be exchanged at the Designated Corporate Trust Office, at the expense of the City, for a Certificate of the same character then Outstanding, upon surrender of such Outstanding Certificate.
Section 10.06. Amendatory Endorsement of Certificates. The provisions of this Article IX shall not prevent any Owner from accepting any amendment as to the particular Certificates held by him, provided that proper notation thereof is made on such Certificates. -33-
ARTICLE XI
COVENANTS
Section 11.01. Compliance with and Enforcement of Lease Agreement. the City covenants and agrees with the Municipal Bond Insurer and the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The Corporation covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement.
The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of their respective Lease Agreement by the Corporation thereunder. The Corporation and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Property, which may or can in any manner affect such estate of the City or the Corporation, will deliver the same, or a copy thereof, to the Trustee and the Municipal Bond Insurer.
Section 11.02. Observance of Laws and Regulations. the City and the Corporation will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the City or the Corporation, respectively, including its right to exist and carry on business as a public entity, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired.
Section 11.03. Prosecution and Defense of Suits. the City shall promptly, upon request of the Trustee or any Owner, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Property, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee and every Owner harmless from all loss, cost, damage and expense, including reasonable attorneys’ fees and expenses, which they or any of them may incur by reason of any such defect, cloud, suit, action or proceeding.
Section 11.04. Recordation and Filing. the City shall record and file, or cause to be recorded and filed, the Site and Facility Lease, the Lease Agreement (or a memorandum thereof), 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 Owners.
Section 11.05. Budgets. the City shall supply to the Trustee and the Municipal Bond Insurer as soon as practicable, but not later than August 1 in each year, a written determination by a City Representative that the City has made adequate provision in its annual budget for the payment of Lease Payments and Additional Payments due under the Lease Agreement in the Fiscal Year covered by such budget. The determination given by the City to the Trustee shall be that the amounts so budgeted are fully adequate for the payment of all Lease Payments and -34-
Additional Payments due under the Lease Agreement in the annual period covered by such budget.
Section 11.06. Further Assurances. The Corporation and the City will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Trust Agreement and the Lease Agreement, or as may be requested by the Trustee and for the better assuring and confirming unto the Owners of the Certificates and the Trustee the rights and benefits provided herein.
Section 11.07. Satisfaction of Conditions Precedent. the City hereby certifies, recites and declares that all acts, conditions and things required by the constitution and statutes of the State, the Lease Agreement and this Trust Agreement to exist, to have happened and to have been performed precedent to and in the delivery of the Certificates, do exist, have happened and have been performed in due time, form and manner as required by law.
Section 11.08. Continuing Disclosure. the City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Trust Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default; however, the holders of at least 25% aggregate principal amount of Outstanding Certificates, or any holder or beneficial owner of the Certificates may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
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ARTICLE XII
LIMITATION OF LIABILITY
Section 12.01. Limited Liability of City. Except for the payment of Lease Payments when due and Additional Payments, if any, in accordance with the Lease Agreement and the performance of the other covenants and agreements of the City contained in the Lease Agreement and this Trust Agreement, the City shall have no pecuniary obligation or liability to any of the other parties or to the Owners of the Certificates with respect to this Trust Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee, except as expressly set forth herein.
Section 12.02. No Liability of City or Corporation for Trustee Performance. Neither the City nor the Corporation shall have any obligation or liability to any of the other parties or to the Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement.
Section 12.03. Indemnification of Trustee. the City shall to the extent permitted by law indemnify and save the Trustee, its officers, employees, directors, affiliates and agents harmless from and against all claims, losses, costs, expenses, liability and damages, including reasonable legal fees and expenses (including allocated costs of internal counsel), arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the Property by the Corporation or the City; (ii) any breach or default on the part of the Corporation or the City the performance of any of their respective obligations under the Lease Agreement, the Assignment Agreement, this Trust Agreement and any other agreement made and entered into for purposes of the Property; (iii) any act of the Corporation or the City or of any of their respective agents, contractors, servants, employees, licensees with respect to the Property; (iv) any act of any assignee of, or purchaser from the Corporation or the City or of any of its or their respective agents, contractors, servants, employees or licensees with respect to the Property; (v) the authorization of payment of Delivery Costs; (vi) the actions of any other party, including but not limited to the ownership, operation or use of the Property by the Corporation or the City including, without limitation, the use, storage, presence, disposal or release of any Hazardous Substances on or about the Property; (vii) the Trustee’s exercise and performance of its powers and duties hereunder or as assigned to it under the Assignment Agreement or any other documents contemplated or executed in connection herewith or therewith; (viii) the offering and sale of the Certificates; (ix) the presence under or about or release from the Property, or any portion thereof, of any substance, material or waste which is or becomes regulated or classified as hazardous or toxic under State, local or federal law, or the violation of any such law by the City; or (x) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, in any official statement or other offering document utilized in connection with the sale of the Certificates. Such indemnification shall include the costs and expenses of defending against any claim or liability arising under this Trust Agreement. No indemnification will be made under this Section 12.03 or elsewhere in this Trust Agreement for willful misconduct or negligence under this Trust Agreement by the Trustee, its officers, affiliates or employees. the City’s obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates or resignation or removal of the Trustee. This Section 12.03 shall survive the termination of this Trust Agreement and the earlier removal or resignation of the Trustee.
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Section 12.04. Limitation of Rights to Parties and Owners. Nothing in this Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Corporation, the Trustee, the Municipal Bond Insurer 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 exclusive benefit of the City, the Corporation, the Trustee, the Municipal Bond Insurer and said Owners. -37-
ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES OF
CERTIFICATE OWNERS
Section 13.01. Assignment of Rights. Pursuant to the Assignment Agreement, the Corporation has transferred, assigned and set over to the Trustee all of the Corporation’s rights in and to the Lease Agreement (excepting only the Corporation’s rights to give approvals and consents, and its rights under Sections 5.8, 7.3 and 9.4 and its obligations thereof), including without limitation all of the Corporation’s rights to exercise such rights and remedies conferred on the Corporation pursuant to the Lease Agreement as may be necessary or convenient (i) to enforce payment of the Lease Payments, Additional Payments and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund, and (ii) otherwise to exercise the Corporation’s rights and take any action to protect the interests of the Trustee or the Owners in an Event of Default.
Section 13.02. Remedies. If an Event of Default shall happen, then and in each and every such case during the continuance of such Event of Default, the Trustee may (with the prior written consent of the Municipal Bond Insurer), and shall upon request of the Municipal Bond Insurer or, if the Municipal Bond Insurer is in breach of its obligations under the Municipal Bond Insurance Policy, and shall upon request of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, and upon payment of its reasonable fees and expenses, including reasonable counsel fees, and being indemnified to its satisfaction therefor shall, exercise any and all remedies available pursuant to law or granted pursuant to the Lease Agreement; provided, however, that notwithstanding anything herein or in the Lease Agreement to the contrary, there shall be no right under any circumstances to accelerate the maturities of the Certificates or otherwise to declare any Lease Payment not then in default to be immediately due and payable.
Section 13.03. Application of Funds. All moneys held by the Trustee in the funds and accounts held hereunder and all moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XII or Article IX of the Lease Agreement shall be applied by the Trustee in the following order upon presentation of the several Certificates:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default, and collecting moneys owed hereunder, including reasonable compensation to its agents, attorneys and counsel (including allocated costs of internal counsel), including all fees, indemnity and expenses past due, and then fees, costs and expenses of the Owners in declaring such Event of Default, and collecting moneys owed hereunder, including reasonable compensation to its agents, attorneys and counsel; and
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 per annum payable with respect to the Certificates (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.
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Third, any amount due to the Municipal Bond Insurer, not paid pursuant to First or Second above, and unpaid.
Section 13.04. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, or if there shall be nonpayment of principal or interest with respect to the Certificates, the Trustee shall, upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon payment of its fees and expenses, including counsel fees and expenses, and 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 other legal or equitable remedy as shall be deemed most effectual in support of any of its rights or duties hereunder. If one or more Events of Default shall occur and be continuing, the Trustee shall be entitled as a matter of right to the appointment of a receiver or receivers for the Property and for any property securing the Certificates and the revenues, income, produce, and profits thereon. In the case of any receivership, insolvency, bankruptcy, reorganization, or other judicial proceedings affecting the City or the Property, the Trustee shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Trustee and Owners allowed in such proceedings for the entire amount due and payable under this Trust Agreement at the time of the institution of such proceedings, and also for any additional amount which may become due and payable thereafter, without prejudice to the right of any Owner to file a claim on his or her own behalf. The Trustee shall not be obligated to take any such action unless offered compensation, indemnity for its potential liability, and reimbursement for its reasonable legal fees and expenses in accordance with this Section 13.04.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Certificates or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected.
Section 13.05. Non-waiver. Nothing in this Article XII or in any other provision of this Trust Agreement or in the Certificates, shall affect or impair the obligation of the City to pay or prepay the Lease Payments as provided in the Lease Agreement, or affect or impair the right of action, which is absolute and unconditional, of the Owners to institute suit to enforce and collect such payment. No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article XII to the Trustee, to the Municipal Bond Insurer or to the Owners of Certificates may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners.
Section 13.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise.
Section 13.07. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, upon the request of the Owners of a majority in principal amount of the Certificates then Outstanding, it shall have full power, 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 -39-
Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, without the consent of a majority in aggregate principal amount of the Certificates Outstanding.
Section 13.08. Limitation on Owners’ Right to Sue. No Owner of any Certificate executed and delivered hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the Owners of at least twenty-five percent (25%) in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Certificates of any remedy hereunder; it being understood and intended that no one or more Owners of Certificates shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates.
The right of any Owner of any Certificate to receive payment of said Owner’s fractional interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section 13.08 or any other provision of this Trust Agreement.
Section 13.09. Parties Interested Herein. Nothing in this Trust Agreement expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the City, the Corporation, the Trustee and the Municipal Bond Insurer, their officers, employees and agents, and the Owners any right, remedy or claim under or by reason of this Trust Agreement, or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Trust Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Corporation and the Trustee, their officers, employees and agents, and the Owners.
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ARTICLE XIV
PROVISIONS RELATING TO THE MUNICIPAL BOND
INSURER AND THE MUNICIPAL BOND INSURANCE POLICY
Notwithstanding any other provision set forth in this Trust Agreement:
Section 14.01. Notices and Other Information.
(a) Any notice that is required to be given to an Owner, nationally recognized municipal securities information repositories or state information depositories pursuant to Rule 15c2- 12(b)(5) adopted by the Securities and Exchange Commission or to the Trustee pursuant to the Lease Agreement or this Trust Agreement shall also be provided to the Municipal Bond Insurer, simultaneously with the sending of such notices. In addition, all information the City is obligated to provide to the Owners or the Trustee under the Lease Agreement or this Trust Agreement or pursuant to the Continuing Disclosure Certificate shall also be provided to the Municipal Bond Insurer, simultaneously with the furnishing of such information, except for the City’s annual report to the extent such report is posted on the EMMA website and available to the Municipal Bond Insurer. All notices required to be given to the Municipal Bond Insurer shall be in writing and shall be sent by registered or certified mail addressed to Build America Mutual Assurance Company, 200 Liberty Street, 27th Floor, New York, NY 10281, Attention:
Surveillance, Re: Policy No. 2025B___/Reserve Policy No. 2025R____, Telephone: (212) 235- 2500, Fax: (212) 962-1710, email: [email protected]. In each case in which such notice or other communication refers to an Event of Default or claim on the Municipal Bond Insurance Policy, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel of the Municipal Bond Insurer at the same address and at [email protected] or Fax: (212) 962-1524 and shall be marked to indicate “URGENT MATERIAL ENCLOSED.”
(b) The Municipal Bond Insurer shall have the right to receive such additional information as it may reasonably request.
(c) The City will permit the Municipal Bond Insurer to discuss the affairs, finances and accounts of the City or any information the Municipal Bond Insurer may reasonably request regarding the security for the Certificates with appropriate officers of the City and the City will use best efforts to enable the Municipal Bond Insurer to have access to the facilities, books and records of the City on any Business Day upon reasonable prior notice. (d) The Trustee shall notify the Municipal Bond Insurer of any failure of the Corporation or the City to provide notices, certificates and other information required to be provided to the Trustee under this Trust Agreement.
Section 14.02. Defeasance. The investments in any defeasance escrow relating to the Certificates shall be limited to non-callable, direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, or as otherwise maybe authorized under State law and approved by the Municipal Bond Insurer.
At least three (3) Business Days prior to any defeasance with respect to the Certificates, the City shall deliver or cause to be delivered to the Municipal Bond Insurer draft copies of an escrow agreement, an opinion of bond counsel regarding the validity and enforceability of the escrow agreement and the defeasance of the Certificates, a verification report (a “Verification -41-
Report”) prepared by a nationally recognized independent financial analyst or firm of certified public accountants regarding the sufficiency of the escrow fund. Such opinion and Verification Report shall be addressed to the Municipal Bond Insurer and shall be in form and substance satisfactory to the Municipal Bond Insurer. In addition, the escrow agreement shall provide that:
(a) Any substitution of securities following the execution and delivery of the escrow agreement shall require the delivery of a Verification Report, an opinion of bond counsel that such substitution will not adversely affect the exclusion (if interest with respect to the Certificates is excludable) from gross income of the Owners of the interest with respect to the Certificates for federal income tax purposes and the prior written consent of the Municipal Bond Insurer, which consent will not be unreasonably withheld. (b) The City will not exercise any prior optional redemption of the Certificates secured by the escrow agreement or any other redemption other than mandatory sinking fund redemptions unless (i) the right to make any such redemption has been expressly reserved in the escrow agreement and such reservation has been disclosed in detail in the official statement for the refunding bonds, and (ii) as a condition to any such redemption there shall be provided to the Municipal Bond Insurer a Verification Report as to the sufficiency of escrow receipts without reinvestment to meet the escrow requirements remaining following any such redemption.
(c) The City shall not amend the escrow agreement or enter into a forward purchase agreement or other agreement with respect to rights in the escrow without the prior written consent of the Municipal Bond Insurer.
Section 14.03. Trustee-Related Provisions.
(a) The Municipal Bond Insurer shall receive prior written notice of any name change of the Trustee or the resignation, removal or termination of the Trustee. (b) No resignation, removal or termination of the Trustee shall take effect until a successor, acceptable to the Municipal Bond Insurer, shall be appointed. (c) The Trustee may be removed at any time at the request of the Municipal Bond Insurer for any breach of its obligations under this Trust Agreement.
Section 14.04. Amendments and Supplements.
(a) With respect to amendments or supplements to this Trust Agreement or the Lease Agreement which do not require the consent of the Owners, the Municipal Bond Insurer must be given prior written notice of any such amendments or supplements. (b) With respect to amendments or supplements to this Trust Agreement or the Lease Agreement which do require the consent of the Owners or adversely affect the rights and interests of the Municipal Bond Insurer, the Municipal Bond Insurer’s prior written consent is required.
(c) Copies of any amendments or supplements to this Trust Agreement or the Lease Agreement which are consented to by the Municipal Bond Insurer shall be sent to the rating agencies that have assigned a rating to the Certificates. -42-
(d) Notwithstanding any other provision of this Trust Agreement or the Lease Agreement, in determining whether the rights of Owners will be adversely affected by any action taken pursuant to the terms and provisions thereof, the effect on the Owners shall be considered as if there were no Municipal Bond Insurance Policy. (e) The Municipal Bond Insurer shall be deemed to be the sole holder of the Certificates for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners are entitled to take pursuant the provisions of this Trust Agreement or the Lease Agreement pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Trustee. Any reorganization or liquidation plan with respect to the City must be acceptable to the Municipal Bond Insurer. In furtherance thereof, the Trustee and each Owner appoint the Municipal Bond Insurer as their agent and attorney-in-fact and agree that the Municipal Bond Insurer may at any time during the continuation of any proceeding by or against the City under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, the Trustee and each Owner delegate and assign to the Municipal Bond Insurer, to the fullest extent permitted by law, the rights of the Trustee and each Owner in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Remedies granted to the Owners shall expressly include mandamus.
Section 14.05. The Municipal Bond Insurer as Third Party Beneficiary. The Municipal Bond Insurer is recognized as and shall be deemed to be a third party beneficiary of this Trust Agreement and may enforce the provisions of this Trust Agreement as if it were a party hereto.
Section 14.06. Control Rights of the Municipal Bond Insurer. (a) The rights granted to the Municipal Bond Insurer under this Trust Agreement or the Lease Agreement to request, consent to or direct any action are rights granted to the Municipal Bond Insurer in consideration of its issuance of the Municipal Bond Insurance Policy. Any exercise by the Municipal Bond Insurer of such rights is merely an exercise of the Municipal Bond Insurer’s contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the Bond Owners and such action does not evidence any position of the Municipal Bond Insurer, affirmative or negative, as to whether the consent of the Owners or any other person is required in addition to the consent of the Municipal Bond Insurer. (b) Anything in this Trust Agreement or the Lease Agreement to the contrary notwithstanding, upon the occurrence and continuance of a default or an event of default, the Municipal Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the Owners or the Trustee for the benefit of the Owners under this Trust Agreement or Lease Agreement. No default or event of default may be waived without the Municipal Bond Insurer’s written consent.
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Section 14.07. Consent Rights of the Municipal Bond Insurer. (a) Consent of the Municipal Bond Insurer. Any provision of this Trust Agreement expressly recognizing or granting rights in or to the Municipal Bond Insurer may not be amended without the prior written consent of the Municipal Bond Insurer. (b) Consent of the Municipal Bond Insurer in Addition to Owner Consent. Wherever this Trust Agreement or the Lease Agreement require the consent of Owners, the Municipal Bond Insurer's consent shall also be required.
Section 14.08. Payment Procedures Under the Municipal Bond Insurance Policy In the event that the principal and/or interest due with respect to the Certificates shall be paid by the Municipal Bond Insurer pursuant to the Municipal Bond Insurance Policy, the Certificates shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid, and the assignment and pledge of the trust estate and all covenants, agreements and other obligations of the City to the Owners shall continue to exist and shall run to the benefit of the Municipal Bond Insurer and the Municipal Bond Insurer shall be subrogated to the rights of such Owners, including, without limitation, any rights that such Owners may have in respect of securities law violations arising from the offer and sale of the Certificates.
If, on the third Business Day prior to the related scheduled Interest Payment Date or principal payment date (“Payment Date”) there is not on deposit with the Trustee, after making all transfers and deposits required under this Trust Agreement, moneys sufficient to pay the principal and interest with respect to the Certificates due on such Payment Date, the Trustee shall give notice to the Municipal Bond Insurer and to its designated agent (if any) (the “Insurer’s Fiscal Agent”) by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal and interest with respect to the Certificates due on such Payment Date, the Trustee shall make a claim under the Municipal Bond Insurance Policy and give notice to the Municipal Bond Insurer and the Municipal Bond Insurer’s Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest with respect to the Certificates and the amount required to pay principal with respect to the Certificates, confirmed in writing to the Municipal Bond Insurer and the Municipal Bond Insurer’s Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Municipal Bond Insurance Policy.
In addition, if the Trustee has notice that any Owner has been required to disgorge payments of principal of or interest with respect to the Certificates pursuant to a final, nonappealable order by a court of competent jurisdiction that such payment constitutes an avoidable preference to such holder within the meaning of any applicable bankruptcy law, then the Trustee shall notify the Municipal Bond Insurer or its designee of such fact by telephone or electronic mail, or by overnight or other delivery service as to which a delivery receipt is signed by a person authorized to accept delivery on behalf of the Municipal Bond Insurer.
The Trustee shall irrevocably be designated, appointed, directed and authorized to act as attorney-in-fact for Owners as follows: a) If there is a deficiency in amounts required to pay interest and/or principal with respect to the Certificates, the Trustee shall (i) execute and deliver to the Municipal Bond Insurer, in form satisfactory to the Municipal Bond Insurer, an instrument appointing the Municipal Bond Insurer as agent and attorney-in-fact for such Owners in any legal proceeding related to the payment and assignment to the Municipal Bond -44-
Insurer of the claims for interest with respect to the Certificates, (ii) receive as designee of the respective holders (and not as Paying Agent) in accordance with the tenor of the Municipal Bond Insurance Policy payment from the Municipal Bond Insurer with respect to the claims for interest so assigned, (iii) segregate all such payments in a separate account (the “Municipal Bond Insurer Policy Payment Account”) to only be used to make scheduled payments of principal and interest with respect to the Certificates, and (iv) disburse the same to such respective holders.
If there is a deficiency in amounts required to pay principal with respect to the Certificates, the Trustee shall (i) execute and deliver to the Municipal Bond Insurer, in form satisfactory to the Municipal Bond Insurer, an instrument appointing the Municipal Bond Insurer as agent and attorney in-fact for such Owner in any legal proceeding related to the payment of such principal and an assignment to the Municipal Bond Insurer of the Certificates surrendered to the Municipal Bond Insurer, (ii) receive as designee of the respective Owners (and not as Paying Agent) in accordance with the tenor of the Municipal Bond Insurance Policy payment therefore from the Municipal Bond Insurer, (iii) segregate all such payments in the Municipal Bond Insurer Policy Payment Account to only be used to make scheduled payments of principal and interest with respect to the Certificates, and (iv) disburse the same to such holders.
The Trustee shall designate any portion of payment of principal with respect to Certificates paid by the Municipal Bond Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Certificates registered to then current Owners, whether DTC or its nominee or otherwise, and shall issue a replacement Certificate to the Municipal Bond Insurer, registered in the name directed by the Municipal Bond Insurer. in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Trustee’s failure to so designate any payment or issue any replacement Certificate shall have no effect on the amount of principal or interest payable by the City with respect to any Certificate or the subrogation or assignment rights of the Municipal Bond Insurer.
Payments with respect to claims for interest and principal with respect to the Certificates disbursed by the Trustee from proceeds of the Municipal Bond Insurance Policy shall not be considered to discharge the obligation of the City with respect to such Certificates, and the Municipal Bond Insurer shall become the owner of such unpaid Certificates and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of the preceding paragraphs or otherwise. This Trust Agreement and the Lease Agreement shall not be discharged or terminated unless all amounts due or to become due to the Municipal Bond Insurer have been paid in full or duly provided for.
Irrespective of whether any such assignment is executed and delivered, the Corporation, the City and the Trustee agree for the benefit of the Municipal Bond Insurer that:
(a) They recognize that to the extent the Municipal Bond Insurer makes payments directly or indirectly (e.g., by paying through the Trustee), on account of principal or interest with respect to the Certificates, the Municipal Bond Insurer will be subrogated to the rights of such holders to receive the amount of such principal and interest from the City, with interest thereon, as provided and solely from the sources stated in this Trust Agreement and the Certificates; and
(b) They will accordingly pay to the Municipal Bond Insurer the amount of such principal and interest, with interest thereon as provided in the transaction documents and the Certificates, but only from the sources and in the manner provided therein for the payment of -45-
principal and interest with respect to the Certificates to holders, and will otherwise treat the Municipal Bond Insurer as the owner of such rights to the amount of such principal and interest.
Section 14.09. Additional Payments. The City shall pay or reimburse the Municipal Bond Insurer on demand any and all charges, fees, costs, losses, liabilities and expenses that the Municipal Bond Insurer may reasonably pay or incur, including, but not limited to, fees and expenses of the Municipal Bond Insurer’s agents, attorneys, accountants, consultants, appraisers and auditors and reasonable costs of investigations, in connection with the administration (including waivers and consents, if any), enforcement, defense, exercise or preservation of any rights and remedies in respect of this Trust Agreement and the Lease Agreement (“Administrative Costs”). For purposes of the foregoing, Administrative Costs shall include a reasonable allocation of compensation and overhead attributable to the time of employees of the Municipal Bond Insurer spent in connection with the actions described in the preceding sentence. The City agrees that failure to pay any Administrative Costs on a timely basis will result in the accrual of interest on the unpaid amount at the Late Payment Rate, compounded semi-annually, from the date that payment is first due to the Municipal Bond Insurer until the date the Municipal Bond Insurer is paid in full.
Notwithstanding anything in this Trust Agreement or the Lease Agreement to the contrary, the City agrees to pay to the Municipal Bond Insurer (i) a sum equal to the total of all amounts paid by the Municipal Bond Insurer under the Municipal Bond Insurance Policy (the “Insurer Advances”); and (ii) interest on such Insurer Advances from the date paid by the Municipal Bond Insurer until payment thereof in full by the City, payable to the Municipal Bond Insurer at the Late Payment Rate per annum (collectively, the “Insurer Reimbursement Amounts”) compounded semi-annually. Notwithstanding anything to the contrary, including without limitation the post default application of revenue provisions, Insurer Reimbursement Amounts shall be, and the City hereby covenants and agrees that Insurer Reimbursement Amounts are payable from and secured by a lien on and pledge pf the same revenues and other collateral pledged to the Certificates on a parity with amounts due under this Trust Agreement.
Funds held in the Municipal Bond Insurer Policy Payment Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee.
Any funds remaining in the Municipal Bond Insurance Policy Payments Account following a Payment Date shall promptly be remitted to the Municipal Bond Insurer.
After payment of reasonable fees and expenses of the Trustee, the application of funds realized upon default shall be applied to the payment of expenses of the City or rebate only after the payment of past due and current debt service on the Certificates and amounts required to restore the Reserve Account to the Reserve Requirement.
The Municipal Bond Insurer shall be entitled to pay principal or interest with respect to the Certificates that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Municipal Bond Insurance Policy), whether or not the Municipal Bond Insurer has received a Notice of Nonpayment (as such term is defined in the Municipal Bond Insurance Policy) or a claim upon the Municipal Bond Insurance Policy.
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ARTICLE XV
MISCELLANEOUS
Section 15.01. Defeasance. If and when all Outstanding Certificates shall be paid and discharged and all other amounts due and owing hereunder have been paid (as set forth below) then, notwithstanding that any Certificates shall not have been surrendered for payment, all obligations of the Corporation, the Trustee and the City with respect to all Outstanding Certificates shall cease and terminate, except only the obligations of the City under Section 11.03 hereof and to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from funds deposited pursuant to paragraphs (b) or (c) of this Section 15.01, to the Owners of the Certificates not so surrendered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraphs (b) or (c), the Certificates shall continue to represent direct and fractional interests of the Owners thereof in Lease Payments under the Lease Agreement.
Such payment and discharge may be accomplished in either of the following ways:
(a) by well and truly paying or causing to be paid the principal, and interest with respect to all Certificates Outstanding, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee or an escrow agent security for the payment of Lease Payments as more particularly described in Section 10.1 of the Lease Agreement, to be applied to pay the Lease Payments as the same become due and payable and prepay the Lease Payments in full on any prepayment date, pursuant to Section 10.1 of the Lease Agreement.
(c) by irrevocably depositing with the Trustee or an escrow agent, Defeasance Obligations in such amount as an Accountant (hereinafter defined) shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to this Trust Agreement, be fully sufficient to pay and discharge the City’s obligations with respect to all Certificates or the applicable portion of (including all principal, interest and redemption premiums) at or before maturity.
Any funds held by the Trustee, at the time of one of the events described in paragraphs (a), (b) or (c) of this Section 15.01, which are not required for the payment to be made to Owners or the Municipal Bond Insurer shall, after payment of all fees and expenses of the Trustee and the Municipal Bond Insurer, including attorneys' fees and expenses (including allocated costs of internal counsel), be paid over to the City.
To accomplish defeasance, other than as described in paragraph (c) above, the City shall cause to be delivered to the Municipal Bond Insurer (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Municipal Bond Insurer (“Accountant”) verifying the sufficiency of the escrow established to pay the Insured Certificates in full on the maturity or redemption date (“Verification”), (ii) an escrow deposit agreement (which shall be acceptable in form and substance to the Municipal Bond Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that (A) the Insured Certificates are no longer Outstanding and (B) the defeasance will not adversely affect the exclusion from gross income for federal income tax purposes of interest with respect to the Certificates; each Verification and defeasance opinion shall be acceptable in form and substance to the Cityand the Municipal Bond Insurer, and addressed, to the City and the Trusteeand the Municipal Bond Insurer. In the event a forward purchase agreement will be employed in the refunding, such agreement shall be subject to the -47-
approval of the Municipal Bond Insurer and shall be accompanied by such opinions of counsel as may be required by the Municipal Bond Insurer. The Municipal Bond Insurer shall be provided with final drafts of the above-referenced documentation not less than five Business Days prior to the funding of the escrow.
Insured Certificates shall be deemed Outstanding under this Trust Agreement unless and until they are in fact paid and retired or the above criteria are met.
Section 15.02. Records. The Trustee shall keep records in accordance with corporate trust industry standards of all moneys received and disbursed by it under this Trust Agreement, which shall be available for inspection by the City, the Corporation, the Municipal Bond Insurer and any Owner of at least five percent (5%) of the Outstanding principal amount of the Certificates, or the agent of any of them, at any time during regular business hours on any Business Day upon reasonable prior notice.
Section 15.03. Notices. All written notices to be given under this Trust Agreement shall be given by first class mail, postage prepaid, overnight mail, courier, and if the information is included below by fax or email to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective upon deposit in the United States first class mail, postage prepaid to the address set forth below:
If to the Corporation: Public Property Financing Corporation of California 2945 Townsgate Road, Suite 200
Westlake Village, CA 91361
Attention: Treasurer
Phone: (805) 267-7140
To the City: City of Ridgecrest
100 West California Avenue
Ridgecrest, CA 93555
Attention: City Manager
Phone: (760) 499-5002
If to the Trustee: U.S. Bank Trust Company, National Association 950 17th Street, 5th Floor
Denver, CO 80202
Attention: Global Corporate Trust
Phone: (303) 585-4596
If to the Municipal Bond Insurer: See Section 14.01(a)
The Corporation, the City, the Trustee and the Municipal Bond Insurer, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent.
Section 15.04. Governing Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State.
Section 15.05. Binding Effect; Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
Whenever in this Trust Agreement the Corporation, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Trust Agreement contained by or on behalf of the -48-
Corporation, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 15.06. 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. The exchange of copies of this Trust Agreement and of signature pages by facsimile or pdf transmission shall constitute effective execution and delivery of this Trust Agreement to the parties hereto and may be used in lieu of the original Trust Agreement and signature pages for all purposes.
Section 15.07. Destruction of Canceled Certificates. Whenever in this Trust Agreement provision is made for the surrender to or cancellation by the Trustee and the delivery to the City of any Certificates, the Trustee may, in lieu of such cancellation and delivery, destroy such Certificates and shall deliver a certificate of such destruction to the City.
Section 15.08. Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Trust Agreement. All references herein to “Articles,” “Sections,” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof.
Section 15.09. Waiver of Notice. Whenever in this Trust Agreement the giving of notice by first class mail, postage prepaid, or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Section 15.10. Payments Due on Other than Business Day. If the date for making any payment as provided in this Trust Agreement is not a Business Day, such payment may be made on the next succeeding Business Day with the same force and effect as if done on the date provided therefore herein.
Section 15.11. Payment of Unclaimed Moneys. Notwithstanding any provisions of this Trust Agreement and subject to the escheat laws of the State, any moneys held by the Trustee in trust for the payment of the principal or interest due with respect to any Certificates and remaining unclaimed two years from the date of deposit of such funds, or if the law shall have been changed and the City has notified the Trustee of such change or the Trustee notifies the City, then on the date thirty (30) days prior to the then applicable escheat provision of State law, shall, on such date, be repaid to the City (without liability for interest) 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 moneys to the City as aforesaid, the Trustee may (at the cost and request of the City) first mail to the Owners to whom such amounts have not yet been paid, at the addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the amounts so payable and with respect to the provisions relating to the repayment to the City of the moneys held for the payment thereof. The Trustee shall not be liable for any interest on funds held by it. the City shall not be liable for any interest on the sums paid to it pursuant to this Section 15.11 and shall not be regarded as a trustee of such money.
Section 15.12. U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to -49-
help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Trust Agreement agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
Section 15.13. Waiver of Jury Trial. EACH OF THE CORPORATION, THE CITY AND
THE TRUSTEE HEREBY IRREVOCABLY WAIVE TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE LEASE AGREEMENT, THIS
TRUST AGREEMENT, THE CERTIFICATES OR THE TRANSACTION CONTEMPLATED HEREBY.
Section 15.14. Separability of Invalid Provisions. In case any one or more of the provisions contained in this Trust Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Trust Agreement, and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid or unenforceable.
[Remainder of this page is intentionally left blank]
S-1
[Signature page to Trust Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement as of the date and year first above written.
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By
Authorized Signatory
CITY OF RIDGECREST
By
Ronald Strand
City Manager
PUBLIC PROPERTY FINANCING
CORPORATION OF CALIFORNIA
By
Stefan A. Morton
Treasurer
Stradling Yocca Carlson & Rauth LLP 03/01/24
05/21/24
08/04/24
08/26/24
10/04/24
11/18/24
12/20/24
Exhibit A
EXHIBIT A
DEFINITIONS
“Additional Payments” means the payments so designated and required to be paid by the City pursuant to Section 4.7 of the Lease Agreement.
“Assignment Agreement” means the Assignment Agreement, dated as of February 1, 2025, by and between the Corporation and the Trustee, together with any duly authorized and executed amendments thereto.
“Bond Counsel” means (a) Stradling Yocca Carlson & Rauth LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City of nationally recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code.
“Business Day” means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the state in which the Designated Corporate Trust Office is located or in the State are closed or are required to close or a day on which the New York Stock Exchange is closed.
“Certificate of Completion” means the certificate of a City Representative certifying that the Project has been completed by the City and that all costs relating thereto have been paid. “Certificates” means the $_____ aggregate principal amount of certificates of participation to be executed and delivered pursuant to the Trust Agreement which evidence direct, undivided fractional Interests of the Owners thereof in Lease Payments. “City” means City of Ridgecrest, a municipal corporation and general law city, duly organized and existing under and by virtue of the laws of the State. “City Representative” means the Mayor, the City Manager, the Finance Director or any other person authorized by resolution of the Council delivered to the Trustee to act on behalf of the City under or with respect to the Site and Facility Lease, the Lease Agreement and the Trust Agreement.
“Closing Date” means February 19, 2025, the date upon which there is a physical delivery of the Certificates in exchange for the amount representing the purchase price of the Certificates by the Original Purchaser.
“Code” means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced in the Lease Agreement or the Trust Agreement) as it may be amended to apply to obligations issued on the Closing Date, together with applicable temporary and final regulations promulgated under the Code.
Exhibit A
“Continuing Disclosure Certificate” shall mean that certain Continuing Disclosure Certificate executed by the City and dated the date of execution and delivery of the Certificates, as it may be amended from time to time in accordance with the terms thereof. “Corporation” means the Public Property Financing Corporation of California, a nonprofit public benefit corporation organized and existing under and by virtue of the laws of the State.
“Corporation Representative” means the President, the Executive Director, the Treasurer and the Secretary of the Corporation, or the designee of any such official, or any other person authorized by resolution delivered to the Trustee to act on behalf of the Corporation under or with respect to the Site and Facility Lease, the Lease Agreement, the Assignment Agreement and the Trust Agreement.
“Council” means the City Council of the City.
“County” means Kern County, a political subdivision of the State. “Defeasance Obligations” means (a) cash, (b) non-callable direct obligations of the United States of America (“Treasuries”), (c) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (d) subject to the prior written consent of the Insurer, pre-refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody’s, respectively, or (e) subject to the prior written consent of the Municipal Bond Insurer, securities eligible for “AAA” defeasance under then existing criteria of S&P the Municipal Bond Insurer otherwise approves. “Delivery Costs” means all items of expense directly or indirectly payable by or reimbursable to the City or the Corporation relating to the execution and delivery of the Site and Facility Lease, the Lease Agreement, the Trust Agreement and the Assignment Agreement or the execution, sale and delivery of the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, costs for statistical data, initial fees and charges of the Trustee (including the fees and expenses of its counsel), financing discounts, legal fees and charges, insurance fees and charges (including title insurance), financial and other professional consultant fees, costs of rating agencies for credit ratings, fees for execution, transportation and safekeeping of the Certificates, the premiums for the Municipal Bond Insurance Policy and the Reserve Policy and charges and fees in connection with the foregoing.
“Delivery Costs Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.01 of the Trust Agreement.
“Designated Corporate Trust Office” means the corporate trust office of the Trustee as designated in Section 10.13 of the Trust Agreement or such other office designated by the Trustee from time to time except that with respect to presentation of Certificates for payment or for registration of transfer and exchange or surrender and cancellation, 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.
“Event of Default” means an event of default under the Lease Agreement, as defined in Section 9.1 thereof.
Exhibit A
“Facility” means, collectively, those facilities described in Exhibit B to the Site and Facility Lease and in Exhibit B to the Lease Agreement. “Federal Securities” means (a) Cash, and (b) obligations of, or obligations guaranteed as to principal and interest by, the United States or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States including: (i) United States treasury obligations, (ii) all direct or fully guaranteed obligations, (iii) General Services Administration, (iv) Guaranteed Title XI financing, (v) Government National Mortgage Association (GNMA), and (vi) State and Local Government Series. “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 selected by the City as its fiscal year.
“Independent Counsel” means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Corporation, the City or the Trustee.
“Information Services” means the Electronic Municipal Market Access System (referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Council (at http://emma.msrb.org) or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other national information services providing information or disseminating notices of redemption of obligations similar to the Certificates.
“Insurance and Condemnation Fund” means the fund by that name established and held by the Trustee pursuant to Section 6.01 of the Trust Agreement. “Interest Payment Date” means the first (1st) day of June and December in each year, commencing June 1, 2025, so long as any Certificates are Outstanding. “Lease Agreement” means that certain agreement for the lease of the Property by the Corporation to the City, dated as of February 1, 2025, together with any duly authorized and executed amendments thereto.
“Lease Payment Date” means the fifteenth (15th) day of May and November in each year during the Term of the Lease Agreement, commencing May 1, 2025. “Lease Payment Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.02 of the Trust Agreement.
“Lease Payments” means the total payments required to be paid by the City pursuant to Section 4.4 of the Lease Agreement, including any prepayment thereof pursuant to Article X of the Lease Agreement, which payments consist of an interest component and a principal component, as set forth in Exhibit C to the Lease Agreement. “Moody’s” means Moody’s Investors Service, New York, New York, or its successors. “Municipal Bond Insurance Policy” means the municipal bond insurance policy issued by the Municipal Bond Insurer guaranteeing the scheduled payment, when due, of the principal and interest with respect to the Certificates.
Exhibit A
“Municipal Bond Insurer” means Build America Mutual Assurance Company, or any successor thereto or assigns thereof.
“Net Proceeds,” when used with respect to insurance or condemnation proceeds, means any insurance proceeds or condemnation award paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. “Original Purchaser” means the first purchaser of the Certificates upon their delivery by the Trustee on the Closing Date.
“Outstanding,” when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 9.03 of the Trust Agreement) all Certificates theretofore executed and delivered by the Trustee under the Trust Agreement except:
(a) Certificates theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;
(b) Certificates for the payment or redemption of which funds or Defeasance Obligations in the necessary amount shall have theretofore been deposited with the Trustee or an escrow holder (whether upon or prior to the maturity or redemption date of such Certificates), provided that, if such Certificates are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Section 4.03 of the Trust Agreement or provision satisfactory to the Trustee shall have been made for the giving of such notice; (c) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to Section 2.09 of the Trust Agreement; and (d) Certificates paid pursuant to Section 2.09 of the Trust Agreement. “Owner” or “Certificate Owner” or “Owner of a Certificate,” or any similar term, when used with respect to a Certificate means the person in whose name such Certificate shall be registered on the Registration Books.
“Participating Underwriter” shall have the meaning ascribed thereto in the Continuing Disclosure Certificate.
“Permitted Encumbrances” means, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V of the Lease Agreement, permit to remain unpaid; (b) the Site and Facility Lease; (c) the Lease Agreement; (d) the Assignment Agreement; (e) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (f) easements, rights-of-way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which the City certifies in writing will not materially impair the use of the Property; (g) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Lease Agreement and to which the Corporation and the City agree in writing do not reduce the value of the Property, (h) the 2018 Site and Facility Lease, (i) the 2018 Lease Agreement, and (j) the 2018 Assignment Agreement.
“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein and are consistent with the City’s investment policies, but only to the extent that the same are Exhibit A
acquired at Fair Market Value (provided the Trustee may rely upon the Written Request of the Authority directing investment hereunder as a determination that such investment is a Permitted Investment):
(a) United States Treasury Obligations;
(b) Federal Housing Administration debentures;
(c) The following listed obligations government-sponsored agencies which are not backed by the full faith and credit of the United States of America:
(i) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts), (ii) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system-wide bonds and notes, (iii) Federal Home Loan Banks (FHL Banks) consolidated debt obligations, (iv) Federal National Mortgage Association (FNMA) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts), (v) Financing Corporation (FICO) debt obligations, and
(vi) Resolution Funding Corporation (REFCORP) debt obligations; (d) Unsecured certificates of deposit, time deposits, demand deposits and bankers” acceptances (having maturities of not more than 30 days) of any bank the short-term obligations of which are rated “A-1” or better by S&P;
(e) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks which have capital and surplus of at least $5 million; (f) Commercial paper (having original maturities of not more than 30 days) rated “A-1+” by S&P and “Prime-1” by Moody’s;
(g) Money market funds rated in the highest rating category by S&P and Moody’s including such funds for which the Trustee or an affiliate provides investment advice or other services;
(h) “State Obligations,” which means:
(i) Direct general obligations of any state of the United States of America or any subdivision of agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated “A2” by Moody’s and “A” by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated, and (ii) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (i) above and rated “SP-1+” by S&P and “MIG-1” by Moody’s;
Exhibit A
(i) Pre-refunded municipal obligations rated “AAA” by S&P and “Aaa” by Moody’s meeting the following requirements:
(i) the municipal obligations are (A) not subject to redemption prior to maturity or (B) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions,
(ii) the municipal obligations are secured by cash or U.S. Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations,
(iii) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations (“Verification”), (iv) the cash or U.S. Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations
(v) no substitution of a U.S. Treasury Obligation shall be permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification, and (vi) the cash or U.S. Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent; (j) Repurchase agreements with
(i) any domestic bank, or domestic branch of a foreign bank, the long term debt of which is rated at least “AA” by S&P and Moody’s, or
(ii) any broker-dealer with “retail customers” or a related affiliate thereof which broker-dealer has, or the parent company (which guarantees the provider) of which has, long-term debt rated at least “AA” by S&P and Moody’s, which broker-dealer falls under the jurisdiction of the Securities Investors Protection Corporation, or (iii) any other entity rated “AA” or better by S&P and Moody’s and acceptable to the Municipal Bond Insurer, provided that:
(A) The market value of the collateral is maintained at levels and upon such conditions as would be acceptable to S & P and Moody’s to maintain an “A” rating in an “A” rated structured financing (with a market value approach), (B) The Trustee or a third party acting solely as agent therefor or for the City (the “Holder of the Collateral”) has possession of the collateral or the collateral has been transferred to the Holder of the Collateral in accordance with applicable state and federal laws (other than by means of entries on the transferor’s books),
Exhibit A
(C) The repurchase agreement shall state and an opinion of counsel shall be rendered at the time such collateral is delivered that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession), (D) All other requirements of S&P in respect of repurchase agreements shall be met, and
(E) The repurchase agreement shall provide that if during its term the provider’s rating by either Moody’s or S&P is withdrawn or suspended or falls below “A-” by S&P or “A3” by Moody’s, as appropriate, the provider must, at the direction of the City or the Trustee (who shall give such direction if so directed by the Municipal Bond Insurer), within 10 days of receipt of such direction, repurchase all collateral and terminate the agreement, with no penalty or premium to the City or Trustee.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with no evergreen provision), collateral levels need not be as specified in (A) above, so long as such collateral levels are 103% or better and the provider is rated at least “A” by S&P and Moody’s, respectively.
(k) Investment agreements with a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long-term debt of which, or, in the case of a guaranteed corporation the long-term debt is rated at least “AA” (stable) by S&P and “Aa” (stable) by Moody’s, or, in the case of a monoline Municipal Bond Insurance company, claims paying ability of the guarantor is rated at least “AAA” (stable) by S&P and “Aaa” (stable) by Moody’s; provided that, by the terms of the investment agreement:
(i) interest payments are to be made to the Trustee at times and in amounts as necessary to pay debt service with respect to the Bonds; (ii) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days’ prior notice; the City and the Trustee hereby agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid;
(iii) the investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof or, if the provider is a bank, the agreement or the opinion of counsel shall state that the obligation of the provider to make payments thereunder ranks pari passu with the obligations of the provider to its other depositors and its other unsecured and unsubordinated creditors;
(iv) the City and the Trustee receives the opinion of domestic counsel (which opinion shall be addressed to the City, the Trustee and the Municipal Bond Insurer) that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the City, the Trustee and the Municipal Bond Insurer; (v) the investment agreement shall provide that if during its term:
Exhibit A
(A) the provider’s rating by either S&P or Moody’s falls below “AA-” or “Aa3”, respectively, the provider shall, at its option, within 10 days of receipt of publication of such downgrade, either (i) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider’s books) to the City, the Trustee or a third party acting solely as agent therefor (the “Holder of the Collateral”) collateral free and clear of any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to S & P and Moody’s to maintain an “A” rating in an “A” rated structured financing (with a market value approach); or (ii) repay the principal of and accrued but unpaid interest on the investment, and
(B) the provider’s rating by either S&P or Moody’s is withdrawn or suspended or falls below “A-” or “A3”, respectively, the provider must, at the direction of the City or the Trustee (who shall give such direction if so directed by the Municipal Bond Insurer), within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the City or Trustee, and (vi) the investment agreement shall state and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement, at the time such collateral is delivered, that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession); and (vii) the investment agreement must provide that if during its term:
(A) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the City or the Trustee (who shall give such direction if so directed by the Municipal Bond Insurer), be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate, and (B) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. (“event of insolvency”), the provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate.
(l) The Local Agency Investment Fund of the State, created pursuant to section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.
(m) Other forms of investments (including repurchase agreements) approved in writing by the Municipal Bond Insurer.
“Proceeds,” when used with reference to the Certificates, means the face amount of the Certificates, less original issue discount.
“Project” means the construction of a new aquatics facility, more particularly described in Exhibit C to the Trust Agreement.
Exhibit A
“Project Costs” means all costs of payment of, or reimbursement for, the Project. “Project Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03 of the Trust Agreement.
“Property” means, collectively, the Site and the Facility. “Qualified Reserve Fund Credit Instrument” means an irrevocable standby or direct-pay letter of credit, insurance policy or surety bond issued by a commercial bank or insurance company and deposited with the Trustee in the Reserve Fund, including the Reserve Policy, provided that with respect to any such letter of credit, insurance policy or surety bond other than the Reserve Policy, all of the following requirements are met at the time of acceptance thereof by the Trustee: (a) at the time of issuance the long-term credit rating of such bank or insurance company is AA or better from S&P or Aa or better from Moody’s, or the claims paying ability of such insurance company is rated in the highest rating category by A.M. Best & Company; (b) such letter of credit or surety bond has a term of at least 12 months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released under the Trust Agreement; and (d) the Trustee is authorized under the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Lease Payment Fund for the purpose of making payments required under the Trust Agreement.
“Rating Category” means, with respect to any Permitted Investment, one of the generic categories of rating by Moody’s or S&P applicable to such Permitted Investment, without regard to any refinement or graduation of such rating category by a plus or minus sign or a numeral.
“Registration Books” means the records maintained by the Trustee pursuant to Section
2.12 of the Trust Agreement for registration of the ownership and transfer of ownership of the Certificates.
“Regular Record Date” means the close of business on the fifteenth (15th) day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day.
“Rental Period” means each twelve-month period during the Term of the Lease Agreement commencing on June 2 in any year and ending on June 1 in the next succeeding year; provided, however, that the first Rental Period shall commence on the Closing Date and shall end on June 1, 2025.
“Reserve Agreement” means that certain Debt Service Reserve Agreement, dated as of February 1, 2025, by and between the City and the Municipal Bond Insurer, relating to the Reserve Policy, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof. “Reserve Fund” means the fund by that name established and held by the Trustee pursuant to Section 6.01 of the Trust Agreement.
“Reserve Policy” means the Municipal Bond Debt Service Reserve Insurance Policy issued by the Municipal Bond Insurer for deposit in the Reserve Fund in an amount equal to the Reserve Requirement.
Exhibit A
“Reserve Requirement” means an amount equal to the least of maximum annual Lease Payments, 125% of average annual Lease Payments and 10% of the principal amount of the Certificates, which amount shall be $_________ on the Closing Date (maximum annual Lease Payments). On the date of delivery of the Certificates, in lieu of a cash deposit to the Reserve Fund, the Municipal Bond Insurer will issue the Reserve Policy, in an amount equal to the Reserve Requirement.
“S&P” means S&P Global Ratings, a Standard & Poor's Financial Services LLC business, New York, New York, or its successors.
“Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th Floor, New York, NY 10041 Attention: Call Notification Department; or to such other addresses and/or such other registered securities depositories holding substantial amounts of obligations of types similar to the Certificates.
“Site” means, collectively, that certain real property more particularly described in Exhibit A to the Site and Facility Lease and in Exhibit A to the Lease Agreement. “Site and Facility Lease” means the Site and Facility Lease, dated as of February 1, 2025, by and between the City, as lessor, and the Corporation, as lessee, together with any duly authorized and executed amendments thereto.
“State” means the State of California.
“Term of the Lease Agreement” means the time during which the Lease Agreement is in effect, as provided in Section 4.2 of the Lease Agreement. “Trust Agreement” means the Trust Agreement, dated as of February 1, 2025, by and among the City, the Corporation and the Trustee, together with any duly authorized amendments thereto.
“Trustee” means U.S. Bank Trust Company, National Association, or any successor thereto, acting as Trustee pursuant to the Trust Agreement. “2018 Assignment Agreement” means the Assignment Agreement, dated as of December 1, 2028, by and between the Corporation and the Trustee, together with any duly authorized and executed amendments thereto.
“2018 Lease Agreement” means Lease Agreement, dated as of December 1, 2018, by and between the Corporation, as lessor, and the City, as lessee, together with any duly authorized and executed amendments thereto, pursuant to which the Civic Center portion of the Facility was leased by the Corporation back to the City.
“2018 Site and Facility Lease” means the Site and Facility Lease, dated as of December 1, 2018, by and between the City, as lessor, and the Corporation, as lessee, together with any duly authorized and executed amendments thereto, pursuant to which the Civic Center portion of the Facility was leased by the City to the Corporation.
Stradling Yocca Carlson & Rauth LLP 03/01/24
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Exhibit B
EXHIBIT B
FORM OF THE CERTIFICATES
Certificate of Participation
(2025 Aquatics Facility Financing Project)
Evidencing a Direct, Undivided Fractional Interest of the Owners Hereof in Lease Payments to be Made by the
CITY OF RIDGECREST
As the Rental for Certain Property Pursuant to a Lease Agreement with the Public Property Financing Corporation of California
RATE OF INTEREST MATURITY DATE DATED DATE CUSIP
______% June 1, ____ February 19, 2025 _____ ___
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: __________________________ DOLLARS
THIS IS TO CERTIFY THAT the registered owner identified above, or registered assigns (the “Owner”), as the registered owner of this Certificate of Participation (the “Certificate”), is the owner of a direct, undivided, fractional interest in a portion of the lease payments (the “Lease Payments”) to be paid by the City of Ridgecrest, a municipal corporation and general law city, duly organized and existing under the laws of the State of California (the “City”), pursuant to that certain Lease Agreement, dated as of February 1, 2025, by and between the Public Property Financing Corporation of California, a nonprofit public benefit corporation organized and existing under the laws of the State of California (the “Corporation”) and the City (the “Lease Agreement”), which Lease Payments, prepayments and certain other rights and interests under the Lease Agreement have been assigned to U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), having a corporate trust office in Denver, Colorado, or any other such location so designated by the Trustee (the “Designated Corporate Trust Office”).
The Owner is entitled to receive, subject to the terms of the Lease Agreement, on the Maturity Date identified above, the Principal Amount identified above, representing a direct, undivided fractional portion of the Lease Payments designated as principal coming due on such date, and to receive on June 1 and December 1 of each year, commencing June 1, 2025 (each, an “Interest Payment Date”), until payment in full of said Principal Amount, the Owner’s direct, undivided fractional share of the Lease Payments designated as interest coming due during the six months immediately preceding each of the Interest Payment Dates; provided that interest represented hereby shall be payable from the Interest Payment Date next preceding the date of execution of this Certificate unless (i) this Certificate is executed on an Interest Payment Date, in which event interest shall be payable from such Interest Payment Date, or (ii) this Certificate is executed after the close of business on the fifteenth (15th) day of the month immediately Exhibit B
preceding an Interest Payment Date, and prior to such Interest Payment Date, in which event interest shall be payable from such Interest Payment Date, or (iii) this Certificate is executed on or before May 15, 2025, in which event interest shall be payable from the Dated Date stated above; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to any Outstanding Certificates, interest represented by such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding Certificates. Payment of defaulted interest shall be paid by check of the Trustee mailed to the registered owners of the Certificates as of a special record date to be fixed by the Trustee, notice of which shall be given to the registered owners of the Certificates not less than ten (10) days prior to such special record date.
Said direct, undivided fractional share of the portion of the Lease Payments designated as interest is the result of the multiplication of the aforesaid portion of the Lease Payments designated as principal by the Rate of Interest per annum identified above. Interest represented hereby is payable in lawful money of the United States of America by check mailed by the Trustee on each Interest Payment Date by first class mail to the Owner at his address as it appears on the registration books of the Trustee, as of the close of business on the fifteenth (15th) day of the month immediately preceding each Interest Payment Date or, upon written request filed with the Trustee prior to the fifteenth (15th) day of the month immediately preceding the Interest Payment Date by a registered owner of at least $1,000,000 in aggregate principal amount of Certificates, by wire transfer in immediately available funds to an account in the United States designated by each registered owner in such written request. Principal represented hereby is payable in lawful money of the United States of America by check of the Trustee upon presentation and surrender hereof at the Designated Corporate Trust Office.
This Certificate has been executed and delivered by the Trustee pursuant to the terms of a Trust Agreement by and among the Trustee, the Corporation and the City, dated as of February 1, 2025 (the “Trust Agreement”). The City is authorized to enter into the Lease Agreement and the Trust Agreement under the laws of the State of California. Reference is hereby made to the Lease Agreement and the Trust Agreement (copies of which are on file at the Designated Corporate Trust Office) for a description of the terms on which the Certificates are delivered, the rights thereunder of the registered owners of the Certificates, the rights, duties and immunities of the Trustee and the rights and obligations of the City under the Lease Agreement, all of the provisions of which the Owner of this Certificate, by acceptance hereof, assents and agrees.
The City is obligated under the Lease Agreement to pay Lease Payments from any source of legally available moneys and the City has covenanted in the Lease Agreement to make the necessary annual appropriations therefor. The obligation of the City to pay the Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.
The obligation of the City to pay Lease Payments does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.
To the extent and in the manner permitted by the terms of the Trust Agreement, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the registered owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then outstanding and may be amended without such consent under certain circumstances; provided that no such amendment shall impair the right of any registered owner to receive, in any case, such registered owner’s fractional share of any Lease Payment or prepayment thereof in accordance with such registered owner’s Certificate, without the consent of such registered owner.
Exhibit B