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HomeMy WebLinkAbout1991-09-10 - AGENDA REPORTS - EXECUTION SALE DELIVERY BONDS (2)AGENDA REPORT (PUBLIC FINANCING AUTHORITY) City Manager Approval,/-, GiYy Item to be presente� Andrea Daroca NEW BUSINESS DATE: September 10, 1991 SUBJECT: Approval of Execution, Sale and Delivery of Local Agency Revenue Bonds Finance BACKGROUND In order to facilitate the financing of the acquisition of a portion of the Valencia Bank Building and begin a more integrated financing plan for the City, the staff recommends approval of the issuance by the Santa Clarita Public Financing Authority (the "PFA") of its revenue bonds ("Pool Bonds") in an aggregate principal amount not to exceed $24,000,000. Basically, the Pool Bonds are sold to the public, the proceeds of which are used to purchase the local obligations, including (a) simultaneously with the issuance of the Pool"Bonds, the Certificates of Participation (City Hall Building Project) (the "Certificates") in the principal amount not to exceed $7,500,000 issued on behalf of the City to finance the acquisition of a portion of the Valencia Bank Building and (b) at a later date, certificates of participation for the construction and improvement of certain Soledad Canyon Road Improvements. The Pool Bonds are secured by the Revenues received by the PFA from the local obligations, as the owner of the local obligations. The money used to purchase the local obligations, including the Certificates,.is used to finance the public improvements listed above or such other permitted substitutions. S PA Agenda Item:4— It is proposed that the City and Agency authorize the execution and delivery of the Certificates and authorize the purchase of Certificates by the PFA; the PFA authorize the issuance of the Pool Bonds and the sale to PaineWebber Incorporated at the interest rates parameters set forth in the related resolution; and the City designate the local obligations, including the Certificates which will make up the first pool. RECOMMENDATION 1. Board. approve the attached Resolution Nos. JPA 91-4 and - JPA 915 A resolution appointing the City Manager, the Director of Community Development and the City Clerk as the Executive Director, Assistant Executive Director and Assistant Secretary, respectively of the PFA. A resolution which authorizes the PFA to (i) enter into a trust agreement for the issuance of the PFA pool bonds to finance the City obligations, including the certificates of participation to finance the purchase of the City Hall building, (ii) enter into and distribute an official statement for the sale.of the PFA pool bonds, (iii) enter into a commitment agreement and purchase contract with the City and the Redevelopment Agency to buy the certificates from proceeds of the PFA pool bonds, and (iv) enter into a fiscal agent agreement to act as fiscal agent for the certificates. RESOLUTION NO. JPA 91-4 RESOLUTION OF THE BOARD OF DIRECTORS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY APPOINTING CERTAIN OFFICERS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY. WHEREAS, the City of Santa Clarita, California (the "City") and the Redevelopment Agency of the City of Santa Clarita (the "Agency") have formed a joint exercise of powers authority pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code to exercise the common powers of the Agency and the City known as the Santa Clarita Public Financing Authority (the "Authority"); and WHEREAS, Section 3.05 of the Joint Exercise of Powers Agreement and Section 3.03 of its Rules and Regulations enable the Authority to create offices and appoint persons to fill such offices as it deems necessary; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY AS FOLLOWS: SECTION 1. The offices of Executive Director, Assistant Executive Director and Assistant Secretary of the Authority are hereby created. The City Manager shall be the Executive Director, the Director of Community Development of the City shall be the Assistant Executive Director and the City Clerk shall be the Assistant Secretary of the Authority and such officers shall perform such duties and functions normal to the offices of Executive Director and Secretary, respectively. The Authority officers appointed hereunder shall hold such offices only so long as they hold the corresponding City offices heretofore mentioned. SECTION 2.This resolution shall take effect immediately upon its passage and adoption. PASSED, APPROVED AND ADOPTED by the Santa Clarita Public Financing Authority this day of , 1991. ATTEST: Secretary SANTA CLARITA PUBLIC FINANCING AUTHORITY Chairman I HEREBY CERTIFY that the above and foregoing resolution was duly passed and adopted by the Board of Directors of the Santa Clarita Public Financing Authority at a regular meeting on the day of , 1991, by the following vote, to wit: AYES: DIRECTORS: NOES: DIRECTORS: ABSENT: DIRECTORS: ABSTAIN: DIRECTORS: Secretary RESOLUTION NO. - JPA 91-5 RESOLUTION OF THE BOARD OF DIRECTORS OF THE SANTA CLARITA . PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF LOCAL. AGENCY REVENUE BONDS, SERIES 1991, IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000, APPROVING A TRUST AGREEMENT AND OFFICIAL STATEMENT, AUTHORIZING THE SALE OF SUCH BONDS, AUTHORIZING THE EXECUTION OF AGREEMENTS FOR THE PURCHASE OF CITY OBLIGATIONS, AND AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS IN CONNECTION THEREWITH. WHEREAS, the City of Santa Clarita, California (the "City"), is a municipal corporation and general law city of the State of California; and WHEREAS, the Redevelopment Agency of the City of Santa Clarita (the "Agency") is a redevelopment agency and public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law, commencing with Health and Safety Code Section 33000, et sec. (the "Law"); and WHEREAS, the City and the . Agency have entered into a Joint Exercise of Powers Agreement establishing the Santa Clarita Public Financing Authority (the "Authority") for the purpose of issuing its bonds to be used to provide financing for public capital improvements of the City and the Agency; and WHEREAS, the Authority proposes to enter into a Trust Agreement dated as of October 1, 1991 (the "Trust Agreement") with , as trustee, to provide for the issuance of its Local Agency Revenue Bonds, Series 1991 (the "Bonds") in the aggregate principal amount not to exceed $24,000,000; and WHEREAS, the Bonds are to be issued pursuant to the Marks -Roos Local Bond Pooling Act of 1985 (the "Act") constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California; WHEREAS, PaineWebber, Incorporated, the underwriter (the "Underwriter") of the Authority's Bonds has submitted a form of an offer to purchase the Bonds (the "Purchase Contract") and has caused to be prepared and presented to the Authority for approval an official statement (the "Official Statement") in preliminary form for use in the sale of the Authority's Bonds and containing information describing the City Obligations (as hereinafter defined); and WHEREAS, the Authority will use the proceeds of the Bonds to purchase local obligations of the City (the "City Obligations") pursuant to a Commitment Agreement and Purchase Contract for the Purchase and Sale of Local Obligations dated as of October 1, 1991 (the "Commitment Agreement") by and among the Authority, the City and the Agency which (a) commits the Agency to sell the City Obligations to the Authority and (b) contains a purchase contract for the Certificates (as hereinafter defined) providing the final terms and conditions of the sale of the Certificates to the Authority. The form of the Commitment Agreement is on file with the Secretary; and WHEREAS, the City and the Agency wish to provide funds to acquire certain real property (the "Land") and a building and related facilities (the Land and the City Hall Building to be referred to herein as the "Facilities"), a portion of which will be used by the City as the Santa Clarita City Hall (the "Project'), by the execution and delivery of Certificates of Participation (City Hall Building Project) Evidencing A Proportionate Interest Of The Owners Thereof In Lease Payments To Be blade By The City Of Santa Clarita (Los Angeles County, California) To The Redevelopment Agency Of The City Of Santa Clarita (the "Certificates") in the aggregate principal amount not to exceed $7,500,000; and WHEREAS, the Commitment Agreement obligates the City to pay certain costs of issuance with respect to the Authority's Bonds in the event the Authority is unable, for any reason, to acquire with the proceeds of the Authority's Bonds.a sufficient principal amount of City Obligations to permit the Authority to repay such costs of issuance and in consideration of the determination of the City that there are significant public benefits to the City in causing the City Obligations to be sold to the Authority, all as set forth in the Commitment Agreement; and WHEREAS, the City further finds and determines that it is necessary and desirable in connection with the sale and delivery of the Certificates that the City enter into certain documents, and that the City take other actions and approve the execution of certain other documents as herein provided; and NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY AS FOLLOWS., Section 1. Findings and Determinations. Pursuant to the Act, the Authority hereby finds and determines that the issuance of the Bonds will result in savings in effective interest rates, bond underwriting and bond issuance costs and thereby result in significant public benefits to the City and the Agency, within contemplation of Section 6586 of the Act. Section 2. Issuance of the Bonds;. Approval of Trust Agreement. The Authority hereby authorizes the issuance of the Bonds under the authority of the Act, in the aggregate principal amount not to exceed 524,000,000, pursuant to the Trust Agreement in substantially the form on file with the Secretary, together with any changes therein or additions thereto deemed advisable by the Chairman, whose execution thereof shall be conclusive evidence of his consent to such changes or additions. The Chairman, or his designee, is hereby authorized and directed to deliver, and the Secretary, or his designee, is hereby authorized and directed to attest, the Trust Agreement for and in the name of the Authority. -2- Section 3. _Approval of Sale and Delivery of the Bonds. The Board hereby approves the sale of the Bonds to the Underwriter, pursuant to the Purchase Contract by and between the Authority and the Underwriter, in substantially the form on file with the Secretary, together with such changes therein or additions thereto approved by the Chairman, who shall execute and deliver the Purchase Contract in the name and on behalf of the Authority and whose execution thereof shall be conclusive evidence of approval of any such additions and changes; provided, that (i) the stated averageannual interest rate payable with respect to the Bonds shall not exceed eight and one-quarter percent (8.25%) per annum and (ii) the purchase price received by the Authority for the Bonds shall not be less than eight -tenths of one percent (0.8%) of the reoffering amount thereof. Section 4. Official Statement. The Authority approves the distribution of the preliminary Official Statement by the Underwriter to persons who may be interested in purchasing the Bonds. The Chairman is hereby authorized and directed to approve any changes in or additions to a final form of said Official Statement approved by the Chairman, whose execution thereof shall be conclusive evidence of approval of any such changes and additions. The final Official Statement shall be executed in the name and on behalf of the Authority by either the Chairman or the Executive Director, who is hereby authorized and directed to execute the final Official Statement on behalf of the Authority. Section 5. Purchase of City Obligations. The Authority hereby approves the purchase of the City Obligations pursuant to the Commitment Agreement in substantially the form on file with the Secretary, together with such changes therein or additions thereto approved by the Chairman or his designee, who shall execute and deliver the Commitment Agreement in the name and on behalf of the Authority and whose execution thereof shall be conclusive evidence of approval of any such additions and changes. Section 6. Fiscal Agent Agreement. The Authority hereby authorizes the Treasurer to act on behalf of the Authority as the fiscal agent for the City Obligations. The Authority hereby approves the Fiscal Agent Agreement dated as of October 1, 1991 (the "Fiscal Agent Agreement") by and between the Agency and the Authority in substantially the form on file with the Secretary, which provides for the execution and delivery of one of the City Obligations, namely, the Certificates. The Chairman is hereby authorized and directed to approve any changes in or additions to the form of Fiscal Agent Agreement, whose execution thereof, or that of his designee, shall be conclusive evidence of approval of any such changes and additions. The Fiscal Agent Agreement shall be executed in the name of the Authority by either the Chairman or his designee, who is authorized and directed to execute the Fiscal Agent .agreement. Section 7. Official Action. The Chairman; Vice -Chairman, Secretary, Treasurer, Executive Director and any and all other officers of the Authority are hereby authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions; including the execution and delivery of any and all assignments, certificates, requisitions, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance, sale and delivery of the Bonds to the Underwriter as described herein. -3- Section 8. Effective Date. This Resolution shall take effect and be in full force from and after its adoption by the Board of Directors of the Authority. Adopted by the Board of Directors of the Santa Clarita Public Financing Authority, this _, day of , 1991. (SEAL) ATTEST: Secretary SANTA CLARITA PUBLIC FINANCING AUTHORITY By: Chairman I HEREBY CERTIFY that the above and foregoing resolution was duly passed and adopted by the Board of Directors of the Santa Clarita Public Financing Authority at a regular meeting held on the day of , 1991, by the following vote, to wit: AYES: NOES: ABSENT: -4- Secretary RESOLUTION NO. JPA 91-5 RESOLUTION OF THE BOARD OF DIRECTORS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF LOCAL AGENCY REVENUE BONDS, SERIES 19919 IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000, APPROVING A TRUST AGREEMENT AND OFFICIAL STATEMENT, AUTHORIZING THE SALE OF SUCH BONDS, AUTHORIZING THE EXECUTION OF AGREEMENTS FOR THE PURCHASE OF CITY OBLIGATIONS, AND AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS IN CONNECTION THEREWITH. WHEREAS, the City of Santa Clarita, California (the "City"), is a municipal corporation and general law city of the.State of California; and WHEREAS, the Redevelopment Agency of the City of Santa Clarita (the "Agency") is a redevelopment agency and public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law, commencing with Health and Safety Code Section 33000, et sec. (the "Law"); and WHEREAS, the City and the Agency have entered into a Joint Exercise of Powers Agreement establishing the Santa Clarita Public Financing Authority (the "Authority") for the purpose of issuing its bonds to be used to provide financing for public capital improvements of the City and the Agency; and WHEREAS, the Authority proposes to enter into a Trust Agreement dated as of October 1, 1991 (the "Trust Agreement") with First Trust National Association, as trustee, to provide for the issuance of its Local Agency Revenue Bonds, Series 1991 (the "Bonds") in the aggregate principal amount not to exceed $24,000,000; and WHEREAS, the Bonds are to be issued pursuant to the Marks -Roos Local Bond Pooling Act of 1985 (the "Act") constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California; WHEREAS, PaineWebber, Incorporated, the underwriter (the "Underwriter") of the Authority's Bonds has submitted a form of an offer to purchase the Bonds (the "Purchase Contract") and Fieldman, Rolapp & Associates, the financial advisor (the "Financial Advisor") has prepared and presented to the Authority for approval an official statement (the "Official Statement") in preliminary form for use in the sale of the Authority's Bonds and containing information describing the City Obligations (as hereinafter defined); and WHEREAS, the City and the Agency wish to provide funds to finance and/or refinance the acquisition, improvement, equipping and construction of certain public capital improvement projects referenced in Agency Resolution No. RDA 91-4 (the "Projects"), by the execution and delivery of Certificates of Participation (Capital Improvement Projects) Evidencing A Proportionate Interest Of The Owners Thereof In Lease Payments To Be Made By The City Of Santa Clarita (Los Angeles County, California) To The Redevelopment Agency Of The City Of Santa Clarita (the "Certificates") in the aggregate principal amount not to exceed $24,000,000; and WHEREAS, the Authority will use the proceeds of the Bonds to purchase the Certificates pursuant to a Certificate Purchase Contract for the Purchase and Sale of Local Obligations dated as of October 1, 1991 (the "Certificate Purchase Contract") by and among the Authority, the City and the Agency which contains a purchase contract for the Certificates providing the final terms and conditions of the sale of the Certificates to the Authority. The form of the Certificate Purchase Agreement is on file with the Secretary; and WHEREAS, the Authority further finds and determines that it is necessary and desirable in connection with the sale and delivery of the Certificates that the Authority enter into certain documents, and that the Authority take other actions and approve the execution of certain other documents as herein provided; and NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY AS FOLLOWS: Section 1. Findings and Determinations. Pursuant to the Act, the Authority hereby finds and determines that the issuance of the Bonds will result in savings in effective interest rates, bond underwriting and bond issuancecostsand thereby result in significant public benefits to the City and the Agency, within contemplation of Section 6586 of the Act. Section 2. Issuance of the Bonds; Approval of Trust Agreement. The Authority hereby authorizes the issuance of the Bonds under the authority of the Act, in the aggregate principal amount not to exceed $24,000,000, pursuant to the Trust Agreement in substantially the form on file with the Secretary, together with any changes therein or additions thereto deemed advisable by the Chairman or the Executive Director, whose execution thereof shall be conclusive evidence of his consent to such changes or additions. The Chairman, or his designee, or the Executive Director, is hereby authorized and directed to deliver, and the Secretary, or his designee, is hereby authorized and directed to attest, the Trust Agreement for and in the name of the Authority. Section 3. Approval of Sale and Delivery of the Bonds. The Board hereby approves the sale of the Bonds to the Underwriter, pursuant to the Purchase Contract by and between the Authority and the Underwriter, in substantially the form on file with the Secretary, together with such changes therein or additions thereto approved by the Chairman or the Executive Director, who shall execute and deliver the Purchase Contract in the name and on behalf of the Authority and whose execution thereof shall be conclusive evidence of approval of any such additions and changes; provided, that (i) the stated average annual interest rate payable with respect to the Bonds shall not -2- exceed eight and one-quarter percent (8.25%) per annum and (ii) the purchase price received by the Authority for the Bonds shall not be less than ninety nine and two-tenths percent (99.2%) of the reoffering amount thereof. Section 4. Official Statement. The Authority approves the distribution of the preliminary Official Statement by the Underwriter to persons who may be interested in purchasing the Bonds in substantially the form on file with the Secretary, together with such changes therein or additions thereto approved by the Chairman or the Executive Director and Bond Counsel. The Chairman or the Executive Director is hereby authorized and directed to approve any changes in or additions to a final form of said Official . Statement approved by the Chairman or the Executive Director, whose execution thereof shall be conclusive evidence of approval of any such changes and additions. The final Official Statement shall be executed in the name and on behalf of the Authority by either the Chairman or the Executive Director, who is hereby authorized and directed to execute the final Official Statement on behalf of the Authority. Section 5. Purchase of the Certificates. The Authority hereby approves the purchase of the Certificates pursuant to the Certificate Purchase Contract in substantially the form on file with the Secretary, together with such changes therein or additions thereto approved by the Chairman or his designee, or the Executive Director, who shall execute and deliver the Certificate Purchase Contract in the name and on behalf of the Authority and whose execution thereof shall be conclusive evidence -of approval of any such additions and changes. Section 6. Fiscal Agent Agreement. The Authority hereby authorizes the Treasurer to act on behalf of the Authority as the fiscalagent for the the Certificates. The Authority hereby approves the Fiscal Agent Agreement dated as of October 1, 1991 (the "Fiscal Agent -Agreement") by and between the Agency and the Authority in substantially the form on file with the Secretary, which provides for the execution and delivery of the Certificates. The Chairman or Executive Director is.hereby authorized and directed to approve any changes in or additions to the form of Fiscal Agent Agreement, whose execution thereof, shall be conclusive evidence of approval of any such changes and additions. The Fiscal Agent Agreement shall be executed in the name of the Authority by either the Chairman or his designee, or the Executive Director, who is authorized and directed to execute the Fiscal Agent Agreement. Section 7. Official Action. The Chairman, Vice -Chairman, Secretary, Treasurer, Executive Director and any and all other officers of the Authority are hereby authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions, including the execution and delivery of any and all assignments, certificates, requisitions, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance, sale and delivery of the Bonds to the Underwriter as described herein. Section 8. Effective Date. This Resolution shall take effect and be in full force from and after its adoption by the Board of Directors of the Authority. -3- Adopted by the - Board of. Directors of the Santa Clarita Public Financing Authority, this _, day of , 1991. (SEAL) ATTEST: Secretary SANTA CLARITA PUBLIC FINANCING AUTHORITY By: Chairman I HEREBY CERTIFY that the above and foregoing resolution was duly passed and adopted by the Board of Directors of the Santa Clarita Public Financing Authority at a regular meeting held on the day of , 1991, by the following vote, to wit: AYES: NOES: ABSENT: -4- Secretary iIt S-CLR3-IND BURKE, WILLIAMS, SORENSEN & GAAR FOR DISCUSSION PURPOSES ONLY DRAFT NO. 4, SEPTEMBER 3, 1991 TRUST AGREEMENT by and between SANTA CLARITA PUBLIC FINANCING AUTHORITY and as Trustee Dated as of October 1, 1991 Relating to $23,000,000 Santa Clarita Public Financing Authority Local Agency Revenue Bonds, Series 1991 Section 1.01. Section 1.02. Section 1.03. Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.10. Section 3.01. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS, CERTIFICATES AND CONSTRUCTION Definitions ................................................. Content of Certificates and Opinions .......................... Interpretation .............................................. ARTICLE II AUTHORIZATION AND TERMS OF THE BONDS Authorization of Bonds ....................................... Terms of the Bonds .......................................... Transfer and Registration of Bonds ............................ Regulations With Respect to Exchanges or Transfers of Bonds ..................................... Registration Books .......................................... Form and Execution of Bonds ................................. Temporary Bonds ............................................ Bonds Mutilated, Lost, Destroyed or Stolen .................................................. Cancellation of Bonds ........................................ Bonds as Special Obligations .................................. ARTICLE III ISSUANCE OF BONDS Provisions for the Issuance of the Bonds ........................ ARTICLE IV REDEMPTION AND PURCHASE OF THE BONDS Section 4.01. Privilege of Redemption and Redemption Price ................................................... Section 4.02. Special Redemption ......................................... Section 4.03 Mandatory Redemption ...................................... Section 4.04. Optional Redemption ........................................ Section 4.05. Notice of Redemption ....................................... Section 4.06. Selection of Bonds for Redemption ............................ Section 4.07. Payment of Redeemed Bonds ................................. Section 4.08. Purchase in Lieu of Redemption ............................... ARTICLE V REVENUES AND FUNDS Section 5.01. Establishment of Funds ...................................... Section 5.02. Deposit of Proceeds of the Bonds and Other NMon= .......................................... Section 5.03. Revenue Fund .............................................. Section 5.04. Interest Fund ............................................... Section 5.05. Reserve Fund ............................................... Section 5.06. Expense Fund ............................................... Section 5.07. Surplus Fund ................................................ Section 5.08. Principal Fund .............................................. Section 5.09. Redemption Fund ........................................... Section 5.10. Proceeds Fund .............................................. Section 5.11. Payment of Expenses ........................................ Section 5.12. Rebate Fund ................................................ Section 5.13. Acquisition of OQ:ily Q li ations .............................. Section 5.14. t3City Qbilgallon Fund ....................................... ARTICLE VI SECURITY FOR AND INVESTMENT OF NMOINEYS Section 6.01. Security ................................................... Section 6.02. Investment of Funds ......................................... ARTICLE VII COVENANTS OF THE AUTHORITY Section 7.01. Payment of Bonds; No Encumbrances.. ......................... Section 7.02. Enforcement and Amendment of Obligations .................... Section 7.03. Further Documents .......................................... Section 7.04. Tax Covenants .............................................. Section 7.05. :Maintenance of Existence .................................... Section 7.06. Cash Flow Certificates ...................................... Section 7.07. Financial Statements ........................................ ARTICLE VIII DEFAULTS AND REMEDIES Section 8.01. Events of Default ........................................... Section 8.02. Remedies Upon Event of Default .............................. Section 8.03. Proceedings by Trustee ...................................... Section 8.04. Application of Revenues and Other Funds ....................... Section 8.05. Power of Trustee to Enforce .................................. Section 8.06. Rights of Owners ............................................ Section 8.07. Limitation on Bond Owners' Right to Sue ....................... Section 8.08. Absolute Obligation of Authority .............................. Section 8.09. Termination of Proceedings ................................... Section 8.10. Remedies Not Exclusive ...................................... Section 8.11. No Waiver of Default ........................................ Section 8.12. Waiver of Events of Default; Effect of Waiver .................................................. Section 8.13. Right of Trustee to Acquire Bonds ............................. ARTICLE IX THE TRUSTEE Section 9.01. Appointment and Acceptance of Duties ........................ Section 9.02. Duties, Immunities and Liabilities of Trustee ................................................. Section 9.03. Merger or Consolidation ...................................... Section 9.04. Right to Rely on Documents .................................. Section 9.05. Preservation and Inspection of Documents ...................... Section 9.06. Compensation and Indemnification ............................. Section 9.07. Liability of Trustee .......................................... Section 9.08. Indemnity for Trustee ........................................ Section 9.09. Successor of Securities Depository ............................. ARTICLE X MODIFICATION OR AMENDMENT OF THE TRUST AGREEMENT Section 10.01. Amendments Permitted ...................................... Section 10.02. Effect of Supplemental Trust Agreement ....................... Section 10.03. Endorsement of Bonds: Preparation of New Bonds .............................................. Section 10.04. Amendment of Particular Bonds ............................... ARTICLE XI DEFEASANCE Section 11.01. Defeasance ................................................. Section 11.02. Bonds Deemed to Have Been Paid ............................. Section 11.03. OMQNEYS Held for Particular Bonds .......................... ARTICLE XII MISCELLANEOUS Section 12.01. Liability of Authority Limited to Revenues ............................................... Section 12.02. Successor Is Deemed Included in All References to Predecessor ................................ Section 12.03. Limitation of Rights to Parties and Bond Owners ................................................. Section 12.04. Waiver of Notice; Requirement of Mailed Notice .................................................. Section 12.05. Destruction of Bonds ........................................ Section 12.06. Severability of Invalid Provisions .............................. Section 12.07. Notices .................................................... Section 12.08. Evidence of Rights of Bond Owners ............................ Section 12.09. Disqualified Bonds ........................................... Section 12.10. Money Held for Particular Bonds .............................. Section 12.11. Funds and Accounts ......................................... Section 12.12. Payment on Non -Business Days ................................ Section 12.13. Waiver of Personal Liability .................................. Section 12.14. Execution in Several Counterparts ............................. Section 12.15. Governing Laws ............................................. Section 12.16. Unclaimed Money ........................................... EXHIBIT A - DEFINITIONS EXHIBIT B - FORM OF BOND EXHIBIT C - DESCRIPTION OF ANTICIPATED NMY QBLGATMNS -iv- TRUST AGREEMENT THIS TRUST AGREEMENT dated as of October 1, 1991, by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency organized and existing under and by virtue of the laws of the State of California (the "Authority"), and , a national banking association organized and existing under and by virtue of the laws of the United States, as trustee (the "Trustee"). WITNESSETH: WHEREAS, the Authority is a joint exercise of powers agency duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated August 5, 1991, by and between the City of Santa Clarita, California (the "City") and the Redevelopment Agency of the City of Santa Clarita (the "Agency"), and under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act"), and is authorized pursuant to Article 4 of the Act (the 'Bond Law") to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing for capital improvements of the Local Agency, as that term is herein defined; and, WHEREAS, for the purpose of providing financing for the acquisition, construction, improving and equipping of capital improvements to be undertaken by the City, the Authority has determined to issue its Local Agency Revenue Bonds, Series 1991 (the 'Bonds"), in the aggregate principal amount of $23,000,0000 pursuant to and secured by this Trust Agreement in the manner provided herein; and, WHEREAS, it has been determined that the estimated amount necessary to finance the purchase of the NC11y Q li ions (taking into account the estimated cost of acquiring, constructing, improving and equipping capital improvements to be financed or refinanced thereby), and -to fund a reserve fund securing the Bonds will require the issuance of the Bonds in the aggregate principal amount of TWENTY-THREE MILLION DOLLARS ($23,000,000); and, WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and to secure the payment of the principal and premium, if any, thereof and interest thereon, the Authority has authorized the execution and delivery of this Trust Agreement; and, WHEREAS, all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee, and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Trust agreement a valid and binding agreement for the uses and purposes herein set forth in accordance with its.terms, have been done and taken, and the execution and delivery of the Trust Agreement have been in all respects duly authorized; NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH: That the Authority, -in consideration of the premises, the acceptance by the Trustee of the trusts hereby created, the purchase and acceptance of the Bonds by the purchasers thereof and other good and valuable consideration, the receipt of which is hereby acknowledged, and in order to secure the payment of the interest on and the principal of and the redemption premiums, if any, on all Bonds Outstanding hereunder from time to time according to their tenor and effect, and such other payments required to be made under the Trust Agreement, and to secure the observance and performance by the Authority of all the agreements, conditions, covenants and terms expressed and implied herein and in the Bonds, does hereby assign, bargain, convey, grant, mortgage and pledge a security interest unto the Trustee, and unto its successors in the trusts hereunder, and to them and their successors and assigns forever, in all right, title and interest of the Authority in, to and under, subject to the provisions of the Trust Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein, each and all of the following (collectively the "Trust Estate"): (a) the proceeds of sale of the Bonds; (b) Revenues (as herein defined); (c) the amounts in the Funds (as herein defined) established by the Trust Agreement, except amounts in the Rebate Fund; (d) the O City QbJjg2L1gns; (e) the Purchase Contracts (as herein defined). TO HAVE AND TO HOLD IN TRUST all of the same hereby assigned, conveyed and pledged or agreed or intended so to be to the Trustee and its successors and assigns forever for the equal and ratable benefit of the Owners from time to time of the Bonds authenticated hereunder and issued by the Authority and Outstanding and without any priority as to the Trust Estate of any one Bond over any other (except as expressly provided in or permitted by the Trust Agreement), upon the trusts and subject to the arrangements, conditions, covenants and terms hereinafter set forth; AND THIS TRUST AGREEMENT FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered and all of the rights and property hereby assigned, bargained, conveyed, granted, mortgaged and pledged are to be dealt with and disposed of under, upon and subject to the agreements, conditions, covenants, purposes, terms, trusts and uses as hereinafter. expressed, and the Authority has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the Owners from time to time of the Bonds, as follows: -2- ARTICLE I DEFINITIONS, CERTIFICATES AND CONSTRUCTION Section 1.01. Definitions. In addition to any words and terms defined elsewhere in the Trust agreement, capitalized words and terms as used in this Trust Agreement shall have the meanings given to such words and terms as set forth on Exhibit "A" attached hereto. Section 1.02. Content of Certificates and Opinions. Every certificate or opinion provided for in this Trust Agreement with respect to compliance with any provision hereof (except the certificate provided for in Section 12.05) shall include: (a) a statement that the Person making or giving such certificate or opinion has read such provision and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the certificate or opinion is based; (c) a statement that, in the opinion of such Person, he has made or caused to be made such examination or investigation as is necessary to enable him to express an informed opinion with respect to the subject matter referred to in the instrument to which his signature is affixed; (d) a statement of the assumptions upon which such certificate or opinion is based, and that such assumptions are reasonable; and, (e) a statement as to whether, in the opinion of such Person, such provision has been complied with. Any such certificate or opinion made or given by an officer of the Authority or the OQ:ity may be based, insofar as it relates to legal or accounting matters, upon a certificate or opinion of or representation by counsel or an accountant,. unless such officer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel or an accountant may be based, insofar as it relates to factual matters (with respect to which information is in the possession of the Authority or the OCA, as the case may be) upon a certificate or opinion of or representation by an officer of the Authority or the Off, unless such counsel or accountant knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which such Person's certificate or opinion or representation may be based, as aforesaid, is erroneous. The same officer of the authority or the O -irv, or the same counsel or accountant, as the case may be, need not certify to all of the matters required to be certified under any provision of this Trust Agreement, but different officers, counsel or accountants may certify to different matters, respectively. 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 include the neuter, masculine or feminine gender, as appropriate. -3- (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 "Article," 'Section", "Paragraph" and other subdivisions are to the corresponding Article, Section, Paragraph or subdivision of this Trust Agreement unless otherwise indicated; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. ARTICLE II AUTHORIZATION AND TERMS OF THE BONDS Section 2.01. Authorization of Bonds. The Authority hereby authorizes the issuance of the Bonds hereunder and under the Bond Law, which shall constitute special obligations of the Authority. Such Bonds are hereby designated the "Santa Clarita Public Financing Authority Local Agency Revenue Bonds, Series 1991". The aggregate principal amount of the Bonds initially issued and Outstanding under this Trust Agreement shall be TWENTY-THREE MILLION DOLLARS ($23,000,000). This Trust Agreement constitutes a continuing agreement with the Owners from time to time of the Bonds to secure the full payment of the principal of and interest on all such Bonds, subject to the covenants, provisions and conditions herein contained. Section 2.02. Terms of the Bonds. (a) The Bonds shall be issued only as .registered Bonds without coupons in Authorized Denominations and shall be numbered as the Trustee determines. The Bonds shall be dated the Dated Date, shall mature on October 1 in each of the years and in the amounts, and shall bear interest (calculated on the basis of a 360 -day year of twelve 30 -day months) at the rates. specified in the table below, such interest being payable semi- annually on each Interest Payment Date, and shall mature on the Principal Payment Dates in the years and in the principal amounts, as .follows: -4- fi SERIAL BONDS Principal Payment Date Principal Interest Rate (October 1) Amount Per Annum 1992 $ % 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 TERM BONDS Term Bonds due October 1, 2011 % Term Bonds due October 1, 2021 (b) . The Bonds, at the request of the Original Purchaser, shall be registered on the Registration Books to CEDE & CO., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except that in the event the Trustee issues Replacement Bonds as provided in subsection (c) hereof. ' It is anticipated that during the term of the Bonds, the Securities Depository will make book -entry transfers among its Participants and receive and transmit payment of principal of, and interest on the Bonds until and unless the Trustee authenticates and delivers Replacement Bonds to the Beneficial Owners'as described in subsection (c). (c) If the Authority determines: (i) that the Securities Depository is unable to properly discharge its responsibilities or (ii) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (iii) that the continuation of a book -entry system to the exclusion of any Bonds being issued to any Bond Owner other than CEDE & CO. is no longer in the best interests of the Beneficial Owners of the Bonds or (iv) if the Trustee receives written notification from Participants having interests in not less than fifty percent (50%) of the Outstanding Bonds, as shown on the records of the Securities Depository, that the continuation of a book -entry system to the exclusion of any Bonds being issued to any Bond Owner other than CEDE & CO. is no longer in the best interests of the Beneficial Owners of the Bonds, then -5- the Trustee shall notify the Bond Owners of such determination or such notice and of the availability of certificates to such Owners requesting the same, and the Trustee shall authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one certificate. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Trustee,Ao the -extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns and the Authority, the Trustee or Bond Owners are unable to locate a qualified successor of the Securities Depository in accordance with Section 9.09. hereof, then the Trustee shall authenticate and cause delivery of Replacement Bonds to the Participants for the benefit of Bond Owners as provided herein. (d) Except as provided .herein, principal of the Bonds is payable to the Owners thereof or their transferees on presentation at the Office of the Trustee or its successor. Interest shall be paid on each Interest Payment Date to the Persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten (10) days prior to such Special Record Date. Interest shall be paid by check. of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; or by wire transfer made on such Interest Payment Date to any Owner of .$1,000,000 or more in aggregate principal amount of Bonds who shall have requested such transfer pursuant to written notice filed with the Trustee, in form satisfactory to the Trustee, received not later than the preceding Record Date. All checks, drafts or wire transfers for the payment of the principal and redemption price of and interest on the Bonds shall include, on the face thereof, the CUSIP number. The principal of and interest on the Bonds are payable in lawful money of the United States of America which, at the time of payment is legal tender for the payment of public and private debts. (e) The Bonds shall be subject to redemption as provided in Article IV hereof. -6- Section 2.03. Transfer and Registration of Bonds. The Bonds may be transferred or exchanged and title thereto shall pass only in the manner provided herein. All Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the Trustee duly executed by the Owner or by his attorney duly authorized in writing and all such Bonds shall be surrendered to the Trustee and canceled by the Trustee pursuant to Section 2.09 hereof. The Authority and the Trustee may deem and treat the Owner of any Bond as the absolute owner of such Bond for the purpose of receiving any payment on such Bond and for all other purposes of the Trust Agreement, whether such Bond shall be overdue or not, and neither the Authority nor the Trustee shall be affected by any notice to the contrary. Payment of, or on account of, the principal of and redemption premium, if any, on and interest on any Bond shall be made to such Owner or upon his written order. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Section 2.04. Regulations With Respect to Exchanges or Transfers of Bonds. (a) In all cases in which the privilege of exchanging or registering the transfer of Bonds is exercised, the Authority shall execute and the Trustee shall authenticate and deliver Bonds in accordance with the provisions of the Trust Agreement. There shall be no charge to the Owner for any such exchange or registration of transfer of Bonds, but the Trustee and the Securities Depository may require the payment of a sum sufficient .to pay any tax or other governmental charge required to be paid with respectto any such exchange or registration of transfer. Neither the Authority nor the Trustee shall be required -to register the transfer of or exchange of any Bond on or after the fifteenth (15th) Business Day immediately preceding the date on which the notice of redemption is scheduled to be mailed and ending on the date scheduled for redemption or any Bond selected for redemption. (b) Upon surrender for exchange or transfer of any Bond at the Office of the Trustee, the Authority shall execute (which may be by facsimile) and the Trustee shall authenticate and deliver in the name of the Owner (in the .case of transfers) a new Bond or Bonds in Authorized Denominations, in the aggregate principal amount which the registered Owner is entitled to receive. (c) New Bonds delivered upon any transfer or exchange shall be valid obligations of the Authority, evidencing the same debt as the Bonds surrendered, shall be secured by this Trust Agreement and shall be entitled to all of the security and benefits hereof to the same extent as the Bonds surrendered. Section 2.05. Registration Books. The Trustee will keep or cause to be kept, at the Office of the Trustee in , California, sufficient records for the registration and transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the Authority; and, upon -7- reement, register or transfer or cause presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe and in accordance with this Trust Ag to be registered or transferred, on such records, the ownership of the Bonds as hereinbefore provided. Section 2.06. Form and Execution of Bonds. such Theonvariations, llbe in substan- tions or tially the form set forth in Exhibit hereto, omissions as are appropriate and not inconsistent herewith. The Bonds shall a execute to the Chairman) attested by the manual or in the name and on behalf of the Authority and sealed with the facsimile signature of its Chairman (or any duly authorized deputy be in the form of a facsimile of the facsimile signature of its Secretary. Such seal nted or impressed on the Bonds. The Bonds Authority's seal and may be reproduced, imp it. In case any of the of the Bonds shall cease to be such officer shall then be delivered to the Trustee for authentication y officers who shall have signed or attested any l have been or officers of the Authority the Trusteehe Bordissueds so �by the Authority, sugned or attested ch Bonds may authenticated or delivered by upon such authentication, nevertheless be authenticated, delivered on the Author tyn s� though those who signed onds delivery and issue, and shall be as binding p attested the same had continued to be such officers of the Authority, and s at the actual also any may be signed and at on behalf of the Auteoofficers of the Authoby such Persons rity although at date of execution of such Bonds shall be the prop the nominal date of such Bonds any such Person shall not have been such officer oft e Authority. a duly Only such of the Bonds as shall bear thereon a certificate of authentication or authorized signatory form of °thee Trustee, � shall lb -e valid and obligatory for any nuted y purpose entitled to the benefits of this Trust Agreement, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly hereunder and are entitled to the benefits of this executed, authenticated and delivered Trust Agreement. temporary form Section 2.07. Temporary Bonds. The Bonds may be issued in temp Y exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be the Authority, shall be in fully registered form without coupons and printed, lithograQhed or typewritten, shall be of such Authorized Denominations as may be determined by of the provisions of this Trust Agreement as may be may contain such reference to any the Authority and authenticated appropriate. Every temporary Bond shall be executed by temporary Bonds it will execute and deliver by the Trustee upon the same conditions and in substantially the same manner s the definitive Bonds. if Authority, fterissuesasepraeticable, and thereupon the temporary definitive Bonds aspromptly Bonds shall be surrendered, for cancellation, at the Office of the Trustee, and the l Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount oof nds shalllve be Bonds to heAuthorized same benefits under thisnTrust exchanged, the temp charge therefor to shnge all meat a def thetAuthority'snds aown expense and without making any r Such theexcrefor to at any Owner. -8- Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. Application for exchange and substitution of mutilated, lost, stolen or destroyed Bonds shall be made to the Trustee at the Office of the Trustee. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond .so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or held by the Trustee upon the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Authority and the Trustee and, if such evidence be satisfactory to them and indemnity satisfactory to them shall be given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such. Bond shall have matured or shall have been called for redemption, instead of issuing a replacement Bond the Trustee may pay the same without surrender thereof upon receipt of the aforementioned indemnity). The Authority may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Trust Agreement with all other Bonds secured by this Trust Agreement. Section 2.09. Cancellation of Bonds. Upon the surrender to the Trustee of any temporary or mutilated Bond, or Bond surrendered for transfer or exchange, or Bonds purchased; redeemed or paid at maturity, the same shall forthwith be canceled and the Trustee shall destroy such Bonds and deliver a certificate of destruction with respect thereto to the Authority. Section 2.10. Bonds as Special Obligations. The Bonds shall be special, limited obligations of the Authority, payable from and secured as to the payment of principal, redemption premiums, if any, and interest in accordance with the terms of the Bonds and this Trust Agreement solely from the Trust Estate. The Bonds shall not constitute a charge against the general credit of the Authority or any of its Members, and under no circumstances shall the Authority be obligated to pay principal, redemption premiums, if any, or interest on the Bonds except from the Revenues. Neither the State nor any public agency (other than the Authority) nor any Member of the Authority, isobligatedto pay principal, redemption premiums, if any, or interest on the Bonds, and neither the faith and credit nor the taxing power of the State or any public agency thereof or any Member of the Authority is pledged to the payment of principal, redemption premiums, if any, or interest on the Bonds. The payment of principal, redemption premiums, if any, or interest on the Bonds does not constitute a debt, liability or obligation of the State or any public agency (other than the Authority) or any Member of the Authority. No agreement or covenant contained in any Bond or this Trust Agreement shall be deemed to be an agreement or covenant of any officer, member, agent or employee of the Authority in his or her individual capacity, and neither the Members of the Authority nor any of its officers or employees who execute the Bonds, shall be personally liable on any Bond or be subject to any personal liability or accountability by reason of the -9- issuance of the Bonds. ARTICLE III ISSUANCE OF BONDS Section 3.01. Provisions for the Issuance of the Bonds. The Bonds shall be executed by the Authority and delivered to the Trustee for authentication, together with a Written Order certifying that all conditions precedent to the authorization of the Bonds have been complied with and authorizing the Trustee to authenticate the Bonds. The Trustee shall authenticate and deliver the Bonds upon receipt of the Written Order described above, and upon the following having been made available to the Trustee (in case of the documents referred to in subsections (a), (b), (c), (e), (f) and (g) below, the Trustee may assume, and shall not be required to verify, the validity of such documents): (a) A copy of the resolution or resolutions adopted by the Authority authorizing the issuance. of the Bonds and the execution and delivery by the Authority of the Trust Agreement, duly certified by the Secretary to have been duly adopted by the Authority and to be in full force and effect on the date of such certification; (b) An opinion of Bond Counsel, dated the date of delivery of the Bonds, to the effect that (i) the Bonds constitute the valid and binding special, limited obligations of the Authority, (ii) the Trust Agreement has been duly and validly authorized, executed and delivered by, and (assuming valid execution and delivery by the Trustee) constitutes a valid and binding obligation of, the Authority and (iii) the interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State personal income taxation; provided, that with respect to (i) and (ii) above, no opinion need be expressed as to the effect of bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws affecting creditors' rights, the application of equitable principles and exercise of judicial discretion in appropriate cases; (c) A Written Order directing that the Trustee authenticate the Bonds and containing instructions as to the delivery of the Bonds; (d) The proceeds of sale of the Bonds; (e) A Written Certificate stating that the Authority is not in default in the performance of any of the agreements, conditions, covenants or terms contained in the Trust Agreement; (f) A Cash Flow Certificate to the effect that, assuming that all of the 0 @9 remaining in the Proceeds Fund (1) will have been used to pay costs of issuance- of the Bonds and (ii) will be used to redeem Bonds on October 1, 1994, pursuant to Section 4.02(a), the Revenues will be sufficient to pay all scheduled principal and interest payments on the Bonds when due; and -10= (g) An original executed counterpart of the Trust Agreement. ARTICLE IV REDEMPTION AND PURCHASE OF THE BONDS Section 4.01. Privilege of Redemption. and Redemption Price. The Bonds subject to redemption prior to maturity pursuant to the Trust Agreement shall be redeemable, upon mailed notice as provided in this Article, at such times and upon such terms as are contained in this Article. Whenever, by the terms of the Trust Agreement, the Trustee is required or authorized to redeem Bonds, the Trustee shall select the Bonds to be redeemed, shall give the notice of redemption and shall pay out of 1$mone available therefor the redemption price thereof, plus interest accrued and unpaid to the redemption date, in accordance with the terms of this Article. Section 4.02. Special Redemption. (a) Redemption From Unexpended Bond Proceeds. The Bonds shall be subject to mandatory redemption in part, on October 1, 1994, and shall be redeemed by the Trustee, from Omonuy transferred to the Redemption Fund from the Proceeds Fund fg—r in the event that no _Cit Qblieations arm ur h KIi 11h� ro of =qn Bmds Aa A whole frim no=v h source 2 er souravailable � a8 1_ye� g a on o i in the Proceeds _Fund) and the Reserve Fund pursuant to Section 5.10, and Section 5.05(b), respectively, at a redemption price equal to the principal amount thereof, without premium. (b) Redemption From Prepayments of OC -11y ObllgafiQns. The Bonds shall be subject to mandatory redemption in part, on any Interest Payment Date, and shall be redeemed by the Trustee, from Om_transferred from the Prepayment Account to the Redemption Fund pursuant to Section 5.03(b) and derived from Prepayments of OCIty Q li ins from sources other than insurance or condemnation proceeds or from Prepayments of Ocily Q li ins other than as a result of mandatory redemption or acceleration of such GC= Q li ins without premium, at a redemption price equal to the principal amount thereof, plus Othe premium, if any, payable upon optional redemption pursuant to Section 4.04. Rp-dernplionn BRon the Sale of Sha Facilities. T_hg Bond shall ¢e 4 m b'e�t 1 n r redem i ❑ in1)€1 2 Interest P_a�me�t Date. ani lel 4P redeem U �h& Trug 1MLn mond & transferred from tM PLepilymeh_Account 14 the UgSLq;nQ= E= mm S Qf all. or art_ nn of the Eacilities aurauln-tI2 i n s 03(b) gi g redem_ tR?_ n r egial 19 the principal amg-1St!gLe4f N1thg-u rMLnjUm-& Section 4.03. Mandatory Redemption. The Term Bonds are subject to mandatory redemption sinking fund redemption in part by lot in the amounts and on the dates, at a redemption price equal to the principal amount thereof plus accrued interest -11- thereon to the date fixed for redemption, as follows: Term Bonds Maturing October 1, 2011 Sinking Fund Date Payment Date Term Bonds Maturing October 1, 2021 Sinking Fund Date Payment Date Sinking Fund Payment Sinking Fund Payment In the event that any Term Bonds are redeemed from funds other than those attributable to mandatory sinking fund payments, the principal amount of such bonds so redeemed shall be credited against the remaining mandatory sinking fund payments on a proportionate basis (as if the Term Bonds of such maturity mature in the years and in the amounts of the sinking fund payments). (d) Extraordinary Redemption Provisions. The Bonds shall be subject to mandatory redemption in part, on any Interest Payment Date, and shall be redeemed by the Trustee, from Mm2n transferred from the Prepayment Account to the Redemption Fund pursuant to Section 5.03(b) and derived from Prepayments of MC-ily O li io s from insurance or condemnation proceeds or other mandatory redemption or acceleration of OC -111y O li ins without premium, at a redemption price equal to the principal amount thereof, without premium. Section 4.04. Optional Redemption. The Bonds shall be subject to optional redemption as a whole on any date or in part on any Interest Payment Date at the option of the Authority from any Orn 2r�`�- deposited in the Redemption Fund for such purpose by the Authority, on and after October 1, 20p1, at a redemption price equal to one hundred percent (100%) of the principal amount thereof together with the following redemption -12- premiums (computed upon the principal amount of the Bonds to be redeemed), plus accrued interest to the redemption date, namely: Redemption Dates Redemption Premium (both dates inclusive) Qetober 2001 throu h S tem er 10 2002 M`5 QatQber 2002 rou h Stgm¢cr 2003 1044 QSSsbu 14 2 0 Su tem er 3 2004 101b Qetober 1, Z004 an thereafter 10—M In the case of the optional redemption of any Outstanding Bonds, the Authority shall deliver a Written Order to the Trustee stating its election to redeem Bonds, the principal amount of Bonds to be. redeemed, the maturity or maturities of the Bonds to be redeemed and the redemption date, which such Written Order shall be delivered to the Trustee at least forty-five (45) days prior to the redemption date. In the event such Written Order is delivered to the Trustee, the Authority shall pay or cause to be paid to the Trustee on or prior to the date on which the notice of redemption shall be given pursuant to Section 4.05 an amount which, in addition to other Gmn�e,s if any, available. therefor held by the Trustee, will be sufficient to redeem on the redemption date at the redemption price thereof, plus interest accrued and unpaid to the redemption date, the Outstanding Bonds identified in such notice; provided, that such amount may be delivered after such date and prior to the redemption date if such Written Order requires the notice of redemption to state that such redemption shall be conditioned upon the receipt of such funds. Section 4.05. Notice of Redemption. In the case of any redemption of Bonds, the Trustee shall. determine that it has in the Funds maintained pursuant to this Trust Agreement and available therefor sufficient ffirMgne on hand to pay the principal, redemption premium, if any, and the interest to make any such redemption. If sufficient 0 Lo are available for such redemption, the Trustee shall give notice, as hereinafter in this Section provided, that Bonds, identified by CUSIP numbers, serial numbers and maturity date,have been called for redemption and, in the case of Bonds to be redeemed in part only, the portion of the principal amount thereof that has been called for redemption (or -if all the Outstanding Bonds are to be redeemed, so stating, in which event such serial numbers may be omitted), that they will be.due and payable on the date fixed for. redemption (specifying such date) upon surrender thereof at the Office of the Trustee, at the redemption price (specifying such price), together with any accrued interest to such date, and that all interest on the Bonds, or portions thereof, so to be redeemed will cease to accrue on and after such date and that from and after such date such Bond or such portion shall no longer be entitled to any lien, benefit or security under the Trust Agreement, and the Owner thereof shall have no rights in respect of such redeemed Bond or such portion except to receive payment from such 0MgD of such redemption price plus accrued interest to the date fixed for redemption. Such notice.shall be mailed by first class mail, in a sealed envelope, postage prepaid, at least thirty (30) but not more than sixty (60) days before the date fixed for redemption, to the Information Services and to the Owners of such Bonds, or portions -13- as the same last thereof, so called for redemption, at their respective address ecifid the Trustee hall appear on the Registration Book (and to one addition amounts specified in writing by any principal person's Beneficial Owner of $1,000,000 or more in p in even to the Owner of a have received evidence satisfactory notice a rustee,ionits s e diiscretion, c a' status as a Beneficial Owner). of and riot w the redemption date. A second notice of Bond to be called for redemption if such Owner waives tionotn date. t leach iowner of such waiver is filed with the Trustee certified mail, return receipt region within sixty (60) days redemption shall be sent by $1,000,000 or .more who has not presented Bonds for redemp after the redemption date. Neither ter ofr in such notire of an ceO shall affect the validity of redemption of Bonds hereunder nor tion any Bonds. the proceedings for the redemption even to the Of the notice of redemption by certified mail or by At least two (2) Business Days before notice of redemption is g Owners, the Trustee shall send a copy ositor provided, that overnight delivery, return receipt requested, to the Securities Dep Y; failure to provide notice to hSecuritiestDeresitory reor demptionany Bonds. Services shall not affect the validity of proceedings Notice of redemption of Bonds shall be given by the Trustee for and on behalf of the Authority. Such notice shall be deemed to have been given when mailed, first provide that such notice shall be g class postage prepaid, to the Owner of the Bonds; P Owner of Bonds in an aggregate Trustee shall notify the notifySecurit es by certified mail, return receipt requested, tThe o any ositor shall, in turn, principal amount of at least tion, and theOSecurit es DeP will notify or cause to be Depository of such redemp Depository, or Participants. it is expected that the Participants, in the Securities Dep y+ notified the Beneficial Owners. Any failure on the p received notice failure on the part of a nominee of a Beneficial Owner of a Bond (having ted shall not affect the validity of the redemption of such Bond. from the Trustee, s Participant or otherwise) to notify the Beneficial Owner of the Bon so affec , Section 4.06. Selection of Bonds for Redemption. Whenever less than all o one date, the Trustee shall receive Cash the the Bonds are to be redeemed ve (45) days prior to the redemption date,ling specifyingpayments of Certificate at least forty - maturity or maturities of Bonds to be redeemed that the remail other Revenues available to iz a timely basis the principal of and the interest principal of and interest ci �C� 4 Bonds of the Trustee, will.be sufficient to Qay one date, the Trustee shall select the on the Bonds not so redeemed when due. Whenever less than all the outstanding tion, the lot and in selecting the Bonds for redemp any one maturity are to be redeemed on an particular Bonds to each redeemed by Trustee shall treat each Bond of a denomination of more than Five Thousand Dollars 00) ($5,000) as representing that number of Bonds principalOf vamount of suchlBond (by'00ve denomination which is obtained by dividing Bond of a denomination of more than Thousand Dollars ($5,000), and the portion ee any tl notify the Authority in writing of the numbers Five Thousand Dollars ($5,000) ttoe P rydeemed shall be redeemed in an Authorize Denomination. The Trustee shall p art on such date. of the Bonds so selected for redemption in whole or in p -14- Section 4.07. Payment of Redeemed Bonds. If notice of redemption has been given or waived as provided in Section 4.05, the Bonds or portions thereof called for redemption shall be due and payable on the date fixed for redemption at the redemption price thereof, together with accrued interest to the date fixed for redemption, upon presentation and surrender of the Bonds to be redeemed at the Office of the Trustee or such other office specified in -the notice of redemption. If there shall be called for redemption less than the full principal amount of a Bond, the Authority shall execute and deliver and the Trustee shall authenticate, upon surrender of such Bond, and without charge to the Owner thereof, Bonds of like interest rate and maturity in an aggregate principal amount equal to the unredeemed portion of the principal amount of the Bonds so surrendered in such Authorized Denominations as shall be specified by the Owner. If any Bond or any portion thereof shall have been duly called for redemption and payment of the redemption price, together with unpaid interest accrued to the date fixed for redemption, shall have been made or provided for by the Authority, then interest on such Bond or such portion shall cease to accrue from such date, and from and after such date such Bond or. such portion shall no longer be entitled to any lien, benefit or security under the Trust Agreement, and the Owner thereof shall have no rights in respect of such Bond or such portion except to receive payment of such redemption price, and unpaid interest accrued to the date fixed for redemption. Section 4.08. Purchase in Lieu of Redemption. In lieu of redemption of any Bond pursuant to the provisions of Sections 4.02, 4.03 or 4.04 hereof, amounts on deposit in the Principal Fund or in the Redemption Fund may also be used and withdrawn by the Trustee at any time prior to selection of Bonds for redemption having been given with respect to such amounts, upon a Written Order of the Authority, for the purchase of such Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Authority may in its discretion determine, but not in excess of the redemption price thereof plus accrued interest to the purchase date. All Bonds so purchased shall be delivered to the Trustee for cancellation. ARTICLE V REVENUES AND FUNDS Section 5.01. Establishment of Funds. There is hereby established with the Trustee and the Trustee hereby agrees to maintain the following special trust funds for the Bonds, which the Trustee shall keep separate and apart from all other funds and N m_gneYs held by it:. the Revenue Fund, the Interest Fund, the Principal Fund, the Redemption Fund, the Reserve Fund, the Expense Fund, the Proceeds Fund, the Surplus Fund, the (KC-11ty Q li i n Fund and the Rebate Fund. Section 5.02. Deposit of Proceeds of the Bonds and Other OM Qng The proceeds received from the sale of the Bonds shall be applied by the Trustee as follows: (a) The Trustee shall deposit in the Reserve Fund the sum of Dollars (S ). -15- (b) The Trustee shall deposit in the Expense Fund the sum of Dollars ($ ). (c) The Trustee shall deposit in the Proceeds Fund the sum of Dollars ($ ). (d) The Trustee shall deposit in the Interest Fund the sum of Dollars ($ ), which 0re21g§2nt, $ of interest accrued on the proceeds from the Dated Date of the Bonds to the date of actually delivery of the Bonds to the original purchaser and 2LaapilaLized1ntergsJ=fp=r pUment of interest gn the Bmda. Section 5.03. Revenue Fund. (a) All Revenues, other than Revenues described in subsections (b) and (c) of this Section, received by the Trustee shall be deposited by the Trustee into the Debt Service Account within the Revenue Fund, which account is hereby created. The Trustee shall transfer Revenues from the Debt Service Account, in the amounts and at the times specified in Sections 5.04; 5.05, 5.06 and 5.07 hereof for deposit into the following respective Funds in the following order of priority, the requirements of each Fund to be fully- satisfied, leaving no deficiencies therein, prior to any deposit into any Fund later in priority: (1) Interest Fund; (2) Reserve Fund; (3) Expense Fund; and (4) Surplus Fund. (b) All Revenues derived from Prepayments received by the Trustee shall be deposited in the Prepayment Account within the Revenue Fund, which account is hereby created. Amounts in the Prepayment Account shall be transferred as soon as practicable (and in any event prior to the next succeeding Interest Payment Date which is at least forty-five (45) days following receipt of such Prepayment) to the Redemption Fund to be used to redeem Bonds on such Interest Payment Date pursuant to Section 4.02M) and Section 4.02 subject to the terms of Section 4.08; provided, however, that—prior—to October 1, 1994, 0 M on Yg on deposit in the Prepayment Account may be applied to the purchase of ®= QUIzalLoms at any time prior to the transfer of such (ft n Yg to the Redemption Fund if the conditions to the purchase of a OCilly Q li i contained in Section 5.13 are satisfied with respect to the purchase of such 0 City QS. (c) All Revenues derived from regularly scheduled principal payments of OQU Q li ins shall be. deposited in the Principal Fund and applied in accordance with Section 5.05. -16- Section 5.04. Interest Fund. In addition to the amount set forth in Section 5.02(d), the Trustee shall deposit in the Interest Fund as soon as practicable before each Interest Payment Date from the Debt Service Account an amount of Revenues which, together with any amounts then on deposit in said Fund, is equal to the interest on the Bonds due on such date. On each Interest Payment Date the Trustee shall pay the interest due and payable on the Bonds on such date from the Interest Fund. All amounts in the Interest Fund shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to the Trust Agreement). Section 5.05. Reserve Fund. (a) As soon as practicable before each Interest Payment Date, after making the deposit required by Section 5.04, the Trustee shall deposit into the Reserve Fund from the Debt Service Account an amount of Revenues which, together with amounts then on deposit in the Reserve Fund, equals the Reserve Requirement. Except as provided in subsection (b) hereof, all Omoonm in the Reserve .Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on or the principal of or the redemption premiums, if any, on the Bonds; but solely in the event that insufficient 0 r114n€Y5 are available in the. Interest Fund, the Principal Fund, the Redemption Fund or the Surplus Fund for such purpose.0 (b) If on any date Oma held in the Reserve Fund equal or exceed the amount necessary to redeem all Outstanding Bonds plus any then -applicable premium on such Bonds, the Trustee. shall liquidate the Investment Securities in the Reserve Fund and deposit all such Omin the Redemption Fund pursuant to Section 5.09(b) to redeem Outstanding Bonds pursuant to Section 4.04. (c) If 0m20_e 6 are transferred from the Proceeds Fund to the Redemption Fund pursuant to Section 5.10, the Trustee shall also on the same day transfer from the Reserve Fund to the Redemption Fund an amount 01n excess necessary 12 maintain 3eserve Ful OS level --a s4 Le i R� it — Section 5.06. Expense Fund. After making the deposits required by Sections 5.04 and 5.051 the Trustee shall deposit from the Debt Service Account into the Expense Fund, an amount of Revenues, specified by the Trustee or in a Written Order of the Authority, necessary (taking into account amounts then on deposit therein) to pay all Expenses as they become due and payable. The Trustee shall also deposit.in the Expense Fund all amounts paid to the Trustee pursuant to Section 5.11. Amounts in the Expense Fund shall be applied by the Trustee to the payment of Expenses upon receipt of a Written Order stating the Person to whom payment is to be made, the amount and purpose of the payment and that the payment is a proper charge against the Expense Fund. Section 5.07. Surplus Fund. After making the deposits required by Sections 5.04, 5.05 and 5.06, the Trustee shall deposit any Om remaining in the Debt Service Account into the Surplus Fund. Amounts in the Surplus Fund (together with any -17- earnings thereon) shall be withdrawn upon Written Order of the Authority within one year of receipt by the Trustee and transferred to the Authority and applied to the payment of Expenses or the acquisition or construction of capital improvements by the City; provided, that the Trustee shall have received a Cash Flow Certificate certifying that such fmgnp s are not required to pay the principal of or premium, if any, or interest on the Bonds when due. Prior to -such withdrawal and transfer, money in the Surplus Fund may be used and withdrawn by the Trustee for the purpose of paying the principal of and the interest and redemption premiums, if any, on the Bonds or Expenses; but solely in the event that insufficient Om n are available for such purpose in the Interest Fund, the Principal Fund or the Redemption Fund. Section 5.08. Principal Fund. All MrD transferred to the Principal Fund pursuant to Section 5.03(c) shall be applied to the redemption of Bonds pursuant to Section 4.02, subject to the terms of Section 4.08, on the Interest Payment Dates specified in the most recent Cash Flow Certificate delivered to the Trustee pursuant to Section 7.06, and to the payment of the Principal Installments of the Bonds when due on each Principal Payment Date. Section 5.09. Redemption Fund. (a) All Omongs held in or transferred to the Redemption Fund pursuant to Sections 5.03(b) and 5.10 shall be used for the purpose of redeeming or purchasing all or a portion of the Outstanding Bonds pursuant to Section 4.02 or Section 4.08. (b) All Omheld in or transferred to the Redemption Fund pursuant to Section 5.05(b), or by the Authority for the purpose of redeeming Bonds pursuant to Section 4.04, shall be used for the purpose of redeeming or purchasing all or a portion of the Outstanding Bonds pursuant to Section 4.04 or Section 4.08. (c): The Trustee shall use amounts in the Redemption Fund solely for the payment of the redemption price of Bonds called for redemption pursuant to Section 4.02, 5=11on and Section 4.04 or the purchase price of the Bonds purchased pursuant to Section 4.08 -(accrued interest to the redemption or purchase date on such Bonds shall be paid from the Interest Fund). Section 5.10. Proceeds Fund. The Trustee shall deposit into the Proceeds Fund proceeds of the Bonds in the amount provided by Section 5.02 hereof. Amounts in the Proceeds Fund shall be applied by the Trustee upon receipt of a Written Order of the Authority to the purchase of O it QbEiZzlions subject to the requirements of Section 5.13. If, on the date forty-five (45) days prior to October 1, 1994, any amounts shall remain in the Proceeds Fund such proceeds shall be deposited by the Trustee into the Redemption Fund and shall be used to redeem Bonds pursuant to Section 4.02(a)ft r i that 1_hg A ri v mgt x n thg redem iqt date M specifi in Sectian 4.02 10 M subseenent date ky liv rin iEloidin docum_ 1Q Shg Tag a1 1paq r -fiv dm 20M 12 such radtmaLvon llgtri A y�1ri n certificate 2f SLe A h ri indicatin¢ She nngw redgmab2nn date gn9 soecifvine the In gALn nt Securities 1=4 >2e n r j 3yith amounts—p1 Qsi jnh1� Proceeds F1Zd and -18- iU A Qaah »w Certificate v rif�vine that She rn-te-rol in-e-rand principal 2MTe- s withMgEjtQ such Inv mer_�t Securities. o h r with all other 3evenues. �yii1 be sufficient 14 2,Shan. dig Ell pem inin scheduled i r and principal pguments Qn the _B_onds when dighrt such ngly rademptd an fcl An Q i1Lg cLi. n gff Bmd Caun� IQ lhp-fe feet that a=h extension gg such redgrr� i n date gnd t� purchase 21 Soh- Inlees —mgnt Securities will g9t vim€ interest Qn the Honds tQ be include in eros s income for federal income lax purposes gs 14 bg tg California personal jn c ome tax. Section 5.11. Payment of Expenses. On or prior to July 1 in each year, the Trustee shall deliver to the OCUy 14if the City has issued a OCily'Q ii io purchased or financed by the Authority hereunder, a statement of Expenses expected to be paid to persons other than the Authority or the NC ty during the next succeeding calendar year. The statement shall actually be prepared by the Authority and delivered to the Trustee no later than June 15 in each year. The statement shall indicate the pro rata amount of such Expenses payable with respect to each OQ1y Q i ion, based upon the amount of each OCj>:Y Q li io then outstanding as compared to the total amount of OCisY Q li a i s then outstanding. The OCiSy shall levy and collect such amounts and shall transfer such amounts to the Trustee as received. Such amounts shall be applied by the Trustee as provided in Section 5.06. Section 5.12. Rebate Fund. The Trustee agrees to establish and maintain a fund separate from any other fund established and maintained hereunder designated the Rebate Fund. The Trustee shall deposit in the Rebate Fund the Rebate Requirement all in accordance with Rebate Instructions received from the Authority. The Trustee will apply OLn held in the Rebate Fund as provided in Section 7.04 hereof and according to instructions provided by the Authority. Subject to the provisions of Section 7.04, Orngn� a held in the Rebate Fund are hereby pledged to secure payments to the United States of America. The Authority and the Owners will have no rights in or claim to such Oro a. The Trustee will invest all amounts held in the Rebate Fund in Investment Securities r n 14 Section X42 as directed in writing by the Authority and all investment earnings with respect thereto shall be deposited in the Rebate Fund. Upon receipt of the Rebate Instructions required by the Rebate Certificate to be delivered to the Trustee, the Trustee will remit part or all of the balance held in the Rebate Fund to the United States of America as so directed. In addition, if the Rebate Instructions so direct, the Trustee will deposit OLn into or transfer Oma out of the Rebate Fund from or into such accounts or funds as the Rebate Instructions shall direct. The Trustee shall be deemedconclusively to have complied with such provisions if it follows the written directions of the Authority including supplying all necessary information in the manner provided in the Rebate Certificate to the extent such information is reasonably available to the Trustee, and shall have no liability or responsibility to monitor or enforce compliance by the Authority with the terms of the Rebate Certificate. The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to this Section, other than from OmgnM held in the Rebate Fund or from other Om n _a provided to it by the Authority. The Trustee shall not be responsible -19- for computing the Rebate Requirement.. Computations of the Rebate Requirement shall be .furnished to the Trustee by or on behalf of the Authority in accordance with the Rebate Certificate. Notwithstanding any other provision of this Trust Agreement, including in particular Article XI hereof, the obligation to remit the rebate amounts to the United States and to comply with all other requirements of this Section, and the Rebate Certificates shall survive the defeasance or payment in full of the Bonds. Section 5.13. Acquisition of 00 ity 4 li ins. Upon receipt of a Written Order, the Trustee shall use t$mon deposit in the Proceeds Fund to purchase OIty Q li i s as specified in such Written Order, but only if the following conditions have been satisfied: (a) The Trustee shall have received a transcript of the proceedings in connection with the issuance of the OCA Q li ins, certified by the NCIl * or Bond Counsel to contain the following items: (i) an Opinion of Bond Counsel to the effect that the ;qcily O li tions are valid and binding obligations of the issuer thereof, to the effect that the interest payable with respect to. such OC_iti Q li ions is excludable from gross income for federal income tax purposes, and to the effect that acquisition of such 0CtY 4 li ins under the Trust Agreement will not, of itself, cause interest on any of the Bonds to be includable in gross income for federal income tax purposes or to be subject to State of California personal income tax; (ii) a copy of the Internal Revenue Service Form 8038-G or 8038 or 8038 -GC, as applicable, filed with respect to the OCA Q li ions, with proof of mailing; (iii) an opinion of the City Attorney in a form acceptable to Bond Counsel; L, Y1 g certificate from the [Authorized city 3gnresentative Shit YhP City hhn no n n if ie that tha acevisition at CRY Qblieations will > 'as if, cause the r in 4R thg Bonds tQ be d4y_yneraded; and (v) all other items required to be delivered to the Trustee and the Authority with respect to the GCi -ily O i ions. (b) The Trustee shall have received a Cash Flow Certificate verifying the following: (i) the regularly scheduled debt service payable on the NCity QbliizaLigns will be sufficient, when combined with other Revenues payable to the Trustee with respect to other OQ:11y O li in held by the Trustee or investments of Gmgn_Qin any of the Funds held by the Trustee hereunder, to make all remaining scheduled principal and interest payments on the Bonds; and -20- (ii) the redemption premiums, if any, on the OCA Q li ions payable in the event of early retirement of oCty Q li ins, together with other Revenues available to the Trustee for such purpose, are sufficient to offset any difference between the interest to accrue on the Bonds to be paid or redeemed with the proceeds of prepayment on such GC_i%Y Q li i s (plus any redemption premium payable upon redemption of such Bonds) and the income to be earned on any investment of such proceeds (assured as of the date of payment thereof), in each case until the date of payment or redemption of Bonds, such that in no event will the Prepayment of the MC_ity Q li ion cause the Trustee to have insufficient funds to either (X) pay debt service on the Bonds when due, or (Y) to redeem at the earliest redemption date an amount of Bonds pursuant to Sac -tion 4 02 or Section 4.02(c) and to pay scheduled debt service on the Bonds which remain Outstanding after such redemption, plus in each case expenses to be payable from the Expense Fund. (c) The Trustee shall have received a certificate of the Cash Flow Consultant to the effect that the effective yield on the OCA Q li tions is no greater than the greater of (i) the effective yield on the Bonds, or (ii) unless no longer required under the Act, the effective yield at which the OCISy Q li ti ns could be sold in the open market at the time of the acquisition, taking into account a proportionate share of any reserve fund or credit enhancement securing the Bonds; provided that the (RQ:iiy.Q li ions may provide for additional payments necessary to pay expenses incurred in connection with the issuance of the Bonds to the extent payable to third parties, not including the Authority or any member of the Authority, or to pay reasonable costs of administration of the Authority's Bonds; and provided further, that in no event shall the yield on the 0 cit—V Q li ions be more than 1.5 percentage points greater than the yield on the Bonds (with yield for purposes of such 1.5% test computed in accordance with Section 148 of the Tax Code) unless the Trustee receives an Opinion of Bond Counsel to the effect that failure to so restrict yield will not cause interest on the Bonds to be -included in gross income for federal income tax purposes or to be subject to personal income tax. (d) The Trustee shall have received a Written Certificate to the effect that: (i) no Event of Default has occurred and is then continuing under the Trust Agreement and none of the OCtY Q li ions previously acquired and held hereunder are then in default; and (ii) the Authority has duly authorized, executed and delivered the Purchase Contract, if any, assignment agreement, confirmation of purchase or similar document with respect to the OCA Q li ions and no further action is necessary to effect performance by the Authority of its obligations thereunder (except for the payment of the purchase price for, and acceptance of delivery of, the 0CA: y Q li ins). -21- (e) Except with respect to any rights under a lease -purchase or similar agreement assigned directly to the Trustee, .the 1ffiCity Q li ions shall be in fully registered form and shall be registered in the name of the Trustee. (f) If the 14CIly Q li ion provides that the Trustee shall hold any of the proceeds thereof as fiscal agent or trustee, the Trustee shall have executed and delivered a certificate accepting such responsibility in a form satisfactory to the &Q -1t . (g) Capital improvements financed with the iffier 4 li ins must be publicly owned; provided, however, that if in the opinion of Bond Counsel such use is permitted under applicable federal tax law, an amount not to exceed ten percent (10%) of the proceeds of the sale of the Bonds may be used for private purposes. Section 5.14. OC_i�y 4 li n Fund. (a) All OC -11y Q li i s acquired by the Trustee hereunder shall be deposited into theit Q li ion Fund, which the Trustee is hereby directed to establish and maintain. (b) Upon a Written Order of the Authority, the Trustee shall sell any 001Y Q li ions specified in such Written Order in the open market, but only on the following conditions: (i) the Trustee shall have received an Opinion of Bond Counsel to the effect that the sale of the OCily Q li io s and the use of the proceeds thereof specified in such Written Order will not, of itself, cause interest on the Bonds to be includable in gross income for federal income tax purposes or subject to State personal income tax; (ii) The Written Order of the Authority shall direct the Trustee to use the proceeds of such sale for one or more purposes authorized by subsection (c); and (iii) the Trustee shall have received a Cash Flow Certificate to the effect that (taking into account the use of proceeds specified in such Written Order) the scheduled debt service on all OQ-ty O li ins held by the Trustee hereunder after giving effect to such sale together with other Revenue available to the Trustee for such purpose will be sufficient and timely to pay scheduled debt service on all of the Outstanding Bonds plus Expenses anticipated to be payable from the Expense Fund. (c) The proceeds of any sale of a OCA Q li i n in accordance with subsection (b) shall be deposited in the Redemption Fund in an amount sufficient to retire Bonds pursuant to Section 4.04 in an amount at least equal to the outstanding principal amount of such 19C.= Q i i n at the time of such sale on the earliest date permitted under Section 4.04 and the remaining amount of such proceeds, if any, shall be deposited in the Surplus Fund. -22- (d) Upon a Written Order of the Authority, the Trustee shall waive any redemption premium payable on any 0M Q 1i ' n pthedmatters set forth ed that the e nsSectiont receive a Cash Flow Certificate verifying 5.13(b)(1) )_ a_ nd Q1 - ARTICLE VI SECURITY FOR AND INVESTMENT OF Omone All Ism n required to be deposited with or paid to provision Section 6.01. Security n held the Trustee in any of the Funds (other than the Rebate Fund) referred to m any p of interest on Bonds pursuant to of the Trust Agreement shall be held by the Trustee in trust, and except for OL for the payment or redemption of Bonds or the payment section12-039 shoallhe 1 en and pledge created Trustee,� while held by the constitute Part of the Trust Estate an shall be So long as the Bonds are Outstanding and on deposit to the creditof Fund and all accounts e Section 6.02. Investment of Funds- g the Revenue Fund, there is no default hereunder, Nm t ( li i ns) shall, at the request Interest Fund, the Principal Fund, the Expense in Fund, the Sur at telephonic if confirmed within such funds (ot .esentative of he Authoer than amounts r ty, w which may of an Authorized Rep,and directing that such investment of n held in writing within two (2} Business Days, specifying nest of an Authorized such funds be made, be invested by the on Fund shall,ee in atethe requests, and �m�s in the Rebate Fund or the Redewhich may be telephonic if confirmed in writing within Representative of the Authorityn and directing that such investment of such funds be two (2) Business Days, specifying made, be invested by the Trustee e Trustee shall be in 'r o ernment O his Section. if no such instructions entitled to rely on such instructions for purposes are provided, the Trustee shall invest such funds in Investment Securities described in Clause (xii) of the definitions thereof. 1ffiMon v on depositaragraphs (xi) and/or in the Proceeds Fund and the Reserve Fund shall be invested may not n invested in any other pursuant to a Written Order in investmentnd suchS0mriton described m P a Cash Flow (xi of the definition thereof, investments unless the Trustee receives, at the time of such reiuvestmen , Certificate to the effect that, after such reinvestment, Revenues will be sufficient to pay principal and interest on the Bonds when due. d in the anything to the contrary containe Investme t Security tequal tothe Notwithstanding, Y aid as part of the purchase price of such Investment an amount of interest received with respect to any - amount of accrued interest, if any, p est was SecurityThe�Trustee credited to be irresponsible account)fromfany Jos ses soncconsequences accrued r of any p good faith. investment if it follows such Instructions in g n in each such Fund shall be deemed a The securities purchased with the 0m s or appropriate that some or purchased with the O[p n� in any such Fund be redeemed or sold in Part of such Fund.' If at any time it shall become nee rovisions of the Trust Agreement, all of the securitie RP necessary to comply with the p order to raise Gm20M -23- the Trustee shall effect such redemption or sale, employing, in the case of a sale, any commercially reasonable method of effecting the same. The Trustee shall not be liable or responsible for any consequences resulting from any such investment or resulting from the redemption, sale or maturity of any such investment as authorized pursuant to this section. Investments in the Revenue Fund, the Interest Fund, the Principal Fund, the Redemption Fund, the Expense Fund, and the Surplus Fund may, at the discretion of the Trustee, be commingled at the written direction of the Authority for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in particular Funds amounts received or held by the Trustee; provided, however, that the Trustee shall at all times account for such investments strictly in accordance with the Funds to which they are credited and otherwise as provided in the Trust Agreement. ARTICLE VII COVENANTS OF THE AUTHORITY Section 7.01. Payment of Bonds; No Encumbrances. The Authority shall cause the Trustee to promptly pay, from Revenues and other funds derived from the Trust Estate pledged hereunder, the principal of and redemption premium, if any, on and the interest on every Bond issued under and secured by the Trust Agreement at the place, on the dates and in the manner specified in the Trust Agreement and in such Bonds according to the true intent and meaning thereof. The Authority shall not issue any bonds, notes or other evidences of indebtedness or incur, any obligations payable from or secured by the Trust Estate, other than the Bonds. Section 7.02. Enforcement and Amendment of Obligations. The Authority shall enforce all of its rights with respect to the OC:ily Q li ins to the fullest extent necessary to preserve the rights and protect the security of the Owners under the Trust Agreement. The Authority and the Trustee may, without the consent of or notice to the Owners consent to any amendment, change or modification of any OQU Q li ion that may be required (a) to conform to the provisions of this Trust Agreement (including any modifications or changes contained in any supplemental trust agreement), (b) for the purpose of curing any ambiguity or inconsistency or formal defect or omission, (c) so as to add additional rights acquired in accordance with the provisions of such Oci Q li ion, (d) in connection with any other change therein which is not to the material prejudice of the Trustee or the owners of the Bonds pursuant to an Opinion of Counsel, or (e) in the Opinion of Bond Counsel, to preserve or assure the exemption of interest on the Bonds from federal income taxes or the exemption from State personal income tax. Except for amendments, changes or modifications provided for in the preceding paragraph, neither the Authority nor the Trustee shall consent to any amendment, change or modification of any OQily Q i i n without the mailing of notice and the written approval or consent of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding given and procured as -24- and the NQM, as the case may be, such proposed amendment, change or in this Section provided. If at any time the Authority en being satisfactorily shall request the consent of Qthl Tr �sneethe anyto such shall, poo amendment, change modification of a expenses, notice of such p P indemnified with respect to exp rovided by Section �7 hereof. or modification to be mailed in the same manner as P amendment, change or Such notice shall briefly set forth the nature s such proposed the same are on file all Owners. Nothing contained in this Section shall be modification and shall state that copies of the instrument embodying with the Trustee for inspection by consent of determine to be in construed to prevent the Trustee, on such terms as the Trustee may from settling a default under any M 4 t the best interests of the Owners. covenants that it will from Section 7.03. Further Documents. The Authority take such r the Trust time to time execute and deliver such further required strumecarrytout ahe purpose further action to pledge the faith and as may be reasonable and as may is or subdivision of the State. Agreement; provided, that no such instruments or actions shall p credit or the taxing power of the State or any political Section 7.04. Tax Covenants• action, if any such adversely (a) The Authority will not take any action, arsely affect the exclusion from fail to take any action or failure to take action would gross _income of interest on the Bonds under Section 103 of the Tax Code. e Authority will not directly or indirectly use or Permit the use of any proceeds or take or omit to take any of the Bonds any other funds of the Authority or activity bonds" within the action that would cause the Bonds to be p meaning of Section 141(a) of the Tof Code 01 Section 149(b)t�ofsthe 1Tax CodederT The guaranteed" within the me cent (10%) or more of the proceeds of the Authority will not allow ten p iy nongovernmental units and will Bonds to be usedein the rader centt (5%)0o r more usinesst ofthe proceeds of the Bonds to any not lend five p nongovernmental units. ly use (b) The Authority will not directly or indirectt to take or omit to itpermit the use of any proceeds of the Bonds or any other funds of the Authory bonds" within take anymeaning oftSection 1481ofetheeTax Codethe s tToethat endo the Authority will comply with all requirements of Section 148 n the Tax Code ty time the o the extent applicable to the urposeslofthe this section itis necessary to restrict torlto limit opinion that for purposes Amon held by the Trustee hereunder, the the yield on the investment of any 0 Authority will so instruct the Trustee in writing, and the Trustee will take suc actions as directed by such instructions. (c) The Authority will pay or cause to be paid the Rebate Requirement as provided in the IdefeasanRebate ce of the Bone. This covenant shl survive pay �ds.merit in full or t The Authoity will cause the Rebate Requirement to be deposited in the Rebate Fund as provided in the Rebate Certificate (which is incorporated herein by reference). -25- The Trustee will conclusively be deemed to have complied with the provisions of this section including the provisions of the Rebate Certificate if it follows the directions of the Authority set forth in the Rebate Certificate and the Rebate Instructions and shall not be required to take any actions hereunder in the absence of Rebate Instructions from the Authority. (d) Notwithstanding any provision of this Section, if the Authority shall provide to the Trustee an Opinion of Bond Counsel that any specified action required under this section is no longer required or that some further or different action is required to maintain the exclusion from gross income for federal income tax purposes of interest with respect to the Bonds, the Trustee and the Authority may conclusively rely on such Opinion in complying with the requirements of this Section, and the covenants hereunder shall be deemed to be modified to that extent. (e) The provisions of this Section 7.04 shall survive the defeasance of the Bonds. Section 7.05. Maintenance of Existence. The Authority shall maintain the existence, powers and authority as a joint powers agency under State law. Section 7.06. Cash Flow Certificates. In addition to the other provisions of this Trust Agreement requiring the delivery of Cash Flow Certificates to the Trustee, while any 0M S remain in the Proceeds Fund the Authority shall cause a Cash Flow Consultant to deliver a Cash Flow Certificate to the Trustee at least annually, on or before June 15 of each year, until and including June 15, 1994, or until all amounts in the Proceeds Fund are expended, whichever occurs first, and upon the acquisition, prepayment or redemption of any Mily Q li ion. The Cash Flow Certificate shall specify the dates upon which Bonds shall be redeemed pursuant to Section 4.02(b) upon the receipt of regularly scheduled principal payments with respect to the fficity QliZ 1s, shall certify that the regularly scheduled debt service payable on the ffi�t Q li ins will be sufficient, when combined with other Revenues available to the Trustee for such purpose, to make all remaining scheduled principal and interest payments on the Bonds and shall contain such other information as shall be reasonably requested by the Authority or the Trustee. Section 7.07. Financial Statements. The Authority shall file with the Trustee within one hundred fifty (150) days of the end of each Fiscal Year a complete, separate financial statement (including a balance sheet and a statement of revenues and expenses) together with the report and opinion of an Accountant stating that the financial statements have been prepared in accordance .with generally accepted accounting principles and that such Accountant's examination was performed in accordance with generally accepted auditing standards. ARTICLE VIII DEFAULTS AND REMEDIES Section 8.01. Events of Default. The following events shall be Events of -26- Default hereunder: (a) If default shall be made in the due and punctual payment of any Principal Installment of any- Bonds, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise; (b) if default shall be made in the due and punctual payment of interest on any Bonds when and as the same shall become due and payable; and (c) if default shall be made by the Authority in the observance of any of the other covenants, agreements or conditions on its part in this Trust Agreement or in the Bonds contained, and such default shall have continued for a period of thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority by the Trustee or the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds Outstanding; provided, however, if the default stated in the notice can be corrected, but not within the applicable period, it shall not constitute an Event of Default if corrective action is instituted by the Authority within the applicable period and diligently pursued until the default is corrected subject to any directions or limitations of time established by the Trustee. Section 8.02.' Remedies Upon Event of Default. (a) If any Event of Default shall occur, then, and in each and every such case during the continuance of such Event of Default, the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the Authority, to declare the principal of all of the Bonds Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon such declaration the same shall become and be immediately due and payable. (b) Any such declaration of acceleration is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the Mm n g due shall have been obtained or entered, the Authority shall deposit with the Trustee a sum sufficient to pay all the principal of, premium, if any, and installments of interest on the Bonds, payment of which is overdue, with interest on such overdue principal at the rate borne by the Bonds and the reasonable charges and expenses of the Trustee, including without limitation those of its counsel, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority, Gt= and the Trustee, or the Trustee if such declaration was made by the Trustee, may, on behalf of the Owners of all of such Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, -27- or shall impair or exhaust any right or power consequent thereon. Section 8.03. Proceedings by Trustee. Upon the happening and continuance of any Event of Default the Trustee in its discretion may, or at the written request of the Owners of not less than twenty-five percent (25%) in aggregate principal amount of Bonds Outstanding shall, do the following: (a) By mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Owners, including the right to receive and collect the Revenues; (b) Bring suit upon or otherwise enforce any defaulting OCAY Q li ion; (c) By action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Owners; (d) As a matter of right, have a receiver or receivers appointed for the Trust Estate and of the earnings, income, issues, products, profits and revenues thereof pending such proceedings, with such powers as the court making such appointment shall confer; and (e) Take such action with respect to any and all OCilyQhlfizations or Investment Securities as the Trustee shall deem necessary and appropriate, subject to Section 9.02 and to the terms of such ClQily Q li ins or Investment Securities. Section 8.04. Application of Revenues and Other Funds. If an Event of Default shall occur and be continuing, all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of this Trust Agreement shall be applied by the Trustee as follows and in the following order: (a) To the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Owners and payment of reasonable charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Trust Agreement. (b) Unless the principal of all of the Outstanding Bonds shall be due and payable, FIRST - to the payment of the Owners entitled thereto of all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest, and if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; SECOND - To the payment of the Owners entitled thereto of the unpaid principal of and redemption premiums, if any, on any of the Bonds which shall have become due (other than Bonds matured or called for redemption for the payment of which Mme are held pursuant to the provisions of the Trust -28- Agreement) in the order of their due dates, and if the amount available shall not be sufficient to pay in full the principal of and redemption premiums, if any, on such Bonds due on any particular date, then to the payment ratably, according to the amount due on such date, to the Persons entitled thereto without any discrimination or privilege; and THIRD - To be held for the payment to the Owners entitled thereto as the same shall become due of the principal of and redemption premiums, if any, on and interest on the Bonds which may thereafter become due, either at maturity or upon call for redemption prior to maturity, and if the amount available shall not be sufficient to pay in full such principal and redemption premiums, if any, due on any particular date, together with interest then due and owing thereon, payment shall be made in accordance with the FIRST and SECOND paragraphs hereof. (c) If the principal of all of the Outstanding Bonds shall be due and payable, to the payment of the principal and redemption premiums, if any, and interest then due and unpaid upon the Outstanding Bonds without preference or priority of any of the principal of or the redemption premium, if any, on any Outstanding Bond over any other Outstanding Bond or of any interest on any Outstanding Bond over any other Outstanding Bond, ratably, according to the amounts due respectively for principal and redemption premiums, if any, and interest, to the Owners entitled thereto without any discrimination or preference except as to any difference in the respective amounts of interest specified in the Outstanding Bonds. Whenever fmonevs are to be applied pursuant to the provisions of this section, such Omonevs shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such Om_�ney� available for application and the likelihood of additional ft becoming available for such application in the future. The Trustee shall give, by mailing by first class mail as it may deem appropriate, such notice of the deposit with it of any such Om Section 8.05. Power of Trustee to Enforce. All rights of action under the Trust Agreement or under any of the Bonds secured by the Trust Agreement which are enforceable by .the Trustee may be enforced by it without the possession of any of the Bonds, or the production thereof at the trial or other proceedings relative thereto, and any such suit, action or proceedings instituted by the Trustee shall be brought in its own name, as Trustee, for the equal and.ratable benefit of the Owners subject to the provisions of the Trust Agreement. Section 8.06. Rights of Owners. Anything in the Trust Agreement to the contrary notwithstanding, subject to the limitations and restrictions as to the rights of the Owners in Sections 8.01, 8.02, 8.03 and 8.07, upon the happening and continuance of any Event of Default, the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding shall have the right, upon providing the Trustee security and indemnity reasonably satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, by an instrument in writing executed and delivered to the Trustee, to direct the method and place of conducting all remedial -29- proceedings to be taken by the Trustee under the Trust Agreement. The Trustee may refuse to follow any direction that conflicts with law or the Trust Agreement or that the Trustee determines would subject the Trustee to personal liability without adequate indemnification therefor. Section 8.07. Limitation on Bond Owners' Right to Sue. (a) No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Trust Agreement, the Agreement, the Bond Law or any other applicable law with respect to such Bonds, unless: (1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding, shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own names (3) such Owner or said Owners shall have tendered to the Trustee indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and, (4) 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. (b) Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every ease, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more such Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Trust Agreement or the rights of any other Owners of Bonds, or to enforce any right under the Bonds, this Trust Agreement, the Bond Law or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this Trust Agreement. Section 8.08. Absolute Obligation of Authority. Nothing in Section 8.07 or in any other provision of this Trust Agreement or in the Bonds. contained shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the Owners of the Bonds at their dates of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor and received by the Authority or the Trustee, or affect or impair the right of such Owners which is also absoluteand unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. Section 8.09. Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Bond Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or such Bond Owners, then in every such case the Authority, the Trustee and such Bond Owners, subject to any determination in such proceedings, shall be -30- restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and such Bond Owners shall continue as though no such proceedings had been taken. Section 8.10. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. Section 8.11. No Waiver of Default. No delay or omission of the Trustee or of any Owner of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Trust Agreement to the Trustee or to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient. Section 8.12. Waiver of Events of Default; Effect of Waiver. Upon the written request of the Owners of at least a majority in aggregate principal amount of all Outstanding Bonds .the Trustee shall waive any Event of Default hereunder and its consequences. The Trustee may waive any Event of Default hereunder and its consequences at any time.. If any Event of Default shall have been waived as herein provided, the Trustee shall promptly give written notice of such waiver to the Authority and shall give notice thereof by. first class mail, postage prepaid, to all Owners of Outstanding Bonds if such Owners had previously been given notices of such Event of Default; but no such waiver, rescission and annulment shall extend to or affect any subsequent Event of Default, or impair any right or remedy consequent thereon. Section 8.13. Right of Trustee to Acquire Bonds. The Trustee and its officers and directors may acquire and.hold, or become the pledgee of, Bonds and otherwise deal with the Authority in the manner and to the same extent and with like effect as though it were not Trustee hereunder. ARTICLE IX THE TRUSTEE Section 9.01. Appointment and Acceptance of Duties. The Trustee hereby accepts and agrees to the trusts hereby created to all of which the Authority agrees and the respective Owners of the Bonds, by their purchase and acceptance thereof, agree. Section 9.02. Duties, Immunities and Liabilities of Trustee. (a) The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust Agreement against the Trustee. The Trustee shall, during the existence of any Event of Default which has not been cured, exercise such of the rights and powers vested in it -31- by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent individual would exercise or use under the circumstances in the conduct of that individual's own affairs. (b) The Authority may remove the Trustee at any time and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any.time the Trustee shall cease to be eligible in accordance with subsection (e) of this section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee and thereupon the Authority shall appoint a successor Trustee by an instrument in writing. (c) The Trustee may, subject to (d) below, at any time resign by giving written notice of such resignation by first class mail, postage prepaid, to the Authority, and to the Bond Owners notice of such resignation at the respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing. (d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within thirty (30) days following giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Bond Owner (on behalf of himself and all other Bond Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Trust Agreement shall signify its acceptance of such appointment by executing and delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and to the predecessor Trustee an instrument indemnifying the predecessor Trustee for any costs or claims arisingwduring the time the successor Trustee serves as Trustee hereunder, and after payment by the Authority of all unpaid fees and expenses of the predecessor Trustee, such successor Trustee, without any further act, deed or conveyance, shall become vested with all the Gm evs• estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Authority or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Trust Agreement and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the -32- trusts and conditions herein set forth. Upon request of the successor Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such ftonevs. estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Authority shall mail or cause the successor Trustee to mail, by first class mail postage prepaid, a notice of the succession of such Trustee. to the trusts hereunder to each rating agency which then maintains a rating on the Bonds and to the Bond Owners at the addresses shown on the Registration Books. (e) Any Trustee appointed under the provisions of this Section 9.02 shall be a trust company or a bank having trust powers, having a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and be subject to supervision or examination by federal or state agency. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in this section. (f) No provision in the Trust Agreement shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder unless the Owners have offered to the Trustee security or indemnity, which the Trustee deems reasonable, for such costs, expenses and liabilities that the Trustee may incur. (g) In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity, and under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Bonds. (h) The Trustee makes no representation or warranty, express or implied, as to the compliance with legal requirements of the use contemplated by the Authority of the funds under this'Trust Agreement including, without limitation, the purchase of the r$C_Uy QtligajiLQns hereunder; provided, however, that the Trustee shall not acquire i Ily Q li ins other than pursuant to the requirements of Section 5.13. (i) The Trustee shall -not be responsible for the validity or effectiveness or value of any collateral or security securing any OCIly Q li i n.. The Trustee shall not be responsible for the recording or filing of any document relating to this Trust Agreement or any OCIlly 4 iiz� or of financing. statements (or continuation statements in connection therewith) or mortgage or of any supplemental instruments or documents of further assurance as may be required by law in order to perfect the security interests or lien on or in any collateral or security -securing any OCily Q li i n. The Trustee shall not be -33- deemed to have made representations as to the security afforded thereby or as to the validity or sufficiency of any such document, collateral or security. (j) The Trustee shall not be deemed to have knowledge of any Event of Default hereunder unless and until it shall have actual knowledge thereof at the Office of the Trustee. (k) The Trustee shall not be accountable for the use or application by the Authority or any other party of any funds which the Trustee has released under this Trust Agreement. (1) The Trustee shall provide a monthly accounting of all Funds held pursuant to the Trust Agreement (and all funds held by the Trustee as trustee or fiscal agent pursuant to any OCiti Q i i n to the Authority within fifteen (15) Business Days after the .end of such month and shall provide business statements of account for each annual period beginning July 1 and ending June 30, within 90 days after the end of such period. Such accounting shall show in reasonable detail all financial transactions during the accounting period and the balance in any Funds and accounts (including the Ocily Q li i Fund) created under this Trust Agreement as of the beginning and close of such accounting period. Section 9.03. Merger or Consolidation. Any bank or trust company into which the Trustee may be merged or converted or with which it may be consolidated or any bank or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any bank or trust company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such bank or trust company shall be eligible under subsection (e) of Section 9.02 shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. Section 9.04. Right to Rely on Documents. (a) Any notice, request, direction, election, order or demand of the Authority, the City oro the Agencyffig mentioned herein shall be sufficiently evidenced by an instrument signed in the name of the Authority, the CityO or the Agency0, as the case may be, by its Authorized Representative, and any resolution of the Authority may be evidenced to the Trustee by a certified resolution. (b) The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, requisition, report, opinion, bonds or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be Authority Bond Counsel or other counsel of or to the Authority, 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; provided, however, the Trustee shall in no event delay any payment with respect to the Bonds in anticipation of any such opinion. -34- (c) Whenever in the administration of the trusts imposed upon it by this Trust Agreement the Trustee shall deem it necessary ior desirable that a matter e proved or established prior to taking or suffering any action hereunder, such herein cally matter (unless other evidence in respect thereof be Band establishedbya prescribed) may be deemed to be conclusively p good faith under the Written Certificate of the. Authority, and such Certificate shall be full warrant t in reliance ulon such Certificate, but in its to the Trustee for any action taken or suffered in g provisions of this Trust Agreemn lieu thereof, accept other evidence of such discretion the Trustee may, deem reasonable. matter or may require such additional evidence as it may (d) The Trustee shall be entitled to advice of .counsel and other professionals rofessional malpractice of any attoney-at-law or concerning all matters of trust and its duty hereunder, but the. Trustee shall not be answerable for the p Agreement, if such attorney - certified public accountant in connection with the rendering of his professions advice in accordance with the terms of this Trust Ag at -law or certified public accountant was selected by the Trustee with due care. Section 9.05. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Trust Agreement shall be retained in s of at least twenty-five percent �� the Ownerrep on reasonable prior notice its possession and shall be subject during business hours an upon resenta- to the inspection of the Authority, the (25%) of the aggregate principal amount of the Bonds, and their agents and tives duly authorized in writing. Section 9.06. Compensation and Indemnification. The a purchasehof its*OM cause the G= to pay in accordance with the terms is the p Q li ion, the Trustee reasonable compensation for its services rendered hereunder and easonable expenses, disbursements and ad ationsthereunder attorneys fees, incurred by reimburse the Trustee for the Trustee n the performance of its oblig and with respect to the OM Q li ins' law, to indemnify the The Authority agrees, to the extent permitted by attorneys and agents for, and to hold it loss, liability or expense incurred without negligence or willful Trustee and its officers, directors, employees,the acceptance or harmless against, any performance of imposed b the Trust Agreement, including P ainst any misconduct on its part arising out y or T connection with i itself against administration of the trusts imp y expenses of defending of its Owers or its duties hereunder, including the costs and exp purchase it the �S claims or liability in connectionwh the exercise efinancr ewithmtheep f any i the and the duties hereunder (ii) the projects Bonds or the purchase of the �S�t 412E t — Q i io s; (iii) the sale of any the Bonds or the 0� carrying out of any of the transactions contemplated fact or omission to state a Q li ins; or (iv) any untrue statement of any material fact necessary to make the statements off cial stade, in latement or other disclosure under which they were made, not misleading in anylon respect to document utilized by the Authority r under its iauthority obligations hereunderiwith respe o ensaons set forth in this Article the Bonds or the Q 1 i n' mens le indemnity of the Trustee and the provision for its comp of shall survive and remain valid and binding notwithstanding the maturity and pay -35- the Bonds, or the resignation, or removal of the Trustee. The Trustee shall have no responsibility for or liability in connection with assuring that all of the procedures or conditions to closing set forth in the contract of purchase for sale of the Bonds that all documents required to be delivered on the closing date to the parties are actually delivered, except its own responsibility to receive or deliver the proceeds of the sale, deliver the Bonds and other certificates expressly required to be delivered by it and its counsel. The Trustee shall not be responsible for determining or investigating whether any 0= Q li ion purchased pursuant to Section 5.10 and 5.13 is a NCIty 4 li i n, as defined in this Trust Agreement, and the Trustee may conclusively rely on the Authority's determination and direction in this regard; provided, however, that the Trustee shall not acquire GOA Q li ins other than pursuant to the requirements of Section 5.13. The Trustee shall be entitled to rely on the covenants and representations of each obligor on any 0S�t 4 i i and in the documents and certificates delivered in connection therewith and the certificates furnished by such obligor in accordance with Section 5.13 hereof, and each Written Order. Section 9.07. Liability of Trustee. The recitals of facts herein and in the Bonds contained shall be taken as statements of the Authority, and the Trustee does not assume any responsibility for the correctness of the same, and does not make any representations as to the validity or sufficiency of the Trust Agreement or of the Bonds or of any NQ:ily Q li i n, and shall not incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it; provided, that the Trustee shall be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. The Trustee (in its individual or any other capacity) may become the Owner of Bonds with the same rights it would have if it were not Trustee hereunder, and, to the extent permitted by law, may act as depositary for and permit any of its officers, directors and employees to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds.then Outstanding. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of a majority in principal amount of the Outstanding Bonds 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, hereunder. Whether or not therein expressly so provided; every provision of this Trust Agreement or related documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article. Section 9.08. Indemnity for Trustee. Before taking any action or exercising any rights or powers under the Trust Agreement, the Trustee may require that satisfactory indemnity be furnished to it for the reimbursement of all costs and expenses which it may incur and to indemnify it against all liability, except liability which may result from its negligence or willful misconduct, by reason of any action so taken. Section 9.09. Successor of Securities Depository. in the event the Securities -36- qualified to act as a securities depository and ency under the Securities and Exchange Act of 1934, as amended, Depository resigns or is no longer 9 provided the Trustee receives registered clearing ag the Trustee may appoint a successor Securities with respect to the ability of the successor responsibilities- Any such successor Securities written evidence satisfactory ha the Trustee with resp . tered clearing agency under Securities Depository to discharge its resp applicable statute or Depository shall d a securitiesdepository of 1934, as which is a or other app the Securities and Exchange its receipt of a certificate of cancellation shllcause in the regulation. The Trustee upn makes tht authorization and delivery of Bonds to 'the successor I Securities Depository appropriate pr, in Sectio— hereof, the Trustee shall ro riate denominations and f�mii Al r i ���- dtermin i or receives the notice P— to be sent and issue Bonds as required therein. cause the notices required in Section ARTICLE X MODIFICATION OR AMENDMENT OF THE TRUST AGREEMENT Section 10.01. Amendments Permitted. ority and of (a) This Trust Agreement and the rights and oblige benmodified or s of the amended from time b a trust agreement or agreements supplemental the Owners of the Bonds and of the Trustee may enter into with the written time to time and at any Y al amount of all Bonds hereto, which the Authority and jorit the in gTrustee grega a princip consent of the owners of a all Y then Outsttee. No such anding; which shall have been lthe the or mandatory Bonds, or reduce the amount of principal modification or amendment shall: y fund requirements thereon, or extend sinking fund redemption date of any thereof, the rate of interest, or sinking a of Bonds the consent of the the time of payment, without the consent of the Owner of each Bon so such modification or amendme affected; or, (2) reduce the aforesaid percentage Owners of which is required to effect any with the lien created this (3) permit the creation of any lien on the Revenues and other assets pledged under this Trust Agreement prior to or rs a parity Trust Agreement or deprive the Owners of the Bonds of the lien created by this Trust Agreement on such Rev w tho Ot t the consent of the Owners of all of provided in this Trust Agreement), for the consent of the the Bonds then Outstanding. It sharticulareformneceSofr anv supplemental trust Bond Owners to approve the p rove the tl after the execution by the Authority and the. agreement, but it shall be sufficient if such consent she approve substance thereof. Promptly Trustee of any supplemental Trust Agreement pursuant to this subsectionforthin first class mail postage preQaid, setting the Trustee shall mail a.notice (the form of which shall be furnished to the Trustee by the Authority), by ie mental trust agreement, to the general terms the substance a such supe defect therein, shall not, Owners of the Bonds at the respective addresses shown on the Registration failure to give such notice, or any such supplemental Books. Any way impair or affect the validity of any however, in any Y trust agreement. -37- (b) This Trust Agreement and the rights and obligations of the Authority, of the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a trust agreement or agreements supplemental hereto, which the Authority and the Trustee may enter into without the consent of any Bond Owners, for any one or more of the following purposes: (1) to add to the covenants and agreements of the Authority in this Trust Agreement contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority; (2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Trust Agreement, or as to any other provisions of the Trust Agreement as the Authority may deem necessary or desirable, in any case which do not adversely affect the security for the Bonds granted hereunder; (3) to modify, amend or supplement this Trust Agreement in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; (4) to modify, amend or supplement this Trust Agreement in such manner as to cause interest on the Bonds to be excludable from gross income for purposes of federal income. taxation by the United States of America; (5) to modify any of the requirements with respect to the terms and provisions of any issue of 0Q1Jy O li i s; and (6) to modify the definition of Government Obligations or Investment Securities. with any effect and to any extent whatsoever permissible by law. Section 10.02. Effect of Supplemental Trust Agreement. Upon the execution of any supplemental trust agreement pursuant to this Article, this Trust Agreement shall be deemed to be modified and amended in accordance therewith, and the rights, duties and obligations under this Trust Agreement of the Authority, the Trustee and all Owners of Bonds Outstanding 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 such supplemental trust agreement shall be deemed to be part of the terms and conditions of this Trust Agreement for any and all purposes. Section 10.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any supplemental trust -agreement pursuant to this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority and the Trustee as to any modification or amendment provided for in such supplemental trust agreement, and, in that case, upon _38- demand of the Owner of any Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Office of the Trustee a suitable notation shall be made on such Bonds. If the supplemental trust agreement shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the Trustee, to any modification or amendment contained in such supplemental trust agreement, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand of the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee in , California, without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same interest rate and maturity. Section 10.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner. ARTICLE XI DEFEASANCE Section 11.01. Defeasance. If and when the Bonds secured hereby. shall become due and payable in accordance with their terms or through redemption proceedings as provided in the Trust Agreement, or otherwise, and the whole amount of the principal and.the redemption premiums, if any, and the interest so due and payable upon all of the Bonds shall be paid, or provision shall have been made for the payment of the same, together with all other sums payable under the Trust Agreement by the Authority, including all feesandexpenses of the Trustee, then and in that case, the Trust Agreement and the lien created hereby shall be completely discharged and satisfied and the Authority shall be released from the agreements, conditions, covenants and terms of the Authority contained in the Trust Agreement, and the Trustee shall assign and transfer to or upon the order of the Authority all property (in excess of the amounts required for the foregoing) then held by the Trustee free and clear of any encumbrances and shall execute such documents as may be reasonably required by the Authority in this regard. Notwithstanding .the satisfaction and discharge of the Trust Agreement, those provisions of the Trust Agreement relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, nonpresentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, remain in effect and shall be binding upon the Trustee and the Owners and the Trustee shall, subject to Section 12.09, continue to be obligated to hold in trust any 0 !D9Dor investments then held by the Trustee for the payment of the principal of and redemption premiums, if any, on and interest on the Bonds, to pay to the Owners of Bonds the funds so held by the Trustee as and when such payment becomes due, and those provisions of the Trust Agreement contained in Section 9.04 relating to the compensation and indemnification of the Trustee shall remain in' effect and shall be binding upon the Trustee and the Authority. Section 11.02. Bonds Deemed to Have Been Paid. If Mrngn= shall have been -39- set aside and held by the Trustee for the payment or redemption of any Bonds and the interest installments therefor at the maturity or redemption date thereof, such Bonds shall be deemed to be paid within the meaning and with the effect provided in Section 11.01. Any Outstanding Bond shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in Section 11.01 if (a) in case said Bonds are to be redeemed on any date prior to their maturity, the Authority shall have given to the Trustee in form satisfactory to the Trustee irrevocable instructions to mail notice of redemption of. such Bonds on such redemption date, such notice to be given in accordance with the provisions of Article IV, (b) there shall have been deposited with the Trustee in escrow either Oma in an amount which (as stated in a Cash Flow Certificate) shall be sufficient, or noncallable Government Obligations the principal of and the interest on which when due, and without any reinvestment thereof, will provide Oma which, together with the OD if any, deposited with or held by the Trustee at the same time, shall be sufficient (as verified by a Cash Flow Certificate), to pay when due the principal of and the redemption premiums, if any, and the interest due and to become due on such Bonds on and prior to the redemption date or maturity date thereof, as the case may be, and (c) in the event any of such Bonds are not to be redeemed within the next succeeding sixty (60) days, the Authority shall have given the Trustee in form satisfactory to the Trustee irrevocable instructions to mail, as soon as practicable in the same manner as a notice of redemption is mailed pursuant to Article IV, a notice to the Owners of such Bonds and to the Securities Depositaries and the Information Services that the deposit required by (b) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with this Section and stating such maturity or redemption dates upon which Om41ge s are to be available for the payment of the principal of and redemption premiums, if any, on and interest on such Bonds. Neither the securities nor 0M deposited with the Trustee pursuant to this section nor principal or interest payments on any such securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and redemption premiums, if any, on and interest on such Bonds; provided, that any cash received from such principal or interest payments on such obligations deposited with the Trustee, if not then needed for such purpose, shall, to the extent practicable and at the direction of the Authority, be reinvested in Government Obligations maturing at times and in amounts, together with the other OMonevs and payments with respect to Government Obligations then held by the Trustee pursuant to this section, sufficient to pay when due the principal of and redemption premiums, if any, and interest to become due on such Bonds on and prior to such redemption date or maturity date thereof, as the case may be, and interest earned from such reinvestments shall, upon receipt by the Trustee of a Written Order so directing, be paid over to the Authority as received by the Trustee free and clear of any trust, lien or pledge. Section 11.03. Omonevs Held for Particular Bonds. Except as otherwise provided in Section 11.02, the amounts held by the Trustee for the payment of the principal or the redemption premiums, if any, or the interest due on any date with respect to particular Bonds shall, on and after such date and pending such payment, be set aside on its books and held in trust by it solely for the Owners of the Bonds entitled thereto. ARTICLE %II -40 MISCELLANEOUS Section 12.01. Liability of Authority Limited to Revenues. Notwithstanding anything in this Trust Agreement or in the Bonds contained, neither the Authority nor any member thereof shall be required to advance any 0m derived from any. source other than the Revenues and other assets pledged under this Trust Agreement for any of the purposes in this Trust Agreement mentioned, whether for the payment of the principal of or interest on the Bonds, for payment of Expenses or for any other purpose of this Trust Agreement. Nevertheless, the Authority may, but shall not be required to, advance for any of the purposes hereof any funds of the Authority which may be made available to it for such purposes. Section 12.02. Successor Is Deemed Included in All References to Predecessor. Whenever in this Trust Agreement either the Authority or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Trust Agreement contained by or on behalf of the Authority or the Trustee shall bind and inure to the benefit of the successors and assigns thereof whether so expressed or not. Section 12.03. Limitation of Rights to Parties and Bond Owners. Nothing in this Trust Agreement or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Authority, the Trustee, the Local Agencies and the Owners of the Bonds, any legal or equitable right, remedy or claim under or in respect of this Trust Agreement or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee and the Owners of the Bonds. Section 12.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in this Trust Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the Person entitled to receive such notice and in any such 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 12.05. Destruction of Bonds. Whenever in this Trust Agreement provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee shall destroy such Bonds as may be allowed by law, and, upon the written request of the Authority, deliver a certificate of such destruction to the Authority. Section 12.06. Severability of Invalid Provisions. If any one or more of the provisions contained in this Trust Agreement or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Trust Agreement and such invalidity, illegality or unenforceability shall not affect any other provision of this Trust Agreement, and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority hereby declares that it would have entered into this Trust Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the. fact that any one or more -41- Sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid ormnenforceable. Section 12.07. Notices. All notices or communications herein required or permitted to be given to the .Authority or the Trustee shall also be given to the original purchaser of the Bonds (not less than two Business Days in advance of the giving thereof to the Authority or the Trustee, as applicable) and shall be in writing and shall be deemed to have been sufficiently given or served for all purposes by being delivered or sent by facsimile.transmission or by being mailed with postage prepaid, addressed as follows: If to the Authority: Santa Clarita Public Financing Authority 23920 Valencia Boulevard, Suite 300 Santa Clarita, California 91355 Attention: Executive Director If to the Trustee: Attention: Reference Trust No. Each such notice, statement, demand; consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender's receipt of an appropriate answer back or other written acknowledgment or confirmation of receipt of the entire notice, approval, demand, report or 'other communication, (c) if given by first class, registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, seventy-two (72) hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, twenty-four (24) hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this section. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impractical to mail to the Owners of Bonds notice of any event when such notice is required to be given pursuant to any provision of the Trust Agreement, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Any notice required. to be given to the Owners pursuant to any provision of the Trust Agreement shall also be given to Section 12.08. Evidence of Rights of Bond Owners. (a) Any request consent or other instrument required or permitted by this Trust Agreement to be signed and executed by Bond Owners may be in any number of -42- concurrent instruments of substantially similar tenor and shall be signed or executed by such Bond Owners in Person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any Person of Bonds transferable by delivery, shall be sufficient for any purpose of this Trust Agreement and shall be conclusive in favor of the Trustee and the Authority if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws .thereof to take acknowledgments of deeds, certifying that the Person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. (c) The ownership of registered Bonds shall be proved by the Registration Books (d) Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in accordance therewith or reliance thereon. (e) In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Owners of the Bonds upon such notice and in accordance with such rules and regulations as the Trustee considers fair and reasonable for the purpose of obtaining any such action. Section 12.09. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Trust Agreement, Bonds which are known by the Trustee to be owned or held by or for the account of the Authority or the Off, or by any other obligor on the Bonds, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the OCIi or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by,. or under direct or indirect common control with, the Authority or the 0= or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 12.10. Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to -43- the provisions of Section,04 but without any liability for interest thereon. ction 12.11. and Trust Agreement to be established and maintains by the Trustee . Any Fund or ccount may be establisby h d and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect. thereto, be treated either. as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with industry standards to the extent practicable, and with due regard for the protection of the security of the Bonds and the rights of every Owner thereof. ion ent on required t be made hereundermon a day which is not Days.usiness usin ss Day, such pent ayment t shall be made on the next succeeding Business Day, provided however, interest shall not accrue to such next succeeding Business Day. 12.13. ion of employee of henA thoritylshalltbe individually or personally Member, able for the payment of the principal of or premium or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such Member, officer, agent or employee from the performance of any official duty provided bylaw or by this Trust Agreement. his Trust Ageement may be executed ino any number Ex a do each of uchTcou erp tsrshall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. Section 12.15. Governing Laws. This. Trust Agreement shall be governed by and construed in accordance with the laws of the State. Section 12.16. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of the interest on, or principal or prepayment premiums, if any, of any Bond which remains unclaimed for two (2) years after the date when such amounts have become payable, if such money was held by the Trustee on such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date such amounts have become payable, shall, pursuant to a Written Order, be paid by the Trustee to the .authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Authority for the payment of such amounts; provided, that before being required to make any such payment to the Authority, the Trustee shall, at the expense of the Authority, give notice by first class mail to all Owners and to those securities depositories and securities information services selected by it pursuant to Section 4.04 that such money remains unclaimed and that after a .date named in such notice, which date shall not be less than sixty (60) days after the date of giving such notice, the balance of such money then unclaimed will be returned to the Authority. -44- IN WITNESS WHEREOF, the SANTA CLARITA PUBLIC FINANCING AUTHORITY has caused this Trust Agreement to be signed in its name by its Chairman and attested by its Secretary, and , in token of its acceptance of the trusts created hereunder, has caused this Trust Agreement to be signed in its corporate name by its officers thereunto duly authorized, all as of the day and year first above written. [SEAL] Attest: By Secretary SANTA CLARITA PUBLIC FINANCING AUTHORITY By Chairman Title -45- as Trustee EXHIBIT A DEFINITIONS "Accountant" shall mean an independent certified public accountant, or a firm of independent certified public accountants, selected by the Authority. "Act" means Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, as amended and supplemented from time to time. "A_gency" means the Redevelopment Agency of the City of Santa Clarita and any successor thereto. "Agreement" means that certain Joint Exercise of Powers Agreement, dated August 5, 1991, by and between the Agency and the City, as duly amended and supplemented from time to time. "Annual pg¢t Service" tgggilsfor each 3md year. her um 4L1Idthg in an The Qutstandine fonds in such Bgnn year, nn JbJ= princioa1 @m_ount �f Yhg Qptstandin¢ Bonds scheduled 1s bbg it such Bgn� gam@ !ffi "Authority" means the Santa Clarita Public Financing Authority, a joint exercise of powers agency organized and existing under the Agreement and under and by virtue of the laws of the State of California. "Authority Bond Counsell' means Burke, Williams, Sorensen &- Gaar, Los Angeles, California, and its successors. "Authorized Denomination" means the amount of $5,000 or any integral multiple thereof. "Authorized Newspaper" shall mean The Bond Buyer or any other financial newspaper customarily published at least once a day for at least five (5) days (other than legal holidays) in each calendar week, printed in the English language and of general circulation in the City and.State of.New York. "Authorized Representative" means: (A) with respect to the Authority, its Chairman, Treasurer, Executive Director or Secretary, or any other Person designated as an Authorized Representative of the Authority by a Certificate of the Authority signed by its Chairman and filed with Nthe City, the Authority and the Trustee; (B) with respect to. the City, its Mayor, City Manager, Assistant City Manager, Acting City Manager, Director of Community Development or Director of Finance, or any other Person designated as an Authorized Representative of the City by a Certificate signed on behalf of the City by its City Manager or Acting City Manager and filed with the Authority and the Trustee; (C) with respect to the.Agency, its Chairman, Executive Director, Assistant Executive Director, Secretary, Treasurer, or any other Person designated as an Authorized Representative of the Agency by a Certificate signed on behalf of the Agency by its Executive Director and filed with the .Authority and the Trustee; Nand (ND) with respect to the Trustee, any Vice President, any Assistant Vice President or anv Trust Officer of the Corporate Trust Department of the Trustee, and when used with reference to any act or document also means any other Person authorized to perform such act or sign any document by or pursuant to a resolution of the Board of Directors of A-1 the Trustee. "Bond" or "Bonds" shall mean any single Bond or all of the Local Aeenev $evenue Don -du Series 19910, as the case may be, authorized and issued by the Authority and authenticated by the Trustee and delivered under the Trust Agreement. "Bond Counsel" means either Authority Bond Counsel or 0( icy Bond Counsel, as applicable in the context hereof. "Bond Law" means .the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 of the Act (commencing with Section 6584), as amended from time to time. "Business Day" means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State of California, or in any state in which the Principal Corporate Trust Office is located, are closed. "Cash Flow Certificate" shall mean a written certificate executed by a Cash Flow Consultant. "Cash Flow Consultant" shall mean , California, or such other financial advisor retained by the Authority ifie to provide financial advisory services with respect to Nthe Qi Obligations. wig g Which h nst a fu --time Implovee gf the Cit . '_'CEDE & QQ�! means CEDE & QQ�, as pominee 2.f Thg p Trust Comoanv. (i.= York. New Y�Ir Y. "Chairman" shall mean the Chairman of the Authority. "City" means the City of Santa Clarita, a municipal corporation organized under the laws of the State of California, and any successor thereto and whiff constitutes a '� r mental U= A= 1_hg meaninz 91 Section 142(b)(1)(A) of Slg Tax QoSlg and B'hose =rmitted 12 bg purauant to Skis T=at Q,�r�ent. "_City Bond Qounsel" mens with -2 the issuance ofn= Local Q li i b� a Lg-qEa Agency, a irm of nationally listed experienced in the issuance of oblieations Shy in r 42 Which ia excluded f_rgm � i�Qrpg for purposes 2 Section LU of 29 Ta_x Qo_de lyhie_h fitm jisf�€d by auch Low Amu ann which acts as to—nd counsel 14 such Local Age in connection with the issuance 01 M issue ff such Local Q lieations. and which LnU be Bgnd Cou sn gl. _'City Qblieation" means the certificates of participation in the Q_it Q li i n listed gm Exhi i Q hereof a such other certificates Qf particinatio in oblieations the Q v substituted therefor in which the r i v�iue of I P r lie i al jmrQ9v ments ins a ual So 2r 7r ater than = jujEunt gfyroceeds Used 19 accuire. construct. Qeuip �, improve such Pq1�rc Qat [in au and whiff Sherg ei a i nQ=nand pledee 4f a ri v interest in She Facilities anti 2 o h r substituted ro gstate Qr improvements ass€S f or h in Section Qf the Lease Agreement dated October 1991 iLhs "Lease") � and i�tween She �eenev and Sha City. Whigh are authorized 12 bI it b=* jh& A ori r n *2 the Bgnsj LaWl provided itial in n4 v n g_oll 1� Cit Q li i bg a r f n oblieation under thg Tam 9291 unless She. Trustee receives an Q2inign 4f Boa CQmnol14 the that A-2 aceuisition of such li ion will not v rselfa feet the exclusion of in r 4_,_n lb -e Qons from Bross h—aQmg f2r federal income >m ourooses. "City Obli¢ation Fund„ shall mem Shp. fund D=y that name established and maintained r n ion .14. "Dated Date" means October 1L 1991. "Debt Service Account" means the account by that name within the Revenue Fund established and maintained, pursuant to Section 5.03(a). "Event of Default" means any ofthe events specified in Section 8.01. "Expense Fund" shall mean the Fund by. that name created pursuant to Section 5.06. "Expenses" shall mean all costs of issuing the Bonds and all administrative costs of the Authority that are charged directly or apportioned to the administration of the OCIlly Obligations and the Bonds, such as salaries and wages of employees, audits, overhead and taxes (if any), legal fees and expenses, amounts necessary to pay to the United States of America or otherwise to satisfy requirements of the Tax Code and the regulations thereunder in order to maintain the tax-exempt status of the Bonds, and compensation, reimbursement and indemnification of the Trustee, together with all other reasonable and necessary costs of the Authority or charges required to be paid by it to comply with the terms hereof or of the Bonds or in connection with the acquisition of the 0 City Obligations. "Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official fiscal.year period of the Authority and certified to the Trustee in writing by an Authorized Representative of the Authority. 0 "Funds" shall mean, collectively, the Revenue Fund, the Interest Fund, the Principal Fund, the Redemption Fund, the Expense Fund, the Reserve Fund, the Surplus Fund, the Proceeds Fund, the Obligation Fund and the Rebate Fund created pursuant to Article V. including all accounts within any such Fund. "Government Obligations" shall mean and include any of the following securities: lawful currency of the United States; State and Local Government Series issued by the United States Treasury (SLGS); United States Treasury bills, notes and bonds; and certificates, receipts or other obligations evidencing direct ownership of, or the right to receive, a specified portion of one or more interest payments or principal payments, or any combination thereof, to be made on any United States Treasury bill, note or bond ("STRIPS"). "Information Services" shall mean the following information services: (i) Financial Information, Inc.'s "Daily Called Bond Service," 30 :Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; (ii) Kenny Information Services "Called Bond Service," 65 Broadway Street, 28th Floor, New York, New York 10004; (iii) Moody's "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and (iv) Standard and Poor's "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or, in accordance with then -current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds, or no such services, as the Authority A-3 may designate in a Written Certificate delivered to the Trustee. "Interest Fund" means the account by that name established with the Trustee pursuant to Section 5.04. "Interest Payment Date" means April 1 and October 1 in each year, commencing AMil jz X992 so long as any Bonds remain Outstandings x e that if such oag -n-Qt 11 �n a Dusiness DmIhe In r Pam Date ¢g t next Business Dom, "Investment Securities" shall mean and include any of the following securities: (i) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any of the federal agencies and federally sponsored entities set forth in clause (iii) below to the extent unconditionally guaranteed by the United States of America; (ii) any certificates, receipts, securities or other obligations evidencing direct ownership of,, or the right to receive, a specified portion of one or more interest payments or principal payments, or any combination thereof, to be made on any bond, note, or other obligation described above in clause (i); obligations of the Federal National Mortgage Association, the Government National Mortgage Association, Federal Home Loan Bank Board, Farmers Home Administration and Federal Home Loan Mortgage Association; (iv) agency bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States of America; or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; (v) obligations of any state, territory or commonwealth of the United States of America or any political subdivision thereof or any agency or department or instrumentality of the foregoing; provided that at the time of their purchase such obligations are rated in any of the O-tW4 highest rating categories by a nationally recognized rating agency; (vi) any bonds or other obligations of any state of the United States of America or any political subdivision thereof (a) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (b) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described above in clause (1) or (ii) A-4 which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the interest payment dates and the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, (c) as to which the principal of and interest on the bonds and obligations of the character described above in clause (i) or (ii) which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay the principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (vi) on the interest payment dates and the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referredto in subclause (a) of this clause (vi), as appropriate, and which have been rated in the highest long- term Orating Ocategory of each,nationally recognized rating agency then rating the Bonds; (vii) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by any corporation which are, at the time of purchase, rated by a nationally recognized rating agency in its highest short-term Orating ilpategory, or, if the term of such indebtedness is longer than three (3) years, rated by a nationally recognized rating agency in one of its two highest long-term rating categories, for comparable types of debt obligations; (viii) demand or time deposits or certificates of deposit, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of any state of the United States of America or any national banking association (including. the Trustee) or any state banking corporation, provided that such certificates of deposit shall be purchased directly from such a bank, trust company or national banking association and shall be either (1) continuously and fully insured by the Federal Deposit Insurance Corporation, or (2) continuously and fully secured by such securities and obligations as are described above in clauses (i) through (v), inclusive, which shall have a market value (exclusive of accrued interest) determined at least monthly to be at least equal to the principal amount of such certificates of deposit and shall be lodged with the Trustee or other fiduciary, as custodian, by the bank, trust company, national banking association of state banking corporation issuing such certificates of deposit, and the bank, trust company, national banking association or state banking corporation issuing each such certificate of deposit required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such certificate of deposit will at all times be an amount equal to the principal amount of each such certificate of deposit and the Trustee shall be entitled to rely on -each such undertaking; (ix) taxable commercial paper, other than that issued by bank holding companies, or tax-exempt commercial paper, in either case rated in the highest short-term rating category by a nationally recognized rating agency; A-5 (x) variable rate obligations required to be redeemed or purchased by the obligor or its agent or designee upon demand of the holder thereof secured as to such redemption or purchase requirement by a liquidity agreement with a corporation and as to the payment of interest and principal either upon maturity or redemption (other than upon demand by the holder thereof) by an unconditional credit facility of a corporation, provided that the variable rate obligations themselves are rated in the highest Orating Ocategory in respect to its short-term rating, if any, and in any of the two highest rating categories in respect to its long-term rating, if any, by a nationally recognized rating agency, and that the corporations providing the liquidity agreement and credit facility have, at the date of acquisition of the variable rate obligation by the Trustee, an outstanding issue of unsecured, uninsured and unguaranteed debt obligations rated in any of the two highest long-term rating categories by a nationally recognized rating agency; (xi) any repurchase agreement with any bank or trust company organized under the laws of any state of the United States of America or any national banking association (including the Trustee) or any state banking association having a minimum permanent capital of Seventy -Olive Million Dollars ($75,000,000) or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities and obligations described in clauses (i), (ii), (iii) or (iv) above, which shall have a market value (exclusive of accrued interest and valued at least monthly) at least equal to the principal amount of such investment and shall be lodged with the Trustee or other fiduciary, as custodian, by the bank, trust company, national banking association, state banking association or bond dealer executing such repurchase agreement, and the entity executing each such repurchase agreement required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such repurchase agreement (as valued at least monthly) will be an amount equal to the principal amount of each such repurchase agreement and the Trustee shall be entitled to rely on each such undertaking; (xii) any cash sweep or similar account arrangement of the Trustee, the investments of which are limited to investments described in items (i), (ii), (iii), (iv), (v) and (xi) of this definition of Investment Securities and any money market fund, the entire investments of which are limited to investments described in (i), (ii), (iii), (iv), (v) and (xi) of this definition of Investment Securities; provided that as used, in this item (xii) Ginvestments will be deemed to satisfy the requirements of item (xi) if they meet the requirements set forth in item (xi) ending with the words "clauses (1), (ii), (iii) or (iv) above" and without regard to the remainder of such item (xi); (xHN shares in a California common law trust established :pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government A-6 Code of the State of California, as it maybe amended. "Maximum Annual Det Service" meanss as of the date gf nom* calculations. t annual Debt Servicedurin the current or nm future Boweta "Office of the Trustee" or "Principal Corporate Trusl Office„ means the principal corporate trust office of the Trustee in Los Angeles, California, which is designated as the office for the physical delivery and any subsequent surrender, exchange or transfer of Bonds and at which; at any particular time, corporate trust business shall be administered, or such other office as it shall designate. "Opinion of Bond Counsel" means a legal opinion signed by Bond Counsel. "Ori in I Purchaser" mead PaineWgtb-f r Incorporated. "Outstanding" when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 12.09) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Trust Agreement except: (A) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (B) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with Section 11.02 including Bonds (or portions of Bonds) disqualified under said Section 12.09; and, (C) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Trust Agreement. "Owner" or "Bond Owner" when used herein with respect to a Bond, means the Person in whose name the ownership of such Bond is registered on the Registration Books. 'participants" meana those financial institutions for whom =2 Securities Dsi orfe fectg kook -entry transfers ani pledees of securities Kith the ri i Depository, ate. such li in of Participants xi at the time of such reference. "Person" means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a -governmental entity or any agency or political subdivision thereof. "Prepayment" shall mean any payment of principal received with respect to a Local Obligation earlier than the time scheduled for payment. "Prepayment Account" shall mean the account by that name within the Revenue Fund established and maintained pursuant to Section 5.03(b). 0 "Principal Fund" means the accounts by that name established with the Trustee pursuant to Section 5.01. "Principal Installment" shall mean, with respect to any Principal Payment Date, the principal amount of Outstanding Bonds due on such date, if any. "Principal Payment Date" shall mean each October 1, commencing in 19022 and concluding in 20011, each inclusive, and October L 20011, and October 1. 20021. A-7 "Proceeds Fund" shall mean the Fund by that name created pursuant to Section 5.10. "Purchase Contract" shall mean a purchase contract, assignment agreement, letter of confirmation or similar document executed and delivered by the Local Agency or seller on the secondary market or the Authority in connection with the purchase of any OCA Obligation by the Authority in such form as may be necessary or appropriate in the judgment of the Authority with respect to the type of Local Obligation or circumstances of issuance or purchase thereof or otherwise. "Rebate Certificate" shall mean that certificate, relating to the requirements of Section 148 of the Code, signed by the Authority on the date.the Bonds are issued, as the same may be amended or supplemented in accordance with its terms. "Rebate Fund" means the account by that name established pursuant to Section 5.12. "Rebate Instructions" shall mean those calculations and directions required to be delivered to the Trustee by the Authority pursuant totheRebate Certificate. "Rebate Requirement" shall mean the Rebate Requirement defined in the Rebate Certificate. "Record Date" means the fifteenth (15th) day (whether or not such day is a Business Day) of the calendar month preceding an Interest Payment Date occurs. "Redemption Fund" means the Fund by that name established with the Trustee pursuant to Section 5.09. "Registration Books" means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05. _Lunt Bonds„ means Bgg id SQ IM B_ n fi i Qy_g Pf ing Bonds in accordance with Sg i n "Reserve Fund" means the fund by that name established with the Trustee pursuant to Section 5.05. "Reserve Requirement" means Oan amount €�1 12 = Lessor of Whie Maximum Annual )e r i n th€ B nd or g�1r r n 1020 Qf that oma= y_ghj�h represents 1h� Drincioal amt pi<Shg Qutstandin¢ Qertificates. "Revenue Fund" means the fund by that name established with the Trustee pursuant to Section 5.03. "Revenues" means all amounts received by the Trustee as the payment of interest or premiums on (or the equivalent thereof) and the payment or return of principal of (or the equivalent thereof) all (4QJ:Jy Obligations, whether as a result of scheduled payments or Prepayments or remedial proceedings taken in the event of a default thereon, and all investment earnings on any monOua held in the various funds or accounts established hereunder, except the Rebate Fund. W., "S&P" means Standard and Poor's Corporation, its successors and assigns. "Secretary" means the Secretary of the Authority. 0 "Securities Df., tory" means initially. Thg Deoosltor Trust Q4m_oany. ijgW Yom jW& YQrk�"nd i -ItE successors andi n "Special Record Date" means the. date established by the Trustee pursuant to Section 2.02(b), as a record date for the payment of defaulted interest on the Bonds, if any. "Tax Code" means the Internal Revenue Code of 1986, as amended from time to time. Any reference to a provision of the Tax Code shall include the applicable regulations of the United States Department of the Treasury promulgated with respect to such provision. "Tpmn Bonds" mgan hie Bonds matindin on Qetober =1=.t 2 Q 11 Lnd 4 I 2021. "Trust Agreement" means this Trust Agreement, as originally executed or as it may from time to time be supplemented, modified or amended by any supplemental trust agreement. "Trust Estate" shall have the meaning ascribed thereto in the granting clause hereof. "Trustee" means , a national banking association, organized and existing under the laws of the United States, or its successor, as Trustee hereunder as provided in Section 9.01. "Vice Chairman" shall mean the Vice Chairman of the Authority. "Written Certificate," "Written Order" and "Written Request" of the Authority or Otheig OQUX mean, respectively, a written certificate, written order. or written request signed in the name of the Authority by its Authorized Representative or in the name of N Mg MCily by its Authorized Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by Section 1.02, each such certificate, order or request shall include the statements provided for in said Section 1.02. A-9 AR (FORM OF BOND) (DESCRIPTION OF ANTICIPATED OXY QBLBGATIQNS) PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER'10, 1991 NEW ISSUE RATINGS: Moody's: Standard & Poor's: In the opinion of BURKE, WILLIAMS, SORENSEN & CAAR, Los Angeles, California, ("Bond Counsel-), under existing law, the interest on the Bonds is excluded from gross .income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes: although it is includable in adjusted current earnings in computing the alternative minimum tax imposed on certain corporations, subject, however to certain qualifications described herein. In the further opinion of Bond Counsel, such interest is exempt from California personal and corporate income taxes. See "TAX EXEMPTION" herein. $22;930,000' SANTA CLARITA PUBLIC FINANCING AUTHORITY LOCAL AGENCY REVENUE BONDS SERIES 1991 Dated: October 1, 1991 Due October 1, as shown below The Bonds (as herein defined) will be prepared as fully registered Bonds and, when issued, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the Bonds. Individual purchasers of the Bonds (the "Beneficial Owners") will not receive certificates representing their Bonds purchased. So long as .Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the Owners will mean Cede & Co., as the "Owner", and will not mean the Beneficial Owners of the Bonds. Individual purchases of the Bonds will be made in book -entry form only, in the principal amount of $5,000 or any integral multiple thereof. Principal and interest are payable directly to DTC by Los Angeles, California, as trustee. Upon receipt of payments of principal and interest, DTC will in turn remit such principal and interest to the DTC Participants (as such term is herein defined) for subsequent disbursement to the Beneficial Owners of the Bonds. See "APPENDIX E" - Book Entry System" herein. THE BONDS ARE SUBJECT TO. OPTIONAL AND SPECIAL MANDATORY REDEMPTION PRIOR TO MATURITY. See "THE BONDS - Redemption" herein. The Bonds are being issued by the Santa Clarita Public Financing Authority (the "Authority") pursuant to and secured by a trust agreement dated as of October 1, 1991 (the "Trust Agreement") by and between the Authority and the Trustee. Capitalized terms used and not otherwise defined herein are defined iq "APPENDIX B - SUMMARY OF TRUST AGREEMENT" herein. The Bonds' are being issued for the purpose of enabling the Authority to acquire certain qualified obligations (the "City Obligations") of the City of Santa Clarita, California (the "City") for whose benefit the program has been primarily designed to finance, refinance or provide reimbursement to the City for the cost of acquiring, constructing, improving and equipping capital improvements. See "THE CITY OBLIGATIONS - Estimated Portfolio of City Obligations" and THE CITY OBLIGATIONS - Projects" herein. From the date of delivery of the Bonds through October 1, 1994, the Bonds will be secured, in part, as to payment of principal and interest by the proceeds of the sale of the Bonds remaining on deposit in the Proceeds Fund (as herein defined). Such proceeds will be invested pursuant to the Trust Agreement. See "APPENDIX B - SUMMARY OF TRUST AGREEMENT" herein. As acquisitions of City Obligations are made by the Authority prior to October 1, 1994, the Bonds will be secured by the remaining moneys in the Proceeds Fund (as herein defined) and by the City Obligations acquired prior to October 1, 1994. The trust estate held by the Trustee (the "Trust Estate") will include the proceeds of the sale of Bonds, Revenues (as herein defined), the amounts in the funds and accounts established by the Trust Agreement (except amounts in the Rebate Fund), the City Obligations and the Purchase Contracts (as defined herein). See "SPECIAL INVESTMENT CONSIDERATIONS" herein, as to the ability of the Authority to collect Revenues from the acquired City Obligations. Bond proceeds may only be applied to the acquisition of City Obligations which are: (i) the City Obligations described herein which will -be issued to finance the Projects described in "THE CITY OBLIGATIONS - Estimated Portfolio of City Obligations". MATURITY SCHEDULE* $ Serial Bonds (plus accrued interest from October 1, 1991) Maturity Principal Interest Maturity Principal Interest (October 1) Amount Rate Price (October 1) Amount Rate Price 1992 1999 1993 2000 1994 2001 1995 2002 1996 2003 1997 2004 1998 2005 $ % Term Bonds Due October 1, 2016 - Price % $ °% Term Bonds Due October I, 2021 - Price % (plus accrued interest from October 1, 1991) THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE. THE BONDS AND THE INTEREST THEREON ARE NOT A DEBT OR LIABILITY OF THE LOCAL AGENCIES, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF, OTHER THAN THE AUTHORITY, AND WILL BE PAYABLE SOLELY FROM THE FUNDS PROVIDED THEREFOR.- THE AUTHORITY WILL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF THE BONDS, OR THE INTEREST THEREON, EXCEPT FROM THE FUNDS DESCRIBED HEREIN. SEE "THE BONDS - Source of Payment" HEREIN. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE LOCAL AGENCIES, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE BONDS. THE ISSUANCE OF THE BONDS WILL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE LOCAL AGENCIES, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR OR TO MAKE APPROPRIATION FOR THEIR PAYMENT. THE AUTHORITY HAS NO TAXING POWER. This cover page contains only a briefdescription of the Authority, the Bonds and the security therefor. It is not intended to be a summary of material information.with respect to the Bonds. Investors should read this entire Preliminary Official Statement to obtain information necessary to make an informed investment decision. The Bonds are being offered by PaineWebber Incorporated (the "Underwriter") when, as and if issued by the Authority and accepted by the Underwriter, subject to the approval of legality by BURKE, WILLIAMS, SORENSEN, & GAAR, Los Angeles, California, Bond Counsel, the approval of certain matters for the Authority by Counsel to the Authority, and the approval of certain matters for the Underwriter by Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Underwriter's Counsel. It is expected that the Bonds will be available for delivery in New York, New York, or at such other place as may be agreed to by the Authority and the Underwriter, on or about October 9, 1991. PaineWebber Incorporated Dated: Preliminary, subject to change. INSERT VICINITY MAP SANTA CLARITA PUBLIC FINANCING AUTHORITY SANTA CLARITA, CALIFORNIA AUTHORITY OFFICIALS Carl Boyer, 3rd, Chairman Mary Jillene Klajic, Vice Chairman George A. Caravalho, Secretary Andrea B. Daroca, Treasurer CITY OF SANTA CLARITA COUNTY OF.LOS ANGELES, CALIFORNIA CITY COUNCIL Carl Boyer, 3rd, Mayor Mary Jillene Klajic, Mayor Pro Tem Janice H. Heidt, Council Member Jo Anne Darcy, Council Member Howard P. McKeon, Council Member BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA Carl Boyer, 3rd, Chairman Mary Jillene Klajic, Vice Chairman Janice H. Heidt, Secretary Jo Anne Darcy, Treasurer Howard P. McKeon, Member CITY OFFICIALS George A. Caravalho, City Manager Andrea B. Daroca, Director of Finance Kenneth Pulskamp, Assistant City Manager John Medina, Director of Public Works Lynn M. Harris, Director of Community Development Jeff Kolin, Director of Parks and Recreation Carl K. Newton, City Attorney Richard Kopecky, Deputy City Engineer PROFESSIONAL SERVICES BOND COUNSEL FINANCIAL ADVISOR Burke, Williams, Sorensen & Gaar Fieldman, Rolapp & Associates Los Angeles, California Irvine, California (213) 236-0600 (714) 660-8500 TRUSTEE UNDERWRITER PaineWebber Incorporated Los Angeles, California (213) 972-1797 No dealer, broker, salesperson or other person has been authorized by the Authority to give any information or to make any representations other than those contained herein and, if given or made, such other information or representation must -not be relied upon as having been authorized by the Authority. This Preliminary Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale authorized of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make an offer, solicitation or sale. This Preliminary Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Preliminary Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed. as representations of facts. This Preliminary Official Statement is "deemed final" by the Authority pursuant to Rule 15c2-12 of the Securities and Exchange Commission promulgated under the Security and Exchange Act of 1934, as amended, except for information which is permitted to be excluded from this Preliminary Official Statement under said Rule 15c2-12. The information set forth herein has been obtained from official sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Authority or the Underwriter. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Preliminary Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the Authority since the date hereof. This Preliminary Official Statement is submitted with respect to the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. WITH RESPECT TO THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVETHAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN'MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT, THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. TABLE OF CONTENTS INTRODUCTORY STATEMENT General......... Payment and Security for the Bonds....» _.............».». » _.„.».»»..„_.».. »2 CashFlow Sufficiency .................. »..........» _.».».....»....»». » ».».......»._...».....:'2 Proceeds Fund Investments .... .............. »..»... ».»...».....»_....... ».... »._»».».».».»....».».»_..........»3 Redemption..... ».........................»...............». »». __ »....».».» »». ». »..»».»._ .».3 Acquisition of City Obligations from TheBonds ...... » .............................»» _....» .........».».» » » »»» ».».» .» ».».».»_»....».......».».......»..» 5 Miscellaneous.............».............».».»..»..................».».».„.... »» _.»»._.»_.._................»»..».».».»...5 THE AUTHORITY AUTHORITYTO ISSUE ............. ........... ... ...... _................................. »_.»......_.»._. »...6 SOURCE AND APPLICATION OF BOND PROCEEDS ....... »... ...._...».».„ .................„...».».6 THE PROCEEDS FUND INVESTMENTS .................. „..» ........................»..........................»....7 THE RESERVE FUND INVESTMENTS .»_........................»................»......».„..................»..........8 THEBONDS.................................................................. -- -- --- - R Source of Payment for the Bonds .............. ».......... ».».».............. »».».......................................... 9 TheReserve Fund .............. ...................... »................... »........... ».... ».».... »....... ................ _.... »....... 9 Redemption................................»..._..................... »..„.»....................... ..... ................ ............... »....... 10 Acquisition of City Obligations from Revenues .».„.... ...».... ».... ».......... ....... ............ I1 General Redemption Provisions »..»................................... »........ _...»......................... ........ ».... 11 Purchase in Lieu of Redemption ...................................................................................... 12 THE CITY OBLIGATIONS .»..... .......................... .................. .»».......»._....»..»»......13 General......»..........................................................»»..».».»..._....................... »».».».................. »........ 13 Requirements Applicable to All City Obligations.............».......»......................».............14 CashFlow Certificates ................ ...».............. »........ ............................. »..»... „.».......................... 16 Estimated Portfolio of City Obligations...................»..»».................................„........»...»...16 TheProjects............................................................. ».............................. ».............................. _ ............ 19 Flowof Funds........................................................................................».......»........................................ ProceedsFund ........................... ............................................................ ».... »...... »................................... RevenueFund ......................... _..».................. ....... ........ ............................... ».....»................................. InterestFund ...................................................................................... »....».».»»......................»..........19 ReserveFund ............................ ».»._............................ ............ ...... .......... »...»..»»....... ...»................ 19 ExpenseFund ..................... »................ .............................. »._............. ................. ».... ».».»...... 19 SurplusFund ........................................ ».......»....................»._..».».__».»....»......................».».....20 PrincipalFund .......... _.............. »._................................. ».»............. »..... »...._...».».......................... 20 RedemptionFund ..».................... _......... ........... ....... »»..»».»..»..........».».».».».........».__.»._.......20 RebateFund........................................................................»_....»...................»..........................._.»20 LocalObligation Fund ....... _................ ».................... »......... ..... ».... ....... »».»............................ ».»21 SPECIAL INVESTMENT CONSIDERATIONS.......................»....»....».»....................................22 ENFORCEABILITY OF REMEDIES Page ABSENCE OF MATERIAL LITIGATION..................................................»..................................25 TAXEXEMPTION ...... ».... ».»....................... »............. .............. ...... ..... _.............................. ».... ......... ... 25 APPROVALOF LEGALITY ....... ................................ »..................»..........».......................... ...:26 UNDERWRITING...... ....................... . ...........................».»_...».....»......_...........................................26 RATINGS.._»....... »........... ...... ....... ».... »..»._................. :...... »........... »............. »..»._».»....._............... _..26 MISCELLANEOUS........................ ...... ».»....»........... ................................ .....................»» ».....»27 APPENDICES APPENDIX A: General Information and Economic Profile of the City of Santa Clarita APPENDIX B: Summary of Trust Agreement APPENDIX C: Form of Opinion of Bond Counsel APPENDIX D: Form of Municipal Bond Policy Insurance APPENDIX E: Book -Entry Only System ii PRELIMINARY OFFICIAL STATEMENT $22,930,000 SANTA CLARITA PUBLIC FINANCING AUTHORITY LOCAL AGENCY REVENUE BONDS SERIES 1991 INTRODUCTORY STATEMENT General The purpose of this Preliminary Official Statement is to set forth certain information concerning the issuance and sale by the Santa Clarita Public Financing Authority (the "Authority") of $22,930,000' of its Local Agency Revenue Bonds, Series 1991 (the "Bonds"). This introductory statement is only a brief description. A full review should be made of the entire Preliminary Official Statement, as well as those documents summarized or described herein. The Bonds are being issued pursuant to the Constitution and laws of the State of California (the "State"), and particularly the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584), Chapter 5, Division 7, Title I of the Government Code of the State (the "Act"), and a trust agreement dated as of October 1, 1991 (the "Trust Agreement"), by and between the Authority and , as trustee (the "Trustee"), to provide moneys to finance, refinance or reimburse the cost of acquiring, constructing, improving and equipping capital improvements (collectively, the "Projects") for the City of Santa Clarita, California (the "City") for whose benefit the program has been primarily designed and to make deposits in various funds (the "Program"). Capitalized terms used and not otherwise defined in this Preliminary Official Statement are defined in "APPENDIX B - SUMMARY OF TRUST AGREEMENT" herein. The Authority will provide moneys from the proceeds of sale of the Bonds to accomplish such financing, refinancing and reimbursement of the cost of the Projects by acquiring certain qualified obligations of the City (the "City Obligations") described in the Trust Agreement. The Authority will acquire City Obligations pursuant to the terms of separate purchase agreements (the "Purchase Contract") the City. As of the date hereof, the Authority intends to purehne only City Obligations. See "THE CITY OBLIGATIONS - Estimated Portfolio of City Obligations" herein. Under the Act, the Authority may acquire Assessment Bonds, Mello -Roos Bonds or other City Obligations the Authority is authorized to acquire or incur under the Act. Under the Trust Agreement, the Authority may only acquire City Obligations which are: (i) the City Obligations described herein which will be issued to finance the Projects listed in "THE CITY OBLIGATIONS - The Projects herein or other City Obligations. Capital improvements financed with the City Obligations acquired with the proceeds of the Bonds must be publicly, owned; provided however, that in the opinion of Burke, Williams, Sorensen & Gaar ("Bond Counsel"), under applicable federal tax law, an amount Preliminary, subject to change. not to exceed ten percent (10%) of the proceeds of sale of the Bonds may be used for private purposes, subject to certain restrictions. See "THE CITY OBLIGATIONS" herein. Payment and Security for the Bonds The Bonds are special, limited obligations of the Authority payable solely from the trust estate held by the Trustee (the "Trust Estate"), which includestheproceeds,of the sale of the Bonds, (less the amount of moneys used to pay the costs of issuing the Bonds, underwriter's discount and original issue discount, if any), the Revenues (as herein defined), the amounts on deposit in any funds established under the Trust Agreement (except the Rebate Fund) including amounts on deposit in the Proceeds Fund, Municipal Bond.Insurance Policy, the City Obligations and the Purchase Contracts. Revenues are all amounts received by the Trustee as the payment of interest or premiums on, or the equivalent thereof, and the payment or return of principal of, or the equivalent thereof, all City Obligations and all investment earnings on any moneys held in the funds or accounts established under the Trust Agreement (except the Rebate Fund). The Bonds will not be deemed to constitute a debt or liability of the Local Agencies or the State of California or of any political subdivision thereof or a pledge of the faith and credit of the Local Agencies or the State of California or any such political subdivision, other than the Authority, .but will be payable solely from the Trust Estate. Neither the Local Agencies nor the State of California nor any political subdivision thereof will be obligated to pay the principal of the Bonds or the interest thereon and neither the faith and credit nor the taxing power of the Local Agencies or the State of California or any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. The issuance of the Bonds will not directly or indirectly or contingently obligate the Local Agencies or the State of California or any political subdivision thereof to levy or pledge any form of taxation whatever therefor or to make any appropriation for their payment. The Authority has no taxing power. . Cash Flow Sufficiency Bond proceeds in an amount not to exceed S will be used to pay the costs of issuing the Bonds, underwriter's discount and original issue discount if any. The City Obligation financing the City Hall Project listed in the "THE CITY OBLIGATIONS - Estimated Portfolio of City Obligations" and "THE CITY OBLIGATIONS - Projects" herein will be acquired simultaneously with the sale and delivery of the Bonds, and at the same time the Municipal Bond Insurance Policy described herein will be provided. The simultaneous acquisition of the Local Obligation and delivery of the Municipal Bond Insurance Policy is necessary in order to issue the Bonds because the Trust Agreement requires that an initial Cash Flow Certificate be executed by the Cash Flow Consultant prior to the issuance of the Bonds. The initial Cash Flow Certificate will certify that, assuming (i) that all payments are made with respect to the City Obligation issued by the City simultaneously with the issuance of the Bonds and purchased with the proceeds thereof, (ii) that the premium of the Municipal Bond Insurance Policy is paid in accordance with its terms, and (iii) that all the moneys remaining in the Proceeds Fund will be.used to redeem Bonds on October 1, 1994 pursuant to the provisions of the Trust Agreement for redemption of Bonds from unexpended proceeds, the Revenues will be sufficient to pay all scheduled principal and interest payments with respect to the Bonds when due. There is no assurance, however, that any other Local Obligation will be acquired other than the City Obligations purchased simultaneously with the issuance of the Bonds or that the cash flow in fact received from such City Obligations will actually be sufficient to pay the interest on or the principal of the Bonds when due. The initial Cash Flow Certificate assumes that [although the moneys in the Proceeds Fund will be invested at a rate which is less than the yield on the Bonds, the rate of investment of the Bond proceeds in the Proceeds Fund and the Reserve Fund will be sufficient, when combined with other Revenues, to pay the principal of and interest on the Bonds.] However, as described under "THE PROCEEDS FUND INVESTMENTS" and the "RESERVE FUND INVESTMENTS" herein, the Proceeds Fund Investments are expected to mature on or prior to October 1, 1994, and the Reserve Fund Investments will mature on or prior, to October 1, 1991. If (i) all of the moneys deposited in the Proceeds Fund are not used to acquire Local Obligations prior to the expiration of the maturity of the Proceeds Fund Investments and the Authority is unable to invest the remaining moneys in the Proceeds Fund at sufficient levels, and (ii) the Authority is unable to invest the moneys in the Reserve Fund at sufficient levels, insufficient interest earnings may be generated from moneys in the Proceeds Fund and the Reserve Fund to pay interest on the Bonds when due. Finally, regularly scheduled principal payments of Local Obligations will be used to pay the principal of the Bonds maturing on October 1, 1992 and thereafter, and to optionally redeem Bonds on or after October 1, 1999. To the extent such payments are received prior to being used to pay principal of the Bonds and are not invested at sufficient yields, insufficient earnings may be generated to pay interest on the Bonds when due. In addition to the other provisions of the Trust Agreement requiring the delivery of Cash Flow Certificates to the Trustee, while any moneys remain in.the Proceeds Fund, the Authority must cause the Cash Flow Consultant to.deliver a Cash Flow.. Certificate to the Trustee at least annually until all amounts in the Proceeds Fund are expended, and upon the acquisition, prepayment or redemption of any Local Obligation. The Cash Flow Certificate will (i) specify the dates upon which Bonds will be redeemed upon the receipt of regularly scheduled principal payments with respect to the Local Obligations; (ii) will certify that the regularly scheduled debt service payable on the Local Obligations will be sufficient, when combined with other Revenues available to the Trustee for such purpose, to make all scheduled principal and interest payments on the Bonds; and (iii) contain such other information as will be reasonably requested by the Authority or the Trustee. Proceeds Fund Investments [TO COME] Redemption The Bonds are subject to optional and special mandatory redemption prior to maturity. Additionally, the Term Bonds are subject to mandatory sinking fund redemption. See "THE BONDS - Redemption" herein. Acquisition of Local Obligations from Prepayments Notwithstanding anything in the Trust Agreement to the contrary, the Authority may, from time to time prior to October 1, . 1994, apply Revenues derived from Prepayments of Local Obligations to the purchase of other Local Obligations, as the Authority directs, provided that the conditions to the purchase of a Local Obligation contained in the Trust Agreement and described herein in "THE CITY OBLIGATIONS - Requirements Applicable to All City Obligations" are satisfied with respect to such purchase. 3 The Bonds The Bonds (as herein defined) will be prepared as fully registered Bonds and, when issued, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the Bonds. Individual purchasers of the Bonds (the "Beneficial Owners") will not receive certificates representing their Bonds purchased. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the Owners will mean Cede & Co., as the "Owner", and will not mean the Beneficial Owners of the Bonds. Individual purchases of the Bonds wilt be made in book -entry form only, in the principal amount of $5,000 or any integral multiple thereof. Principal and. interest are payable directly to DTC by Los Angeles, California, as trustee. Upon receipt of payments of principal and interest, DTC will in turn remit such principal and interest to the DTC Participants (as such term is herein defined) for subsequent disbursement to the Beneficial Owners of the Bonds. See "APPENDIX E" - Book Entry System" herein. Miscellaneous In the opinion of BURKE, WILLIAMS, SORENSEN & GAAR, Los Angeles, California, ("Bond Counsel"), under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes; although it is includable in adjusted current earnings in computing the alternative minimum tax imposed on certain corporations, subject, however to certain qualifications described herein. In the further opinion of Bond Counsel, such interest is exempt from California personal and corporate income taxes. See "TAX EXEMPTION" herein. The Bondsare being offered by PaineWebber Incorporated (the "Underwriter") when, as and if issued by the Authority and accepted by the Underwriter, subject to the approval of legality by Bond Counsel, the approval of certain matters for the Authority by Counsel to the Authority and for the Underwriter by its counsel. It is expected that the Bonds will be available for delivery in New York, New York or at such other place as may be agreed by the Authority and the Underwriter on or about October 9, 1991. The Preliminary Official Statement speaks only as of its date and the information herein is subject to change. The Preliminary Official Statement contains brief descriptions of, among other things, the Proceeds Fund Investment Agreement, the.Reserve Fund Investment Agreement, the Authority, the Bonds, the City Obligations, the Purchase Contracts.and the Trust Agreement. Such descriptions do not purport to be comprehensive or definitive. All references in this Preliminary Official Statement to documents are qualified in their entirety by reference to such documents and to the form of the Bond included in the Trust Agreement. Until the issuance and delivery of the Bonds, copies of the Trust Agreement, the form of Proceeds Fund Investment Agreement and other documents described in this Preliminary Official Statement may be obtained at the office of the Underwriter, in Los Angeles, California. Copies of these documents will be on file with the Trustee following delivery of the Bonds. 9 THE .AUTHORITY The Santa Clarita Public Financing Authority was established pursuant to a Joint Exercise Powers Agreement .dated August 5, 1991, by and between the City and the Agency in accordance with provisions of the Act. The Authority was created for the purpose of providing financing for public capital improvements for the Local Agencies, the acquisition by the Authority of such public capital improvements and/or the purchase . by the Authority of City Obligations within the meaning of the Act. Under the Act, the Authority has the power to issue bonds, including at the option of the Authority, bonds bearing interest, to pay the cost of. any public capital improvement. See "THE CITY OBLIGATIONS" herein. The Authority has no independent staff and consequently will be dependent upon the City's officers and employees to administer the program on its behalf. The Board of Directors of the Authority is comprised. of the members of the City Council of the City and Officers of the City. AUTHORITY TO ISSUE The Bonds are being issued pursuant to the Constitution and the laws of the State, and particularly the Act, which provides for .the issuance of revenue bonds of joint exercise of powers authorities, such as the Authority, to be repaid from the proceeds of certain municipal obligations, such as City Obligations. The Authority was organized pursuant to the Act and the City Obligations acquired under the program will qualify for acquisition under the terms of the Act. SOURCE AND APPLICATION OF BOND PROCEEDS The net proceeds of the sale of the Bonds will be deposited with the Trustee, in trust pursuant to the terms of the Trust Agreement. See "APPENDIX B - SUMMARY OF TRUST AGREEMENT". In accordance therewith, the Trustee will credit the Bonds proceeds in the amounts set out below to the Expense Fund (the "Expense Fund"), the Reserve Fund (the "Reserve Fund") and the Proceeds Fund (the "Proceeds Fund"). -The moneys in the Reserve Fund will be invested in Investment Securities and used to pay principal of or interest on the Bonds in the event of a deficiency of moneys for either purpose. See "THE BONDS - The Reserve Fund" herein. The moneys in the Proceeds Fund will be invested in the Investment Securities and used to purchase the City Obligations. See "THE CITY OBLIGATIONS" herein. Moneys in the Expense Fund will be used to pay various expenses associated with the cost of issuing the Bonds and Program Expenses as defined in the Trust Agreement. 5 The estimated source and uses of funds, excluding accrued interest on the Bonds, is summarized as follows: Source of Bond Proceeds Sale of Bonds $ Underwriter's Discount Total Armlication of Bond Proceeds Proceeds Fund Reserve Fund Expense Fund Interest Fund] Total 1. Represents capitalized interest on S Bonds from October 1, 1991 through THE PROCEEDS FUND INVESTMENTS principal amount of the On the date of issuance of the Bonds, the Trustee and the Authority will purchase Investment Securities in amounts and .at interest rates which will [result in interest earnings equal to the bond yield.] It is anticipated that the rate of invested funds will be payable in immediately available funds to the Trustee on each Interest Payment Date. On October 1, 1994 all amounts not previously withdrawn from the Proceeds Fund will be paid to the Trustee in immediately available funds and will be applied to the mandatory redemption of the -Bonds pursuant to the Trust Agreement. THE RESERVE FUND INVESTMENTS On October 9, 1991, the Trustee and the Authority will purchase Investment Securities in the Reserve Fund. The amount deposited in the Reserve Fund will be invested thereunder at a bond equivalent rate of % from October 9, 1991 to the stated maturity date of the Investment Securities, which is but subject to withdrawal of funds on any date in which amounts are authorized to be withdrawn pursuant to the Trust Agreement. THE BONDS The Bonds will be issued in the aggregate principal amount of $22,930,000', will be dated October 1, 1991, will bear interest from October I, 1991, and will be payable as to interest at the rate per annum set forth below, will be payable commencing on April 1, 1992, and semi-annually thereafter on October 1 and April 1 of each year (each and "Interest Payment Date"), will be subject to redemption prior to maturity, see "THE BONDS - Redemption" herein, and will mature or be subject to mandatory sinking fund redemption according to the following debt service schedule: r Maturity Principal (October 1) Am un ` Interest Total 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Includes mandatory sinking fund redemption Preliminary subject to change. The Bonds (as herein defined) will be prepared as fully registered Bonds and, when issued, will be registered in the name of Cede & Co., as nominee of the Depository Trust 2011 Company, New York, New York ("DTC"). DTC will act as securities depository of the Bonds. Individual purchasers of the Bonds (the "Beneficial Owners") will not receive certificates representing their Bonds purchased except in the event the, Trustee issues Replacement Bonds. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the Owners will mean Cede & Co., as the "Owner", and will not mean the Beneficial Owners of the Bonds. Individual purchases of the Bonds will be made in book -entry form only, in the principal amount of $5,000 or any integral multiple thereof. Principal and interest are payable directly to DTC by , Los Angeles, California, as trustee. Upon receipt of payments of principal and interest, DTC will in turn remit such principal and interest to the DTC Participants (as such term is herein defined) for subsequent disbursement to the Beneficial Owners of the Bonds. See "APPENDIX E" - Book Entry System" herein. Interest on the Bonds will be calculated on the basis of a 360 -day year of twelve 30 -day months. Should the Authority determine that: (i) DTC is unable to properly discharge its responsibilities or (ii) DTC is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (iii) the continuation of a book -entry system to the exclusion of any Bonds being issued to and Owner other than CEDE & CO. is no longer in the best interests of the Beneficial Owners of the Bonds or (iv) if the Trustee receives written notifications from Participants having interests in not less than fifty percent (50%) of the Outstanding Bonds, as shown on the records of the DTC that the continuation of a book -entry system to the exclusion of any Bonds being issued to any Owner other than CEDE & CO. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Trustee will notify the Owners of such determination or such notice and of the availability of certificates to such Owners requesting the same, and the Trustee shall authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption. In such event, all references to DTC herein shall relate to the . period of time when DTC has possession of at least one certificate. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by DTC will be deemed to be imposed upon and performed by the Trustee, to the extent. applicable with respect to such Replacement Bonds. If DTC resigns and the Authority, the Trustee or the Beneficial Owners are unable to locate a qualified successor of the Securities Depository in accordance with The Trust Agreement, then the Trustee will authenticate and cause delivery of Replacement Bonds to the Participants for the benefit of the Beneficial Owners, as provided herein. Each Bonds is to bear interest from the Interest Payment Date next preceding the date of authentication thereof unless: (i) it is authenticated on or before an Interest Payment Date and after the Record Date, in which event it will bear interest from such Interest Payment Date, (ii) it is authenticated on or before the first Record Date, in which event interest thereon will be payable from October 1, 1991, or (iii) interest thereon is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full. Source of Payment for the Bonds The Bonds are special, limited obligations of the Authority payable solely from the Trust Estate, which includes the proceeds of the sale of the Bonds, less the amount of 8 moneys used to pay the costs of issuing the Bonds, Underwriter's discount and original issue discount, the Revenues, the .amounts in any funds and accounts established under the Trust Agreement (except the Rebate Fund) including amounts on deposit in the Proceeds Fund and invested in the Proceeds Fund Investment Agreement, amounts on deposit in the Reserve Fund and invested in the Reserve Fund Investment Agreement, the Municipal Bond Insurance Policy, the Local Obligations and the amounts received by the Trustee as the payment of interest or premiums on, or the equivalent thereof,"and the payments received under the Municipal Bond Insurance Policy and all investment earnings on any moneys held in the funds or accounts established under the Trust Agreement (except the Rebate Fund). The Bonds will not be deemed to constitute a debt or liability of the Local Agencies or the State of California or of any political subdivision thereof or a pledge of the faith and credit of the Local Agencies of the State of California or any such political subdivision thereof, other than the Authority, but will be payable solely from the Trust Estate. Neither the Local Agencies nor the State of California nor any political subdivision thereof will be obligated to. pay the principal of the Bonds or the interest thereon and neither the faith and credit nor the taxing power of the Local .Agencies or the State of California or any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. The issuance of the Bonds will not directly or indirectly or contingently obligate the Local Agencies or the State of California or any political subdivision thereof to levy or pledge any form of taxation whatever therefor or to make any appropriation for their payment. The Authority has no taxing power. The Reserve Fund The Bonds are secured by. the Reserve Fund established under the Trust Agreement. All money in the Reserve Fund must be used and withdrawn by the Trustee solely for the purpose of paying the interest on or the principal of or the redemption premiums, if any, on the Bonds if insufficient money are available in the Interest Fund, the Principal Fund, the Redemption Fund or the Surplus Fund for such purpose, provided that if on any date moneys held in the Reserve Fund equal or exceed the amount necessary to redeem all outstanding Bonds plus any then -applicable premium on such Bonds, the .Trustee will liquidate the Investment Securities in the Reserve Fund and deposit all such moneys in the Redemption Fund to redeem Bonds. Redemption Optional Redemption The Bonds are subject to optional redemption, as a whole on any date or in part on any Interest Payment Date, at the option of the Authority from any moneys deposited in the Redemption Fund for such purpose by the Authority, on and after October I , at a redemption price equal to the following redemption premiums (computed upon the principal amount of the Bonds to be redeemed), plus accrued interest to the redemption date, as follows: Redemption Dates Redemption Price October 1, 2001 through September 30, 2002 102.% October 1, 2002 through September 30, 2003 101.% October 1, 2003 and thereafter 100.96 D Special Redemption The Bonds are also subject to special mandatory . redemption at the following redemption prices at the following times and under the following circumstances: 1. Redemotion from Unexnended Bond Proceeds. The Bonds are subject to mandatory redemption in part, on October 1, 1994, and will be redeemed by the Trustee from moneys transferred to the Redemption Fund from the Proceeds Fund (or in the event that no City Obligations are purchased with the proceeds of the Bonds, as a whole from any other source of available funds as well as moneys on deposit in the Proceeds.Fund), at a redemption price equal to the principal amount thereof, without premium; provided that the Authority may extend the redemption date as specified in this sentence to any subsequent date by delivering the following documents'to the Trustee at least forty-five (45) days prior to such redemption date: a. A Written Certificate of the Authority indicating the new redemption date . and specifying the Investment Securities to be entered into with amounts on deposit in the Project Fund; and b. A Cash Flow Certificate verifying that the interest and principal payments with respect to such Investment Securities, together with all other Revenues, will be sufficient to pay when due all remaining scheduled interest and principal payments on the Bonds when due through such new redemption date; and C. An Opinion of Bond Counsel to the effect that such extension of such redemption date and the purchase of such Investment Securities will not cause interest on the Bonds to be included in gross income for federal income tax purposes or to be subject to California personal income tax. 2. Redemption from Prepavment of Local Obligations The Bonds are subject to mandatory optional redemption in part, on any Interest Payment Date prior to October 1, 1994, and will be redeemed by the Trustee, from moneys transferred from the Prepayment Account to the Redemption Fund, and derived from Prepayments of City Obligations from sources other than insurance or condemnation proceeds or Prepayments of City Obligations other than as a result of mandatory redemption price equal to the principal amount thereof, plus a premium equal to the prepayment premium of the City Obligations. 3. Redemption from Prepayments of City Obligations pursuant to Extraordinary Redemotion Provision . The Bonds are subject to mandatory redemption in part, on any Interest Payment Date, and will be redeemed by the Trustee, from moneys transferred from the Prepayment Account to the Redemption Fund and derived from Prepayments of City Obligations from insurance or condemnation proceeds or other mandatory redemption or acceleration of City Obligations without premium, at a redemption price equal to the principal amount thereof, without premium. 10 Mandatory Sinking Fund Redemption The Term Bonds are subject to mandatory sinking fund redemption in part by lot in the amounts and on the dates, at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, as follows: Imn Date Term Bonds Maturing October 1. 2011 Sinking Fund Payment Date Term Bonds Maturing October 1. 2021 Sinking Fund Payment Date Sinking Fund Payment Sinking Fund Payment In the event that any Term Bonds are redeemed from funds other than those attributable to mandatory sinking fund payments, the principal amount of such bonds so redeemed shall be credited against the remaining mandatory sinking fund payments on a proportionate basis (as if the Term Bonds of such maturity mature in the years and in the amounts of the sinking fund payments). Acquisition of City Obligations from Revenues Notwithstanding anything in the Trust Agreement to the contrary,'the Authority may, from time to time prior. to October 1, 1994, apply the proceeds of Revenues derived from Prepayments of City Obligations to the purchase of other City Obligations, as the Authority directs, provided that the conditions or the purchase of a City Obligation contained in the Trust Agreement and described herein in "THE CITY OBLIGATIONS - Requirements Applicable to All City Obligations" are satisfied with respect to such purchase. General Redemption Provisions When the Bonds are to be redeemed, whether as an optional or mandatory redemption, the Trustee will give to the affected Owners written notice of the redemption of the Bonds. Notice of redemption will be mailed by first-class mail, postage prepaid, at least thirty (30) but not earlier than sixty (60) days before the date fixed for redemption, to the Information Services and. the Owners of such Bonds, or portions thereof, so called for redemption and at their respective addresses as the same as it appears on the Bond Register. No notice of redemption need be given to any Owner of a Bond called for if such Owner waived notice thereof in writing, and such waiver filed with the Trustee prior to the redemption date. Neither the failure of any Owner to receive any notice so mailed nor any defect therein will affect the sufficiency of the proceedings for redemption of any Bonds nor the cessation of accrual of interest thereon. 11 At least two.(2) days before notice of redemption is given to the Owners, the Trustee will send a copy of the notice of redemption by certified mail or by overnight delivery to the Securities Depositories; provided, that failure to provide notice to the Securities Depository or to the Information Services will not affect the validity of proceeding for the redemption of any Bonds. Whenever less than all of the Bonds are to be redeemed on any date, the Trustee will received a Cash Flow Certificate specifying the maturity or maturities of Bonds to be redeemed so that the remaining payments of principal of and interest on Local Obligations, together with other Revenues available to the Trustee, will be sufficient to pay on a timely basis the principal of and interest on the Bonds not so redeemed. Whenever less than all the Bonds of any one maturity are to be prepaid on any one date, the Trustee will select the particular Bonds to be redeemed by lot and in selecting the Bonds for redemption the Trustee will treat each Bond of a denomination of more than $5,000 as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond by $5,000, and the portion of any Bond of a denomination ofmorethan $5,000 to be redeemed in an Authorized Denomination. If any Bond or any portion thereof has been duly called for redemption and payment of the redemption price, together with unpaid interest accrued to the date fixed for redemption, has been made or provided for by the Authority, then interest on such Bond or such portion will cease to accrue from such date, and from and after such date such Bond or such portion will no longer be entitled to any lien, benefit or security under the Trust Agreement, and the Owner thereof will have no rights in respect of such Bond or such portion except to receive payment of such redemption price, and unpaid interest accrued to the date fixed for redemption. Purchase in Lieu of Redemption In lieu of redemption of any Bond pursuant to the provisionsof the Trust Agreement, amounts on deposit in the Principal Fund or in the Redemption Fund may also be used and withdrawn by the Trustee at any time prior to selection of Bonds for redemption having been made with respect to such amounts, upon a Written Order of the Authority, for the purchase of such Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Authority may in its discretion determine, but not in excess of the redemption price thereof plus accrued interest to the purchase date. THE CITY OBLIGATIONS General Pursuant to the Act and the Trust Agreement, the Authority may acquire City Obligations with proceeds of the Bonds deposited in the Proceeds Fund. City Obligations include any other obligation the Authority is authorized to acquire or incur pursuant to the Trust Agreement. See "APPENDIX B- SUMMARY OF TRUST AGREEMENT". The Authority may only acquire City Obligations which are: (i) the City Obligation described herein which will be issued to finance the Project listed in "THE CITY OBLIGATIONS - Estimated Portfolio of City Obligations" and "THE CITY OBLIGATIONS - Projects" herein or other City Obligations; provided however, that no City Obligation may be acquired by the Authority, notwithstanding. that it is otherwise qualified, if any of the proceeds of such City Obligation are proposed to be used to finance or refinance a Project eligible under the Act which includes an entity with any ownership interest therein if 12 such entity is described under federal law as a "thrift" or "savings association" and has been required by the Federal Office of Thrift Supervision to file a plan designed to comply with minimum capital standards set out in the Financial Institution's Reform, Recovery and Enforcement Act of 1989. Capital improvements financed with the City Obligations must be publicly owned; provided however, that in the opinion of Bond Counsel, under applicable federal tax law, an amount not to exceed ten percent (10%) of the proceeds of the sale of the Bonds may be used for private purposes, subject to certain restrictions. The City may be responsible for issuance associated with each City Obligation in accordance with the Purchase Contract relating to such City Obligation. City Obligations will be secured only by a pledge of the moneys available on deposit in the general fund and the covenant of the City to make annual appropriations in its budget to make principal and interest payments due with respect to the City Obligations. See "The City Obligations - Estimated Portfolio of City Obligations" herein. The Trust Agreement does not require the establishment of a debt service fund for any issue of City Obligations. Requirements Applicable To All City Obligations Upon receipt of a Written Order, the Trustee will use moneys on deposit in the Proceeds Fund to purchase City Obligations pursuant to a Purchase Contract as specified in such Written Order, but only if the following conditions have been satisfied: 1. The Trustee has received a transcript of the proceedings in connection with the issuance of the City Obligations, certified by the to contain •the following items: a. an Opinion of Bond Counsel to the effect that the City Obligations are valid and binding obligations of the issuer thereof, to the effect that the interest payable with respect to such City Obligations is excludable from gross income for federal income tax purposes, and to the effect that acquisition of such City Obligations under the Trust Agreement will not, of itself, cause interest on any of the Bonds to be includable in gross income for federal income tax purposes or to be subject to State of California personal income tax; and b. a copy of the Internal Revenue Service form 8038-G or 8038 or 8038 - GC, as applicable, filed with respect to the City Obligations, with proof of mailing to the Internal Revenue Service (which proof of mailing must be delivered to the Trustee no later than the fifteenth (15th) day of the second month of the calendar quarter succeeding the Closing of such Obligations); and C. an opinion of the City. Attorney or similar counsel of the City in form satisfactory to the Authority; and d. all other items required to be delivered to the Trustee and the Authority with respect to . the City Obligations by the Purchase Contracts. 2. The Trustee has received a Cash Flow Certificate verifying the following: 13 a, The regularly scheduled debt service payable on the City Obligations will be sufficient, when combined with the Municipal Bond Insurance .Policy and other Revenues payable to the Trustee with respect to other City Obligations held by the Trustee or investments of moneys in any of the Funds held by the Trustee, to. make all remaining scheduled principal and interestpayments on the Bonds; and b. The redemption premiums, if any, on the.City Obligations payable in the event of early retirement of the City Obligations, together with other Revenues available to the Trustee for such purpose, are sufficient to offset any difference between the interest to accrue on the Bonds to be paid or redeemed with the proceeds of Prepayment of such City Obligations (plus any redemption premium payable upon redemption of such Bonds) and the income to be earned on any investment of such proceeds (assured as of the date of payment thereof), in each case until the date of payment or redemption of Bonds, such that in no event will the Prepayment of the Obligation cause the Trustee to have insufficient funds to either (i) pay debt service on the Bonds when due, or (ii) to redeem at the earliest redemption date an amount of Bonds pursuant to the Trustee Agreement and to pay scheduled debt service on the Bonds which remain Outstanding after such redemption, plus in each case expenses to be payable from the Expense Fund. 3. The Trustee has received a certificate of the Cash Flow Consultant to the effect that: a. The yield requirements of the Act, if any, are met. 4. The Trustee has received a Written Certificate to the effect that: a. No Event of Default has occurred and is then continuing under the Trust Agreement and none of the City Obligations previously acquired and held hereunder are then in default; and b. The Authority has duly authorized, executed and delivered the Purchase Contract with respect to the City Obligations and no further action is necessary to effect performance by the Authority. of its obligations thereunder (except for the payment of the purchase price for, and acceptance of delivery of; the City Obligations). 5. The City Obligations are in fully registered form and will be registered in the name of the Trustee. 6. If the City Obligation provides that the Trustee will hold any of the proceeds thereof as fiscal agent or trustee, the Trustee has executed and delivered a certificate accepting such responsibility in a form satisfactory to the City. Substitution of Projects [To Come] 14 Cash Flow Certificates In addition to the other provision of the Trust Agreement requiring the delivery of Cash Flow Certificates to the Trustee, while any moneys remain in the Proceeds Fund, the Authority must cause the Cash Flow Consultant to deliver a Cash Flow Certificate to the Trustee at least annually until all amounts in the Proceeds Fund are expended, and upon the acquisition, prepayment or redemption of any City Obligation. The Cash Flow Certificate will specify the dates upon which Bonds will be redeemed upon the receipt of regularly scheduled principal payments with respect to the City Obligations, will certify that the regularly scheduled debt service payable on the City Obligations will . be sufficient, when combined with other Revenues available to the Trustee for such purpose, to make all scheduled principal and interest payments on the Bonds and will contain such other information as shall be reasonably requested by the Authority or the Trustee. Estimated Portfolio of City Obligations Estimated Proiect Proiect Costs Type of Financin¢ 1. City Hall Capital Acquisition $7,500,000 Certificates of Participation. 2. Soledad Canyon Road Improvements $10,500,000 Certificates of Participation TOTAL $18,000.000 The Authority intends and reasonably expects to acquire the City Obligations listed above to finance the Projects. However, there is no guarantee that any of the Projects will be financed with tax-exempt obligations or, that the Authority will acquire the respective City Obligations. In addition, the Authority and the City are not restricted to the Projects and the Authority is entitled to acquire and the City to sell any other City Obligations which conform to the required credit conditions. See "APPENDIX B - SUMMARY OF TRUST AGREEMENT" herein. The Authority's purpose in issuing the Bonds is to promote economic development in the City. In addition, the City intends to offer tax-exempt financing for residential and commercial projects that conform to its credit requirements. Purpose. Proceeds from the sale of the Certificates of Participation will be used for the purchase of an interest in a building and related facilities (the "City Hall Building") (i) the real property upon which the City Hall Building is situated, (the "Land") to be leased to the Agency (the "lessee") under a Base Lease with the City and leased back to the City under a Lease Agreement with the Agency and (ii) the purpose of making road improvements to Soledad Canyon Road. The City has pledged the [City corporation yard (the "yard") and City sewer system (the "system")] as security for the Certificates. The Land, the City Hall Building, the Yard and the System are collectively referred to herein as the "Facilities". Security for the Certificates. The City is obligated under the Lease Agreement to make lease payments (the "Lease Payments") as the rental for the use and possession of the Facilities. The Certificate evidences and represents the interest of the owner thereof in Lease Payments to be.made by the Lessee as specified in such Certificate. The City has 15 covenanted under the Lease Agreement that so long as the Facilities are available for the use by the City, it will take such action as may be necessary to include its Lease Payments in its annual budget and to make the necessary annual appropriations therefor. Under California law, the obligation of the City to make Lease Payments (other than to the extent that funds are available for such purpose in accounts established for the City from proceeds of the Certificates) must be abated in whole or in part if the City does not have full use and possession of the Facilities. The Agency will assign to the Fiscal Agent for the benefit of the Owner of the Certificate (the Authority) its rights under the Lease Agreementi including (i) its right to receive amounts payable by the City under the Lease Agreement, (ii) its right to receive and collect any proceeds of any insurance maintained amounts payable upon default. Prepayment. The Certificates are subject, in whole or in part, to prepayments made at the option of the City at a prepayment price equal to the principal amount thereof plus a premium, as set forth below. Redemption Date; Redemption Price October 1, 2001 through September 30, 2002 102.% October 1, 2002 through September 30, 2003 101.% October 1, 2003 and thereafter 100.% THE OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS UNDER THE LEASE AGREEMENT IS AN OBLIGATION PAYABLE FROM THE CITY'S GENERAL FUND OR ANY OTHER SOURCE OF FUNDS LEGALLY AVAILABLE TO THE CITY FOR THE PAYMENT OF LEASE PAYMENTS. THE OBLIGATION OF THE CITY TO PAY LEASE PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO PAY LEASE PAYMENTS UNDER THE LEASE AGREEMENT DOES NOT CONSTITUTE A DEBT OR INDEBTEDNESS OF THE CITY, THE AGENCY, THE COUNTY OF LOS ANGELES, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. follows. A map of the City showing the general location of the aforementioned projects 16 The Projects City Hall The City intends to purchase a three-story office building located at 23920 Valencia Boulevard in Santa Clarita, California. The total purchase price of the City Hall is eleven million, five hundred thousand dollars ($11,500,000), of which the City intends to make a cash contribution of four million dollars ($4,000,000) from its general fund. The balance of the purchase price will be obtained by the City form the proceeds of the Bonds on deposit in the Project Fund. The building has approximately 75,000 square feet, of which about 72,000 square feet is rentable space. Currently, the City occupies approximately thirty-eight percent (38%) of the building and [has agreed to take occupancy of an additional 4,200 square feet in , 1991]. The building has tenants whose occupancy is [private activities under the Internal Revenue Code of 1986, as amended (the "Code").] Nevertheless, the City will occupy approximately fifty percent (50%) of the building. The Code requires that . The following is a listing of the other tenants in City Hall and their respective lease termination dates. Soledad Canyon Road Improvements The Project consists of four (4) distinct improvements as follows: 1. The City intends to widen Soledad Canyon Road between Sand Canyon Road and Oak Springs Canyon Road to accommodate two (2) lanes of traffic in each direction. Additional work, incidental to the widening of the roadway will be performed, as necessary, to bring Soledad Canyon Road between Sand Canyon Road eastward to the City limits into compliancewith highway standards. The City currently owns a right-of-way over the land where Soledad Canyon Road is situated. Additional right-of-way interests will be required to construct this portion of the Project, such interests are expected to be acquired through the condemnation process. The City anticipates requesting construction bids in January 1992 and awarding a construction contract by March 1992. Construction is expected to be completed by September of 1992. Environmental Concerns An initial study has been initiated for this portion of the Project pursuant to the California Environmental Quality Act ("CEQA"). It is anticipated that the appropriate environmental documentation will be prepared by the City and no additional environmental review will be required. 2. The City intends to construct an off-street trail suitable for use by bicyclists and pedestrians; equestrian use is .anticipated in the future. The City intends to acquire the necessary right-of-way over the land where the trail will be situated. The acquisition of right-of-way interests in expected to be completed by the end of 1992. This portion of the Project is expected to be accomplished in four (4) phases, with the advertising of construction bids for the first phase in March of 1993. 18 Environmental Concerns An Initial Study has been undertaken for this portion of the Project pursuant to CEQA and it is expected that an Environmental Impact Report will be required. Additionally clearances and permits from the United States. Army Corps of Engineers ("COE") and the California Department of Fish and Game ("DFG") not to be required. 3. This project consists of the widening of an existing bridge on Soledad Canyon Road west of Camp Plenty Road to accommodate three (3) lanes of traffic in each direction. This portion of this Project requires the acquisition of additional right- of-way interests which the City expects to obtain through condemnation proceedings. Right -of -Way engineering and project design are expected to be completed by the end of calendar year 1992, It is anticipated that construction bids will be taken during January - of 1993 and a contract will be awarded by March of 1993. The Construction is expected to be completed by December of 1993. Environmental Concerns An Initial Study must be undertaken for this project pursuant to the California Environmental Quality Act ("CEQA"). In addition, it is anticipated the additional environmental clearances and permits from the U.S. Army Corps of Engineers ("COE") and the California Department of Fish and Game ("DFG") may be required. 4. Valencia/Soledad Re -striping. This project consists of the re -striping and re-signing of Valencia Boulevard and Soledad Canyon Road between Interstate 5 (I-5) and Sand Canyon Road, to accept three lanes of traffic in each direction. (The section of Soledad Canyon Road between Sand Canyon Road and the City limits to the east will be striped to accept two lanes of traffic in each direction in accordance with the Soledad Widening Project described in Subparagraph I above.) The City will perform this work upon completion of the Cross Valley Bikeway and Soledad Canyon Road at Santa Clara River Bridge projects described above. M FLOW OF FUNDS Proceeds Fund The -Trust Agreement creates the Proceeds Fund, which will be funded from Bond proceeds and which will be used -to acquire City Obligations. Moneys in the Proceeds Fund may also be used to redeem Bonds when required or permitted by the Trust Agreement. See "THE BONDS - Redemption" herein. Earnings on moneys in the Proceeds Fund will be deposited.in the Debt Service Account of the Revenue Fund. Any amounts remaining in the Proceeds Fund on October 1, 1991, will on that date be transferred to the Redemption Fund and used to redeem Bonds. Revenue Fund All Revenues, other than Revenues described in the nest two (2) succeeding paragraphs, received by the Trustee will be deposited by -the Trustee into the Debt Service Account within the Revenue Fund, which account is created pursuant to the Trust Agreement. The Trustee will, from the Debt Service Account, transfer Revenues in the amounts and at the times specified in the Trust Agreement for deposit into the following respective funds in the following order of priority, the requirement of each fund to be fully satisfied, leaving no deficiencies therein, prior to any deposit into any fund later in priority. 1. Interest. Fund; 2. Reserve Fund; 3. Expense Fund; and 4. Surplus Fund. All Revenues derived from Prepayments of City Obligations prior to their stated maturities pursuant to the terms thereof, including any premiums with respect to such Prepayments, received by the Trustee will be deposited in the Prepayment Account within the Revenue Fund. Amounts in the Prepayment Account will be transferred on each Interest Payment Date to the Redemption Fund to be used to redeem or purchase Bonds on such Interest Payment Date. Notwithstanding anything in the Trust Agreement to the contrary, the Authority may, from time to time prior to October 1, 1991, apply the proceeds of Revenues derived from Prepayments of City Obligations to the purchase of other City Obligations, as the Authority directs, provided that the conditions to the purchase of a City Obligation contained in the Trust Agreement and described herein in "THE CITY OBLIGATIONS - Requirements Applicable To All City Obligations" are satisfied with respect to such purchase. All Revenues derived from regularly scheduled principal payments of City Obligations, or from payments with respect to the Municipal Bond Insurance Policy for the purpose of paying the principal of the Bonds, will be deposited in the Principal Fund. Interest Fund The Trustee will deposit in the Interest Fund as soon as practicable bcfore.each Interest Payment Date, from the Debt Service Account an amount of Revenues which 20 together with any amounts then on deposit in the Interest Fund is equal to the interest on the Bonds due on such date. On each Interest Payment Date, the Trustee will pay the interest due on the Bonds on such date from the Interest Fund. All amounts in the Interest Fund will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it will become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). Reserve Fund As soon as practicable before each Interest Payment Date, after making the required -deposits to the Interest Fund, the Trustee will deposit into the Reserve Fund from the Debt Service Account an amount of Revenues, if any, required to restore the amount on deposit in the Reserve Fund to the Reserve Requirement. ' All moneys in the Reserve Fund will be used and withdrawn by the Trustee solely for the purpose of paying the interest on or the principal of or the redemption premiums, if any, on the Bonds if insufficient moneys are available in the Interest Fund, the Principal Fund, the Redemption Fund and the Surplus Fund for such purpose. Expense Fund After making the required deposits to the Interest Fund and the Reserve Fund, the Trustee will deposit from the Debt Service Account into the Expense Fund an amount of Revenues specified by the Trustee or in a Written Order of the Authority necessary (taking into account amounts on deposit therein) to pay all Expenses as they become due and payable. The Trustee will also deposit in the Expense Fund any amounts received from the Local Agencies as described in the following paragraph. Amounts in the Expense Fund will be applied to the Trustee to the payment of Expenses upon receipt of a Written Order of the Authority stating the person to whom payment is to be made, the amount and purpose of the payment and that payment is a proper charge against the Expense Fund. On or prior to July I in each year the Trustee will deliver to the City a statement of expenses expected to be paid to entities other than the Authority or the City during the next succeeding calendar year• which statement will indicate the pro -rata amount of such Expenses payable with respect to each City Obligation, based upon the amount of - each City Obligations then outstanding as compared to the total amount of City Obligations then outstanding. The City will levy and collect such amounts, and will transfer such amounts to the Trustee as received. Surplus Fund After making the required deposits to the Interest Fund, the Principal Fund, the Reserve Fund and the Expense Fund, the Trustee will deposit any moneys remaining in the Debt. Service Account into the Surplus Fund. Amounts in the Surplus Fund (together with any earnings thereon) will be withdrawn upon Written Order of the Authority within one year of receipt by the Trustee and transferred to the Authority and applied to the payment of Expenses or the acquisition or construction of capital improvements by the City, provided, that the Trustee has received a Cash Flow Certificate certifying that such moneys are not required to pay the principal of or redemption premium, if any, or interest on the Bonds when due. Prior to such withdrawal and transfer, money in the Surplus Fund may be used and withdrawn by the Trustee for the purpose of paying the principal of and the interest on and redemption premiums, if any, of the Bonds, but solely 21 in the event that insufficient moneys are available for such purpose in the Interest Fund, the Principal Fund or the Redemption Fund. Principal Fund The Trustee will deposit in the Principal Fund all Revenues derived from regularly scheduled principal payments of City Obligations, or from payments with respect to the Municipal Bond Insurance Policy for the purpose of paying the principal of the Bonds, to be applied to the redemption of Bonds on or after October 1, 1994 .on the Interest Payment Dates specified in the most recent Cash Flow Certificate delivered to the Trustee and to the payment of the principal of the Bonds when due. Redemption Fund All amounts in the Redemption Fund will be used and withdrawn by the Trustee solely for the purpose of redeeming Bonds in the manner and upon the terms and conditions specified in the Trust Agreement. The Trustee may, at any time, apply amounts on deposit in the Redemption Fund to the purchase of Bonds at public or private sale, when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as may be directed by the Authority but not in excess of the redemption price thereof plus accrued interest to the purchase date. Rebate Fund The Trustee will establish and maintain a Rebate Fund separate from any other fund established and maintained under the Trust Agreement. The Trustee will deposit in the Rebate Fund the Rebate Requirement all in accordance with Rebate Instructions received from the Authority. Moneys held in the Rebate Fund are pledged to secure payments to the United States of America. The Authority and the Owners have no rights in or claim to such moneys. Upon receipt of the Rebate Instructions required by the Rebate Certificate to be delivered to the Trustee, the Trustee will remit part or all of the balance held in the Rebate Fund to the United States of America as so directed. In addition, if the Rebate Instructions so direct, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as the Rebate Instructions direct. The Trustee will be. deemed conclusively to have complied with such provisions if it follows the written directions of the Authority including supplying all necessary information in the manner provided in the Rebate Certificate to the extent such information is reasonably available to the Trustee, and will have no liability or responsibility to monitor or enforce compliance by the Authority with the terms of the Rebate Certificate. The Trustee has no obligation to rebate any amounts required to be rebated pursuant tot he Trust Agreement, other than from moneys held in the Rebate Fund or from other moneys provided to it by the Authority. Computations of the rebate amount will be furnished by or on behalf of the Authority in accordance with the Rebate Certificate. Notwithstanding any other provision of the Trust Agreement, the obligation to remit the rebate amounts to the United States of America and to comply with all other requirements of the Trust Agreement related thereto, and the Rebate Certificate will survive the defeasance or payment in full of the Bonds. 22 City Obligation Fund 1. All City Obligations acquired by the Trustee will be deposited into the City Obligation Fund established and maintained by the Trustee. 2. Upon a Written Order of the Authority, the Trustee will sell any City Obligations specified in such Written Order in the open market, but only on the following conditions: a. The Trustee has received an Opinion of Bond Counsel to the effect that the sale of the City Obligations and the use of the proceeds thereof specified in such Written Order will not, of itself, cause interest on the Bonds to be includable in gross income for federal income tax purposes or subject to California income tax; and b. The Written Order of the Authority directs the Trustee to use the proceeds of such sale for one. or more purpose authorized by paragraph (3) below; and C. The Trustee has received a Cash Flow Certificate to the effect that (taking into account the use of proceeds specified in such Written Order) the scheduled debt service on all City Obligations held by the Trustee after giving effect to such sale together with other Revenues available to the Trustee for such purpose will be sufficient and timely to pay scheduled debt service on all of the Bonds plus Expenses anticipated to be payable from the Expense Fund and not otherwise provided for under Purchase Contracts. 3. The proceeds of any sale of City Obligation in accordance with paragraph (2) above will be deposited in the Redemption Fund in an amount sufficient to redeem Bonds in an amount at least equal to the outstanding principal amount of such City Obligation at the time of such sale on the earliest date permitted and the remaining amount of such proceeds, if any, will be deposited in the Surplus Fund. 4. Upon a Written Order of Authority the Trustee will waive any redemption premium payable on any City Obligation provided that the Trustee first receives a Cash Flow Certificate verifying the matters set forth in clause (2) of "THE CITY OBLIGATIONS - Requirements Applicable To All City Obligations". SPECIAL INVESTMENT CONSIDERATIONS The ability of the Authority to pay principal of and interest on the Bonds depends primarily upon the receipt by the Authority of sufficient Revenues from the acquired City Obligations for the Bonds and interest earnings on amounts in the funds and accounts for the Bonds established under the Trust Agreement. The payment of a portion of principal of and interest on the Bonds prior to October 1994 is, additionally, secured by moneys on deposit in the Proceeds Fund and to the extent that the proceeds of sale of the Bonds have been applied to the acquisition of City Obligations, from the Revenues received by the Authority. A number of risks which could prevent the Authority from receiving such amounts are described below. 23 City Obligations Beginning with the first acquisition of a City Obligation under the Program, a number of factors could adversely affect the ability of the Authority to collect sufficient Revenues to pay principal of and interest on the Bonds, including: (i) General Fund Obligations The obligations of the City to make payments under the City Obligations does not constitute obligations of the City for which the City must levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation, nor constitute debts or indebtedness of the City, (the . "General Fund Obligations") or the State of California or any political subdivision thereof, within the meaning of any constitutional or statutory debt limitation or restriction. See "THE CITY OBLIGATIONS - Estimated Portfolio of City Obligations" and "THE CITY OBLIGATIONS - -Projects" herein. General Fund Obligations are also subject to the following risks: Repayment Unsecured. The payments due under the City Obligations of General Fund Obligations, including payment of costs of improvements, repair, operation and maintenance of their Projects, taxes and other governmental charges and assessment levied against the Projects may not be secured by any pledge of taxes or other revenues of the City, but may be payable from any funds lawfully available to the City. The City will covenant in connection with its City Obligations in each year during which it has use and Possession of its Projects to annually budget and appropriate moneys sufficient to pay the principal of and interest due in accordance with the City Obligations. In the event that the City's revenue sources are less than its total payment obligations, the City could choose to fund other municipal services before making such payments. The same result could occur if, the State of California Constitution were to limit expenditures and the City would not be permitted to appropriate and spend all of its available revenues. See "SPECIAL INVESTMENT CONSIDERATIONS - Constitutional Amendments Affecting City Revenues" herein. Limited Recourse on Default. If the City should default on its obligation to make payments with respect to its City Obligations, the Trustee may retain the related City Obligations and hold the City liable for all such payments on an annual basis, and will have the right to exercise all rights as the owner of the City Obligations. Alternatively, the Trustee may proceed against the City to recover damages pursuant -to the terms of the City Obligations. The Trustee is not empowered to sell the Projects, or any of them, for the benefit of the Owners. Any suit for money damages would be subject to limitations on legal remedies against local agencies in the State of California, including a limitation on enforcement or judgments against funds needed to•serve the public welfare and interest. Abatement. In the -event of loss or substantial interference in the use and possession of all or any discrete portion of a Project financed by the City which is caused by material damage or destruction of such discrete portion of the Project, payments under its City Obligations may be abated. The amount of abatement will be such that the resulting rental represents fair consideration for the use and possession of the portions of the affected Project not damaged or destroyed. Such abatement will continue for the period commencing with the date of such damage or destruction and ending with the substantial completion of the work repair or replacement of such portion of the Project. In the event such portion of the Project cannot be repaired during the period of time that proceeds of the City's rental interruption, insurance will be available in lieu of its 24 payments under its City Obligations; plus the period for which funds are available in the City's reserve account, if any, securing the related City Obligation, or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of such portion of the affected Project or redemption of the Bonds attributable. to General Fund .Obligation, there may be insufficient funds to make payments due to the Owners. 2. Constitutional Amendments Affecting Local Agency Revenue Certain provisions of Article XIIIA to the California Constitution (i) limit ad valorem property taxes on all real property.to one percent (1%) of the full cash value of the property; (ii) exempt certain classes of voter -approved bonded indebtedness from the one percent (1%) limitation; (iii) define "full cash value" as the Assessor's appraised value of real property as of March 1, 1975, adjusted by changes in the Consumer Price Index— not to exceed two percent (2%) per year; (iv).permit establishment of a new "full cash value when there is new construction or a change in ownership; (v) permit the reassessment, up to the March 1, 1975, value of property which was not current on the 1975-76 assessment roll, (vi) require counties to collect one percent (1%) property tax and to "apportion according to law to the districts within the counties;" (vii) prohibit new ad valorem taxes on real property or sales taxes, or transaction taxes, on the sale of real property; (viii) permit the, imposition of special taxes by Local Agencies, other than those prohibited, by a two-thirds (2/3) vote of the "qualified electors" of such agencies; and (ix) require a two-thirds (2/3) vote of all members of both houses of the Legislature for any changes in States taxes which would result in increased revenues. Article XIIIB to the California Constitution provides that state and local government agencies are subject to an annual "appropriations limit," and are prohibited from spending "appropriations subject to -limitation* above the limit. "Appropriations subject to limitation" consist of tax revenues, state subventions, and certain other funds. The Article does not affect the appropriation of money excluded from the definition of "appropriations subject to limitation", such as debt service on indebtedness existing or authorized by January 1, 1979, or subsequently authorized by the voters and appropriations mandated by the court. The Article also excludes from limitation the appropriation of proceeds from regulatory licenses, user charges; or other fees to the extent that such proceeds equal "the costs reasonably borne by such entity in providing the regulation, product, or service." In general terms, Article XIIIB provides that the appropriations limit will be based on certain 1978-79 expenditures and will be adjusted annually to reflect changes in cost of living, population, and transfer of financial responsibility of providing services from one governmental unit to another. The Article also provides that if an agency's revenues in any year exceed the amount which is appropriated by such agency in compliance with the initiative, the excess must be returned during the next two (2) fiscal years by revising tax rates or fee schedules. No assurance can be given that any particular Local Agency which may subsequently participate in the Program will not be adversely affected by the application of Article XIIIB of the California Constitution. 3. No Liability of the Authority to the Owners Except as expressly provided in the Trust Agreement, the Authority will not have any obligation or liability to the Owners with respect to the payment when due of the City Obligations, or with respect to the observance or performance by the City of other agreements, conditions, covenants and terms required to be observed or performed by them under the respective City Obligation or under the Trust Agreement, or with respect 25 to the performance by the Trustee of any duty required to be performed by it under the Trust Agreement. 4. Trustee's Right to Be Indemnified Prior to Pursuing Remedies Under Section 9.08 of the Trust Agreement, the Trustee is under no obligation to institute any suit or take any remedial action or to enter any appearance in or in any way defend any suit in which it may be made defendant, or to take any steps in the execution of the trusts created in the Trust Agreement or in the exercise of any rights or powers under the Trust Agreement at the request, order or direction of any Owners or otherwise until it is indemnified to its satisfaction against any and all reasonable costs and expenses, outlays and counsel fees and other disbursements, and against all liability not due to its negligence or willful default, provided, however, that if the Trustee intends to rely on Section 9.02(f) of the Trust Agreement as a basis for non -action it is required to so inform the Owners (as appropriate) and the Authority as soon as possible. 26 ENFORCEABILITY OF REMEDIES The remedies available to the Trustee, the Authority or the Owners upon an Event of Default or default under the Trust Agreement, any of the Purchase Contracts or the Proceeds Fund Investment Agreement are in many respects dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code (the federal bankruptcy code) and relevant banking and insurance law, the remedies provided in the Trust Agreement, the Purchase Contracts or the Proceeds Fund Investment Agreement may not be readily available or maybe limited. The various legal opinions to be delivered concurrently with the delivery of . the Bonds and the- later delivery of .the Purchase Contracts will be qualified as to the enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. ABSENCE OF MATERIAL LITIGATION To the best of the knowledge of the officers of the Authority, there is no controversy or litigation now pending against the Authority, or threatened, restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds. TAX EXEMPTION In the opinion of Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided, however, that, for the purpose of computing the alternative minimum tax imposed on such corporations (as defined for federal income tax purposes), such interest is required to be taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes, including certain limitation on investment earnings and the rebate of certain moneys to the United States of America. The Authority has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive. to the date of issuance of the Bonds. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should be aware that (i) Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of the Owner's interest expense allocated to interest payable with respect to the Bonds, (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, for taxable years beginning after December 31, 1986, Section 831(b)(5)(B)(i) reduces the deduction for loss reserves by fifteen percent (15%) of the sum of certain items, including interest on the Bonds, (iii) for taxable years beginning after December 31, 1986 and before January 1, 27 1992, interest on the Bonds earned by some corporations could be subject to the environmental tax imposed by Section 884 of the Code, (iv) passive investment income, including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the code for subchapter S corporations that have subchapter C earnings and profit at the close of the taxable year if greater than twenty-five percent (25%) of the gross receipts of such subchapter S corporation is passive investments income and (v) Section 86 of the Code requires recipients of. certain determining gross income, receipts or accruals of interest on the Bonds. In the further opinion of Bond Counsel, such interest is exempt from California personal and corporate income taxes. APPROVAL OF LEGALITY Legal matters incident to the issuance of the Bonds are subject to the approving opinion of Bond Counsel. A copy of the form of the Opinion of Bond Counsel is attached as "APPENDIX C" herein. Copies of such opinion will be available at the time , of delivery of the Bonds. Fees payable to Bond Counsel are contingent on the successful sale and.dclivery of the Bonds. Certain matters will be passed upon for the Authority by its counsel UNDERWRITING -The Bonds are being purchased by the Underwriter at a purchase price equal to the par amount of the Bonds. being issued, less an Underwriter's discount of percent ( %) of such par amount and an original issue discount of % . of such par amount, pursuant to a purchase contract between the Authority and the Underwriter (the "Purchase Agreement"). The Purchase Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase, if made, being subject to certain terms and conditions set forth in the Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter may offer and sell Bonds to certain dealers and others at a price other than the offering price. The offering price may be changed from time to time by the Underwriter. RATINGS [to come] MISCELLANEOUS The foregoing summaries or descriptions of provisions of the Bonds, the Trust Agreement, the Purchase Contracts and all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof and do not purport to summarize or described all of the provisions thereof, and reference is made to said documents for full and complete statements of their provisions. The appendices herein are a part of this Preliminary Official Statement. 28 Copies of the Trust Agreement, Base Lease Agreement, Fiscal Agent Agreement and other information are available upon request and payment to the of a charge for copying, mailing and handling. Such requests should beaddressed to: The Preliminary Official Statement has been issued by the Authority. The Preliminary Official Statement is not to be construed as a contract or agreement between the Authority and the purchasers or Owners of any of the Bonds. SANTA CLARITA PUBLIC FINANCING AUTHORITY By: Chairman APPENDIX A GENERAL INFORMATION AND ECONOMIC- PROFILE OF THE CITY OF SANTA CLARITA A-1 APPENDIX A CITY OF SANTA CLARITA GENERAL INFORMATION AND ECONOMIC PROFILE The City of Santa Clarita (the "City") is located in the Santa Clarita Valley (the "Valley"). which is comprised of the communities of Canyon Country, Newhall, Saugus, Valencia, Agua Dulce, Castaic and Val Verde, all located in Los Angeles County (the "County"). The following information specifically relates to the City and generally to: the Valley. General Background Discovery of gold was the beginning of a transformation of the area of the City, where the once -ancient Alliklik Indians, wild horses, Spanish explorers and European colonists lived. Many people migrated west to the Valley to seek their fortunes. Henry Mayo Newhall was among them and in 1870 he started the Valley on the road to modernization through his auctioneering and railroad interests. After purchasing Rancho San Francisco (later known as Newhall Ranch) in 1875, Newhall sold a right-of-way to the Southern Pacific Railroad for $1 and a town site known as Newhall for another $1. Not only did it become a rail center, but the first commercially producing oil well began operation in Pico Canyon in 1875, followed by the state's first oil refinery in Railroad Canyon. The City was officially incorporated on December 15, 1987, after a ballot measure was passed by the City's residents. The City operates under a Council -Manager form of government and provides, either directly or under contract with the County, a full range of municipal services including public safety, public works, parks and recreation, community development, etc. General statistics for the.City, as of 1990, are shown in the table below: The City of Santa Clarita General Statistics 1991 Source: City. Category Population City Area Median Household Income Median Age Ave. Household size Housing Units Average Resale Home Costs Median New Home Cost Average New Condominium Cost Industrial Leasing Costs Commercial/Office Space A-2 1991 Statistic 118,758 41.96 square miles $44,825 30.3 2.83 44,385 $251,478 $243,900 $175,100 $0.30-0.80/sq. ft. $1.00-1.80/sq. ft. DreanIzation The City Council is the governing body of the City. Each of the five (5) City Council members is elected in an at large election for a four-year term to represent the people of the City. The following biographical summaries provides information regarding the five City Council members and pertinent staff members. CITY COUNCIL: MAYOR CARL BOYER, 3rd: Mr. Boyer has served as a member of the City Council since the City was incorporated in 1987 and has served as an elected official for more than fourteen (14) years. Prior to being elected to the City Council, Mr. Boyer served on the Community College Board and the Castaic Lake Water Agency Board. Mr. Boyer teaches history and government at San Fernando High School. JO ANNE DARCY, Councilmember: Ms. Darcy was the third Mayor of the City and has been a Councilmember since the City was incorporated in 1987. Ms. -Darcy served as the Executive Director of the Santa Clarita Valley Chamber of Commerce for seven (7) years, prior to becoming a Senior Deputy to Los Angeles County Supervisor Mike Antonovich in 1980. Ms. Darcy has been active in civic, political and business organizations and in local, county and state government and was named "Woman of the Year" by the Santa Clarita Valley Chamber of Commerce in 1984. JANICE H. HEIDT, Councilmember: A veteran of the United States Navy, Ms. Heidt served as the second Mayor of the City and has been a member of the City Council since incorporation. Ms. Heidt has worked as a community leader and volunteer for many years within the City and is the owner of "One for the Books" bookstore within the City. HOWARD P. MCKEON, Councilmember. The first Mayor of the City, Mr. McKeon has made his home in the City for 27 years and has been a. Councilmember since incorporation in 1987. Mr. McKeon has given many years of service to the local community which includes serving as the Chairman of the Governing Board of the Henry Mayo Newhall Hospital, serving on the Hart High School District Board of Trustees, the founding and current Chairman of the Board of Valencia National Bank and President of "Howard and Phil's Western Wear.- MARY ear"MARY JILLENE KLAJIC, Councilmember: Ms. Klajic played an integral role towards bringing cityhood to the City. As a member of the Formation Committee, Ms. Klajic volunteered countless hours working within the community to create public support for the incorporation. A special assistant to interim City Manager Bien, Ms. Klajic helped lay the foundation in the early days of incorporation. In the City's first general election, Ms. Klajic was elected to the City Council and inaugurated on April 17, 1990. A-3 CITY MANAGER: GEORGE A. CARAVALHO: City Manager of the City since June of 1988,.Mr. Caravalho came to the City with an extensive background in city management. Mr. Caravalho has served as City Manager and Executive Director of the redevelopment agencies to the cities of Bakersfield and San Clemente for four (4) years each. Prior to this, Mr. Caravalho served as the Assistant City Manager for the cities of San Clemente and San Mateo, and as special assistant to the Mayor of Seattle, Washington. Mr. Caravalho is a veteran of the United States Marines. DIRECTOR OF FINANCE: ANDREA B. DAROCA: Ms. Daroca has been with the City since September of 1988, assuming the dual role as the Director of Finance and General Services, and the City Treasurer. Prior to these positions with the City, Ms. Daroca served as the Director of Finance/Treasurer to the City of Walnut, and the Walnut Redevelopment Agency for two (2) years. Ms. Daroca has had numerous publications and is involved with many professional activities and organizations. A-4 Geoeraohy and Climate The Valley is located 35 miles northwest of, Los Angeles and 40 miles east of the Pacific Ocean. It covers 150 square miles and forms an inverted triangle with the San Gabriel and Santa Susana mountain ranges, separating it from the San Fernando _ Valley and the Los Angeles Basin on the south, and the San Joaquin Valley, Mojave Desert and Angeles. National Forest to the north. The Santa Clarita River and its tributaries drain over. 490,000 acres of mountains. and canyons forming the valley. In general, the climate in the City is sunny, warm and dry in the summer; semi - moist -and mild in the winters. The annual rainfall of 15 to 18 inches occurs between November and March. Communities Four (4) communities are located within the City, as described below. 1. Canyon Country. Canyon Country, with more than 30,000 residents, is the most Populous community in the City. It includes an industrial hub and several neighborhood shopping plazas. 2. Newhall. Newhall is a residential area which contains many shops and restaurants, The Master's College, the Disney Movie Ranch, Gene Autry's Melody Ranch, a park and nature center and William S. Hart's former ranch, a museum drawing. thousands of visitors each year. 3. Saueus. Saugus is an established residential area which also contains commercial and retail centers. The Saugus Speedway provides a place for professional auto racing in the Los Angeles area. 4. Valencia. Valencia is a residential community of just less than 30,000 people. Valencia is home to College of the Canyons, California Institute of the Arts, a Los Angeles County Civic Center and Six. Flags Magic Mountain amusement park. Ponulation Since its incorporation in- late 1987, the City has experienced considerable Population growth. The following table provides population census for the years 1970 and 1980, a population estimate for 1990 and projections for the years 1994 and 2010. Source: City. City of Santa Clarita Total Population Estimates And. Projections Year Population 1970 50,084 1980 77,262 1990 111,000 1994 151,665 2010 250,000 A-5 Population Estimates Source: 'State Department of Finance. Population of Housing Characteristics: City, State and United States 1980 for the City. County and State 1995 Proi. Year -1980 Population: (as of 1/I1 S!1XCounty State 1988 109,100 8,537,800 27,995,000 1989 115,700 8,652,800 28,701,000 1990 111,000 8,837,480 29,558,000 1991 118,758 8,988,800 30,351,000 Source: 'State Department of Finance. Population of Housing Characteristics: City, State and United States 1980 Census 1990 Est• 1995 Proi. State 1980 -1980 Population: Median Age 29.0 31.0 32.5 29.9 30.0 % School Age (6-17) 22.8 21.2 21.7 19.8 20.9 % Working Age (18-64) 61.3• 61.4 61.5 62.8 60.7 % 65 and over 6.8 7.8 8.1 10.2 11.3 Income: Median Family Income 27,271 51,483 64,716 21,541 19,908 Per Capita Income 9,088 16,359 19,917 8,294 7,313 Housing: % Owner Occupied 73.1 -- -- 55.9 64.4 Occupied Housing Units 18,416 35,140 43,428 -- Source: Urban Decision Systems, Inc. Public School Enrollment [to come] A-6 Employment Listed below are the major employers in the Valley area. These are employers with 250 or more employees. Santa Clarlta Valley Major Employers Source: City. The following chart summarizes the average number of employed and unemployed residents of the County of Los Angeles and includes the average unemployment rates for the County and the State of California. COUNTY OF LOS ANGELES Estimated Average Annual Employment and Unemployment of Resident Labor Force (in thousands) -1986 Business 1988 Emnlovers Tvoe No. of Employees Six Flags Magic Mountain Amusement Park 3,300 H.R. Textron Aerospace 1,179 Henry Mayo Newhall Memorial Hospital Hospital 1,140 Baxter Pharmaseal Pharmaceutical 500 Louver Drape ' Drapery 370 California Institute of the Arts Arts 300 Carpeteria Carpet 300 Newhall Land & Farming Co. Developer 260 Target Dept. Store 250 Magic Ford 250 Source: City. The following chart summarizes the average number of employed and unemployed residents of the County of Los Angeles and includes the average unemployment rates for the County and the State of California. COUNTY OF LOS ANGELES Estimated Average Annual Employment and Unemployment of Resident Labor Force (in thousands) -1986 1987 1988 1989 1990 Employed 3,822 3,976 3,970 4,182 4,172.8 Unemployed 273 247 203 219 255.0 Total Workforce 4,095 4,223 4,173 4,401 4,427.8 Unemployment rates: Los Angeles Cty 6.7% 5.9% 4.9% 5.0% 5.8% California 6.7% 5.8% 5.3% 4.8% 5.6% Source: State Department of Finance and U.S. Bureau of Economic Analysis A-7 Largest Employers Headquartered In COUNTY OF LOS ANGELES COMPANY Lockheed Corporation Rockwell International Vons Northrop Corporation Pacific Enterprises Carter Hawley Hale Security Pacific SCEcorp Walt Disney Times Mirror First Interstate Bancorp Hilton Hotels Castle & Cooke National Medical Enter. Teledyne Litton Industries 1. 1989 figure. INDUSTRY Aerospace Aerospace Retail Foods Aerospace Utility Merchandizing Financial Services Utilities Entertainment Media/Communications Financial Services Resort/Leisure Food Products Health Care Manufacturing Hi-Tech/Electronics CALIFORNIA EMPLOYMENT 41,100 34,000 32,600 30,900 27,525 26,000 20,000 16,256 15,500 13,600 11,648 10,0001 8,680 8,067 8,000 7,713 Source:Los Angeles Times "The Best Performing Companies in California" published April 30, 1991. A-8 The types of employment located in the Valley are listed in the following table: Santa Clarita Valley Estimated Annual Employment by Industry 1989 Total 100.0% Source: Dun and Bradstreet, 1989 estimates. Tax Levy and Tax Collection Below is a chart which indicates the and tax collection records for the City from 1988 through 1991: Total Total Industry Employment % of Total Agr/For/Fish/Min 924 2.8% Construction 2012 5.8 Manufacturing: 2,673,787 2,515,423 Nondurable 1650 4.2 Durable 7597 20.4 Transportation 1430 3.8 Communications 1698 4.4 Wholesale Trade 1316 3.4 Retail Trade 5546 14.6 Fin/Ins/Real Est 2555 6.8 Bus/Repair/Sery 1789 4.9 Pers/Ent/Rec Sery 2758 7.5 Prof/Rel Serv: Health 2021 5.5 Educational 2812 7.3 Other 1216 3.2 Public Admin 1960 _5-4 Total 100.0% Source: Dun and Bradstreet, 1989 estimates. Tax Levy and Tax Collection Below is a chart which indicates the and tax collection records for the City from 1988 through 1991: Largest Taxpayers The ten largest taxpayers in the City and County as shown for the 1990/1991 secured tax roll and the approximate amount of their levies for all taxing jurisdictions with the County are shown below. A-9 Total Secured Total Year Levy Collections 1988 [to come] [to come] 1989 $2,628,992 $2,457,851 1990 2,673,787 2,515,423 1991 [to come] [to come] Largest Taxpayers The ten largest taxpayers in the City and County as shown for the 1990/1991 secured tax roll and the approximate amount of their levies for all taxing jurisdictions with the County are shown below. A-9 CITY Taxpayer Amount Paid Magic Ford Frontier Auto Sales Mervyn's Target Stores Hughes Markets Lucky Stores Vince Wiese Chevrolet Valencia Motors K -Mart Vons Grocery Store COUNTY A 10 Total Tax Levy Comnanv Name ] 90-91 Pacific Bell $48,434,114 Southern California Edison Company 40,814,286 GTE California, Inc. 33,068,576 Southern California Gas Company 20,416,080 Hughes Aircraft Company 17,079,508 Northrop Corporation 13,916,348 Chevron USA Inc 13,013,864 Shuwa Investments Corporation 11,824,517 McDonnell Douglas Corporation 10,757,062 Atlantic Richfield 9,959,110 A 10 0 0 .O.O <O,MN NNw M O O:.-%. EN.N .:m M !n. O Oi v N.N nj U ca M;�M V N MMN O Q H m N QU J{ to O 'o O tG V f0 ,p 0 M tD OS f7 N N .t- N w G N M Cl N O CD 0U �Oi ONN 'C� NNm.M mCO cl UN'OMO m M NC3r m O, ��M'00, Of m_,ca 4�N uNi.m M N CO. (O N. N •?O N V W T,v ,0CC! N fD x N >' v C 7 O U y m ,i] M co •-N a0 mO. G.n O :6: N t� ::w N,� v :vi:to m o r!v moo �M00 0C, 07 . W M 4N ::N N N �N O C i 7 V Q M w J a cc to :O1N OFOA M N N ;cq f D N y:E >- V � C Zy LU Y xO CC m o o .tom M cu r M �;f CO. Z O it N c, LU og IL �y uw o Q m G m Zw w Z U' Q Q W m w m a m cc m a a m o c y O N J C N ul 0 � fl H tL RCO`LNmO aQZ OCN •NU0-Z�- JQ0 .Z H � 0 mo `m0 cmm: 0 0 CITY OF SANTA CLARITA BUILDING PERMIT VALUATION (in thousands of dollars) Tyne COUNTY OF LOS ANGELES BUILDING PERMIT VALUATION (in thousands of dollars) Tyne 1988 1989 1990 Residential Multi -Dwellings 38,084 53,781 235 New Single Dwelling 25,262 55,670 23,862 Additions, Alterations 5.627 9.904 1.168 Total Residential 68,973 119,354 33,528 Non -Residential New Commercial 13,822 15,663 5,850 New Industrial 5,824 9,973 11,021 Other 10,326 6,540 4,395 Additions, Alterations 5.352 10,715 6.868 Total Non -Residential 35,325 42,891 28,134 TOTAL VALUATION 104,299 162,246 61,662 Number of Dwelling Units Single Dwelling 207 366 119 Multi -Dwelling 621 801 5 Total Units 828 1,167 124 COUNTY OF LOS ANGELES BUILDING PERMIT VALUATION (in thousands of dollars) Tyne I1 1988 1989 2900 Residential Multi -Dwellings 2,118,463 1,823,456 1,346,701 New Single Dwelling 2,395,364 3,423,322 1,630,183 Additions, Alterations29 4,924 1,074,206 1,108.880 Total Residential 5,438,750 6,320,984 4,085,764 Non -Residential New Commercial 2,373,065 2,164,569 1,617,325 New Industrial 454,268 316,438 281,550 Other 445,063 464,706 433,393 Additions, Alterations 1370,221 1 431.503 1,472,104 Total Non -Residential 4,642,617 4,377,217 3,804,372 TOTAL VALUATION 10,081,367 10,698,200 7,890,136 Number of Dwelling Units Single Dwelling 17,677 23,707 9,010 Multi -Dwelling 32,608 24,765 16,090 Total Units 50,285 48,472 25,100 I1 Type of Business Retail Stores Apparel Stores General Merchandise Stores Drug Stores Food Stores Packaged Liquor Stores Eating and Drinking Places Home Furnish. and Appliances Bldg. Matrl. and Farm Implmts. Auto Dealers and Auto Supp, Service Stations Other Retail Stores Retail Stores Total: All Other Outlets: Total All Outlets: Source: State Board of Equalization (1) First through third quarter data only, CITY OF SANTA CLARITA TAXABLE TRANSACTIONS For the years 1988 through 1990 (Taxable Transactions in 000's) 19900 PERMITS (1) 97 29 17 58 21 202 90 57 60 39 369 1039 3325 4364 1988 1989 TAXABLE TAXABLE TAXABLE TRANS. PERMITS TRANS. PERMITS TRANS. $16,259 56 $23,280 71 $19,593 $43,556 19 $69,643 24 $55,087 $13,306, 16 $19,971 15 $15,849 $51,503 32 $68,675 43 $57,985 $5,484 16 $6,619 18 .$4,635 $65,101 .156 $78,261 181 $66,361 $23,375 65 $28,090 80 $18,150 $20,393 32 $42,415 43 $35,906 $156,618 42 $231,872 49 $201,836 $52,795 38 $64,247 42 $51,485 $61,671 274 $76` 319 $61,817 $510,061 746 $709,574 885 $588,704 $128,675 2584 $161,376 2852 $119,612 $638,736 3330 $870, 3737 _950 708 316 19900 PERMITS (1) 97 29 17 58 21 202 90 57 60 39 369 1039 3325 4364 Type 91_Business Retail Stores Apparel Stores General Merchandise Stores Drug Stores Food Stores Packaged Liquor Stores Eating and Drinking Places Home Furnish. and Appliances Bldg. Matrl. and Farm Implmts. Auto Dealers and Auto Supp. Service Stations Other Retail Stores Retail Stores Total: All Other Outlets: COUNTY OF LOS ANGELES TAXABLE TRANSACTIONS For the years 1988 through 1990 (Taxable Transactions in 000's) Total All Outlets:$72.246,949 2fi10II6 Source: State Board of Equalization (1) First through third quarter data only. 12) First a. second _quarter data only,_ 77 706,166 263507$59,262 688 270167 1988 1989 1990 1) TAXABLE TAXABLE TAXABLE TRANS. PERMITS TRANS. PERMITS TRANS. PERMITS (2) $6,243,168 8969 $6,243,168 9321 $2,527,865 9738 $6,243,168 1705 $6,608,949 1749 $4,627,010 1848 $1,061,593 1439 $1,107,221 1454 $810,659 1457 $3,465,372 6639 $3,742,356 6682 $2,897,269 6825 $671,600 2103 $674,984 2064 $495,798 2060 $6,352,508 19015 $6,731,883 19131 $1,806,116 19183 $2,479,485 5542 $2,681,534 5659 $1,966,408 5700 $3,398,293 2304 $3,767,044 2349 $2,794,393 2366 $9,152,780 4331 $9,554,283 4460 $6,983,969 4591 $3,779,459 3321 $4,021,784 3209 $3,278,474 3017 $7,165,239 22990 $7.729.880 24006 $9082,892 25090 $46,820,253 78358 $50,104,484 80084 $37,270,853 81875 $25,426,696 154596 $27,601,682 155099 $21,991,835 159876 Total All Outlets:$72.246,949 2fi10II6 Source: State Board of Equalization (1) First through third quarter data only. 12) First a. second _quarter data only,_ 77 706,166 263507$59,262 688 270167 tilitle The following utility companies provide service to the City and its citizens: Electricity Southern California Edison Company Natural Gas Southern California Gas Company Telephone Pacific Bell Currently, four (4) purveyors of water provide water to.the City and its residents. Castaic Lake Water Agency and Newhall Water District are public water purveyors that sell water to the City, private individuals and private water companies. The Santa Clarita Water Company and the Valencia Water Company are private water purveyors that sell water directly to the public and the City. Transportation Highways Interstate 5 is the major artery for north/south traffic through the Valley linking cities such as Los Angeles and San Diego to the south, and Bakersfield and San Francisco to the north. Highway 14, the Antelope Valley Freeway, emanates from the northern San Fernando Valley and is used by traffic going to the Palmdale/Lancaster area, other desert communities, and Las Vegas. Highway 126 links the Valley'to the coastal cities of Ventura and Santa Barbara. Airports The Los Angeles International Airport is located 40 miles to the south and Burbank Airport is only 25 miles to the south. Bus, van and limousine service to both airports is available throughout the Valley. Railroads The Southern Pacific Railroad has. daily freight runs; and Amtrak, with stations in the adjacent San Fernando Valley, provides regular daily passenger service to key cities. Seaports The ports of Los Angeles and Long Beach are 50 and 60 miles south of the Valley respectively. Ventura and its nearby ports are 40 freeway miles northwest of the Valley. Buses The City of Santa Clarita operates three (3) modes of mass transit within the Santa Clarita Valley and to the City of Los Angeles. These modes are: local, commuter and dial -a -ride forthe elderly and handicapped as well as the general public. 14 Local System The City's local transit system contracts through a private operator for seven (7) local lines in the incorporated as well.as the unincorporated areas of the Valley. Service is available six (6) days a week, Monday through Saturday from 6:00 a.m. to 6:00 p.m. In Fiscal Year 1989-90 over 326,000 riders used the local system. This was a 9.5% increase over the previous fiscal year. Farebox return for Fiscal Year 1989-90 was 11.3%. Commuter System The City contracts for six (6) over -the -road coaches to make six (6) morning trips to downtown Los Angeles and six (6) evening trips from downtown Los Angeles. The coaches have five (5) stops in the City and three (3) stops in Los Angeles. The commuter system operates five (5) days per week Monday through Friday. In Fiscal Year 1989-90 over 435,000 riders used the system and it had a farebox return of over 60%. Dial -A -Ride Dial -A -Ride is a contracted door-to-door transit service for the elderly and handicapped during the day time and for the general public during evening hours. Wheelchair lift equipped vans are used to deliver this service for the elderly and handicapped between the hours of 6:00 a.m. and 6:00 p.m. In Fiscal Year 1989-90 over 24,000 elderly or handicapped persons used this service. General public service was not available in Fiscal Years 1989-90. Health Care For outpatients, the Valley has several walk-in centers, clinics and medical office buildings. The area's hospitals offer a full spectrum of acute-care services and advanced diagnostics. These medical centers also feature specialized trauma, cardiac and obstetric care, along with 24-hour emergency departments. The Valley's 250 -bed Henry Mayo Newhall Memorial Hospital offers comprehensive patient care. Education and Community Service The Valley's fifty (50) child-care facilities provide a full range of programs including: preschool, cooperative, school age, year round, infant, parent -toddler, kindergarten and special education. For primary and secondary education, there are six (6) public school districts that include twenty-one (21) elementary schools, three (3) junior high schools, five (5) senior high schools, and an adult education high school. There are also several private schools. The Valley itself has three (3) institutions of higher learning: California Institute of. the Arts, the nation's first fully accredited, four-year visual and performing arts college; the Master's College, a Christian -oriented, four-year liberal arts college; and College of the Canyons, a fully -accredited two-year community college. Recreation There. are a number or recreational and historical facilities located in the Valley. Among them is Six Flags Magic Mountain Amusement Park. For water enthusiasts there is Castaic Lake, Lake Hughes, Lake Elizabeth, Lake Piru and Lake Pyramid. The Angeles 15 National Forest, Placerita Nature Center, Saugus Train Station, William S. Hart Park Museum and the Vasquez Rocks County Park are also available for hiking, picnicking and museum viewing. Frazier Park is available for ski enthusiasts. Also located in the Valley is the California Institute of the Arts. This is one of the world's premier centers for study in the visual and performing arts. More than 500 public performances and exhibitions are staged each year. 1L APPENDIX B SUMMARY OF TRUST AGREEMENT mm APPENDIX C FORM OF OPINION OF BOND COUNSEL C - I APPENDIX D FORM OF MUNICIPAL BOND POLICY INSURANCE D - I APPENDIX E BOOR -ENTRY ONLY SYSTEM E-1 APPENDIX E BOOK -ENTRY ONLY SYSTEM Depository Trust Company DTC will act as securities depository for the Bonds. DTC is a limited -purpose trust company organized under the laws of the State of New York, 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 1934; as amended. DTC was created to hold securities of its participants ("DTC Participants") and to facilitate the clearance and settlement of securities transactions among DTC Participants in -such securities through electronic book - entry changes in accounts of DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks; trust companies, clearing corporation and certain other organizations, some of whom (and/or their representatives) own DTC. Accesstothe DTC book -entry system (the "Book -Entry System") is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the "Indirect Participants"). Transacting Through DTC and Status of Beneficial Owners Purchases of Bonds under the Book -Entry System may be made only through brokers and dealers who are, or act through, DTC Participants. DTC Participants will receive a credit balance in the records of DTC. The ownership interest of each actual purchaser of each Bond (the "Beneficial Owner") wilt be recorded through the records of a DTC.Participant. Beneficial Owners will receive a written confirmation of their purchase providing certain details of the Bonds acquired. Transfers of ownership interest in the Bonds will be accomplished by book entries made by DTC and by DTC Participants who act on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Bonds, except as specifically provided in the Resolution of Issuance in the event participation in the Book -Entry System is discontinued (see Discontinuance of DTC Services). The principal, interest and any premium evidenced by the Bonds will be paid. to DTC, or its nominee, and then paid by DTC to DTC Participants, and thereafter paid by DTC Participants to Beneficial Owners when due. THE AUTHORITY AND THE TRUSTEE DO NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS. As provided in the Resolution of Issuance, unless participation in the Book -Entry System is discontinued, Beneficial Owners of the Bonds or interests therein will not receive or have the right to receive physical delivery of such Bonds, and will not be or be considered to be registered owners thereof under the Resolution of Issuance. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the holders or registered owners of the Bonds will mean Cede & Co. and will not mean the Beneficial Owners of the Bonds. E-2 Payments on Bonds and Notices So long as the Book -Entry System is used for the Bonds, principal, prepayment premium and interest payments evidenced by the Bonds will be made to DTC or its nominee, Cede & Co., as registered owner of the Bonds. Upon receipt of moneys, DTC's current practice is to immediately credit the accounts of DTC Participants in accordance with their respective holdings shown on the records of DTC. Payments by DTC Participants and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such DTC Participant or Indirect Participant and not of DTC, the Trustee, or the District, subject to any statutory and regulatory requirements as may be in effect from time to time. So long as the Book -Entry System is used for the Bonds, the Trustee will give any notice of prepayment or any other notices required to be given to the Owners of Bonds only,to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify the Beneficial Owner, of any such notice and its content or effect will not affect the validity of the prepayment of the Bonds called for prepayment or any other action premised on such notice. Beneficial Owner may desire to make arrangements with a DTC Participant so that each notice of prepayment or other communications to DTC which affect such Beneficial Owners, and notification of all interest payments, will be forwarded in writing by such DTC Participant. The Trustee cannot and do not give .any assurances that DTC will distribute to DTC Participants payments of principal, interest or any premium with respect to the Bonds paid to DTC or its nominee, as the -registered owner, or any prepayment or other notices or that it will do so on a timely basis or will serve and act in a manner described in this Preliminary Official Statement; in addition, the Authority and Trustee cannot and do not give any assurances that DTC Participants or others will in turn distribute in a timely manner to the Beneficial Owners any such payments or notices which they receive from DTC or that will act in a manner described in this Preliminary Official Statement. The Authority and Trustee are not responsible or liable for the failure of DTC or any DTC Participant to Act in a manner described in this Preliminary Official Statement or any error or delay relating thereto. Discontinuance of DTC Services In the event that (a) DTC determines not to continue to act as securities depository for the Bonds or (b) the Authority determines to remove DTC from its functions as a depository, DTC's role as securities depository for the Bonds and use of the Book -Entry System will be discontinued. If the Authority fails to select a qualified securities depository to replace DTC, the Authority will cause the Trustee to execute and deliver replacement Bonds in fully registered form in denominations of $5,000 or any integral multiple thereof in the names of the Beneficial Owners or DTC Participants. Upon such registration, the Beneficial Owners or DTC Participants will become the Owners of the Bonds for all purposes. In the event that the Book -Entry System is discontinued, the following provisions would also apply: (a) Bonds may be exchanged for an equal aggregate principal amount of such Bonds in other authorized denominations and of the same maturity, upon surrender thereof at the principal corporate trust office of the Trustee; (b) the transfer of any Bond may be registered on the books maintained by the Trustee under the Trust Agreement for E-3 such purpose only upon the surrender thereof to the Trustee ,with a duly executed assignment in a form satisfactory to the Trustee; (c) for every exchange or registration of transfer of Bonds, the Authority and the Trustee may make a charge sufficient to pay them for any tax, other governmental charge or transfer fees with respect to such exchange or registration of transfer; (d) the Trustee will not be required to register the transfer or selection of any Bonds for prepayment, or after the selection for prepayment of such Bond or portion thereof; (e) all interest payments will be made by check or draft mailed to the registered owners thereof, as they appear on the registration books maintained by the Trustee on the fifteenth (15th) day of the month next preceding such Interest Payment Date (except in the case of registered owners of at least $1,000,000 in aggregate principal amount of outstanding Bonds, which payment shall, at such owner's request, be made by wire transfer as provided in the Trust Agreement); and (f) all payments of principal and any premium with respect to the Bonds will be made upon presentation thereof at the principal corporate trust office of the Trustee. Transfer Fees For every transfer and exchange of Bonds, Beneficial Owners may be charged a sum sufficient to cover any tax, governmental charge or transfer fees that may be imposed by the Trustee, DTC, or the DTC Participant in connection with such transfer or exchange. E-4 $22,930,000 SANTA CLARITA PUBLIC FINANCING AUTHORITY LOCAL AGENCY REVENUE BONDS (SERIES 1991) PURCHASE CONTRACT 1991 Santa Clarita Public Financing Authority c/o City Councilmembers 23920 Valencia Boulevard, Suite 300 Santa Clarita, CA 91355 Dear Councilmembers: PaineWebber Incorporated (the "Underwriter"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Purchase Contract with the Santa Clarita Public Financing Authority (the "Authority"), which upon acceptance hereof will be binding upon the Authority and upon the Underwriter. This offer is made subject to the Authority's acceptance by the execution of this Purchase Contract and its delivery to the Underwriter at or before 5:00 p.m., local time, on the date set forth hereinabove, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority at any time prior to the acceptance hereof by the Authority. 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and conditions and in reliance upon the representations and agreements herein set forth, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agrees to sell to the Underwriter, all (but not less than all) of the Santa Clarita Public Financing Authority, Local Agency Revenue Bonds, Series 1991 (the "Bonds"), in the aggregate principal amount of $ dated October 1, 1991, bearing interest from said date (payable on April 1, and October 1, in each year, commencing on April 1, 1992) at the interest rates per annum and maturing on the dates as set forth on Exhibit A attached hereto and incorporated herein by this reference. The purchase price for the Bonds shall be equal to the , plus accrued interest on the Bonds, if any, from the date thereof through the Closing Date (as hereinafter defined). The Bonds shall be substantially in the form described in, shall be issued upon satisfaction of the contingencies set forth in, shall be secured under the provisions of, and shall be payable and subject to redemption as provided in the Trust Agreement dated as of October 1, 1991 (the "Trust Agreement") between the Authority and , as Trustee (the "Trustee") and the Marks -Roos Local Bond Pooling Act of 1985, Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Act"). (b) The Authority by its acceptance of this offer approves the final official statement relating to the Bonds (the "Official Statement") (the term "Official Statement" meaning that certain Official Statement relating to the Bonds dated as of the date hereof, including the cover page, appendices and supplemental information set forth therein, conforming to the terms of this Purchase Contract and with such changes, amendments or supplements as may be made thereto, with the approval of the counsel to the Authority,.Burke, Williams, Sorensen & Gaar, Los Angeles, California (the "Authority's Bond Counsel") and the Underwriter, from time to time as provided herein). The Authority hereby authorizes the Underwriter to use and distribute in connection with the offer and sale of the Bonds the following documents: the Official Statement, the Trust Agreement, this Purchase Contract and all information contained herein, and all other documents, certificates and statements furnished by the Authority to the Underwriter in connection with the transactions contemplated by this Purchase Contract. (c) Except as the Authority and the Underwriter may otherwise agree, the Authority will deliver to the Underwriter, at the offices of the Authority's Bond Counsel in Los Angeles, California, the documents hereinafter mentioned and, at the offices of The Depository Trust Company in New York, New York, the Bonds, in definitive form (bearing CUSIP numbers), duly executed by the Authority and authenticated by the Trustee in the manner provided for in the Trust Agreement and the Act, at 9:00 a.m. California time, on , 1991 or such later date as may be acceptable to the Underwriter (the "Closing Date"); and the Underwriter will accept such delivery and pay the purchase price of -the Bonds as set forth in paragraph (a) of this section in. immediately available funds (such delivery and payment being herein referred to as the "Closing"). The Bonds shall be made available to the Underwriter not later than 24 hours prior to the Closing Date for purposes of inspection and packaging. The Bonds shall be in fully registered form and shall be registered in accordance with instructions to be supplied to the Trustee by the Underwriter. -2- 2. Representations and Agreements of the Authority. The Authority represents -to -and agrees with the Underwriter that: (a) The Authority is, and will be at the date of Closing, duly organized and validly existing as a joint exercise of powers authority of the State of California under the Constitution and laws thereof and has, and at the Closing date will have, full legal right, power and authority, under the Joint Exercise of Powers Agreement dated , 1991, between the City of Santa Clarita (the "City") and the Redevelopment Agency of the City (the "Agency") (the "JPA Agreement"), its other organizational documents and otherwise, (i) to enter into this Purchase Contract, (ii) to enter into the Trust Agreement, (iii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, and (iv) to carry out, give effect to and consummate the transactions contemplated by this Purchase Contract, the Trust Agreement, the Official Statement and any Authority resolutions or agreements referred to therein. (b) The Authority has complied, and will at the Closing Date be in compliance, with the Trust Agreement, the Act, and all other applicable laws and the documents referred to in subsection (a) hereof. (c) The Authority has, or prior to the Closing Date, will have, duly and validly taken all official action necessary to: (i) adopt the Trust Agreement and.approve and authorize the execution and delivery of the Bonds, this Purchase Contract, the official Statement and any other applicable agreements; and (ii). authorize and approve the performance by the Authority of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by, each of said documents. (d) The Bonds and the Trust Agreement conform to the descriptions thereof set forth in the official Statement; and the Bonds, when delivered to and paid for by the Underwriter at the Closing in accordance with the provisions hereof, and (assuming due authorization, execution and delivery by the respective other parties thereto, where necessary) the Trust Agreement, this Purchase Contract, and all other applicable agreements will constitute the valid, legal and binding obligations of the Authority, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; and the Bonds will be entitled to all of the benefits and security of the Trust Agreement. -3- (e) To the best knowledge of the Authority, the Authority is not, and at the Closing Date will not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or default under any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order, or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound. (f) To the best knowledge of the Authority, the execution and delivery of the Bonds, the Trust Agreement, this Purchase Contract, and all other applicable agreements and the other instruments contemplated by any of.such documents to which the Authority is a party, and compliance with the provisions of each thereof, will not, in any respect material to the transactions referred to herein or contemplated hereby, conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order, the JPA Agreement or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to.which the Authority is a party or is otherwise subject or bound. (g) To the best knowledge of the Authority, all approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Authority of its obligations hereunder and under the Trust Agreement, the Bonds and all other applicable agreements have been obtained or will be obtained prior to the Closing. (h) To the best knowledge of the Authority, the Official Statement will be, as of the Closing Date, true, correct and complete in all material respects; and, to the best knowledge of the Authority, the Official Statement (with respect to statements relating to the Authority, the City or both) will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (i) During the period commencing on the date hereof and ending on the date 90 days following the Closing Date, if any event shall occur as a result of which it may be necessary to supplement the Official Statement in order to make the statements therein, in light of the circumstances existing at such time, not misleading, the Authority will forthwith notify the Underwriter of any such event of which it has knowledge and, if in the opinion of the Underwriter such event requires an amendment or supplement to the Official Statement, the Authority will at no expense to the Underwriter amend or supplement the Official Statement in a form and manner jointly approved by the Authority and the Underwriter and provide for the distribution of such amendment or supplement to the owners of the Bonds. (j) To the best knowledge of the Authority, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, or public board or body is pending or threatened, in any way affecting the existence of the Authority or the titles of its officers to their respective offices or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with theTrustAgreement, the collection or application of any monies or revenues pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the Trust Agreement, the JPA Agreement, any other applicable agreements, this Purchase Contract, or any action of the Authority contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Official Statement or the powers of the Authority or its authority with respect to the Bonds, the Trust Agreement, any other applicable agreements, this Purchase Contract or any action of the Authority contemplated by any of said documents, or in any way seeking to enjoin or restrain the Authority from approving the acquisition or construction of any of the public capital improvements listed in the Official Statement or which would adversely affect the exclusion from gross income for federal income tax purposes of interest paid on the Bonds or the exemption thereof from California personal income taxation; nor to the best knowledge of.the Authority, is there any basis therefor. (k) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Bonds for offer and sale under the "blue sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and will assist, if necessary, in the continuation of such qualifications in effect as long as required for the distribution of the Bonds; provided, however, that the Authority shall not be required to consent to -service of process outside of California. -5- (1) Any certificate signed by any official of the Authority authorized to do so shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (m) The Authority will not apply the proceeds of the Bonds to. any purpose other than the purchase of City Obligations (as such term isdefinedin the Trust Agreement) in accordance with the Trust Agreement and all other applicable documents and as described in the Official Statement, provided that this paragraph shall not be construed to prevent either the temporary investment of bond proceeds or the use thereof to redeem Bonds as provided for in the Trust Agreement. (n) The Authority will not use or invest proceeds of the Bonds in any manner which would cause the Bonds to be considered arbitrage bonds within the meaning of Section 198 of the Internal Revenue Code of 1986. (o) The Authority will, at the Underwriter's request, take any action reasonably necessary to assure or maintain the exclusion from gross income for purposes of federal income taxes of interest on the Bonds and will not take any action, or permit any action to be taken with respect to which it may exercise control, which would result in the loss of such exclusion. 3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, (i) to the accuracy in all material respects of the representations on the part of the Authority contained herein as of the date hereof and as of the Closing Date; (ii) to the accuracy in all material respects of the statements of the officers and other officials of the Authority, as well as of the other individuals referred to herein, made in any certificates or other documents furnished pursuant to the provisions hereof; (iii) to the performance by the Authority of its obligations to be performed hereunder at or prior to the Closing Date; and (iv) to the following additional conditions: (a) At the Closing Date, the resolution authorizing the execution and delivery of the Bonds, the Trust Agreement and any other applicable agreements shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter; and there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions.contemplated thereby and by this Purchase Contract, all such actions as, in the opinion of Authority's Bond Counsel, shall be necessary and appropriate. (b) At the Closing Date, the Official Statement shall be in form and substance satisfactory to the Underwriter. (c) Between the date hereof and the Closing Date, the market price or marketability of the Bonds (at par) shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by notice to the Authority terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: (i) legislation introduced in or enacted by the Congress or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation has been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of.America, or an order, ruling, regulation (final, temporary or proposed), press. release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any holders of the Bonds; (ii) legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of.the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any and all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Trust Agreement is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect; (iii) a general suspension of trading.in securities on the New York Stock Exchange.or the American Stock Exchange, the establishment of minimum prices on either such exchange, the establishment of material -7- restrictions (not in force as of the date hereof)1pon trading in securities generally by any governmenta general authority or any national securities exchange, a 9 banking moratorium declared by federal, State of New York or State of California officials authorized to do so, or a war or other national calamity; (iv) the withdrawal or downgrading of any rating of any securities of the Authority by a.national rating agency; (v) any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Authority, its property, income, securities (or interest thereon), or the pledge of the Revenues pursuant to the Trust Agreement; (vi) the New York Stock Exchange or other national securities exchange or any governmental authority, shall impose, as to the Bondsor obligations of the ions general character of the Bonds, any those now in force, with in force, or increase materially respect to the extension of credit by, or the charge to the net capital requirements of, underwriters; or (vii) any event occurring, or information becoming known which, in the judgment of the saUnderwriter, information untrue in any material respect any contained in the official Statement, or has the effect that the official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) At or prior to the Closing Date, the Underwriter shall have received two counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter: (i) The Official Statement, executed on behalf of the Authority by its Executive Director or such other official as may be approved by the Underwriter; (ii) The JPA Agreement, as in effect on and as of the Closing Date, together with a certificate of the Secretary of the Authority to the effect that it is a true, correct and complete copy of said agreement as duly approved and executed by the City and Agency effect as of the Closing Date and that said agreement has �� not been amended, modified or rescinded (except as may have been agreed to by the Underwriter) and is in full force and effect as of the Closing Date; (iii) The resolution authorizing the issuance of the Bonds and approving the execution and delivery of the Trust Agreement by the Authority, together with a certificate of the Secretary of the Authority dated as of the Closing Date, to the effect that it is a true, correct and complete copy of the resolution duly adopted by the Authority and that it has not been amended, modified or rescinded (except as may have been agreed to by the Underwriter) and is in full force and effect as of the Closing Date; (iv) An opinion, dated the Closing Date and addressed to the Authority, of the Authority's Bond Counsel in substantially the form set forth in Appendix B to the Official Statement, together with a letter of the Authority's Bond Counsel, dated the Closing Date and addressed to the Underwriter and the Trustee, to the effect that such.opinion addressed to the Authority may relied upon by the Underwriter and the Trustee to the same extent as if such opinion was addressed to it; (v) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of the Authority's Bond Counsel to the effect that (1) this Purchase Contract has been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the Underwriter, constitutes a legal, valid and binding agreement of the Authority, enforceable in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought; (2) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (3) the Bonds and the Trust Agreement conform as to form and tenor to the descriptions thereof contained in the Official Statement, and the statements contained in the Official Statement on the cover and under the captions "Introductory Statement," "The Bonds," "Security For The Bonds," "Summary of Certain Provisions of the Trust Agreement," "Approval of Legality," and "Tax Matters," insofar as such statements purport to summarize certain provisions of the Act, the Bonds, the Trust Agreement, and other applicable laws and agreements, present a fair and accurate summary of such provisions, and such summaries do not contain any untrue statements of a material fact or omit to state a material fact required to be stated in the Official Statement or necessary to make the statements made therein, in the light of the circumstances under which they are made, not misleading in any material respect; and (9) the Trust Agreement creates for the benefit of the owners from time to time of the Bonds a valid pledge of, lien upon and security interest in the Revenues (as defined in the Trust Agreement) pledged thereby, subject in all cases to the provisions of the Trust Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein; (vi) An opinion, dated the Closing Date and addressed to the Underwriter, of Stradling, Yocca, Carlson & Rauth, a Professional Corporation, counsel to the Underwriter, to the effect that (1) the Bonds are exempt from the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended, and (2) based upon the information made available to them in the, course of their participation in the preparation of the Official Statement as counsel.to the Underwriter and without having undertaken to determine independently or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, such counsel do not believe that the Official Statement, as of its date and.as of the Closing Date, contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any appendices and any other financial and statistical data contained in the Official Statement); and such memoranda of said firm, or of other counsel specified by the Underwriter, as to "blue sky" matters as the Underwriter may reasonably require; (vii) A certificate, dated the Closing Date and signed by the Chairman of the Authority's Board of Directors or such other officer of the Authority as the Underwriter may select, to the effect that (1) to the best knowledge of said officer, the representations of the Authority contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (2) to the best knowledge of said officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official -Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (3) to the best knowledge :of said officer, the Authority has complied with all the agreements and satisfied all the conditions on its -10- part to be performed or satisfied under this Purchase Contract, the Trust Agreement, and the Official Statement at and prior to the Closing Date; (viii) An opinion, dated the Closing Date -and addressed to the Underwriter and the Trustee, of the City Attorney as counsel for the Authority, to the effect that (1) to his best knowledge no action, suit, proceeding, inquiry or investigation,.at law or in equity, before or by any court, regulatory agency, public board or body, -is pending or threatened in any way affecting the existence of the Authority or the titles of its officers to their respective offices, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Trust Agreement, the collection or application of the reassessments and the interest thereon to pay the principal of and interest on the Bonds, or in any way contesting or affecting the.validity or enforceability of the Bonds, the Trust Agreement, this Purchase Contract, or any other applicable agreements or any action of the Authority contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Official Statement or the powers of the Authority or its authority with respect to the Bonds, the Trust Agreement, this Purchase Contract, or any other applicable agreement, or any action on the part of the Authority contemplated by any of said documents, or which challenges the exclusion of interest paid on the Bonds from gross income for purposes of federal income taxation or the exemption thereof from California personal income taxation, nor to his knowledge is there any basis therefor; (2) the Authority is duly organized and validly existing as a body corporate and politic and political subdivision of the State of California under the Constitution and laws thereof with full legal right, power and authority to issue the Bonds and to perform all of its obligations under this Purchase Contract; the Bonds, and all other_ applicable agreements; (3) the Authority has duly and validly authorized the execution and delivery of the Trust Agreement, and it is in full force and effect; (4) the Authority has duly authorized, executed and delivered this Purchase Contract and the Official Statement; (5) the JPA Agreement, the Trust Agreement and, assuming due authorization, execution and delivery by the Underwriter, this Purchase Contract, constitute legal, valid and binding agreements of the Authority and the Agency, respectively, enforceable in accordance with their terms, subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; and (6) the statements contained in the Official Statement relating to the City and the Authority, to the best of his -11- knowledge, do not contain any untrue statement of a material fact or omit to.state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ix) A certificate dated the Closing Date and signed by an authorized officer of the issuer of the Investment Agreement to the effect that the information contained in the Official Statement under the heading "Security for the Bonds - The Investment Agreement - The Depository" fairly and accurately summarizes the information purported to be presented or summarized therein and that such information is included in the Official Statement with the consent of said entity; (x) An opinion, dated the Closing Date and addressed to the Underwriter and the Trustee, of counsel to the issuer of the Investment Agreement as to the validity and enforceability thereof, in form and substance satisfactory to the Underwriter; (xi) A certificate of the Trustee dated the Closing Date addressing the organization and existence of the Trustee, its corporate powers to enter into and perform its obligations under the Trust Agreement and the Investment Agreement and such other matters as may be reasonably required by the Underwriter, all in form and substance satisfactory to the Underwriter; (xii) An opinion, dated the Closing Date and addressed to the Underwriter, of counsel to the Trustee addressing the Trustee's right, power and authority to enter into and perform its obligations under the Trust Agreement and the Investment Agreement, the due authorization, execution and delivery of each of said documents by the Trustee and -the legal validity and binding nature of the obligations of the Trustee thereunder, all in form and substance satisfactory to the Underwriter; (xiii) A certificate, dated the Closing Date and signed by the City Manager of the City or such other officer of the City as the Underwriter may approve to the effect that the information concerning the City and the Public Capital Improvements contained in the Official Statement were, as of the date of the Official Statement, and are as of the Closing Date true and correct in all material respects and that the Official Statement did not, as of the date thereof, nor as of the Closing Date, does it contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, nor misleading; -12- (xiv) A transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds; and (xv) Such additional legal opinions, certificates (including a non -arbitrage certificate), instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the Authority's representations contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Authority at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Authority in connection with the transactions contemplated hereby and by the Trust Agreement and the Official Statement. All the opinions, letters, certificates, instruments and other documents mentioned in this section or elsewhere in this Purchase Contract shall be deemed to be in compliance with the terms hereof if, and only if, they are in form and substance satisfactory to the Underwriter. If any of the conditions to the obligations of the Underwriter contained in this section or elsewhere in this Purchase Contract shall not have been satisfied when and as required herein, all obligations of the Underwriter hereunder may be terminated by the Underwriter at, or at any time prior to, the Closing Date by written notice to the Authority. 4. Expenses. (a) Whether or not the Underwriter accepts delivery of and pays for the Bonds as set forth herein, it shall be under no obligation to pay, and the Authority shall pay or cause to be paid all expenses incident to the performance of the Authority's obligations hereunder, including but not limited to the fees and disbursements of the Trustee, excluding fees of counsel to the Trustees, the Authority's Bond Counsel, accountants, engineers, appraisers, economic consultants, financial advisers and any other experts or consultants retained in connection with the Bonds; and any other expenses not specifically enumerated in paragraph (b) of this section incurred in connection with the issuance of the Bonds. (b) Whether or not the Bonds.are delivered to the Underwriter as set forth herein, the Authority shall be under no obligation to pay, and the Underwriter shall pay, the cost of printing, engraving and delivering the Bonds to the Underwriter; the cost of printing, distribution and delivery of the Official Statement in reasonable quantities as.requested by the Underwriter; all expenses paid or incurred to qualify the Bonds for sale under any "blue sky" laws; and all other -13- expenses paid or incurred by the Underwriter in connection with its offering and distribution of the Bonds not specifically enumerated in paragraph (a) of this section, including the fees and disbursements of its counsel. 5. Notices. Any notice or 'other communication to be given to the Authority under this Purchase Contract may be given by delivering the same in writing to the Authority to the attention of its Chairman, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to 6. Parties in Interest. This Purchase Contract is made solely for the benefit of the Authority and the Underwriter (including successors or assignees of the Underwriter) and no other person -shall acquire or have any right hereunder or by virtue hereof. 7. Survival of Representations. The representations of the Authority set forth in or made pursuant to this Purchase Contract ,shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Contract and regardless of any investigations made by or on behalf of .the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Authority and regardless of delivery of and payment for the Bonds. 8. Offering by Underwriter. It is understood that the Underwriter proposes to offer the Bonds for sale to the public (which may include selected dealers) as set forth in the Official Statement. In the sole discretion of the Underwriter, concessions from the public offering prices may be allowed to selected dealers. It is understood that the initial public offering price and concessions set forth in -the Official Statement may vary, in the sole discretion of the Underwriter, after the initial public offering and that the Bonds may be offered to the public at prices other than the par value thereof. The -net premium on the sale of the Bonds, if any, shall accrue to the benefit of the Underwriter. The Authority hereby confirms the authority and use by the Underwriter of the Official Statement. Time. Time shall be of the essence of this Agreement. 10. Counterparts. This Agreement may be executed in any number of counterparts, all of which shall constitute a single agreement. -14- 11. Effective. This Purchase Contract shall become effective and binding upon the respective parties hereto'upon the execution of the acceptance hereof by the Authority and shall be valid and enforceable as of the time of such acceptance. Very truly yours, PAINEWEBBER INCORPORATED 0 Accepted: By: Executive Director ATTEST: By: 6915u/2173.029 Secretary -15-