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HomeMy WebLinkAbout1997-07-08 - AGENDA REPORTS - ECONOMIC DEVELOPMENT GOALS (2)goals ECONOMIC DEVELOPMENT I 1. Job Creation 2. Tax Revenue -Growth 3. Jobs/Housing Balance ECONOMIC DEVELOPMENT o%!tplishnlents O Santa Clarita was named as the second best city in California in which to do business by the California Business Magazine O The location of Princess Cruises is the largest new employer (600) to locate to Santa Clarita in the last six years, and will have an economic impact of over 2.7 million annually O Santa Clarita is the Fourth Safest Citv of its size in the nation according to FBI data O Santa Clarita is now the fourth largest city in population in Los Angeles County; at 141,690 Add „da tame 1 ! ECONOMIC DEVELOPMENT omplishments O The California Retail Survey listed Santa Clarita as the fastest growing Southern California retail market over the past six years with a 41 % growth rate O Santa Clarita has the sixth largest labor force in L.A. County at 62,240 O Santa Clarita has the fourth highest jobs to housing ratio of cities over 100,000 in L.A. County O Santa Clarita has the absolute lowest unemployment rate of any city in L.A. County with a population over 100,000 THE CITY OF SANTA CLARITA SANTA CLARITA VALLEY CHAMBER OF COMMERCE economic development Small Business Assistance Shop Local Campaign Film & Entertainment Bureau Tourism Bureau 2 DProvide business counseling through the California Chamber's Small Business Assistance Program, disseminating materials referencing SBA assistance DCity permit processing, demographic data, referrals and contacts DProvide seminars based on demand, focusing on specific subject areas City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance 3 MALL BUSINESS ASSISTANCE $4,000 per year City Funds $2000 Chamber Match $2000 City of Santa Clarita/Chamber of Commerce Contract DProvide business counseling through the California Chamber's Small Business Assistance Program, disseminating materials referencing SBA assistance DCity permit processing, demographic data, referrals and contacts DProvide seminars based on demand, focusing on specific subject areas City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance 3 ccom is ments DBusiness assistance office at the Chamber compiled information relative to business start-up, SBA, business plans, and legal, accounting and marketing materials. D July 1, 1996 through June 1997: • 125 people visited the business center • 97 business kits were ordered and sold • 38 persons were counseled City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance I!Vccompfishments DTwo round table seminars were held with a panel of chamber volunteer professionals: CPA, Banker, Commercial broker and Marketing company to discuss business start-up to include: • writing a business plan • planning a budget • marketing strategies • office set-up. City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance a i 4 I'%ccomplishments DA seminar was held featuring Kent Burnes, economist and marketing specialist to assist businesses in competing with the big box stores. 21 businesses signed up for the in-store counseling ... City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance estimonia s "I attended the Kent Burnes Seminar and found it extremely useful". DTrends in commerce are changing at an ever increasing rate. We need new information on a continual basis if our businesses are to prosper. City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance 5 i m esnmoniais i "The Kent Burnes Seminar was by far the best I've ever attended." DKent Burnes motivates you through his enthusiasm and gives businesses ideas they can implement immediately. Kathy Alfie Owner, Cobblestone City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance creasing the success LZngoinq Events e SCVBusinesses DOngoing small business breakfasts monthly to include speakers and networking DBusiness After Hours Mixers DGrand Openings DRibbon Cuttings D. Lobby Advertising DMember Discount Programs pQuarterly Luncheons City of Santa Clarita/Chamber of Commerce Contract For Small Business Assistance 6 0 J HOP LOCAL CAMPAIGN $8,000 City Funds $4000 Chamber Match $4000 City of Santa Clarita/Chamber of Commerce Contract DDesign a community wide campaign encouraging Santa Clarita residents to shop locally DCreate an awareness with graphic elements symbolizing the shop local message City of Santa Clarita/Chamber of Commerce Contract For Shop Local VA A I Z�%ccomplish ments D City ads highlighting each of our four communities Placed in the Signal and The Magazine of Santa Clarita SHOP SANTA CLAR.IMA, Auto Mall Ads Placed in Seasons Magazine and The Magazine of Santa Clarita City of Santa Clarita/Chamber of Commerce Contract For. Shop Local Shop Local Campaign 1997-1998 PHASE ONE City-wide logo contest with community involvement and permanent shop local identity. Final product provided by a professional design firm City of Santa Clarita/Chamber of Commerce Contract For Shop Local 8 FA S 1160%ccomplishments DPHASE TWO New logo is placed in a wide range of mediums Santa Clarita One City Four Towns One Thousand Places to Shop Shop Local Campaign 1997-1998 As decals in store windows and in business ads City of Santa ClaritalChamber of Commerce Contract For Shop Local In bus shelters and on area billboards ccomplishments Shop Local Campaign 1997-1998 PHASE THREE Education D Why shop local? D Where are your tax dollars going? What are the community benefits? City of Santa Clarita/Chamberof Commerce Contract For Shop Local 9 ilm & Entertainment Bureau $90,000 City Funds $30,000 Chamber $60,000 City of Santa Clarita/Chamber of Commerce Contract 511kMa-Mm- > Promote and increase the film and entertainment industry as a meggs of bringing revenue to the Santa Clarita Valley DDevelop and maintain good working relationships with industry professionals and guilds DOperate a full time film liaison office to provide assistance and referrals to locations, studios and businesses which supply industry products and services DBecome a statistical model for reporting economic benefits received from filming in the SCV City of Santa Clarita/Chamber of Commerce Contract For The Film Bureau _..; r t 1c ccomp is ments DParticipation in Locations Expo, Showbiz Expo and Business Expo DHosted quarterly film mixers and meetings and the annual Appreciation Luncheon DProduced annual FAM Tour, hosting more than 50 filming companies City of Santa Clarita/Chamber of Commerce Contract For The Film Bureau Accomplishments D223 permits recorded with a combined total of 1150 production days D1051 referrals/assists made for locations, studios and businesses DIncreased database from 500 to 1850 members City of Santa ClariWChamber of Commerce Contract For The Film Bureau 11 In ccom is ments 47 new residential locations added to "Your Property In A Starring Role" City of Santa Clarita/Chamber of Commerce Contract For The Film Bureau jj�ccomplishments Produced Fifth annual Film Guide Sponsored the making of the award winning chamber video Inside! Santa Clarita City of Santa Clarita/Chamber of Commerce Contract For The Film Bureau Y 12.y 3 ccom is ments The Big Picture Newsletter Revenue generated in the SCV during the '96 season is estimated to meet 1995 figures of $200 million dollars. This is a combination of salaries, location fees, supplies purchased, equipment leased and other production necessities. City of Santa Clarita/Chamber of Commerce Contract For The Film Bureau Rev n ustry rowth Expanslon D: Movie ranches are expanding their facilities D Studios are attracting more production D A new studio is anticipated With an average feature production spending $28,000 a day, it brings increased sales tax revenue to the City of Santa Clarita. City of Santa Clarita/Chamber of Commerce Contract For The Film Bureau 12 ourism Bureau $83,000 City Funds $30,000 Chamber Match $53,000 City of Santa Clarita/Chamberof Commerce Contract DPromote Santa Clarita Valley Tourism DStimulate economic activity through increased awareness and visitation of the area DServe as a marketing organization, creating promotional packages which advocate the Santa Clarita Valley as a tourist destination. City of Santa Clarita/Chamber of Commerce Contract For The Tourism Bureau jj'%ccomplishments A 17 The Tourism Bureau 800 number reached a record 10,000 + callers DOver 20,000 Tourism brochures were distributed, targeted at geographic areas including Fresno, Bakersfield, South San Francisco and Pier 39 City of Santa Clarita/Chamber of Commerce Contract For The Tourism Bureau Accomplishments Press Kits were developed and distributed to travel writers, travel tour operators, long lead publications and other print media with two mailings, winter/fall City of Santa Clarita/Chamber of Commerce Contract For The Tourism Bureau 1E ccomp Is meets Co-operative advertising with area attractions and accommodations for promotion and advertising in the AAA (Auto Club) Tour Book Advertising in other publications such as California Travel Ideas and Destination LA City of Santa Clarita/Chamber of Commerce Contract For The Tourism Bureau CCOm IS meets Even,Promotions SANTA CLARITA M A R A T H O N Annual Santa Clarita Marathon : —1$0 1996 economic 5 impact for the community Annual Cowboy Po;;Ym 1996 economicimpact in localbusiness sales and tax revenue City of Santa Clarita/Chamber of Commerce Contract For The Tourism Bureau tA.p��0aTR The dynamics of our infrastructure are co m I n Vent$ ch ging and we are preparing for future tourism projects D1998 will see the PGA Nissan Open with over 50,000 attendees expected DSpring 1998 will open the new 250 room Hyatt Hotel and Santa Clarita Conference Center D1998 will introduce over 500 new hotel rooms in the Santa Clarita marketplace from four separate hotel properties City of Santa Clarita/Chamber of Commerce Contract For The Tourism Bureau F1 j pcominq Events DTwo new public golf courses are proposed for opening in 1999 DA new Edwards Theater Complex and a 3D IMAX theater will be introduced into the Valley D600 new jobs in the ocean/travel hospitality industry will result from the relocation of the Princess Cruise customer service center to Santa Clarita DOur largest tourism attraction, Six Flags California, has 1996 attendance numbers of 1.8 million persons who traveled in excess of 100 miles to reach the park. Six Flags supports over 2,175 full and part time employees directly from the Santa Clarita Valley f: THE CITY OF SANTA CLARITA economic SANTA CLARITA VALLEY ._- CHAMBER OF COMMERCE Small Business Assistance Shop Local Campaign Film & Entertainment Bureau Tourism Bureau AGENDA REPORT City Manager Item to be pre NEW BUSINESS DATE: July 8, 1997 SUBJECT: ADVANCED REFUNDING OF PFA BOND RESOLUTION JPA 97-1 DEPARTMENT: Administrative Services Steve Stark In October of 1991, the City of Santa Clarita issued bonds through the Public Financing Authority (PFA) in the amount of $22,940,000. The PFA is a joint powers authority created by the City and Redevelopment Agency. These bonds were issued in order to fund certain public improvements including; the purchase of the City Hall building and land; certain road improvements; and to repay the corporate yard note. These revenue bonds were rated A- by Standard and Poor's. The security for these bonds, which were publicly sold, was lease payments to be made by the City under a lease -leaseback arrangement (utilizing Certificates of Participation or COPS) for use of the City Hall building and the City's sewer system. The City agreed to budget and appropriate from the general fund or other available funds amounts equal to these lease payments for a period of 30 years. The proceeds from these bonds have been spent. The current outstanding principal is $18,800,000 at an average interest coupon rate of 6.82 percent. Over the past few months the Bond Market has rallied producing very attractive interest rates. Due to this decrease in interest rates, the City has an opportunity to refinance the PFA bonds. For example, if the City were to refinance at an average coupon rate of 5.40 percent, the City would realize a net present value savings of approximately $990,000. If the rates were to drop another 25 basis points or to 5.15 percent, the City would see a net present value savings of approximately $1,340,000. As interest rates tend to fluctuate, it is important to provide flexibility in the timing of such a sale. Interest rates are currently low, however rates could begin to rise, causing the City to miss the opportunity to secure a lower interest rate. Therefore, staff is recommending that the City • move forward with the process at this time. Adopted: --8 A endo ltem:f4 / These savings would be generated by selling new lower interest COPS to repay the existing bonds. The term of the new COPS would remain at the current term of 24 years. The Council action authorizes the City Manager to choose between a competitive or semi - competitive sale for the refunding COPs. The City Manager will award the sale of the refunding COPS to the best bidder. Proceeds from the refunding will be put in escrow for the benefit of the owners of the PFA bonds until such bonds may be redeemed on October 1, 2001, their earliest call date. Prior to closing, the Redevelopment Agency will need to assign its rights under the 1991 documents to the PFA and additional resolutions will be brought before the boards. Staff recommends that the Board of the Santa Clarita Public Financing Authority approve the following documents: 1. Preliminary Official Statement; 2. Trust Agreement; 3. Assignment Agreement; 4. Amended and Restated Lease Agreement; 5. Amended and Restated Base Lease; 6. Memorandum of Amended and Restated Lease Agreement and Base Lease; and 7. Escrow Agreement. • RECOMMENDATION 1. The Authority adopt resolution JPA 97-1 approving the refunding of the 1991 revenue bonds, approving and authorizing the execution, sale, and delivery of refunding certificates of participation, in the principal amount not to exceed $20,900,000 to provide funds to refinance the cost for certain public improvements. 2. Authorize and approve certain documents in connection with the execution, sale, and delivery of said certificates of participation. 3. Authorize certain other actions in connection therewith. 0 RESOLUTION NO. JPA 97-1 RESOLUTION OF THE BOARD OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY APPROVING THE REFUNDING OF THE 1991 REVENUE BONDS, APPROVING AND AUTHORIZING THE EXECUTION, SALE AND DELIVERY OF REFUNDING CERTIFICATES OF PARTICIPATION IN THE PRINCIPAL AMOUNT OF NOTTO EXCEED $20,900,000 TO PROVIDE- FUNDS TO REFINANCE THE COSTS OF CERTAIN CAPITAL IMPROVEMENTS; AUTHORIZING AND APPROVING CERTAIN DOCUMENTS IN CONNECTION WITH THE EXECUTION, SALE AND DELIVERY OF SAID REFUNDING CERTIFICATES OF PARTICIPATION; AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Santa Clarita, California (the "City") and the Redevelopment Agency of the City of Santa Clarita (the "Agency") have entered Into a Joint Exercise of Powers Agreement, dated July 9, 1991 (the "Agreement'), creating the Santa Clarita Public Financing Authority (the "Authority") for the purpose of aiding in their financing objectives; and WHEREAS, pursuant to Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the California Government Code (the "Act) and the Agreement, the Authority is authorized to assist the City in financing public capital improvements, working capital, liability and other insurance needs or projects whenever there are significant public benefits, as determined by the Agency or the City; and WHEREAS, pursuant to Resolution No. 91-145 of the City, adopted on September 10, 1991, the City sold and delivered its 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 to the Redevelopment Agency of the City of Santa Clarita (the 01991 Certificates") in the original principal amount of $22,940,000, of which $18,800,000 remains outstanding, for the purpose of financing certain public capital improvement projects referenced in Resolution No. 91-145 of the City (the "Projects"); and WHEREAS, pursuant to Resolution No. JPA 91-5 of the Authority, adopted on September 10, 1991, the Certificates were purchased on November 12, 1991, by the Authority using proceeds from the sale of its Local Agency Revenue Bonds, Series 1991 (the "1991 Bonds"), which 1991 Bonds were issued in the original principal amount of $22,940,000, and of which $18,800,000 remains outstanding; and WHEREAS, the City has determined to refinance the Projects by taking advantage of costs savings available to the City through the advance refunding of the 1991 Certificates and the 1991 Bonds; and WHEREAS, the Authority desires to assist the City in the refinancing of the Projects and the sale and delivery of the hereinafter described Certificates; and WHEREAS, the Board of Directors does find and determine that it is both a public purpose and within the authority of the Authority, and within the best interests of the Authority (a) to assist the City in refinancing the Project by approving the refunding of the 1991 Bonds; (b) to lease from and lease to the City certain facilities; and (c) to approve the execution and sale of the Certificates for the purpose of providing funds to refinance the 1991 Certificates and the 1991 Bonds; and WHEREAS, the Board of Directors further finds and determines that it is necessary and desirable in connection with the execution, sale and delivery of the Certificates that the Authority execute certain documents, and that the Authority take certain other actions and approve the execution of certain other documents as herein provided; and WHEREAS, the City has caused a Preliminary Official Statement relating to the Certificates to be prepared for distribution to prospective purchasers of the Certificates; NOW, THEREFORE, BE IT RESOLVED BYTHE BOARD OF DIRECTORS OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY, AS FOLLOWS: Section Recitals. The foregoing recitals are true and correct and this Board of Directors so finds and determines. Section Approval of the Execution. Sale and Delivery of the Certificates and the Refunding of the 1991 Bonds. The City hereby approves the execution; sale and delivery of the Refunding Certificates of Participation (Capital Improvement Projects) Evidencing Direct, Fractional, Undivided Interests of the Owners Thereof in Lease Payments to be Made by the City of Santa Clarita, California, as the Rental for Certain Property Pursuant to an Amended and. Restated Lease Agreement with the Santa Clarita Public Financing Authority (the "Certificates") in the principal amount of not to exceed $20,900,000, and hereby approves and authorizes the refunding of the 1991 Bonds. Section Approval and Authorization of Execution of Documents. The proposed forms of the below -enumerated agreements (collectively, the 'Documents"), which were presented to the Board of Directors and are on file with the Secretary, are hereby approved: the Trust Agreement, by and among the Authority, the City and a trustee to be designated (the 'Trustee'), pursuant to which the Certificates shall be executed, sold and delivered upon the terms and conditions as set forth in said form of Trust Agreement; the Assignment Agreement, by and between the Authority and the Trustee, pursuant to which the Authority shall pledge and assign the lease payments, revenues, proceeds, receipts received pursuant to the Amended and Restated Lease Agreement to the Trustee for the benefit of and security of the owners of the Certificates upon the terms and conditions as set forth in said form of Assignment Agreement; the Amended and Restated Base Lease, by and between the City, as lessor, and the Authority, as lessee, of the Facilities (as such term is defined therein); the Amended and Restated Lease Agreement, by and between the Authority, as lessor, and the City, as lessee, of the Facilities; the Memorandum of the Amended and Restated Lease Agreement and Base Lease, by and between the Authority and the City; and the Escrow Agreement, by and among the City, the Authority and the Trustee, as escrow bank, for the purpose of redeeming the 1991 Bonds on October 1, 2001. The Chairman, Vice -Chairman, Executive Director, Secretary and Assistant Secretary (or written designee of any of them) is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver.each of the Documents and to make or approve such changes therein or additions thereto as shall be necessary or appropriate to complete them, including, without limitation, with respect to designation of the Trustee, interest rates, maturities, amortization and the purchase price of the Certificates; provided however, that the stated average annual interest rate payable with respect to the Certificates shall not exceed six percent (6.00%) per annum, the purchase price paid by the Purchaser for the purchase of the Certificates shall be not less than ninety-eight percent (98%) of net the par amount thereof, excluding any original issue discount on the Certificates and the net present value savings of the refinancing is at least $800,000. The approval of any additions or changes in such forms shall be conclusively evidenced by such execution and delivery of the Documents. Section Approval of the Preliminary Official Statement, Final Official Statement. The Preliminary Official Statement substantially in the form presented to the Board of Directors and on file with the Secretary, together with such amendments and supplements as shall be necessary or convenient to accurately describe the Certificates in accordance with the Documents, this Resolution and the other related proceedings and documents, is hereby approved and the distribution to such broker-dealers, banking institutions and other persons as may be interested in purchasing the Certificates is hereby ratified. The Authority hereby authorizes the Executive Director to execute a certificate on behalf of the Authority deeming the Preliminary Official Statement, including such amendments and supplements, "final" pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934. The Chairman, Vice -Chairman or Executive Director (or the written designee of any of them) are hereby authorized and directed to approve any changes in or additions to the final form of such Official Statement as any such official (or any such designee) shall deem advisable to cause the final Official Statement to describe accurately the Bonds and matters contained in the Documents, this Resolution and the other related proceedings and actions, and to execute (or cause to be so executed by any such designee) said final Official Statement for and in the name and on behalf of the Authority. The approval of any additions or changes in such form shall be conclusively evidenced by such execution and delivery of the final Official Statement. Section Sale of the Certificates. The Authority hereby approves the sale of the sale of the Certificates, provided, however, that the true interest cost payable with respect to the Certificates shall not exceed six percent (6.00%) per annum, the purchase price paid by the Purchaser for the purchase of the Certificates shall be not less than ninety- eight percent (98%) of net the par amount thereof, excluding any original issue.discount on the Certificates and the net present value savings of the refinancing is at least $800,000. Section Official Actions. All actions heretofore taken by the officers. and agents of the Authority with respect to the delivery of the Certificates, the execution of the Documents and the refunding of the 1991 Bonds are hereby approved, confirmed and ratified. The Chairman, Vice -Chairman, Executive Director, Treasurer, Secretary, Assistant Secretary, Special Counsel 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 execution and delivery of any and all assignments, certificates, requisitions, agreements, 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 execution, sale and delivery of the Certificates pursuant to the Documents approved herein. Section Effective Date. This Resolution shall take effect and be in full force from and after its adoption by the Board of Directors. Adopted. by the Board of Directors of the Santa Clarita Public Financing Authority, this day of , 1997. SANTA CLARITA PUBLIC FINANCING AUTHORITY 0 (SEAL) ATTEST: Assistant Secretary 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 special/regular meeting held on the day of , 1997, by the following vote: AYES: Boardmembers: NOES: Boardmembers: ABSENT: Boardmembers: Assistant Secretary MP&G. DRAFT NO, 1. 7/3/97 TRUST AGREEMENT Dated as of July 1, 1997 by and among SANTA CLARITA PUBLIC FINANCING AUTHORITY, CITY OF SANTA CLARITA, CALIFORNIA, and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee Relating to $20,900,000 REFUNDING CERTIFICATES OF PARTICIPATION (Capital Improvement Projects) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the CITY OF SANTA CLARITA, CALIFORNIA As Rental for Certain Property Pursuant to an Amended and Restated Lease Agreement with the SANTA CLARITA PUBLIC FINANCING AUTHORITY MG18537.1.0011K:10ATA141514150509 TRUST AGREEMENT THIS TRUST AGREEMENT, made and entered into as of July 1, 1997, by and among the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency duly organized and existing under the laws of the State of California (the "Authority"), and the CITY OF SANTA CLARITA, CALIFORNIA, a municipal corporation and general law city organized and existing under the laws of the State of California (the "City"), and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United. States,as trustee (the "Trustee"), ; WITNESSETH: WHEREAS, the City and the Redevelopment Agency of the City of Santa Clarita (the "Agency") have entered into a Joint Exercise of Powers Agreement, dated July 9, 1991 (the "Agreement% creating the Santa Clarita Public Financing Authority (the "Authority") for the purpose of aiding in their financing objectives; and WHEREAS, pursuant to Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the California Government Code (the "Act") and the Agreement, the Authority is authorized to assist the City in financing public capital improvements, working capital, liability and other insurance needs or projects whenever there are significant public benefits, as determined by the Agency or the City; and WHEREAS, the City desired to finance and/or refinance the design acquisition, improvement, equipping or construction of certain public capital improvement projects (the "Projects"); and WHEREAS, the City, as lessor, and the Agency, as lessee, entered into that certain Base Lease dated as of October 1, 1991, and amended on December 24, 1991 (the "1991 Base Lease"), whereby the City granted to the Agency a leasehold interest in certain real estate described in Exhibit A attached to the Base Lease (the "Land"), a building and related facilities located on the Land described on Exhibit B, attached to the Base Lease, a portion of which is used as the City Hall (the "City Hall Building") and certain sewer improvements described on Exhibit C attached to the Base Lease (the "Sewer Improvements") (the Land, City Hall Building and Sewer Improvements are referred to herein as the "Facilities"), and the Agency, as lessor, and the City, as lessee, entered into a leaseback of the Facilitiespursuant to that certain Lease Agreement dated as of October 1, 1991 and amended on December 24, 1991 (the "1991 Lease Agreement") for the purpose of financing the Projects; and WHEREAS, pursuant to Resolution No. 91-145 of the City, adopted on September 10, 1991, the City sold and delivered its 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 to the Redevelopment Agency of the City of Santa Clarita (the "1991 Certificates") in the original principal amount of $22,940,000, of which $18,800,000 remains outstanding; and MAN85371.0011 MATAW1514150508 WHEREAS, pursuant to Resolution No. JPA 91-5 of the Authority, adopted on September 10, 1991, the Certificates were purchased on November 12, 1991, by the Authority using proceeds from the sale of its Local Agency Revenue Bonds, Series 1991 (the "1991 Bonds"), which 1991 Bonds were issued in the original principal amount of $22,940,000, and of which $18,800,000 remains outstanding; and WHEREAS, the City has determined to refinance the Projects by taking advantage of costs savings available to the City through the advance refunding of the 1991 Certificates and the 1991 Bonds (the "Program"); and WHEREAS, the City and the Authority now propose to finance the Program by entering into (a) the Amended and Restated Base Lease dated as October 1, 1991 (the "Base Lease"), whereby the City leases the Facilities to the Authority, and (b) an Amended and Restated Lease Agreement dated as of October 1, 1997 (the "Lease Agreement"), whereby the City leases back the Facilities from the Authority; and WHEREAS, the City and the Authority propose to provide for such financing through the execution and delivery of $20,900,000 Refunding. Certificates of Participation (Capital Improvement Projects) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the City of Santa Clarita, California, as Rental for Certain Property Pursuant to an Amended and Restated Lease Agreement with the Santa Clarita Public Financing Authority; and WHEREAS, the Authority will assign to the Trustee certain of its right, title and interest in and to this Lease Agreement, and direct the Trustee to execute and deliver to the initial purchasers thereof the Certificates payable from Lease Payments and certain other additional payments and moneys to be received from the City pursuant to the Lease Agreement; and WHEREAS, in order to provide for the execution and delivery of the Certificates, to establish and declare the terms and conditions upon which the Certificates are to be executed and to provide for the payment of the principal and interest with respect thereto, the Authority has authorized the execution and delivery of this Trust Agreement; and NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: ARTICLE 1 DEFINITIONS Section 1.1 Definitions. The terms defined in Exhibit A attached hereto and by this reference incorporated herein, as used and capitalized herein, shall, for all purposes of this Trust Agreement, have the meanings ascribed to them in said Exhibit A unless the context clearly requires some other meaning. Section 1.2 Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement, and has taken all actions necessary to authorize the execution of this Trust Agreement by the officers and persons signing it. MLG185371.0011 ADATA1415W 50509 2 Section 1.3 Exhibits. The following exhibits are attached to, and by reference made part of, this Trust Agreement: Exhibit A: Definitions. Exhibit B: Form of the Certificates. Section 1.4 Content of Written Certificates and Opinions. Every certificate or opinion provided for in this Trust Agreement with respect to compliance with any provision hereof 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 or she has made or caused to be made such examination or investigation as is necessary to enable him or her to express an informed opinion with respect to the subject matter referred to in the instrument to which his or her 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 City or the Authority 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 City or the Authority, as the case may be) upon a certificate or opinion of or representation by an officer of the City or the Authority, 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 City or the Authority, 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 1.5 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. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. (c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. MLG\95371.001U WAW415N4150509 ARTICLE II THE CERTIFICATES OF PARTICIPATION Section 2.1 Authorization. The Trustee is hereby authorized and directed, without further request, to prepare, execute and deliver, to the Original Purchaser, Certificates in an aggregate principal amount of $20,900,000 evidencing direct, undivided, fractional interests of the Owners thereof in the Lease Payments. Section 2.2 Date; Payment of Interest. Each Certificate shall be dated the Closing Date. Interest with respect thereto shall be payable from the Interest Payment Date next preceding the date of execution thereof, unless: (i) it is executed as of an Interest Payment Date, in which event interest with respect thereto shall be payable from such Interest Payment Date, or (ii) it is executed after a Regular Record Date and on or before the following Interest Payment Date, in which event interest with respect thereto shall be payable from such Interest Payment Date; or (iii) it is executed on or before September 15, 1997, in which event interest with respect thereto shall be payable from the Closing Date; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to any Outstanding Certificates, interest represented by such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding Certificates. Section 2.3 Maturity: Interest Rates. The Certificates shall mature on October 1 in each of the respective years, and in the respective amounts, except that no Certificate may have principal maturing in more than one year, and interest represented thereby shall be computed at the respective rates, as follows: Maturity Date Principal Interest (October 1) Amount Rate Ito come] A10195371.001 W:WATA1415H150509 4 Section 2.4 Interest. Interest represented by the Certificates shall be payable on each Interest Payment Date to and including the date of maturity or prepayment, whichever is earlier, as provided in Section 2.10 hereof. Said interest shall represent the portion of Lease Payments designated as interest and coming due during the six-month period preceding each Interest Payment Date (or the shorter period preceding the first Interest Payment Date, as applicable). The portion of Lease Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Lease Payments designated as principal with respect to such Certificate by the rate of interest applicable to such Certificate (on the basis of a 360 -day year of twelve 30 -day months). Section 2.5 Form. The Certificates shall be delivered in the form of fully registered Certificates without coupons in the denomination of $5,000 or any integral multiple thereof. The Certificates shall be assigned such alphabetical and numerical designation as shall be deemed appropriate by the Trustee. The Certificates shall be substantially in the form set forth in Exhibit B attached hereto and by.this reference incorporated herein. Section 2.6 Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of an authorized officer or signatory of the Trustee. If any officer or signatory whose signature appears on any Certificate ceases to be such officer or signatory before the date of delivery of said Certificate, such signature shall nevertheless be as effective as if the officer or signatory had remained in office until such date. Section 2.7 ADDlication of Proceeds. The net proceeds received by the Trustee from the sale of the Certificates in the aggregate amount of $ shall forthwith be set aside by the Trustee in the following respective funds and accounts.- (a) ccounts:(a) The Trustee shall deposit in the Reserve Fund an amount equal to $ (the initial Reserve Requirement); (b) The Trustee shall deposit in the Delivery Costs Fund an amount equal to $, of which $ will be paid directly to AMBAC Indemnity Corporation as premium for the bond insurance; and (c) The Trustee shall transfer to the Escrow Bank pursuant to the Escrow Agreement an amount equal to $ (d) The Trustee shall wire (federal funds transfer) to AMBAC Indemnity Corporation to pay the bond insurance gross premium [wire instruction] an amount equal to Section 2.8 Transfer and Exchan (a) Transfer of Certificates. The registration of any Certificate may, in accordance with its terms, be transferred upon the Registration Books by the person in whose name it is registered, in person or by his attorney duly authorized in writing upon surrender of such Certificate for cancellation at the Office of the Trustee, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for registration of transfer, the Trustee shall execute and deliver a new Certificate or Certificates for like aggregate principal amount in authorized denominations. The Trustee may require the payment by the Certificate Owner MLG185371.001 W-MATA141514150509 requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. The cost of printing any Certificates and any services rendered or any expenses incurred by the Trustee in connection with any transfer shall be paid by the City. The Trustee shall not be required to transfer (i) any Certificates during the period between the date fifteen (15) days prior to the date of selection of Certificates for prepayment and such date of selection, or (ii) any Certificates selected for prepayment. (b) Exchange of Certificates. Certificates may be exchanged, upon surrender thereof, at the Office of the Trustee for a like aggregate principal amount of Certificates of other authorized denominations of the same maturity. Whenever any Certificate or Certificates shall be surrendered for exchange, the Trustee shall execute and deliver a new Certificate or Certificates for like aggregate principal amount in authorized denominations. The Trustee may require the payment by the Certificate Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The cost of printing any Certificates and any services rendered or any expenses incurred by the Trustee in connection with any exchange shall be paid by the City. The Trustee shall not be required to exchange (i) any Certificates during the period between the date fifteen (15) days prior to the date of selection of Certificates for prepayment and such date of selection, or (ii) any Certificates selected for prepayment. Section 2.9 Certificates Mutilated. Lost. Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute and deliver a new Certificate of like tenor, maturity and amount in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be cancelled by it and destroyed with a certificate of destruction furnished to the City upon its request. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft shall be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and if an indemnity satisfactory to it shall be given, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new Certificate of like tenor, maturity and amount and numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of the expenses which may be incurred by the Trustee in carrying out the duties under this Section 2.9. Any Certificate executed and delivered under the provisions of this Section 2.9 in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and fractionally entitled to the benefits of this Trust Agreement with all other Certificates secured by this Trust Agreement. The Trustee shall not be required to treat both the original Certificate and any replacement Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and.delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and replacement Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section 2.9, in lieu of delivering a new Certificate in exchange for a Certificate which has been mutilated, lost, destroyed or stolen, and which has matured or has been called for prepayment, the Trustee may make payment with respect to such Certificate upon receipt of the aforementioned indemnity. Section 2.10 Paymen . Payment of interest due with respect to any Certificate on any Interest Payment Date shall be made to the person appearing on the Registration Books as the Owner thereof as of the Regular Record Date immediately preceding such Interest Payment Date, such interest to be paid by check mailed on the Interest Payment Date by first LILGI85371.001%K:1DATA%41514150509 6 class mail to such Owner at his address as it appears on the Registration Books as of such Regular Record Date or, upon written request filed with the Trustee prior to the Regular Record Date by an Owner of at least $1,000,000 in aggregate principal amount of Certificates, by wire transfer in immediately available funds to an account in the United States designated by such Owner in such written request. Any such written request shall remain in effect until rescinded in writing by the Owner. The principal and prepayment price with respect to the Certificates at maturity or upon prior prepayment shall be payable by check of the Trustee denominated in lawful money of the United States of America upon surrender of the Certificates at the Office of the Trustee. Section 2.11 Execution of Documents and Proof of Ownershio. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Trust Agreement to be signed or executed by Certificate Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Trust Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or. partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person and the amount, the maturity and the numbers of such Certificates and the date of his holding the same shall be proved by the Registration Books. Any request or consent of the Owner of any Certificate shall bind every future Owner of the same Certificate in respect of anything done or suffered to be done by the Trustee pursuant to such request or consent. Section 2.12 Registration Books. The Trustee shall keep or cause to be kept, at its Office, sufficient records for the registration and registration of transfer of the Certificates, which shall at all reasonable times be open to inspection by the City and the Authority during regular business hours with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration Books, Certificates as hereinbefore provided. Section 2.13 CUSIP Numbers. The Trustee, the City and the Authority shall not be liable for any defect or inaccuracy in the CUSIP number that appears on any Certificate or in any prepayment notice. The Trustee may, in its discretion, include in any prepayment notice a statement to the effect that the CUSIP numbers on the Certificates have been assigned by 7 an independent service and are included in such notice solely for the convenience of the Owners and that neither the Trustee, the City nor the Authority shall be liable for any inaccuracies in such numbers. Section 2.14 Book -Entry System. (a) Original Delivery. The Certificates shall be initially delivered in the form of a separate single fully registered Certificate (which may be typewritten) for each maturity of the Certificates. Upon initial delivery, the ownership of each such Certificate shall be registered on the Registration Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Certificates shall be registered in the name of the Nominee on the Registration Books. With respect to Certificates the ownership of which shall be registered in the name of the Nominee, the City, the Authority and the Trustee shall have no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Nominee or the Depository System Participant holds an interest in the Certificates. Without limiting the generality of the immediately preceding sentence, the City, the Authority and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any Depository System Participant or any other person, other than a Certificate Owner as shown in the Registration Books, of any notice with respect to the Certificates, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Certificates to be redeemed in the event of redemption of the Certificates in part, (iv) the payment to any Depository System Participant or any other person, other than a Certificate Owner as shown in the Registration Books, of any amount with respect to principal or interest or redemption premiums, if any, with respect to the Certificates or (v) any consent given or other action taken by the Depository as Owner of the Certificates. The City, the Authority and the Trustee may treat and consider the person in whose name each Certificate is registered as the absolute owner of such Certificate for the purpose of payment of principal and interest and redemption premiums, if any, with respect to such Certificate, for the purpose of giving notices of redemption and other matters with respect to such Certificate, for the purpose of registering transfers of ownership of such Certificate, and for all other purposes whatsoever. The Trustee shall pay the principal and interest and redemption premiums, if any, with respect to the Certificates only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal and interest and redemption premiums, if any, with respect to the Certificates to the extent of the sum or sums so paid. No person other than a Certificate Owner shall receive a Certificate evidencing the direct, undivided fractional interests in Lease Payments pursuant to the terms of this Trust Agreement. Upon delivery by the Depository to the Nominee of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the City shall promptly deliver a copy of the same to the Trustee. (b) Representation Letter. In order to qualify the Certificates for the Depository's book -entry system, the City and the Trustee shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the Certificates. The execution and delivery of such letter shall not in any way limit the provisions of subsection MM85371.0011 MATA141514150509 (a) above or in any other way impose upon the City or the Trustee any obligation whatsoever with respect to persons having interests in the Certificates other than the Certificate Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Trustee in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the City may take any other actions, not inconsistent with this Trust Agreement, to qualify the Certificates for the Depository's book -entry program. (c) Transfers Outside Book -Entry System. In the event that either (i) the Depository determines not to continue to act as Depository for the Certificates, or (ii) the City determines to terminate the Depository as such, then the City shall thereupon discontinue the book -entry system with such Depository. In such event, the Depository shall cooperate with the City and the Trustee in the execution and delivery of replacement Certificates by providing the Trustee with a list showing the interests of the Depository System Participants in the Certificates, and by surrendering the Certificates, registered in the name of the Nominee, to the Trustee on or before the date such replacement Certificates are to be executed and delivered. The Depository, by accepting delivery of the Certificates, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository acting as such, the City fails to identify another Securities Depository to replace the Depository, then the Certificates shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging Certificates shall designate, in accordance.with the provisions hereof. In the event the City determines that it is in the best interests of the beneficial owners of the Certificates that they be able to obtain certificated Certificates, the City may notify the Depository System Participants of the availability of such certificated Certificates through the Depository. In such event, the Trustee will transfer and exchange Certificates as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the City shall cooperate with the Depository in taking appropriate action (i) to make available one or more separate certificates evidencing the Certificates to any Depository System Participant having Certificates credited to its account with the Depository, or (ii) to arrange for another Securities Depository to maintain custody of a single certificate for each maturity evidencing such Certificates, all at the City's expense. (d) Payments to the Nominee. Notwithstanding any other provision of this Trust Agreement to the contrary, so long as any Certificate is registered in the name of the Nominee, all payments of principal and interest and redemption premiums, if any, with respect to such Certificate and all notices with respect to such Certificate shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository. ARTICLE III DELIVERY COSTS FUND Section 3.1 Delivery Costs Fund. The Trustee shall establish a special fund designated as the "Delivery Costs Fund"; shall keep such fund separate and apart from all other funds and moneys held by it; and shall administer such fund as provided herein. There shall be deposited in the Delivery Costs Fund the proceeds of sale of the Certificates required FlG\95371.001 W-ADATA415M 50509 to be deposited therein pursuant to Section 2.7 (c) hereof and any other funds from time to time deposited with the Trustee for such purpose and identified in writing to the Trustee. Section 3.2 Payment of Delivery Costs. The moneys in the Delivery Costs Fund shall be disbursed by the Trustee to pay the Delivery Costs upon receipt by the Trustee of the Written Request of an Authority Representative or a City Representative. Any balance remaining in the Delivery Costs Fund as of 1, 19971 -shall be withdrawn therefrom and deposited in the Reserve Fund. ARTICLE IV PREPAYMENT OF CERTIFICATES Section 4.1 Preoavment. (a) Optional Preoavment. The Certificates maturing on or before October 1, 2005, shall not be subject to optional prepayment prior to maturity. The Certificates maturing on or after October 1, 2006, shall be subject to optional prepayment as a whole on any date or in part on any Interest Payment Date, in a manner determined by the City, on or after October 1, 2005, at the following respective prepayment prices (expressed as percentages of the principal amount of the Certificates to be prepaid), plus accrued interest with respect thereto to the date of prepayment: Prepayment Periods Price October 1, 2005 through September 30, 2006 102% October 1, 2006 through September 30, 2007 101°k October 1, 2007 and thereafter 100°% (b) Extraordinary Mandatory Preoavment. The Certificates shall be subject to mandatory prepayment in part by lot, but not in excess of $7,000,000 principal component of the Certificates, on any date, from moneys transferred from the sale of all or portion of the Land and the City Hall Building at a prepayment price equal to the principal amount thereof to be prepaid, without premium, together with accrued interest to the date fixed for prepayment. (c) Preoavment from Net Proceeds of Insurance and Condemnation. - The Certificates are subject to mandatory extraordinary prepayment in whole or in part on any Interest Payment Date from the Net Proceeds of an insurance, title insurance or condemnation award to the extent credited towards the prepayment of the Lease Payments by the City pursuant to Section 6.2 of the Lease Agreement, at a prepayment price equal to the principal amount thereof to be prepaid together with accrued interest to the date fixed for prepayment, without premium. - Section 4.2 Selection of Certificates for Prepayment. Whenever provision is made in this Trust Agreement for the prepayment of Certificates and less than all Outstanding Certificates are to be prepaid and except as provided in Section 4.1(a) herein, the Trustee shall select Certificates for prepayment from the Outstanding Certificates not previously called for prepayment in inverse order of maturity. The Trustee shall select Certificates for prepayment within a maturity by lot or in any other manner which the Trustee shall, in its sole WM85371.0019CADATAM15WI 50609 10 discretion, deem appropriate and fair. For the purposes of such selection, Certificates shall be deemed to be composed of.$5,O0O portions, and any such portion may be separately prepaid. The Trustee shall promptly notify the City and the Authority in writing of the Certificates so selected for prepayment. Selection by the Trustee of Certificates. for prepayment shall be final and conclusive. Section 4.3 Notice of Preoayment. (a) Official Notice. Unless waived by any Owner of Certificates to be prepaid, notice of any such prepayment shall be given by the Trustee on behalf of the City by mailing a copy of a prepayment notice by first class mail at least thirty (30) days and not more than sixty (60) days prior to the date fixed for prepayment to the Owner of the Certificate or Certificates to be prepaid at the address shown on the Registration Books. All notices of prepayment shall be dated and shall state: (i) the prepayment date, (ii) the prepayment price, (iii) if less than all Outstanding Certificates are to be prepaid, the Certificate numbers (and, in the case of partial prepayment, the respective principal amounts) of the Certificates to be prepaid, (iv) that on the prepayment date the prepayment price will become due and payable upon each such Certificate or portion thereof called for prepayment and that interest with respect thereto shall cease to accrue from and after said date, and (v) the place where such Certificates are to be surrendered for payment of the prepayment price, which place of payment shall be the Office of the Trustee. Prior to any prepayment date, the City shall deposit, or cause to be deposited, with the Trustee an amount of money sufficient to pay the prepayment price of all the Certificates or portions of Certificates which are to be prepaid on that date. Notice of prepayment having been given as aforesaid, the Certificates or portions of Certificates so to be prepaid shall, on the prepayment date, become due and payable at the prepayment price therein specified, and from and after such date (unless the City shall default in the payment of the prepayment price) interest with respect to such Certificates or portions of Certificates shall cease to be payable. Upon surrender of such Certificates for prepayment in accordance with said notice, such Certificates shall be paid by the Trustee at the prepayment price. Installments of interest due on or prior to the prepayment date shall be payable as herein provided for payment of interest. All Certificates which have been prepaid shall be cancelled and destroyed by the Trustee and shall not be redelivered. Failure by any Owner to receive notice as hereinabove provided shall not affect the validity of any such prepayment. (b) Further Notice. In addition to the foregoing notice, further notice shall be given by the Trustee as set forth in this subsection (b), but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for prepayment if notice thereof is given as prescribed in subsection (a) above. Each further notice of prepayment given hereunder shall contain the information required above for a notice of prepayment plus (A) the CUSIP numbers of all Certificates being prepaid; (B) the original date of execution of the Certificates; (C) the rate of interest payable with respect to each Certificate being prepaid; (D) the maturity date of each Certificate being prepaid; and (E) any other descriptive information needed to identify accurately the Certificates being prepaid. Each such further notice of prepayment shall be sent, at least LM85371.0011K:QATA1/1514150509 1 thirty (30) days before the prepayment date, by telecopy, registered, certified or overnight mail to all Securities Depositories and to at least one Information Service selected by the City. Section 4.4 Partial Prepayment of Certificate. Upon surrender of any Certificate prepaid in part only, the Trustee shall execute and deliver to the Owner thereof, at the expense of the City, a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unpaid portion of the Certificate surrendered and of the same interest rate and the same maturity. Section 4.5 Purchase of Certificates. In lieu of prepayment of Certificates as provided in this Article IV, amounts held by the Trustee for such prepayment may also be used on any Interest Payment Date, upon receipt by the Trustee at least seventy-five (75) days prior to the next scheduled Interest Payment Date, the written. request of a City Representative, for the purchase of Certificates at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the City may in its discretion direct, but not to exceed the prepayment price which would be payable if such Certificates were prepaid. The aggregate principal amount of Certificates of the same maturity purchased in lieu of prepayment pursuant to this Section 4.5 shall not exceed the aggregate principal amount of Certificates of such maturity which would otherwise be subject to such prepayment. Remaining moneys, if any, shall be deposited in the Lease Payment Fund. ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.1 Assignment of Rights in the Sublease Agreement. The Authority has, in the Assignment Agreement, transferred, assigned and set over to the Trustee certain of its rights, but none of its obligations, set forth in the Lease Agreement, including but not limited to all of the Authority's rights to receive and collect all of the Lease Payments and all other amounts required to be deposited in the Lease Payment Fund pursuant to the Lease Agreement or pursuant hereto, and including but not limited to all of the Authority's rights as assignee of the City to receive and enforce collection of the Revenues. All Lease Payments, Revenues and such other amounts to which the Authority may at any time be entitled shall be paid directly to the Trustee and all of the Lease Payments, Revenues and such other amounts collected or received by the Authority shall be deemed to be held and to have been collected or received by the Authority as the agent of the Trustee, and if received by the Authority at any time shall be deposited by the Authority with the Trustee within one Business Day after the receipt thereof, and all such Lease Payments, Revenues and such other amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund (except as provided in Section 6.4 hereof). Section 5.2 Establishment of Lease Payment Fund. The Trustee shall establish a special fund designated as the "Lease Payment Fund". All moneys at any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates. So long as any Certificates are Outstanding, neither the City nor the Authority shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited therein, except only as provided in this Trust Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. WG185371.001 XKMATA141514150509 12 Section 5.3 Deposits. There shall be deposited in the Lease Payment Fund all Lease Payments received by the Trustee (except as provided in Section 6.4 hereof), including any moneys received by the Trustee for deposit therein pursuant to Sections 3.2, 5.1 or Article VII hereof, or Article IV of the Lease Agreement, and any other moneys required to be deposited therein pursuant to the Lease Agreement or pursuant to this Trust Agreement. Section 5.4 A_ rmlication of Moneys. All amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal, interest and prepayment premiums (if any) with respect to the Certificates as the same shall become due and payable in accordance with the provisions of Article II and Article IV hereof. Section 5.5 Surplus. Any surplus remaining in the Lease Payment Fund after prepayment and/or payment of all Certificates, including premiums and accrued interest (if any) and payment of any applicable fees and expenses to the Trustee, or provision for such prepayment or payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and remitted to the City. ARTICLE VI RESERVE FUND Section 6.1 Establishment of Reserve Fund. The Trustee shall establish a special fund designated as the "Reserve Fund." All moneys at any time on deposit in the Reserve Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates, and applied solely as provided herein. Section 6.2 De osi s. There shall be deposited and maintained in the Reserve Fund from the proceeds of the sale of the Certificates an amount equal to the Reserve Requirement, in accordance with Section 2.7(b). Moneys in the Reserve Fund shall be held in trust as a reserve for the payment when dueof the Lease Payments. Section 6.3 Transfers of Excess. The Trustee shall, on each March 15 and September 15, transfer any moneys in the Reserve Fund then in excess of the Reserve Requirement to the Lease Payment Fund to be credited to the Lease Payments next coming due and payable. Section 6.4 Application in Event of Deficiency in Lease Payment Fund. If, on any Interest Payment Date, the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest and prepayment premiums (if any) with respect to the Certificates then coming due and payable, the Trustee shall apply the moneys available in the Reserve Fund to make delinquent Lease Payments on behalf of the City by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease. Payment shall be deposited in the Reserve Fund to the extent of such advance. Section 6.5 Transfer To Make All Lease Payments. If, on any Interest Payment Date, the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding amounts required for payment of principal, interest and prepayment premium, if any, with respect to Certificates not presented for payment) are sufficient to pay all Outstanding LLD185371.0011 ADATAW15M150509 13 Certificates, including all principal, interest and prepayment premiums, if any, the Trustee shall, upon the written direction of a City Representative, transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease Payments on behalf of the City, and such moneys shall be distributed to the Owners of Certificates in accordance with Article IV of this Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates, or upon provision for such payment as provided in Section 15.1, and upon the payment of all outstanding fees and expenses of the Trustee; shall be withdrawn by the Trustee and paid to the City. ARTICLE VII INSURANCE AND CONDEMNATION FUND; INSURANCE; EMINENT DOMAIN; TITLE INSURANCE Section 7.1 Establishment of Insurance and Condemnation Fund: Aoolication of Net Proceeds of Insurance Award. (a) Any Net Proceeds of insurance against accident to or destruction of any part of the Facilities collected by the City in the event of any such accident or destruction shall be paid to the Trustee by the City pursuant to Section 6.2(a) of the Lease Agreement and deposited by the Trustee promptly upon receipt thereof in a special fund to be then established and designated as the "Insurance and Condemnation Fund." (b) Within ninety (90) days following the date of such deposit, the City shall determine and notify the Trustee in writing of its determination either (i) that the replacement, repair, restoration, modification or improvement of the Facilities is not economically feasible or in the best interest of the City, or (ii) that all or a portion of such Net Proceeds are to be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Facilities. (c) In the event the City's determination is as set forth in clause (i) of paragraph (b) above, such Net Proceeds shall be promptly transferred by the Trustee to the Lease Payment Fund, applied to the prepayment of Lease Payments pursuant to Section 6.3 of the Lease Agreement and applied to the prepayment of Certificates as provided in Section 4.1 hereof; provided, however, that in the event of damage or destruction of the Facilities in full, such Net Proceeds may be transferred to the Lease Payment Fund only if sufficient, together with other moneys available therefor, to cause the prepayment of the principal components of all unpaid Lease Payments allocable to the Facilities pursuant to Section 6.3 of the Lease Agreement; provided further, however, that in the event of damage or destruction of the Facilities in part, such Net Proceeds may be transferred to the Lease Payment Fund and applied to the prepayment of Lease Payments only if the resulting Lease Payments represent fair consideration for the remaining portions of the Facilities, evidenced by a certificate signed by a City Representative and an authorized representative of the Authority. (d) In the event the City's determination is as set forth in clause (ii) of paragraph (b) above, Net Proceeds deposited in the Insurance and Condemnation Fund shall be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Facilities by the City, and disbursed by the Trustee upon receipt of requisitions signed by a City Representative stating with respect to each payment to be made KEG185371.00111MATMAI B 4150508 14 W the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid and (iv) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance and Condemnation Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied by a bill or a statement of account for such obligation. The Trustee shall not be responsible for such requisitions and may conclusively rely thereon. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to the City. Section 7.2 Application of Net Proceeds of Eminent Domain Award. If all or any part of the Facilities shall be taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain) the Net Proceeds therefrom shall be deposited with the Trustee in the Insurance and Condemnation Fund pursuant to Section 6.2(b) of the Lease Agreement and shall be applied and disbursed by the Trustee as follows: (a) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Facilities or the ability of the City to meet any of its obligations with respect to the Facilities under the Lease Agreement, and (ii) such proceeds are not needed for repair or rehabilitation of the Facilities, the City shall so certify to the Trustee and the Trustee, at the City's written request, shall transfer such proceeds to the Lease Payment Fund to be credited towards the prepayment of the Lease Payments pursuant to Section 6.2 of the Lease Agreement and applied to the prepayment of Certificates in the manner provided in Section 4.1 hereof. (b) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Facilities or the ability of the City to meet any of its obligations with respect to the Facilities under the Lease Agreement, and (ii) such proceeds are needed for repair, rehabilitation or replacement of the Facilities, the City shall so certify to the Trustee and the Trustee, at the City's written request, shall pay to the City, or to its order, from said proceeds such amounts as the City may expend for such repair or rehabilitation, upon the filing with the Trustee of requisitions of the City Representative in the form and containing the provisions set forth in Section 7.1. (c) If (i) less than all of the Facilities shall have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City has given written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the operation of the Facilities or the ability of the City to meet any of its obligations with respect to the Facilities under the Lease Agreement or (ii) all of the Facilities shall have been taken in such eminent domain proceedings, then the Trustee shall transfer such proceeds to the Lease Payment Fund to be credited toward the prepayment of the Lease Payments pursuant to Section 6.2 of the Lease Agreement and applied to the prepayment of Certificates in the manner provided in Section 4.1 hereof. (d) In making any determination under this Section 7.2, the City may, but shall not be required to, obtain at its expense, the report of an independent engineer or other independent professional consultant, a copy of which shall be sent to the Trustee. Any such determination by the City shall be final. MM85371.001 MODATAW1514150509 15 Section 7.3 Cooperation. The Authority and the Trustee shall cooperate fully with the City, at the expense of the City, in filing any proof of loss with respect to any insurance policy maintained pursuant to Article V of the Lease Agreement and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Facilities or any portion thereof. The Trustee shall not be obligated to join in such action if it believes it will be exposed to liability or has not been indemnified to its satisfaction from any loss, liability or expense including, but not limited to, attorneys' fees. ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Section 8.1 Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement are irrevocably held in trust for the benefit of the Owners of the Certificates and for the purposes herein specified and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Trust Agreement and shall not (except as set forth in Section 9.3 hereof) be subject to levy, attachment or lien by or for the benefit of any creditor of the Authority, the Trustee, the City or any Owner of Certificates. Section 8.2 Investments Authorized. Moneys held by the Trustee hereunder shall, upon written directions of a City Representative, such directions to certify the investment to be a Permitted Investment, be invested and reinvested by the Trustee in Permitted Investments. If a City Representative shall fail to so direct investments, the Trustee shall invest the affected moneys in Permitted Investments described in paragraphs (d) or (f) of the definition thereof. Such investments, if registrable, shall be registered in the name of and held by the Trustee or its nominee, as trustee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section 8.2. Such investments and reinvestments shall be made giving full consideration to the time at which funds are required to be available. The Trustee may act as principal or agent in the making or disposing of any investment. For purposes of investment, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. Section 8.3 Accounting. The Trustee shall furnish to the City, at least monthly, an accounting which may be in the form of its customary accounting statements of all investments made by the Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds- made by it in accordance with Section 8.2 hereof. Section 8.4 Allocation of Earnings. All interest or income received by the Trustee on investment of the Lease Payment Fund hereof shall as received be retained in the Lease Payment Fund. Amounts retained or deposited in the Lease Payment Fund pursuant to this Section 8.4 shall be applied as a credit against the Lease Payment due from the City pursuant to the Lease Agreement on the Due Date following the date of deposit. All interest or income received by the Trustee on investment of the Reserve Fund shall be retained in the Reserve Fund in the event that amounts on deposit in the Reserve Fund are less than the Reserve Requirement. Pursuant to Section 6.3 hereof, if amounts then on deposit in the Reserve Fund equal or exceed the Reserve Requirement, such excess shall as received be transferred to the Lease Payment Fund. Transfers to the Lease Payment Fund from the Reserve Fund shall be made by the Trustee on or prior to each Due Date. All interest or income in the Delivery Costs IKG185371.001 U(-.=TA741514150509 16 Fund shall be retained in the Delivery Costs Fund until the Delivery Costs Fund is closed pursuant to Section 3.4 hereof. Section 8.5 Valuation and Disposition of Investments. For the purpose of determining the amount in any fund, Permitted Investments credited to such fund shall be valued at the Value of such Permitted Investments. Section 8.6 No Arbitraae. The City shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the Gross Proceeds of the Certificates which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date, would have caused the Certificates or the Lease Agreement to be "arbitrage bonds" within the meaning of section 148 of the Code and Regulations. Section 8.7 Rebate of Excess Investment Earnings to United States. The City covenants that it will assure compliance with requirements for rebate of excess investment earnings to the federal government in accordance with section 148(f) of the Code and applicable regulations, and the Trustee shall have no responsibility therefor. ARTICLE IX THE TRUSTEE Section 9.1 ADDointment of Trustee. FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association organized and existing under and by virtue of the laws of the United States with its Office in Los Angeles, California, is hereby appointed Trustee, registrar and paying agent by the Authority and the City for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Trust Agreement. The Authority and the City agree that they will maintain a Trustee which shall be a corporation or association organized and doing business under the laws of any state of the United States of America under the laws of the United States of America authorized under such laws to exercise corporate trust powers, which shall have (or, in the case of a corporation included in a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least fifty million dollars (550,000,000), and subject to supervision or examination by federal or state authority, so long as any Certificates are Outstanding. If such corporation or association publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to then for the purpose of this Section 9.1, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus. as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 9.1, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.7. The Trustee is hereby authorized to pay the Certificates when duly presented for payment at maturity, or on prepayment, or on purchase by the Trustee prior to maturity -in accordance with Section 4.5 hereof, and to cancel all Certificates upon payment thereof. The Trustee shall keep records in accordance with corporate trust industry standards of all funds administered by it and of all Certificates paid and discharged. The Trustee shall be I.LG185371.001 WADATAW1 MAI 50509 17 compensated for its services rendered pursuant to the provisions of this Trust Agreement. Section 9.2 AcceotanceofTru sts. The Trustee hereby accepts the trusts imposed upon it by this Trust Agreement and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust Agreement against the Trustee. In case an Event of Default has occurred (which has not been cured or waived) the Trustee may exercise such of the rights and powers vested in it by this Trust Agreement and shall use the same degree of care and skill in their exercise as a prudent and reasonable person would exercise or use under the circumstances in the conduct of such person's own affairs. No provision in this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder either directly or by or through attorneys or agents and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder. The Trustee shall not be responsible for any recital herein, in -the Assignment Agreement or in the Certificates, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Certificates delivered hereunder or intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Authority or the City under the Lease Agreement. The Trustee shall not be accountable for the use of any Certificates delivered hereunder or the proceeds thereof. The Trustee, in its individual or any other capacity, may become the Owner or pledgee of Certificates secured hereby with the same rights which it would have if it were not the Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the City with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the.rights of Owners of Certificates, whether or not such committee shall represent the Owners of the majority in principal amount of the Certificates then Outstanding. In the absence of bad faith on its part, the Trustee shall be protected in acting or refraining from acting upon any notice, request, consent, requisition, certificate,order, affidavit, letter, telegram or other paper or document believed by it to be genuine and to have been signed or sent by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith pursuant to this Trust Agreement upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Certificate, shall be conclusive and binding upon all future Owners of the same Certificate and upon Certificates executed and delivered in exchange M M85371.001WOATA141514150509 18 therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Certificate or to take any action at his request unless such Certificate shall be deposited with the Trustee or satisfactory evidence of the ownership of such Certificate shall be furnished to the Trustee. As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed by a Authority Representative or a City Representative as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default of which the Trustee has been given notice or is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient. The Trustee may accept a certificate of a representative of the Authority or a City Representative to the effect that an authorization in the form therein set forth has been adopted by the Authority or the City, as the case may be, as conclusive evidence that such authorization has been duly adopted, and is in full force and effect. The permissive right of the Trustee to do things enumerated in this Trust Agreement shall not be construed as a duty and it shall not be answerable for other than its gross negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except failure by the City to make any of the Lease Payments to the Trustee required to be made by the City pursuant to the Lease Agreement or failure by the Authority or the City to file with the Trustee any document required by this Trust Agreement or the Lease Agreement to be so filed subsequent to the delivery of the Certificates, unless the Trustee shall be specifically notified in writing of such default by the Authority, the City or by the Owners of at least five percent (5%) in aggregate principal amount of Certificates then Outstanding and all notices or other instruments required by this Trust Agreement to be delivered to the Trustee must, in order to be effective, be delivered at the Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default except as aforesaid. The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. Notwithstanding anything elsewhere in this Trust Agreement with respect to the execution of any Certificates, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Trust Agreement, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition so that by the terms hereof required as a condition of such action, by the Trustee deemed desirable for the purpose of establishing the right of the City to the withdrawal of any cash, or the taking of any other action by the Trustee. All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be MLG\85371.001\KADATA\{159150509 19 segregated from other funds except to the extent required by law. 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 aggregate principal amount of the Outstanding Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Trust Agreement. Prior to taking any action under Article XIII hereof or this Section 9.2 at the request or direction of the Certificate Owners or the Bond Insurer, the Trustee may require that an indemnity bond satisfactory to the Trustee be furnished to the Trustee by the Certificate Owners for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its own gross negligence or willful misconduct in connection with any action so taken. Before being required to take any action, the Trustee may require an opinion of Independent Counsel acceptable to the Trustee, which opinion shall be made available to the other parties hereto upon request, which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, the Trustee shall be absolutely protected in relying thereon. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced. by the Certificates. The Trustee shall not be accountable for the use or application by the City or the Authority or any other party of any funds which the Trustee has released in accordance with the terms of this Trust Agreement. The Trustee makes no representation or warranty, express or implied, as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City or the Authority of the Facilities. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Lease Agreement or this Trust Agreement for the existence, furnishing or use of the Facilities. The Trustee makes no representations as to the validity or sufficiency of the Certificates and shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Certificates assigned to or imposed upon it. The Trustee shall not be responsible for the validity or sufficiency of the Lease Agreement or the assignment under the Assignment Agreement. The Trustee shall not be liable for the sufficiency or collection of any Lease Payments or other moneys required to be paid to it under the Lease Agreement (except as provided in this Trust Agreement), its right to receive moneys pursuant to the Lease Agreement, or the value of or title to the premises upon which the Facilities is located or the Facilities. The Trustee makes no representations and shall have no responsibility for any official statement or other offering material prepared or distributed with respect to the Certificates. I. M53T1.001 WMATA141514150509 20 In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons, including without limitation the Owners and the City or the Authority having any claim against the Trustee arising from this Trust Agreement shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided. herein. The Trustee shall not be personally liable, in case of entry by it or the Authority upon the Facilities, for debts contracted or liabilities or damages incurred in the management or operation of the Facilities by the Authority or it. Whether or not therein expressly so provided, every provision of this Trust Agreement and the Assignment Agreement relating to the conduct or affecting the liability of the Trustee shall be subject to the provisions of this Article IX. Section 9.3 Fees. Charnes and Exoenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services and, in the Event of Default, the Trustee shall have a first and prior lien on the funds held hereunder to secure the same. The Trustee's rights hereunder, including its rights under Section 12.3 hereof, shall survive its resignation or removal and final payment of the Certificates. Section 9.4 Notice to Certificate Owners of Default. If an Event of Default occurs of which the Trustee has been given or is deemed to have notice, then the Trustee shall, within ninety (90) days of the occurrence thereof, give written notice thereof by first class mail to the Owner of each Certificate, unless such Event of Default shall have been cured before the giving of such notice; provided, however that unless such Event of Default consists of the failure by the City to make any Lease Payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Certificate Owners not to give such notice. Section 9.5 Intervention by Trustee. In any judicial proceeding to which the Authority or the City is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of the Certificates, the Trustee may intervene on behalf of the Certificate Owners, and shall do so if requested in writing by the Owners of at least five percent (5%) of the aggregate principal amount of Certificates then Outstanding, provided the Trustee shall have no duty to take such action unless it has been indemnified to its satisfaction against all risk or liability arising from such action. Section 9.6 Removal of Trustee. Subject to any provision hereof with respect to the Bond Insurer, for any breach of the trust set forth herein and upon thirty (30) days' notice, the City (so long as no Event of Default shall have occurred and be continuing) or the Owners of at least a majority of the aggregate principal amount of Certificates then Outstanding may, with the consent of the Authority, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee and the Authority, and may appoint a successor or successors thereto; provided that any such successor shall be a corporation or association meeting the requirements set forth in Section M M85371.001 WMATAMM4150509 21 9.1 hereof. Section 9.7 Resignation by Trustee. The Trustee and any successor Trustee may, at any time, resign by giving thirty (30) days' written notice by registered or certified mail to the City and the Authority subject to any provision hereof with respect to the Bond Insurer. Section 9.8 A000intment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 9.6 or 9.7 hereof, the City shall promptly appoint a successor Trustee. In the event the City shall, for any reason whatsoever, fail to appoint a successor Trustee within thirty (30) days following the delivery to the Trustee of the instrument described in Section 9.6 hereof or within thirty (30) days following the receipt of notice by the City pursuant to Section 9.7 hereof, the Trustee may apply to a court of competent jurisdiction at the expense of the City for the appointment of a successor Trustee meeting the requirements of Section 9.1 hereof. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the City purporting to appoint a successor Trustee following the expiration of such thirty (30) day period. The foregoing provisions of this Section 9.8 are subject to any provision hereof with respect to the Bond Insurer. Section 9.9 Merger or Consolidation. Any company or association into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company or association to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company or association shall be eligible under Section 9.1 hereof, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 9.10 Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its or his predecessor and also the Authority and the City an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of. its predecessors; but such predecessor shall, nevertheless, on the written request of the City, or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Upon such acceptance, the City shall mail, or cause the mailing of, notice thereof to the Certificate Owners at their respective addresses set forth on the Registration Books. Should any instrument in writing from the City be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the City. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article IX, shall be filed or recorded by the successor Trustee in each recording office where WM85371.001 MQATA141514150508 22 the Assignment Agreement shall have been filed or recorded. The foregoing provisions of this Section 9.10 are subject to any provision hereof with respect to the Bond Insurer. Section 9.11. Provisions Applicable to the Bond Insurer. (a) The Trustee (or paying agent) may be removed at any time, at the request of the Bond Insurer, for any breach of the trust set forth herein. (b) The Bond Insurer shall receive prior written notice of any Trustee (or paying agent) resignation. (c) Every successor Trustee appointed pursuant to this Article IX shall be a trust company or bank in good standing located in or incorporated under the laws of the State of California, duly authorized to exercise trust powers and subject to examination by federal or state authority, having a reported capital and surplus of not less than $75,000,000 and acceptable to the Bond Insurer. Any .successor paying agent, if applicable, shall not be appointed unless the Bond Insurer approves such successor in writing. (d) Notwithstanding any other provision of this Trust Agreement, in determining whether the rights of the Certificate Owners will be adversely affected by any.action taken pursuant to the terms and provisions of this Trust Agreement, the Trustee (or paying agent) shall consider the effect on the Certificate Owners as if there were no Municipal Bond Insurance Policy. (e) Notwithstanding any other provision of this Indenture, no removal, resignation or termination of the Trustee (or paying agent) shall take effect until a successor, acceptable to the Bond Insurer, shall be appointed. ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.1 Amendments Permitted. Subject to any provisions hereof with respect to the Bond Insurer, this Trust Agreement and the rights and obligations of the Owners of the Certificates and the Lease Agreement and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 10.3 hereof, shall have been filed with the Trustee. No such modification or amendment shall (1) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof or reducing any premium payable upon the prepayment thereof, without the express consent of the Owner of such Certificate, or (2) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease Agreement, or (3) modify any of the rights or obligations of the Trustee without its F1G195371.001 WADAW41514150509 23 written assent thereto. Any such supplemental agreement shall become effective as provided in Section 10.2 hereof. This Trust Agreement and the rights and obligations of the Owners of the Certificates and the Lease Agreement and the rights and obligations of the respective parties thereto, may be modified or amended at any time by a supplemental agreement, without the consent of any such Owners, but only to the extent permitted by law and only (1) to add to the covenants and agreements of the Authority or the City, (2) to cure, correct or supplement any ambiguous or defective provision contained herein or therein and which shall not, in the opinion of Bond Counsel, materially adversely affect the interests of the Owners of the Certificates, or (3) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which shall. not, in the opinion of Bond Counsel, materially adversely affect the interests of the Owners of the Certificates. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto, as the case may be. The Trustee may obtain an opinion of Independent Counsel that any amendment entered into hereunder complies with the provisions of this Article X and the Trustee may rely conclusively on such opinion. Section 10.2 Procedure for Amendment with Written Consent of Certificate Owners. Subject to any provisions hereof with respect to the Bond Insurer; this Trust Agreement and the Lease Agreement may be amended by supplemental agreement as provided in this Section 10.2 in the event the consent of the Owners of the Certificates is required pursuant to Section 10.1 hereof. A copy of such supplemental agreement, together with a request to the Certificate Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as set forth on the Registration Books, but failure to mail copies of such supplemental agreement and request shall not affect the validity of the supplemental agreement when assented tows in this Section 10.2 provided. Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 10.3 hereof) and a notice shall have been mailed as hereinafter in this Section 10.2 provided. Each such consent shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.11 hereof. Any such consent shall be binding upon the Owner of the Certificate giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section 10.2 provided for has been mailed. After the Owners of the required percentage of Certificates shall have filed their consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of the Certificates in the manner hereinbefore provided in this Section 10.2 for the mailing of such supplemental agreement of the notice of adoption thereof, stating in substance that such MLW5371.O01UC:0ATA141SWI 50509 24 supplemental agreement has been consented to by the Owners of the required percentage of Certificates and will be effective as provided in this Section 10.2 (but failure to mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A record, consisting of the papers required by this Section 10.2 to be filed with the Trustee; shall be conclusive proof of the matters therein stated. Such supplemental agreement shall become effective upon the mailing of such last-mentioned notice, and such supplemental agreement shall be deemed conclusively binding upon the parties hereto and the Owners of all Certificates at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60) day period. Section 10.3 Disaualified Certificates. Certificates owned or held by or for the account of the City or by any person directly or indirectly controlled or controlled by, or under direct or indirect common control with the City (except any Certificates held in any pension or retirement fund) shall not be. deemed: Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Trust Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Trust Agreement. Section 10.4 Effect of Suoolemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article X, this Trust Agreement or the Lease Agreement, as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Trust Agreement or the Lease Agreement, as the case may be, for any and all purposes. Section 10.5 Endorsement or Reolacement of Certificates Delivered After Amendments. The Trustee may determine that Certificates delivered after the effective date of any action taken as provided in this Article X shall bear a notation, by endorsement or otherwise, in form approved by the Trustee, as to such action. In that case, upon demand of the Owner of any Certificate Outstanding at such effective date and presentation of his Certificate for the purpose at the Office of the Trustee, a suitable notation shall be made on such Certificate. The Trustee may determine that the delivery of substitute Certificates, so modified as in the opinion of the Trustee is necessary to conform to such Certificate Owners' action, which substitute Certificates shall thereupon be prepared, executed and delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such substitute Certificate shall be exchanged at the Office of the Trustee, at the expense of the City, for a Certificate of the same character then Outstanding, upon surrender of such Outstanding Certificate. Section 10.6 Amendatory Endorsement of Certificates. The provisions of this Article X shall not prevent any Certificate Owner from accepting any amendment as to the particular Certificates held by him, provided that proper notation thereof is made on such 5/4150508 25 Certificates. ARTICLE XI COVENANTS Section 11.1 Compliance With and Enforcement of the Lease Agreement. The City covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The Authority covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of the Lease Agreement by the Authority thereunder. The Authority and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Facilities, which may or can in any manner affect such estate of the City, will deliver the same, or a copy thereof, to the Trustee. Section 11.2 Extension of Payment of Certificates. The City shall not directly or indirectly extend or assent to the extension of the maturity of any of the.Certificates or the time of payment of any claims for interest by the purchase of such Certificates or by any other arrangement, and in case the maturity of any of the Certificates or the time of payment of any such claims for interest shall be extended, such Certificates or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Trust Agreement, except subject to the prior payment in full of -the principal with respect to all of the Certificates then Outstanding and of all claims for interest with respect thereto which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the City to prepay the Lease Payments from the proceeds of refunding certificates of participation for the purpose of refunding any Outstanding Certificates, and the execution and delivery of such refunding certificates of participation shall not be deemed to constitute an extension of maturity of the Certificates. Section 11.3 Observance of Laws and Regulations. The City will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the City, including its right to exist and carry on business as a municipal corporation, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. Section 11.4 . Prosecution and Defense of Suits. The City shall promptly, upon request of the Trustee or any Certificate Owner, from time to time take such action as may be WM85371.001 WADATAWI 514150509 26 necessary or proper to remedy or cure any defect in or cloud upon the title to the Facilities, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose and, to the extent permitted by law, shall indemnify and save the Trustee and every Certificate Owner harmless from all loss, cost, damage and expense, including attorneys' fees, which they or any of them may incur by reason of any such defect, cloud, suit, action or proceeding. Section 11.5 Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and accounts prepared in accordance with corporate trust industry standards, in which accurate entries shall be made of all transactions relating to the Lease Payments, the Net Proceeds and all funds and accounts held by it and established pursuant to this Trust Agreement. Such books of record and account shall be available for inspection by the City or Authority, during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. Section 11.6 Punctual Payment. The City shall punctually pay or cause to be paid the Lease Payments in strict conformity with the Lease Agreement and this Trust Agreement, according to the true intent of the meaning thereof. Section 11.7. General Tax Covenants. The City shall not take, or permit or suffer to be taken by the Trustee, the City, the Authority or any other Person, any action with respect to the Proceeds of the Certificates which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused, interest with respect to the Certificates to become includable in gross income for federal income tax purposes or any of the Certificates to be "arbitrage bonds" within the meaning of Section 148 of the Code. The City shall assure compliance with the requirements for rebate of excess investment earnings to the federal government in accordance with Section 148(f) of the Code and Regulations. The City shall assure that: (a) not in excess of ten percent (10%) of the Proceeds of the Certificates is used for Private Business Use if, in addition, the payment of the principal or interest with respect to more than ten percent (10%) of the Proceeds of the Certificates is (under the terms of the Certificates or any underlying arrangement) directly or indirectly, (i) secured by any interest in property, or payments in respect of property, used or to be used for a Private Business Use, or (ii) to be derived from payments (whether or not to the City) in respect of property, or borrowed money, used or to be used for a Private Business Use; and (b) if in excess of five percent (5%) of the Proceeds of the Certificates is used for a Private Business Use, and, in addition, the payment of the principal or the interest with respect to more than five percent (5%) of the Proceeds of the Certificates is (under the terms of the Certificates or any underlying arrangement), directly or indirectly secured by any interest in property; or payments in respect of property, used or to be used for said'Private Business Use or is to be derived from payments (whether or not to the City) in respect of property, or borrowed money, used or to be used for a Private Business Use, then, (A) said excess over five percent (5%) of the Proceeds of the Certificates which is used for a Private Business Use shall be used for a Private Business Use related to a governmental use of such Proceeds and (B) each such Private Business Use over five percent (5%) of the Proceeds of R&MB5371.001\MATAW1514150508 27 the Certificates which is related to a governmental use of such Proceeds shall not exceed the amount of such Proceeds which is used for the governmental use of Proceeds to which such Private Business Use is related. The City shall assure that the Proceeds of the Certificates are not used, directly or indirectly, to make loans to two or more ultimate borrowers (including governmental units) and in the event that loans are made, directly or indirectly, to a single borrower other than a governmental unit, the City shall assure that not in excess of five percent (5%) of the Proceeds of the Certificates is used for such purpose. The provisions of the preceding sentence do not apply to loans constituting Nonpurpose Investments or to loans which enable the borrower to finance any governmental tax or assessment of general application for specific essential governmental functions. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Certificates to be "federally guaranteed" within the meaning of section 149(b) of the Code and Regulations. Section 11.8 Recordation and Fling, The City shall record and file, or cause to be recorded and filed, the Lease Agreement (or a memorandum thereof), the Assignment Agreement and all such documents as may be required by law (and shall take all further actions which may be necessary or be reasonably required by the Trustee), all in such manner, at such times and in such places as may be required by law in order fully to preserve, protect and perfect the security of the Trustee and the Certificate Owners. Section 11.9 City Budgets. The City shall supply to the Trustee, in all events by July 1 in each year, a written determination by a City Representative that the City has made adequate provision in its annual budget for the payment of Lease Payments due under the Lease Agreement in the fiscal year covered by such budget. The determination given by the City to the Trustee shall be that the amounts so budgeted are fully adequate for the payment of all Lease Payments due under the Lease Agreement in the annual period covered by such budget. Section 11.10 Continuing Disclosure. The City hereby covenants that it will comply with and carry out all of the provisions on its part in the Continuing Disclosure Agreement. Notwithstanding any other provision of this Trust Agreement, failure by the City to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee shall at the written request of any Participating Underwriter (as defined in the Continuing Disclosure Agreement) or the Owners of at least twenty-five percent (25%) aggregate principal amount of Outstanding Certificates (but only to the extent the Trustee has been indemnified to its satisfaction from and against any liability, cost, claim, expense or claim of any kind whatsoever, including, without limitation, fees and expenses of its attorneys and advisors and additional fees and expenses of the Trustee) or any Certificate Owner or Beneficial Owner may seek mandate or specific performance by court order, to cause the City to comply with its obligations under the Continuing Disclosure Agreement. Section 11.11 Further Assurances. The Authority and the City will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Trust Agreement and the Lease Agreement, or as may be requested by the Trustee and for the better assuring and confirming unto the Owners of the Certificates and the Trustee the rights MLG185371.001 W:10ATA141SAI 50509 28 and benefits provided herein. Section 11.12 Satisfaction of Conditions Precedent, The City hereby certifies, recites and declares that all acts, conditions and things required by the constitution and statutes of the State, the Lease Agreement and this Trust Agreement to exist, to have happened and to have been performed precedent to and in the delivery of the Certificates, do exist, have happened and have been performed in due time, form and manner as required by law. ARTICLE XII LIMITATION OF LIABILITY Section 12.1 Limited Liability of City. Except for the payment of Lease Payments when due in accordance with the Lease Agreement and the performance of the other covenants and agreements of the City contained in the Lease Agreement and this Trust Agreement, the City shall have no pecuniary obligation or liability to any of the other parties or to the Owners of the Certificates with respect to this Trust Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee, except.as expressly set forth herein. Section 12.2 No Liability of City or Authority for Trustee Performance. Neither the City nor the Authority shall have any obligation or liability to any of the other parties or to the Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement. Section 12.3 Indemnification of Trustee. The City shall to the extent permitted by law indemnify and save the Trustee, its officers, employees, directors and agents harmless from and against all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the Facilities by the Authority or the City, (ii) any breach or default on the part of the Authority or the City in the performance of any of their respective obligations under the Lease Agreement, this Trust Agreement and any other agreement made and entered into for purposes of the Facilities, (iii) any act of the Authority or the City or of any of their respective agents, contractors, servants, employees, licensees with respect to thq Facilities, (iv) any act of any assignee of, or purchaser from the Authority or the City or of any of its or their respective agents, contractors, servants, employees or licensees with respect to the Facilities, (v) the acquisition, construction, installation and equipping of the Facilities or the authorization of payment or Delivery Costs, (vi) the actions of any other party, including but not limited to the ownership, operation or use of the Facilities by the Authority or the City, (vii) the Trustee's exercise and performance of its powers and duties hereunder or (viii) the offering and sale of the Certificates. No indemnification will be made under this Section 12.3 or elsewhere in this Trust Agreement for willful misconduct or gross negligence under this Trust Agreement by the Trustee, its officers or employees. The City's obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates or resignation or removal of the Trustee. MLG185971.0011K:1GATA141514150609 29 Section 12.4 Limitation of Rights to Parties and Certificate Owners. Nothing in this Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Authority, the Trustee and the Owners of the Certificates, any legal or equitable right, remedy or claim under or in respect of this Trust Agreement or any covenant, condition or provision hereof; and all such covenants, conditions and provisions are and shall be for the sole and exclusive benefit of the City, the Authority, the Trustee and said Owners. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.1 Assignment of Rights. Pursuant to the Assignment Agreement, the Authority has transferred, assigned and set over to the Trustee all of the Authority's rights in and to the Lease Agreement (excepting only the Authority's rights under.Sections 5.7, 7.3 and 9.4 thereof), including without limitation all of the Authority's rights to exercise such rights and remedies conferred on the Authority pursuant to the Lease Agreement as may be necessary or convenient (i) to enforce payment of the Lease Payments and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund, and (ii) otherwise to exercise the Authority's rights and take any action to protect the interests of the Trustee or the Certificate Owners in an Event of Default. Section 13.2 Remedies. If an Event of Default shall happen, then (a) the Trustee shall give notice to the extent provided in Section 9.4 hereof, and (b) in each and every such case during the continuance of such Event of Default, the Trustee may, and upon request of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding and upon being indemnified to its satisfaction therefor shall, exercise any and all remedies available pursuant to law or granted pursuant to the Lease Agreement; provided, however, that notwithstanding anything herein or in the Lease Agreement to the contrary, there shall be no right under any circumstances to accelerate the maturities of the Certificates or otherwise to declare any Lease Payment not then in default to be immediately due and payable. Section 13.3 Aoolication of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XIII or Article IX of the Lease Agreement shall be applied by the Trustee in the following order upon presentation of the several Certificates: EjEEL to the payment of the fees, costs and expenses of the Trustee for performance of its duties hereunder and of the Certificate Owners in declaring such Event of Default, including reasonable compensation to its or their agents, attorneys and counsel, including all fees and expenses past due; and Secondto the payment of the whole amount then owing and unpaid with respect to the Certificates for principal and interest, with interest on the overdue principal and installments of interest at the rate of twelve percent (12%) per annum (but such interest on overdue installments of interest shall be paid only to the extent funds are available therefor MLGW5371.001UC:WATA141 MAI 50500 30 following payment of principal and interest and interest on overdue principal, as aforesaid), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the Certificates, then to the payment of such principal and interest without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest. Section 13.4 Institution of Legal Proceedinas. If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon being indemnified to its satisfaction therefor; shall, proceed to protect or enforce its rights or the rights of the Owners of Certificates by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or- equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder. Section 13.5 Non -waiver. Nothing in this Article XIII or in any other provision of this Trust Agreement or in the Certificates, shall affect or impair the obligation of the City to pay or prepay the Lease Payments as provided in the Lease Agreement, or affect or impair the right of action, which is absolute and unconditional; of the Certificate Owners to institute suit to enforce and collect such payment. No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article XIII to the Trustee or to the Owners of Certificates may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Certificate Owners. Section 13.6 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. Section 13.7 Power of Trustee to Control Proceedinas. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of. the Certificates, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided. however, that the Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, without the consent of a majority in aggregate principal amount of the Certificates Outstanding. Section 13.8 Limitation on Certificate Owners' Right to Sue. No Owner of any Certificate issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner MLG185371.001UC:WATA141514150500 31 shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the Owners of at least a majority in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Certificates of any remedy hereunder; it being understood and intended that no one or more Owners of Certificates shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. The right of any Owner of any Certificate to receive payment of said Owner's direct, undivided, fractional interests in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section 13.8 or any other provision of this Trust Agreement. ARTICLE XIV THE BOND INSURER Section 14.1. Payment Procedure Pursuant to the Municipal Bond Insurance Policy. As long as the Municipal Bond Insurance Policy shall be in full force and effect, the City, the Authority, the Trustee and paying agent, if any, agree to comply with the following provisions: (a) At least one (1) day prior to all Interest Payment Dates the Trustee or the paying agent, if any, will determine whether there will be sufficient funds in the funds and accounts to pay the principal or interest with respect to the Certificates due on such Interest Payment Date. If the Trustee or the paying agent, if any, determines that there will be insufficient funds in such funds or accounts, the Trustee or paying agent, if any, shall so notify the Bond Insurer. Such notice shall specify the amount of the anticipated deficiency, the Certificates to which such deficiency is applicable and whether such Certificates will be deficient with respect to principal or interest, or both: If the Trustee or paying agent, if any, has not so notified the Bond Insurer at least one (1) day prior to an Interest Payment Date, the Bond Insurer will make payments of principal or interest due with respect to the Certificates on or before the first (1st) day next following the date on which the Bond Insurer shall have received notice of nonpayment from the Trustee or paying agent, if any. AQG195371.001 W:1DATAW1514150509 32 (b) The Trustee or paying agent, if any, shall, after giving notice to the Bond Insurer as provided in (a) above, make available to the Bond Insurer and, at the Bond Insurer's direction, to United States Trust Company of New York, as insurance trustee for the Bond Insurer or any successor insurance trustee (the "Insurance Trustee"), the Registration Books maintained by the Trustee or paying agent, if any, and all records relating to the funds and accounts maintained under this Trust Agreement. (c) The Trustee or paying agent, if any, shall provide the Bond Insurer and the Insurance Trustee with a list of registered owners of Certificates entitled to receive principal or interest payments from the Bond Insurer under the terms of the Municipal Bond Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Certificates entitled to receive full or partial interest payments from the Bond Insurer and GO to pay principal with respect to the Certificates surrendered to the Insurance Trustee by the registered owners of Certificates entitled to receive full or partial principal payments from the Bond Insurer. (d) The Trustee or paying agent, if any, shall at the time it provides notice to the Bond Insurer pursuant to (a) above, notify registered owners of Certificates entitled to receive the payment of principal or interest with respect to the Certificates from the Bond Insurer (i) as to the fact of such entitlement, (ii) that the Bond Insurer will remit to them all or a part of the interest payments next coming due upon proof of Certificate Owner entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right to payment, (iii) that should they be entitled to receive full payment of principal from the Bond Insurer they must surrender their Certificates (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Certificates to be registered in the name of the Bond Insurer) for payment to the Insurance Trustee, and not the Trustee or paying agent, if any, and (iv) that should they be entitled to receive partial payment of principal from the Bond Insurer, they must surrender their Certificates for payment with respect thereto first to the Trustee or paying agent, if any, who shall note on such Certificates the portion of the principal paid by the Trustee or paying agent, if any, and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal. (e) If the Trustee or paying agent, if any, has notice that any payment of principal or interest with respect to a Certificate which has become due and payable and which is made to a Certificate Owner by or on behalf of the City has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee or paying agent, if any, shall notify the Bond Insurer and at the time the Bond Insurer is notified, notify all registered owners that if any registered owner's payment is so recovered, such registered owner will be entitled to payment from the Bond Insurer to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee or paying agent, if any, shall furnish to the Bond Insurer its records evidencing the payments of principal and interest with respect to the Certificates which have been made by the Trustee or paying agent, if any, and subsequently recovered from registered owners and the dates on which such payments were made. P&G185371.001WMATAW1514150509 33 (f) In addition to those rights granted the Bond Insurer under this Trust Agreement, the Bond Insurer shall, to the extent it makes payment of principal or interest with respect to the Certificates, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Municipal Bond Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee or paying agent, if any, shall note the Bond Insurer's rights as subrogee on the Registration Books maintained by the Trustee or paying agent, if any, upon receipt from the Bond Insurer of proof of the payment of interest with respect thereto to the registered owners of the Certificates, and (ii) in the case of subrogation as to claims for past due principal the Trustee or paying agent, if any, shall note the Bond Insurer's rights as subrogee on the Registration Books maintained by the Trustee or paying agent, if any, upon surrender of the Certificates by the registered owners thereof together with proof of the payment of principal with respect thereto. Section 14.2. Bond Insurer as Third Party Beneficiary. To the extent that this Trust Agreement confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this Trust Agreement, the Bond Insurer is hereby explicitly recognized as being a third -party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. Section 14.3. Consent of Bond Insurer. (a) Generally Any provision of this Trust Agreement expressly recognizing or granting.rights in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond Insurer hereunder without the prior written consent of the Bond Insurer. (b) Consent of Bond Insurer in Addition to Certificate Owners' Consent. Unless otherwise provided in this Section, Bond Insurer's consent shall be required in addition to Certificate Owners' consent, when required, for the following purposes: (i) execution and delivery of any supplemental indenture or any amendment, supplement or change to or modification of this Trust Agreement or the Lease Agreement; (ii) removal of the Trustee or any paying agent and selection and appointment of any successor trustee or paying agent; and (iii) initiation or approval of any action not described in (i) or (ii) above which requires Certificate Owners' consent. (c) Consent of Bond Insurer in the Event of Insolvency. Any reorganization or liquidation plan with respect to the City must be acceptable to the Bond Insurer. In the event of any reorganization or liquidation, the Bond Insurer shall have the right to vote on behalf of all Certificate Owners who hold Bond Insurer -insured Certificates absent a default by the Bond Insurer under the applicable Municipal Bond Insurance Policy insuring such Certificates. (d) Consent of Bond Insurer upon Default. Anything in this Trust Agreement to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default, the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the Certificate Owners or the Trustee for the benefit of the Certificate Owners under this Trust Agreement, including, without limitation: (i) the right to accelerate the principal of the Certificates as described in this Trust Agreement; and (ii) the right to annul L&M5371.0011KADATAW 5/4150509 34 any declaration of acceleration, and the Bond Insurer shall also be entitled to approve all waivers of events of default. Section 14.4. Notices to be Given to Bond Insurer. (a) While the Municipal Bond Insurance Policy is in effect, the City shall furnish to the Bond Insurer: (i) as soon as practicable after the filing thereof, a copy of any financial statement of the City and a copy of any audit and annual report of the City which includes information relating to the Systems; (ii) a copy of any notice to be given to the registered owners of the Certificates, including, without limitation, notice of any redemption of or defeasance of Certificates, and any certificate rendered pursuant to this Trust Agreement relating to the security for the Certificates; and (iii) such additional information it may reasonably request. (b) The Trustee shall notify the Bond Insurer of any failure of the City to provide relevant notices, certificates, etc., required to be provided to it hereunder. (c) The City will permit the Bond Insurer to discuss the affairs, finances and accounts of the City or any information the Bond Insurer may reasonably request regarding the security for the Certificates with appropriate officers of the City. The City will permit the Bond Insurer to have access to the Facilities and to make copies of all books and records relating to the Certificates at any reasonable time. (d) The Bond Insurer shall have the right to direct an accounting at the City's expense, and the City's failure to comply with such direction within thirty (30) days after receipt of written notice of the direction from the Bond Insurer shall be deemed a default hereunder; provided, however, that if compliance cannot occur within such period; then such period will be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any registered owner of the Certificates. (e) Notwithstanding any other provision of this Trust Agreement, the Trustee shall immediately notify the Bond Insurer if at any time there are insufficient moneys to make any payments of principal and/or interest as required and immediately upon the occurrence of any Event of Default hereunder. (f) To the extent the City has entered into a continuing disclosure agreement with respect to the Certificates, the Bond Insurer shall be included as a party to be notified. MLGW5371.0011KMATAW154150508 35 ARTICLE XV MISCELLANEOUS Section 15.1 Defeasance. If and when all Outstanding Certificates shall be paid and discharged in any one or more of the following ways and all other amounts due and owing hereunder have been paid: (a) by well and truly paying or causing to be paid the principal, and interest and prepayment premiums (if any) with respect to all Certificates Outstanding, as and when the same become due and payable; or (b) by depositing with an escrow holder security for the payment of Lease Payments as more particularly described in Section 10.1 of the Lease Agreement, to be applied to pay the Lease Payments as the same become due and payable and prepay the Lease Payments in full on any prepayment date, pursuant to Section 10.1 of the Lease Agreement then, notwithstanding that any Certificates shall not have been surrendered for payment, all obligations of the Authority, the Trustee and the City with respect to all Outstanding Certificates shall cease and terminate, except only the obligation of the City to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from funds deposited pursuant to paragraph (b) of this Section 15. 1, to the Owners of the Certificates not so surrendered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraph (b), the Certificates shall continue to represent direct, undivided, fractional interests of the Owners thereof in Lease Payments under the Lease Agreement. (c) Notwithstanding anything herein to the contrary, if the principal and/or interest due with respect to the Certificates shall be paid by the Bond Insurer pursuant to the Municipal Bond Insurance Policy, the Certificates shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the City, and the assignment and pledge of the Trust Estate and all covenants, agreements and other obligations of the City to the registered owners shall continue to exist and shall run to the benefit of the Bond Insurer and the Bond Insurer shall be subrogated to the rights of such registered owners. Any funds held by the Trustee, at the time of one of the events described in paragraphs (a) or (b) of this Section 15.1, which are not required for the payment to be made to Owners, shall, after payment of all fees and expenses of the Trustee, including attorneys' fees, be paid over to the City. Section 15.2 Records. The Trustee shall keep records in accordance with corporate trust industry standards of all moneys received and disbursed by it under this Trust Agreement, which shall be available for inspection by the City, the Authority, and any Owner or Owners of at least 5% in aggregate principal amount of the Certificates, or the agent of any of them, at any time during regular business hours upon reasonable prior notice. Section 15.3 Notices. All written notices to be given under this Trust Agreement shall be given by mail, facsimile transmission or personal delivery to the party entitled thereto R&G185371.001 WMATA415W 50509 36 at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective upon deposit in the United States mail, postage prepaid or, in the case of personal delivery, upon delivery to the address set forth below: If to the City: City of Santa Clarita 23920 Valencia Boulevard, #300 Santa Clarita, California 91355 Attention: Finance Director Facsimile (805) 259-8125 If to the Authority: Santa Clarita Public Financing Authority 23920 Valencia Boulevard, #300 Santa Clarita, California 91355 Attention: Finance Director Facsimile (805) 259-8125 If to the Trustee: First Trust of California, National Association Attention: Facsimile Section 15.4 Govemina Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State. Section 15.5 Bindina Effect: Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Whenever in this Trust Agreement the Authority, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Trust Agreement contained by or on behalf of the Authority, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 15.6 Execution in Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Section 15.7 Destruction of Cancelled Certificates. Whenever in this Trust Agreement provision is made for the surrender to or cancellation by the Trustee and the delivery to the City of any Certificates, the Trustee may, in lieu of such cancellation and delivery, destroy such Certificates and deliver a certificate of such destruction to the City. Section 15.8 Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Trust Agreement. All references herein to "Articles," "Sections," and other subdivisions are to the corresponding UMS5371.001 MADATA141514150509 37 Articles, Sections or subdivisions of this Trust Agreement; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 15.9 Waiver of Notice. Whenever in this Trust Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 15.10 Payments Due on Other than Business Dov. If the date for making any payment as provided in this Trust Agreement is not a Business Day, such payment may be made on the next succeeding Business Day with the same force and effect as is done on the date provided therefore herein. Section 15.11 Non -Presentment of Certificates. In the event any Certificate shall not be presented for payment when the principal with respect thereto becomes due, either at maturity or at the date fixed for prepayment thereof, if moneys sufficient to pay such Certificate shall have been deposited in the Lease Payment Fund all liability of the City to the Owner thereof for the payment of such Certificate shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys in trust, without liability for interest thereon, for the benefit of the Owner of such Certificate who shall thereafter be restricted exclusively to such moneys for any claim of whatever nature on his or her part under this Trust Agreement or on, or with respect to, said Certificate. However, after two (2) years, such moneys shall be paid by the Trustee to the City free from the trusts created by this Trust Agreement, and thereafter Owners shall be entitled to look only to the City for payment and then only to the extent of the amount so repaid by the Trustee. The City shall not be liable for any interest on the sums paid to it pursuant to this Section 15.11 and shall not be regarded as a trustee of such money. Section 15.12 Separability of Invalid Provisions. In case any one or more ofthe provisions contained in this Trust Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Trust Agreement, and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or- more sections; paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid or unenforceable. MM85371.001 WMATA14151415050B 38 IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement as of the date and year first above written. FIRSTTRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee Vice President By: Assistant Vice President SANTA CLARITA PUBLIC FINANCING AUTHORITY By: Chairman CITY OF SANTA CLARITA, CALIFORNIA By: City Manager Attest: City Clerk MG18537 1.001 W:ZATA%l M4150509 r5y.9T.Tir1 DEFINITIONS "Additional Certificates" means the certificates bonds duly authorized, executed and delivered pursuant to Section 15.1 of the Trust Agreement, secured by Revenues on a parity with the Certificates. "Additional Payments" means the payments made by the City pursuant to Section 4.4(f) hereof. "Agency" means the Redevelopment Agency of the City of Santa Clarita, a redevelopment agency duly organized and existing under the laws of the State. "Assignment Agreement" means the Assignment Agreement, dated as of July 1, 1997, by and between the Authority and the Trustee, together with any duly authorized and executed amendments thereto. "Authority" means the Santa Clarita Public Financing Authority, a joint exercise of powers agency duly organized and existing under the laws of the State. "Authority Representative" means the Chairman, Secretary or Treasurer of the Authority, or any other person authorized by resolution of the Authority or by any of said officers to act on behalf of the Authority under or with respect to this Trust Agreement. "Base Lease" means the Amended and Restated Base Lease, dated as of July 1, 1997, by and between the City, as lessor, and the Authority, as lessee, together with any amendments thereto. "Bond Insurer" means , or any successor thereto. "Business Day" means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State, or any state in which the Office of the Trustee is located, are closed. "Certificates" means the $20,900,000 aggregate principal amount of refunding certificates of participation to be executed and delivered pursuant to the Trust Agreement. "City" means the City of Santa Clarita, a municipal corporation and general law city duly organized and existing under the laws of the State. "City Hall Building" means the building and related facilities located upon the Land described in Exhibit B to the Lease Agreement. "City Representative" means the Mayor, the City Manager, the Finance Director or the City Clerk of the City or any other person authorized by resolution of the City Council of the City or by the Mayor or the City Manager to act on behalf of the City under or with respect MLG185371.001WADATA4/154150509 A-1 to this Trust Agreement. "Closing Date" means the date -upon which there is a physical delivery of the Certificates in exchange for the amount representing the purchase price of the Certificates by the Original Purchaser. "Code" means the Internal Revenue_ Code of 1986, as amended. "Delivery Costs" means all items of expense directly or indirectly payable by or reimbursable to the City or the Authority relating to the execution and delivery of the Lease Agreement, the Base Lease, this Trust Agreement, the Escrow Agreement and the Assignment Agreement or the execution and delivery of the Certificates, including but not limited to filing and recording costs, title insurance premiums, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of the Trustee and Escrow Bank, financing discounts, legal fees and charges, California Debt Advisory Commission reporting fees, insurance fees and charges, financial and other professional consultant fees, fees of rating agencies for credit ratings, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Delivery Costs Fund" means the fund by that name established and held by the Trustee pursuant to Article III of this Trust Agreement. "Depository" means (a) initially, DTC, and (b) any other Securities Depositories acting as Depository pursuant to Section 2.14 of this Trust Agreement. "Depository System Participant" means any participant in the Depository's book -entry system. "DTC" means The Depository Trust Company, New York, New York, and is successors and assigns. "Due Date" means, with respect to each Lease Payment Date, the date which is the fifteenth (18th) day of the month preceding such Lease Payment Date. "Escrow Agreement" means the Escrow Agreement, dated as of July 1, 1997, by and among the City, the Authority and First Trust of California, National Association, as escrow bank, together with any amendments thereto, relating to the defeasance of the 1991 Bonds. "Escrow Bank" means First Trust of California, National Association, in its capacity as escrow bank for the 1991 Bonds. "Event of Default" means an event of default under the Lease Agreement, as defined in Section 9.1 hereof, or an event of default under this Trust Agreement, as defined in 14.2 of the Trust Agreement. "Facilities" mean, collectively, the Land, the City Hall Building and the Sewer Improvements, or other land, facilities or improvements or any part of the Facilities as the City WG185371.0011K:=TA141514150508 A-2 may from time to time substitute or designate pursuant to Section 8.4 of this Lease Agreement. "Facilities Additions" means all additions, improvements,. extensions, alterations, expansions or modifications of the Facilities or any part thereof financed with the proceeds of Additional Certificates. "Federal Securities" means any of the following which are non -callable and which at the time of investment are legal investments under the laws of the State for trust funds held by the Trustee: (a) Direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America ("United States Treasury Obligations"), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interest in future interest and principal payments on obligations described in (a) above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated. "Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending on June 30 ofthe next succeeding year, or any other twelve-month period selected by the City as its fiscal year. "Gross Proceeds" means the sum of the following amounts: (a) original proceeds, namely, net amounts received by or for the City as a result of the sale of the Certificates, excluding original proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Lease Agreement; (b) investment proceeds, namely, amounts received at any time by or for the City, such as interest and dividends, resulting from the investment of any original proceeds (as referenced in clause (a) above) or investment proceeds (as referenced in this clause (b)) in Nonpurpose Investments, increased by any profits and decreased (if necessary, below zero) by any losses on such investments, excluding investment proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Lease Agreement; R&GO 85371.0011K:{DATA141614160608 A-3 (c) sinking fund proceeds, namely, amounts, other than original proceeds, investment proceeds or transferred proceeds (as referenced in clauses (a) and (b) above) of the Certificates, which are held in the Lease Payment Fund and any other fund to the extent that the City reasonably expects to use such other fund to pay Lease Payments; (d) amounts in the Reserve Fund and in any other fund established as a reasonably required reserve for payment of Lease Payments; City; and (e) Investment Property pledged as security for payment of Lease Payments by the (f) amounts, other than as specified in this definition, used to pay Lease Payments; (g) amounts received as a result of investing amounts described in this definition. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Authority, the Trustee or the City. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302,Attention: Editor; Kenny Information Services' "Called Bond Service," 65 Broad Street, 16th Floor, New York, New York 10004; Moody's Investors Service "Municipal and Government", 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; Standard & Poor's Corporation "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds as the City or the Authority may designate by written notice delivered to the Trustee. "Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to Section 7.1 of this Trust Agreement. "Insurance Consultant" means a person or firm who is not an employee or officer of the City, who is.appointed by the City, and is qualified to survey risks and to recommend insurance coverage for the City's facilities, has actuarial personnel experienced in the area of insurance for which the City is insuring and who has a favorable national reputation for skill and experience in such surveys and such recommendations. "Interest Payment Date" means the first (1st) day of each April and October, commencing October 1, 1997, so long as any Certificates are Outstanding. "Investment Property" means any security (as said term is defined in Section 165(g)(2)(A) or (B) of the Code), obligation, annuity contract or investment type property, excluding, however, obligations (other than specified private activity bonds as defined in Section 57(a)(5)(c) of the Code) the interest on which is excluded from gross income, for federal tax purposes, under Section 103 of the Code. I.1G195371.0011K.WATAWISX4150509 A-4 "Land" means that certain real property located in or adjacent to the City Hall Building and described in Exhibit A to the Lease Agreement. "Lease Agreement" means the Amended and Restated Lease Agreement, dated as of July 1, 1997, by and between the Authority, as lessor, and the City, as lessee, together with any amendments thereto. "Lease Payments" means Property A Lease Payments, Property B Lease Payments, and Property C Lease Payments, including any prepayment thereof pursuant to the Lease Agreement, which payments consist of an interest component and a principal component. "Lease Payment Date" means the first day of April and October in each year during the Term of the Lease Agreement, commencing October 1, 1997. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.2 of this Trust Agreement. "Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by the Bond Insurer insuring the payments when due of the principal and interest with respect to the Certificates as provided therein. "Net Proceeds means any insurance proceeds or condemnation award paid with respect to any part of the Facilities, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. "1991 Base Lease" means the Base Lease, dated as of October 1, 1991, and amended on December 24, 1991, by and between the City, as lessor, and the Agency, as lessee, together with any amendments thereto. "1991 Bonds" means the Authority's Local Agency Revenue Bonds, Series 1991, authorized and issued in the original principal amount of $22,940,00 under the 1991 Trust Agreement. "1991 Bonds Escrow Fund" means the fund by that name established and held by the Escrow Bank pursuant to the Escrow Agreement. "1991 Bonds Interest Fund" means the fund by that name established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Bonds Principal Fund" means the fund by that name established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Bonds Reserve Fund" means the fund by that name established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Bonds Revenue Fund" means the fund by that name, including the 1991 Bonds Prepayment Account, established and held by the 1991 Trustee pursuant to the 1991 Trust KCM85371.0011R:WATA1415514150509 A-5 Agreement. "1991 Certificates" means the $22,940,000 aggregate principal amount of Certificates of Participation (Capital Improvement Projects) evidencing a proportionate interest of the owners thereof in 1991 Lease Payments to be made by the City to the Agency, which were executed and delivered pursuant to the 1991 Trust Agreement. "1991 Fiscal Agent Agreement" means the Fiscal Agent Agreement, dated as of October 1, 1991, and amended on December 24, 1991, by and between the City and the Authority, as fiscal agent, together with any amendments thereto, relating to the 1991 Certificates. "1991 Lease Agreement" means the Lease Agreement, dated as of October 1, 1991, and amended on December 24, 1991, by and between the Agency, as lessor, and the City, as lessee, together with any amendments thereto. "1991 Lease Payments" means Property A Lease Payments, Property B Lease Payments, and Property C Lease Payments, including any prepayment thereof pursuant to the 1991 Lease Agreement, which payments consist of an interest component and a principal component. "1991 Revenues" means all amounts, including 1991 Lease Payments, prepayments and investment income, in the funds and accounts held by the 1991 Trustee under the 1991 Trust Agreement, which are pledged to the payment of the 1991 Bonds. "1991 Trust Agreement" means the Trust Agreement, dated as of October 1, 1991, by and between the Authority and First Trust of California, National Association, as successor trustee, together with any amendments thereto. "1991 Trustee" means First Trust of California, National Association, in its capacity as successor trustee for the 1991 Bonds. "Nominee" means Cede & Company or such other entity as is requested by an authorized representative of the Depository. "Nonpurpose Investment" means any Investment Property which is acquired with the Gross Proceeds of the Certificates and is not acquired in order to carry out the governmental purpose of the Lease Agreement. "Office" means the corporate trust office of the Trustee in Los Angeles, California, or such other offices as may be specified to the City by the Trustee in writing, provided, however for transfer, exchange, payment and surrender of the Certificates means care of the corporate trust office of First Trust National Association in St. Paul, Minnesota or such other office designated by the Trustee from time to time. "Original Purchaser" means as original purchaser of the Certificates. UMS5071.0011K:WATAAl 514150509 A-6 "Outstanding", when used as of any particular time with reference to. Certificates, means (subject to the provisions of Section 10.3 and Section 15.1(c) of this Trust Agreement) all Certificates theretofore executed and delivered by the Trustee under the Trust Agreement except: (a) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Certificates for the payment or prepayment of which funds or Federal Securities in the necessary amount shall have theretofore been deposited with the Trustee (whether upon or prior to the maturity or prepayment date of such Certificates), provided that, if such Certificates are to be prepaid prior to maturity, notice of such prepayment shall have been given as provided in Section 4.3 of this Trust Agreement or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (c) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to Section 2.9 of this Trust Agreement. "Owner" when used with respect to a Certificate means the person in whose name such Certificate shall be registered. "Permitted Encumbrances" means, as of any particular time: (i) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V permit to remain unpaid; (ii) the Assignment Agreement; (iii) the Lease Agreement and the Base Lease; (iv) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (v) easements, rights of way, mineral rights; drilling rights and other rights, reservations, covenants, conditions or restrictions, which exist of record as of the Closing Date, which the City certifies in writing will not materially impair the use of the Facilities; and NO easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Lease Agreement and to which the Authority and the City consent in writing. WG185371.001 WADATAW SW 160509 A-7 "Permitted Investments" means any of the following which are legal investments under the laws of the State for the moneys proposed to be invested therein: (a) Federal Securities; (b) obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including the Export -Import Bank, Farm Credit System Financial Assistance Corporation, Rural Economic Community Development Administration, General Services Administration, U.S. Maritime Administration, Small Business Administration, Government National Mortgage Association, United States Department of Housing and Urban Development (PHA's) and the Federal Housing Administration; (c) bonds, notes or other evidence of indebtedness rated "AAA" by S&P and "Aaa" by Moody's Investors Service issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation with remaining maturities not exceeding three years; (d) U.S. Dollar-denominated deposit accounts in commercial banks (including the Trustee or any of its affiliates) which are (i) fully insured to the holder (up to the $100,000 maximum coverage) by the Federal Deposit Insurance Corporation ("FDIC") and (ii) for deposits in excess of the $100,000 FDIC coverage, deposits which are fully collateralized with Federal Securities; and U.S. dollar denominated deposit accounts, federal funds and banker's acceptances with domestic commercial banks (including the Trustee or any affiliate of the Trustee) which have a rating on their short-term certificates of deposit on the date of purchase of 'A-1" or "A-1 +" by S&P and "P-1 " by Moody's Investors Service and maturing no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the. rating of the bank.); (e). commercial paper which is rated at the time of purchase in the single highest classification, "A-1 +" by S&P and "P-1 " by Moody's Investors Service and which matures not more than 270 days after the date of purchase; (f) investments in a money market fund rated "AAAm" or "AAAm-G" or better by S&P (including funds for which the Trustee, its parent or affiliates provide investment advisory or other management services); and (g) pre -refunded Municipal Obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency; instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and which are rated, based on the escrow, in the highest rating category of S&P and Moody's Investors Service or any successors thereto. "Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a governmental unit and use as a member of the general public. K&M85371.0011K:WATAWM4150509 A-8 "Program" means the refinancing of the Projects by the prepayment of the 1991 Certificates and the advance refunding of the 1991 Bonds, as approved by resolutions of the City and the Authority. "Projects" means the those public capital improvement projects financed with the proceeds of the 1991 Certificates. "Registration Books" means the records maintained by the Trustee pursuant to Section 2.12 of this Trust Agreement for registration of the ownership and transfer of ownership of the Certificates. "Regular Record Date" means the fifteenth (15th) day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day. "Regulations" means temporary and permanent regulations promulgated under the Code or any predecessor Internal Revenue Code. "Rental Period" means each twelve-month period during the Term of the Lease Agreement commencing on October 2 in any year and ending on October 1 in the next succeeding year; except that the first Rental Period during the Term of the Lease Agreement shall commence on the Closing Date and end on October 1, 1997. "Reserve Fund" means the fund by that name established and held by the Trustee pursuant to Section 6.1 of this Trust Agreement. "Reserve Requirement' means an amount initially equal to (S 1, and following the execution and delivery of the Certificates, the least of (i) ten percent (10%) of the difference which results from subtracting original issue discount from the aggregate initial principal amount of the Certificates, (ii) an amount equal to one hundred and twenty-five percent (125%) of the average of the scheduled Lease Payments to be paid in each Rental Period or (iii) an amount equal to the aggregate Lease Payments required to be paid in any future Rental Period, calculated for the Rental Period in which such aggregate Lease Payments are the greatest. "Revenues" means: (a) all amounts budgeted and appropriated during the term of the Lease Agreement for Lease Payments, including, without limitation, those amounts budgeted and appropriated pursuant to Section 4.4(e) in the Lease Agreement; (b) investment income with respect to any moneys held by the Trustee in the funds and accounts established under this Trust Agreement; (c) Net Proceeds; and (d) any other investment income received under this Trust Agreement. "Special Counsel" means (a) on the Closing Date, the firm of attorneys delivering the opinion with respect to the exclusion from gross income, for federal income tax purposes, of the interest payable with respect to the Certificates or (b) after the Closing Date, any attorney or law firm of attorneys selected by the City or the Authority, of nationally recognized standing in matters pertaining to the exclusion from gross income, for federal income tax purposes, of the interest payable on bonds issued by states and political subdivisions. WM85371.001 W.-IDATAMM4150509 A-9 "S&P" means Standard & Poor's Ratings Group, Inc. a division of McGraw-Hill Corporation, New York, New York or its successors. "Securities Depositories" means The Depository Trust Company, 711 StewartAvenue, Garden City, New York 11530, Fax 516/227-4039 or -4190; Midwest Securities Trust Company, Capital Structures -Call Notification; 440 South LaSalle Street, Chicago, Illinois 60605, Fax 312/663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Fax 215/496-5058; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City or the Authority may designate in a written notice delivered to the Trustee. "State" means the State of California. "Term of the Lease Agreement" means the time during which the Lease Agreement is in effect, as provided for in Section 4.2 hereof. "Trustee" means First Trust of California, National Association, in its capacity as Trustee for the Certificates. "Trust Agreement" means this Trust. Agreement, dated as of July 1, 1997; by and between the Authority and First Trust of California, National Association, as trustee, together with any amendments thereto, relating to the Certificates. "Value" means the value which shall be determined, as of the end of each month, of any investments calculated as follows: (a) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in the New York Times): the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination; (b) as to investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or the New York Times: the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service; (c) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; and (d) as to any investment not specified above: the value thereof established by prior agreement between the Issuer, the Trustee and AMBAC Indemnity Corporation. "Written Certificate," "Written Request," or "Requisition" of the Authority or the City means, respectively, a written certificate, request or requisition signed in the name of.the M M85371.001 WAGATA141514150509 A-10 Authority or the City by its Authorized Representative. Any such certificate, request or requisition may, but need not, be.combined into 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. b1G185371.0011K-.ZATAIA154150509 A-1 1 EXHIBIT B FORM OF THE CERTIFICATES 6L0W5371.001 MMATA141514150509 B- MP&G. Draft #1. 7/2/97 AMENDED AND RESTATED LEASE AGREEMENT Dated as of July 1, 1997 by and between SANTA CLARITA PUBLIC FINANCING AUTHORITY, as Lessor and the CITY OF SANTA CLARITA, as Lessee MLGIS5351 AMENDED AND RESTATED LEASE AGREEMENT THIS AMENDED AND RESTATED LEASEAGREEMENT (this "Lease Agreement"), dated for convenience as of July 1, 1997, by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency duly organized and existing under the laws of the State of California, as lessor (the "Authority"), and the CITY OF SANTA CLARITA, a municipal corporation and general law city duly organized and existing under the laws of said State, as lessee (the "City"); WITNESSETH: WHEREAS, the City and the Redevelopment Agency of the City of Santa Clarita (the "Agency") have entered into a Joint Exercise of Powers Agreement, dated July 9, 1991 (the "Agreement"), creating the Santa Clarita Public Financing Authority (the "Authority") for the purpose of aiding in their financing objectives; and WHEREAS, pursuant to Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the California Government Code (the "Act") and the Agreement, the Authority is authorized to assist the City in financing public capital improvements, working capital, liability and other insurance needs or projects whenever there are significant public benefits, as determined by the Agency or the City; and WHEREAS, the City desired to finance and/or refinance the design acquisition, improvement, equipping or construction of certain public capital improvement projects (the "Projects"); and WHEREAS, the City, as lessor, and the Agency, as lessee, entered into that certain Base Lease dated as of October 1, 1991, and amended on December 24, 1991 (the "1991 Base Lease"), whereby the City granted to the Agency a leasehold interest in certain real estate described in Exhibit A attached hereto (the "Land"), a building and related facilities located on the Land described on Exhibit B, attached hereto, a portion of which is used as the City Hall (the "City Hall Building") and certain sewer improvements described on Exhibit C attached hereto (the "Sewer Improvements") (the Land, City Hall Building and Sewer Improvements are referred to herein as the "Facilities"), and the Agency, as lessor, and the City, as lessee, entered into a leaseback of the Facilities pursuant to that certain Lease Agreement dated as of October 1, 1991 and amended on December 24, 1991 (the "1991 Lease Agreement") for the purpose of financing the Projects; and WHEREAS, pursuant to Resolution No. 91-145 of the City, adopted on September 10, 1991, the City sold and delivered its 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 to the Redevelopment Agency of the City of Santa Clarita (the "1991 Certificates") in the original principal amount of $22,940,000; of which $18,800,000 remains -outstanding; and 6LG185351.001 WUMATA74154150511 WHEREAS, pursuant to Resolution No. JPA 91-5 of the Authority, adopted on September 10, 1991, the Certificates were purchased on November 12, 1991, by the Authority using proceeds from the sale of its Local Agency Revenue Bonds, Series 1991 (the "1991 Bonds"), which 1991 Bonds were issued in the original principal amount of $22,940,000, and of which $18,800,000 remains outstanding; and WHEREAS, the City has determined to refinance the Projects by taking advantage of costs savings available to the City through the advance refunding of the 1991 Certificates and the 1991 Bonds (the "Program"); and WHEREAS, the City and the Authority now propose to finance the Program by entering into (a) the Amended and Restated Base Lease dated as October 1, 1991 (the "Base Lease"), whereby the City leases the Facilities to the Authority, and (b) this Amended and Restated Lease Agreement dated as of October 1, 1997 (the "Lease Agreement"), whereby the City leases back the Facilities from the Authority; and WHEREAS; the City and the Authority propose to provide for such financing through the execution and delivery of refunding certificates of participation (the "Certificates") evidencing the direct, undivided, fractional interests of the owners thereof in the lease payments to be made by the City under the Lease Agreement; and WHEREAS, the Authority will assign to the Trustee (as hereinafter defined) certain of its right, title and interest in and to this. Lease Agreement, and direct the Trustee to execute and deliver to the initial purchasers thereof the Certificates payable from Lease Payments and certain other additional payments and moneys to be received from the City pursuant to the Lease Agreement; and WHEREAS, the Agency will assign its rights under the 1991 Base Lease and 1991 Lease Agreement to the Authority, subject to the rights of the 1991 Fiscal Agent and 1991 Trustee (as such terms are defined in the Lease Agreement), pursuant to a Conveyance and Assignment Agreement (the "Conveyance"), and the City will consent to such transfer; and WHEREAS, this Lease Agreement maintains in full force and effect the 1991 Lease Agreement such that the obligations of the City under the 1991 Lease Agreement are not terminated and title shall not vest in the City by reason of the deposit provided for in Section of this Lease Agreement. This Lease Agreement is not, and is not intended to be; an "executory contract" or "unexpired lease" within the meaning of Section 365 of the United States Bankruptcy Code; NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: bYG185351.001 WADATA141514150511 2 ARTICLE I CERTAIN DEFINITIONS, EXHIBITS AND INTERPRETATION Section 1.1 Certain Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease Agreement have the meanings herein specified. "Additional Certificates" means the certificates bonds duly authorized, executed and delivered pursuant to Section 15.1 of the Trust Agreement, secured by Revenues on a parity with the Certificates. "Additional Payments" means the payments made by the City pursuant to Section 4.4(f) hereof. "Agency" means the Redevelopment Agency of the City of Santa Clarita, a redevelopment agency duly organized and existing under the laws of the State. "Asbestos Containing Materials" shall mean material in friable form containing more than one percent (19/6) of the asbestiform varieties of (a) chrysotile (serpentine); (b) crocidolite (ricbeclote); (c) amosite (cummington-itegrinerite); (d) anthrophylite; (e) temolite; and (f) actinolite. "Assignment Agreement" means the AssignmentAgreement, dated as of July 1, 1997, by and between the Authority and the Trustee, together with any duly authorized and executed amendments thereto. "Authority" means the Santa Clarita Public Financing Authority, a joint exercise of powers agency duly organized and existing under the laws of the State. "Authority Representative" means the Chairman, Secretary or Treasurer of the Authority, or any other person authorized by resolution of the Authority or.by any of said officers to act on behalf of the Authority under or with respect to this Lease Agreement. "Base Lease" means the Amended and Restated Base Lease, dated as of July 1, 1997, by and between the City, as lessor, and the Authority, as lessee, together with any amendments thereto. "Bond Insurer" means or any successor thereto. "Business Day" means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State, or any state in which the Office of the Trustee is located, are closed. "Certificates" means the $20,900,000 aggregate principal ampunt of refunding certificates of participation to be executed and delivered pursuant to the Trust Agreement. l.LGMM1.0011K:ZATA141514150511 3 "City" means the City of Santa Clarita, a municipal corporation and general law city duly organized and existing under the laws of the State. "City Hall Building" means the building and related facilities located upon the Land described in Exhibit B. "City Representative" means the Mayor, the City Manager, the Finance Director or the City Clerk of the City or any other person authorized by resolution of the City Council of the City or by the Mayor or the City Manager to act on behalf of the City under or with respect to this Lease Agreement. "Closing Date" means the date upon which there. is a physical delivery of the Certificates in exchange for the amount representing the purchase price of the Certificates by the Original Purchaser. "Code" means the Internal Revenue Code of 1986, as amended. "Delivery Costs" means all items of expense directly or indirectly payable by or reimbursable to the City or the Authority relating to the execution and delivery of this Lease Agreement, the Base Lease,the Trust Agreement, the Escrow Agreement and the Assignment Agreement or the execution and delivery of the Certificates, including but not limited to filing and recording costs, title insurance premiums, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of the Trustee and Escrow Bank, financing discounts, legal fees and charges, California Debt Advisory Commission reporting fees, insurance fees and charges, financial and other professional consultant fees, fees of rating agencies for credit ratings, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Delivery Costs Fund" means the fund by that name established and held by the Trustee pursuant to Article III of the Trust Agreement. "Due Date" means, with respect to each Lease Payment Date, the date which is the fifteenth (15th) day of the month preceding such Lease Payment Date. "Environmental Regulations" means all Laws and Regulations, now or hereafter in effect, with respect to Hazardous Materials, including; without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C. Section 9601, gt seg.) (together with the regulations promulgated thereunder, "CERCLA"), the.Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, Attu.) (together with the regulations promulgated thereunder, "RCRA"), the Emergency Planning and Community Right -to -Know Act, as amended (42 U.S.C. Section 11001, at egg.) (together with the regulations promulgated thereunder, "Title 111"), the Clean Water Act, as amended (33 U.S.C. Section 1321 gt seg.) (together with the regulations promulgated thereunder, "CWWA"), the Clean Air Act, as amended (42 U.S.C. Section 7401, gj sea.) (together with the regulations promulgated thereunder, "CAA") and the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 gs egg.) (together with the regulations promulgated thereunder, "TSCA"), and any state or local similar laws and regulations and any so-called MLG185351.0011K:WATA141514150511 4 local, state or federal "superfund" or "superlien" law. "Escrow Agreement" means the Escrow Agreement, dated as of July 1, 1997, by and among the City, the Authority and First Trust of California, National Association, as escrow bank, together with any amendments thereto, relating to the defeasance of the 1991 Bonds. "Escrow Bank" means First Trust of California, National Association, in its capacity as escrow bank for the 1991 Bonds. "Event of Default" means an event of default under this Lease, as defined in Section 9.1 hereof, or an event of default under the Trust Agreement, as defined in 14.2 of the Trust Agreement. "Facilities" mean, collectively, the Land, the City Hall Building and the Sewer Improvements, or other land, facilities or improvements or any part of the Facilities as the City may from time to time substitute or designate pursuant to Section 8.4 of this Lease Agreement. "Facilities Additions" means all additions, improvements, extensions, alterations, expansions or modifications of the Facilities or any part thereof financed with the proceeds of Additional Certificates. "Federal Securities" means any of the following which are non -callable and which at the time of investment are legal investments under the laws of the State for trust funds held by the Trustee: (a) Direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America ("United States Treasury Obligations"), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interest in future interest and principal payments on obligations described in (a) above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right -to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated. "Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending on June 30 of the next succeeding year, or any other twelve-month period selected by the City as its fiscal year. KCM85351.001 WMATA741514150511 "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Authority, the Trustee or the City. "Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to Section 7.1 of the Trust Agreement. "Insurance Consultant" means a person or firm who is not an employee or officer of the City, who is appointed by the City, and is qualified to survey risks and to recommend insurance coverage for the City's facilities, has actuarial personnel experienced in the area of insurance for which the City is insuring and who has a favorable national reputation for skill and experience in such surveys and such recommendations. "Interest Payment Date" means the first Ost) day of each April and October, commencing October 1, 1997, so long as any Certificates are Outstanding. "Land" means that certain real property located in or adjacent to the City Hall Building and described in Exhibit A. '"Lease Agreement" means this Amended and Restated Lease Agreement, dated as of July 1, 1997, by and between the Authority, as lessor, and the City, as lessee, together with any amendments thereto. "Lease Payments" means Property A Lease Payments, Property B Lease Payments, and Property C Lease Payments, including any prepayment thereof pursuant to this Lease Agreement, which payments consist of an interest component and a principal component. "Lease Payment Date" means the first day of April and October in each year during the Term of this Lease Agreement, commencing October 1, 1997. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.2 of the Trust Agreement. "Net Proceeds" means any insurance proceeds or condemnation award paid with respect to any part of the Facilities, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. "1991 Base Lease" means the Base Lease, dated as of October 1, 1991, and amended on December 24, 1991, by and between the City, as lessor, and the Agency, as lessee, together with any amendments thereto. "1991 Bonds" means the Authority's Local Agency Revenue Bonds, Series 1991, authorized and issued in the original principal amount of $22,940,00 under the 1991 Trust Agreement. "1991 Bonds Escrow Fund" means the fund by that name established and held by the Escrow Bank pursuant to the Escrow Agreement. MLG185351.00tIX:1DATA141514150511 6 "1991 Bonds Interest Fund" means the fund by that name established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Bonds Principal Fund" means the fund by that name established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Bonds Reserve Fund" means the fund by that name established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Bonds Revenue Fund" means the fund by that name, including the 1991 Bonds Prepayment Account, established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Certificates" means the $22,940,000 aggregate principal amountof Certificates of Participation (Capital Improvement Projects) evidencing a proportionate interest of the owners thereof in 1991 Lease Payments to be made by the City to the Agency, which were executed and delivered pursuant to the 1991 Trust Agreement. "1991 Fiscal Agent Agreement" means the Fiscal Agent Agreement, dated as of October 1, 1991, and amended on December 24, 1991, by and between the City and the Authority, as fiscal agent, together with any amendments thereto, relating to the 1991 Certificates. "1991 Lease Agreement" means the Lease Agreement, dated as of October 1, 1991, and amended on December 24, 1991, by and between the Agency, as lessor, and the City, as lessee, together with any amendments thereto. "1991 Lease Payments" means Property A Lease Payments, Property B Lease Payments, and Property C Lease Payments, including any prepayment thereof pursuant to the 1991 Lease Agreement; which payments consist of an interest component and a principal component. "1991 Revenues" means all amounts, including 1991 Lease Payments, prepayments and investment income, in the funds and accounts held by the 1991 Trustee under the 1991 Trust Agreement, which are pledged to the payment of the 1991 Bonds. "1991 Trust Agreement" means the Trust Agreement, dated as of October 1, 1991, by and between the Authority and First Trust of California, National Association, as successor trustee, together with any amendments thereto. "1991 Trustee" means First Trust of California, National Association, in its capacity as successor trustee for the 1991 Bonds. "Office" means the corporate trust office of the Trustee in Los Angeles, California, or such other offices as may be specified to the City by the Trustee in writing, provided, however for transfer, exchange, payment and surrender of the Certificates means care of the corporate trust office of First Trust National Association in St. Paul, Minnesota or such other K"%8535 1.001 1KADATA141 514 1 5 0 51 1 office designated by the Trustee from time to time. "Original PurchaseF" means as original purchaser of the Certificates. "Outstanding", when used as of any particular time with reference to Certificates, means (subject to the provisions of Section 10.3 and Section 15.1(c) of the Trust Agreement) all Certificates theretofore executed and delivered by the Trustee under the Trust Agreement except: (a) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Certificates for the payment or prepayment of which funds or Federal Securities in the necessary amount shall. have theretofore been deposited with the Trustee (whether upon or prior to the maturity or prepayment date of such Certificates), provided that, if such Certificates are to be prepaid prior to maturity, notice of such prepayment shall have been given as provided in Section 4.3 of the Trust Agreement or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (c) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to Section 2.9 of the Trust Agreement. "Owner" when used with respect to a Certificate means the person in whose name such Certificate shall be registered. "Permitted Encumbrances" means, as of any particular time: (i) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V permit to remain unpaid; (ii) the Assignment Agreement; (iii) this Lease Agreement and the Base -Lease; (iv) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (v) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions, which exist of record as of the Closing Date, which the City certifies in writing will not materially impair the use of the Facilities; and (vi) easements, rights of way, mineral rights, drilling rights and other rights, reservations; covenants, conditions or restrictions established following the date of recordation of this Lease Agreement and to which the Authority and the City consent in writing; and (vii) the Lease Agreement. "Program" means the refinancing of the Projects by the prepayment of the 1991 Certificates and the advance refunding of the 1991 Bonds, as approved by resolutions of the City and the Authority. "Projects" means the those public capital improvement projects financed with the proceeds of the 1991 Certificates. MLG185351.001YC:XDATAl415%4150511 8 "Regulations" means temporary and permanent regulations promulgated under the Code or any predecessor Internal Revenue Code. "Rental Period" means each twelve-month period during the Term of this Lease Agreement commencing on October 2 in any year and ending on October 1 in the next succeeding year; except that the first Rental Period during the Term of this Lease Agreement shall commence on the Closing Date and end on October 1, 1997. "Reserve Fund" means the fund by that name established and held by the Trustee pursuant to the Trust Agreement. "Reserve Requirement" means an amount initially equal to I$ 1, and following the execution and delivery of the Certificates, the least of (i) ten percent (10%) of the difference which results from subtracting original issue discount from the aggregate initial principal amount of the Certificates, (ii) an amount equal to one hundred and twenty-five percent (125%) of the average of the scheduled Lease Payments to be paid in each Rental Period or (iii) an amount equal to the aggregate Lease Payments required to be paid in any future Rental Period, calculated for the Rental Period in which such aggregate Lease Payments are the greatest. "Revenues" means: (a) all amounts budgeted and appropriated during the term of the Lease Agreement for Lease Payments, including, without limitation, those amounts budgeted and appropriated pursuant to Section 4.4(e) in this Lease Agreement; (b) investment income with respect to any moneys held by the Trustee in the funds and accounts established under the Trust Agreement; (c) Net Proceeds; and (d) any other investment income received under the Trust Agreement. "Special Counsel" means (a) on the Closing Date, the firm of attorneys delivering the opinion with respect to the exclusion from gross income, for federal income tax purposes, of the interest payable with respect to the Certificates or (b) after the Closing Date, any attorney or law firm of attorneys selected by the City or the Authority, of nationally recognized standing in matters pertaining to the exclusion from gross income, for federal income tax purposes, of the interest payable on bonds issued by states and political subdivisions. "State" means the State of California. "Term of this Lease Agreement" means the time during which this Lease Agreement is in effect, as provided for in Section 4.2 hereof. "Trustee" means First Trust of California, National Association, in its capacity as Trustee for the Certificates. "Trust Agreement" means the Trust Agreement, dated as of July 1, 1997, by and between the Authority and First Trust of California, National Association, as trustee, together with any amendments thereto, relating to the Certificates. MLG185351.0011K:WATA111514150511 "Written Certificate," "Written Request," or "Requisition" of the Authority or the City means, respectively, a written certificate, request or requisition signed in the name of the Authority or the City by its Authorized Representative. Any such certificate,request or requisition may, but need not, be combined into 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. Section 1.2 Exhibits The following Exhibits are attached to, and by reference made a part of, this Lease Agreement: Exhibit A. Description of the Land. Exhibit B. Description of the City Hall Building. Exhibit C. Description of the Sewer Improvements. Exhibit D. Schedule of Lease Payments. Exhibit E. Schedule of Property A Lease Payments. Exhibit F. Schedule of Property B Lease Payments. Section 1.3 Related Agreements. The City and the Authority hereby acknowledge the following agreements and the terms thereof: (a) the 1991 Base Lease; (b) the 1991 Lease Agreement; (c) the 1991 Fiscal Agent Agreement and the 1991 Trust Agreement; (d) the Amended and Restated Base Lease; (e) this Amended and Restated Lease Agreement; (f) the Assignment Agreement; and (g) the Trust Agreement. Section 1.4 Rules of Intermetation. Words of any gender shall be deemed and construed to include correlated words of all genders. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations, partnerships, joint ventures and associations, including public bodies, as well as natural persons. The terms "hereby", "hereof", "hereto", "herein", "hereunder" and any similar terms, as used in this Lease Agreement, refer to this Lease Agreement. Unless the context otherwise indicates, references in this Lease Agreement to articles, sections and paragraphs are to articles, sections and paragraphs of this Lease Agreement. R&G185351.001 W:MATA141514150511 10 ARTICLE 11 REPRESENTATIONS AND COVENANTS Section 2.1 Representations and Covenants of the Citv. The City represents and covenants to the Authority as follows: (a) Due Organization and Existence. The City is a municipal corporation and general law city duly organized and existing under the laws of the State. (b) Authorization. The laws of the State authorize the City to prepay the 1991 Certificates and advance refund the 1991 Bonds, and to enter into this Lease Agreement, the Base Lease, the Trust Agreement, and the Escrow Agreement and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid agreements, and the City has duly authorized, executed and delivered all of the aforesaid agreements in accordance with the Constitution and laws of the State. (c) No Violations. Neither the execution and delivery of this Lease Agreement, the Base Lease, the Trust Agreement, or the Escrow Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City, or upon the Facilities, except Permitted Encumbrances. Section 2.2 Reoresentations and Covenants of Authoritv. The Authority represents and covenants to the City as follows: (a) Due Organization and Existence. The Authority is a joint exercise of powers agency duly organized and existing under the laws of the State; has power to advance refund its 1991 Bonds; enter into this Lease Agreement, the Assignment Agreement, the Base Lease and the Trust Agreement; is possessed of full power to own and hold, improve and equip real and personal property, and to lease and sell the same; and has duly authorized, executed and delivered all of the aforesaid agreements. (b) No Violations. Neither the execution and delivery of this Lease Agreement, the Assignment Agreement, the Base Lease, the Trust Agreement, or the Escrow Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms,. conditions or provisions of any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of.the property or assets of the Authority, or upon the Facilities, except Permitted Encumbrances. t. M85351.001 W-ADATAN1514150511 11 . ARTICLE 111 DEPOSIT OF MONEYS; REFUNDING PROGRAM Section 3.1 Deoosit of Moneys., In order to assure that moneys needed to refinance the Projects and refund the 1991 Bonds will be available for this purpose without delay, the Authority or its assignee, immediately following the recordation of the Memorandum of the Amended and Restated Lease Agreement and Base Lease, shall cause to be deposited with the Trustee from the proceeds of sale of the Certificates, the sum of $ . Of this amount S is required to be deposited in the 1991 Bonds Escrow Fund established pursuant to the Escrow Agreement, $ is required to be deposited in the Delivery Costs Fund and $ is required to be deposited in the Lease Payment Fund for the other purposes set forth in the Trust Agreement. In addition, the Authority shall cause to be deposited in the Reserve Fund with the Trustee the sum of $ , remitted by the 1991 Trustee from the 1991 Bonds Reserve Fund established under the 1991 Trust Agreement. It is understood and agreed that said deposit into the Escrow Fund, while paid pursuant to the 1991 Lease Agreement, is not intended to and. shall not result in all of the consequences provided for in the 1991 Lease Agreement, in that obligations of the City thereunder shall continue and title shall not completely vest in the City; in all other respects, the consequences of said deposit shall be as provided in the 1991 Lease Agreement. The 1991 Lease Agreement shall be deemed amended to the extent that the foregoing provisions are inconsistent with the 1991 Lease Agreement, such amendment being made pursuant to section of the 1991 Lease Agreement. ARTICLE IV AGREEMENT TO LEASE; TERMINATION OF THIS LEASE AGREEMENT, LEASE PAYMENTS Section 4.1 Lease: No Mercer. Pursuant to Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, and Sections 37350 and 37392.1 of said Code, as amended, the Authority hereby leases the Facilities to the City, and the City hereby leases the Facilities from the Authority, upon the terms and conditions set forth in this Lease Agreement. Notwithstanding any other provision of this Lease Agreement or of the Base Lease, it is the express intention of the City and the Authority that this Lease Agreement and the obligations of the City and the Authority hereunder shall be and remain separate and distinct from the Base Lease and the obligations of the parties thereunder, and that no merger of title or interest shall occur or be deemed to occur as a result of the position of (a) the City as lessee under this Lease Agreement and as lessor under the Base Lease and (b) the Authority as lessor under this Lease Agreement and as lessee under the Base Lease. WM85351.001 WMATA441544150511 12 This Lease Agreement supersedes in full the lease of the Facilities effected under the 1991 Lease Agreement, inasmuch as this Lease Agreement constitutes an amendment and restatement in full of the 1991 Lease Agreement, except as expressly set forth herein. Section 4.2 Term of Anreement. The Term of this Lease Agreement shall commence on the Closing Date and shall end on October 1, 2021, unless such term is extended as provided herein. If on October 1, 2021, the Trust Agreement shall not be discharged by its terms, or if the Lease Payments payable hereunder shall have been abated at any time and for any reason, then the Term of the Lease Agreement shall be extended until October 1, 2031 or until the Trust Agreement shall be discharged by its terms. If prior to October 1, 2021, the Trust Agreement shall be discharged by its terms, or all or the Lease Payments are paid or prepaid, or this Lease is terminated pursuant to Sections 6.1 or 9.2, then the Term of this Lease Agreement shall thereupon end. Upon commencement of such term, the terms and provisions of this Lease Agreement shall supersede and shall amend and restate in full the provisions of the 1991 Lease Agreement, effective July 1, 1997, except as otherwise expressly provided herein. Section 4.3. Possession. The City shall take possession of and occupy each portion of the Facilities upon the commencement of this Lease Agreement. The first Lease Payment shall be the Lease Payment for the October 1, 1997 Lease Payment.Date. Section 4.4 Lease Payments. (a) Obligation to Pay. Subject to the provisions of Section 6.3 and Article X, the City agrees to pay to the Authority and its successors and assigns, as rental for the use and occupancy of the Facilities during each Rental Period, the Lease Payments (denominate4 into components of principal and interest) for the Facilities in the respective amounts specified in Exhibit D, to be due and payable on the respective Lease Payment Dates specified in Exhibit D and any overdue payments in amounts as specified in Section 4.4(c); provided, however, that each such Lease Payment (including the interest component thereof through the applicable Lease Payment Date) shall be remitted not later than the Due Date thereof. Any amount held in the Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to Article X and other amounts required for payment of past due Lease Payments) shall be credited towards the Lease Payment then due and payable; and no Lease Payment need be remitted on any Due Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be paid. The Lease Payments payable in any Rental Period shall be for the use of the Facilities for such Rental Period. Notwithstanding the foregoing provisions, 1991 Lease Payments, constituting 1991 Revenues, shall be made to the 1991 Trustee on April 1 and October 1 of each year in accordance with the provisions of the 1991 Lease Agreement, 1991 Fiscal Agent Agreement and the 1991 Trust Agreement, without regard to any amendment and restatement thereof effected by this Lease Agreement, and such payments shall be deemed made from and to the extent of moneys in the 1991 Bonds Escrow Fund which are furnished to the 1991 Trustee for such purpose in accordance with the Escrow Agreement. There shall be applied as a credit against the 1991 Lease Payments payable under the 1991 Lease Agreement, and in WG185351.001 WADATA141514150511 13 turn Revenues, payable under the 1991 Trust Agreement, all amounts held, received or scheduled to be received by the 1991 Trustee on or before each April 1 or October 1 on which said 1991 Lease Payments and 1991 Revenues are due and payable thereunder, which amounts constitute proceeds of the 1991 Bonds Escrow Fund or funds held in any fund or account under the 1991 Trust Agreement which are permitted thereunder to be applied to such 1991 Lease Agreement and Revenues for the 1991 Bonds, as of such April 1 or October 1, as the case may be. (b) Effect of Prepayment. Subject to the provisions of Section 10.1, if the City prepays all remaining Lease Payments in full, the City's obligations under this Lease Agreement shall thereupon cease and terminate, including but not limited to the City's obligation to pay Lease Payments under this Section 4.4. If the City purchases the Authority's interest in the Facilities pursuant to Section 1O.2(a), the amount paid pursuant to Section 10.2(a) shall be credited entirely towards the prepayment in full of the Lease Payments. If the City prepays the Lease Payments in part but not in whole pursuant to Section 1O.2(b) or Section 10.3, such prepayment shall be credited entirely towards the prepayment of the Lease Payments as follows: (i) the principal components of each remaining Lease Payment shall be reduced on a pro rata basis; and (ii) the interest component of each remaining Lease Payment shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the principal component of such Lease Payments, unless all of the Property A Lease Payments or all of the Property B Lease Payments are prepaid, in which case principal and interest components as set forth on Exhibits E and F shall be deemed prepaid and the remaining Lease Payments reduced accordingly. (c) Rate on Overdue Payments. If the City should fail to make any of the payments required in this Section 4.4, the payment in default shall continue as an obligation of the City until the amount in default shall have been fully paid, and the City shall pay the same with interest thereon, to the extent permitted by law, from the date of default to the date of payment at the respective interest rates represented by the Outstanding Certificates. (d) . Fair Rental Value. The Lease Payments in each Rental Period shall constitute the total rental for the Facilities for each Rental Period, and shall be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy of the Facilities during each Rental Period. For prepayment purposes, the Lease Payments shall be comprised of Property A Lease Payments as shown on Exhibit E relating to the Land and the City Hall and Property B Lease Payments as shown on Exhibit F relating to the Sewer Improvements. Property C Lease Payments described in subsection (e) below shall not be deemed a part of the Lease Payments and shall not be included in any prepayment for the Facilities. The parties hereto have agreed and determined that the total Lease Payments represent not more.than the fair market value of the Facilities. In making such determination, consideration has been given to the anticipated value of the Facilities, other obligations of the parties under this Lease Agreement, the uses and purposes which may be served by the Facilities and the benefits therefrom which will accrue to the City and the general public. (e) Property C Lease Payments. During each Fiscal Year, the City shall pay to the Authority the sum of $10 as rental for the portion of the Facilities used for private and not public uses. MLG185351.0011K:=TAM M4150511 14 M Budget and Aoorooriation. The City covenants to take such action as may be necessary to include all Lease Payments and Additional Payments due under this Lease Agreement in its budgets during the Term of this Lease Agreement and to make the necessary annual appropriations for all such Lease Payments and Additional Payments. On or before July 1 of each Fiscal Year the City shall send to the Trustee a certificate that the City has included all scheduled Lease Payments during such Fiscal Year in the City's budget for such Fiscal Year. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City. (g) Additional Payments. In addition to the Lease Payments, the City shall pay when due the following Additional Payments: (a) all fees and expenses incurred by the Authority in connection with or by reason of its leasehold interest in the Facilities as and when the same become due and payable; (b) all reasonable compensation to the Trustee, Escrow Bank and Bond Insurer for all services rendered under the Trust Agreement and the Escrow Agreement, .and also all reasonable expenses, charges, legal fees and other disbursements incurred in and about the performance of its powers and duties under the Trust Agreement; (c) the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required. hereunder or the Trust Agreement; (d) the reasonable out-of-pocket expenses of the Authority in connection with the execution and delivery of this Lease Agreement or the Trust. Agreement, or in connection with the execution and delivery of the Certificates, including any and all expenses incurred in connection with the authorization, execution, sale and delivery of the Certificates and the defeasance of the 1991 Certificates and 1991 Bonds, or incurred by the Authority in connection with any litigation which may at any time be instituted involving this Lease Agreement, the Certificates, the Trust Agreement or any of the other documents contemplated thereby, or otherwise incurred in connection with the administration of this Lease Agreement; and (e) any and all indemnification obligations to the Trustee pursuant to the Trust Agreement. IN Assignment. The City understands and agrees that the Authority has assigned its right, title and interest in this Lease Agreement to the Trustee pursuant to the Assignment Agreement for the benefit of the Owners and the City consents to such assignment. The Authority hereby directs the City, and the City hereby agrees, to pay to the Trustee at the Office of the Trustee or at such other place as the Trustee shall direct in writing all payments payable by the City pursuant to this Section 4.4 and all amounts payable by the City pursuant to Article X hereof. Section 4.5 Quiet Enioyment. During the Term of this Lease Agreement, the Authority shall provide the City with quiet use and enjoyment oftheFacilities, and the City shall during such Term peaceably and quietly have and hold and enjoy the Facilities, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease Agreement. The Authority shall, at the request of the City and at the City's cost, join in any R&M85351.001WMATAW1514150511 15 legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority shall have the right to inspect the Facilities as provided in Section 7.2. Section 4.6 Tale. During the Term of this Lease Agreement, the City shall hold title to the Facilities and any and all additions which comprise fixtures, repairs, replacements or modifications to the Facilities, including those fixtures, repairs, replacements or modifications which are added to the Facilities by the City at its own expense and which may be removed without damaging the Facilities and any items added to the Facilities by the City pursuant to Section 5.8. If the City pays all of the Lease Payments and Additional Payments during the Term of this Lease Agreement as the same becomes due and payable, or if the City prepays the Lease Payments pursuant to Article X or makes the security deposit permitted by Section 10.1, and has paid in full all of the Additional Payments coming due and payable as of the date of such prepayment or security deposit, and provided in any event that no Event of Default hereunder shall have occurred and be continuing, all right, title and interest of the Authority in and to the Facilities shall be transferred to and vested in the City. The Authority shall take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title. ARTICLE V CERTAIN COVENANTS Section 5.1 Maintenance. Utilities, Taxes and Assessments. Throughout the Term of this Lease Agreement, as part of the consideration for the rental of the Facilities, all improvement, repair and maintenance of the Facilities shalt be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Facilities, which may include, without limitation, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Facilities resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Facilities, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the City under the terms of this Lease Agreement. The City shall also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Facilities or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the Term of this Lease Agreement as and when the same become due. R&M85351.00MADATA415%4150511 16 The City may, at the City's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority shall notify the City that, in the opinion of Independent Counsel, by nonpayment of any such items, the interest of the Authority in the Facilities will be materially endangered or the Facilities or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Trustee. The City covenants and agrees that it will, during the Term of the Lease Agreement pay all of the costs incurred by it in operating, maintaining and using the Facilities. Section 5.2 Modification of Facilities. The City shall, at.its own expense, have the right to remodel the Facilities or to make additions, modifications and improvements to the Facilities. All additions, modifications and improvements to the Facilities, but not any additional buildings or improvements, shall thereafter comprise part of the Facilities and be subject to the provisions of this Lease Agreement. Such additions, modifications and improvements shall not in any way damage the Facilities or cause it to be used for purposes other than those authorized under the provisions of State and federal law; and the Facilities, upon completion of any additions, modifications and improvements made thereto pursuant to this Section, shall be of a value which is not substantially less than the value of the Facilities immediately prior to the making of such additions, modifications and improvements. The City shall not permit any mechanic's or other lien to be established or remain against any portion of the Facilities for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City pursuant to this Section; provided that if any such lien is established and the City shall first notify or cause to be notified the Authority of the City's intention to do so. The City may in good faith contest any lien filed or established against the Facilities, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority shall cooperate fully in any such contest, upon the request and at the expense of the City. Section 5.3 Public Liability and Property Damage Insurance. The City shall maintain or cause to be maintained, throughout the Term of this Lease Agreement, and as agent for and on behalf of the Authority, a standard comprehensive general insurance policy or policies in protection of the Authority, the City and their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Facilities. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $150,000 (subject to a deductible clause of not to exceed $75,000) for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of single limit policy in MLG185351.001%KADATA14151415D511 17 the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with other liability insurance coverage carried by the City, and may be maintained in the form of a self-funded protection plan by the City. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall be have been paid. Section 5.4 Fire and Extended Coverage. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease Agreement, as agent for and on behalf of the Authority, commercial insurance against loss or damage to any structures constituting any part of the Facilities by fire and lightning, with extended coverage for vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to the greater of (a) the aggregate Outstanding principal amount of the Certificates or (b) 100% of the replacement cost of each component of the Facilities. Such insurance may be subject to deductible clauses of not to exceed 51,000,000 for any loss (or, if higher, the minimum deductible available from reputable insurers at reasonable cost). Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the City. The Net Proceeds of such insurance shall be applied as provided in Section 6.2(a). Section 5.5 Rental Interruotion Insurance. The City shall procure, and maintain throughout the Term of this Lease Agreement, as agent for and on behalf of the Authority, commercial rental interruption or use and occupancy insurance to cover loss, total or partial (other than as a result of earthquake), of the use of any structures constituting any part of the Facilities during the Term of this Lease Agreement as a result of any hazards covered in the insurance required by Section 5.4 hereof, in an amount at least equal to one (1) year's maximum Lease Payments. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment, and shall be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. Section 5.6 Title Insurance. The City shall provide, at its own expense, on or before the Closing Date, a title insurance policy in the amount of not less than the aggregate principal amount of the Certificates, insuring the City's leasehold estate in the Land and the City Hall Building, subject only to Permitted Encumbrances (excluding (ii) of the definition thereof). All Net Proceeds received under said policy shall be deposited with the Trustee in the Bond Fund and shall be applied to the redemption of Bonds pursuant to the Trust Agreement. Section 5.7 Insurance Net Proceeds: Form of Policies. Each policy of insurance required by Sections 5.4 and 5.5 shall provide that all proceeds thereunder shall be payable to the Trustee and applied as provided in Section 6.2. All policies of insurance required by this Lease Agreement and any statements as to any self-funded protection plan permitted under Section 5.3 shall be in form satisfactory to the Authority. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease Agreement. All such policies shall provide that the Trustee shall be given thirty (30) days' notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee shall not be responsible for the coverage or.sufficiency of any insurance herein WM85351.001 WMATA411514150511 18 required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. The City shall cause to be delivered to the Trustee and the Bond Insurer on or before September 1 during the Term of this Lease Agreement a certificate upon which the Trustee may conclusively rely that the insurance policies required by this Lease Agreement are in full force and effect or, if applicable as to Section 5.3, a certificate as to the adequacy of the City's self-funded protection plan. The City shall provide the Trustee or Bond Insurer with copies of said policies upon request. Section 5.8 Advances. If the City shall fail to perform any of its obligations under this Article (excluding the obligation to make Lease Payments) the Authority may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as soon as possible, with interest at the rate of twelve percent (12%) per annum form the date of the advance to the date of repayment. Section 5.9 Installation of City's Eauioment. The City may at anytime and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Facilities. All such items shall remain the sole property of the City, in which neither the Authority nor the Trustee shall have any interest, and may be modified or removed by the City at any time provided that the City shall repair and restore any and all damage to the Facilities resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement shall prevent the City from purchasing or leasing items to be installed pursuant to this Section under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Facilities. Section 5.10 Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Facilities, other than the respective rights of the Authority and the City as herein provided and Permitted Encumbrances. Except as expressly provided in this Article, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City shall reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. The Authority shall not pledge or assign the Lease Payments or other amounts derived from the Facilities and from its other rights under this Lease Agreement, and shall not mortgage or encumber the Facilities, except as provided under the terms of this Lease Agreement and the Trust Agreement. The City has the right pursuant to Section , however, to delete or substitute for portions of the Facilities an alternate facility subject to the satisfaction of the requirements under Section t&G185351.001'X:WAYAN41514150511 19 Section 5.11 Continued Existence. The City and the Authority each covenant to maintain their existence as a municipal corporation and as a public entity, respectively, duly existing under the laws of the State. Section 5.12 City Budgets and Financial Statements. The City shall supply or cause to be supplied to the Trustee, in all events by July 1 in each year, a Written Certificate of the City that the City has made adequate provision in its annual budget for the payment of Lease Payments due under the Lease Agreement in the Fiscal Year covered by such budget. The Written Certificate given by the City to the Trustee shall be that the amounts so budgeted are fully adequate for the payment of all Lease Payments due.under the Lease Agreement in the annual period covered. by such budget. The City agrees to provide the Annual Financial Report to the Bond Insurer within 180 days after the end of the .City's Fiscal Year and the City's annual budget within 30 days after the availability thereof. Section 5.13 No Arbitrage. The City shall not take, or permit or suffer to be taken by the Authority or the Trustee or otherwise, any action with respect to the Gross Proceeds of the Certificates which if such action had been reasonably expected to have been taken; or had been deliberately and intentionally taken, on the Closing Date, would have caused the Certificates or the Lease Agreement to be "arbitrage bonds" within the meaning of section 148 of the Code and Regulations. Section 5.14 Rebate of Excess Investment Earnings to United States. The City covenants that it will assure compliance with requirements for rebate of excess investment earnings to the federal government in accordance with section 148(f) of the Code and applicable regulations, and the Trustee shall have no responsibility therefor. Section 5.15 Private Business Use Limitation. The Authority and the City will assure that the proceeds of the Certificates are not so used as to cause the Certificates or the Lease Agreement to satisfy the private business use tests of the Code. Section 5.16 Limitation on Use of Proceeds for Loans. The Authority and the City shall assure that the proceeds of the Certificates are not so used as to cause the Certificates or the Lease Agreement to satisfy the private loan financing test of the Code. Section 5.17 Federal Guarantee Prohibition. The Authority and the City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Certificates or the Lease Agreement to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Section 5.18 Continuing Disclosure. The City hereby covenants that it will comply with and carry out or cause to be complied with and carried out all of the provisions on its part in the Continuing Disclosure Agreement. Notwithstanding any other provision of this Indenture, failure by the City or its agent to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee shall at the written request of any Participating Underwriter (as defined in the Continuing Disclosure Agreement) or the Owners of at least twenty-five percent (25%) aggregate principal amount of Outstanding Certificates (but only to the extent the Trustee has been indemnified to its satisfaction from 6L0185351.0011K:1DATA141514150511 20 and against any liability, cost, claim, expense or claim of any kind whatsoever, including, without limitation, fees and expenses of its attorneys and advisors and additional fees and expenses of the Trustee) or any Bond Owner may seek mandate or specific performance by court order, to cause the City to comply with its obligations under the Continuing Disclosure Agreement. Section 5.19 Further Assurances. The City shall make, execute and deliver or cause to be made executed and delivered any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Trust Agreement and this Lease Agreement, or as may be requested by the Trustee and for the better assuring and confirming unto the Owners of the Certificates and the Trustee the rights and benefits provided herein. Section 5.20 Satisfaction of Conditions Precedent. The City hereby certifies, recites and declares that all acts, conditions and things required by the constitution and statutes of the State, this Lease Agreement and the Trust Agreement to exist, to have happened and to have been performed precedent to and in the delivery of the Certificates, do exist, have happened and have been performed in due time, form and manner as required by law. Section 5.21 Compliance with Environmental Law. Regulations. Etc. (a) The City has, after due inquiry, no knowledge and has not given or received any written notice indicating that the Facilities or the past or present use thereof or any practice, procedure or policy employed by it in the conduct of its business materially violates any applicable law; regulation, code, order, rule, judgment or consent agreement, including, without limitation, those relating to zoning, building, use and occupancy, fire safety, health, sanitation, air pollution, ecological matters, environmental protection, hazardous or toxic materials, substances or wastes, conservation, parking, architectural barriers to the handicapped, or restrictive covenants or other agreements affecting title to the Facilities (collectively, "Laws and Regulations"). Without limiting the generality of the foregoing, neither the City to the best of its knowledge, after due inquiry, nor any prior or present owner, tenant or subtenant of any of the Facilities has, other than as set forth in subsections (a) and (b) of this Section or as may have been remediated in accordance with Laws and Regulations, (i) used, treated, stored, transported or disposed of any material amount of flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and Title III, and the regulations promulgated pursuant thereto, and in all other Environmental Regulations applicable to the City, any of the Facilities or the business operations conducted by the City thereon (collectively, "Hazardous Materials") on, from or beneath the Facilities, (ii) pumped, spilled, leaked, disposed of, emptied, discharged or released (hereinafter collectively referred to as "Release") any material amount of Hazardous Materials on, from or beneath the Facilities, or (iii) stored any material amount of petroleum products at its Facilities in underground storage tanks. 514150511 21 (b) Excluded from the representations and warranties in subsection (a) hereof with respect to Hazardous Materials are those Hazardous Materials in those amounts ordinarily found in the inventory of or used in the operation of a city hall building and a sewerage system, the use, treatment, storage, transportation and disposal of which has been and shall be in compliance with all Laws and Regulations. (c) No part of the Facilities located in an area of high potential incidence of radon has an unventilated basement or subsurface portion which is occupied or used for any purpose other than the foundation or support of the improvements to such Facilities. Section 5.22 Environmental Comoliance. (a) The City shall not use or permit the Facilities or any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, if necessary to maintain the improvements on the Facilities and then, only in compliance with all Environmental Regulations, and any state equivalent laws and regulations, nor shall it permit, as a result of any intentional or unintentional act. or omission on its part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee and agent, the storage, transportation, disposal or use of Hazardous Materials or the Release or threat of Release of Hazardous Materials on, from or beneath the Facilities or onto any other property excluding, however, those Hazardous Materials in those amounts ordinarily found in the inventory of or used in the operation of a library and cultural center, the use, storage, treatment, transportation and disposal of which shall be in compliance with all Environmental Regulations. Upon the occurrence of. any Release or threat of Release of Hazardous Materials, the City shall promptly commence and perform, or cause to be commenced and performed promptly, without cost to the Authority, all investigations, studies, sampling and testing, and all remedial, removal and other actions necessary to clean up and remove all Hazardous Materials so released, on, from or beneath the Facilities or other property, in compliance with all Environmental Regulations. Notwithstanding anything to the contrary contained herein, underground storage tanks shall only be permitted subject to compliance with subsection (d) and only to the extent necessary to maintain the improvements on the Facilities. (b) The City shall comply with, and shall use its best efforts to have its tenant's subtenants, agents, licensees, employees, contractors, and agents to comply with, all Environmental Regulations and shall keep the Facilities free and clear; provided, however, that notwithstanding that a portion of this covenant is limited to the City's use of its best efforts, the City shall remain solely responsible for ensuring such compliance and such limitation shall not diminish or affect in any way the City's obligations contained in subsection (c) hereof as provided in subsection (c) hereof. Upon receipt of any notice from any person with regard to the Release of Hazardous Materials on, from or beneath the Facilities, the City shall give prompt written notice thereof to the Authority and Bond Insurer, (and, in any event, prior to the expiration of any period in which to respond to such notice under any Environmental Regulation). &&G\85351.001 VX.MTAW I 5 150511 22 (c) Irrespective of whether any representation or warranty contained in this Article V is not true or correct, the City shall defend, indemnify and hold harmless the Authority, the Bondholders, the Trustee and Bond Insurer, its partners, depositors and each of its and their employees, agents, officers, directors, trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys' fees (including, .without limitation, attorneys' fees incurred to enforce the indemnification contained in this Section 5.22, consultants' fees, investigation and laboratory fees, liabilities, settlements (five (5) Business Days' prior notice of which the Authority, Trustee -or the Bond Insurer, as appropriate, shall have delivered to the City), court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in part, arising out of, or in any way related to, (i) the presence, disposal, Release, threat of Release, removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the Facilities, (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials, (iii) any lawsuit brought or threatened, settlement reached (five (5) Business Days' prior notice of which the Authority, the Trustee or Bond Insurer, as appropriate, shall have delivered to the City), or governmental order relating to Hazardous Materials on, from or beneath any of the Facilities, (iv) any violation of Environmental Regulations or subsection (a) or (b) hereof by it or any of its agents, tenants, employees, contractors, licensees, guests, subtenants or invitees, and (v) the imposition of any governmental lien for the recovery of environmental cleanup or removal costs. To the extent that the City is strictly liable under any Environmental Regulation, its obligation to the City, Certificate holders, the Trustee and Bond Insurer and the other indemnitees under the foregoing indemnification shall likewise be without regard to fault on its part with respect to the violation of any Environmental Regulation which results in liability to any indemnitee. Its obligations and liabilities under this Section 5.22(c) shall survive any foreclosure, and the satisfaction of all Certificates. (d) The City shall conform to and carry out a reasonable program of maintenance and inspection of all underground storage tanks, and shall maintain, repair, and replace such tanks only in accordance with Laws and Regulations, including but not limited to Environmental Regulations. Section 5.23 Condemnation. The City shall not condemn, and neither the City nor the Authority shall consent to the condemnation of, the Facilities or any interest of the City, the Authority or the Trustee therein. ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1 Eminent Domain. If all of the Facilities shall be taken permanently under the power of eminent domain or sold to a governmental entity threatening to exercise the power of eminent domain, the Term of this Lease Agreement shall cease as of the day possession shall be so taken. If less than all of the Facilities shall be taken permanently, or if all of the Facilities or any part thereof shall be taken temporarily, under the power of F&M85351.001 WADATA141514150511 23 eminent domain, (1) this Lease Agreement shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (2) there shall be a partial abatement of Lease Payments as a result of the application of the Net Proceeds of any eminent domain award to the prepayment of the Lease Payments hereunder, in an amount to be agreed upon by the City and the Authority such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining useable portion of the Facilities. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.1, to the extent that any Net Proceeds, or amounts in the Reserve Fund are available to pay Lease Payments which would otherwise be abated under this Section 6.1, it being hereby declared that such proceeds and amounts constitute special funds for the payment of the Lease Payments. Section 6.2 Aoolication of Net Proceeds. (a) From Insurance Award. Subject to the provisions of the Trust Agreement, the City may use Net Proceeds of any insurance award resulting from any damage to or destruction of any Facilities by fire or other casualty to repair or restore the Facilities, and such Net Proceeds shall be paid by the City to the Trustee, as assignee of the Authority under the Assignment Agreement, and deposited in the Insurance and Condemnation Fund by the Trustee and applied as set forth in the Trust Agreement. (b) From Eminent Domain Award. The Net Proceeds of any eminent domain award resulting from any event described in Section 6.1 hereof shall be paid by the City to the Trustee, as assignee of the Authority under the Assignment Agreement, and deposited in the Insurance and Condemnation Fund and applied as set forth in the Trust Agreement. Section 6.3 Abatement of Rental in the Event of Damage or Destruction. The amount of Lease Payments shall be abated, during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Facilities (other than any portions of the Facilities described in Section 5.2) or any portion thereof. The amount of such abatement shall be agreed upon by the City and the Authority such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of the Facilities not damaged or destroyed. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease Agreement shall continue in full force and effect and the City waives any right to terminate this Lease Agreement by virtue of any such damage and destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that any Net Proceeds or amounts in the Reserve Fund are available to pay Lease Payments which would otherwise be abated under this Section 6.3, it being hereby declared that such proceeds and amounts constitute special funds for the payment of the Lease Payments. 1991 Lease Payments which are payable from moneys in the 1991 Bonds Escrow Fund or otherwise available under the 1991 Lease Agreement shall not be abated to the extent of such funds. P&G185351.0011K-.WATA141514150511 24 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS Section 7.1 Disclaimer of Warranties. The Authority makes no warranty or representation, either express or implied, as to the value, design, condition merchantability or fitness for any particular purpose or fitness for the use contemplated by the City of the Facilities or any other representation or warranty with respect to the Facilities. In no event shall the Authority be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this. Lease Agreement or the Trust Agreement for the existence, furnishing, functioning or City's use of the Facilities. Section 7.2 Access to the Facilities: City Information. The City agrees that the Authority and any Authority Representative and the Authority's successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the Facilities. The City further agrees that the Authority and any Authority Representative and the Authority's successors or assigns shall have such rights of access to the Facilities as may be reasonably necessary to cause the proper maintenance of the Facilities in the event of failure by the City to perform its obligations hereunder. Section 7.3 Release and Indemnification Covenants. The City shall and hereby agrees to indemnify and save the Authority and its officers, agents, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the Facilities by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Lease Agreement, (iii) any act or negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Facilities, or (iv) any act or negligence of any sublessee of the City with respect to the Facilities. No indemnification is made under this Section or elsewhere in this Lease Agreement for willful misconduct or gross negligence under this Lease Agreement by the Authority or its officers, agents, employees, successors or assigns. ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1 Assignment by the Authority. The Authority's rights under this Lease Agreement, including the right to receive and enforce payment of the Lease Payments to be made by the City under this Lease Agreement, have been assigned to the Trustee pursuant to the Assignment Agreement, to which assignment the City hereby consents. Section 8.2 Assignment and Subleasing by the City. This Lease Agreement may not be assigned by the City. The City may sublease the Facilities or any portion thereof, but only with the prior written consent of the Authority and subject to all of the following conditions: MLG185351.001 WADATA141514150511 25 (a) This Lease Agreement and the.obligation of the City to make Lease Payments hereunder shall remain obligations of the City; and (b) The City shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Authority, the Bond Insurer and the Trustee a true and complete copy of such sublease; and (c) No such sublease by the City shall cause any of the Facilities to be used for a purpose other than as may be authorized under the provisions of the Constitution and laws of the State; (d) Such sublease shall by its terms expressly provide that it is subject to the terms and provisions of this Lease Agreement; and (e) the City shall furnish the Authority and the Trustee with a written opinion of nationally -recognized bond counsel, which shall be an Independent Counsel, stating that the sublease is permitted by the Lease Agreement and the Trust Agreement, and will not cause the interest component of the Certificates to become included in gross income for income tax purposes. Section 8.3. Amendment of this Lease Agreement. Without the prior written consent of the Trustee and the Bond Insurer, the City shall not alter, modify or cancel, or agree or consent to alter, modify or cancel this Lease Agreement, excepting for the purposes of issuing Additional Certificates, or excepting only such alteration or modification as may be permitted by Article X of the Trust Agreement. Section 8.4. Substitution or Release of Facilities. The City has the option at any time and from time to time during the Term of the Lease Agreement to substitute other land, facilities or improvements or to provide for deletion of one or more portions of the Facilities (a "Substitute Facility") for portions of the Facilities (the "Former Facilities") provided that the City has satisfied all of the following requirements which are conditions precedent to such substitution: (a) The City shall file with the Authority and the Trustee an amended exhibit to this Lease Agreement which adds thereto a description of such Substitute Facility and deletes therefrom the description of the Former Facilities. (b) The City shall have delivered to the Authority and the Trustee an appraisal report, prepared by a MAI appraiser, demonstrating that the fair rental value of the Substitute Facility is not less than the Outstanding Certificates (as determined prior to the Closing Date or as thereafter determined pursuant to this Lease Agreement); (c) The City shall certify in writing to the Authority and the Trustee that such Substitute Facility serves the municipal purposes of the City, and constitutes property which the City is permitted to lease and lease back under the laws of the State; P&G185351.0011K:1DATA1/15%4150511 26 (d) The City shall certify in writing to the Authority and the Trustee that such Substitute Facility constitutes property for which the City is permitted to pay Lease Payments therefor; (e) The City shall certify in writing to the Authority and the Trustee that the estimated useful life of such Substitute Facility is at least as long as the Former Facilities or at least exceeds the remaining term of the Certificates and that real property has been substituted for real property; (f) The City shall certify in writing to the Authority and the Trustee that substitution of the Substitute Facility shall not cause the City to violate any of its covenants, representations and warranties made in this Lease Agreement; (g) The City delivers to the Trustee an opinion of Special Counsel to the effect that the substitution will not adversely affect the exclusion from gross income for purposes of federal income taxation of the interest component of the Certificates; (h) That the City shall certify in writing to the Authority and the Trustee that the essentiality of the Substitute Facility is comparable to the Former Facilities; (i) The Substitute Facility is subject to no prior liens; (j) The City will obtain a title policy for the Substitute Facility meeting the requirements of this Lease Agreement; and (k) The City shall notify Standard & Poor's Services, a Division of McGraw Hill, Inc., in writing regarding the deletion or substitution of a Substitute Facility and will obtain the prior written consent to such deletion or substitution from the Bond Insurer. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.1 Events of Default Defined. The following shall be "events of default" under this Lease Agreement and the terms "events of default" and "default" shall mean, whenever they are used in this Lease Agreement, with respect to the Facilities, any one or more of the following events: (a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder on the applicable Due Date, and the continuation of such failure for a period of ten (10) days. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed under the Trust Agreement or this Lease Agreement, other than as referred to in clause (a) of this Section, for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority, the Trustee or the Owners of not less than five percent M.G185351.001 MMATA141514150511 27 (5%) in aggregate principal amount of Certificates then outstanding; provided, however, such failure shall not constitute an event of default hereunder if such failure stated in the notice can be corrected, but not within the applicable period, and corrective action is instituted by the City within the applicable period and diligently pursued until such failure is corrected. (c) The commencement by the City of a bankruptcy proceeding, or failure by the City promptly to lift any execution, garnishment or attachment, or to obtain the dismissal of a bankruptcy proceeding commenced involuntarily against the City, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Act, as amended, or under any similar acts which may hereafter be enacted. Section 9.2 Remedies on Default. Whenever any event of default referred to in Section 9.1 hereof shall have happened and be continuing, it shall be lawful for the Authority or its assignee to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement; provided, however, that notwithstanding anything herein or in the Trust Agreement to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights of entry and re-entry upon the Facilities, and also, at its option, with or without such entry, may terminate this Lease Agreement; provided, that no such termination shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. In the event of such default and notwithstanding any re-entry by the Authority, the City shall, as herein expressly provided, continue to remain liable for the payment of the Lease Payments and/or damages for breach of this Lease Agreement and the performance of all conditions herein contained and, in any event such rent and/or damages shall be payable to the Authority at the time and in the manner as herein provided, to wit: (a) If the Authority does not elect to terminate this Lease Agreement in the manner hereinafter provided for in subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and shall reimburse the Authority for any deficiency arising out of the re-leasing of the Facilities, or, if the Authority is unable to re -lease the Facilities, then for the full amount of all Lease Payments to the end of the Term of this Lease Agreement, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Facilities or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority, as the agent and attorney-in-fact of the City, to enter upon and re -lease the Facilities in the event of default by the City in the performance of any covenants herein contained to be performed by the City and to remove all personal property whatsoever situated upon the Facilities and to place such property in storage or other suitable place in the County of Los Angeles, for the account of and at the expense of the City, and the City hereby MLG185351.001 WMATM41514150511 28 exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the Facilities and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City hereby waives any and all claims for damages caused or which may be caused by the Authority in re-entering and taking possession of the Facilities as herein provided and all claims for damages that may result from the destruction of or injury to the Facilities and all claims for damages to or loss of any property belonging to the City that may be in or upon the Facilities. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re -lease the Facilities in the event of such re-entry without effecting a surrender of this Lease. Agreement, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such re-leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the City, the right to terminate this Lease Agreement shall vest in the Authority, to be effected in the sole and exclusive manner hereinafter provided .for in subparagraph (b) of this Section 9.2. The City further waives the right to any rental obtained by the Authority in excess of the Lease Payments and hereby conveys and releases such excess to the Authority as compensation to the Authority for its services in releasing the Facilities. (b) In an event of default hereunder, the Authority at its option may terminate this Lease Agreement and re -lease all or any portion of the Facilities. In the event of the termination of this Lease Agreement by the Authority at its option and in the manner hereinafter provided on account of default by the City (and notwithstanding any re-entry upon the Facilities by the Authority in any manner whatsoever or the re-leasing or sale of the Facilities), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments. Any surplus received by the Authority from such re-leasing or sale shall be the absolute property of the Authority, and the City shall have no right thereto, nor shall the City be entitled to any credit in the event of a deficiency in the rentals received by the Authority from the Facilities. Neither notice to pay rent or to deliver up possession of the premises given pursuant to law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the Facilities or of the remainder of the Term hereof or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. Section 9.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as W085351.0011 MATA1415M150511 29 may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice, other than such notice as may be required in this Article or by law. Section 9.4 Aareement to Pay Attorneys' Fees and Expenses. If any party to this Lease Agreement should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party. Section9.5 No Additional Waiver lmpliedbyOne Waiver. Ifany agreement contained in this Lease Agreement should be breached by any party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. Section 9.6 Application of Proceeds. All net proceeds received from the sale, re -lease or other disposition of the Facilities under this Article IX, and all other amounts derived by the Authority or the Trustee as a result of an event of default hereunder, shall be applied in accordance with Section 13.3 of the Trust Agreement. Section 9.7 Trustee and Certificate Owners to Exercise Rights. Such rights and remedies as are given to the Authority under this Article IX have been assigned by the Authority to the Trustee under the Trust Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners of the Certificates as provided in the Trust Agreement. ARTICLE X SECURITY DEPOSIT; PREPAYMENT OF LEASE PAYMENTS Section 10.1 Security Deposit. Notwithstanding any other provision of this Lease Agreement, the City may on any date secure the payment of Lease Payments by a deposit with the Trustee of: (i) an amount of cash which, together with amounts on deposit in the Lease Payment, the Insurance and Condemnation Fund and the Reserve Fund, is sufficient to pay all unpaid Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment Schedule set forth in Exhibit D, or (ii) Federal Securities together with cash, if required, in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon and, if required, all or a portion of moneys or Federal Securities then on deposit in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment Dates or on any purchase option date as set forth in Section 10.2, as the City shall instruct at the time of said deposit. In the event of a security deposit pursuant to this Section, all obligations. of the City under this Lease Agreement, and all security provided by this Lease Agreement for said obligations, shall cease M.G185351.0011KADATAW 15W 150511 30 and terminate, excepting only the obligation of the City to make, or cause to be made, Lease Payments from such security deposit, and title to the Facilities shall solely vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said security deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with the provisions of this Lease Agreement. Section 10.2 Prepayment Ootion. (a) Purchase of Facilities. The City shall have the option to purchase the Facilities on any Lease Payment Date on or after October 1, by paying a prepayment price on the applicable Due Date equal to the aggregate unpaid principal components of all remaining Lease Payments, together with the interest component of the Lease Payment required to be paid on such Lease Payment Date and together with a prepayment penalty equal to the applicable prepayment premium (if any). Such prepayment price shall be deposited by the Trustee in the Lease Payment Fund to be applied to the prepayment of Certificates pursuant to 4.01(a) of the Trust Agreement. The City shall give the Trustee notice of its intention to exercise its option not less than seventy-five (75) days in advance of the date of exercise. (b) Preoavment in Part. The City may exercise its option to prepay the Lease Payments in part on any Lease Payment Date on or after October 1, , by paying a prepayment price on the applicable Due Date equal to the aggregate unpaid principal components of the Lease Payments to be prepaid (in any integral multiple of $5,000), together with the interest component of such Lease Payments required to be paid on such Lease Payment Date and together with a prepayment penalty equal to the applicable prepayment premium (if any). Such prepayment price shall be deposited by the Trustee in the Lease Payment to be applied to the prepayment of Certificates pursuant to Section 4.1(a) of the Trust Agreement. The City shall give the Trustee notice of its intention to exercise its option not less than seventy-five (75) days in advance of the date of exercise. (c) Prepayment Premium. The amount of each prepayment premium payable under this Section 10.2 shall be computed as a percentage of the principal component of the Lease Payments prepaid according to the following table of Lease Payment Dates and premiums: Lease Payment Dates Premium October. t, , and April 1, _ 2% October 1, , and April 1, _ 1 September 1, 2008 and thereafter 0 Section 10.3 Mandatory Prenavment from Net Proceeds of Insurance or Eminent Domain. The City shall be obligated to prepay the Lease Payments, in whole or in part, on any Payment Date, from and to the extent of any Net Proceeds of insurance award or condemnation award theretofore deposited in the Insurance and Condemnation Fund for such purpose pursuant to Article VI hereof and Article VII of the Trust Agreement. The City and the Authority hereby agree that such Net Proceeds, to the extent remaining after payment of any delinquent Lease Payments, shall be credited towards the City's obligations under this MYG185351.0011K;=TA141514150511 31 Section 10.3. Section 10.4 Credit for Amounts on Deposit.- In the event of prepayment of the principal components of the Lease Payments in full under this Article X, such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all amounts then on deposit in the Lease Payment Fund, the Delivery Costs Fund or the Reserve Fund shall be credited towards the amounts then required to be so prepaid. ARTICLE XI MISCELLANEOUS Section 11.1 Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received 48 hours after deposit in the United .States mail, first class, with postage fully prepaid: If to the City: City Manager City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, California 91355 (facsimile 805- ) If to the Authority: Santa Clarita Public Financing Authority c/o Finance Director, City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, California 91355 (facsimile 805- ) If to the Trustee: First Trust of California, National Association 550 South Hope Street, Suite 500 Los Angeles, California 90071 Attention: Corporate Trust Department (facsimile ) The Authority and the City, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. Section 11.2 Bindino Effect Third -Party Beneficiary Parties in Interest. This Lease Agreement shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns. Nothing in this Lease Agreement expressed or implied is intended to or shall be construed to confer upon, or to give or grant to, any person or entity, other than the City, the Authority, the Trustee and the registered owners of the Certificates, any right, remedy or claim under or by reason of this Lease.Agreement or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Lease Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Authority, the Trustee and the registered owners of the Certificates. W=5351.0011K:1DATA141514150511 32 Section 11.3 Severability. If any provision of this Lease Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 11.4 Net -net -net Lease. This Lease Agreement shall be deemed and construed to be a "net -net -net lease" and the City hereby agrees that the Lease Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set -offs whatsoever. Section 11.5 Further Assurances and Corrective Instruments. The Authority and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Facilities hereby leased or intended so to be or for carrying out the expressed intention of this Lease Agreement. Without limitation on the foregoing, the Authority and the City shall record such amendments to this Lease Agreement or memoranda thereof (including a corrected description of the Site) as may be necessary from time to time to identify portions of the Facilities not originally included in such description of the Site. Section 11.6 Execution In Counterparts. This Lease Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.7 Anolicable Law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.8 Authority and City Representatives. Whenever under the provisions of this Lease Agreement the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given on behalf of the Authority by a Authority Representative and on behalf of the City by a City Representative and any party hereto shall be authorized to rely upon any such approval or request. Section 11.9 Captions. The captions or headings in this Lease Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Lease Agreement. M M85351.001WMATA141514150511 33 IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed in their names by their duly authorized officers; as of the date first above written. SANTA CLARITA PUBLIC FINANCING AUTHORITY, as Lessor By— [Name] [Title] _ CITY OF SANTA CLARITA, as Lessee By Attest [Name] City Clerk MLG185351.001 W."IDATA161516150511 George Caravalho City Manager STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES) On before me, the undersigned, a Notary Public, State of California, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. (SEAL) LILMS5351.001 MADATA141514150511 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES) On before me, the undersigned, a Notary Public, State of California, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. (SEAL) MM85351.0011K:MATA1415%4150511 STATE OF CALIFORNIA ) } ss COUNTY OF } On , before me, the undersigned, a Notary Public, State of California, personally appeared , personally known to me _ (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. (SEAL) K"%85351.0011K:1DATA141514150511 SCHEDULE OF LEASE PAYMENTS Payment Date Principal Interest Total Annual Total Lt MS5351.0011K:WATA%41514150511 MP&G, DRAFT NO. 1, 7/3/97 ASSIGNMENT AGREEMENT Dated as of July 1, 1997 by and between SANTA CLARITA PUBLIC FINANCING AUTHORITY and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT, made and entered into as of July 1, 1997, by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency organized and existing under the laws of the State of California (the "Authority"), and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, as trustee (the "Trustee"); The Parties in consideration of the mutual covenants herein contained; and for other valuable consideration, hereto recite and agree as follows: Section 1. Recitals. (a) The Authority and the City of Santa Clarita, California (the "City") have entered into an Amended and Restated Lease Agreement, dated as of July 1, 1997 (the "Lease Agreement"), a memorandum of which is recorded and which incorporates this Assignment Agreement therein, whereby the Authority has agreed to lease to the City, and the City has agreed to lease from the Authority, the Facilities (as said term is more particularly defined in the Lease Agreement) in the manner and on the terms set forth in the Lease Agreement, which terms include, without limitation, the obligation of the City to pay Lease Payments (as defined in the Lease Agreement) to the Authority in consideration of the City's use and enjoyment of the Facilities under the. Lease Agreement. (b) Under the Lease Agreement, the Authority is required to cause to be deposited with the Trustee and the City certain sums of money to be credited, held and applied in accordance with the Lease Agreement and with a Trust Agreement, dated as of July 1, 1997, by and among the Authority, the City and the Trustee (the "Trust Agreement"). (c) Upon delivery of the Lease Agreement, the Authority is required to deposit with the Trustee moneys for the financing of the Program (as said term is more particularly defined in the Lease Agreement). For the purpose of obtaining such moneys, the Authority wishes to cause the Trustee to execute and deliver the Refunding Certificates of Participation (Capital Improvement Projects), evidencing the direct, undivided, fractional interests of the owners thereof in the Lease Payments (the "Certificates"). In order to make the Certificates marketable on terms acceptable to the Authority, the Authority is willing to assign and transfer its rights under the Lease Agreement to the Trustee for the benefit of the Owners of the Certificates. Concurrently with the delivery of this Agreement, the Trustee is executing Certificates in an aggregate face amount of $20,900,000 to the Owners. The proceeds of such sale are anticipated to be sufficient to permit the Authority to make the deposits and transfers required under the Lease Agreement and the Trust Agreement and to permit the City to finance the cost of the Program. (d) Each of the parties has the power and authority to enter into this Assignment Agreement and has taken all actions necessary to authorize its officers to execute it. A Qd 71 MIMMATAW WiWW7 Section 2. Assignment. The Authority transfers, assigns and Sets over to the Trustee, for the benefit of the Owners of Certificates executed and deliveredunder the Trust Agreement, all of its rights under the Lease Agreement (excepting only its rights under Sections 5.7, 7.3 and 9.4 of the Lease Agreement), including without limitation (a) the right to receive and collect all of the Lease Payments (including prepayments thereof) from the City under the Lease Agreement, (b) the right to receive and collect any proceeds of any insurance maintained thereunder, or of any condemnation award rendered with respect to the Facilities and (c) the right to exercise such rights and remedies conferred on the Authority pursuant to the Lease Agreement as may be necessary or convenient (i) to enforce payment of the Lease Payments, prepayments thereof and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund established under the Trust Agreement or (ii) otherwise to protect the interests of the Owners in the event of a default by the City under the Lease Agreement. All rights assigned by the Authority shall be administered by the Trustee in accordance with the provisions of the Trust Agreement and for the equal and proportionate benefit of the Owners of Certificates. Section 3. Acceptance. The Trustee hereby accepts the assignments made herein for the purpose of securing, equally and proportionately, the payments due pursuant to the Lease Agreement and Trust Agreement to, and the rights under the Lease Agreement and Trust Agreement of, the Owners of the Certificates delivered pursuant to the Trust Agreement, all subject to the provisions of the Trust Agreement. Section 4. Conditions. This Assignment Agreement shall confer no rights nor impose any duties upon the Trustee beyond those expressly provided in the Lease Agreement and the Trust Agreement. Section 5. Counterparts. This Agreement may be executed in one or more counterparts and shall constitute one validly executed Agreement, notwithstanding the number of counterparts or any differences among counterparts as to the titles of authorized officers executing it. rmc ".wuxmatAWIWI 7 2 IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by their officers thereunto duly authorized as of the day and year first written above. SANTA CLARITA PUBLIC FINANCING AUTHORITY By Chairman FIRSTTRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee By [TITLE] MP&G. DRAFT #1, 7/2/97 AMENDED AND RESTATED BASE LEASE Dated as of July 1, 1997 by and between CITY OF SANTA CLARITA, CALIFORNIA as Lessor and the SANTA CLARITA PUBLIC FINANCING AUTHORITY, as Lessee MLOI05351 N1 XADATAI41516150510 TABLE OF CONTENTS Page ARTICLE I CERTAIN DEFINITIONS, RELATED AGREEMENTS AND INTERPRETATION 2 Section 1.1 Certain Definitions ................................. 2 Section 1.2 Related Agreements 3 Section 1.3 Rules of Interpretation .............................. 3 ARTICLE II REPRESENTATIONS AND COVENANTS ....................... 3 Section 2.1 Representations and Covenants of the City ................ 3 Section 2.2, Representations and Covenants of Authority ............... 4 ARTICLE III DEPOSIT OF MONEYS; REFUNDING PROGRAM ................. 4 Section 3.1 Deposit of Moneys ............. ............... . Section 3.2 Refunding Program ................................. ARTICLE IV AGREEMENT TO LEASE; TERMINATION OF THIS BASE LEASE; LEASE PAYMENT ............................. Section 4.1 Lease; No Merger .................................. Section 4.2 Term of Base Lease ................................ Section 4.3 Possession ...................................... Section 4.4 Lease Payment .................................... Section 4.5 Quiet Enjoyment .................................. Section 4.6 Title ........................................... !! 4 5 5 5 5 5 ARTICLE CERTAIN COVENANTS ................................... 6 Section 5.1 Maintenance, Utilities, Taxes and Assessments ............. 6 Section 5.3 Insurance ....................................... 6 Section 5.4 Liens ........................................... 6 Section 5.5 Continued Existence ................................ 6 Section 5.6 Compliance with Environmental Law, Regulations, Etc......... 6 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS .................................. 7 Section 6.1 Eminent Domain ................................... 7 ARTICLE VII WAIVEROF PERSONAL LIABILITY ........................... 7 Section 7.1 Waiver of Personal Liability ........................... 7 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT ................ 7 MLGI 61.01 XADATAN16U160610 Section 8.1 Assignment and Subleasing by the Authority ............... 7 Section 8.2 Amendment of this Base Lease ........................ 7 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES ........................ 8 Section 9.1 Default and Remedies ............................... 8 ARTICLE X MISCELLANEOUS ...................................... 8 Section 10.1 Notices ......................................... 8 Section 10.2 Binding Effect; Parties in Interest ....................... 8 Section 10.3 Severability ..................................... 9 Section 10.4 Net -net -net Lease .................................. 9 Section 10.5 Further Assurances and Corrective Instruments ............. 9 Section 10.6 Execution In Counterparts ............................ 9 Section 10.7 Applicable Law ................................... 9 Section 10.8 Authority and City Representatives ..................... 9 Section 10.9 Captions ........................................ 9 EXHIBIT A - DESCRIPTION OF LAND EXHIBIT B - DESCRIPTION OF CITY HALL BUILDING EXHIBIT C - DESCRIPTION OF SEWER IMPROVEMENTS Mt0MM51.00IXADATAW"l W510 ii AMENDED AND RESTATED BASE LEASE THIS AMENDED AND RESTATED BASE LEASE (the "Base Lease"), dated as of July 1, 1997, by and between the CITY OF SANTA CLARITA, CALIFORNIA, a municipal corporation and general law city duly organized and existing under the laws of the State of California (the "City"), as lessor, and the SANTA CLARITA.PUBLIC FINANCING AUTHORITY, ajoint exercise of powers agency duly organized and existing under the laws of the State of California, as lessee (the "Authority"); WITNESETH: WHEREAS, the City and the Redevelopment Agency of the City of Santa Clarita (the "Agency") have entered into a Joint Exercise of Powers Agreement, dated July 9, 1991 (the "Agreement"), creating the Santa Clarita Public Financing Authority (the "Authority") for the purpose of aiding in their financing objectives; and WHEREAS, pursuant to Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the California Government Code (the "Act") and the Agreement, the Authority is authorized to assist the City in financing public capital improvements, working capital, liability and other insurance needs or projects whenever there are significant public benefits, as determined by the Agency or the City; and WHEREAS, the City desired to finance and/or refinance the design acquisition, improvement, equipping or construction of certain public capital improvement projects (the "Projects"); and WHEREAS, the City, as lessor, and the Agency, as lessee, entered into that certain Base Lease dated as of October 1, 1991 (the "1991 Base Lease"), whereby the City granted to the Agency a leasehold interest in certain real estate described in Exhibit A attached hereto (the "Land"), a<building and related facilities located on the Land described on Exhibit B, attached hereto, a portion of which is used as the City Hall (the "City Hall Building") and certain sewer improvements described on Exhibit C attached hereto (the "Sewer Improvements") (the Land, City Hall Building and Sewer Improvements are referred to herein as the "Facilities"), and the Agency, as lessor, and the City, as lessee, entered into a leaseback of the Facilities pursuant to that certain Lease Agreement dated as of October 1, 1991 (the "1991 Lease Agreement") for the purpose of financing the Projects; and WHEREAS, pursuant to Resolution No. 91-145 of the City, adopted on September 10, 1991, the City sold and delivered its 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 to the Redevelopment Agency of the City of Santa Clarita (the "1991 Certificates") in the original principal amount of $22,940,000, of which $18,800,000 remains outstanding; and WHEREAS, pursuant to Resolution No. JPA 91-5 of the Authority, adopted on September 10, 1991, the Certificates were purchased on November 12, 1991, by the Authority using proceeds from the sale of its Local Agency Revenue Bonds, Series 1991 (the "1991 Bonds"), which 1991 Bonds were. issued in ,the original principal amount of $22,940,000, and of which $18,800,000 remains outstanding; and WHEREAS, the City has determined to refinance the Projects by taking advantage of costs savings available to the City through the advance refunding of the 1991 Certificates and the 1991 Bonds (the "Program"); and WHEREAS, the City and the Authority now propose to finance the Program by entering into (a) this Amended and Restated Base Lease dated as October 1, 1991 (the "Base Lease"), whereby the City leases the Facilities to the Authority, and (b) an Amended and Restated Lease Agreement dated as of October 1, 1997 (the "Lease Agreement"), whereby the City leases back the Facilities from the Authority; and WHEREAS, the City and the Authority propose to provide for such financing through the execution and delivery of refunding certificates of participation (the "Certificates") evidencing the direct, undivided, fractional interests of the owners thereof in the lease payments to be made by the City under the Lease Agreement; and WHEREAS, the Agency will assign its rights under the 1991 Base Lease and 1991 Lease Agreement to the Authority, subject to the rights of the 1991 Fiscal Agent and 1991 Trustee (as such terms are defined in the Lease Agreement), pursuant to a Conveyance and Assignment Agreement (the "Conveyance"), and the City will consent to such transfer; and WHEREAS, this Base Lease maintains in full force and effect the 1991 Base Lease such that the obligations of the City under the 1991 Base Lease are not terminated and title shall not vest in the City by reason of the deposit provided for in Section 3.1 of this Base Lease. This .Base Lease is not, and is not intended to be, an "executory contract" or "unexpired lease" within the meaning of Section 365 of the United States Bankruptcy Code; NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS, RELATED AGREEMENTS AND INTERPRETATION Section 1.1 Certain Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Base Lease have the meanings herein specified. Capitalized terms not defined in this section shall have the meanings specified in Section 1.1 of the Lease Agreement. "Base Lease" means this Amended and Restated Base Lease, together with any amendments hereto. "Lease Payment" means the payment required to be made by the Authority pursuant to Section 4.4 of this Base Lease. "Term of this Base Lease" means the time during which this Base Lease is in effect, as provided for in Section 4.2 hereof. 2 Section 1.2 Related Agreements, The City and the Authority hereby acknowledge the following agreements and the terms thereof: (a) the 1991 Base Lease; (b) the 1991 Lease Agreement; (c) the 1991 Assignment Agreement, the 1991 Fiscal Agent Agreement and the 1991 Trust Agreement; (d) this Amended and Restated Base Lease; (e) the Amended and Restated Lease Agreement; (f) the Assignment Agreement; and (g) the Trust Agreement. Section 1.3 Rules of Interoretation. Words of any gender shall be deemed and construed to include correlated words of all genders. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations, partnerships; joint ventures and associations, including public bodies, as well as natural persons. The terms "hereby", "hereof", "hereto", "herein% "hereunder" and any similar terms, as used in this Base Lease, refer to this Base Lease. Unless the context otherwise indicates, references to the Amended and Restated Base Lease to articles, sections and. paragraphs are to articles, sections and paragraphs of this Base Lease. ARTICLE 11 REPRESENTATIONS AND COVENANTS Section 2.1 Representations and Covenants of the City. The City represents and covenants to the Authority as follows: (a) Due Organization and Existence. The City is a municipal corporation and general law city duly organized and existing under the laws of the State. (b) Authorization. The laws of the State authorize the City to enter into this Base Lease, the Lease Agreement and the Trust Agreement, and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid agreements, and the City has duly authorized, executed and delivered all of the aforesaid agreements in accordance with the Constitution and laws of the State. (c) No Violations. Neither the execution and delivery of this Base Lease, the Lease Agreement, the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the MLGR 51.00IM.GATAUIWI1 10 3 City is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City, or upon the Facilities, except Permitted Encumbrances. Section 2.2 Reoresentations and Covenants of the Authority. The Authority represents and covenants to the City as follows: (a) Due Organization and Existence. The Authority is a joint exercise of powers agency duly organized and existing under the laws of the State; has power to enter into this Base Lease, the Assignment Agreement, the Lease Agreement and the Trust Agreement; is possessed of full power to own and hold, improve and equip real and personal property, and to lease and sell the same; and has duly authorized, executed and delivered all of the aforesaid agreements. (b) No Violations. Neither the execution and delivery of this Base Lease, the Assignment Agreement, the Lease Agreement, or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Authority, or upon the Facilities, except Permitted Encumbrances. ARTICLE III DEPOSIT OF MONEYS; REFUNDING PROGRAM Section 3.1 Deoosit of Moneys. In order to provide funds for the financing of the Program and for the other purposes set forth in the Trust Agreement, the Authority shall on the Closing Date cause to be deposited with the Trustee the proceeds of sale of the Certificates. Section 3.2 Refunding Program. Prepayment of the 1991 Lease Payments under the 1991 Lease, which constitute 1991 Revenues, and which will be used to retire the 1991 Bonds and pay Delivery Costs, shall be made from the moneys deposited with the Escrow Bank in the Escrow Fund and with the Trustee in the Delivery Costs Fund, respectively, which shall be disbursed in accordance and upon compliance with the Trust Agreement. ARTICLE IV AGREEMENT TO LEASE; TERMINATION OF THIS BASE LEASE; LEASE PAYMENT Section 4.1 Lease: No Meroer. Pursuant to Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California and Sections 37350 and 37392.1 of said Code, as amended, the Authority hereby leases the Facilities from the City, and the City hereby leases the Facilities to the Authority, MLQMW51.WIXA0ATAWI 416 10 4 upon the terms and conditions set forth in this Base Lease: Notwithstanding any other provision of this Base Lease or of the Lease Agreement, it is the express intention of the City and the Authority that this Base Lease and the obligations of the City and the Authority hereunder shall be and remain separate and distinct from the Lease Agreement and the obligations of the parties thereunder, and that no merger of title or interest shall occur or be deemed to occur as a result of the position of (a) the City as lessee under the Lease Agreement and as lessor under this Base Lease and (b) the Authority as lessor under the Lease Agreement and as lessee under this Base Lease. This Base Lease supersedes in full the lease of the Facilities effected under the 1991 Base Lease, inasmuch as this Base Lease constitutes an amendment and restatement in full of the 1991 Base Lease, except as expressly set forth herein. Section 4.2 Term of Base Lease. Upon the delivery of the Base Lease Payment, the Term of this Base Lease shall commence effective on the Closing Date, and shall end on October 1, 2031, or, if earlier, the date on which the term of the Lease Agreement shall end in accordance with its terms; provided, however, that upon commencement of such term, the terms and provisions of this Base Lease shall supersede and shall amend and restate in full the provisions of the 1991 Base Lease, effective July 1, 1997, except as otherwise expressly provided herein. Section 4.3 Possession. The Authority shall take possession of and occupy each portion of the Facilities as of the effective date of this Base Lease and immediately thereupon give such possession to the City. Section 4.4 Lease Payment, The Authority shall pay to the City a single Lease Payment under this Base Lease on the Closing Date, constituting the advance payment in full of the entire Lease Payment due hereunder. Such payment by the Authority shall be payable only from the proceeds of the sale of the Certificates and shall be deemed to have been made upon the deposit with the City and the Trustee of the respective amounts required. under Section 2.7 of the Trust Agreement to be deposited with them or for their accounts, respectively. Notwithstanding any other provision of this Base Lease, if the Term of this Base Lease shall end as a result of any failure of title, the City shall be obligated to reimburse the Authority for the unamortized portion of the Lease Payment at the time of such termination, determined with reference to the then outstanding principal balance of and accrued but unpaid interest with respect to the Certificates, provided that such reimbursement shall be payable solely from the funds of the City legally available therefor. Section 4.5 Quiet Eniovment. During the Term of this Base Lease, the City shall provide the Authority with quiet use and enjoyment of the Facilities, and the Authority shall during such Term peaceably and quietly have and hold and enjoy the Facilities, without suit, trouble or hindrance from the City, except as expressly set forth in this Base Lease or in the Lease. The City shall, at the request of the Authority and at the Authority's cost, join in any legal action in which the Authority asserts its right to such possession and enjoyment to the extent the City may lawfully do so. Notwithstanding the foregoing, the City shall have the right to inspect the Facilities. Section 4.6 Title. During the Term of this Base Lease, the City shall hold fee title to the Facilities and any and all additions which comprise fixtures, repairs, replacements or modifications to the Facilities. 11 ARTICLE V CERTAIN COVENANTS Section 5.1 Maintenance, Utilities. Taxes and Assessments. Throughout the Term of this Base Lease, as part of the consideration for the rental of the Facilities, all operation, maintenance, improvement and repair of the Facilities shall be the responsibility of the City acting on behalf of the Authority pursuant to the Lease Agreement, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Facilities, which may include, without limitation, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Facilities resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Base Lease Payment herein provided, the Authority. agrees to provide only the Facilities, as hereinbefore more specifically set forth. The Authority waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the Authority under the terms of this Base Lease. The City on behalf of the Authority and pursuant to the Lease Agreement shall also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Facilities or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the Term of this Base Lease as and when the same become due. Section 5.2 Insurance. The City shall comply with all of the provisions of Article V of the Lease Agreement regarding insurance of and with respect to the Facilities. Section 5.3 Liens. The Authority shall not, directly or indirectly; create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Facilities, other than the respective rights of the Authority and the City as herein provided and Permitted Encumbrances. Except as expressly provided in this Article, the Authority shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim; for which it is responsible, if the same shall arise at any time. The Authority shall reimburse the City for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. The City shall not pledge or assign the Base Lease Payment or other amounts derived from the Facilities and from its other rights under this Lease Agreement, and shall not mortgage or encumber the Facilities, except as provided under the terms of this Base Lease, the Lease Agreement and the Trust Agreement. Section 5.4 Continued Existence. The City and the Authority each covenant to maintain their existence as a municipal corporation and as a public entity, respectively, duly existing under the laws of the State. Section 5.5 Compliance with Environmental Law, Regulations. Etc. The City shall comply with all Laws and Regulations regarding the Facilities, including Environmental Regulations, (as such terms are defined in the Lease) as set forth in Sections 5.21 and 5.22 MLG.H00W.00IMR TAM1H416 10 of the Lease Agreement. The City shall indemnify the Authority, the Bondholders, the Trustee and the Bond Insurer to the extent and as set forth in Section 5.22 of the Lease Agreement. ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1 Eminent Domain. In the event the whole or any part of the Facilities is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be as provided by the Lease Agreement. ARTICLE VII WAIVER OF PERSONAL LIABILITY Section 7.1 Waiver of Personal Liability. All liabilities under this Base Lease on the part of the Authority are solely corporate liabilities of the Authority as a joint powers agency, and, to the extent permitted by law, the City hereby releases each and every director, officer, agent and employee of the Authority of and from any personal or individual liability under this Base Lease. No member, director, officer, agent or employee of the Authority shall at any time or under any circumstances be individually or personally liable under this Base Lease for anything done or omitted to be done by the Authority hereunder. ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1 Assianment and Subleasina by the Authority. This Base Lease may not be assigned by the Authority. The Authority shall sublease the Facilities to the City pursuant to the Lease Agreement. Section 8.2 Amendment of this Base Lease. Without the prior written consent of the Trustee and the Bond Insurer, the Authority shall not alter, modify or cancel, or agree or consent to alter, modify or cancel this Base Lease, excepting only such alteration or modification as may be permitted by the Trust Agreement. The City has the option at any time and from time to time during the Term of the Lease Agreement to substitute other land, facilities or improvements or to provide for deletion of one or more portions of the Facilities (a "Substitute Facility") for portions of the Facilities (the "Former Facilities") provided that the City has satisfied all of the requirements in the Lease Agreement which are conditions precedent to such substitution. Should a substitution or release occur pursuant to the Lease Agreement, Facilities under this Base Lease shall mean Substitute Facilities. ML0I9fi80IMIA:10ATA4M41 610 7 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.1 Default and Remedies: The City shall not have the right to exclude the Authority from the Facilities or take possession of the Facilities (other than pursuant to the Lease Agreement) or to terminate this Base Lease prior to the expiration of its term upon any default by the Authority hereunder, except that if, upon the exercise of the option to purchase the Authority's interest in the Facilities granted to the City in the Lease Agreement and after the payment of the purchase price specified therein and other sums payable under the Lease Agreement and the Trust Agreement, the Authority fails to convey its interest in the Facilities to the City pursuant to said option, then the City shall have the right to terminate this Base Lease, such termination to be effective thirty (30) days after delivery of written notice of such termination to the Authority. However, in the event of any default by the Authority hereunder, the City may maintain an action for damages or, if permitted in equity, for specific performance. ARTICLE X MISCELLANEOUS Section 10.1 Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received 48 hours after deposit in the United States mail, first class, with postage fully prepaid: If to the City: City Manager City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, California 91355 (facsimile 805- ) If to the Authority: Santa Clarita Public Financing Authority c/o Finance Director, City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, California 91355 The Authority and the City, by -notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. Section 10.2 Bindina Effect: Parties in Interest. This Base Lease shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns. Nothing in this Base Lease expressed or implied is intended to or shall be construed to confer upon, or to give or grant to, any person or entity, other than the City, the Authority, the Trustee and the Owners of the Certificates, any right, remedy or claim under or by reason of this Base Lease or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and -agreements in this Base Lease contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Authority, the Trustee and the registered Owners of the Certificates. 0 Section 10.3 Severability. If any provision of this Base Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 10.4 Net -net -net Lease, This Base Lease shall be deemed and construed to be a "net -net -net lease" and the Authority hereby agrees that the Base Lease Payment shall be an absolute net return to the City, free and clear of any expenses, charges or set -offs whatsoever. Section 10.5 Further Assurances and Corrective Instruments. The Authority and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Facilities hereby leased or intended so to be or for carrying out the expressed intention of this Base Lease. Without limitation on the foregoing, the Authority and the City shall record such amendments to this Base Lease or memoranda thereof (including a corrected description of the Site) as may be necessary from time to time to identify portions of the Facilities not originally included in such description of the Site. Section 10.6 Execution In Counteroarts. This Base Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 10.7 Annlicable Law. This Base Lease shall be governed by and construed in accordance with the laws of the State. Section 10.8 Authority and City Renresentatives. Whenever under the provisions of this Base Lease the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given on behalf of the Authority by a Authority Representative and on behalf of the City by a City Representative and any party hereto shall be authorized to rely upon any such approval or request. Section 10.9 Captions. The captions or headings in this Base Lease are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Base Lease. MG 51MIXADATAA1WI1 10 9 IN WITNESS WHEREOF, the Authority and the City have caused this Base Lease to be executed in their names by their duly authorized officers, as of the date first above written. SANTA CLARITA PUBLIC FINANCING AUTHORITY, as Lessee By [NAME] [TITLE] CITY OF SANTA CLARITA, CALIFORNIA, as Lessor By George Caravalho City Manager Attest [NAME] City Clerk rxc 51.WInaoAuutaspsato EXHIBIT A DESCRIPTION OF LAND ML6I 61A01K10ATMM6100510 A-1 *NflI,,Ai:l DESCRIPTION OF CITY HALL BUILDING MLGMMSIMIXWATA\416 1fi 10 A-1 EXHIBIT C DESCRIPTION OF SEWER IMPROVEMENTS Cl MP&G. DRAFT NO. 1. 7/3/97 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of July 1, 1997, is executed and delivered by the City of Santa Clarita, California (the "Issuer") and First Trust of California, National Association (the "Dissemination Agent"), in connection with the execution and delivery of $20,900,000 Refunding Certificates of Participation, (Capital Improvement Projects) (the "Certificates"), Evidencing Direct, Undivided Fractional Interests of the Owners'Thereof in Lease Payments to be Made by the City of Santa Clarita, California, as Rental for Certain Property Pursuant to an Amended and Restated Lease Agreement with the Santa Clarita Public Financing Authority, executed and delivered pursuant to a Trust Agreement, dated as of July 1, 1997 (the "Trust Agreement"), by and among the Santa Clarita Public Financing Authority (the "Authority"), the Issuer and First Trust of California, National Association, as trustee (the "Trustee"). WHEREAS, the Issuer is the "obligated person" (the "Obligated Person"), in connection with the Certificates under Securities and Exchange Commission Rule 15c2 -12(b)(5) (the "Rule"), and is obligated to provide continuing disclosure information for the benefit of holders and Beneficial Owners of the Certificates; and THEREFORE, the Issuer and the Dissemination Agent covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by.the Issuer for. the benefit of the holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriters in complying with the Rule. SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized. terms shall have the following meanings: "Annual Report" shall mean each Annual Report provided by the Obligated Person pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income tax purposes. "Dissemination Agent" shall mean First Trust of California, National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer and the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement and any other event legally required to be reported pursuant to the Rule. 4150519 "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule, as they may be designated from time to time pursuant to the Rule. As of the Spring of 1997 the Issuer believes all of the National Repositories to be asset out in Exhibit B attached hereto. "Obligated Person" shall mean the Issuer. "Participating Underwriters" shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of California. "State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule. As of the date of this Disclosure Agreement, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) At their sole cost and expense, the Obligated Person shall cause the Dissemination Agent to, not laterthan December 31 of each year, commencing December 31, 1997 with the Annual Report for the Fiscal year ending June 30, 1997, file with each Repository an Annual Report which satisfies the requirements of Section 4 of this Disclosure Agreement. Each Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Agreement; provided, that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Report(s) and later than the date required above for the filing of an Annual Report if they are not available by that date. If the Issuer's fiscal year changes, such Obligated Person shall give notice of such change in the same manner as for a Listed Event under Section 5(f). (b) Not later than fifteen (15) days prior to the date specified in subsection (a) for providing Annual Report(s) to Repositories, the Issuer shall provide its Annual Report to the Dissemination Agent. If by the fifteenth (15th) day prior to such date, the Dissemination Agent has not received a copy of the Annual Report from the Obligated Person, the Dissemination Agent shall contact the Obligated Person to determine if the Obligated Person is in compliance with subsection (a). The Obligated Person shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Obligated Person and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report of the Obligated Person has been filed with the Repositories by the date required in subsection (a), 4150519 the Dissemination Agent shall send a notice to each Repository in substantially the form attached hereto as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the last date for filing the Annual Report(s) the name and address of each National Repository and the State Repository, if any, and in doing so the Dissemination Agent may rely on information provided by the Securities and Exchange Commission regarding each National Repository and by the California Debt Advisory Commission regarding each State Repository; and (ii) to the extent determined by the Dissemination Agent file a report with the Issuer (with a copy to the Trustee if the Trustee is not the Dissemination Agent) certifying that the Annual Report(s). has been filed pursuant to this Disclosure Agreement, stating the date it was filed and listing all the Repositories with which it was filed. SECTION 4. Content of Annual Reports. The Annual Report(s) shall contain or include by reference the following information supplied by the Obligated Person: The Issuer shall provide (a) audited financial statements of the Issuer for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board, provided that if the Issuer's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available; (b) updates of information set forth in the final Official Statement of the Certificates under the section titled CITY FINANCIAL INFORMATION, including the subsection : and (c) other information which is material to the Certificates. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Issuer, the Corporation or related public entities is an "obligated person" (as defined by the Rule), which have been filed with each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement; it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Obligated Persons shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates, if material: 6150519 3 G) principal and interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events adversely affecting the tax-exempt status of the security; (vii) modifications to rights of security holders; (viii) bond calls; (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the securities; and (xi) rating changes. (b) The Obligated Person, within one (1) Business Day of obtaining actual knowledge of the occurrence of any of the Listed Events, shall contact the Dissemination Agent in writing and instruct whether or not to report the event pursuant to subsection (f). For purposes of this Disclosure Agreement, "actual knowledge" of such Listed Events shall mean knowledge by an officer of the Issuer with responsibility for matters related to the Trust Agreement and the Certificates. (c) Whenever the Obligated Person obtains knowledge of the occurrence of a Listed Event, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws. . (d) If the Obligated Person has determined that a Listed Event would be material under. applicable federal securities laws, the Obligated Person shall promptly notify the Dissemination Agent and the Bond Insurer of such determination in writing. Such notice shall instruct the Dissemination Agent to report the Listed Event pursuant to subsection (f). (e) If the Obligated Person determines that the Listed Event would not be material under applicable federal securities laws, the Obligated Person shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the Listed Event pursuant to subsection (f). 4150519 4 M If the Dissemination Agent has been instructed by the Obligated Person to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and the State Repository, if any. Notwithstanding the foregoing: (i) notice of the occurrence of a Listed Event described in subsections (a) 0), (viii) or (ix) shall be given by the Dissemination Agent unless the Obligated Person gives the Dissemination Agent affirmative instructions not to disclose such occurrence; and (ii) notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the time notice (if any) of the underlying event is required to be given to holders or Beneficial Owners of affected Certificates pursuant to the Trust Agreement. The Dissemination Agent and Trustee may conclusively rely upon any determination made by the Obligated Person hereunder and shall have no duty or obligation to provide notice or report any Listed Events to any party in the absence of written direction from the Obligated Person. SECTION 6. Termination of Reporting Obligation. The Obligated Person's, the Trustee's and the Dissemination Agent's obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Certificates or upon the delivery to the Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required. If such termination occurs prior to the final maturity of the Certificates, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5(f). SECTION 7. Dissemination Agent., The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If for any reason the designated Dissemination Agent resigns, is dismissed, is dissolved or for any other reason is unable to perform its duties hereunder, the Issuer shall act as the Dissemination Agent without any further action whatsoever. The initial designated Dissemination Agent shall be First Trust of California, National Association, and said Dissemination Agent hereby accepts such appointment. The Dissemination Agent may resign by providing thirty (30) days written notice to the Obligated Person and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the Obligated Persons. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the Obligated Person in a timely manner and in a form suitable for filing. SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Obligated Person and the Dissemination Agent may amend this Disclosure Agreement (provided, however, the Dissemination Agent shall not be obligated to enter into any such amendment that modifies or increases its duties or obligations hereunder), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: 4150519 (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change. in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Certificates, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Certificates, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Certificates in the same manner as provided in the Trust Agreement for amendments to the Trust Agreement with the consent of the Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or Beneficial Owners of the Certificates. In the event of any amendment or waiver of provision of this Disclosure Agreement, the Obligated Person shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Obligated Person. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(f), and (ii) the annual Report for.the year in which the change is made should present a comparison in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Obligated Person from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Obligated Person chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Obligated Person shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Obligated Person to comply with any provision of this Disclosure Agreement, the Trustee may (and, at the written request of any Participating Underwriter or the Beneficial Owners of at least twenty-five percent (25%) aggregate principal amount of Outstanding Certificates, shall but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, fees and expenses of its attorneys), or any holder, Beneficial Owner or the Obligated Person may seek mandate or specific performance by court order, to cause the Obligated Person or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement. 4150519 6 SECTION 11. Duties, Immunities and Liabilities of Issuer and Dissemination Agent. Article VIII of the Trust Agreement is incorporated into this Agreement as if it were a part hereof, and the Trustee and Dissemination Agent shall be entitled to the protections, limitations from liability and indemnities afforded the Trustee thereunder. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Obligated Person agrees to indemnify and save the Dissemination Agent and the Trustee and their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or Trustee's respective negligence or wilful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Trustee shall have no duty or obligation to review any information provided to them hereunder and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Corporation, the Certificate holders, or any other party. The obligations of the Obligated Persons under this section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates. SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Corporation, the Trustee, the Dissemination Agent, the Participating Underwriters and holders or Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity. SECTION 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 14. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: To the Issuer: City of Santa Clarita 23920 Valencia Boulevard Santa Clarita, California 91355 To the Dissemination Agent: First Trust of California, National Association 550 South Hope Street, Suite 500 Los Angeles, California 90071 To the Trustee: First Trust of California, National Association 550 South Hope Street, Suite 500 Los Angeles, California 90071 4150519 7 To the Insurer: AMBAC Indemnity Corporation One State Street Plaza 16th Floor New York, New York 10004 [SIGNATURES BEGIN ON FOLLOWING PAGE] 4150519 CITY OF SANTA CLARITA, CALIFORNIA, as Issuer By 4150519 City Manager Acknowledged: CITY OF SANTA CLARITA, CALIFORNIA, As Issuer Authorized Signatory 4150519 Accepted and Acknowledged: FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Dissemination Agent EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Santa Clarita, California Name of Issue: $20,900,000 Certificates of Participation (Capital Improvement Projects) (the "Certificates"), Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the City of Santa Clarita, California, as Rental for Certain Property Pursuant to an Amended and Restated Lease Agreement with the Santa Clarita Public Financing Authority Date of Issuance: NOTICE IS HEREBY GIVEN that the Issuer has not filed an Annual Report with respect to the above-named Certificates as required by Section 11.10 of the Trust Agreement, dated as of July 1, 1997, by and among the Santa Clarita Public Financing Authority (the "Authority"), the Issuer and First Trust of California, National Association, as Trustee. The Issuer anticipates that the Annual Report will be filed bydl atel. Dated: on behalf of Dissemination Agent 0 cc: Issuer, Authority Authorized Officer 4150519 A-1 NATIONAL REPOSITORIES 1. Bloomberg Financial Markets Municipal Repository P.O. Box 840 Princeton, NJ 08542-0840 Phone: (609) 279-3200 Fax: (609)279-5962 2. Thomson NRMSIR Attn: Municipal Disclosure 395 Hudson Street, 3rd Floor New York, NY 10014 Phone: (212) 807-3826 Fax: (212)989-2078 Internet: Disclosure @ muller.com 3. Disclosure, Inc. 5161 River Road Bethesda, MD 20816 Attn: Document Acquisition/Municipal Securities Phone: (301) 215-6015 or (301) 951-1300 Fax: (301) 718-2329 4. Moody's Investors Service Attn: NRMSIR 99 Church Street P.O. Box 1370 New York, NY 10007 (10008 P.O. Box) Phone: (800) 339-6306 Fax: (212) 553-4720 5. JJ Kenny Attn: Repository 65 Broadway New York, NY 10006 Phone: (212) 770-4568 Fax: (212) 770-0222 or 770-2223 6. R.R. Donnelly Financial Municipal Securities Disclosure Archive 559 Main Street Hudson, MA 01749-2912 Phone: (800) 580-3670 Fax: (508) 562-8878 Approved by the Securities and Exchange Commission as of January 1, 1997 ����a>rLL�7�11�7k1F� ESCROW AGREEMENT by and among the CITY OF SANTA CLARITA, CALIFORNIA, SANTA CLARITA PUBLIC FINANCING AUTHORITY, and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Escrow Bank Dated as of July 1, 1997 Relating to the Payment and Redemption of the Santa Clarita Public Financing Authority Local Agency Revenue Bonds Series 1991 41W516 TABLE OF CONTENTS '- Section 1. Certain Definitions .................................... 2 Section 2. Receipt of. 1991 Trust Agreement ......................... 3 Section 3. Appointment of Escrow Bank ............................ 3 Section 4. Establishment of Escrow Fund ........................... 3 Section 5. Deposits into the Escrow Fund; Investment of Amount ........... 3 Section 6. Instruction as to Application of Deposits .................... 4 Section 7. Substitute Escrowed Securities ........................... 4 Section 8. Creation of Lien ....................................... 5 Section 9. Compensation to Escrow Bank ............................ 5 Section 10. Liabilities and.Obligations of Escrow Bank .................... 5 Section 11. Amendment .......................................... 6 Section 12. Termination; Unclaimed Moneys .......................... 7 Section 13. Merger or Consolidation of Escrow Bank ..................... 7 Section 14. Severability ......................................... 7 Section 15. Notice of Escrow Bank, City and Authority ................... 7 Schedule A Payment and Redemption Schedule of 1991 Bonds Schedule B Summary of Cash Receipts of Candidates .for 1991 Bonds Refunding. Escrow Portfolio Purchased from 1997 Certificate Proceeds Schedule C Summary of 1991 Bonds Escrow Fund Cash Flows to Defease the 1991 Bonds Schedule D Notice of Redemption 41WSIB ESCROW AGREEMENT This ESCROW AGREEMENT, dated as of July 1, 1997, by and among the CITY OF SANTA CLARITA, CALIFORNIA,.a municipal corporation and.general law city organized and existing under the laws of the State of California (the "City"), the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency organized and existing under the laws of the State of California (the "Authority") and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee with respect to the hereinafter described 1991 Bonds and as escrow bank hereunder (the "Escrow Bank"); WITNESSETH: WHEREAS, pursuant to Resolution No. JPA 91-5 of the Santa Clarita Public Financing Authority (the "Authority), the Authority issued its Local Agency Revenue Bonds, Series 1991 (the "1991 Bonds"), in the original principal amount of $22,940,000 and now outstanding in the amount of $18,800,000, pursuant to a Trust Agreement dated as of October 1, 1991 (the "1991 Trust Agreement"), by and between the Authority and First Trust of California, National Association, as successor trustee (the "1991 Trustee"); and WHEREAS, the Authority desires to refund in advance of their maturities the 1991 Bonds; and WHEREAS, to obtain funds to deposit in trust for the payment, redemption and discharge of the 1991 Bonds, the City of Santa Clarita, California (the. "City"), and the Authority intend to enter into an Amended and Restated Lease Agreement, dated as of July 1, 1997 (the "Lease Agreement"), and the Authority will assign and transfer certain of its rights under the Lease Agreement to First Trust of California, National Association, as trustee (the "Trustee") under an Assignment Agreement dated as of July 1, 1997 (the "Assignment Agreement"), and a Trust Agreement dated as of July 1, 1997 (the "Trust Agreement"), pursuant to which the Trustee has agreed to execute and deliver Refunding Certificates of Participation (the "1997 Certificates"), each evidencing the direct, undivided fractional interest in the Lease Payments (as defined in the Lease Agreement) made by the City under the Lease Agreement; and WHEREAS, Article XI of the 1991 Trust Agreement provides for the payment, redemption, and discharge of the 1991 Bonds prior to maturity by the setting apart of money in a special trust fund to insure the payment or redemption thereof; and WHEREAS; the 1991 Bonds mature, -bear interest and are callable as set forth on Schedule A attached hereto; and WHEREAS, pursuant to the 1991 Trust Agreement, the Authority may provide for the payment of the 1991 Bonds by depositing in trust with the Escrow Bank non -callable Government Obligations (as defined in the 1991 Trust Agreement), the principal and interest on which when due,.. and without any reinvestment thereof, will provide moneys which, together with the moneys, if any, deposited with or held by the 1991 Trustee at the same time will be sufficient to pay when due the principal of and the redemption premiums, if any, 41WEIS and.the interest due on such 1991 Bonds on and prior to the redemption date or maturity thereof, as the case may be; and WHEREAS, the City and the Authority wish to make a deposit with the Escrow Bank and to enter into this Escrow Agreement for the purpose of providing the terms and conditions for the deposit and application of amount so deposited; and WHEREAS, the Escrow Bank has full powers to act with respect to the irrevocable escrow and trust created herein and to perform the duties and obligations to be undertaken pursuant to this Escrow Agreement. NOW, THEREFORE, in consideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows: Section 1. Certain Definitions. Unless the context otherwise requires, the terms defined in this section shall, for all purposes of this Escrow Agreement have the meanings herein specified. Capitalized terms not defined in this section shall have the meanings specified in Section 1.1 of the Lease Agreement. "Bond Counsel" means Musick, Peeler & Garrett LLP, or any other attorney or firm of attorneys of nationally recognized standing in the field of municipal law whose opinions are generally accepted by purchasers of municipal bonds or notes, appointed from time to time by the Authority. "Escrow Agreement" means this Escrow Agreement dated as of July 1, 1997, by and among the City, the Authority and the Escrow Bank. "Escrowed Securities" means the Government Obligations referred to on Schedule B attached hereto and any Substitute Escrowed Securities. "Government Obligations" means and includes any of the following securities: lawful currency of the United States; State and Local Government Series issued by the United States Treasury (SLUGS); 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"). "1991 Bonds Escrow Fund" means the Fund by that name as created in Section herein. "1991 Bonds Principal and Interest Fund" means the Fund so designated, which is established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1991 Bonds Reserve Fund" means the Fund so designated, which is established and held by the 1991 Trustee pursuant to the 1991 Trust Agreement. "1997 Certificates" means the Certificates. Al bo61" "Payment Date" means each date upon which interest or principal is due on the 1991 Bonds as shown on Schedule A attached hereto. "Substitute Escrowed Securities" means Government Obligations which havebeen acquired by the Escrow Bank and substituted for Escrowed Securities in accordance with Section 7 of this Escrow Agreement. Section 2. Receipt of 1991 Trust Agreement. The Escrow Bank hereby acknowledges receipt of a true and correct copy of the 1991 Trust Agreement. Reference herein to, or citation of, any provision of the 1991 Trust Agreement shall be deemed to incorporate the same as a part hereof in the same manner and with the same effect as if fully set forth herein. Section 3. AAtmointmentofEscrow Ban k.The Authority hereby appoints the Escrow Bank as escrow bank for all purposes of this Escrow Agreement and in accordance with the terms and provisions of this Escrow Agreement and the 1991 Trust Agreement and the Escrow Bank hereby accepts such appointment. The Escrow Bank is entering into this Escrow Agreement in its capacity as escrow bank and as trustee for the 1991 Bonds. Section 4. Establishment of Escrow Fund. There is hereby created by the Authority with, and to be held by, the Escrow Bank, as security for the payment of the principal of, redemption premium and interest on the 1991 Bonds as hereinafter set forth, an irrevocable escrow to be maintained in trust by the Escrow Bank on behalf of the Authority and for the benefit of the owners of the 1991 Bonds, said escrow to be designated the "1991 Bonds Escrow Fund." All moneys deposited in the 1991 Bonds Escrow Fund shall constitute a special fund for the payment of the principal of, redemption premium and interest with respect to the 1991 Bonds in accordance with the provisions of the 1991 Trust Agreement. If at any time the Escrow .Bank shall receive actual knowledge that the moneys in the Escrow Fund will not be sufficient to make any payment required by Section 6 hereof, the Escrow Bank shall notify the City and the Authority of such fact and the City and the Authority shall immediately cure such deficiency. The Escrow Bank may rely upon the conclusion of , independent certified public accountants, that the moneys in the Escrow Fund, will be necessary and sufficient to make the payments referred to in Section 6 hereof. Section 5. Deoosit into Escrow Fund: Investment of Amounts. (a) Concurrently with the execution of this Escrow Agreement, there is hereby deposited with the Escrow Bank in connection with the refunding of the 1991 Bonds, and the Escrow Bank hereby acknowledges the receipt of, immediately available federal funds in the amount of $ from the proceeds of the 1997 Certificates, $ transferred by the 1991 Trustee from the 1991 Bonds Principal and Interest Fund and $ transferred by the 1991 Trustee from the 1991 Bonds Reserve Fund. The amounts deposited inthe 1991 Bonds Escrow Fund will be used by the Escrow Bank as follows: i) An amount equal to $ shall be used to purchase the Escrowed Securities described on Schedule B which shall be held on deposit in the 1991 Bonds Escrow Fund; and 41e 18 3 ii) An amount equal to 8 shall be held in the 1991 Bonds Escrow Fund uninvested. The Escrow Bank shall use such amount to pay the principal and interest due on the 1991 Bonds in accordance with the provisions of this Escrow Agreement. (b) Except as set forth in this Section, the Escrow Bank shall not invest any money on deposit in the 1991 Bonds Escrow Fund. The Escrow Bank shall hold uninvested moneys deposited into the Escrow Fund pursuant to the preceding paragraph. Moneys held by.the Escrow Bank in the Escrow Fund are solely for the uses and purposes set forth herein. The Escrow Bank is hereby authorized and empowered to deposit uninvested monies .held hereunder from time to time in demand deposit accounts, without .payment for interest thereon as provided hereunder, established at commercial banks that are corporate affiliates of the Escrow Bank. (c) Upon payment in full of all of the principal of, premium, if any, and interest on the 1991 Bonds in accordance with Schedule C, all funds remaining in the 1991 Bonds Escrow Fund shall, after payment of amounts due the Escrow Bank hereunder, be paid to the City, or its successors or assigns. Section 6. Instructions as to Application of Deposit. The Escrow Bank shall apply the moneys derived from the maturing principal of and interest on the Escrowed Securities in the 1991 Bonds Escrow Fund to the payment of the principal'of, the premium, if any, and interest due or to become due on the 1991 Bonds as the same become due and payable as set forth on Schedule C attached hereto, and shall on or before each Payment Date, pay such amounts; by check mailed or funds transferred in such manner as to arrive at the office of the 1991 Trustee, at the times and in the amounts shown on Schedule C. The Escrow Bank shall direct the 1991 Trustee to send written notice by United States first-class mail in the name of the Authority to the owner of each of the 1991 Bonds at the address shown on the registration books maintained by the 1991 Trustee at least thirty (30) but no more than sixty (60) days prior to October 1, 2001, the date fixed for redemption and payment of all of the 1991 Bonds. Said Notice shall be in substantially the form of Schedule D attached hereto. Section 7. Substitute Escrowed Securities. At the written request of the Authority, and upon compliance with the conditions hereinafter stated, and provided that such substitution is approved by Bond Counsel, the Escrow Bank shall have the power to request the redemption of, sell, transfer or otherwise dispose of any Escrowed Securities in the 1991 Bonds Escrow Fund and to substitute cash or other Government Obligations therefor, which are not subject to redemption prior to maturity except at the option of the holder thereof and which are available for purchase with the proceeds derived from such disposition on the date of such transaction. The Escrow Banff shall purchase such substitute Government Obligations with the proceeds derived from the sale, transfer, disposition or redemption of the Escrowed Securities in the 1991 Bonds Escrow Fund. The transactions may be effected only by simultaneous sale and purchase transactions, and only if (a) the amounts and dates on which the anticipated transfers from the 1991 Bonds Escrow Fund to the 1991 Trustee for the payment of the principal of, the premium, if any, and interest on the 1991 Bonds will not be diminished or postponed thereby; (b) the Escrow Bank shall receive, at the expense of the Authority, the opinion of Bond Counsel, to the effect that such disposition and substitution would not cause the 1991 Bonds to be (i) "arbitrage bonds" within the meaning of Section 41w;s 4 148(a) of the Code and (ii) not described in paragraph (3) or (4) of Section 149(d) of the Code and the regulations thereunder; and (c) concurrently with such substitution, the Escrow Bank shall receive from an independent certified public accountant a certification that, after such transaction, the principal of and interest on all of the Escrowed Securities in the 1991 Bonds Escrow Fund will, together with other moneys available for such purpose, be sufficient at. all times to pay the principal of, the premium, if any, and interest on the 1991 Bonds when due. To facilitate timely delivery from the Authority of the Escrowed Securities described on Schedule C hereto, which may not be available for delivery on the date of delivery of this Escrow Agreement, the Escrow Bank is directed to accept substitute Government Obligations in lieu thereof, provided the maturing principal of and interest on such substitute Government Obligations (excluding any interest after any optional call date) is at least equal to the maturity value of such unavailable Escrowed Securities, and payment of such principal of and interest on the substitute Government Obligations will be received on or before the maturity date of the unavailable Escrowed Securities. Subsequently, whenever the Agency tenders the correct Escrowed Securities to the Escrow Bank, the Escrow Bank shall accept such Escrowed Securities and thereupon return the substitute Government Obligations to the Authority. The Authority hereby covenants that no part of the moneys or funds at any time in the 1991 Bonds Escrow Fund shall be used directly or indirectly to acquire any securities or obligations, the acquisition of which would cause the 1991 Bonds or the 1997 Certificates to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. Section S. Creation of Lien. The trust created hereby shall be irrevocable. The Owners of the 1991 Bonds are hereby given an express lien on, and security interest in, the Escrowed Securities in the 1991 Bonds Escrow Fund and all earnings thereon until used and applied in accordance with this Escrow Agreement. The maturing principal of, and earnings on, the Escrowed Securities and any cash in the 1991 Bonds Escrow Fund are hereby pledged and assigned, and shall be applied solely for the payment of the principal of, the premium, if any, and interest on the 1991 Bonds. Section 9. Compensation to Escrow Bank. The City shall pay or shall cause the Authority to pay to the Escrow Bank full compensation for its duties under this Escrow Agreement, including out-of-pocket costs such as.publication costs, redemption expenses, legal fees and other costs and expenses relating hereto.. Without limitation on the foregoing, the Escrow Bank shall not be entitled to any lien or right of set-off on amounts on deposit in the Escrow Fund for payment of its compensation under this Escrow Agreement. Section 10. - Liabilities and Obligations of Escrow Bank. The Escrow Bank shall have no obligation to make any payment or disbursement of any type or incur any financial liability in the performance of its duties under this Escrow Agreement unless the City or the Authority shall have deposited sufficient funds with the Escrow Bank. The Escrow Bank may rely and shall be protected in acting upon the written or oral instructions of the City or the Authority or their agents relating to any matter or action as Escrow Bank under this Escrow Agreement. The Escrow Bank and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract, or otherwise, in connection with the execution and delivery of this Escrow Agreement, the establishment of the 1991 Bonds Escrow Fund, the acceptance of the moneys deposited therein, the sufficiency of moneys held hereunder to accomplish the redemption of the 1991 Bonds, or any payment, transfer or other .,�1a 5 application of moneys by the Escrow Bank in accordance with the provisions of this Escrow Agreement or by reason of any non -negligent act, non -negligent omission or non -negligent error of the Escrow Bank made in good faith in the conduct of its duties. The recitals of fact contained in the "whereas" clauses herein shall be taken as the statement of the City and the Authority, and the Escrow Bank assumes no responsibility for the correctness thereof. The Escrow Bank makes no representations as to the sufficiency of the moneys to accomplish the redemption of the 1991 Bonds pursuant to the 1991 Trust Agreement or to the validity of this Escrow Agreement as to the City and the Authority and, except as otherwise provided herein, the Escrow Bank shall incur no liability in respect thereof. The Escrow Bank shall not be liable in connection with the performance of its duties under this Escrow Agreement except for its own negligence, gross negligence or willful misconduct, and the duties and obligations of the Escrow Bank shall be determined by the express provisions of this Escrow Agreement. The Escrow Bank may consult with counsel, who may or may not be counsel to the City and the Authority, and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Agreement, such matter (except the matters set forth herein as specifically requiring a certificate of a nationally recognized firm of independent certified public accountants or an opinion of counsel) may be deemed to be conclusively established by a written certification of the City and the Authority. The City and the Authority hereby assume liability for, and hereby agree (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and hold harmless the Escrow Bank and its respective successors, assigns, agents and servants from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, at any time, the Escrow Bank (whether or not also indemnified against by any other person under any other agreement or instrument) and in any way relating to or arising out of the execution and delivery of this Escrow Agreement, the establishment of the Escrow Fund, the retention of the moneys therein and any payment, transfer or other application of moneys by the Escrow Bank in accordance with the provisions of this Escrow Agreement, or as may arise by reason of any act, omission or error of the Escrow Bank made in good faith in the conduct of its duties; provided. however, that the City and the Authority shall not be required to indemnify the Escrow Bank against its own negligence, gross negligence or willful misconduct. The indemnities contained in this Section 10 shall survive the termination of this Escrow Agreement. Section 11. Amendment. This Escrow Agreement may be modified or amended at any time by a supplemental agreement which shall become effective when the written consents of the owners of one hundred percent (100%) in aggregate principal amount of the 1991 Bonds then outstanding shall have been filed with the Escrow Bank. This Escrow Agreement may be modified or amended at any time by a supplemental agreement, without the consent of any such owners, but only (a) to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power herein or therein reserved to the City and the Authority, (b) to cure, correct or supplement any ambiguous or defective provision contained herein, (c) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which, in the opinion of counsel, shall not materially adversely affect the interests of the owners of the 1991 Bonds and the 1997 Certificates, and that such amendment will not cause interest with respect to the 1991 Bonds or the .1997 Certificates to become subject to federal income taxation. Section 12. _Termination. Unclaimed Money. This Escrow Agreement shall terminate when the principal of and interest on all 1991 Bonds have been paid; provided. however, that money held.by the Escrow Bank in the Escrow Fund for the payment and discharge of any of the 1991 Bonds which remain unclaimed for two (2) year after such payments were due, shall be repaid by the .Escrow Bank to the City free from the trust created by the 1991 Trust Agreement and this Escrow Agreement, and the Escrow Bank shall thereupon be released and discharged with respect thereto and hereto and all liability of the Escrow Bank with respect to such money shall thereupon cease. Upon the discharge and redemption of all of the 1991 Bonds, any funds in excess of those applied or to be applied to such discharge and redemption remaining on deposit with the Escrow Bank shall be transferred to the City. Section 13. Meroer or Consolidation of Escrow Bank. Any company into which the Escrow Bank may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Escrow Bank may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible to act as fiscal agent under the 1991 Trust Agreement, shall be the successor hereunder to the Escrow Bank without the execution or filing of any paper or any further act. Section 14. Severability. If any section, paragraph, sentence, clause or provision of this Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provision shall not affect any of the remaining provisions of this Escrow Agreement. Section 15. Notice of Escrow Bank. City and Authority. Any notice to or demand upon the Escrow Bank may be served and presented, and such demand may be made, at the principal corporate trust office of the Escrow Bank at 550 South Hope Street, Suite 500, Los Angeles, California 90071. Any notice to or demand upon the City or the Authority shall be deemed. to have been sufficiently given or served for all purposes by being mailed by registered or certified. mail, and deposited, postage prepaid, in a post office letter box, addressed to such party, at 23920 Valencia Boulevard, Santa Clarita, California 91355 (or such other address as may have been filed in writing by the Authority with the Escrow Bank). 41WOO 7 IN WITNESS WHEREOF, the City, the Authority and the Escrow. Bank have each caused this Escrow Agreement to be executed by their duly authorized officers all as of the date first above written. Attest: By Attest: a City Clerk Secretary CITY OF SANTA CLARITA, CALIFORNIA George Caravalho City Manager SANTA CLARITA PUBLIC FINANCING AUTHORITY By. Chairman FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Escrow Bank By Assistant Vice President SCHEDULE A PAYMENT AND REDEMPTION SCHEDULE OF 1991 BONDS Payment Date Maturing Principal Interest Called Principal Redemption Premium Total Payment 41NGIS A-1 SCHEDULE B SUMMARY OF CASH•RECEIPTS OF CANDIDATES FOR 1991 BONDS REFUNDING ESCROW PORTFOLIO PURCHASED FROM 1997 CERTIFICATE PROCEEDS 41MBIS B'1 SCHEDULE C SUMMARY OF 1991 BONDS ESCROW FUND CASH FLOWS TO DEFEASE THE 1991 BONDS 41W510 "-1 EXHIBIT D FORM OF NOTICE OF REDEMPTION NOTICE OF REDEMPTION NOTICE OF FULL REDEMPTION OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY LOCAL AGENCY REVENUE BONDS, SERIES 1991 NOTICE IS HEREBY GIVEN, that, pursuant to the provisions of Resolution No. , of the Santa Clarita Public Financing Authority (the "Issuer"), the Issuer hereby calls for redemption on October 1, 2001 (the "Redemption Date") all of its outstanding Local Agency Revenue Bonds, Series 1991 (the "Bonds") in the aggregate principal amount of $ . The Bonds will be redeemed at redemption prices as follows, plus accrued interest to the Redemption Date: BOND CUSIP PRINCIPAL MATURITY REDEMPTION NUMBERS NUMBERS AMOUNT DATE PRICE [Insert appropriate information from the books maintained by the Refunded Obligations Trustee] The Bonds, along with all interest coupons maturing subsequent to the Redemption Date, must be surrendered for redemption and payment (except no coupons need be surrendered on registered bonds) to First Trust of California, National Association, as Trustee, at: [address(es) of Trustee for presentment] Interest on the Bonds shall cease to accrue on the Redemption Date. Dated: SANTA CLARITA PUBLIC FINANCING AUTHORITY BY: FIRST TRUST OF CALIFORNIA NATIONAL ASSOCIATION, as Trustee .,Ns," D-1 MP&G, DRAFT NO. 1, 7/3/97 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of Santa Clarita, California c/o Musick, Peeler & Garrett LLP 624'South Grand Avenue, Suite 2100 One Wilshire Boulevard Los Angeles, California 90017 Attention: Maryann L. Goodkind THIS. TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. MEMORANDUM OF AMENDED AND RESTATED LEASE AGREEMENT AND BASE LEASE This Memorandum of Amended and Restated Lease Agreement and Base Lease (this "Memorandum") is entered into as of July 1, 1997, by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a public entity duly organized and existing under the laws of the State of California (the "Authority"), and the CITY OF SANTA CLARITA, a municipal corporation duly organized and existing under the laws of said State (the "City"), who agree as follows: 1. The Lease: Leased Premises. The City hereby leases to the Authority and the Authority hereby hires back from the City the Facilities as more fully described in Exhibit A attached hereto and incorporated by this reference herein upon the terms and conditions, and for the term, more fully set forth in the Amended and Restated Base Lease dated as of July 1, 1997, (the "Base Lease"), by and between the City qnd the Authority, all of the provisions of which are hereby incorporated into this Memorandum by reference. 2. Term. The Base Lease effected by the Base Lease is for a term commencing on the Closing Date (as defined in the Lease Agreement referenced below), and ending on October 1, 2031, or such earlier date on which the term of the Lease Agreement (hereinafter referred to) shall end in accordance with its terms. 3. The Lease Agreement: Leased Premises. The Authority hereby subleases to the City and the City hereby hires back from the Authority the Facilities as more fully described in Exhibit A attached hereto and incorporated by this reference herein upon the terms and conditions, and for the term, more fully set forth in the Amended and Restated Lease Agreement; dated as of July 1, 1997 (the "Lease Agreement"), by and between the Authority 41 W517 and the City, all of the provisions of which are hereby incorporated into this Memorandum by reference. 4. Term. The sublease effected by the Lease Agreement is for a term commencing on the Closing Date (as defined in the Lease Agreement), and ending on October 1, 2031, or such earlier date on which the Lease Payments (as defined in the Lease Agreement) are paid in full or provisions made for such payment. 5. Assignment of Authority's Rights Under Lease Agreement. In order to provide funds to enable the Authority to fulfill its financial obligations under the Lease Agreement, the Authority. has agreed to assign and transfer to the Trustee named therein certain of its rights under the Lease Agreement pursuant to the Assignment Agreement, dated as of July 1, 1997 (the "Assignment Agreement".), a copy of which. is attached hereto as Exhibit B and incorporated herein by reference. The assignment effected by the Assignment Agreement is to provide for the payment of principal and interest with respect to the $20,900,000 Refunding Certificates of Participation (Capital Improvement Projects), evidencing the direct, undivided fractional interests of the owners thereof in the Lease Payments, being executed and delivered by the Trustee under a Trust Agreement, dated as of July 1, 1997, by and among the Authority, the City and the Trustee named therein. 6. Provisions Binding on Successors and Assigns. Subject to the provisions of the Base Lease and of the Lease Agreement relating to assignment and subletting, the Base Lease and the Lease Agreement shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns. 7. Puroose of Memorandum. This Memorandum is prepared for the purpose of recordation, and it in no way modifies the provisions of the Base Lease or the Lease Agreement. 8. Execution. This Memorandum may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. .,� 7 2 IN WITNESS WHEREOF, the Authority has caused this Memorandum to be executed in its name by its duly authorized officer; and the City has caused this Memorandum to be executed in its name by its duly authorized officer, as of the date first above written. SANTA CLARITA PUBLIC FINANCING AUTHORITY, a public entity and agency By Chairman CITY OF SANTA CLARITA, a municipal corporation By George Caravalho City Manager .,�,7 3 STATE OF CALIFORNIA SS. COUNTY OF LOS ANGELES On this_ day of July in the year 1997, before me, the undersigned notary public, personally appeared personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument as Chairman of the Santa Clarita Public Financing Authority, and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person or the entity upon behalf of which the person acted, executed.the instrument. WITNESS my hand and official seal. (Notarial Seal) 41017 Signature Notary Public for the State of California My Commission Expires: STATE OF CALIFORNIA SS. COUNTY OF LOS ANGELES On this _ day of July in the year 1997, before me, the undersigned notary public, personally appeared George Caravalho, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument as City Manager of the City of Santa Clarita and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. (Notarial Seal) Signature Notary Public for the State of California My Commission Expires: 41W517 EXHIBIT A SITE LEGAL DESCRIPTION All that certain real property situated in the City of Santa Clarita, County of Los Angeles, State of California, described as follows: All that certain real property situated in the City of Santa Clarita, County of Los Angeles, State of California, described as follows: Land and rights-of-way upon which are located certain improvements and appurtenances thereto of. the City of Santa Clarita's sewer facilities within the City of Santa Clarita, County of Los Angeles, State of California, including, without limitation, the following sites: 41 W517 A- 1 EXHIBIT B ASSIGNMENT AGREEMENT B-1 MP&G. DRAFT NO. 1. JULY 3. 1997 NOTICE OF INTENTION TO SELL SECURITIES $20,900,000- CITY 20,900,000-CITY OF SANTA CLARITA (Los Angeles County, California) REFUNDING CERTIFICATES OF PARTICIPATION (Capital Improvement Projects) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the CITY OF SANTA CLARITA, CALIFORNIA As Rental for Certain Property Pursuant to an Amended and Restated Lease Agreement with the SANTA CLARITA PUBLIC FINANCING AUTHORITY NOTICE IS HEREBY GIVEN that sealed proposals will be received by the City of Santa Clarita, California (the "City"), at the office of [Musick, Peeler & Garrett LLP, Attorneys at Law, 624 South Grand Avenue, 20th Floor, Los Angeles, California 90017-33831 on ,1997 at the hour of o'clock a.m. Pacific Time, for the purchase of $20,900,000* principal amount of Refunding Certificates of Participation (Capital Improvement Projects) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the City of. Santa Clarita, California, as the Rental for Certain Property Pursuant to an Amended and Restated Lease Agreement with the Santa Clarita Public Financing Authority (the "Certificates"). The Certificates will be dated July 1, 1997 and shall be payable as to interest from their date at the rate or rates to fixed upon the sale thereof. The City has caused to be prepared an Official Notice of Sale and a Preliminary Official Statement for the Certificates, copies of which will be furnished on request made to Kelling, Northcross & Nobriga, Inc., .1333 Broadway, Suite 1000, Oakland, California 94612 (510)839-8200, financial advisor to the City. If the purchase of the Certificates is not awarded on 1997, NOTICE IS HEREBY GIVEN that the City intends to again offer the Certificates for public sale on , 1997 and on each successive thereafter at a.m. at the office set forth above until the City has awarded the Certificates. * Approximate Dated: 4150516 By: /s/ City Clerk CITY OF SANTA CLARITA