HomeMy WebLinkAbout0111.092-
January 9 •• 992
HONORABLE CITY COUNCIL
palo Alto, California
Attention: Finance Committee
Members of t~e Council:
Report in Brief
'lbe purpose ot this report 15 to request council appz'oval of the
Official Statement~ Legal OXuments, and Purchase AqrE!ement for-th'=!
city of Palo Alto 1992 Civic Center certificates of Participation
~hich will refinance the City's 1983 Civic Center Certificates of
participation at a lower interest rate, and provide new money for
two previously approved capital projects~
'ackqroun~
In ·september 1983, the City ot Palo Alto issued $5.920,000 in
certificates of Participation to structurally retrofit City Hall
for seismic safety. Of that principal amoun-c., $4,960,000 remains
outstanding.
In September 1991 Council approved a contract with security Pacific
National Sank to operate as underwriter for refinancing the
outstanding 1983 civic Center Certificates of Participation
(CMR:42J:91) ~ Interest rates have declined significantly since the
1983 finar.~ing. As shown in Attachment A# r~tes which were above
9 percent at that time are now below i perc nt. This means that
the outstanding Certificates of Part.icipation which have coupon
interest rates ranging from 8.5 to 9.5 percent can be refinanced
CMR: 1l1:92
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with lower rates and save the City over-$50,000 per year~ In
December 1991 the underwriters f Se:c'Jrity Pacific, estimated the
gross savings of the refundinq would be $775,000 and the: net
present value savings would be $506,000.
In addition to the refinancinq, staff is con~idering issuing new
Civic Center certificates of Participation concurrently tor
approximately $1.9 million of current proj~cts.
~d~ition.l ~roj.ct. Proposed lor linaneipq
The two projects propoE;ed to be fir.anced along ",-ith the refunding
certificates of participation are the structural improvement of the
Police win9 at a cost of approximately $1.34 million and retro
fitting of 4 portion of the Civic Center for a sprinkler system at
a cost ot approximately $570,000.
A project for structural improvements to the police Departme-nt wing
was approved as part of t.he 1990-91 elP (CIP No. 19505). The.
project includes the addition of concrete shear 'Walls on three
sides of the building .... ing, extending from level C of the parx_ing
garage to the roof ~ The project was originally budgeted at
$500,000, was unsuccessfully bid twice in 1990 and 1991, and was
revised up~ard to $1.1 million in ~e 1991-92 CIP. In November,
1991 the Council approved a contract with Lee Engineering Enter
prises in the amount of $82-4,400 'With cha.nges not to exceed
$165,000 for the structural modifications and a contract with
Forell/Elsesser Enqinee~s Inc. in the amount cf $65~lOO tor
construction JD.anagement services {CMR:5l0:91.). construction is
estimated to be completed by June 1992.
The pLoject for retrofitting of a portion of the Civic center for
a sprinkler system inclUdes engineering analysis, design and
installation of a fire sprinkler protection system for those areas
of the Civic Center (including the police wing and the City Council
Chambers), which are presently 'Wi thout a sprinkler system. Revised
fire code regulations require that the Civic Center be fitted with
sprinkle~s. The City presently intends to bid the fire sprinkler
project (CIP No. ~9108) in September 1992 vith construction to De
cOJl!.pletsa by March 199J. The total estimated program cost is
$570,000, 'Which is cOlr.prised of $520,000 construction, $35,000
design consultant and $15,000 contract administra~:on.
Publie Improvement Corporatio~
In ~983# when the city of Palo Alto decided to issue Certificates
of Participation to finance the improvements and repair of Civic
center, the city created the Palo Alto Public Improvement Corpor
ation (Corporation}. The City leased the Civic center to the
Corporation, and the Corporation issued the CertificDtes of
Participation anQ leased the civic Center baCK to the City.
CMR: 111: 92
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The corp9ration meeti~g took place on Decemb~r 9, 1991. At that
meeting, the Soard of Directors ot the Corporation by a unanimous
vot.e approve.d. the refinancing, and the additional financing for the
Police ~ln9 and sprinkler system. Ouring the meeting r the Board.
members asked if other projects could be added to the financing.
Tney felt that with the current l~w inter~st rates, this was a good
time to finance additional projects.
8i'e of Bond I~sue
In order to refinance the outstanding $4.96 million Certificates of
Participation, the City would need to place funds in an escrow fund
until the first 6vailable redemption date of Octobe~ 1, 1993. It
will also be necessary to p~y a redem~tion pre.m1u~ of 2 percent.
To fund the escrow acco'u.nt and the redemption premium r and finance
the $1.9 million of new projects, $7.67 million in bonds would be
needed based o~ December 1991 interest rates.
Sho'JD. belo'" is the estimated Source and Use of Funds: (000'5)
Source of funds!
Par amount of bonds
Old debt pe~vice reserve
Available funds
Use of funds.:
EscroW' Fund
New debt service ~eserve
Construction fund for new projects
Capitalized inter~st
Underwriter discount
Cost of issuance
Use of funds
O~fieial statement
$7,670
__ 648
$8,318
$5,372
746
1,908
124
96
70
$8,318
The Official statement {Attachment HI ~ill be provided to prospec
tive purchasers vf the new Certificates of Participation. This
document describes the Certificates of Participation and aives
additional information about the city of Palo Alto for prospective
purchasers of the certificates of Participation. The inforJrI.ation
is supplementary to the City's undertaking to pay interest and
principal when it is due.
CMR: 111: 92 J
L"9&l PO:CUUpt.
Termination Agreement (Attachment C): The purpose of this document
is to terminat~ the Site Lease ana Lease Aqreement and the
Assignment Agreement between the City and the ccrporation. Both
relate to the Palo Alto Civic Center project and are dated as of
october 1, 1983. This action sets the stage for proceeding ~lth
the refinancing \lith the followinq new transaction docUJllents.
Site 'nd Fa~ility LeAse (Attachment 01: This document would lease
the Civic Center site and the existing improved Civic Center to the
Corporation, as Lessee~ by the City, as Lessor, for the purpose of
allowinq the corporation to accomplish the new improvements and the
refinancinq4 Cons.~eration for this lease is a nominal one dollar
($1.00).
Leese AgrGement <Attachment E): This document is a leaseback of
the Civic Center, after the construction of th~ 1992 improv~ments
~y the' Corporation, as Lessor, to the City, as Lessee, thEreby
obliqating the City to make r~ntal payments on the facility over
the period of the term of 't.he financing.
Trust AgreEment (Attach'Jlent F): Staff requested bids for banks to
act as trustee for the future Certificates of PartiCipation. Staff
reviewed the bids and selected Bank of Ame~ica to act as trustee.
This selection was based on fees, services to be provided,
individuals aSSigned to !"he account, and past history with the
City~ The Trust Agreement is the legal document which provides the
appointment of Bank of America as trustee, and 11£:5 t~e covenants
of the City.
Agency Agreement (Attachment G): This agreeme~t, between the City
and the Corporation , identifies the City as the agent of the
Corporation for the purpose of accomplishing the construction of
the proposed improvements to the Civic Center~
Assignment Agreement 'attachment HJ: This document, between the
Carper. ion and the Trustee~ is intended to assign to the Trustee
all of ~he Corporation's riqht, title and interest in and to the
lease payments to be made to it by the City under the Lease
Agreement. This creates a flo~ of funds from the City directly to
the Trustee fc= the purpose of meeting the principal and interest
payments with respect to the Certificates.
CMR: 111: 92 4
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~crow peposit and Trust Agreentent !At't.achment I): In order to
accomplish the refinancing of the 19B3 obligation, a certain amount
of the proceeds of the 1~92 certificates ~ill be deposited into an
escrow held by a bank (Bank of An:erica) called the Escrow Bank
under this a9re~ment. Monies ~ill be invested in federal securi
ties. Toe investment income from the securities will be such as to
make it possible for ~he Escro~ Bank to pay to the 198) Trustee the
precise amounts necessary to pay principal and interest on the 1983
certificates until October 1, 1993, at which time ~he outstanding
1983 certificat~s are redeemed at their par amount plus a pre~ium
of 2 percent of their par value~ tTntil that time, the sole
security for the 1933 certificates is the federal securities and
the interest thereon derived from the escrow under this agreement.
Purcham. Agr.am.n~
The purchase agreement (Attachment J) is the legal docu'!ll~nt 'Which
provides for the sale of the certificates of Participation from the
Corporation to Security Pacific National Bank. Security Pacific
~ill then sell the securities to the investment community and the
public.
Staff determined to sell the bends on a negotiated basis instead of
~ public sale because the municipal markat conditions are volatile;
therefore., timing and. notice requirements for a public sale are
such that it is difficult to control the time of sale to catch the
market at a favorable time when the refinancing is profitable. The
City believes that a private sale to an underwriter who is
thoroughly familiar with the issue will produce more favorable
rates.
Recommendation
Staff recommends that the Council authorize the Mayor-, city Manager
and Finance Director to sign the Official statement, attached legal
docume:'1ts., and Purchase Agreement, and Inake any changes necessary
to complete the finanCing.
CMR: 111: 92 5
Respectfully submitted t
/~/~71:Yf
GORDON B. FORD
Treasury Manager
~-0J/~ EM¥t:Y"!&l.l& SON "
Director ot~nce
Related staff Reports:
CMR: 111:92
CMR 570 0
CMR 406 91
CMR 417 91
CMR 423 91
CMR 446 91
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TABLE OF CONTENTS
Attachment A: Interest Ra.tes
Att.achment s: Official statement
Attachment c: Termination Agreement
Attacr..ment 0: Site and Facility Lease
Attachment E: Lease Agreement
Attachlgent F: Trust Ag'l"eement
Attachment G: Agency Aqreement
Attachment 11: Assignm€nt Agreement
Attachment I: Escrow Deposit and Trust Agreement
Attachment J: PUrchase Agreement
CMR: 111: 92 7
A T T A C B X Z H T A
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14.00% ~
13.00% 1---,
12.00%
11.000~
10.00%
9.00%
8.00%
7.00%
6.00%
20 Band GO Index
I
Jan-SO Jan·81 Jan-82 Jan-53 Jan-84 Jan·8S Jan·8S Jan-57 Jan-S8 Jan-89 Jan-90 Jan.91
Note' GarlSrsl obligation bonds rnA-turing in 20 '198m. The 20 Bond Index has a rating roughly aquivalent to A 1.
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A T ~ A C R X E N T 2
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ATTACHMENT B ATTACHMrn B PRELTMll":.:'lR'1'OFFlClAL STATEME"'7 DAT£D ______ --.J !:n2
P.t!!u,g:
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l~ • ~ r.;.{ /(IN!:$ HaD HiD. &. ~ A .""rof~ IGlll Ccw;v>ra.-in<1, S!lPI FrUI'Cixa, CaJifatni4,. Sp«i4l C(JI,V«I, ~'n;1, hoOW'YC, 11:1 .:oC'J'lo:loin q .. di/j.;~'UI\J
~ ~ ~ ~ law, 1hz ~ oj 1r4M ~ des£gnmtd...,. aM ~0I1I{"isin, ~at -.J r'e<;c-I"cd o!::I' ~ 0I>'nCS of IN Ceni%aJb U o..'L;daf
from r:-~}or foImIJ """""'" iI4:I ~ und .... ft ~ ;, /IIOJ QI'I iJt,,: of I4It ~ for ~ "f rill f~Jn-..1 al=ntui~ ...wr-1.# im;x-ti
Oft inJi,.'~I1Nl~ ~plN ~c{~!N~' ~ ~ 1m: 1m('OM-ti "" ("m.:wt "0<p<>I'~~ .IIOdI iluar'JO it:a.l=
u.o t1I«CIfII1J" ~ ~ incUn( _I ~ ~ oN fwIhc rJ~ of 3ptcim c~ _-j, Rw-"""'" <: ~ fronl CQJ.i~ ~ ~ I<UQ.
S«"TAX UAtn:PS ~
$00,00(10,000-
Certificates of Parncipation
(1m CMt Ccalc:r iUn-iDI a.noIl~p~_1 ,,",jK1)
EI'1deIldQl; Ilk Dlnd, U~ F.-..:Uo.nal talerts15 of ILtM
o.-n. TbolNOt La '-h1-1I1s ~ lie-Mack II,-a..,
CI1Y OF PALO ALTO
.... Iht-..... bI.! toe-c:at.dII Prop.nt)' ~ III ,. r.
ApetmcDl.:llh IIlw: PUo ~ .... hblk Imp~1l1 IArptlta'lioaa
Thil «l'YOt:f paF CC1I:.aim. c:tT\IIIill m.fonnaLion fOf" ~n.en;l rr:iC'CT1CC" ooly 11: iI 001 !I wmmary of !.hili ~IW In>'.cJ.lon iIr-e l::l,,"u.ed '0 read tl'Ic: emirr
Oma.aJ Sti.ll:1Denl IcJ otulo iDIonJutioa ICIIaIoWJ 10 Illc-m.a.ill&; of In informed ITlYOl!J)al1 deciWoo
blleft:I.I 011 1M-Catif)QlotCio is payabk IoItD'lWllflu.a1ly or. MarctJ I aftIl Sepietllbet: 1, oommen;ill&: Sq>Ieml:tcl" 1, 1119l. The Cenil'i0ll1~ will N-del~
Ill. fuDy ~ fonl' 0Qlr .lDI1"Ifrl)eo acculeCl and Ocl~ will hi: rt'J,~end Lll iJl~ RJ!PC or ee.k .I: Co., as nomine:.: .:;. the !)(;~;IOI)' ~rl&St -comp.1l1!"
~ Yor\, l"l'_ Yori; \D'fCj. ()wQcn.ijp ilI~ i.a .he Q.rtiClClllo. wi!1 be Ul denoiDln.l[iooI, of S_~.OC(l/llnd il1lqnl fIIul~!tllel-thereof. ~'Cl.il C>Mnc:~
cl Cenificna.m IKX ~ ~l oeMl!k:alet repca=LinC ~ C',o:rllrll-Jlla. p.I~, buI .. in recciYe /II credil balance-,-", 111<: booo-.>U or the: DOIlIine5 of
such ~ "The prittcipallll4 prrmlWll. II all)" an4 inL~ wall rapr:c! 10 t~.r Ce01ifia.[e!I .... W be paid b:-' Bar!k ot A.mcnca ~lIoli(ltlbl Tn.m .'Ind s.,...·ir.p
AJ:tocialioll, San FZ"aI\a.I.()}, California _ Tl"lIIl~ (Iboo: "7l""1Dl:C'C"'), U) DTC ..tlictl ... ·1111ll 111m remil IlOot!. prinC'ip.a1 .nd Inll:"~1 10 lIS r~"I'\lcipa!\~ for .I11~uenl
dis~1 1.0 the: b=dicaT CJI1ITIen ollhe Ccrt,nala ill deIocribal haria. Sa: "BOOK -ENTRY -aI'lL" SYS TEM'" bere' 'I., nw C.1tltkMlIIIo an RbjK1
'10 .,u.aaJ PJt1 maad.a1or7 "DlpUoa ;prieN" \a JD8.tarity _ ~ btftID.
'!be Catific:atcll ~ and I"C:preiCIIl l1w: dir1!lL1, undivided ~1 iDl~ oi tbe-rqi.slo:n.;:l coa~ tberea( III OI:TUill rr.Jl.a1 M'Ulnl~ Ie be
a:na4c under I Leaw: ~l, d.uo:I • ol Mardl I, 1m ~ oI.Ild ~ the-CilY cl Palo Alto (1M "'CIty") InJ the: Palo Alto Po.IbiK laJ~WC[\l
Oxpon,tlQCl. (lhe ~Iior!;. ru~\L:>M to..mcb.ll\c Ci.'ry h-. ~ tnm.U.e laac J'i.ymcn'.l.I,!N:: "Lcuc. f~'\I.-j COl" 1.he IJIS.e 11000 OCC\i?ll-~' 0/. ~in
1'Cal prope:rty W im~lII tI\ert:On (lbc "'ProjccI"). • more PlT1.~ desaibel:l ~ =&er ~THE PROJECT' A ponioc. all1lC prtX>OWs of ttIC
Cerufi~tlw:iD. be w.aJ to fu:um~ the rer~ of Ihe Cily'l oo~ Ger1ifocalts of. PM1~liGII (CIVIC Center-Projea) on£inar!)' wu~ III th~ I"reple
principal" inY-MIlll cl .$S,920,OOC d.-hid! S4;960,OOI} an: C\I~lllly ouw.a1ld1nj (1M "198:3 CertirIC/llLcl-j aNi fD'" rU\3ncin, a:1'U1,' ,a,;ld'l ;oNoI tJl?~-e:rn:r.13. 10
me Oly's CMr:; <hIe'/" (1M '1992 I"roject~,.
11Ic" City lw; (X7\'eI.ani.ed ul>lkf" ilIc Lc:ue ~nl thlllI will like web Id;on as ~ be n«eU.ary I" il1c1u.:k ltoe t.easoc P~rmenl$ d,.e un.ler l11e
L..casc ~I ill illl 11111'11.11 bOO,eu, ana 10 malt me oo:\;oury 1Mu.allpproprial~ I.berefor, Tho!: QbJicell"ll of u.., ell" La n:oau t..-_ Plymtnt.. d~
..-. u... t-..... _Dl!lool5 DOt iC8ftI.LIu.. III. MUpIJoG of &be CI1J' lor .t.kb u.-City II; olIUp;.:o! ....... O') Or p~dCC an] fonD O~ i.II ..... 1uo o. ror "hldl
UMo CII)' h-. kvVcf or-p'!ordrd &111 :arm .r la::ulioc. !'Iil"llhu lbo (:.ertl!k;dn. row Ibt ohllplloa or tlo" Cli,!' 10 InIIU uav r",TlMIl t.. d-w: .. ndrr 1hc" Loa. ...
"'F-moo1:o\ -U~\K. 4/tM .... 11M C\~,.. oIlbt su,lI. al' C .. HfD .... \a .... Dr.~ <lI11.S. polllk>l.l s~\o..,. _il,Ml'ltht ~1I"ill& .,r ,.,,~ ~"n:.m",oo ..... 1 tiT .I.:l.IU\<'>1)
ckbt li.mILIl(k>a Of' rn.UictJon.
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TbC" CaliflCala.an: ofi<"n':ld wtK:n, ...... Oil if wual uld r=er.-ed tooy Itle UlXierWIilu, .ub:1cct to ttl:-appH""al 01 leg_lily tIj-' Jone:: Hatl H,ll A: I,l,'hli~,
;.. PruCCXIQlU.l Law C".orponlkm. Sac. fraociKo. Gllilomu., Special C.illlnsc-l, an.d ~io oth=-oor..:I\lions u/Uin k~1I1 mllilen. _iIlll1e ~ u~ tOf LtIc
01)' ~ tbr. eny Niamey Jr ill IllticipaLal IbJll !t.e CenirlCl~...w be ...... il~b~ r')f" delf\'cry 10 DTC ill Nl"ItI YOJ-\" New '!'or)': 011 0: at>Ol.ll p,.tardl _' 19'1Z-
SECURITY PACIFIC NATIONAL BANK
Du=J.' Mgn;}J -' }992
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No deale~ broker, s:;.1es~on or other person has been aUlIwri..~ed by me Ci.y to giv~
any information or make any representations other tlran those contained herein and, if given 0;
made, such ~lher information or representation must not be relied upon a.J hal,'ing been
authoriud by the Cily. This Official Statement does nol cOfISfi:.ae an offer 10 Jell or the
solicitation of an offer 10 buy nor shall there by any sak of ,he Certificates by a pernm in any
juri.rdktion ;'1. which iI is unio'K-juJ for such perJon to make such an offer~ so/ieftan"on O!' sale.
This OffICial Slolemen.! ir not 10 be consnued as Q contract with the purchilsers of the
Certificates. Sl!ltemems contained in this Official Sralemen.z which inv'?lve estimates, foreca'its
or matten of opinion, whether or not expressly '0 descn'bed herein, are intended sokly as such
and !Jre not to be con:;trued as a rtpre.rentation of facts.
The ir.fonnotWn ,," forth herein has been ooUJined from soun:'J which are believed to
be reliabk but it is 1WI guI1runteed as /0 accuracy or CompJel~ and is nollo be construed
as Q repre.senJalion by the UndeTwriter. The infonnation and expression of opinions herein are
subject 10 change withaul notice and neither delivay of this Official SlClemenl nor any sale
made iteTewr.du shalJ, under any circumstances, create any implication that mere has bun no
change in the affair> of 1M Cily since 1M dale hereof
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SIDEBAiI lANGUAGE
This Prd1m1nary O.rnc:w Statemenl ."WI rtar infonutioa OOII~ned berd.a &re subJed 10 completion IX'
amcodateILt. UDder DC drruJD..Ctucu sbaD tbh; PreI.lm1oar1 Ctft'kiIJ Sta~J]J constitute an oft'tt to sen 01"
&he 5OUcffUIoa of a..n olI'er 10 leO or the soUdmtioa 0I!lD oIftt to buy nor IhaJI there be lin,. IIalt: 0( these
sec:u.rt&M 10 ..,. Jw1.sdIcdoa In wbkb IDCb olI'tt, wlkttaUoa or IAJe woulci be nma.rul prior-to l-q:lstralJon
... qnalH1<odoo UDdtt !he oecuriti ....... of "'" sud! JurWtictJo<>.
TABLE OF CONTENTS
SV'MMARY STA,<MENT .....
OFFICIAl. ST A TEMEN'T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ......... Z
INTRODUCTION ......................................................... Z
G<-.I... ............... . ............................................. 3
Book-Entry·Only System ... . . . . .. .. .. .. .. .. .. .. . . . . • . . . . . . . .. . .. .. . . ... 4
nlE PROJECT ...................................... . 6
SOURCES AND USE OF fUNDS .. . . .. .. . . . . . . . . . .. . . .. .. .. . .. .. .. .. .. .. . . . . . .. .. .. 7
nlE CERTIF1CATES .. .. . . .. . .. .. . . . . . .. . . . . . .. .. .. .. . . . . . . .. . . . . . . . . . . .. . . . . . . .. 8
GeDcnI........... ...... '" ......................................... 8
OptJoaaJ _poo. .... ............ 8
Mandatory Sinkic& Fund Red~mptiOD ••••••••••••• . • . • . • • • • • • • • . . • • . • • • • • • • • • . . 51
MaDdalOIJl Redemption ................. ' ................................... 9
NotJoe of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Scauily lox the Corti!\ca,.. . .. .. . .. .. .. .. .. .. .. .. . . . . .. . .. .. .. . .. .. . .. .. .. . .. 10
PLAN OF REruNDING ........ . 13
THE CORPORATION .•......................................................... 13
R1SKFAcroRS................................................................ L1
GcoenJ Collsideratioru. . Securiry for tbe Certificat~ .................... 14
AbaleQ1eD1 ••............. . • • . . . • . 14
Jl.cm.edics .. , ..... , •••••.. '........ .., ...... , ...•• , ..•.... 15
State Law Umilaliom on Appropriations ..... " ................... ,............ 15
TID &ell'lpOOt! of the Q:nificates ........... _ ......... _ . . . . . . . . . . . . . . . . . . . . . .. 15
CONSTlTUTIONAL AND STATUTORy UMITATIONS ON
TAXES AND APPROPRIATIONS ..................................... ,
Article xm A .......... ..
Article XUl B . .. . . . ... ......... . ...... .
Recenllltigation Regardmg Property Tax Allocatio~s ........ . . . . . . ... 17
ESCROW DEPOSIT AND1'RUST AGREEMENT
TAX EXEMPTION ....•............ 1.8
CERTAIN LEGAL MATTERS ... 18
ABSENCE OF LITIGATION .. __ ...................... . 18
RATL'IGS __ .................. .
A Y AJLABlLITY OF DOCUMENTS .. 19
UNDERWRITING ............................................................. . 19
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MISCElLANEOUS .............. ,"', .................. " .......... . 19
APPENDIX A .................... ,' ... ,"',',' ........ . A·l
General and "Economic Wormation on \be. Clty
APPENDIXB .............................. "", ........... ," .............. , B·l
S1llllllWY of Principal Lepl Documen15
APPENDIX C ......... , , ........................ , , , , , ......... , , , , , , ........... C-I
Aadited FlnanciaJ Stateme:at of the City for the
Year En60d Ju~ 30, 1991
APPENDIX D ................. , , ..................... , , , , ............. , , , '" .. ' [).!
Form: of Speci&J Co1lnse! Opinloc:
IN CONNECTION WITH THIS OF}'ElUNG, THE UNDERWRJTI:R MAY OVER·ALLOT OR EITECT
TP.ANSACTIONS WHICH !ITABllIZE OR MAINTAIN THE MARKEr PRICE OF THE CERTIFICATES
AT A LEVEL ABOVE THAT WHlCH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, SUCH
!ITABILIZING, IF CO~lENCED, MAY BE DISCONTINUED AT "''IV TIME.
SUMMARY STATEMENT
nns SUMMARY STA 'ffiMENT IS SUBJECT tN All RESPEcrs TO THE MORE COMPLETE
INFORMATION IN '!HIS OFFICIAL STA1EMENT MT THE OFFERING OF THE CERTIFICATES
TO POTENTIAL INVESTORS IS MADE ONI. Y BY MEA!;S Of' THE ENTIRE OFFICIAL
STATEMENT_
Form of Certfricates
The refir..anctng of the ImprO'}'Cmco[ and renovation or the existing
Palo Alto CiVK-Cemer. originally financed ,..,ilb the proceeds of the
SS,920,CXXJ Certificates of Participation (Civlc Center Project) (the
-1983 Project'"). oC which $4,960,OCO are currently outstanding. III
addition. the City wi)! undertake additional improvements and
rCD01I3.tion of the Pale AIto CivlC Cer.ter lO~th additional proceeds
of the Certilic;nes (tbe "199'2 Project" and IOgether with the 1983
Project, tlIe 7rojea'") ..
The Certificates represent direct, undtvided fractional rnterests of
the ownen thereof [n lease payments (the "Lease Payments) to be:
made by tl;e at)' as [he rental fOT the Projea pursuaet [0 the lase
Agreem!1ll The CHy h& covenanted under the Lease Agreement
that as :lcng as the Project is availahle for the Cily's use it wiil take
£uch action as rna)' be n.ecess.ar)' 10 include such Lease Payments in
its annual budget::, .mlto mate the necessarj annual approprialions
therefor. A Reservt Account is Qublished from CertifLcale
proceeds ror Ole benefit of the Certificale C\IooT.eTS in an amount
tqU:l.I10 Ihe ~r 0[: (i) maximum anllual deb; !.en-ice or (ii) 10%
of Cenlncate proceeds (as defined in the Trusl Agroem.etH).
Pursuant to 3D As.signmem Agreement, the Corporation will assign
Ie 1.he TI1JSIe: ror 1be ocncfH or th.: Ownc:rs of \be Certificates its
righlS u!ldcr the I....eue Agreement, including (i) its rights to receive
and OOIlec1 amounts pa)'3ble by t!\e Oty untler the Lease
Agreemerl r, (ii) its rights to r"c.eivc procc:eds or COndemtl31ion of ,
and insunlnce ('lb, tbe Proje\..l. and (til) ito;. Tights to enforce amounts
payable upoc defall[~
The Cenificz les will be i.\s ued it! fy ny registered form, [n the name
or Cede & Co.., as nominee of the Depos.lmry Trust C.ompany
(~DTC"), LC denominations of $5,0:::0 each or an)' inlegralmultiple
thucof.
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The Ccrtilicata are :subject to optioD4~ aM mandalory rt>.dempooa
15 more rutty descl':bed herein.
The ary or Palo All.O 'WaS incorporated in 1894. II is \oC:ated in
DCmbenl. Santa Qua County, about 305 aules south 0( San Francisco
and 1.S miJes aonhWCl!it or San J~. The Ot)' opera~ under \be
Cowy.1]4M!:uger fcm or goyern.ment and has an ~tim.ated 1991
populatio. 0( 56,000.
THE OBUG:4.110N OF TIlE CrIY TO MAKE PAYMENTS UNDER THE l..F.ASE AGREEME.."IT IS
LIMITED AS SEI' FORTH IIEREIN. NEITHER THE OBUG4nON OF THE Cl1Y TO MAKE SUCH
P4YMENTS NOll THE CERTIF1C4TES WILL CONSTTI1JTE 4 DEBT OF THE CITY, TIlE STATE OF
CAUFORNlA OR ANY POlmCAL SUBDIVISION THEREOF. THE LEASE AGREEMENT DOES NOT
CON!m'IVl'J: AN INDElITEDNESS WIl1!IN TIlE MEANlNG OF ANY CONSTITUTIONAL OR
STATUTORY DEBT UMITATION OR RESTRJCI10N. NElTIIER THE CITY OFnCERS, EMPLOYEES
AND AGEN'n> NOR ANY PERSONS EXECUTING THE LEASE AGREEMENT OR THE CERTIF1CATES
SHALL DE UABLE PERSONALLY ON THE LEASE AGREEMENT GR BE SUBJECT TO ANY PERSONAL
LlA1UU1Y OR ACCOUNTABWTI BY REASON OF THE EXECUTION AND DELIVERY THEllEOF'.
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Mike Cobb
Gloria Young
Clty Ckrk
KeYin Riper
AssistaDt Director
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CI'IY OF PAW ALTO
Santa Clara County, California
City Council
Gary FaDioo
~..!Iyor
City Management
F'lDBDot Departmen:
Proression.aJ Services
Spocial Coorud
JODQi H211 Hill &:. While
A Professjonal Law CorporaliOll
San: Fr.tncisco. California
Trustee, Payi., Age.t & Regis!",r
Banl: or America National Tru5t and Savings Association
San Franci<;.c(l, California
Richard Rosecbaum
Josepb Huber
Joe Simltian
Lallie Wheeler
.Ar;e[ Dionne
City AtTOrmy
Tracy K90"Ot
Acting CHy Auditor
Gordoa Ford
Treasury Manager
Carol Ferrell
A.ccounting Mecater
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OFFICIAL STATE.1IiENT
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CERTIFICATES OF PARTICIPATION
(1991 CMC CENTER REFINANCING AJ'1II L'dPROVFMF.NT PROJECl)
Evtdencln& the Dlr<d, VacIhicIed hactlooaIln..,.,,' of c'>e
Owners 'i'bercot lD La:sc PaJllMntli to bt Made by the
em OF PALO ALTO
(Calif ...... )
PALO ALTO PVlIUC IMPROVEMEN1" CORPORA nON
INTRODUCTION
nus Official StatemenL, induding the ooYJer page an~ appeod.i;;es thereto, is provided to furnish
information in OOilOectiotl w:itb. the offering by the City 01 Palo .".ho (thcwC,ity") or iu. S __ , ~ __ '
aWegatc principal amount of Certi.ficaICS otparticlpatioo (1992 Chic Center Refinan.clng and ImpfO\'crnenl
Project) (the. "Certificates"). This introduction is DOl i.ntcnded 10 boe oompic::e and 1£ qualified by the more
detl:!led information contained elsewhere in IhLs Officiat StatemenL
The Certificates ar~ betng delivered to finaoce the refinanciog orlhe City's Cenifj(41CS ofPanif.ipadon
(Civic Center Project) (the "1983 Certificatesj oritin~~ issued in :he amount of $5,920,00'.). of whkb
S4.960,(XX) are currently outstanding.. whkh were oogina[1y deLivered to finance the improvemcDI and
teDOYIlion (the "'1983 Project) 0( the Palo Alto Cr.ic Cenu~:r {the ·Ctvk C'l:nter}. AS well as 10 pa)' tbe C:OS~
of issuaJKz. thereof In connection with the Oertifk30tes.. In addition, the CLty v.ill undertake additional
fmprOYemC:%lt and renovatiol! Dr the CM.: Center (the ~1992 Project,,) with additkmaJ proceeds of the
Certifica.[C5.
"The City now intends to finrr;nce the 1992 Project and refinanct: the 1983 Project {~ogether. tbe
'"Proja:1") by leasing the Project to the Palo AJto Pubtic lmp~ment Ccrpon.tion {the 'CorporatioD!
punuant to that O!rtalD Site and FaCJUij' l...c:Isc and l..case Agreement descnbed bel~·. The Corporation '911.1]
und:rLau 10 makl': additional imprO\'ements and repairs to tbl.! Ctvic Center a:ld wi~l then lease tt,e CMc
Center and the impr()\o'CmenLS made :.hereto back to the City pursuant te the Site and Fadlity l...ea-.c dated as
of March i. 1992 (the 'Site and Fac:ilhy Lea~") and Lease Agr~menl. date4 as of March I. 1992 (the ~
Agreement") between the Corporation and the aty.
"The Corporation wm designa~e the City as its agent for purposes of <:arrying out ;. ',', ph~ of the
design. SUpervision and coru.tru.ction of the 1992 Project and ~ntering into purchase erders and ooMlruct[on
conlnCtS "With respea thereto, pursWUll to aD Agency Agreement dated as of March I, 1992 (the' Agency
ApeemeIlt") between the Corporation and the Oty.
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The. Certificates r~prcsellt the din'.(,' I,Hh1ivided, fractlonat interots oC \.he regfstere<! owners (the
aOwn~') thcrooC in lease payments (the 'U-AS! PlymCt'lU") to be made t-) [he Cit)' as lhe rental for the
Project pursuant to the l...ta.;;.e Agreemenl 11Ie Cen[ficates are bdn,g executed 80d delivered PUl"5uant to a
Trust Agreement dated as of March 1, 1992 (ttl(: "Trust Agree-mecl") by and bet'llr.'etrt the CIt). the
Corporat~n. and Bank or America National T1'1JS[ and s.a..ings A,r,..-.ocil!rion, S2n Francisco, Califor:niJ. as
tnL:stce (the ~ruslec" and constitute propaniOn3!C inle,eslS o! !te ~'llcrs i.:3 ~ P.ymeoLS payable by
the City 10 the Corporatioc }.Ju~uant to the Lease Agrecmclil Pursuant m an A"ioSignmen: Agrt!.cmcnt dated
as of March ), 1992 (the -Assignment Agreement-) the Corporation bas a:;..signc.d [0 the Trusux:, for the
benefit or Ole Owners of the CenifiC3les, (1) its right to amounts P'I)'liIbk by the CiT)' iJl1der (he Lease
Agree:mec.t (ll) its right to any p~oce..eds of aIly iru.uTance maintained under t.~ L.e.lse Agrf'.(:meat and 0: any
condem.n.ation award rendered wilb re:specllo lb.e Project, aDd (iii) il$ rights to enforce payment of amoun1.S
required to be deposited In the Le.a..-.e Payment Fund or the !nsuranre and CDn~emnl.tion Fund or ammmu
due upon default.
In general. the at)' is reqtlired 10 ;:>ay (0 the Trus~ee Specified rentals for Woe of tne Project., which
amounts are designated 10 be sufficient in both lime and amount 10 pay. when due, the principal of 3nd
premium., if any. and interest with respect 10 the Cenifkates (set' APPENDIX B -SUMMARY OF
PRL"lCIPAL LEGAL DOCUMENTS· L.E.J...sE AGRr-:EMEJ>.T berein). In the Leas.eAgreement, the City
has w,Ierumted that so Jong as the Project i~ a\l3J1abJe for Lts !,is( [t ""iU take such action as may be I'eo:ssary
.0 include all Lease PaymenLS under th.e Lease Agreement in its annual budget and to make the Ilocess.ar)'
annual apprc;rialioDS theIefor. 'The oblig:uiOD Dr Lhe City 10 make Lease Payments does nOI coruti:ute aD
obtfgation of the City for wh!cb the City is obilglted 10 ~'Y or plooge any form of taution or for which the
eH), has le\.ied Dr pledged any form of t.a~tion. Neither tlle Cenificates nor lhe obliga!ioo of the CHy to
make Lea~ Payments unGer the Lease Agreement constitutes a deb! of the Clty. the State or CalifOTIl[a or
any of its political subdl"isions w:ilhie the meaning Df the ConstitlJtlO~ of the Stale or California: or olhcr.lo~ .. <;C
a pl~ge of the !ailb and credit of the Qry. For certain financial L"l.formation with respect to the City. !lee
-APP~"DIX A -City Financi.aI Inrormation-herein. For a dis.c.UMLon of certain amendments lO the
Corutitution of the 'SLate or California and thelr impact on the City, see the beading ~CONSTITUTlOl'."AL
AND STATUTORY LIMITATIONS O:'oJ TAXES ..A..ND APPROPRlATIONS~ bercin.
General
The Certificates will mature on thc dates and in tile amounts and bear interes.. at the rates ~t [onh
on Ute ccwer page of this Official Statemc[]t. The Cenificates will be dated Man:;b 1,1992 and wilen iss.ue.d
will be ini!iariy registered in tbe name of Cede &. Co" a.s reg~lered C>wr.er and nominee of The De~ilory
TrUSt Company, N(""\1o' YOTk, New York ("DTC). See "THE CERTlFlCATt::.S -Booii-Enlry-Onl)' System:
The principal of and premium (If any) 'Oil lhe Cen1ficale:; is payable in la .... ful mom:), or tile Unite;>i%
States or Anlerka upon ~ttITender thereof at maturity or IIp.:!n earlier redemption at the Princ.ipal C.orporate
TJ'I.15t Offit:e (as defined in \l!e TJU5t AgreemeDt) or the Trustee (tbe 'Paying A8ent-). The imer~t o[] the
CcrtificatCii shaD be paid, commencing September 1. 199'2., acd thereafter Oft Marcb 1 and Scp!ember 1 of eacb
year that the CeruficatCii are Outstanding (each aD 'Interest PaymeDt DaLe~>. b)' 'heel.:: or draft mailed on the
applicable Interest Payment Date by the Paying Agent to the registered Owners as or the qQ6e of busines.o;. on
!.he fifteentb day of tbe D10t:!th immediately preo-.ding such Intere:.f P<tyment Date. wb~thcr o. DOl .such
fifteenth day is a B"-Sina.s Day (as der:ned in the Trust Agreement) (a "Regular Date~). at lb~ addr~ shown
on the Certificate regiHer maint.ained by the PaJoing Agent (the ~Ceruficate Reglslt:r·).. Inter~t will be pai.;!
by wire transfer UpoD the "'TilteD request or an ()v.'!Ier of not 1~ th,m $UXXJ.OJO in aggregate pfim.ipal
amount of Certificates ..... hich r .. ..quest mUSl be: filed with the Trustee prior 10 the fifLeelllh d<lj' of the monlh
preu:ding [M Interest Pa)'l'nem Date. Each Ccnificate shall bear lnlere:;.[ (calculaled on th~ basis or.a 31..i1J..day
year compo$('od of twelve 3CJ...day monll'~:;) from the Interest Payment DOlle next pr&.Cding the date of eAe(;Ution
ot the Certificate unles.s (I) the Cel1ifi.:ales. ale exc('lJtOO as of ao Intere$[ ;Pa~mcnt Date, in. ""hicb e'o'eot
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interest shaD be payabk from iiJdI Interest Paymetlt Date, or (il) the Certificates are c::r:on:ted Oil or before
SepLembe: J, 1992. in whidl Cotefll iDterest shall be payabte from Mardi 1, 1m: provided. bowe'ver, lhal if.,
as of tbe 4ale of e:::te:Ql.Uon of any Ccrti.fiQllC:, inlerd.t h in Gefaujl '\ooilh respect to any o--.. tstamling Cenj1'lcate:s,
iD:tl'CSl reprc::5CZlted by sud! Certlfica'e slia1l be p.1Y3b1e from the Interest P"ymtDI Date to wb~ interest bAS
prevtoU!ty bCCD p.ai:! or made ...... ilabk: for paymenl with re5 pect to tbe Qutsandi e.g CertificatC5. The
Certifiates are 5\1bject to optional redemption prior 10 maturity. Sec -REDEMPTION ~ OptionaJ
Redcmprioo. •
Book· EDtry-Ooly Sysrem
DTC will act &5 securities ckpositoI)' lor the Cenif:icates... The ownership of oce fulty registered,
cen!ficate(i CertifiC2te fot eacb or !be maturity dlres of the D=ttificateS as. set tanh on the CO'V1:r page bereo~
~ m the agzrepte principal am<)UDt of \he CcrtificalQ. InatutiJlg in ~uc.b yea1, will be legiMl:Ted in the Dame
of Cede &: Co., as nominee for PTe DTC is II limited-purpose U'Wot company organi.<..ed uncler the laws of
tht: State of New York, a member or the Fe4ertl Reserve S~tem. a "clearing oorporotion" .. ithin tbe meaning
of the New York Uniform CoCUDefCial 0J4e. aCi1 • "clearing age::tey"' reg:i5tered pursuant 10 the provi.1ions
of Sectiotl17A or lbe Securilic$ Exchange Act of 1934, as amended.. OTC WlLii created to bold stCUrities of
ilS pani<:ipanlS (t...\e -ore Pe.rticipanlS") and to racili Late the ctearan~ and settJemeot 01 ~Jitie:s transaction.~
aDl<J:D& DTC PlTticipaill$ in such se;;uritics through electronk boo'k-cntry c1langes in attOunts or DTe
Participants., thereby climinatint the need ror physical movement or securities certlficatcs. DTC partkipanu
incll1de securities broken Iller dea1en, Nola, truSt companies, dearing corporations., and c:eruin r.ther
organizalioll5, some or whom (andlor tileir j'epresentativcs} own DTC Ao::les.s to the DTC system is also
avaiiabIe to oth.ers such as bankS, broke~ deoIlen. 'nd l.TWot oompanie:s that cleo;r throUgh or maintaio a
custodial relationship w:itb 1 DTC Pankipant,. dthcr directly O! indirc:aly (the -Indirect ParticipanU").
The OTe Partidpants will receive , credit balance i1l 1M: records of OTC. The ownership interest
of tildt. ae.u.al p'Urcbaser oC eatl:!! Cc.rUr)Cl\e (the '"Beneficial Ownel') 1/rriU be T«(Ir~eO "".rough \lie records. of
the DTC ParticipanL 'Ead! Beneficial ~JDeT will receive .. "'Titten ronfinnaooo of their purc~ providing
de,-&,i15 0( tile CertirtcatC acquired. TraasJen. of ownership interes~ in the Cenific:nes ~iIl be a«.ompli5hed
by bOOt entriQ made by DTC and, in turn, b'i the: DTC Pankipants who act OQ behalf of !.he Ec:nerKia!
0wncr5. BenerlCial Owne~";1] not rece~ certJ{tcateS represer.ting their ownen.hip iDlo:rest in the Cen [ficalcs.
except u proo.ided below.
As \eng as ~e &. Co. is the registered Owner of the Cenificau::s, as nominee o! DTC. references
~erein to the Owners or registered Owners 0{ lbe Certificates shan mean C.e..1t & Co. (which shiJII be the
registe.red Owner of llle Certificales as shown on the regtmatiDo boola; of the Paying Agent) and shaIl not
mean the Beneficial OwneM or lhe Certificatcs.
The City and the pay..n£ Agenl will r(X()gDiz.c: DTC or its nominee a!i t]le Certificate ~er for aU
pu~ ioclucllng notices and voting. Conveyance or no:ice:s and ottLer communications by DTC 10 DTC
PaJ'tiCipan1S, by DTC ParUcipanLS \0 lndlrec1 P1rtkipanu, and by DTC ?anicipants and I~irec:t Panidpants
to Bene-!kiaI Qo.trnc:n will be governed by arran~meDl.'s among them, 5ubject to 811)· ,tatulory and regulatory
rt.quuements IS may be in effect from time lO time. Neil ber the City nor the P~ing ~ent will assume Iny
responsibility or obligation with respect to the payments to or the provlding or notic( for DTe Participants,
Indirect Participants or the Beneficial Owners.. Neither the Ciiy no: the Pay:ing Agent is responsible or liabre
(or sendlf,g transactioo statements 10 the Beneficiar Owner:; or ror maintaining. supervising or reo.iewing such
records.
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PriDdpal or, premium, if ey. a.cd interest payments OD the ~rti1icales ",ill be made ]0 Die or its
oominee, Cede 41. Co., t.5 r~tered Owner of Ibe C<::rtifi-.::ala. Upon rectipt or monies, DTes current practice
:is to 1ttunc:dtalely credit the accounts of the: DTe Panic:ipants in acmrdance with L~ei! re.spectivc: hol.iiiJgs
shown 011 the record.& of DTC. PaymenlS by DTC Partidpants and Indirect Panicipant<i to Beneficia! Owners
shaH be gDYeIned by standing iL.s.tructiom and customary pratticcs, as is:cow tbe case wilh municipal securities
held for lhe accouc.ts of QlStomen. m bearer form Dr regi5tered in 'slroet t!.al:le;" and will be the respotlSlbility
of sur.h DTC Participant or IndiJect Partidpant aDd Dot or DK or the City. suhject to ani sUtu.to!),' and
reguLatory requirements as may be in effect from ti..~ to time..
UNLESS OTIlERWlSE NOTED, THE INFORMATION COro."rAlNED IN THE PRECEDlNG
PARAGRAPHS OF TIllS SUBSECTION "BOOK·ENTRY-ONLY SYSTEM' HAS BEEN EXTRACITD
FROM A REPORT PREPARED BY DTC ENlTILED 'BOOK·ENTRY-ONLY MUNICIPALS: THE
CITY W.AI(ES NO REPRESENTATION AS TO 'lWl COMPLETENESS OR TIlE ACCURACY OFSUCH
INFORMATION OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES L'I SUCH
INFORMATION SUBSEQUENT TO THE DATE HEREOF.
THE CITY WILL NOT HAVE AWi RESPONSmTLITY OR OBLIGA nON TO DTC
PARTICIPANTS, TO INDlRECTFARTICIPANTS, OR TO Al'Y BENEFlCIAL O"'NER WITH RESPECT
TO (I) TI{B ACCURACY OF A"IY RECORDS MAINTAINED I!Y DTe, ANY DTC PARTICiPANT. OR
ANY INDIRECTPARTlClPANT; (II) ANY NOTICE (INCLUDING ANY NOTICE OF REDEMPTION)
THAT lS PERMi'ITED OR REQUIRED TO BE GIVEN TO CERTIFICATE OWNERS tINDER l1iE
RESOLtmON OF ISSUANCE; (III) THE PAYMENT BY DTC OR A"'Y DTC PARTI<;IPANT OR
INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF, PREMIUM,
IF ANY. OR INTEREST DVE ON THE CERTIFICATES; (IV) mE SELECTION BY DTe, DTC
PARTICIPANTS OR INDIRECT PARTICIPANTS OF ANY PERSON TO RECEIVE A PAYMeNT IN
TIlE EVEro."T OF A PARTIAL REDEMI'110N OF TIlE CERTlFIC.HES; OR (V) ANY CONSa."r
GIVEN OR OTHER ACTION TAKEN BY CEDE '" CO. AS NOMINEE OF DTC AND TIlE
REGlSTERED CERTIFICATE OWNER. THE RULES APPLICABLE TO DTC ARE ON FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION, AND THE PROCEDURES OF DTC TO BE
FOLLOWED IN DEALING wrn-r DTe PARTICIPANTS AND INDIRECr PARTICIPANTS ARE ON
FILE WITH DTe.
The boot-enuy SJIitem with DTC shan be dio;.(X)[!tinuoo if (a) DTC determines nOllO comieue to act
as sccuriHes depository lor the Cenifical~ or (b) tm City has advised DTC that it d".Je$ :COl \lIi:!.h DTe te
continue as securities depository. If the Oty Iep~ DTe with another qualified .securities deposilory. a futty
reg~lered Certfficate for caU! mam.nty, regislc:'"e.::l til the name of the sUtu:$(}r, shall he preparo;l, consistenl
with the Trust Agreemeat It the Cjty faits. to select another qW:llifioo s.ecurities depository to replace DTt:,
the aty shall Oetute and the Paying Agern shaD authenticate and <leij,,'er cenificale5. (the 'Replacement
CertIficates") to the Benefidal Owners oftbe Ceniticalei. Certifkates represellted 'by Replaa:menl Certificates
will be ltaruJerahle only upon presentation anti surrender 10 the Paying Agent, toget.her with an aSSignment
duly executed by the ~'tler of the Replacement Certificates, or by h~ or her represc.ntalive in form
satisfactory 10 the P"')ing Agera and containing information requlied by the Pa}ing Agent in Ofder to effect
sllCh U'ansrer. The Paying A&ent ~y r~uire the 09r.'Uer 10 pay certain costs and apenses incurred as I result
or sucb traru;fer, Beneficiar ()v.,'l\~", or the Ctrtificales may ~rierlce some dela)' in their rea:jpl of
dlstnoutions or principal and in~eresr on the Cenificates sinc.e sueh dlstn1!utioru. will be forwarded b)' the
Paying Agent to DTC a.nd DTC v.'ill credit s.uc-b distn"bu.tions 1.::J Ll;e ao:::ounts of [he DTe Participant v.'hkh
-a.iU thereafter credit tllem to the ao:oun~ of the Berleficial O'Iloners either dir«1.I.y or indiJ«.1.1y tbrough
Inclir~ Pat1icipanLs.
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Issuar.ce ot the CerJficatCl iB blxIk-eCLry forol may redOlce the liquidity of the Certifica.es ill Ibe
seconda!)' trad.ing m.l!iec s.ince !n ... es;tor'\ ma:; be U%lVrtit:iflg to purchase Cerliftca!es for which they cannot
ablai:.n phj'5k:al ccrtiJ'icatu. In additiost, stnce traJ'l.UCtions iD Ole -::ertificat~ can 'be effe;.1oo only throvgh
DTC. DTC Participants, Ind[re(t Pani.cipanlS .aru:l cernie !).ana. the ability of • Beneficial o..1l.er to pleC'ge
Certificates t'!) penolU Of cntiw WI do 001 p.utkipate in tile: DTC system, or othuwik to take act;ons ii1
respect of sucll CertUk::a1C:5., may be limited 41,)(: 10 i.ack or • physi;;al oertif.ca:e. BenetkiaJ Owners will not
be recognized l'y lbe P.ayi:al A&cnl as. repstered Owners rm PI.lI'pOIieS of the Trust .4..greemenl, and Betleficial
Qwn.en MD be permltt.od to aerQse the ripts of r.egistecod OwDcn only lOOirectly through DTC arA tbt DTC
PanJdpaDU,
THE PROJECl'
The 1983 Pro,Ject,. previously almp1clCd., aq CJ.t1JM:tod IOtal COSot ~ $.4.140,0C(] by tbe Oty, consisted
of c:erta.in improvemea.tf to the ary'l. exist in, Ovic Ceater iDdudinl tht purcll.ue of a thin~ ctevator as.sembly
and! ill ic.sWLaoou in I pre-=tinJ: deYalor ,hal't and the nrengtbenlng of am.a.in I.lruClura] and deconnlvc
ell'..me'!IotS of the buiJdiDI for &eismk purposes.. Pursuant to a Site Lease and Leue Agreement RelatinllO Palo
Alto Civic Cenlel Project. dated as. of Octobel' 1. 1983 (the: 91983l..e:ase1. the City agreed to kase cenain real
propcny (lhc. "Site) 10 the Corporaoo.. ud. the Corporatioa agrood 10 tease Ihe Site and the 1983 Proja..1
to the Qry.
The City now intends 10 fimiDCe the 1992 Project tor the further impfO\Icment oC the C1vk Cen1er anJ
refiIwK:e the 1983 Project by etlterinl iD\o I Terminatiotl AgrCCI!leDt (whkh wit! term.inatc \he 1983 Lt:ase.
subject to certalD oonditIons) and a new Site and Facility I....ease betweeD tbe Corporation and tbe City wberein
the City will lease to the Corporation the Siie .and. the 1m Project aDd the Corpora tion will lease the
improved Q\.ic Center back to the Oty. The 199'2 Projea consb.rs or lbe. SLnlCluntl remodeling of tbe pollee
be&dquanm aDd ll'le telro!'ittit!g of I portion oftbe CMc Center for Iplinkler system fire prevcntioD ba1j tics..
Tbe Cily eWmatc:s. the total KqUU.iOOD and con.uroaion allot of the: 1992 Proj~ to be approximately
1I,9OO,IlOO.
The poticc bcadqu.ancn fad1ity (or lbe Ciry 11 loc:aaed OD the southside of me Chic: Center Ind
cor\SlJu 01 • one story aboYc' grouD<l ~uildillJ wftkh a!eDds two storY-!. below street level of the Civic Cenler
partin. garage. The .tructural impTO\leiDCtlU 10 the police hcadquartel1i facility 'M:re apprtJ\o'ed as. a part of
the Cry's ft5.cal year 199()..91 Captw Impf"m/'CtDeDt BYdjet "Tbe projed: inclu4es tbe additioD of ooncretc sbear
waUt. on three-sides of the police headqu.arten facllj~. attOOiDa. frOM the botlom or the Civk Center parking
garage In Iho roof DC Ib, police beadqunen Cadlity, The project ..... on,uwlJl bid "' NOYCmber 1910 and
again in Deotmber 1990 but aD bids were. rej«tt:4. Tbe City solidted bLds for a l~iTd t;me and P"8rded the
connructioD cont.ract Oll ~~mber 2S. 19911. ColUtructkJn is estimated lO be completed. by June 1992.
The Civic Center rue .prinklet project p~ for the engjnecriug ap,atysis. dotgn and instalLnion
01 a fi.:e sprin.kler tire protection SYSlem for those areas or tbe CMc Center (ilIdu4ing tbe: potioe headquarters
facility and the. City Council chamben) which arc presently without a fire sprinkler system. ~ September
1991. the Cil)' approved. r.be hiriDl ol a CODiultant fur lbc. daip pll.uc: ot tbc. tire sprinlUcr projca. The Cicy
prea.enlly intends to bid: \be fire. .s.priDkk:' pro}ett 01\ or abolll September 1992 .,Ub oonstrucuon 10 be
completed. by March 1993.
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SOURCES AND VSE OF FUNDS
The p~ 10 be rtt.e!ved from the ~ of the ~n..ifiates, c:xduding accrued i'ltcresr whicb will
bt. ~ited jn the Lease Payment Att:CIuDt, lind t:Cruin IllCQe:r.> 1.0 't)e transferred from tbe 1983 TflJSt
Agreemc::u., are to be depo6ited wilb the TruslCC and appUed' ib fcUoM:
SOURCES·
1983 RESERVE FUND 5
CERTIFlC-ATI! PROCEEDS (?AR VALUE) 5
TOTAL SOU1lCES OF Ft'NDS S
VSES·
DEPOSIT TO LEASE PAYMENT FUND (I) S
DEPOSIT TO ESCROW fUND
DEPOSIT TO RESERVE FUND
DEPOSIT TO 1992 CONSTRUc..-nON FUND
DEPOSIT TO D~Y COS1'S FUND
UNDERWRITER'S DISCOUNT
TOTAL USES OF FUNDS
(1)
• Preliminary. subject to change.
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THE CERTIFICATES
Genom
The Cenificates ...w be accuted.and: dclhlered. 1.:: th;:: .aggregate prbcipal amc!i,!lIt of S ., will
be d.itcd Maret 1. 1~ w: bear mtcrCliiI from Mareb 1. 1992 at the rata per arulum Sc:t ronh 00 the cover
pap hcrto[, payable ~ttnc.aDy 01l M.arch 1 and September 1, rorruucnclng September 1. 1992 .and 9il1l
manrrc OD MarcD 1. 2O!2 ill e:ad!l of the designated years lD !be pri!lCipal amO"D~ $bow:n below:
y .... or_.,. P7tDdpal Amowrt •
1m s
199<1
1995
1996
1997
199'3
1999
200J
2001
2002
2()12
TOTAL
Tbe Certificates ""ill be Q«Uted and delivered in ru[ly registered form in the denomination of SS,<XX>
each cr any integral multiple thereor. Prindpaland premium.. if any, with respect to tbe Certificates will be
pB'jabk: at the principal corporate trust office of Bank or America National Trust ~nd Sal,ings k.social [on., SaD
Francisro. CaItfurnia. as Trustee.. Inter.est 90ith respect 10 the Certificates will be payabte by c1te..ck. or draft
maned [i,) the registere4 OW!ler of record al the address shown (II] the Certlficale rcgi:.\r3tion books maintained
by the Trw.tee for liuch purposes.
Optionar Redemption
1b.e Cenificates matunng on or be-fore Ma-rch 1,2001 are not sUbjoc:t to opthmal redemption prior
to D'.aturity.
Tbe CertificatC!i maturing on or after March I, 2001 are suhject co redemption prior 10 rna tUI ity OIl
or aftet Maccb. 1,2001. at tbc: optioll. or the City, as a w'hole or in pan 011 any tnten:::;l Payment DaLe (but not
in a 10:aI redemption amount of less than 520,(0) in prim.ipOll at anyone time). from prepaym.enl of Le.as.c
Paymects-, at the f('llowing prkes (expressed as percentages of the principal amount 101 be prepaid), plus
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accrued mtcre&t to the. redempOO:l date:
REDEMYrION DA IT 1U.1'lF.MYn'ON PRE.\fIUM
Matcb 1. 2001 aDd. S::plember 1, lOOl 2%
M.at<:h I, 2OO'l and September 1, 2iX.r. 1%
Mareh I. lOO3 and thereafter 0%
Mandatory SllIIdng Fund Redemption
'The Cer1if]catcs Jnal1UlnB on Marcb t. '2:0_ are !.'Ubjtc'. \0 man.dator)' redemption 00 Marcb 1.:20_
and on eaclI March 1 tbereaIIer as set forth fD I~ following tabJe Ln lbc rcspectfve priocipal amour! r.s set forth
oppo6ite f'V..lIi date at 11t6emption price equal to 100% 01 the principal amoUnt therWf:
REDEMPIlON DATE PRINCIPAL iU10l.TNT •
March I, 200_ S
March I, 200_
March 1. 200_
March I, 200_
March I, 200_
Marcb i,200_
M2.rchl.200_
Man;!J I, 200_
MlI1dI I, 200_
March 1, 200_
M..andatory Redemption
The CettiliOltes are also iiubject to mandatory redemption prior to malUrity on any Interest Payment
Date (bu.t DOt in a lOtalrooemption OlmOunt of ~ than S20,iXX) ill princip-at al any time). at a redemption
prk:e equal 10 the principal amount meteor, wilbout premium, a.<; .I wbole or in pa rt, together witb accrued
inleres.t 10 the elate me.d for redemption, to tbe exteDt that the pr~ of insur.mce. title imuratlct,
a:ondemnation or eminent ckomain award or are DO! used 10 repair or replace the Project..
If jess tha!I all Certificates ;lte called for redemption, Cenificate!o \0 be redeemed shan be ~lected 'b):
the Truslcc in whatsOeVer :manner as directed by tile City.
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Notice or R.edemption
\Vheu redemption is lUtboriz.c4 or !equ.ireQ, the Trustee mll.St gi'.'e to the Owners of the CenifiC2.le!
wtice, at the apensc of the CJr:-. of lbe redemption of the Cenificates. Such notice shall speciIy. (a) thu th!!
",bole or I designated portio!!. thceof is Ie be prepaid.. (b) the mnnbcn of the Certificates 10 be red~ed
It Ies.s than aU. (I:) the date of redemption,.and (d) tbe place or places "#>'here the redemption will be II".ade.
Such notice muM further stale thaI ot! the specified pa.ymenl date there will berom~ dilC and p&yabtc, a-ith
respocI to each C.erillicate IQ be redeemed, the pri...'!dpal tbcroo( an<! premiuCl, if any, together with interest
ac:c:rved' 10 the payment date, and. lha: from and after the payment date imeresl wi)h respect thereto lJoiU cease
10 accrue and be payr.bk
Notice ot sucb redemplioD must be given., Ifter the: moneys therefor have been deposited in the I...ease
Payment Account created ~. the Trust Agreement., by mail,. postage pr~paKI. 10 the Owner.; of Cenifica res
design3tcd (Of re4emptioD at tbeu addresses appeui.ng on the: Certil:icatc registnllioD boola, at least 30 days
hI DOl more. tbaa 60 days prior 10 the rcc1emption date, whic1l DOtice must, in addilioD to 5C.uing forth the
ilbove intormation, sel I'orth, Ul the: case of cadi Cert:ific:;ate calJo.l only iD pan. \be ponion of the princip&l
thercofwbicb i5 to be redeemed.. Any detect in ,uch notice willllot affect tbe vaJiditj of tbe proceedin,p; lOr
1M redemption of sUCh Certificales, provided thai notice is IctuaIiy maile-j as abc\Je provided..
Security for the Certi/i""tes
Each Certificate reprC".erns I prop:JrJ ... a.ate interest in Lease Payments to be made by tbe Cit), to the
Corponu.iDD under the Lease Agreement.. The Corporation,. pursuant to the A&<,ignmem Agreement, will
auip all of Us righu urKcr tbe Lease AgTeemenL 10 the Trw.lee for the benefil Df Ihe o..ner:s of (he
Cc:nifica1C6., iDdudJng its rigbt 10 receive Lease Pay:nenLS thercunc1c:r 31"." its ngbt to ~crci;e su.::b tigb lS aDd
remedies 15 may be DettsSary to c.n(ora: Lease Payments when (I ue or otheNbe 'c protect its interests fa the
event of. cScfaul: by the City. Lease Payments will be made .as J<)J1g as the Project is aViulabie for the CilY',
use: from amoaDlS induded in the City's annt&al budgets and appropriated therefor, olher than Lease PaymeD ts
made 00 behalf of the City from (i) the proc.eeds of O:nlfu::'Ho., (il) net proceed.s of insurance or
condemnaliotl pertaininJ to the 1992 Projed to the extent not used for repair or reptacement, and (iii) any
mtc;c::s.[ or other income derived from the: lnveI;lment of funm and accounts held by tbe Trustee for !.he QIy
pursuant to the Trust AgreenteDL
The Lease: AgrcemeOlt provides that the aty shan take ~ucb action each year a.o;. may be cecessary (0
indwk an L.:ase Payments in its annu.al budgel5 and 8nnU,Cl;Uy to IippropriaLe all amou.nt neces.r.ary to maile
such Lease Paymec.t.s. The amoWltS payable to the Trustee are 10 be used 10 make the paymen!5 or pr;ncipal
;and inlen:st 'With rcs.pect 10 th~ ~ficates.
A RQCI"W: Aca>L1Dt is. e<;Labli!lhod by the Tru.st Agreement aDd is required to be funde4 from proc::ccds
of tJlc Cutificale!. in an amount ~u.aI to Lbe lesser of: (i) maximum ac.nuaI debt set"'o'ia:: or (ii) 10% of
Cettificaie Plcw;eeda; (as d~ in the Trust Agree-meat). Amoun&s in the Rcscrve .Account are 10 be used
only (or the paymenl on behalf of 1be at)' of ~ PaymenLS to the extent amounts in the I....e:uc Payment
Account Ire iruuffic}e[;.t Iberef"or. Prior 10 !M completion or the acquisLtion and constructiOll or the 1992
Project. iDletQt inrome (In a pro-rata portio!:! of favalments credi1ed: 10 tbe Re5.erve Account are to be
periodic:aTIy transferred to l1Ie 1992 Ccn.structioll Account, provided that the Reserve Aa;ount ~ at il'i required
.amounL For~g completion ofacqui5.itioD and construction oflhe 1992 Project, amounts in cxcess ,,[the
ReseJ'VC Requiremenl are 10 be transferred to the ~ Payment on or prior 10 February 23 and AUllust 26
of eacJI yeat.
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:i'?'~ obfigJtiofI of the Cit)' ro ~ LuJ.se Paymnus dOI!S IWl COl1.i1tJuU tJII obligation o[tJu: City for which
1M ~ if ~ to !r.;.y (K pledge any font! 0{ !In:abbrJ. or far w/ticl troe CLo' Juu Je..'~ or pledged any form
of taualion. Neiilwr 1M Cnrifu:a1I'J ntJI" tM obligruinfl uf the CII)I to m.akt U(l,Jf! Payme/lts cOtIStilUteJ GTI
indebttiJM.n 0{ 1M cay. ~ Stare of Cc.fifcmill Of' IVf'j of in poIilicai $Ubdi~isions willtin the meQnir:g of rM
~ of tJw Stale of CQlijomio. or OEhn'wist or (J pitagt of W JaiJh and emlit of l1"~ Ci1J.~
Lea>e Payments
The l..ca5c Agreement requlres tMt U\. am01Jnt 'C<iIW. \0. __ CMntb.<;' advance rental (to be treated
as interest only) will be funded flom t1Je procced.c; of the Certificales and de"pos[tcd jc. the Lease Pllymecl
.Ao;:ou.ct L.c.as.c: paylDeDt5 arc require<! ti) be made t,. the Ciry u.ttdet 11Ie!....ease Agre.e.!::leot on each February
23 (for W period beginnira:g the precedlng 3eptem):\er 1 and endiJ1g on tbe sua:eeding Mm;b 1) and Augtl'it
26 (for the period beginni:.c,g the prec:ed.ng March 1 and clldi.cg the ~l.lCCeedJ.ng September 1)., commencing
August 26, 1992
The Lease Agreement requires that Le2se Paymc:nu be 6cposi1oo in the Uasc-Pa.,.-ment )U:rount
maintained by the Trustee. Pursuant \0 the Trun Agreemt'I'It, on Fd;lruary 13 and' August 26 of eacb year,
commen-...'in& August 26, 1992 the Trustee .. ill ilppt)' sucb amo;/.o.u. in lhe Las.e Payment Account as are.
necessary to make the payments due with respect to the CenIDcatcs. Portions or tbe I..us.e Payments are
designated principal and interot with re:>pea to the Certificates in ao:ordance ... ;Ih the: roUcw.ing anflual
sclleduJe:
Year EDdlnc Mardi 1 Principal-Inta't$l(l) -Total Payments •
1m s S S
1994
1995
]9\16
1997
1_
1999
2000
2001
2002
2003
2004
2005
2006
2007
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IlItcml (1} • Total P~t!'
2008 s s s
2010
2011. ----~------~~------~--------~
2012
I S s
(1) A pottion of""'"'" ~ r-M<lldl1, 199] :c ___ 1, 19_ wIJJ b< pail! r-W P'f'CUIh of IN!
Cmiji<a4
Flow of FUlId.
From lbc proc:eed:s or the sa~ or the Cenltiaues. tbe Tru:stoe shall (i) deposit 1%1 the Lczc: Payment
Fun<! U aIDOYot equal 10 the: acaued interest with respect to the Certilia:les. fi'om Marc!!. 1. 1992 lO lh~ dale
of dUiYery of the Certificues to the origi:lal pun.ila.sers thereof {the ~Omill:, Da!el. (ii) deposit S __ ~_
iII ~ Lease PJymeot Fund., ICpn::&eoting • pomon or Jd\ilnoe }ease paymtnts from me date of delivery or lbe
Cettific:alC'$ to ___ I. 199-, (tii) deposjl $ __ i..::J the Res.eNC Fu.nd. rrv) depos.11 $ ___ in the
Delivery Coau FUJM1. (v) cSepo$it 1 __ in tbe Escrow Fuoo 10 p1'O"ide for the p;epaymetlt or the J~3
C<niIic>t<s (sec "Pu.N OF REFUNDING' b""'in), .". (vi) dcpo<it Ib, balance of said procwlS in lb. 1992
Constru.ctioo FIIIl4.
PunWUIlIO the lerms of the Leaie AgrecmcGt. on lbc: twenry-Ihiid d.ty 0( February and the fWeOty~
Jin:lI day of Aupt in eaciI )'Ciil'. oom.mcDling Allgun 26. 1992 Ind until February 21. 20 __ the Cty iii;
required to make Lease Paymetlts 10 the Trustee clesl,pc:d 10 be. suffident 10 pe.'"mlt lbe Trnst.oe to make the
paymezns. designated as principal ,,00 iater=.t Mtb respect h1 the Cenifi.catCl, Clue and payable 011 March 1
aM September 1 or eacb 'P' A poruon of 2'ymetlu or in,erut wi!b respect lO me Ccnificates due and
poyablc CD September I of 1992 'Q~ MarcIl 1 of 1993 will be made &om ... ~ of the .. Ie of th<
Cen:itiaLl.es deposited til ibe L.casc PaymeDI ALxount 1.5 described above.
If on &1'1 lDterest PaytPellt Dale,. IJl,P, amount or tbe Lease Paymeau. then due aDd 'Unpaid Qoeeds the
IJIlOUDt OD hand iD the I....ea:$e Payment FlIDd.,!.he Truslee will U'l115(e:r the ImOWJ[ ceccssary to mare up suc~
IJefide.n.;:y from me Reserve F uod aDd in the C'Yent I deficiency remains in lht Lc:ase Payment Fund., ; be
Trustee shaD apply moll~ OD hand in the Lease Payment Fund first to the paymc~t or jnter~1 past Clue 'Witll
respect to all Certifica.tes. pro rata if ne.cess.aJ)', aod seco'\d to the payment or the unpaid principal balance
with respect to eacll Certificate whlch ~ then past due, pro rata if ~ry_
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PLAN OF REFUNDING
The City pn:vious!y ncered iD'LO • Site Lease and l..casc Ag;ecment RelatIng to Palo Alto Cwic
Center, I1IliOd as or OC1Ober 1. 1983, by aM betwcc:c. tile Palo AltO PubliC Improvement Corporation (Ihe
"1983 Corpo11tioC.") a.ad tlw'; aty (the ·Prior Lease"):'Or the purpose: of financiag [he 1983 Project. Pursuant
10,1 Trust Agreement Relating to Palo Alto CtvicCelltcr Proj('Q. dated as of October 1. 1983 (the "Prior Tr\lSt
AgrCClll'!Ut}, by atld .motl~ the City, the J983 C.orporation and Ba:Jk of America Naiional Trust :lnd ~v!ng5
~tioQ., as tl"Wtcc (the "Pri(1C Trmle(!),. the Trw.tee o«."ted and delivered S5.920,(((l cenificates of
participation (the "1983 Certificates"). ofwhicb $4.960.000 prindpal amount is currcnll) outstanding. The City
is providing for llIe prepayment of Poor Lease PaymeDts due under the Prior Lea...e Agrl!Cment [n ordf.r to
red<.em the outslanding 19&3 Cenifica!es on October 1, 1993.
A portioQ of lhc: proceeds rec:eived from the sa}c: of me Ceniflcates v.;lI be u.saJ to e:s~ bllih .an
irrevocable C'iSa'OQr' (-the -Escrow Fund1 hcld by Bad: of Amvka NatiouaJ Trust ar.d Savings A;.soci.dtlon., Sa:!.
Frandsco, CaUfomia., .t.s es.cruw bank {lbe '"Escrow Bank}. pursuanl to an Escrow Dep06it and Tn:st
Agroement, <late&! .March 1. 1992 (the '"E.scrow Agreement"), by and berween the City and tile ~, Bank.
There $han also be deposited into the Escr~' Fl.:lld mone:r-; from the reseovc: fund .and the lease payment fuDd
established pursuant 1.0 tbe Prior Trust Agreement Moneys 0.0 deposit i.n the Escrow Fuod will be invested
i.e direct general obJL,gations or the Unlted States Goo.-cmment (the ·United States Obligations). the interest
a!l.d principal payments from which shaD s.ecure .Inc! prO\o"Ede fu nw. for ihe City's Prior Lease Payment
obligA.tions due \meler the prior Lease Agreement prior to October 1. 199J and prepayment., mclwing
premium., due on OctOber J, 1993., to prepay 00 said date L'I1e rern..aining Prj()r l....ea.5c: PaymentS due under the
prior Lease Agreement. Said payments ""ill be applied to principal and interest due with respect 10 the 198,)
Certificates on and prior .0 October 1, 1993, and' to redeem (he remainlng oU1Sunding plincipal of the 1983
Cert:6cates ou October 1. 1993. See "VERJF1CATION OF ARnliMETICAL AND MATHEMATICAL
COMPUTA TIONS~ herein.
&tabIisbmenl of llle Escrow FLind ""111 operolte 10 defease !.he 1983 Certificates and 10 satiSfy and
discharge the Prior Lease Agreement;. bowever. me City will remain liable for paymenl of Prior Lease
PiymeOUo due undcr lbe 1983 I...ease Agreement, sa)d u!lbility 10 be limited 10 amount. .. depos..ited in the Escrow
Fund, and ~ OWtIen cf the 198.3 Certificates wiil remain the ownel'l of an undivided interest i[l the pavmentS
under the PliOf Lca.se Agreement. The Es.crow Bank, as agent for the City, is irrcvocably committed (0 make
payment of Pnor !.use P.aymeols under 1..he Prior Lea.se Agreemem as due prior to October 1, 1993, and to
cause prepayment ol the rema.ining Prior Lease Pa}meDb d~ onder the Prior Lease ~reerncnt Oil October
1.1993.
THE CORPORATION
The ('...orpor'dtioD has been incorporated' as a CaliIomia non-profit corJX)r3tion for the purpo;e of
a<:quiring. con.<:ttucting and leas!ng capital improvement projects. The Corpor.UiOD is govemoo by a five·
member Boord of DitectOI'!.. The Corpcration i5 anticipated 10 have no ao:.sets Oi" propeni($ other than its
right 10 receive l....ea:se Payments plmuanl 10 the Lease Agreement, which righ!. has beea assignC'd to the
Trustee for the benefil of the Owners of the Certificates.
RlSK FACfORS
The following factors, along with aU other information tn th~ Official Statement, should be oonsider.u:l
by potential in'o'eStor.> in evaluating the inveslment risk! inherent [[I purcl1ases Dr the Certificates.
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The OOliptioD of \te aty to pay iu l.,.e&se P.yments 00cs DO! constitute an ObUgation of the Clty for
wwell Ule Ci;y is obligated. to lay or pledge any rorm ot taution or (or which the Cry ha5 k:\.ied or pledged
ail)' form of taDOOD. The obliptiOD or lIY! City 10 pay it:5 l..eau Paymedts does DO! constitute a dclll or
iodcl>tednes.s of the Chy. the State 01 any of iv» poTllk:a1 ,cb<livU!om. within Ute ~ng of any copstilutiollal
or SLa tutory debt ltmhation or I't3trictioll.. The obligation of the City to make its l....eau Payments. is in
considePltion of the right or the Cit) to the oontinued u.s.r. aDd possession or the Project. In t!l.e ~...ct ol
failure of luch USC' ud posseWoc, the obllgatiOll of lhe CHy may be aba;ed in wbole or in part as d.cscn"bed
herein
A1~bougb tile Lease Agreement docs pm oeate , ptcdgc, tiel'l or erlCUmhrance c.pon the I\lIlds of the
Cry, the aty i& obligated lIndtr the l.ea:;c AgreemeDt to pay the uase Paym.ellts from .l!ly sour<;e of !egall)'
availabk funds m4lbc City has roven.anted ill the Lease Agrecmenllh4.t, ror so ~ng as the Project Is availabie
tor its usc. il WIll make the nec:es.s.ary annual appropriatioN-wiLb,in its b~get for its Leas.c Paym~nu.. The City
is currently Liable and may become liaNc 011 otbeI obligatioDS payable from general revenucs, some: of ""'bfeb
may blIve I priority over tht: Lease PaymenLs..
The: aty b&s the capacity to enter into other ob] igalions whk:b may ronstitute 8ddjtio~[ charge!
apwf its re.'etlucs. To the extent thai addj tional obUgations are iIK"Urred by the an:, the fun<1s available to
make Lease Payments may be ao:rease4
Failure to Comp'k:te tlle 1992 Project -~ obUgation or l}a.c Oty under its Lease Agreement to pay
j;s l...ease Paym.cnts is in consi<Jerrstion for the use and possots.$ion of the Projet;t, 'The obligation of the City
10 mate its Letic: P:ryments (other thAn 10 lhc: c::J;:UnI tlla; fynds 10 make Least Payments are available in the
Lease Paymc!l( Fund, the Reserve Fund aDd, in the: case of tcnnir.aitoD of the Le..ase Paymenu., the 1992
ConstrUCtion Fund) may belbated in wbole llr [n part if the City docs not have full US!!' aM possession of tbe
Project. If all or part of I:be 1992 Project is DOl comt!'\lCtCld, installed: aM .o:.epted, lbe ely may DOl be
obligated to make a portion or Its l..c::;Qc: PzymenlS.
Damars or Destruction.: Emil1enf Domain -If damage or destruction or eminec t donu La prc.ce::dings
w{;:b respect tQ Ute Pro~ res.Ull in aba!ement or adjustment of I..ea:sc P.ayc!CnlS aDd lbe te:!iuldng Lease
Payments, tC'gether with moneys in the Reserve Fund (and: in lbe event of damag.e or destructior., together 1N:ith
rental interruption or insurance proceeds, if Imy) ate insuffitien! to make an payments of principal and interest
due with res.pect to the Certificat~ 4uriag the. petiod that \1\e P~jCC1. is octng repla:.:o1, repair~ or
reconstructed. IlIec sud ~nts of principal and [ntetesl Ita), Dol t'IC made in [uIl and' no remedy is 3Vdilable
to tbe TfllSlCe or the Ownc:n. of me Cetti1k:ates undc:r tbe Le.a.>c Agreement or Tru,st A.greemC'~: for
nonpaymenl un4er sucli cifcumstallCe$.
Abseng: of EaohQuake !lnd Flood Insurance -The obligation or the City 10 malc~ Lc.uc: P.aymenu
may be: adversely affected if the Project or any improvements tlIer~n are damaged or ~tJoycd by natural
hazard such as earthquake Of fiood The CIy, bowevu, lis Dot obUg.Jtcd under the Lease AgrUmeDl 10
plocure and maintain,. or came to be mainlOllncd., eanbquake Of floOO insUf30CC on the Projet."'t. The City,
b09r'e'YCr, is obrtBated un!kr tl1e I...eas.e Agreemen! to maintain olher types. if irumance. See "APPEl'lDIX B
-SUMMARY OF PRINCIPAL LEGAL DOCUMEN .. -LEASE AGREEMENl'
14
Remdin
Failure by lbe Oty to. pay its Luse Payme.cU or other p.ayrcents reqwred 10 be made liodcr the Lease
Agreement or failure to ob:§.eJ"\/C' and perform its other a:r-.renanu an<! agrr"JemeCl!. under the Lease Agreement
rOf a period of 30 4.ays (or greater period as descn'be.d in "APP£."'JDrx B -SU1 ... 1M4.R, OF PRINCIPAL
LEGAL DOCUME.NTS -l...EASE AGREEMENT -R~medics Upon E .... em of Ddalltn after ~"titt-eQ nobo:e
of.s.ucb bilure and reqllt$1 that it be. remedied ba<; ~n givfn 10 the Ciry 'by lbe Ccrporation. Ot the T~I<=t".
as. the assigne:c o( the C.orporation. consiit!]!e &n e'\Ietlt or default under the Lease Agreement anI! permit Ibe
Trustee to pun.ue remMia at taw or i.e eqwty to cmnn::e such covenants aDd agreements.
The enforcement ohny remedies. pro-.'ided in the ~ AgrecmeJlI and Trust Agreement could prove
!Iolll erpenstve and time consuming. Al though !.be I..us.t: Agreement and lbe TI'J51 Agt'eemenl pro\i~c that
the Trustee mol}' :ake po6iC5o!iion or the Project and ieas.e it if there is a defautt b)' the City. and t1l.e Lea..~
Agreement prcMdes that the Tru.stee may have su.cll rights of access to the Project as may be neces.s.ary 10
e:rerdlic any ~ portions of lh~ Projea may J1O[ be easily rec0'Verabie and even if rewvered, could tk.'=
of little value to others. Furthermore., it is DOl certain wfielber I court wou 10 permit Ule C(ercise of the
remedies at rtposscuioll: and }.casing with ICSpect lbereto.
In tbl: event or I defanlt, there is no remedy of acceleration of the lotal L.e.a:s.e Payments d~ over the
term of the Lease Agrec:meot. The Cicy will oely be wble for its ~ Payments on an 3i1nual ba..~ is, and the
Trustee rouJd be required to seek a separate judgement each year for that year's defaulted l,..ease Payments.
Article XIII B of the California Constitution broits the amount that local government!. caD appropr.alc
anoually. 'I'M Ci-::y in reeent years hll5 remained well within its app(Opnations limll. See
·CONS11'J'UJIONAL AND STAn-lORY LIMITS ON TAXES AND APPi':OPRIATIONS· berc.in.
The City ~ ro'I'enanted in the TNt Agreemect that it ,baIl not 'We or permit the use of any
proc:ee>ds at the Cel"tifiUIl~ or any funds of tbe Corporation or the Cry. d(rectt",.. or indirectly, iD any manner,
and shan nor take or omit 10 take any action that would ClLlSe th.e interest component or the ~ Payments
to be inducted i.D the gr~ income of Lbe Owners Dr the CertifiCllte:s for federal income u:x purposes. In the
eve>.Jt the ary faLls 10 rom ply with the roregoing !ax covenant. the interest component ot the Qrtificatei rna)'
be Includable in L'le gross ina;>In(. or the ~ers thereof for fedt-rat tax purposes.. In such t:YCnL, ~he
Certificate OwnCC5 may be ~nlitled to bring. damages actioo against lhe elry. See 7AX EXEMPTION"
hecei.n...
l5
, •
,
" !ft··
.lii(_,
CONSTITUTIONAL AND STATIlTORY LIMITATIONS ON
TAXES ANl> APPROPRIATIONS
Article XIII A
Artidc XllI .A, knctwn 2.S Proposition n. ot \he ~ifornla Co~st:it\l.\ion limi.ts tbe amoutot of ad
vaklmP t.ue5 OD real Propen-itO 1 % of "fuD cash value" 15 dc~rmill:ed by the County .&\ssc:Swr. A11.kk xm
A Clefin.ea ·run caslI value· to mean me County ~r"s vat~tion or real property as 5h~'tli on t.'lI~ 1915-16
tal bill Wldet tu.D cash vaI ... c:. or lhcreaft~r lbe appraised value of real property wben pur:::ha.s.e4, ne'IJo'ly
wnstr'UCted. or a cbaDgc: in OWJH:n.ttip bas occulTed afte! tl1e 1975 assessment ·Crumges. i!l o.wnc:~hip· do
not iDdude purc:hasC:S or transeers whea the per.ioOC acquiring the property was 4isptace<l by emicc!1t domain.
invenc amdemnaliOD. or acquiSltioD cr 9roperty by a ~nt c:uJty. or ceruln 'tnm. .. rc:n betwecc 'f'OUSC:S
or parents aDd childrc'n.. '"Newly construct.cd" docs DOt indl.:dc real property COD.StTu.cted after I disaster as
<Ieclattd by the 00YerD0f" of tbc S1a~ wbere the property reconstructed is comparable I.e vatU':. I;) lhat
4eltr0yc4 Funhenoo~. aD real propetty'VlluaOOD may be i..ncTt.'.asc4 to re:1ect the innalionary rate, as shown
by tM consumer price unSex .• ar companbk t1ata. not to e:zcoed 2% per year, 01' may be reduced.. Article: xm
A also pemtiu. lhc: reduction of the "full cash value'" baSe in the evc:nt of declining property wlues Clused by
damage. destruction. or other factors..
Article XIII A exempts rrom the 1 % t..a:I: l.imitatloD any general or spet..ial taxes to l'tpa)' i1l<.1ebtedr.ess
appt'O'tto'ed by the ~terS prior to July 1. 197:1, and requires apprcwal by two thl1d1 of :be qv.alified electorate
to im~ 5pCda.! taUS. while lotaUy precluding the imposiulJII of any Il:Idttional ad valorem.. sales, or
transaaion to OD leal property, In addition. Article xm A ~uires tlIe approval of two thin1s of aU
members of both bouse5 or lhc Stale kgislaluTe 10 chaogc: any Slate tax laws Te£u1cing ill increased tax
r.""u,~
On June 3, 1986., California voters .pproved Propositioc 46, which added an addi tiona.l exemptfon to
the 1% IU.lim'u..ooa. imposed by Ani<;\c XllI A. Under tMs amendment to Article xm A. local pem-meot!.
aDd school dislricu may increase l1Ie properry laI: rate lbove 1 % for the period necessary 10 retire Ilew general
obllp:tioo boJlds, if rwo thir.1s of those wtiog .ill • kM::a.! election approve Ihe isSnance of such ~ IDd the
monies. rabed: through the sale or the bondS are us.ed aclusiYely to acqulre or improve real property.
Article XIII B
On NtJYember 6, 1979, CaHCornia wiers apprCl'VCd Propositio!l .c, known as the GaM ·Initiztive, which
added Artide. XIII B to the California Constitution. Propositions S@ and Ill, approved by llIe California
VOltn. in 198& and 1990, respe.ct.t.."'e~. s.ubstaPtialJy modify Ankle XlII B, The prindpa! effect or Article xm
B:is to limit the annual appropriatioru. or tb.e Slale and any ary, oounry, K"..':.ool district, autbority, or oLher
potitica.l subd.i\'i!-ion,. including the City, of lhe State 10 t"!le level of appropriations for the prior FL5Cii.l Year.
as adjus'ed for changes in the cost oI lMng and poputatioll, The initial version of Anicle XHl B provided
lhal tbe "base year" Cor estabUd\~ng an appr-opriatKlru. limtt "'':Z!. 191&.19 fisca.t year. ~hi.ch was. then a.dj-w.too
an nuaIly to re!iect cbanges iD populatkm, ronsurner pfic,.e$ aDd certain l.ncreas.es ill the W5-t orsc1".ic,elj provided
b) Ihesc: pubUc agencies. Proposilioc 111 revised t..i.e method or making annual adjustments to tbe
appropriabons limlt"by redefining changes in: the C06t of hving aed in population, 1t 100 rcq ulred that
beginning in fiscal year 1990--91, e2cb ap~opri.ations limit must be recalculat~ using the actual fiscal year
1986-87 appropriaticru.limil and making ;he applicable annua13djustments.as ifth~ provi:!iioos of Proposition
111 had been in effect.
Appropriations subject 10 Iim1tatioll of a kxa[ go\,erwnent under Article XIII B [nch.de generatly any
authorization to expend during.a fuQi yt'ar the pr0c:;.ee6s of tues levied by or rot that eTltity and the pr~
or certai.tt Stale liuMntions to thai entity, ex.cl\L'..;.'e of refiJllds of u.:~, Pr~ or taxes inc:lude, but are Dot
limited to. III tax revenues plus the proceeds lo all ectity of governmenl from (1) regulatory licenses, wer
charges :md usc:r fees (but oaly 10 !.be c:ncnl :such proct.eds c:xceed (he cost or prO\iding the service or
re~tioD). (2) the investmeDt or tax revenues, and (3) certain su~D1joru. roc:er.'ed from the State..
16
I
f
-
As amrooed ~. PtOposllioD 111. Article XIII a pfQ'\oidC5 for tesllng 0{ app:-opriatioos limits ove.
consecutive :wc-yur pr-fi.04s.. If an entity's revenues !t! any ~'O·ycar period oceod the amOunts permLttod: 10
be-spent 0Ye1 sucb perioc1, the ~.5 has 10 be returned by Tc.ising tal rate-;; or fee !oCf'.N!lles o\'er tbe
subsequenT two yean.. A5 amen<led by Propoeoition 98, Artick XIlI B provides for Ole payment of I panioo
of any e:xc.as revenues IQ a fund ts13blisbed to assi:sJ: in :..nancir.g cer'.aiI.. school needs.
The G:y5 Artide XIII B limjt flJr 'Ltc 1990-91 Budget 'Irt'ilS $52..42 million aDd 199J..91 budget
appropriatioD.s subjecllO tbe limit are S4n96 million. k such. the Cil:y l\oao;. under the Article' X!U B lic::Jj1
by SS.46 IDillion.
The City's Article xm B limit for the lQ91·92 BUdget is S48.3S mIl!ioll and 1991~92 ~udget
appropriations subject to the limit are $42.89 million. N :!uch. the City 9.ill be U oder t..M-Anicle: XIII B llm..il
by $5.49 million.
Article XlII B pel"Dtili aD}' goYe:1'1lfD(ot entity 10 change: the appropriations limit by • VOLe or the
e!«'.orate in oontortnity with SUltlltory and Constit!.l.tionaI voting requiremeots.., but all)' such vorer-apprO'o'cd
change C»n only be effective: for a maximum of four yean.
R.,..,nt LitigatioD Regarding l'ropeny Tax A1locatioos
In Jan\l.aIy 1989, iI! A!ieg'heny pjtuburgt. Coal Company v. CounTv C.omrni}sion of Websler County
West V·uginia.. th'! United States SLlpreme Coun lnwlidale(l .a system or assostDg propert}' b.a..or.ed tlpoD the
date ot acquL\Hion. The Supreme CoUlt was not presenred willi and djd DOt decide the oonstitutionaUI} of
ArtiCle XID A of the Cali(ornfa Constituticn, which impk'meDts on I ~tatc ·'Wide basi.<; a simrJar property tax
a.ssessme.rn S)'5tem.
The Allegheny decision ha1 led 10 the filing of several iaw5.uilS renewing auacli. on the valldUy or
Article XlII A. lWO or wlUeb have been decideA It the Cllifornia Court or Appeal k:vc:L In both cases, the
California Coun of Appeal upheld the oonslitutionality o( Article Xlil A 00. June 3, 1991 the United Stiltes
Supreme Coun acu:pled review or ODe of the ca.ses., RH. Macy & Co. Inc. v. (",oTllra C',Q5la CoUT!t'i.
Subsequently. R.Ji. Macy &: Co. withdrew from the ~ On October 7, 1991. the United StalQ Supreme
Coun Iccepted for revi.,.· .. similar caM: ehaUengiDg Artick XlII A. Nordlineer 11. Hahn. 10 the event the
Supreme Court concltKk::s tllat Artide xm A v;olates the. Fede ... ! Comti!ulion, it could eJca it variety or
temedw options" wbich ooliid include requiring !.he C..a.lifQrnia Legislature (0 devise a revised property tax
SfJ'em. K..x:ent)y, the California Sena,e also appoinled an i.JJd.epentknt bipilnis.1n pane! (0 examine allernate
tnation melbodt..
The CJty cannot predict 9o'helher lbes.e cbatkoges to CaUfornia's Pl'estnl syslem of a.ssessing prD~rty
for taxation will be successful or wheEl the ultimate resohnloD or thcsc cases ,~ti11 OCt'"\lr. :oor can the Cit)'
evalllatc. the ultimate effect that any j.uch decision would h.a\le QD its t.u revenues.
ESCROW DEPOSIT A.'iIl TRUST AGREEMTh"T
Pursuznt to the Escrov.' Agreement, the Escrow Bank will receive, from {i} a portion of the proceed:;
of the Certificates, (ii) I portioo. or the: money5 on depo&[t i~ the 1983 reserve fund for tbe 1983 Certificates
land (ill) the mo~ on deposit in the lea.<.e payment fiwd for the 19:83 Cenificatesj. aD amount which, wben
invested in certain Federal Securities. together with in."eslment eamin~ thereon, ~ill be &ufficient to provide
for the payment of the principal and inlerest due and to become due w:ith f¢Spect to the 1983 Cenificales prior
10 October 1, 1993. and to redeem the remaining !983 Cenlficalcs. incluchng the applicable redemption
premium. 00 October 1, 1993.
17
•
TAX EXEMPTION
In lbe optn.Io~ (If Jones Han Hill .t: Whitt:, A Pror!SSionaI uw CorporatioIl, San Francisco,
Califoruia. ~pectal C.ou..c.ser.. 5oubject, hOWCYe1, to !.he qualifk:atioWi SCI forth bclaw. under exislinJ: law, the:
interesl on the Certificates is ac1uded !rom gros..o; income ror fbderal income tax purposes and such interest
.is nol AD Item or ~.ax preference for purposes of the federal alternative minimum tal: imposed 011 ind[vW.Wlis
and corpontions, aIlbo'llgh for the purpose of annpa.ting the rederat alternative minimum to: imposed Oil
certain oorporaooDS,. ,nell Interest is taten into acc:oUtlt in determ.inillg certain iJ:;come and earnings.
The optniom I!.Ct ronh 1D the prececl1n& puragrapfl. Irc suhject to t!le condition tllat the City comply
.-lib all requirements of the IIlten!.a.l Revenue: COOe 0: 1986 (tbc "Code; that m...sl be satisfied sUbsequent
to !.be i&5u.aoce of the: Certifk:att!S in order thai Iud: mlerCs.t be,. or CODtiDl.IC to be, cx:cludcd itom gross inrome
for t'ederal !ncomc: In purposes.. !be a.ty bas covenanted. 10 comply with eacb Ioucll requlremCIlt Failure m
comply with .::ert.al:J 0( such requirements may c:au:se the. i:nd~ioIl of such interest in gross income for federal
UY.:omc tu pu.~ f,O be. retr'OICI.iYe to the date of iuaanoe or the Cenificate:6. Special Counsel CKprcs5C3
no Opinion regarding other rederal ta:I: consoquelKa uishlJ: with respect 10 the Certific:a(el;..
ProI.peaiYc purchasers or the Cetti6cates 5obould be aware that (i) with re6pea 10 insurance
oomparues.. otll::r than l.lfe insurang:, companies subject to the t.a:I imposed by Section 831 of the Code.,
Soctioo 832(bXS)(B)(i) red:~ {he deduruol1 for loss rtSerVe$ by 15 percelll of the: sum of certain itew.
indlldini lnteres. ",jib resp«I 10 !he C<nifica .... (ii) lor ..... ble ,..,. ~g before January I. 1992,
interest wiUl respea Ie the Cc:nUicalCli earned by some corporations coukl be subject to the: c:mironmenLaI
tax im~ by s.ectiOD 59A of tbe Code. (iii) interest willi resrect to lhc: CertifiwUCIii earned by cen..afn foreign
tOIpOralions doing business in Lbe UrulCd SlI'tCIii rould be subject 10. .. branch profits tax imposed by sec:tion
884 of the Code. (iv) passive investment income, iDdudiDg int.crCiot wilt! rC5pcct 10 the Certificate&, may be:
sUbJea to federal income la:QUon under ~QD 137S at the Cod.e ror .s.ubcblpter S Corporations that 'have
SUbchapter C eamil:g:s aDd profits It lbe cJosc. of .he taDbk: rear if 8JUtc:r than 25* of the grm& tea:ipts of
SUc;;)15lIbdJapter S COrporatioD is pa.uive investment im:ome. an (v) Kaion 86 0( the Code requires redp:eats
of cenain Socia] Security and <:enaiD R.ailroad Retiremenl benefits to tate: iDto a(XX)unt, in dctenn.in.Ulg gloss
moome, receipts or aa:rua:J!. of mlCfCS.t Dill (be CertiHc:atc:s.
ID the Iu:rtber oplnion of Spcdal CoWlSd, &Ddt. intc:rc&1 5 a:t:mpt from Califernia personal iDwme:
CERTAIN LEG .... L 1t".A TIERS
JODeS Hall Hill &. White, A Profes.skmall...1w c.orporation, San Francisco, ealirorni;.. Speciat Coun.sct.
will render all OpintDD wirh respect t\J tbe valJdlty and cnforceabllity of the Lease Agreemcnt and the Trust
Ag;'eement and as to the validity of the: Certificates. Copies of sucb a~provi.Dg opinion will be: available at the
time of deHvcl)' oC the Certificates.
ABSENCE OF LITIGATION
There is DO AClio.n. suit or proceeding known to be: pending OJ IhrcaleJled., remaintng or enjoining
the execution or delivery of the CertiilOlte:s, the Leas.e Agr~menl, the: Trust Agreement, the As.signrnent
Agrecmcut or the: AgcIK)' Agreement or in any way con!esting or afrecriDg !:be validi ty of the foregoIng or any
proceed£n&5 of the City takeD with respea 10 aDY or the foregoing.
18
.) .,',11='
.,
~.;?:";:": -
APPENDIX A
GENERAL AlliD ECONOMIC INFORMATION
ON THE CITY
,.
" -
RATINGS
MoOOy's !nva tors Servio::, ltJc. .arid Standaro & POOr'i Corpor:.:tioD have gi\'cn the Certificates tile
n:inp 01-__ • and • ___ ", respectively. Such ratings re1l«t oc.ly lbe ~ of such org.anizaooru. and
an explanation of the ~tgrufiClncc of nell tat!.ngs In£)' be obtained from them a.s ~OIi0W5: Mood"/s InYCStors
SeMce. Inc., 99 Cbun;h Street., New York.., New Yori nXXT? (212) S53-03CO:; Standard &. Poor's Carpo:atioa.
2.5 Broadway, New York. New York l(XX)4, {l12) 248-1525. There i! no usurancc th.31 either of such ratings
will eontinue for any gr."CD perkxf or time or that ei [her will not be !e'Ioi!.ed downv.'Jr\! or withdraw:::: ell (irely
by the rating agency that ts.\iJOO It. it in the judgment of such rating agency circurrutances so 'W3rraot. An~
such dO'A'nWafd rMsloD or witbdrawa[ of eltter of $uch ratings may have aD. ad ... 'er;;e effect OD the market price
of the Certificates..
AV AllABlLIlY OF DOCUMENTS
Copiel of the l....ease Apeemect, the T1'U5t Agreement, !be ~ignment Agreement and ,he Agency
Agreement .. ill be: 2V&ila~1c., upon requmt., from tbe Office of the City Oerk. at)' of Palo Alto, Palo AlIa
Civic Center, P.alo Alto, California 94301.
t;NDERWRITING
The Cenificales 'lTe being pun::hased by Security Psdtic National Bank (the -Underwriter). The
Underwriter bas .ag.roed to puIdaa.ov: [he Cenificafes It .II price of $ ___ plus accrued interest The
purchase agreement relatins 10 th~ Certificates providcz that the Underwriter will purcha.sc ae o( the
CertiflcalCl if ;my are purch.ased. the obligatioD to make such purchase being subject 10 certain terms and
coOlditions set forth in said purcbase agreemetlt, the approval of certain kgal marte~ by counsel !Uld certain
othu ron4itiom.
The UodeJwriter may offer aXl sen Certifical~ to certain dealers :and olhen al p~ lower lr.an the
ofJeri.D1 pric:es stared on the cover page hereof. The offering prices may be change<! fi.--om time to time by the
Underwriter.
lIUSCELLANEOUS
Refcre~ are made bereLn 10 cert:l,ln documents and reports .'h icb are hrief s.u mmar:i~ [hereof .. ·bid!
do DOl purpon 10 be complete or definitit;e and reference is made 10 such documents and repor'.£ for fuD and
oomplclc s.talements of the contents L'lcreo(.
Any statem::nts In this Official Statement bvoMng mailers or opinion, .,..he~h(.J' or nOl expr~l)' s.o
,tated, are i:rnefJded as su<:h and DOl.lS representalku\$ of f;act ThiS Official Statement is not 10 te construoo
2!i • CODtract or agreement beh\leeD the Gty and the purcJw.e~ or Owners. of an)' of the Cenificales..
11K executiOD and deilvery of this Official Statement ba.-; beeD duly authorized by th: City.
CrTY OF PALO ALTO, CALIFORNIA
Br-________________ __
Da\C4: March -' 1992
19
THE CITY
~1Ieral
The City is iocate.:l (n northern Sacta C..ara County (Ine ·County). aMut 35 mnes .south DC San
Francisco ar.~ 15 ntiks northwest of San Jose.. Th~ City is adjacent to the Sac Franci<;co Bay to the East, aed
extends latenDy ac:as.s the Sac Frandsco Pec.insula, rismg.across 1.D anuvia[ plaiD 10 the footb.ilh of the Co.ast
Range Mnuntains.. The Oty COY'Cn ae arcz or aooul 26 square DlL."le;;
The Orj WB!!i incorporate<! in ]894.and has operated 8..<, 8 cbart~ city :since 1909. The Ciry chaner.
adopted by the VOlers of the Ciry ill 19SO, bas been a1]J.end.eJ.and.adr1e.: to from time to time. Slnce 1953, the
a.ty has operated u.nder the Counci1.Man.ager form of go ... ernmenL
TDere are Dine City Coundl membcn. elected at large, for Staggered four·year terms oommem:ing
Ja!\tutry 1st or tven-nnmhere4 yea.n Each year in lijDuary the City Council elects a Mzyor and I V"Jet: Mayor
from iu members to serve for one year. EJec:tJons are held every two yeal1lo, In November of odd-oumbered
years.. The Mayor presidCi at all OIY Cu.uudi meetings. The ary Manager is res.ponstbJe ror the opera lion
or aD m\:wpal functions except tbe offices. of Ci<y AHorr.ey. aty Oerk and Cit)' Audllor. These off1ci.aIs are
appoinle.d by IDd report dirc:ct1y to the at)' Council.
At I specf.aI eIec:tion llc-1d November S, 1991. the City eleaon. approved Measure E whlch amended
the Ct!)l Charter to limili!Je n!.Jmber or consecutive lerm.s tor members of t1le City Cotinci1 Effective January
I, 1992, DO person would be eligible 10 serve consecutively in more than two full tenr..~ of office as a 1l)C'rnber
of the Oty CoUJ:;ci!.
\
.'
Ana POpulaliOD
The Iollowins: !&blc sh~ the romp.a:rati\'t pop..:!.atiol1 5111 tistks of the Ciry, the Cou Dty, lbe 'Stale and
lhe n.adoll~
y .... 0f1 I
1\181 55,100
191n 54,lDl
1983 56,000
1984 S6,2OO
1'l85 56,600
1986 S6,6OO
1987 56,500
1988 S6,6OO
1989 57,100
1990(1) 56,000
1991 56,000
CfIY OF PALO,uro
ARE!. POPUU nON
FOI" Yeuw 1981 CIuoacJt 1"1
_Clara 5 .... or
CoaaIy c.JJfDnlla
1,340,600 24,395,100
1,341,300 24,912,000
1,347.600 2S,I65,OOJ
1,368,400 2S,414,00J
1,386,600 2S,ss7,500
1,393,800 26,681,500
1,407,600 27,338,000
1,422,900 27,996,1XXJ
1,443,800 28,662,00J
1,493,800 29,760,021
1"\13,100 3(),351,00J
(1) u.s. CmnL, Daul. os oj April 1, J99fl
"'"'"' CiW{omI4 Dq>mrnoDu of F ___ (utinuues os of JQ1WlJry J).
A·2
Vnlr.ed StaUS
229,009,000
231.002.000
232,791,000
234,864,000
236,942,OlC
239,114,000
241,279,OCXl
243,490,000
245,744,000
248,·)'10,00)
250,87&,000
Persona' Income
The (ollllWfng tat,1e summaritcs lbe toLoll effective b'J)'ing income and tile median how.chold effcaive
buyil'lg inOJmt [or the City. thc: County and the State aver the past five yean:
VelD' md Area
..
1986
City of Palo .AJto
Santa Clara County
Californla
l!lS?
City of Palo Aho
Santa Oara Coun!)'
Calltornia
U88 (1)
Cit)' of Palo Alto
Santa Clara CcUDty
California
1 ....
City of Palo Alto
Sinta aara Coun ty
C.alifornia
1 ...
City of Palo Alia
SaD'La Clara Coun ry
California
CflY OF PALO ALTO
PERSONAL INroME
For Ymrs 1986 throoeh 1990
Lut. J1vc YUI'C
Toe.! EftecIl .. BIIJIac """-(_. QIDlUuI)
S 1,103,525
22,888,039
380,811,129
S 1,3~5.012
26,136,654
426,008,347
S 1,341,$21
26, 1!S,1iS3
426,174,001
S !,..154,1'32
26,770,972
444,9'08,647
S 1,544,186
29,611,407
447.78<,nl
M.rdian Hou.:sebold Ertec~
Bu)inz Inrome --
S 39,753
37,517
=7
S 43,986
41,148
30,537
S 44,012
41,717
30,081>
S .... ,492
41..126
j,Q,713
S 48,228
45,662
33,342
{I) C'attlnt'nang VI 1988. SaJes and MOl'kerutg MlJN1gmtclJ SJUY~ of Buying POWD' Tf:'I;S.U:d the method by
tto'hidI mufian housrhold buying income i.r wlculaJeJ, re5'lJIMI in tzl'I. lWO'lJge 11 '::{: downword re>'Uion ~f
1M 1988 filum.
Sourc.t: S&MM (Sahs and Mi11'UMg MtlMgtmt:n1), Su1'\'!)' of Buying Powrr.
Employment
The aty's UJWI1'Dpla}-menl rate bas remained beiow that of the County. the StAte and the United Stalc:5
C'YeT the. put five years.. b July 1991, the Inlcmplayment nte i.n lhe City was 3.8 percent, as. compared to 6.2
perc.ent fc; the Q)u.nty am! 7.6 j>eTctfil (or tbe State.. The foDowlng table $ummari,tc:s. the civilian Latlor force.
cmpt.oymcu and unem.ploymeJJt figures over lhc past fiyc yean for the Ciry, the: Colltlty and the State of
C.atiforn1a:
CITY OF P.-LO ALTO
CIVILIAN v.JIOR FORCE EMPLOYMENT AND UNF.bIPLOYMENT
FOR YFAIIS US, TIIlI()VGB '''1 (1)
at)' or hIo AlUl 36,572 35,573 999
Sa ... Clan Count)' 8iJ7.IOO 770,100 36,400
13:137,000 12.946,000 791,000
2.7%
4.5%
511%
CaIlIornia 14,133,000 13,385,000 748,(00 5.3% 1,.,
Ci t)' or Palo Alro 37,619 884 2.3%
Santa Clan County 847,200 815.000 311"
14.5ls.ooo 13,780,000 731,000 5.1%
I""
CHy or Palo Aho 36.005 901 2.4%
Sa.n1.2o ClItIa County 813,600 780,'100 32,900
14,6;0,(0) 13,846,000 823,000 5.6%
19" (1)
~a_W~._O_f_P'_W~AI_Ul __ ~ _________ 36.~4~29~ ______ ~35~,~~94-________ ~I~~~ ________ ~).8~
Santa Oar.! County 809,600 i59,300 50,.300 6.2%
California 14.725,OOJ 13.609,(0) 1,116,0C(1 7.6%
(1) A> 0{ July }991.
Sowu' SkU< 0{ c.IifomJ;j Empr">,"",, fu'dcpm<nJ Dqx;nm< .... L<Wm Marlat Infonn<Ui<M Divis"",
Iud.olly
Tbe O(y bas a 4iYcBe eoonol'l\k base Mad is home to I Luge Dumber and vp.rie!y or high tech_'1Otogy icdLL\U)'.
•
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The Cty"s major icdustrial c:mpkJyen a:e clustered in rhe City's three ind w:trtaJ p3rb. The Largest Dr tbe three,
Stanford IndliJ.tri.aI Part. CO'VetS 660 jh,es, aDd boWC15 approximately 311t'Danu.. The St.ai1rord Ind'i/.5trial Park: is rolled for light
lMCutaCiuring. Tbe P.aJo Allo lildustrla! Park is the Oly's second laztest industria! park. c.overi:lg 90 acres, the Paio AJ to
ln~u.mial hIk i6 also zoned for Up! matlufacnJ.ncg and has about 15 teJ!:alHs. B.aylaD:ds lMustrial Park is the thirc:! iDdusajai
park; it COYers '.2 &CI"'eS. 'The following :ttt among the City's largest lII(jU,!;trial employers:
1.000 or mnn; EmpIwoes
Loral Corporaticn
HCWlett·Packard' Cvmpany
Syntcx Labs Inc.
Va,ian As.sociatc:s
Wa!kins-Johnsoll Compaay
Western DeveJoPDlCDt La't"{,n<ltoriesi
Be:ckmaa WttUmeIlt
0""",1 Imtrumen. Corp.
lJuernational BusiDes:; Machines
Lockhee4
Teledyn<, loc.
101m Emp\!!!m
Aavalloy loc.
Al2a Corporation
Cobereat RaWatioa
Collagen Corporation
Crystal Technology Inc.
Ea.>tman Kadak: Compan)'
CI1Y OF PALO ALTO
MAJOR INDUSTRIAL EMPLOYERS
Aerospace eq Iljpmetlt
Computen a.nd electronic aDd mooical equipmeot
Prin.ted drcuit boards., die astiDg. transform.,;
MicI'Owave generators and power meters
MlcrowaVt: transistors and power meters
Ptwmaceulical
Electronic-equipment
Eloctronic component;
Eiectronics.
Clioical instrumen ts
Optc;..ek:ctronic Ge<.1ces
Small bw;iDe6S computers
MtssllC!;
Microwa~ equipment
Computer lead frames
Tbe..-apy ~leffi5
Faircbi1d Camera Illd wtNment Corporation
HotlghlOo MrmiD Company
I..a.ser optical ~tems
Biomedical prodUC1.!o
Optical CI)'StaIs
Pbotographic equipment
Ekttronic components
Books
Information Management Internalkmai
Penim;ula TImc:s Tn"bune
Systems Con1To~ Inc.
Syva
Tao Produa.!
Telesensory Systems, Inc.
Xerox
Zoecon Corporation
A-5
PrinLing. data proc:ess.ing
Publishing
Software
Diagnostk assays
Data eq uipmenr
EJectrk.a~ reading ajd!;
Business machines
Agricuhu ra! chemicals
101
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Bo ... ~
A$ ofluae 30,1930, the City had apprcaimateJy 25,008 bousiDg units, whIclI is. approximately OIJC.-.-mtb
or the -l1li oa the mid-pc_ola /rom the Ctleo 0/ R_ Oty 10 SUllfIY'U-III od<Iitlon. Stanfon!
UntYersUy }If'OYid,es boDS!nr for 8,422 0( it!. 13,972 5~ts.. '!beu are also 848 .campus units availabk for
me 12.J30 fIcuIty aDd statr. R~tals for ODe lDd two bedroom apa:nments and dupJeza ranee between $60}..
1,600 per moDt.h. Ralta15 for twO and three. bedroom benna qry from S 1, 100-1,600 monthly. SaJe prices of
bomes sprezd in the approximate range of S2.S0,oco 10 S2..S milliun liepenaln8 on the age., size, condition a~
location 0( the home. There are:igbl primary subtlrban IIQS withlD fiye nillcs o( the City, with bome prices
Y1U)'i%l& !rom allow S2.<O,cro • $4 _ ot more.
Constructlo:o. Adl>lty
0YerilD value 0( oonstructkm: actirir, :bD incrcascd, over the period from 1986 1hrough 1990, lotal
..... ual buil4la& pcnul' YOl .. _ iIIcreased :IS.5 petoeIiL
The ~ table StlnuDar1zes buik1inJ pemrit KIM!)' in lbe City in the last five yean..:
Valuations rIO tho...oos)
Rco!<leDtiai _tlal
New DodliDI Uol1s
(Number or penni,,)
Single Family
MuTtiple Fam.ily
Cl1Y OF PALO ALTO
BI.'lLDIl'G PERMIT VALt:ATlONS
For Yan 19M throuch 1990
U8I> l'l87 lm
S36,(JOO $36,519 SlU56
$4,908 S8,809 55,344
Total $91,5(11 S95,327 588,910
51 lOS 61
298 56 2
T:x.l 349 161 63
..-1_
$45.319 ~608
74,145 77.351
S1I9,465 $123,959
44 70
13~ 90
183 160
. ~ F ... 19&1 aNt 1987 CAlif"'"'" C_ Trends, SmuUy P.ci/i< N_ &utJc iJNJ fm-I9S8·90,
E.co.cmic Scimca ~ Bridey. CsJZfonli4.
A-6
•
Commercial Actinty
The two large:lil sboppi:lg cen~ers iJlllIe Cit)' are the Stallrord Shopping Center and Ibe TO'iWn &: CoUDI1}I Village. Th~
SlanCoN Shop~jll.g Center bou.ses loout ~ ~tores.. which inclu~e $ala FLttn Aveoue, Norw.t1om, Neiman·Marcus, The
Emporium, and Ma.:y'L Town &: eolOlitIy Village includes over 100 tenallts., prizrui,n1y ~pecialty shop1.
RecaLl sates in the City in 1990 increaGCd '.3 percellt OYCI' the 1989 le\.'c1. Between 1986 anod 1990, the City experienCed:
.. growtb tD tax:!'bie saJes of 24.4 percent. The: fonowing table summariza; the annl!.al volume o( taubl«: transactio~ ",;lhttl
the at)' sloee 1986.
Appattl StOles
General Mcrwnd.lse Slores
Drug Stores
FX>d Stores
Packaged Liquor Stores
Eating Ii. Drinking Places.
Home FuT'Dhllings &. A.ppliances
BWlding Materials &:
Fum tmplem.etlts
Service Sl.atiom.
A,,'omobDe Dealers &.
A';ltmnobile Supplies
Other Retail Stores
Total
All Other Oudeu.
Total All Outleu
S
S
em OF PALO ALTO
TAXABLE 1'R""54C1101I5
rOO" y ..... 1986 throo&b 1990
(IloI1ars In Tbousond»
198& 1!187
67.'>66 S 66,089 S
, 87.1I2 193.009
7,303 8,441
21,283 22,m
4.s14 4,ISI
98.795 lOl'<ll
24.059 J(),580
11,022 11,587
24,495 25.188
98,021 81,417
127,359 J 22,59:8
611.929 5 668,25() S
350.284 364,952
1988
65,488
2..11,895
7,886
22,564
3,694
112,%6
31.358
13,163
26.380
103,1XX)
119,628
718.9"'2
351).322
SI,022,213 51m3.202 51.069.2-'4
A·7
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1989 1!>90
5 74= S 72,l!O4
211.559 216.709
8.058 10,068
25.372 27,982
3.522 3,165
109,132 111,671
36,469 36,178
r2.016 JO,14S
26,988 28,428
112,046 83,508
131.422 135,720
5 757,419 S 736-'81
421,286 535.,3::'3
51,184,705 Sl,.27i,'04
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CI1Y FINANCIAL INFORMA:10N
The jODowfq l\lDllJW:Y of lbc: General Fund of the City baYC beer; prepared ~ the City O"cm its &udilcd Iinanda1
SUloteme!!o~
CITI OF PAl.O ALTO
_ruuol
~C(~~ __ T"""""
lean 'F.zwJtd JDDt" 30
REVENUES lJlII I_
PropenyTu S6,578 $6,887
S>k:s Tu 12,590 12,4()9
0tI>er y.,.. '" FInes 3,608 3m
TraDsi<nt OI:aJpaIIC)' Tu 2,919 2.913
Utility Usen' Tu: 2,623 5,019
Fecs-Pennits-I..ioenscs .. ,ill 5,02'
lote=t EarniD!p 1,673 1,!G6
Otlm" Revooue 6Z? 761
Fire hotection 4: Emergeoc.y Commurucacioll 3,479 3,217
Not 111_ CIIarJ<$ 2,931 2.228
From Other AFa<i<S 429 462
TOTAL REVENUES 42,163 44,653
EXPENDrruRES
Admini5tratM: &: Support SeI'Vk:e& 8,510 9,675
hblic Wort> 1l"'84 7,953
COm.m:gnlty EnviroDJllea;t 2,S53 2,807
P-.blic SalOl)' (police '" Fire) 19,9(l'j 19.,293
Social Services 7.;;47 1],918
TOTAL EXPENDITURES 49.903 51,646
OpenIlliIJ Transfers In 15,095 17,039
Operating Transfers. Out 4,246 4,,98
EXCESS REVENUES (EXPENDITURES) 3,1l4 S,548
",-=;:;0--------.---"
I"" 1"1
$7,512 $8,1C9
13,98'7 14,!4(]
3,733 3,637
3,()40 2,969
4,832 4,967
5.612 6,168
2.381 1,919
1,464 2,146
3,029 ),501
2,419 (300)
463 436
48.476 41.74.1
7,g25 7,l!83
7,808 6.154
3,065 2,881
20,948 22,629
13.992 15,742
53,6.~ 55,289
15,119 14,OOi
5,216 6,636
4,74! (181)
, ---
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Budgetary Process
BegiDJl.1ng October 1989, the aty Cou:tcil changed the City's bu1getary system !rem an annlia] to a bi
annual basis. In an:ordance >;l.itb gULdetine& prepared with the City Council's appro"" .. l in Decc:mbcr 1989, the
proposcxt blidget for the Ciry tor the two-year period tx.gioniog Ju!y 1, 1990 and ending June 3{), 1992 was
prcsetltcd 10 we Ory CoUllcil I.e May 1990. Under the Ciry"s new budgeury syster:n. the Cny Cound] revie-.vs
a rwo-rear spending plan and officiany appropriates the fint year al!-~ '\Ippro~ the sewn" year in principle,
~ second year spending plan was pre--...entcd agm to the City Coun.c<J in May 1991. along ~"itb adjustment.\
required dlle to priority changes., lle'A-mandates, health and saf;ety concerns cr .significant changes 1.D project
cost estimates. The five year (",apitaJ Impl'C'\lcmcm Program, .'hich is issued as I separate document, is
prepared on the same two Y"'...aI ~is as the operating budget
The fiscal year of the City begi..ns on the ["ust day or Ju}y of each year and ends OD the thlnJeth daj'
of JWle the following year.
10 order 10 prepare U'..e Cly's two year budgel, at ,uch dale as the Cil)' Manager or bis de:sigr,ee
determines,.each department bead must furnish to tbe Cit)' Manager an c:sti mOl Ie of revenues .and expendil loire-;
for su.cb department for the ens:.!!n, two fiscal ye.us, detal1ed in such manner as may be prescribed by Ihe Cit)'
Manager or bis des[gnee. In preparing lhe F-roprn.ed two year hudge\, the City ManaEer or his de<.fgnec
reviews the estimalC:s.. botlJ:s conferences thereon \Io'itb tbe respective department headS, and rev~ the
estimates as be deems advi5.a:ble..
At least thirty days prior to the beginning of llIe !irst fisca1 year for which tbe two year budget is being
prepare(!, the ety Maoager ~\!bmits to the City Collnnl the proposed two year hudEet Afler lC\i!ew'.ng ana
making sucll re-"isions &S it deems ad .... isable, the City Council ~termines the time for the holdmg o(:a public
hearing thereon and causes to be published a notice thereof l10t Jess than ten days prior to Lhe bearing date.
Copk:s of the proposed two yea! budget are avatlable for inspection by the pubfic in the office of tbe City
auk at :least teD days prior to the hearing.
At the conclusion of the pubbc hearing, the City Coundl further considers lbe proposed two year
budget and makes any ~ion tbereof that it deems advis.al:".le. On or before June 30 it adopts the l'NO year
budget wilb. revisions, if any, by lbc affirmative mle or at least ~ :majority or tbe total members of the at)'
CoUDdL
From the effC(..iive date of tlle r-NC year budge t, the several amounts 'taled as propose<j expendil u res
become appropriared to the several departments, offices and agen~ for the objeclS and pLl~ named.,
provided that tbe City Manager may uan:o;fcr the appropriatioos of.a rucd from one Object or p'Jrposc to
another within the same de~ent, office or <lEeney. 'I'M ope-ralirlg budget for fucal year 199;).·91 oonlains
appropriatioru for Budget Advance Re:M:rve.<i in the General Fund and in each oI the Enterpru.e Funds. An
appropr'.atioD lor Budget Advance Reserves serves. to anow City departments to move rorward. witb the City
Manager'S approval non-salary c:xpe~ from tbe second year 10 the fint )'eal in order to save money andlor
complete a project more efficiently. Any SUdl advance is dedu.cted fwm the req~ting deparUrle!lt's second
:r-ar appropri.:nlon.s. An appropriations lapse at the end of the relatoo fi."iCal year to tne extenl lhat they have
DOt been expended or lawfun.l' encumbered.
At any public meeting after the .adoption of the two year budget, the City Counci1 may make
aruJilional appropriatioas to tbe r.vo year budget by motion adopted by Ole affirmaIwe vOle of al k.<bt SIX
memben; of the rune member cry Council. By a majority .... me, the City Council may Iraruier by ordinance
part or aD of the unencumbered balance or any appropriation from one ft.Ind department or office or capital
project to another. The f.ollow:ing table pro\'ldes.a 'ummaf)' of tbe .adopte(j budge1 ~.r fiscaly.::.ar 1~91 and
the proposed budget lor fiKal year 1991-92.
A-9
rc $ ..
-,
em' OF PALO ALTO
GF.NERAL FUND
AIlVI'JU) BUDGET FOil FISCAL YEAII 1-"1
AND PROPOSED BUDGET FOR FISCAL i'EUlI99I"l
( ..... OMlTfED)
ADOP'IED 199().91 PROPOSED 1991·<n
BUOOFT B~}DGET
RErcNUES
PROPERTY TAX S i,886 S 8,123
SAtES TAXES 14,674 14.'<JO
t..r'11LITY USERS TA.X S,1!J7 5,381
l1\ANSffi!o,1' OCCUPANcY TAX 3.161 3,250
OrnER TAXES FINES d< PENALTIES 3,747 ;,800
SERVICE FEES AND PERMITS 6,143 6,383
OITiER REVENUES 5,682 6,274
INTEREST EARNINGS 2,COJ 1,s07
TOTAL REVENUES 49,tm :149,418
OPERA TING TRANSFl'~ IN B,823 16,537
TOTAL REVENUES d< TRANSFERS IN $62,823 .>6.5,955
EXPENDITURES
SALARIES AND BENEFlTS S 4(],786 544,397
MA TERlALS SUPPLIES AND SERVICES 7.'45 1.449
GENERA!. EXPENSE 8.081 8,885
RENTS, LEASES d< EQUIPMENT 1.l:J@t !,O31
CHAR,GES/CONTINCiENClES 1,188 796
TOTAL EXPENDITURES 558,487 $62,558
OPERATING TRANSFERS OUT S,93c2 3,""5
OPERATING SURPLUS (DEFlCrI) (51,596) (525B)
No betided indebtedness whicb .shan constitute I ge ~ral obt! gatioe ot the City may be created UIt1es.s
authori1,e.Q by tbe a1firmativt action \/Otcs of tv.o-thirds of me qu.:dified e\eCtors and unless in fuD compUance:
witb the provisions of Lbe Sale Constitu.tion. See "CONSTTI1J110NAL AND ST ATIrrORY. LIMIT A nONS
ON TAXES AND APPROPRlA nONS' berein.
A·to
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~ Cry Coull<;iI empl~ II the beginning of each fis.a:l year, an :..ndepcndent a:nified public
&e..".Ountant who. at ~UdI: time or times spec:ifitd 'try ItJe Cil)' Ccur.ctl., I! j("4S' annuatiy, al'1~ al such other times
as be shall cJt:te.rm..i.nt, examines '.be boots end records or the Cil}' and sus!! rcpons of officers aoo emplOyeeS
who re...-eive. cotItrol. handle or disburse public funds;as. the Ciry Council may a:fre4..'1. As soon as prncticable
after the cod: of the fiscal year, a final audit repon is submitted by sudl !KXOUD[an1 10 the at; .. Council and
a copy of tbe financial staleme.c~ .as of the close or the rlSCol! year is pu~lIshed.
A'56sed ValoatiOll aDd Tn CollectiOD.
Tues are levied fur eaclI fiscal year on ta:<able rea! and personal property whictl is !'.ttuar!,d \\Ii!.hin the
(lty as of the p~ec:eding Marth 1. For a.s.se5Smen[ an~ collection purposes, property is classified eitbcr as
"secured"' or ~ and is w.ted accordUtgly Oft separate parts of tile ~men[ roll The "secured roil"
is that pan of Ihe as.sc:ssmen; roll contaln.ing Sta te~ public utility property and property the taKs on
which are I lieD on real property 5uflk:ie:n. ill !.he opinion of the County A.s.Z1SOr, 10 5eClIre payme1l1 of 1M
'taXrS. Other property i; assewx1 all. the "unsccurc:d. mll."
Total estimated run martel valuation iD. tbc eLty increased from $6.5 bLllloD in 1990-9110 S6.9S billion
i.e 1991·92, all inCfe.ase of appro:timalely 6.88 percenL Sucb .. alu.lliom ir.dude sectlrec! and \H1secu:ed
properties a..ot;S.eSSed by the Count)' ~r, and seco..ued utility properties ~ by the SLate Board or
Equaliutioil. Such 'IIluations are bel"orc: deduction ofStatc·reimbun.cd homoovmer's, lIod busine:s.s inVC"Dtot)'
c:ttmptions b'll( ettfude veteran. religious, charitable., and o\bcr sucb. Donrecoverable exemptions.
In addition to a rerord of as.s.essed varuatiaru, the tables bem' 5ho ..... lJle Ci ty'j secured tal: levies,
oo.(JectiOD£., and: deJ.jnquencies for the las! five )'ears.
FIseoI Year
l~
1987-88
1988-89
)989-90
lm.91
1'991·92
(1, 1-= Eumptions.
CITY OF p.u.o ALTO
ASSESSED VALVATION
flSCAL YFARS 19016-31 THROUGH 1991·'2
(OOD'S omlU.d)
Securod (I) VWIIy (2) U""""""
53,515,702 $IJ<l,299 51,198,144
3,903,445 130.952 1,128,2.27
4,186,381 1,295 1,145,8?;l
4,607,895 8,138 J ,24&,{P...8
5,107,212 ]0,139 1,384,612
5,595,683 13,666 1.340,081
TOIalAs_
VaIuadOll (2)
$4.844.145
5,]62,625
5,3)9~1
5.&:14.061
6,5()1,973
6,949,429
(2) lkginning in fiscal year 1989, W Stott e.J!obliJhed ringle coolIl}·.M.oldt" tar mlr CrfGS fIN unoin type! of
SlQU Qsu.ued uti1uy property.
Sow-cL· City of Palo Alto.
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7kealYAr
1986-87
1987-88
1~
198'>-'>l
199Q.91
CTIY OF PALO ALTO
SECURED TAX IA:VY AND CQi.LEC'l10NS
FlSCU-YEUS 1986-87 TlUtOVGH 1-.'1
(000'. omla.d)
_Tau.,-.--at CoIl«Ud II)
$6,762 $6,748
6,.186 6.578
6,l!69 6,887
7~ 1,512
8,192 8,109
(1) r.c6;dc,"~ ~
&>ouu. CiIy a( PtzJo .4/u).
Lo", Term Lease and Contractua1 Obligations
F .......... DdI_'
2.16%
2.26
2.06
103
1.01
Stanford LtiJ.u. The oty ~ twO parcels oC land aggregating approrimately 21 acres from Leland Stanford
Jr. UJlfveJSity rstanfordj under leases tenninatiDg U:t 201.3 and 202L The C:i ty utilizi.'$ .. ponicc or the land knmr'n
iIS FJ Cam100 Park for athk:tic fields and opeD lpace ;wd ren15 1M. remairu:ng portions tc four subtenants. The mOM
significant 51Jibkasc, which nms to 2021, is willi the l"oiIcifi(; Motel Development Venl\ue rPacific Hotel1-the
developer or .. Holiday Inn bunt on the site.. '!be aty':s annual lent obligatioas to Stanford is approximately $600,(0)
per year a.od the rental tnc:ome to the City 1UIdc.r tM bur sub.leases is approximateiy s.soo,COO per year.
MIUfJcipaJ Go/[ ~ U4Sf! "!be City "has lea.scd its mlllticipal golf course to the aty of Palo Allo Golf
Cours.e Corporatioa {the "Golf CoUlR: Cotpor:uioaj, I DOn-profit corporation., .... bictl is.sued Sl,800,OOO of bonds
IlllriDg the Oty's 1911·78 ftscal year (0 finance impJ'C\1eDlcn15 to atld reD(M.tioD 0( lhe golf course and consU"UCtion
or a DeW clubbouse. Tile Golf Cou.rse Corpor.\tioll is \t.asing me improved facility back to '.be City (or an IDDcaj
rental suflicieDl 10 ooYCr adtniJWitlaltYe COStS IDd debt setVice OQ the: boDd&. Tbe City is resPOJW"b}e for operation
aDd maiDlCDIUM:e: at the JOlt rouse and. upoa COIIdus.ioD of tbe lease. tilk 10 Ibe new d~boU5C aDd the
improveme:ats will vest in the at)'.
TtmWI Sdu:1ollA4.u-~ In January 1982 tbe Oty acquired the Terman Mid4lc School site from the
Palo Alto Unified ScIloot Disuict (the "'School District, for S9,OO1,OOO. Tbe lease-purchase 8grcemc.tl~ provida for
a Sl,lXX),COl 40wa payment and 19 subsequent annual imtallmt:tlS or $421,(0) plUS int.::rest on the oUlSLinding
prindyal baLaooe at 3; variable nne based upon the sverage re~urn on !.he SQrol District', invested funds.
Direct aua! Overlapping Debt
The following table sb<rw& lbe direct aM' oYCTlapping bonded deb! burden supported by the real property
localCd within the cu:y as of N~ t. 1991:
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cny OF PALO ALTO
E.."'TIMATED DIRECT AND OVERL\J'PlNG DEST
.4....'\: OF NOVEMBER t, 1991
1991·92 ~ Valuatjon: $6,949,429,..'\82
DIRECT AND QY~'RLAPPING BONDED DEBT: %App[~
Santa Oara CoUllty Bw1.1inJ Autboritie:s
Santa Clara Couuty FC &. WCD, Zone \\'-1
Footlull Comn:aniry College Di.str~
Palo Alto Unilied School District
Whisman Schoot Distrid
Otilc:r School Di1t.-iru and School Authorities
Oty of hlo Allo General Fund ObliptioM
City or hlo Aho Special A.s.seo.smeOI Boo4s
ML~peninsuJa Regional Part District
aM CertUICate:5 of Panicipajioo
SaDla C1ana Valley Water District
Cenificates of Participation
7.385%
C.46S
21.037
89672
6.012
Various
100.
IIXl
13.04U
7.385
Other Spc:cia.I Districts Various
TOTAL GROSS DIRECT AND OVERl.APPINO
BONDED DEBT
l...e6s: El Camino Hospital Authority (100% self-supporting)
TOTAL NET DIRECT ~ OVERLAPPING BONDED DEBT
Or"", Oil.:;;' Debt (S12.5J9,o1O)
Total Gross Debt
Total Net Debt
STATE SCHOOL AID REJ'A Y ABLE ~ OF 61lOm: 523,790
(J) Ba.red Oft 199()..1991 ratios.
.18%
.77%
.77%
SI7/i063,811
:i10,OO.3
4,831.147
448.360
222,444
102,056
12.519,010 (2)
8,L."'9,OOO
6,216,95/j
2,845,071
9,142
553,196,995
4,985
553,192,010
(2) Jncluda ierma.., SdsooI Je.aM purcJuzMob/igation.s EKlw!eJ 'pmding cntrjictzleJ of parriciparion co be sold.
~ CDlifomia Mwticipal StlltUtics, Inc..
Retirement Systems
The City OO\Iers aD of (ts permanent employees onder the Public Employee<; Retirement System (PERS) or
the: Stale of california. PERS is a 5t.ate9roide system opc:raled pun.uant 10 TItle 2, Division S. Part 3 of [he
Government Code. The BoarCf or A<lmitlisl:-atlon or PERS adm!nislers [he Public Employees' Retirement Fund (the
"Fund1 and ftve other benefit programs. The Fund is a defined t>cnefil reliremeD.l plan ba~ on members' years
or service aDd final oompensation. In add[ticn, benefits are pTO\ided for disability. death and 5U~rs of eligible
members or beneficiaries. Pension OOSl<i are funded by mol'lth1)· CODtrib~[ioru, 10 PERS by the City and the
empioyec:s. Rlr tbc: fis.I;;a! year ended June 30. 1m, CLty ronln"bulions 10 PERS tOlale(! S6.220,0C().
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Sr.ate in' abo requites WI PERS undergo actuarial reviev.r co kss oiteD than e.'VC:ry fourth year. The latest
(too-8cturW valuatiot!: as of June 30. 1989, showed the unfunded Uability of ?ERS at .$5.5 billion., of which S4.4 blllion
reprcsenled the s:Nire aruibuable to state employees.
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Labor Rdatlono
QI)I emp~ ue represeoted in collective bargalning by throe organizatio!lS: Service: Employees
tnttmatiollal Unit, Loca11J5, AFL-CIO; Palo Alto Peace Officen ~lioc; and the l:!.ternatiOLtl Association
of Fm Fighten.,. I.netI 13J9. The ternJs of employment and .compensation arc cxpr~ .in memoranda of
.n_~ ("MOIJj _ are ro, terms of""" yean. ~ MOU ro, _ EDtploycos "'Pires o. April 3<],
1993; for Peact otriam; Db JUDe 30, !993; aad for rue Fighters OD JUDe 30, 1992.
The servioc: employa:z;' aM peace officers' MOU provi<.1e for annua! peroet'Itage adj ustmetlU in compensation..
The:set'ikc employees' adjustment. effo:tive May 1. 1991. is b.a.sed on .nnu.aJ price fnllaOOll. Ind canDm cceed S~.
1"M peac:e officers~ c:ompeuaUoa was increased 5% effective July 1, 1991, for a two-year period ceding JUDe 30, 1993.
with the City pI)'iI!s K of the employees' retirement oontn~'Utioe ti of September 1, 1984.
FiDanciaJ Statem..nts
See Appendix D for the andilCd fin.anciaJ statements or the aty for the year e.nded June 30, 1 t;'I9 L
Utilities
'I'M Ciry Utility ~ 11K Utililie'i Department is respoD$fble for the operation of P.)W" utility syslems
that serve the City. TIle City 5e1"o'ka; approximately 27,000 ataJunlS for the ekctrk, gas, water and wa .. te:water
ooUection s)'uem:s.
Treated a enterprise funds, the E1ectric, Gas. Water. Wwaewrner, Refuse and Storm Drainage Utilities (the
'"Enterprise Fuaos.j arc: financed aod operated in I ma.nner comparable to private blWDC$S e:nterpr1ses.. ary policy
provi4es that the cost or Providinlloltilit)' .services to the general public C(l:ctinue to be fuedtd predominately lhroIJCh
user c1wga.
An Eoterpri6e Fuod1 are acccuntoo for usmg the aC01lo.ilI basis of 8£X'Ounting. Revenues are recogn.iz.ed: when
earaed, and CIpe~ are recognized when incurred. Utillty revetlu.es are W'.ed to pay openntng costs, debt 5el"\oice,
apft2.l' expenditures, and reserve. accumulations. Traosren .. to the Genera! Fu~d, are ~ on the approved rate of
return lor comparable pubtk utilities arid wert established.t 11% (Gili aed Ele.!..'uic) and 11.13% (Waler) for the
199().9l fiscal year. "The Ulilitie6 and Publk Works DePill~U; are expected to continue meeting aIJ of their
fi.nancial obbgations wbiJe charging C(lClpetitivc retail rates 10 thcir CU:itome~ The operawJl1 0( each of lbe utillties
openlting a! the EDterprisc Funcis are described below:
I::1ecoic. Operatioll o[tbe City's clo:tric utility dates from 1900 wbe; the City acquired: the fatilitW:s or the PeDiDsula
Ughtlng Compuy. The City proYided electrkity from iLs OWII steam powered generating plant until 1921. In
.response lO .ao;:elen:ting load growth,. the City entered i.nto a wtloles.ale supply contr.Kl with Pact1k: Gas &: Electric
Company ('"PG&.Ej en 192.3. In 1964. the aty executed a wholesale, all-requirements contract with Ole Weslera
Area Power MnUnislrilltion rweslern-J lO purch.a.se power produced by tbe Central Valk)o Project. The contract
witt: PG&E was term.inatoo... SiJKc that time, Ihe lower cost power pro-.ided by We::.tern has enabled the City to
pl"O'ride electric service 0111 ra~ weD below lbose pr.:va.i!ing in adja!;eot PG&:E s.crvk'.e areas.
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Tbc: City owns DO tkctric generating faciliUes. The C:::y's coll!nC1 for electric power with lhe fo::lerai
government ~ a.:2minb11""J'ed by Wc::nern. We!i1eT11 markets power from rue Ccctral V&Uey Project. a re..lleral mlllti~use
bydrOe!ectric ~pment in Northern Ca!.ifOrnia, and has vaditlonally l)e,en Ute:letil e:xpcn:sive sour.r of bulk power
for t.be Chy. It pJ'Ol'lida power 10 the at)! at I ap3dty of up to 175 M\V wilb as..socU\l~ tnerg:.·. The oontract
api."l!S iD 2004 IDd is .Iubjcct to adjustmtnts Ic lhe price oI pcwc:r.
The Ory p1l1'Chase5 supplemeo!.al power above the capacit)· of tbe W~tetIl c:omraCl. througb il,s mtmbership
in me Nortbern California Power Agency ("NCPA") acd is a SigntilOry of tlIe NCPAlPG&E lllterronnecriotl
Agr.eement The Oty"s 19')0...'91 peak demand ""'as appr0J:5.roalCly 139 MW and aDnual ener~ consumption ....-.u
approximately 1,084,739 MWH The OIVl:rage mocthi)' load (actor <'!tiling 1m-91 was 6554 percc:nt,
In addition, the City is participa!iIlg in NCPA'~ Calaveras. H)W'oek.clric Project.. Oeot.be~-:n.11 Project (the
Cit"fS sha.-e of ~ 1:& been sold. 10 • third part)'. as descn'bed ~\ow), and Geyser.. T1"in!imis&ioll Pro)&:t.
'The City is alsG .. mem'tler of the TratUttW.s}oD Agc:oq of Nortl!.en\. Cali(oru..t& \I' A.."IC). 1b.roug'h. its
partidpiUcn in NCP A and T ANC, the City believes it :is able LO diversify its resource baSe aod gain economies of
scale that VKlnld. not o!.herw\ie be available as weI! as Ieuen. it! depeadence on purchased power. Except for cer..ain
s.tart-up C06ts. currcot NCPA and TANC projects are funded thrnug}llhe topet.we agencie5. The City is C11rrentTy
partidpaliDg iD R:Yeral project\., AS de:sajbcd bc~
CaJaveros ~(t'crric Proj«:!. The Cj ty ~ a 22.92 perceat participaD.t in the NCP A Calaveras project. a Z30
MW byct."1:IClectric project witb related facilities, Pursuant to a power purchase .. g:; eement lIr'itJ\ the Cal;l'\o'era.s Coun ty
Waler Disuict, NCPA is entitled to the electri<: output of the project for SOye;lrS from F.;bruary 1982, with an OptiOn
[0 purcbuc: power in CICC&S of the District's reql.!irements thereaher. The aty's 22.92 percent entitk'ment is on a
take or pay ~ The project is ~ed (0 ~uPptl pe<;k load requirefDectl5 and complement other re.soUTCC'i which
are preseatly and are anticipated to be available to the Qty. NCPA 'fW ect.ered into I oonstruction contract to
provide for t1Ie desLgn: and oonstrUctio:c of tbe project 00 • t"'rUey ba.s.is, The oonsl"Uctton was tOmpkm.!d and
operation of tbe projeCt WiL'5 commenced 00 Februa~ 1. 1990. SUbsequent ro that dale, Palo Alto made roolractuaI
a~ets with the City of Rosevilk to assign 6.52 percent of the project output to Roseville lor a period of 14
~ ending 2004. 1bh layoff sale: relieves Palo AJto of I portioll of Qla\"eT<IS d(l)1 servlCl! am! operating al1d
mamten.anoc. costs.. The partieD sold i5 SUrplW5 10 the Oty"s lleeds.
~. The 01)' ts .. 6.158 percent pirtic.ipanl I.e the NC?A Geotherma! Project Number I, oonsisting
of two (2) 110 MW geothermal iteam-aenerating plalm operating in \lle Oeysen area. The aty tl.a.\ sold 1.i1 of jUi
:share of the project to the Turlock lrTigr;.tlon DisUict ("TID-) on I; take Of pay basis for lbe lift: of We plant since
me neOO for ~ load generation if, limited du.ring th~ time penoo,
ea:lromia.-<Jrqon. TrtmSmission. Projf!c.t. TheCit'j is a 4,00 perCl!l'.\ panicipant ofT ANC's shate or .. ?fO~
lhird ~ ICY AC Intertie transm:i!.sion line from the Pacific Northwest to NOrlMrn OJifomLa. J3.ased upon a 1.600
MW traflSfet capability. TANC expects. to receive. between 100) aItd l30J MW of capacity. Presenl plan.s call for line
completion in 1993.
From 1936-87 through 1990-91 e~ sales revenues fncreased at a compound annual rate of 2%.
Operaling revenues have gencrany increased witb each fiscal year due to ooolintie<l gro'Wti:! in C'Dergy O'Jmumption.
Purchased power costs play a major role in formuLaling the City"s finaodat polities as they pertain 10 the Electric
SYSlem. Purchased power C)Sts decreased at aD annual compounded rate of O.2()%, be~'een the years 1986-87 to
199().~1.
Th five-year projected financial S1a.lemeOI 5oh~ sales revtnue forecasled fa increase by 32%, This revenue
increase reflew .. compoumJed anou.a.! grC'rWtb ralC' in lcwb sales of 1.7% mer this period.
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The m:tjor imp*=! 00 the Electric Utility .is purchased ~r etpens( wb.ich is estimated at I nel increase
0( l~ OYer tbe fiv:-yeat period. In ,~~ or absQhlle dol1an, wbolesak oommodity ros!5 a re ~ed to increase
by $8,837,000 &Del will maiDlAin these costs al approximately 57 cents out or each saks !C'VeDue cloUar in 19)15-96.
ThJs estimate i& ba!ie<: OD continued availability of federal power from Wc:sttrn as prc:':5enlfy pro\ided under the
aistinJ c:oalIacL BDlinI rate; to Palo Alto's residential accolJ..Dts were the kJoNesl tc California in 1990-91 ~
dc.tC'!'miDed by. JUNe)' conducted by the Palo All.o Utilities [)c:pa~aL
GQ,,1. Municipal OWDcnhlp ol the gas ~tem began O!l Octol'lcr 1. 1917 when the City purchased the Palo
AH.o Gas ComptDy through I $40,(((1 bond tssue. On Octobet 7. 1929 D31urat ps was introduCQC! i.et 0 the Citp
mains., as the ell)' begIuI purcbasin,g gas from PG&E. The p system ao<l [ts Ras consumptID~ !t.avt: growD wit.!! the
developmeol or the Oil)'. Until 1991 PO&:E had lTllditionaUy beetl the Ot)"'s SOUlCie' of 'Supply. Now, 'Under new
CaIifotu.ia Publk: Utilities Commission ruhnp. 1M: City hal. ~Iopcd • fa\lOrablc contra....1. for natura! gas from
Canada.
Tk 0til cmTeII.l NatlU'lll Gti Supply Agrcemepl with Sbe[l. Canada is dlited Aggmt I, 1991, has • term
of ODe year. Tbe Oty abo utiWa POlcE"l p5 stont,IC SYSlem 10 "bank-.lDeqIeD5ive gas supplies .mich caD be
wil..bdnrw!l. 4111'in& the trintcr monl.hs when £as pr1cei rise..
From 1966-87 through 1~9I salef. reo.-enue decreased from $18.8 million 10 S18.1 milliot! for I compound
UIlua1 6tdinoe of .83%. Operating :revenues bave: dec;'!&Sed because or COD.SeIYattoll efforts. The Ciry's COSts LO
pu.rcbase pSi baYe KluaDy inaeased by 33.2% from 1986-87 10 1990-91 as I result or an lDCTCUC' in natura! gas
pri<>es.
Prier to 1988. the City .t.1liIintained its rates at a &cd pelUDtage below (be rates ch<:rged by PO&:E. I.e. 1988,
the City 4etermiDe¢ that itS ps s.uppty re5eTVC was in ~ of tbe amount required and r~runded in the form 0(
credia; Of" rebalCS Ippro:Iimately 193 million. The City'l 1991 p:s ralQ are apprOXimately 21% lower than the rate:5
whidI PG&E dwp 10 re&ideutia.] CUStomers in neighboring cities..
'The ~ projeacd salc:$ forc:c:ast shows a 31.7% rCYC!lue increase by 199$-96. This revenue increase:
:rdIeas • .31% anaw groMlI rate-iD sales (I.berms}. Sales estimatcs are principarly atrocted by additional days ror
leap year and wcalher tacton.. lbe largesl openting cost a.a;:ounting for 'higher reYeDU'C requirements is aD
ILlltidpated rUe (11~) in wboaa1e com.mooity costs c(feacd by the City supplier.
IA lenDS 0( absolute cSoIl:m, wholesale commodlty CQII.tI. arc apected 10 increase: by S52I.OCO and Will
ina'easc those aJ5IS approximately 59 cents oul of cadi sales teYe!:lue dolbr by 1996. 'Th.is estirrune is based 00 the
qrutinnod' supply of an PJi requtrements. by PGd::E UJldc.r e:U.ting OOIltract... In .addition, approximalcly S9J71,cnJ
of capital imp~ts are planned lor the,gas :system OYer tbe nat [our years.. the Jna!ority ofwhkh are antici~led .0 be .finaDced !rom te\'ltDUCS.
",au,.. Prior 10 incorpontiOD i.n 1894, the area I~t was to become the City developer:! as a Dum'bc1 or smali
population ceater1. Tbese ceDters were served by private water rompaDies that drew tbeir supply {rom relatively
shaDow w.:ns. I:a 1896, two years after inoorpon tiOD., I bond tuue was authorized ('or purcbase by lhe Gry or a
majority of me 9o'Iter companies. In 5uco:ediag years.. additj.onaJ pLln:hase:. compk:led tbe acquisition or privately
owned fKlIjlies.
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[X-.ep wens provided waur to tb~ ~u.alty iDaeasing popuLation IUJtil 1938, when the 6ecline of the
gro,,~dwalCr level ne.oes.!IiLaled th¢ purrhasc {)~ imported: wale!. The grO"Wing demand ~hereah:er "''lIS m(:t w:lh
ilk.'Twfng pW\::baSeS or su ppry from the Water Department 01 the Ciry a.nd County of San Francisco {"SFW'D"}. in
1962, in order Kt provide .. hIg~r quality o(W3ter to its cuslomen, the Ctry began supplying 100% of its ';l.-atef from
SfWD.
San Franci.!.w impons 80% or tbe water supply sold 10 we Ciry Irom the TuolurnDe River walcnhed ill the
SicC1'3 Nevada rtelI Yostm.ite National Park. Impoucded at Helch-Hclchy R~IVoir. the Mter is !leiwe-red. to
terminal reservoirs on the!: San Fr.uKisal Peninsula via aD I!qu.educt that a05SeS the County. prmiding.acces.s to fhe
Oty and other wholesale cus!omers. !be remaining 20% of tJ:e suppty is iocal anC! runoff impounded in resel'YOirs
located in the Coastal Ra.o~ of the San Franct.c.co PeDinsuta and E.ast Bay.
The c::u.rrent water ~ contract with SFWD was iJr"plement~ 00 July 1, 1984 9.ilb a 25 yea! term to expire
JUDe 30, 2009. It is an all-requirements contract with the; ap!idl provisions (or iKljusting wboloaL(;! r.n~ to match
chaoging reYCfJue ~uirements of the SFWD 00' pr.-... .odk: b.3sis. The contract et)i.illes t:!1.: ary 10 I minimum of
15.5 mfilioll gallOns per ~.
The Ciry also mainlainli it!. awn deep we[1.syslC1n, .-hich could supply half or the ~rvice area'3 ooeds 00 an
emergent)' basis. The SFWD y,ner is or e:xceUeot G;u.ali~. Consequerrl.iy, the City's wat~r Uea\men~ ls hml\ed \0
DuOfUk: iIl}ection. The current rate Structure is an :inC1easing block rate lO enoourage ,jl"3ter conservation. The City
also bas programs it can implement in response to peTicdk drought sit~lions. Th~ elry mail1U1im aWut 10.5 million
gallons of storage in its WsIIibutiolJ system. Curren! average ronsumption is 16.1 million galloru. pt:r day.
From :.986-87 through i99().91 sales J"e\/etlue mr;rr.ased from $6.8 millioc 10 $9.5 million for a C0mpound
annual growth nne of 9.1%. PUlChast-c.o:s~ otwaler have inCreue~ by Z5% from 198&87 to 1993-91 doe 10
in~ water purcbas.e ro:s.U.
The five-year projected fina~1 statement shows sales revenue for~.t;:d to increase 88% by 1995-96. There
was In 18% rale increase in 'uly 1m and aD 18% increase in JulJ' 199110 D.:)mpen.~le for the-sales reduction due
~ .:::onservatioc.. In terms or absolute l1ol1.a~ wooksale commodity c:osts are expected 10 iJlcrease by $4,161,OCXJ lind
t.1l1 result in costs or apprwimatc.ly 41 cents out of each sales reven~ dollar by 1995-96. This es.limalC: a5.ljUmCli
OOGtinualioo of the: Hetch-Hetcby system and the City'~ water suppner a Dd the adequacy of n«:e:;.s.ary (ac:ililfes. In
ad4ition, approrimately S6,630,oc.o of capital improvement\ are planned fOf tbe W31er system over the nCX1 four years.,
the majority of whi.cb are anlkipaced 10 be financed from reo,·enuo.
Calif0mu. is in iu; rllth year of drough.t. The Ct~· or Sar .. Fr.:.nci.<.ro has impose.! ""-arer rationing on i~
municipal CU!lornll!rs, including the City. The aty's allotment.is 27% below the amount pUf(ha.sc..:l in 1987. The Cay
is responding wilh a three part Wiler Managemem Plan: {i) lmpiementing I Drought Rale Schedule witb adjusted
nile bloCks and more sleepl)' inclined rates in the higher tiers;. (u) expaDding (he [ist of prohibitions beyond those
<eady ia the exiSting water usc crdjila~ (iii) Initiat~ g I targeted program or public outreach and conservation
assio;,unce..
TM. San Fraociso.::o Water Department bas. imp'emen\~ 140.2% '9Obola.aie rai.e increa.o.,e effecti .. e hne 1991-
100 increue has resulted in approximately an 18% reLai} Tale increase for Ciry coruUnter1i.
Wa.rltwOUT, The wasle'llrr'a1er COncct[OIJ system became the City'l first ',aWl!' in 1896, scro.·ing a popul<ltion
of .about 3.000. CUrrently, we collection system $CIVe.\ approximately 5',0:10 resfdcn ts in the Ci I)' 'Wi thill its 25 square
mile service area.
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The Oty operates a 38 millioc gaUotI per day (rugd) RcgionAJ W.iI1Cl O..a.Hty Coctrot Plotm (the 'PlOIillt1
serving I 96 aqu.ar.c mile-area indudiDg lhc City aDd the cit~ of l...a. ~JlOS. Mountaill V.ew, lhc: Town of Los Alt~
I-'Jlls", SWlford UD1Yers.Iry ars1 tbe East Palo Alto S&n:fwy DistrlcL The City ana the cities of MOUDtafn VlC'W I!.[ia
Lo6 Alios are partaets iD an .Ilgroement spc:cLFyiag QJtKtiOOD! for IinaPdng a.c.d opera.:ing ~be Plant 1..0'; AHQ6 Billi.
t:b.c Eut Palo Alto Sanitary DistriCt. and SWlfonl Ul1iYersity are itIduded by separate: con1racts 'With Ll,c City ... Web
arc: refet'f"C(t ro :is slJb-.partner agroemenu.
From 1986-87 through 1990-9:0. ~ reven"l)C; in~ from 58.9 mi1Uon \0 S121llrillloD. 10r a compo\l!ld
annual growth rate of 7%. Operating, reYelJUC::5 nYC' i.nal:ILsed 'because of nt.e increases rc.qufred to rover higher
COSts of opentiaa. Approximately. Sll,(XX),<XXJ or capital tmP~DIS an pt:lo:ned for the wasterwater system over
tW: nat 1M: years, the majority of wbice riJ be 6nanocd from J'e\o'CIlUCI..
!be. wastewater residenli3l rates do DOt follow a per unh WIl$IUnCd locrea.se, but are mostly flat rale:; of fees
per bo1Heho1c1. lDcra.se.'J flow rateS Iio not ~,.. r.;sl1.il !..Ill increased "saJa,' regardl::s.s of their source. HeoC*:
~ five..year.aventgc: annul growt1lln Dow is DOt refJeCled i.a projectcO Ie\ll:O!iICL Anlidpated inaea.se& in opcratioa
and mailt:~ costs result i.e signifk:allotJ}' higher r~1.'C requitemenu. This estimate is based Oll the WllUlptioD
that present kw'1:s of treatment are adcquatt: and: DO major capita:] expeooiturc:s 'aill be: required by the Say Basin
Pl.a.r:l n! other R egionaI Water QLta!jrJ Controi Board deQsion:s.
The: Plant's discharge into San Francisoo Bay is authorized by a three year NatiOMI Polh.tioo Discharge
E.l.im!aatioll Sysrem (N?DES) permit 'i1ihidI WlI$ issued on Peo:mber 28. 1988 by me Regional Water Quality Con~
Board. Tbe pemUt was amended ~ 16, 1990 10 iadu4e Idditwoal pre-trea1ment and waste minimization
tcquirem<:Ql$. 'The permit requires several ongoing siudiel regarding panicu'la! componetlt.\ or lbe P~ct's effiuenL
All ;itudy d.eadli:le!. have been met The Pb.nl is; meeting an discharge requiremec L.!i specified in iLS NPDES permit.,
an pre-UQU!ICIl\ aDd 'lJiaS.te minimiD.tioG requirements and an otMr mvironmental requiremenu., iDdudlng air
Q",lity.
'lbe water conservation measures Iidoptcd m ra.poDSe to drought cnMitions bave resulted i.e • n:dlKtion
of 1JI8Ste9"ttr: dw'p for major CQSlOmers. Con.~~ntly. me City bas Sipifialltly increased Ule per ~nh rate for
wa:s.tewater .::o6cr;;tion W meet J'e\1etlue reqlriremeut$.
SIcmI J:;aiAagte. The City created br Ordinaore I Storm and Surfaa: Water Maruiigemem and: UclLry .an
NOttCmber 6, 1989. On November 27, 1989 the City Cou.nGilapproYed I melbod for Cillculalil1g Storm Dtainage rees
and establisbed a Utility Rate Schedule. rOf Ihe Storm Drainage enterprise to t-! effective JanWlIY I. 1990. Storm
Drainage (ees were oaDeacd for tbe fin.t time with the City's February 19SIO unlit)' bill.
The purpose: of the Storm and Surface WalC! Management Utility h 10 a::m~tl,\jct and maintain Slorrn
drainage improvetneDlS OQ a C'ity-wide basif,., The City is tc5JXln:ilble 10r at! drainage facilities in the stre:1 and the
public right or way inclu4ing curbs Bnd gutterS. catch basins, pipeli.n<$ and pump sUltKms.. These tadlil)es CGUea
storm water and convey it to the SaDta Clara Valley Water District', ~tc:m or major channelS and creei.3 1IrithiD the
ClI). Tbe 01) b.as clelermi.Ged that i~ COUectioll system is incomplete and old, llDden.ized and in poor condLtion.
The City levie5 .. mont'hly Slorm DrainaBt Fee based Oll llIe average.area of impervious CO'\Ier (2.500 square feet) for
I Ciry home. Fees lor indU51rial and wmmerc:iat ::nLiklings are equivalenl 10 Ule single family :ra tes, bul are based
on the aClual impervious surface of the property. The re'llcnuc (or the Storm Drainage: Enterprise: Fund for 1990-91
was SI,658,!XXl.
Tbe Piloblic Works Depanment 1991-96 Capital Improvement Progn.m Re;>on Hle.ntifies "'Sr1oW storm
drolinage S)'St~ improvetnellt projecu tot.alling $935,000 (or t'iscal yesr 1991·92. Budget figures for tbe rcm.UniFig
rears are yet 10 be finalli.ed,. subject to the r~ulU of the ongoing Storm Draioage Conditiu .. ~ment and Master
Plan stwici. Thes.e twO s!ud[es ...-ill K1ealiI)' portions or the Ciry'.s cxisling siorm drainage system that need to be
rc:p1J:ced or rehabilitated,. and areas or the Cry where tbe capacity or the system lleeds tD be mcreased.
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Staff has ideatified S4.25 million in proposed Qlpit.al c:xpc:nditUle5 for the ~10rrc: dfiiaage Sy5!em (or fucal
years 199()..91 thn"lugh 1993--94, soiIle of which will be funded D!:I .II ~pa)' as yOIL go' basis, The projects 10 be funde.:l
are k>cated throughout the City and iIlCludt the Condltioc Au.c:s&men( and Ma,su,:r P.Lan studies, storm draln
construction.. pump .station Lmprovemen.r~ C'Jrb aod gutler repliIcemeDt, (uDdin! [or the Santa Oar .. Valle), Nonpoinl
Source PoDudolJ Control Progra.n and stormwater quattty improvements. Tbest propos.ed imrfO'o'cments are
described 10 d!:tail in .an carrier sectioa of this document. The Ctty intends 10 use the 1992 Bonds as .. mean! of
financiog tbc:5e improvements. The City intend:!; that its StOrm Drainage improvem~DlS will be undenaken as Stann
Draina~ Fee revenues are sufficient 10 pay maintenance .a.o<l ope17t\illg expenses of tbe Utility ~ provide ;i [j
iDcremenl of additional revenue to cover debt :5e1'Itice payments resultiug from th.: impro .... ements.
rnkrfund transf .... from City Utiliti .. III Genei'll) j'und
The City annuaOy transfers to the: CitY's General Fund I portion or the excess earnings of tlle CHy Utilitieo.
Enterprise Fund This trar:ufer has avenger. a.33 percect foe the Watei' Fund and 11 per(;CDt for tbe Gas and
Electric Fund The: following sllOws actual or Clitimated uansfers bom the City's Utilities Enterprise fUnd since fisoil
year 1986-8'1:
CITY OF PALO ALTO
TRANSITRS FROM CITI' lJTlLIT1ES ENTEIIPRISE F1IND
TO Cl1Y'S GENERAL F1IND
nSCAL YEARS 1984-81 THROUGH 199,·'2
J1scaI Veal" Ro<of,..
1986-87 S&,7J9,!ID
198'l-S8 58,951,000
1-$8.568,00)
1989-90 $8.773,000
1990-91 57.510,000
1991·92 (Budget) $9,645,OO'J
Source.:. 11'~ Ciry of Palo A/to.
S",.foro tJniversilJ'
S~Dron1 University wa.s e5Lablisbed in 1885 by Senator and Mrs. Leland Sanford ItS .. memorial to their SOIl,
uland, Jr. EnroUmect for the FaU quarter for 1991 -was approximately 13,{X)() sludents. The University's academic
innuence has been a principal raclDr in molding commllnity altitude.;. aM fostering aD envirOWIlent :in Vo'·hich
lecbnoklgy bas no~t~
Stanford Univen.ityempToys approximately 1.443 faculry member!. and a staff of approximatel}' 7,1.m (not
including Hosptlal staff not a:.s.s.oci.ated witb the Medlail School;.
The market \'3.lue Clf tl]c U:J.['\'ersitl"s end,")\iI'Iflcnt a.'i..\.C\5 'III'aS e;1imated .!IS of Aug'J5t 31. 1990 loUis. 52.06
billia:o. The: academlc facilities or Stanford are a separate unincorporated area..
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Transportation
Highway 101. also 'k:nCwn 1.\ the Baysbore Freeway, aLa !ntersialc 280 or the Juniput) Scm Freeway.
CODDeCt the CiI)' to SaD Francisco In \he North and Sao J~ to tile Sou.h.
Sao Jose lntematiunal Airpon is located approximat~ty IS miles from the City. Nationa! add rcgio!l3.! air
.s.eMce as provided for p.as.s.en,en and beight by 13 airlines. The City is abou;: 20 milt:s from San Fn.ncisro
InternatiOnal Airport. 'The SaD!'l Clara CoUllty-operated Airport in the City :s.erv:iQ!:S private aircra~
The California Department or Tran.\ponaoon (CALTRA.!I/S) provides a.lIIlruuler min Soef:'oice to Sa!'!
Francisoo and SIln Jose from tbc: aly. ~d.i.tion.al ran pa:sseD~r SCJ'\ ice is .available througb .AMTRAK, wbkh bas
a terminal in San Jose.
!be Sa:cta Oara County Transit Distria prm1des local bl:S service in and awund the City. The San Mateo
CD""'Y 'nalIill Dlstricl (SAMffiANS) pt<Md<o S<tvioc be1w=I 1M City aDd San F",odsoo.
~ter tansponatiOD ~ awiIabk; II tbe Pon or Redwood City. six mi1c:s %lonb. Pons at San Francisco
and 0atlaDd. Ire wen equfppOO to handk.tI1 types 0( mastaland oversea. .. cargo. All tb.rec pons ar,,= ootl,,-enier.L1
~ible by 1. freeway from the City.
MediaL! Faciliti ..
StanIord University MesSial Center bouse! 66'30 bed.s and: Vc:ter.m·~ Admlninnnioru Hospital houses l;lTI
beds. Both ladlitie5 ;Ie loafed in the City. as are several private ronvaksc.etlt bospit.1ls and nut'jing oome6. The
Sanford Ul1fversity Medical Center is I recogn~ center for medical Te:!tUJdI and is famous for pkmeering in organ
tru:5plant surgery. City residents arc also ck)se to the EI Camino Hospital in Mo.main V1ew, tlIe K.aiser
Fo'Undaoon. HospitalS. in Santa. Clan an~ R~ City, 1100 hoSphah ill the San Jo;x.e 1IYI~a.
Rette.ation
The City owns 4,lSS.8 ttaes of park an~ recreation lands. The two largest parts are tK 1,500 acrt" Byxtlee
RcaabuP Area and the 1,430 acre Foolh:ills Park. several C(1llnty parts are also kxated near the City. Th~ City
and ClOUDty parks and reaeatiao.al !.aDds provide ~deo ts of tlle dty witb I wi~ variety of recreational opportunities
that ind.we biting. fishing. pictlidting. tennis and swimming. There are three golf courses in the Cil)' including a
munidp.al ('()';lt5(.. 'The City has fu'~ museums., inc'll~lng thrt.1'. a.rt mllSell.mli 01'1 the Sunford Camp~.
Education
The high quality of pubtit and private edliUtion in the CoUDty re1lec1..5 widespread illterest in thU :subject
and the large number of degree holden liVing in the Irea The aty is served by 14 schooLs (K thru 12), ~rving
apprcmmalcly 7.soo students In the Palo Alto Unified Sctlool ou,lrict.
SUn!ord Uur.-en.ity. esUlblisb.ed in 1885, is located adjacent to the Ciry. Shu:ued on ()'\.'er &'(0) acres., \be
University has .. total e6timaled enronment or 13.co:J including undergraduate, graCluale and post-<Joo:oral slu.de[1lS.
The aty ~ wilhin th.e Fooihili Community College District. wbkh operates twO modern campuses ";th I
total CDrQnmel1.~ of approximately .2,OCKJ ~y a.nd evettlt\g 'Studen1.S.
In addition iO Staoford University. other nearby edLOcalionai iruitiluliottS offering undergraduale and grad uate
degrees rndudc the Unfversit) of Sam" Clara. San Jos.e State, San Franruco Stale, the University or San Francisco
and the Uativersity or Califorrua Berlc.eky.
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APPENDIX B
SUMMARY OF PRINCIPAL LEGAL OOCUMENTS
The fcllowing are brief summaries af the provisions ot the principallegai documents for the
financJng. These summaries are nat iniended 10 be definitive. Reference is made to ihe
respective dccumeilts for the compieta terms thereof which are on file with the Crty. Cet1ain
capl1arized words arid ierms used in this SL1mmary and not defined Mrein are defined in the Trust
Agreement
CERTAIN DEFINITIONS
Capita~zed !erms used in this Summary h?ve the respective meanings as fo!lows:
Agency Agreement means the Agency Agreement dated as of March 1, 1992, by ar.d
bet'Neen ttle Corporation and City.
Assfgnmem Agreement means the Assignm.g~! Agree",en1 dated as of March ~. 1992, by
and between the Corporation and the Trustee.
Certjficate .Paymen! Date means March 1 and Sep1emoo! 1 of each year. commencing
September 1, 1992 and ending March 1, 2012. .
Civic Cenrer means the civic center structure with aH appurtenar1t fixtures which now
exists 01"} the Site. In cef1aln con1exts, the teom "Ch/ic Cen!er~ refers to the Civic Center as
improved b~ the construction of the Structural Repairs, the 1992 Project and otherwise.
Completion Date means the date of 5ubs1an1iaf comp1etlon of construction and instaliation
of the 1992 PfOject as evidenced by L'1e filing with the City of a certificate of completion thereof
eX'ecuted by ali Au1hori.;::ed Officer of City and as more P2r1icularly described in the lease
Agreement
Construction Fund means the fund by that name estabfistled and admir,isteroo by the
Trustee pursuant 10 the Trust Agreement
Corporation means the Palo Alto PubliC Improvemen1 CorpQr~lion. a nonprofit pubn-:
benefit corporation duly organized arrd exiS1ing under and by virtue of the laws of the State 01
Cafifamia,
Defeasance Obr.gafions means (al cash, or (b) non-caflable Federa! SeC~riHes.
Delivery Costs means all items of expense djrect~y or indirectly payable by or
reimbursabfe 10 tne City or the Corporation relating to the execution and delivery of the
Termination Agreement, the Site and FacHity Lease. the lease Agreement, the Trust Agreement,
the Agency Agreement, the Escrow Agreement and tr~e Assignment A~reemenl or the execution.
sale and defivery of the Certificates, fncluding but not limited 10 flUng and recording costs,
setilement cos!s. print~ng costs. repl'oduction and biooing costs, initial fees and charges of the
Trustee (including the fees and expenses of i1s COunsel), financing discounts, lega1 fees and
charges, insurance fees and charges, ffnancial and other professional consultant fees. costs of
rating agencies for credit ratings, fees for execution, regulatory agency fees, CUSIP fees,
transportation and safekeeping of the Certrflcates and charges and fees in connection with the
foregoing
Defivery Costs Fund means the fund by that name established Elnd admin'lstered by the
Trustee 10 I~~ Trust Agreement.
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Escrow 83r.k means BanK of America Nat~onal Trust and Savings Assxiaiion, as escrow
bank pursuant 10 the Escrow Agreement.
Escrow Fund means the Escrow Fund established and hele by the Escrow BanI<
pursuant to the Escrow Agreemen:t
Federa/SecurftJP...s means any of the fonowir.g whicli are ~cncallable and whjc~ at the time
of jnvestment are ~egal investments under the laws of the Sta~e of California for L';e moneys
proposed to be Invested therei n:
(a) direct obligations of Oncludlng obiigations issued or held in book entry
form on tile bookS 01 the Department of the Treasury of the Unned States of
America), Of obngations the timely payment of principal 0' and interest an wh:ch are
unconartionany guaranteed by, the United States of America, incl'.lding State and
Local Governrnen! Series obfigations; or
{b) bonds, debentures or notes payable in cash issued by anyone or
more of the fo~owing fed8ral agencies whose obngations reoresent the fun farth
and credtt of the Unned Slates of America: AesoluliO!1 Trust Corporation, General
Services Administration, Smatl Business Administration, Farmer's Home
Administration, Federal Housing Adminis1ration, United' States Maritime
Administralion, Un"ed States Department of HouSinq and Urban Development and
Goverrment National Mortgage Association. -
Lease or Lease Agreement means that certain lease, to be det'S<I for convenience as of
March 1,199210 be enlered into bY and belWeen the Corporation and the Ctly.
Lease Paymen! Fund means lhe tond by lhat name eslabnshed and adminislered by the
Trustee to fhe Trust Agreemenl.
Lease Payment Dafe means February 23 and August 26 of each year commenCing on
August 2fl, 1992, and term inating on FebcJary 23, 20 1 C.
Lease Payments means lease payments payable by City to 1he Corporation or its
asstgnee pursuant to the Lease Agreement
Ner Proceeds when useG' wtth respect to any insurance or condemnation award, means
the gross proceeds from the insurance or condemnation award with respect to which that term is
used remaining after payment of all expenses incurred in the oonection of such gross proceeds..
-1992 Project means the structural remodelltng of the poTice headqua rters and the rstrofi"i ng
of the Ctvic Center 101 sprinkler system fire prevention factlilJes and all inckfenla! and aux~llary
work necessary for cornpietioo thereat.
1992 Projecf Costs means all costs of payment of, Of' reimburSf:m~nt for, construction,
installation and financing cf the 1992 Project, includlng but no1 fimited to, architect, engineering and
construction supervIsion costs. construction cont~actor payments, costs of feasibility.
environmental and other reports, SOil tes!ing costs, inspection COSiS, permit fees, insurance
premiums, tiling and recording costs, title insurance costs and settlement costs.
Permitted Encumbrances means, as of any particular time: {a} nens for general ad valorem
1axes and assessments, if any, not then delloquent, or which the City may. pursuant to
provisions of Article V of the Lease Agreement, permit to remain unpaid; (b) the Assignment
Agreement; (e) the Site and Facilrty Lease; (d) the Lease Agreemen~ Ie) any right Of claim of any
mechanic, laborer, materialman, supplier Of vendor not filed or perfected in the manner prescnbed
by law~ and (1) easements, fights of way, mineral rights, drWing rights and other rights,
reservations, covenants, conditions or res!rictions which exlst of record as of the Closing Date
and which the City cert.if~s in writing will r>Ot ma1er[al!y wnpair the use of the Project.
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Prepaymerr! Price means the price to be paid by the C~ty to exercise flS opt jon to prepa,'
the remaining Lease Payrren:s on any Prepayment Date.
Principaf Office mear\S the principal corporl:lte trust office or the Trustee In San Francrsco.
Caltfomia.
Prfor Certific.stes mMns the certific.ates of participation executed and de0vered by the Prior
Trustee re~esentjng interest in lease payments to be made by the Git'i under the Prior Lease.
Pn"or Leilse means th09 Site Lease and lease Agreement Aelating to Palo Ano Crllie
Center, dated as of OctobeJr 1,1983. by and between1he Corporation, as lessor, and the Cft)',
as lessee, together with any duly authorized a n.d execlrted amendmerLt t~eretD"
Prior Trust Agreement means that certaIn Trust Agreement Relating to Palo Alto Crllic
Center Profect. da.ted as of October 1,1983. by and among the Prior TrJJstee.1he C~y and the
Corporatio.~.
Project means, collectively, 1/18 S~e and the StruC1ural Repairs, together with the 1992
Project.
Reserve Fund means the fund by that name estabnshed and administered by 1he Trustee
pursuant \0 the Trust Agreement.
Reserve Requiremerrt meati3; a sum equal to the lesser of (i) ten percent of the aggregate
orig1nal principal component of Instanment Payments, or (ii) the maximum amount of principal and
imerest payments with respect to the CertifICates due in the current Dr ani future year.
Site means the land more fully described in Exhib~ B attached to the Lease Agreement on
which l/1e Civic Center ~ loCated.
Structural Repairs means the Ctvic Cenler Struct'Jral Repai~s Impro\;'2'ments and inclderLtal
imprO'lements as general!y set rorth and descn"bod in the Prior Lease.
Trust Agreement means the Trust Agreement dated as of March 1,1992. by and among
the Trustee, l/1e Corporation and City.
Trustee means Bank of America NaUonal irust and Sz;vings Association Of its successor
in interest acting as Trustee under It',e Trus1 Agreement
LEASE AGREEMENT
Tenm
The term of lne Lease will commence on the date thereof and end on March 1.2012,
\m~ess, on March 1,2012, \tie 'Trust A.greement shal1 not be 6\scn'2lrged by tts terms Of i1 the
Ltl~e Payments sha~1 have been abated at any time ana' for ar1y reason, then the Term of the
Lease Agreement shall be extencf€,d unt!1 there has ben deP05it~ wrth the Trustee an amoun1
sufficient 10 pay an OOligallons due under the Lease Agreement. but in no ellent shall the Term of
the lease Agreemeni extend beyond March 1, 2022.
Construction 011992 Prolect
The Corporation agrees to cause the Civic Center to be improved by the construc1fon of
the 1992 Project in accoraa!1ce with the plans and specifications. The City will serve as agt:;nt of
the Corporation in 'the construction of the 1992 Pro}ect pursuant to the Agency Agreement, and the
Corporation will reimburse the City for an costs ar.d expenses .
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Lease Payme nls
. Certain "mounts will be de.fX'S~ed in It,e lease Payment Account 800 used to make
paymen:s designatoo as interest with respect to the CArtificates during the construction perlod,
and the amount of the Reserve Requirement shall be deposited ir'l the Reserve Ac-count, both
deposits 10 boa trea1&d as advance rental.
The Lease Payments commence on August 26, 1992. and are payable vn each
February 23 and Augusl26thereafier, to and including FebrJary 23, 2012, The lease Payme"ts
ara designed to be sufficient tll make the pa,ments designated as principa: and interest with
respect 10 the Certificates on tile suoceed,"9 March 1 and ~.mber i of each year.
The City covenants to take such action as may be necessary to include all Lease
Payments in its annual budget ond to complete Ihe 1992 Project using other legally available
funds ff necessary,
Abatement of Lease Payments
The Lease Payments shan be abated during any period in: which, due to damage or
destruction, there is substantial interference with the City's usa and posses~jon of tile Civic
Cenler, $uch abalemem shan be based on the proportion to wh',ch tile unusable portion of \he
CMc CI>.nler bears to the en~re Civic Center, until repair of l/1e d.ma~ed portion" completed.
The lease neverthele.-;s shan continue in fun force and effect, Tho C~ has agreed to procure
and maintain. th.oughout the term of the lea'Se, use and occupancy insw'-a;-}ce in an amount
sufficient to pay lease Payments for a period of twenty-four months (see "Insurance" below).
Malnte~ance and Repair
Throughout the tenn of \!',e Lease, repair and maintenance of the CMo Center shan be tile
responsibility ol1he City. The C~y has tile power 10 make .~eraUoi1S and aclcfrtions to the Civic
Center. A'ly such alterations or additions to the Civic Center will be and remair. ttle property 0'
the City.
Insurance
The lease requires the City to maintain or cause 10 be maintained the fonowfng insJrance
against various risks, ~ayable to the City or the Trustee as their fnterests may appear.
{i) Compre:hensive genera! an.d automobile pubric nabiHty insurance against loss for
personal injury. death or property damage during construction in t~e minimum amOU!lt of
$5,000,000;
~i; Fire and lightning with special coverage to tooude var.da.~sm and ma~clol.lS mischief in a
minimum amount equal 10 90% of replacemel'1t cost Oess Ihe appropriale deductible amount);
[tiQ Workers compensation insurance;
(IV) Business interruption and use and occupancy insurance in an amount not less then
maximum Lease Paymants payabl:e 01'1 any lour consecutive Lease Payment Dates.
Net Pioceeds 0' casuafty insurance must be applied eittler to repair the dar:"lage or to
prepayment of lease Payments and redemptlan of the Certi1icates. as datermined by the City.
The City must also provide tiUe il'\SUrance.
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EmInent DemaIn or T!tle De~ect
in the ever.t of the exercls9 of elninent domain or discovery of a tille defect wi1;' respect to
the Civic Cen!er or an)' portion thereof, the City is requ:red 10 deposit the Net Proceeds Of any·
condemna~io(\ award 0(' tit1~ tnSl..trarloo wtti". the Trustee. 11 the City determir,es t'nat the operation
of the Civlc Cen1er or the City's abi1ity 10 pay its obllgations is nat affected, such proceeds shari
be appried towards prepa>'ment of the Lease Payments and 10 the redemp1ion of an or a port;on
of outstanding Certificates, pursuant to the Tru~1 Agreement. If the City de:e-Tll1ines that the title
defect or condemnation has materially affected. operation or abHity to pay, or if such Net Proceeds
are sufficIent therefor, tile Net ProceedS shall be appfied to prepayment and call of the Certificates
in fu~,
Ass!gnment; SubleaSes
The Corporation may assign and reassign rlghts under the Lease, incllJdir1g. the right to
recerve and enforce payment of the Lease Paymel1ts to be made by the City. The City may not
assign any of f!s rights without the wrrtten consent of the Corporation,
Vesting ot Title
Upon expiratlol1 of the Term of t~le Lease, title in and 10 t~e Civrc Cen.ter shali vest in t!1e
City free and clear o~ the ffiasehold interest of the Corporaf:on .
. . The Crty may •. on any date, Sec1.I.re I.he payment of all Of a portion of the Lease P2.yme:nts
remaonmg due by an Irre'{ocable depoSlt with too Trustee Of an escrow holder under an esc;row
deposit and trust agreement of: ta} in the case of a secun1y deposit retaling to all lease
Payments, either (~ cash in an amount which. together with amounts on deposit in the various
funds held by the Trustee is sufficient to pay aIr unpaid Lease Pa~'ments, 0'" (Ii) Defeasance
Obligations in such amount as will, in the written opnion of an independent certJfied public
accoun1ant or other firm of recognized experts in such miSltters, together with intere:5t to accrue
thereon and, if required, a~1 or a portion of moneys or Fadera' Securities or casn then on depos!t
and interest earnings thereon in various funds neki by the Trustee, be fully suHicient to pay all
unpaid Lease Payments on their respective Lease Payment Dales; or '0) in the case of a
seet:.rity deposit relatirlg 10 a portion o11.he Lease Payments, a certi1iCa1.e executed by a City
Aepl'BSemative designating 1118 portion of th e Lease Payments 10 which the deposit per1ains, and
eitner (i) cash in an amount WhiCh is sufficient to pay the por1ion of the Lease Payments
designated in such City Representative's certincate, including the principa.l and interest
components thereof, or (Ii} Oe.teasance Obligations in such amount as. WIll, 10gether with interest
10 be received thereon, if any, in the written opiniol1 of an independent certified public ac.cour>tant
or oU1er firm of recognized experts in such iTIatters, be ful!y suffiCien! to pay the parDon ot the
Le&se Payments desigilated in the aforesaid City Representative's certificate.
The Co,'"poration has gcarlted an option to the Crt)' 10 prepay the pr~:lcipai component of
the Lease Payments in full, by paying the aggregate unpaid principal companenls of the Lease
Payments, or 'In part, but not 'In an amount of less than $20,000, together. ~n any event, with a
specified prem ium as set forth in 'the Lease Agreement
The City is obligated to prr..pay Vie lease Payments a~ocabre 10 the Project. in w~oie on
any date Of in part on any Lease Payment Date, from ana to the extent of any Net Proceeds of
insurance, tttJe insuranC6 or condemnation award with respect te the Project Uleretofore deposh'3d
in the Lease Payment Fund iOl' such purpose.
Events of Defaut!
The following constitute "events or default r :.mder the Lease:
m the City shall faH any Lease Payment or other payment required under the lease wi1hin
S days from the time speclffed therein;
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(ii) 1he Ctty shall tail ~o observe and pertorm any other term, covena.nt Of condition an its
part 10 be observed 01 performed for a period of Irrirty (30) days after written notice thereof by
the Corporation or the Trustee; or
~ii) Bankruptcy or insolvency proceedings involv!ng the CiW·
rn any suet'! event, the Corporatfon Of the TrustEe may proceed to: (D retake possession
of the Civic Center and' exclude the City from using it until the default is cured, holding the City
flable for the lease Payments and other amounts P2Mb1e by Hie C~y prior 10 such re-takirig 01
the Civic Ceotel' under and pursuant to the lease; Dr ii) without terminating the Lease. re-1aking
possession of the Civic Center, and lease the CiviC nter !of the account of the City, holding
the Cfty riable for the difference between the amounts received under sucl"11eaM' and the Lease
Payments payable 1»' the Crty under the Lease; Vii) lerminale Ihe Lease and hoid Ihe CrtY liable
tn damages fCN" amnurns equal 10 Lease Paymen1s under t'rie rease; or (ill) take whate ..... er action at
Law Of in equity may a~ar necassary or desirable to enforce its rignts as the owner of the Civic
Cenler.
TRUST AGREEMEIIT
Trustee
The Trustee is appointed pursuanl to the Trust Agreement to prepare, execu:e and
deriver 1he Certificates, and to act as a depository of am']unts helO thereunder. The Tr,;stee is
required to make deposits into and withdrawals from funds, and invest amounts held under the
TrJst Ag!'eement in accordance with the Corporation's and the Ctty's instructiOns. !l"Ilhe event of
8 default in payment o11ne Lease Payme~\s Of in ott-lei obiigations ot the City under the lease,
the Trustee shan exercise the righls of the CorporaVon with re'peCllo sue h default
Special Funds
The Trust A.greement creates vanous funds to be estabrisf1ed and maintained by the
Trustee, which consist of the Construction Fund, the Deriyery Costs Fund, the Lease Payment
Fund and the Reserve Fund.
Construction Fund. Accounts in the Construction Fund'wlll be diSbursed 1Jr 1992 Project
Costs upon receipt of a requisition requesting disbursement executed by an authorized officer of
the City, Any amounts remaining in the COnstruction Fund upon payment of the entire 1992
Project Costs will be deposited by the Trustee il1 the lease Payment FunO. and crecHtoo 10
Lease Payments.
OerIVery Costs Fund. Amounts ir) the Delil/ery Costs Fund will be disbursed for De!i\lery
Costs. DiSbursements lrom the DilIivery Cosls Fund will be made by the "Truslee upon receipt 01
e requisition requesting dIsbursement executed or approved by an authorized officer of the City.
Upon receipt at a certificate statir1g that all Oetil/eri Costs have been paid or provision for
payment nas been made, the Trustee wiH transfer any amounts remaining in the DeHl/ery Cos1s
Fund 10 t!1e Construction f" undo
Lease Payment Fund. Lease Payments paid to the Trustee as assignee of the
Corporation pursuant to the lease and the Assignment Agreement wBi be deposited by the
Trustee in the Lease Payment Fund. The Trustee will withdraw from lhe Lease Payment Fund,
on each Certificate Payment Date. an amount equal 10 the Cer1ifica,e payment due on such
Certificate Payment Oat-e, and will cause the same to be applied to the payment of pfincipal and
interest pa}ments dUB wfth mspect to the Certificates on suet] Certificate Payment Date.
Reserve Fund. Moneys in the Reserve Fund wiil be (i) transferred to the Lease PaJ'ment
Fund and applied as a credtt against the last remaining installments o! lease Payments prior 10
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the Certificate Payment Oats pertaining to such installments, or (ii) used fo!' the purpose of maKing
up deflCiE.:'lcies in the Lease Payment Fund in the event that moneys in the Lease Paymen1 Fund
are less than the Certificate paym(:nt then due on any Cer1Jflcate Payment Date. 11 on 6riy
Ce:bficate Payment Date, the amount of all ~ayments due and payable on the Certificates
exceer.'.s the amount in the Lease Payment Fund, laking into aCCOLJnt any transfers made tram 'the
Reserve Fund pursuant 10 Oi) above, the Trustee shall apply the mone~rs first to the payment of
af! interest past due wIth respect to the Certificates. and second to the payment of tnat portion of
1he unpaid principaf balance of each Certi1icate which is then past due, pro rata if necessary.
Upon receipt of any delinquent Lease Payment with respect to which moneys have been
advanced from ihe Reserve Fund, such Payment wi~1 be deposited in the ReseNe Fund, The
agreement provides that the Reser .... e Fund may be hereafter funded wfth a surety bond 01" letter
of credit in !he amount IJf the REMtVe Requirement in rfeU of cash. .
Deposit and Investment of Moneys In Funds
AIT moneys held by the Trustee in ally of the funds or accounts shari be deposrted or
invested in Permitted Investments, as directed I:y the Crt}'.
An interest and other irtcame received b~ the Trumoo on investmei\t c{ the lease Payment
Fund sha!!' prior 10 the Completion Oa1e, be deposited in the Constiuction Fund ar1d, after the
Completion Date, be re1ained in the Lease Payment Fund. All interest and other income recefved
b~' the Trustee on investment of the Reserve Fund shar: be retained ii1 the Reser-.le Fund in the
e'lent that amourits. on depoSIT in the ReseNe fund are less than the Reserve Requirement In
the event that amounts then on deposit in the 'Reserve Fund equal O( e)(ceed the Reser\le
Requi~ement. such e..;.:ess shall, ;Jrior to the Completlon Date, be transferred to the Construction
Fund and. following the Completion Date, shall be transferred to the Lease Payment Fund.
Tra~s1ers 10 the Lease Payment fund sha~ be made by 'the Trustee on or prior to February 23
and August 26 01 each year, commencing with the first of such dates forlowing the Completion
Date, and shal1 be appfied as set forth herein. Provided that thele are no delinquent Lease
Paymerlts , amounts retained Of deposited in the Lease Paymen1 Fund pursiJanl 10 this paragraph
shan be appfled as a credit against the Lease ?aymen1 Que from the city on the next Lease
Payment Date. All inleres1 and other if1com~ 0:1 the Construction Fund shaft be reta1ned in the
COnstruction Fund until the ConstructiOn Fund is closed.
Events of Default
Upon the oocurrenr,.e of an event of defauft by the Cr.y under the lease, the Trl:stee may
pursue the remedies under the Lease summarized abOve, After the Lease has been terminated,
the Trustee shail take sudi action as it determines to be in the best interests of the Owners of the
certificates, ei'!:her to sen. lease 01' otherwise dispose of the Civic Center and use the proceeds
therefrom, together wfth all other moneys held by the Trustee to pay the uflpaid principal and
interest with respect to the ol..!tstanding Certificates, pro rata r. ri%Essary, on or before thelr stated
maturlty dates. Nel1tler the Lease nor the "rust Agreement permits or requires acce'eralion of
Lea..c;e Payments or principal and interest with respect to 'the Cert~icates in the event of default.
Amendments
The Trust Agreement may be amended by agreement among all of the par1jes tt',ereto, but
no amendment shall become effective as to the horders of the Certrficates then outstanding
without the approval of the holders of sixty percent (50%) in aggregate principar amount of the
Cer1lficates Olo1standing, provided tha1 no such amendment shall impair the righl of any such
holder to receive his proportionate sham of Lease Paymen!s in accordance with h1s Certificate
without such tlokie('s consent. Notwithstanding the foregoing, the "rust Agreement may be
amended without such holder's consent, but only for the purpose of curing any ambiguity,
correcting defects, or in regard to questions arising under the TruS1 Agreement, provided that such
amendment does not adversely affect the interest ofUle holders of the Certificates,
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Upon paym!nl of all outstanding Certificates. eithel' at Of before maturity, or upon the
deposit of money or Defeasal1ce ObligatIons with the Trustee sufficlerll wlth other available
funds to retire the Certificates at or before maturity. the Trust Agreement will at the elec1JOO of the
City. be tanninated. subject to the payment 01 the Certificates.
Covenants
The City CO"cmants as fonows:
1) to per'.orm all oblig2ttons and duties imposed on n under the Lease Agreemen~
2) to well and truly keep, observe and perform all valid and lawful obligations 0'
legulations nOW Ol' hereafter tnlpOsed' on it by contract. or prescribed by' any law of the Un~ted
States. or of the State;
3) to promptly take such action as may be necessary or proper 10 remedy Of cure any
defect in or cloud upon the title 10 the Project, and prosecute all sucll sul1s, actions and other
proceedings as may b.e appropriate for such P"rpose i .
4) to record and file a memorandum of lease, the Assignment Agreement and all stJcll
documents as may be recroired b~ law in order fully to preserve. p<otE!Ct and pertect the securijy
altha Trustee and the Certificate Owners;
5) to supply 10 the TruSlee a3 soon as practicable. but nO! later than July lOin each
year, a written determ:nation by a city repiesentative that the City has made adequate pro .... islon
in Its annuaJ budget for the payment of lease Payments due under the Lease Agreement in the
fiscal year covered by such budget and
6) to make, execute and deliver any and all such flJrther assurances as may be
reasonably necessary or ~roper.
AGEflCY AGREEMENT
The Agency Agreement is entered into b6tween the Corporalioo and the City. TM
CorporaUon appoints the City as its agent to carry out all phase-s of the acquisition and
installation of the 1992 Project. The City. as agent. may enter into any purchase orders or
conSlructicm contracts required lor corTllletion of 'he 1992 Project
ASStGNMENT AGREEMENT
The Assignment Agreement, between the Corpora11on, as assignor, and the Trustoo, as
assignee, assigns ali of the Corporation's rights and interest in the lease to the Trustee. 10 be
exercised as provided fn 1he Trust Agreement
ESCROW OEPOSIT AND TRUST AGREEMENT
This ag~ment establishes an Escrow Fulld into whict1 s.~a" be deposited a portion of tI"1e
proceeds of sale of the CertitIC2'les. togelher with cenain funds held under the 1983 Trust
Agreement. The amoun1s so deposited are to be invested in Federal Secunttes (defined to mean
non-canallle. direct general obIigatioos at the Uoijed States of America (including obligations
isSued 0< held in book entry form on the booi<s 01 the Department 01 the Treasury of Ihe United
Stales of America)). such that the Federa! Securities, together with ln1erest to accrue tIleron, and
cash win be fully sufficient 10 pay all principal and Jnteres1 due witn respect to the Prior
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Certificates due and payable to and including ():t:..>ber 1, 1993, aM to redeem a~ oul.staJldtr.g
Poor CertifICates in fu~ on October 1 • 1993, at the redem~fon price of 102%. of the .p rinclpal
a"llount thereof. ?Ius accrued inte rest
TERMINATION AGREEMENT
This agreemen!. among the Clty.1t1e 1983 Trustee and tn. Corporation. provides for the
terminalion of the S~e Lease and Lease Agieement and the Assignment Agreement, l>oth relatlng
to the Palo Alto Civic Center PrOject, and da1ed as of October 1, 1983. Tills action sels the stage
for proceearng ..... ith 'the new transaction documen:, .summarized aboVE.
SITE AND FACILITY LEASE
. Under this document, the City leases the Site and the Civic Center, complelo wJth the
Structu ra~ Repairs. to the Corporation for a Ie rm commensurate with the term of the Lease
Agreement
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APPENDIX C
FORM OF SPECIAL COUNSEL OPINION
ICiosi09 D~!eJ
City Of Palo Mo
250 Hammon Avenue
Palo Mo, Canfomi. 94301
OPINION: $ Certificaleso! Participatior, (1992 Civic Cenle; Refinancing
and ~mprovemer;~ Project) Evldencing the Direct, L1ndivided Fractionai
Interests of the Owners Thereof ~ lease Payments to he Made by the
Cfty of Palo Alto, Ca'itornia As the Rentar for Certain Property Pursuant to
a. lease Agreement wfth the P?lo ANo Pubnc Improvement ~_~Ci1!~
Members of the Counci!:
We have acted as special counsel in connectkm with the delivery by the Ctly of Palo Alto
(the "City') of the Lease Agreement, dated as of Marcn 1, 1992ltne "Lease Agreemen!") by and
between the Palo Atto Public rmprovement Corporation (the "Corporation"] and tl1e City.
Pursuant to the Trust Agreement. dated as of Marcn I, 1992 (tne "Trust Agreement") by and
among the City. the Corporation and Bank of America Na1ional Trust and Sailings ASSOCiation, as
1rustee 1hereunder {the "Trjstee"), the T~ustee tlas executed and dellvere.d $-=0=-==
aggregate prfne,;ipal amount of certmca1es of participatJun (ttle "Certl!K;ates") evidencing the direct.
undivided fractional interests of the owners thereof j~ leasa payments to be made by the Crty
pursuant to the Lease Agreement (the "lease Paymer,ts") whic!"', have been assigned by the
Corporation to the Trustee pursuan! to the Assignment Agreement dated as of March 1. 1~92 (the
~Assignment Agreement") by and betweecn the Corporation and the Trustee. We have examined
the law and such certmed proceedings and otner papers as we deem necessary to render this
opinion.
As to questions of fact material 10 Qur opinion, we havs rened upon representaUolls of the
City contained in the Lease Agreement and the Tr.us1 Agreement. and in certified' proceoo'in~s and
other certffica1ions of publiC officials and others furnished to us, without undertakfng to verify the
same by inciepende!1i investigation.
Based upan1he foregoing, we are of1he opinion, under existir1g law, as follows:
1. The-City is a charter c~y and municipal co~ration duly organized and validly
existing under the Constih.rtlon and laws of1he State of Call1arn[a with lhe furl power to enter in10
the Lease Agreement and the Trust Agreement and to perform the agreements on its pail
contained therein.
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Cooool Merroers
City of Palo AM
IClosing Date]
page 2
2. The Lease Agreement and the Trust Agreemer.t ha\le boon duly ap,rnoved bv the
City and constitute valid and binding obngetions of the Crty enforceable agair.st the City !n
accordance wilh their respectlve te:ms.
3. The Certi~cates hal/e beEn v.aJldly executed and deliveled by the Trus1ee pursuant
to the Trust Agreement and, by virtue of the assignment made pursuant to the Assignment
Agreement, the 0Wners of the Certiflcates are entrtled to the benefits of the Lease Agreem ent.
4. The porti~f"! of the lease Payments desj~na!ed as and comprising inte~est and
received by 1tle owners of the Certificates is B:'(c!udobfe hom gross income for federal income tax
purposes and Is 001 an ~em of tax preference for purposes of the fedsral a:l'temativ$ minimum tax
Imposed on individuals and corporations; provided, however, that for the purpose of, compu1ing
1he altemative minimum tax imposed Oil such corporations (as defined fOf federal Income 1ax
purposes), such interest is required tc be taken into account in determining certain income and
earnings. The opinion set forth in the preceding sentence is subiecl to the condition that the City
comply witI'! all requirements of the Internal Revenue code ot 1985 which must be satisned
subsequent to the de~ve:y of the Lease Agreement in order that interest with respect thereto be,
Of" continue to be, excludable from gross income for federar income tax purposes. The City has
covenanted in the Lease Agreement and 1I1e Trust Agreement and other instruments reia~ng 10lhe
Certificates to comply with. each of SlJCh fequirements. Failure to comply with certain of sucn
requirements may cause the inclusion of such interest in gross income for federal income tax
purpv:ses 10 be retroactive Ie ther date of denvery of the Lease Agreement. We express no
~nion r:.egarding other federal tax consequences arising with respect to the lease Agreemerlt
and !he certifICates.
5. The portion of the Lease Payments designzted as and comprising interest and
received by the owners Of the Certificates is exempt from pc rsonal income ta"<al io rl Imposed by
the State of Cal~omia.
, The rights of tile owners of trle CerL'fica1es and the enforceability o~ 1he Lease Agreement
and the Trust Agreement may be SIJbject to bankruptcy, insolvency, reorgan'zaoon. moratorium
and Oiher similar taws affecti~ creditors' riQhts heretofore or hereafter enacted and may also be
subject 10 the e.xer~i.se of jl.ld';claf dlscrelion m accord3nce with principles of equity or otherwise in
appropriate cases.
Respectlun) subm ittec,
A Professional Law Corporation
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.• AFTER RECORDATION RETURN TOe
JONES HALL HILL & WHITE.
A PROFESSIONAL LAW CORPORATION
Four Embarcadero Center, 19th Fk>cY.
San fra,"Clsco, Califomia 94111
Attentlon: KeMeth I. Jones, Esq,
~,TTMCHMENT C
111'ilI9'
THIS TRA."'JSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT
TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMeNT IS
EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNiA
GOVERNMENT CODE.
TERMINATION AGREEMENT
Dated as of March " 1992
by and among the
CITY Of PALO ALTO, CALIFORNIA
tile
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
and
BANK Of AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION.
as Trustee
(1992 CIVIC CENTER REFINAIICIIIG AND IMPROVEMENT PROJECT)
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TERMINATION AGREEMENT
Ttlis TERMINATION AGREEMENT, dated as of March 1, 1992, and is by and belween
the CITY OF PALO ALTO, CALIFORNIA (the "City"), the PALO ALTO PUBLIC
IMPROVEMENT CORPORATION (the "Cvrporation"). and BANK OF AMERICA NATION,o,L
TRUST AND SAVINGS ,o,SSOCIATION. (Ihe "1983 Trustee");
WIT N E SSE T H:
WHEREAS, ttle City and the Corporation: have he,el.oiore entered into a Site Lease and
Lease Agreement Relating to ParD AM:O Civic Center Prolect, dated as of October 1, 1983 (the
"1983 Lease"}, pllrsuant to whicli the City agreed to lease certain real property (the ~Site"1 to 1he
Corpora:ion. and the Corporation agreed to lease the She and certain improvements (collectively,
t!1e "1983 Project") to the City, and the City agreed to make cenain lease paymenls (Ihe "1983
lease Payments") to the Corporation;
WHEREAS, the 1983 lease provides that in the ellent that tile Cily deposits, or causes
the deposit on its behalf Of. moneys Dr certain Federal SeclJrities (as deti,ned In the 1983 Lease,
and which may include United States Treasury notes, bonds, biHs or certificates of indebtedne~s
Of obrJgalions for which lhe full faith and credn of the Unned States are ~Iedged for the payment of
principal and interest, Including United States Treasury (oook entry) certificates, notes and
bonds, state and lOcal go\.'.~mment series). in an amount, together wnh investment earr.ings,
sufflcient ~o make the 1983 lease Paymenls wtlen and as due and in connection wntl the
prepayment thereof in accordance with mstructio'liS of the City, then ai: of U",e obligations of the
City under Ine 1983 Lease and aTi of the seclJrity prov~decl by ttle City for such obHgations,
excepting only the obligation of the Crt;' to make the 1983 Lease Paymenls from said deposit,
shan cease and terminate, and unencumbered title to the Project shall be lIested ir1 the City
without further action by !he City Of the Corporation;
WHEREAS, pursuant to an Asslgnment Agreement Relatiilg to Palo Alto Civic Center
Project, dated as of October 1, 1983 ~he "1983 Assignment Agreement"). by and between the
Corporation and the 1983 Trus!ee, the Corporallor1 assigned to the 1983 Trustee 11s rights 10
receive 1983 Lease Payments from the City under til e 1983 Lease and the ric ht to exercise s u c h
rights and remedfes conferred on the Co.rporation under t'le 1983 Lease 10 enforce p2yment of the
1983 Lease Payments;
WHEREAS, pursuant tc a Trust Agreement Relati;1g to Palo Alto Crvic Center Proj!2:ct.
dated as of October 1, 1983, by and among the City, the Corporation aM the 1983 Tn.:stee (the
~1983 Trust Agreement"). the 1983 Trustee agreed, among ott'1er maners, to execute and deliver
certfficates of participation (the "1983 Certificates~) representing undivided fractional interests of
the owners thereof, to receive 1983 Lease Payments made by the City and to apply sucf11983
Lease Payments 10 the pa,'ment of principal and inlBrest due witil respect to the 1953
Certlficates, and to administer certain 1urrds and accounts created pursuant to the 1983 Trust
Agreemen~
WHEREAS, the CUy has de1ermined that, as a resuft of favorabre financial marKet
evndilions, it is in the best interests of the 01y at th1s time ia refinance the City's obfigalion to
make the 1983 Lease Payments under the 1983 Lease and, as a result thereof, to provide for the
payment of the 1963 Certificates througn October 1,1993, and 10 redeem all outsiandir)g 1983
Certifica1es in full 0:1 October 1,1993, at the redemptJon price of 102% of the principal amount
thereof, pfus accrued irtterest, and to tha1 end, the City proposes to lease the 1983 Project to the
Corporatkln and to lease-bacl<. the 1983 Project, together wJth certain additional improvements,
from the Corporation pursuant to that certain Lo:;;ase Agreement. dated as of March 1, 1992 (ttle
"Lease Agreement");
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WHEREAS, the City proposes 10 make Ihe deposit of mooeys and Federal Securtties
rmerenced in the 1983 Lease;
WHEREAS, to obtain moneys to make such deposits, the Corporation proposes to
assign and tra:wfer certain of its rrghls under the Lease Agreement to the Tn.k~ee&UrSuant to Ihat
certain Assignmen1Agreeman:, dGted as of Marcl11. 1992. by and between the tlrpo[ation and
!he Tru51ee, and to enter inlo thai certain Trust Agreemenl, dated as 01 March 1, 1992 (the 'Trust
Agreement"), by and among the Corporation. 1he City and the Trustee. wher~by the Trustee
agrees to e)(ecute and deliver certifocates of panicipation each evidencing a direct, l~:ld1vided
fractional interest in the !ease payments .med!e by lhe Cit), under the Lease Agreement; and
WHEREAS, upon denvery 01 the Certificates and deposit 01 a portion of the proceeds
1hereof In an escrow fund for paymenl of the 1983 Lease Payments, IIle 1983 Lease and the
agreeme~ts related ltiereto need not be maintained (excl3pt as otherwise provided below), and
the partles hereto now deslrt, 10 proviCie fof the termination of such docume:nts as provlded nere~n:
NOW, THEREFORE, m consideration of the foregoing and for other consideration the
receipt and sufficien<:y of which are hereby aclulowledged, !he parties hereto do hereby agree:
Section 1. Termioatjoo.
(al By llirtue 01 the depes n of hJ nds in an escrow fund for parment of IOe 1983 Lease
Payments pursuanflo Section 312 of the 1983 Lease, alt obligations a Ihe Cil)! under the 1983
Lease shan cease and ferminate, e,cepting only the obngatlon of the City to make, or cause to be
made, an payments from such depostts made b1 the City and tiUe to the 1983 Project shan ve51
in the City on the date 01 said depos~ automalicaBy and wtthout lurther action by Ihe City or the
Corporation. Said deposit anu interest earnings the reo,., shari be deemed to be and sha.i!
constitute a special fund for the paymenl of the 1983 Lease Payments.
(b) In accordance with the foregoing, the IoIIowing agmements 0ncluding any optiDn to
purchase contained therein) are hereby terminated' and ate of no further focce Of effect:
1. 1983 lease, recorded October 11,1983, as Document No. 7846807, Off",;al Records
of Sarna Clara County; and
2. 1983 Assignment Agreemen~ recorded October t t, 1983, as Documenl No. 7846808,
Official Records of Santa Clara County.
(c} From and after ttle date hereof, none of the parties shal! have any further rights or
obfigations thereunder.
Section 2. Execution in Co!Jn~emar1s. This Termination Agreement may be executed in
severa! counterparts, each of which shall be an original and all of wnich shall constitute but one
and the same instrumenL
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IN W1TNESS WHEREOF. the parties t',8ret~ ha,,'s d'Jly executed trl:s Termir.atian
Agreement
Ccty Clerk
Attest
Secretary
APPROVED AS TO FO~M:
Crty Anorney
JONES HALL HILL & WHITE,
A Pro1essional Law Corporation
By ___ ~~,,~~~ ____ ___
Ke nnetn I. Jones, Esq.
Special Counsel
CITY OF PALO ALTO, CALIFORNIA
B,c ____ ""::;:-:-____ _
Mayor
PALO ALTO PUBliC IMPROVEMENT
CORPORATION
By: ___ --,;:== ____ _
Presldent
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSCCIATION,
as Trustee
By: ___ ~~~"~~~ __ _
Authoriz ed Sign atar)'
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STATE OF CALiFORNIA
COUNTY OF SANTA CLARA
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On • before me, _.____ , a Notary Pub!ic in and for said
County and State, personally appeared and ___ -_~~-=-~, personany known to me to be the Mayor and CItY-Clerk.
respective!y, of the City of Paro Alto and known to me {or proved 10 me on the basjs of
satisfactory evidence) to be the persons who executed the within instrl.Jmetri on behalf of said
municipal corpo.atic.n. ann aCKnowledged to me that such municipal corporation executed the same.
Notary Publ; c in and for said County and Sta!e
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STATE OF CALIFORNIA
COUNTI OF SANTA CLA,'O.A
ss.
On • before me, . a Notary pubnc in and for said
County and State, personally appeared and ====-c-====",,-;:-,,-' personally known to me (~r proved to me on the basis of
satisfactory evidence) to be the persons who exe<:uted the within instrument as President and
Se<:retary, respectively, of \t,e Palo Mo Public Improvement Corporation, the corporation thal
executed the w:thin instrument and known to me 10 be the persons wtiO exoouted the will1ira
Instrument on behalf of the COrpofation herein named, and acknowledged to me that such
corporation executed the within i.,s1rument pursuan1 to its Bylaws or a Resolution of tis Board of
Directors.
Notary Public In and for said County and State
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STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
)
) 55.
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On thts __ day of , in the year 1992, before me, the undersigned
Notary Pubiic, persona~ly appeared , personally known to r.te (or
~~~~t~i ;n the ba~_i_~_ of satr$facto~l evidence) to be the person wno eX_~_~;jt~~ ___ ~he w:t~~
national banking assocratfo."" therein named, and aGkrmwledged to me thai said natior.al banking
association e~.ecl.J1ed the same pursuant to its Bylaws or a Reso!IJtion of its Board of Dlrec1ors.
WITNESS m)' ha,d and oft;c;als.al.
(5 E A L)
Notary Pub!ic in and IOf said. State
My Commission Expires: ________ _
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EXHIBIT A
DESCRIPTION OF CIVIC CENTER SITE
The tam referred to herein is described as follows:
,oJl that ~e~ajn ,eal property in the City 01 Palo "110, County of Santa Clara, Stale of
Ca:tlomia, descTiIJed as follows:
All allols 3510 68, Inclusive, as shewn upon that ce~in map enmled, "Wf-!, H, H, Han's
Subdivision 01 Block No. 11 University Park.' which map was filed for record in the Office of the
Re!:order 01 the Co'.:nty 01 Santa Cla,a, State of Caliiornia, on May 23, IS9tl in Book' of Maps,
at Page 21.
Exhibrt A
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;riT,~Crit1ENi 0
AFTER RECORDATION PlEASE RETURN TO:
Jares Hall Hill & White,
A Professkm8.1 Law Corporation
FOl!r Embarr-adero Center. 19itl F~
San Frnndsco, CA 941 11
AttentlOrl: Kenneth!. JOf'IeS, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT
TO SECTION 1192g OF THE CALIFORNIA REVENUE AND TAXATION CODE. TH'S DOCUMENT IS
EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA
GOVEfRlM~NT CODE.
SITE AND FACILITY LEASE
Dated as of March 1, 1992
by and between the
CITY OF PALO ALTO, CALIFORNIA,
as lessor
and the
PALO ALTO PUBLIC IMPROVEMENT CORPORATION,
as Lessee
(1992 CIVIC CENTER REFINANCING AND IMPROVEMENT PROJ.ECT)
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SITE AND FACILITY LEASE
THIS SITE AND FACILITY LEASE, dated as 01 March 1, , 992, is by and Delween the
City of Palo Alto, a charter city and municipal corporatiC:1 organiz.ed and existing under and by
virtue of ttle laws of the Stale 01 California (the "Cijy"l, as lessO(, and the PALO ALTO PUBLIC
IMPROVEMENT CORPORATION, a roonprofit, publiC benefrt ccrporation organized aM eXisting
under and by virtUB otthB laws 01 the Stale 01 California (the "Ccrpora'ion"), as lessee;
WIT N E SSE T /1;
WHEREAS, the Co~rat\c(i intends to assist the City by firlancirtg celtaln improll€:nents
to the Palo Mo Civic Center (the "1992 Project'; and refinancing cer1ain improvemen1s here~ofore
made 10 the Palo Attc Ci""ll1c Cen:er and the site thereof (the -1983 Project"), and to lease the Si1e
(as herein defined) and the Palo Alto Civic Center. as improved by the 1983 Project, and as
further jmpro .... ed by the 1992 Project (coflective!v, the "Project") t01ne GrW pursuant to a Lease
Agreemen~, dated as of March 1.1992 (the "Lease Agreement"), and the Ci1y proposes Ie enter
Into this Slte and Facility lease with the Corporation as a ma!eriar cons,deration for the
Corporation's agreement 10 lease the Project to th e City;
NOW, THEREFORE, IT IS HEREBY MlJTUP,Ll Y AGREED, as foliows,
Section 1. ~ and Faci!ity lease. The City hereby leases to the Corporation and the
Corporation hereby leases from 1he Cttv, on the terms and conditions t1ereinafter set forth,lt1at
certain parcel of real property situated in the City of Palo Alto, Santa Clara County, State ot
California, more particularly descrlbed in Exhibit A attached her8to and made a part hereof (the
"Site"), and the improvemen1s on the Site 6ncludi~ the 1983 Project) more par1icularly described
1.'1 Exhibit B attached hereto and made a part hereof lcollectJvely, tne "Fac:lrty"}.
Section 2. Term. The term of this Site ar.d T=aciH'ty Lease 5"al1 commence on the date of
recordati!Jn of this Site and Fac~lity lease in the Office of the County Recorder 01 Santa Clara
County. State of Canfornta, and shall end on March 1,201;2, unless such term is extended or
sooner tenninated as hereinafter provided. H, on March 1, 2012, the aggregate amount of Lease
Payments (as defineci in and as payable unde( the lease Agreement) shall not have been paid,
or prey-sion shan not l1ave been made for their payment. then the term of this Site and Facility
Lease shall be exten1ed until such lease Payments shall be fufly paid or provis:on made for
such payment tt, prior 10 March 1, 2012, an Lease Payments shall be 1u!ly paid or provision
made for such payment in accordal1ce wtth SectKlll 4.2 or 10.1 of the Lease Agreement, the term
ofth~s Site afld Facility Lease shall end len PO) days t1ereafter; prov"ided, tr.at 'In no event s'nali
1heterm 01 this S~e and Facility Lease e>:tend beyond March 1, 2022.
Section 3 . .B..e.n1a1. The Ctty acknowledges reC2ipt from the Corporation as and for rental
hereuncler the sum of one donar ($1.00), Of' or before the date Q( delivery o( tr,is Stte and FaciHt'1'
Lease.
Section 4. Purpose. The Corporation sha!1 use the Site and the Facility solely fm ttle
purpose of leasing the Project to the City pursuant to Ihe Lease Agfeement and for well
pUfPOseS as may be incidental thereto; provided, however, that in the event 01 default by the
City lJf'1der the Lease Agreement, tne Corpofation and its assigns may exercise the remedIes
provided in the Lease Agreement
Section 5. Clly's Interes,l in She and 1he FacmN. Tr.e Crty colJenams that it is the OVoIner
in fee of the Sije and the Facilrty.
Section 6. Ass~meo's and Sqhleases· Unless the City sr,aH be in default under the
Lease Agreement, the rporation may not assign fts rights under this Srte and Facility Lea~e or
sublet 1he Site Of the FacHity, except as provided in the Lease Agreement, withou1 the written
consent of Ihe C 'Y.
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Section 7. 8~ght Q~ fr.try. The CIty reserves the right for any of its duly authoriz€d
representatives fo enter uporl1he Site and the Fadlity at any reasonable 11me to inspect the same
()( to make any rep(l;rs. impfOvements Of changes necessary fer the preservation L'1ereof.
Section 8. Terminalion. The ("...orporation agrees. ufXI/'11he termination of this Site ar .
Fnciltty Leese. to quit and surrender the Site and the l=acili1y in the same good order and condltiQn
as the same were in at the time 01 commencement of the term hereunder, reasonable we:,r and
tear excepted, and ag;ees that any permanent improl,'emen!s and stru~l.Hes existing upon trl8
Site at 'the time of tile termination of this Site and Faci!!tl lease shall remain thereon and ti11e
t1-<>reto shall vest in lhe Cily.
Seaion 9. oma.utI. In the event the Corporation Shan be in defa:.Jrt in the performance of
any obligation on its part to be performed under the terms of ~his Site and Facllity lease, which
delautt continues 10' thirty (3~) days IOliowinQ nolice and oemano IOf correclion ther",,1 to the
C..QfPOfation, the City may exercise any and a1~ remedies granted by law, except tha1 no merger
of this Site and Facility Leass and of the Lease Agreement shan be deemed to occur as a resuft
thereof; provided. however, thai So long as any Certrlicales (as oofined in the Lease Agreement)
Rre outstanding and unpaid in 2rxordance with the terms thereof, the Lease Pay~ents assigned
by the Corporation 10 the trustee u~r the Assignment Agreement. dated as of Marc~, 1,1992.,
by and between the Corporation and Bank of America National Trust and Savings Associa!ior't,
as 1rUS'.ee (the "Trustee"I, sMIl con~nue 10 be paid 10 the Trustee.
Section 10. Quiet Enjoyment The Corporation, a1 sf! times d!Jring the term of this Site
and F&CiI~y Lease. shall peaceably and quietly have, hoid and eojoy ali of the Site and the
Facility subjec1 to the provisions of the Lease .6,greement and the Trust Agreement. dated as of
Mard1 I, 1992, I:>y and among tlle City. the Corporalion and the Trustee.
of HIe Corporation and the City hereby releases ~~~~~~~~~~~~~ Al1liabilnies under this Site ai1d Faciirty Lease on
emlploy",,_ar1d agent 01 the Corporation of and from any
ity lease. No member, director, officer, lI~=,'~~~~i'~~ any or under any circumstances be ir.Or ..... iduan~ u, and Facility Lease ior anyUling done {)( omiUed 10 be dene by
Section 12. ~. The City COIIenants and agrees to pay any and an assessments of
any kind or CflcJIacter and al so an taxes, indudi ng possessory interest taxes, levied or assessee
upon !he Site or the Facility [including both land and improvements).
Section 13. Emjnent Domain. In the event the whole or any part of the Site, trle Facillty or
the improvements thereon is taken by emlne-nt dOl'T1ail'l proce~ir.gs, Ine interest of the
Corporation shall be recognized and is hereb~' d€1erm~ned 10 be the amount of t,e then unpaid
Certificates delive:e6 to finar.ce the Project. i:1Cluding 'the unpalcl prirlcipal and interest with respect
10 any then outstanding such Certjf~cates and, subject to the p~ovisions 01 the Lease Agreement,
the balance of the award. if any, sllatl be paid to the Ctry.
Section 14. Partjaj lnyaljdtlv. If an~ one Of more of the terms, pro ..... isions, covenants Of
concfrtions of this Site and FacHiti Lease shan to any extent be declared invar.d, unenforceable,
void or vokiable for any reason whatsoe ..... er by a court of competent juriSdiction, the finding or
order 01" decree of which becomes final, none of the remaining 1e:1l1s, prollisions, covenants and
concfiti.ons of 1his Site and Facil11y Lease shall be affected thereb>', and each proviSiOr1 of this Srte
and Faclltty lease shan be vand and enforceable to the fullest extent permitted by law.
SecUon 15. Nptices. All notices, statements, derr.ands, consents, approvals.
authorizations, offers, designatIOns, requests o( ot~r communicatiortS hereunder by either partY.
to the other shall be in wrrting and stlall be sufficiently gwen and served upon the other party If
delivered personally or if mailed by United States registered mail, retum receipt requested
postage prepaid, addres....oo as follows: '
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If to Co!pO'8tlon:
If 10 C~ty:
Para AIto Public Improvement Corporation
Clvic Center
250 Ham:lton A .... enue
Palo Alto, CA 94301
Attention: Coy Clerk
City of Palo Mo
Civlc Center
250 Hamilton Avenu3
Palo Alto, CA 94301
An~ntion: C'Y Cieri<
The parHes hereto. by notice given: hereunder, may, respec1jvely, designate different
address 10 whicn subsequent notices, certjficates or other communlcations will be sent.
Section 16. Sectioo Headings. All sect'lon headings conlained here1n are iOf convenience
of reference only and are not intended 10 define or ~mit the scope of any provision of thiS SMe and
Facility Lease.
Sect,on 17. Execution. Thls S'rte and Facirrty Lease may be executed in any number of
counterparts, each 01 which sha~ be deemed to be an orlginal but all together shan constitute but
one and tile 9.Jiie instrumt!nt
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I~J WITNESS WHEREOF, the City and the Corporal ion have caused this Site and
Facility lease 10 be executed by their respective officers thereunto du'y authorized, al1 as of the
dar and yoar ~rnt above written.
(S E A L)
Attest
(S E A L)
Attest
City Clerk
Secretary
APPROVED AS TO FORM:
Crty Attorney
JONES HALL HILL & WHITE,
A Professional Law Co<por.itiOtl
By----v=~~~70~-----Kenneth I, Jones, Esq.
Special Counsel
CITY OF PALO ALTO, CALIFORNIA,
as Lessor
By
Mayor
PALO ALTO ?<JBUC IMPROVMENT
CORPORATION,
as lessee
By _______ ~==~----__
President
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STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
ss.
On • before me, _____ • a Notary Publlc in and for said
COl!nty and State, personally appeared __ and ====.,.,,===-.::-.::::-' personany knowrr to me (or provec to me on the basis of
satisfactory evidence) to be the persons wt'lo.execL~ed the within instrument as President and
Secretary, respectively, of the PaiD Alto Public Improvement Corporat'lon, the corporation that
executed the wtthir:-instrument and known to me to be the persons W!"IO executed the within
instrument on behalf of the corporatio~ t1ere'n named, and acknowledged 10 me that sucn
corporation executed the Within instrument pursuant ia ~s Bylaws or a Reso:ut~on of ft5 Board 01
Directors.
Notary Public in and 'or said County and State
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STATE Of CALIFORNIA.
COUNTY OF SANTA CLARA
on , before me, _ , a No!arj Public in and fcY said
County and Slale, personally appear9d ____ and
-;:;=:;:;,:;;;:r;;--,,,,,,=7'==' personally known to me to be the Mayor and-cl!Ycreri<,
respeo\ively, oj \he C~y of Palo Me ana Known \0 me (or pro_ed 10 me on the basis a(
,satjsfactory evidence) l-:::. be the ~rsons who ell:ecl.'1ed the within lns1rument on behalf of said
municipal corporation, and aCknowlOOged to me that such municipal corporation executed the
sarTle_
Notarl" Public in and for said County and State
EXHIBIT A
DESCRIPTION OF CIVIC CENTER SITE
The land referred to herein is deSC1'ibed as 10110'1\'5:
All that certafn real propert,1 in the City of Palo Alto, County of S3J'lta Clara. Stale of
Califomia, descnbed as fOnDWS:
An of Lots 35 to £8, incll..'sr'.'e, as shown Ural"' that certain map ent[tled, "WH, H. H. Hart's
Subdivision of Block No. 11 Universrt'l Park," which map was filed for record in the Office of 1he
Recorder of the County oJ Santa Clara, Sta1e of CalHornia, on May 23, 1696 in aook 1 of Maps,
a:P~21.
c.1.HI ell e
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A T T ~ C H K ! • r l!
A TTACI,MENT E
LEASE AGREEMENT
Dated as of March 1, 1992
by and between the
PALO ALTO PUBLIC IMPROVEMENT CORPORATION,
as Lessor
and the
CITY OF PALO ALTO, CALIFORNIA,
as lessee
(1992 CiVIC CENTER REFIN~NCING ~ND IMPRvVEMENT PROJECT)
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TABLE OF CONTENTS
ARTICLE I
DEFINIT IONS AND 8(H1 BITS
Section 1.1. Oeflnit:ons ...
Section 1.2. E~!libits.
$ectfon 2."_
Section 2.2.
~J'\TICtE ~
REPRESENTATIONS. COVENANTS AND WARRANTIES
Ae;:wesentations, Co\lenants arld Warranties ol 1M City ......... .
Repres el iiations, CoIJe,lan1s and Warranties of Corporatlon
ARTlCLEfil
DEPOSIT OF MONEYS; PAYMENT OF DELIVERY COSTS;
CONSTRUCTION OF 1 992 Project
Deposit of Moneys .............. __ .
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.. ... 2
... 3
. ... 3
.. .. .......... ...5 Section 3.'.
Section 3.2.
Sectlon 3.3.
Section 3 .•.
Payment 01 De~ .. ery Costs ...
ConstructJon a~d Leaseback .. ,
Construction of th~ 1:)92 Project ......
............................... ................ . ........... 5
Section •. 1.
Section 42.
SecOOn 4.3
Section 4.4.
S$c:tion 4.5.
Section 4.S
Section 4.7.
section 5,1.
Sectkln 5.2.
Sectkm 5.3.
Section 5.4.
_n5.5.
Sect jon 5.6.
Section 5.7.
Section 5.8
Section 5.9.
Section 5.10.
... _.,_ .... ___ ,_.. . .. 5
ARTIClE IV
AGREEMENT TO LEASE; TERM Of THIS LEASE AGREEMENT;
lEASE PAYMENTS
lease » ••• __ ••• -•••••••••••• -................................ .
Term of Agreement.. ............................... .
Possession ...................................... ..
lease Payments .................................. ..
Ollie'!. Enjoyment .................. " ... ..
Title ..
.~Odrtional Payments.. . ............ .
ARTICLE \I
MAINTENANCE; TAXES; INSURANCE; USE LIMn ATIONS; ANI)
OTHER MATTERS
Maimenance, Utilities, Taxes and Assessments ................. ..
Modification of Project........ .. ............ .
P~ic Liability 800 Pro~ Camage lns.ur~'ce ........ .
Workers' CompensatiOn Insurance
Fire aM Special Extended CO\lerage Endon:;emerrt ..
Business Interruption Insurance.
T~ Immrance.. . ....................... ..
Insurance Net Proceeds; Form of P('llicies
Ad .... ances ...... .
~nstanatiOIl of City's Equipmerrt ."
+
. ................. 5
. .. 6
..6
.6
. .. 6
.7
.7
..7
. ....... 9
. .......... 9
.. ...... 10
. ..... , ......... 10
. ..... '0
. ...... 10
.. ..... 1 Q
...... 10
.. ...... 11
. ...... 11
Section 5.11. liens. .. ............ .
Section 5.12. Pri\late BuOS;iness Use Umitabon .11
", 2 . .......... , 2
Section 5." 3. Prtvate Loan Limitation ........... ..
Section 5.14. Federal Guaramee Prorubttion ..
_S.l.
Section 6.2.
8ectiao 6.3.
Section 7.1.
Section 7.2.
Section 7.3.
Section 8.1.
Section 8.2.
section 8.3.
Section 9.1 .
Section 9.2.
section 9.3.
Section 9.-4.
Secbon 9.5.
5ectK>r1: 9.6.
Section 9.7.
ARTICl.E V1
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET
PROCEEDS
Emin-ent Domain..................... . .............................................. , ............ 13
Apprution of Net Proceeos... ...... .... ...... ........ ..... . .......... 1 .3
Abatement of Lease Payments in 1he Event 01 Oa m age or De:structf 0.1 ........................ 1 3
AATIC\.E >'11
DISClAIMER OF WARRANTIES; ACCESS; INDEMNIFICATlON
Disclaimer of Warranties... . .................... . ............ ".......... . ...................... 14
Access to the Project.. .. ...... ....... ........... .......... .......... . ..•. 1.c
Release and Indemnfficat"ion COvenants ................................................................... 14
ARTIClE Viii
ASStGI<MENT, SllBLEASING AND AMENDMENT
Assign mflflt by ttle Corporat!on ........... .
Assignment a.nd Subteasing b)' the City ................. .
. " ............ " ............. , 5
. ............. '5
Amendment of this Lease Agreement. ...... . . ................................. 15
ARTICLE [)(
EVENTS OF DEFAUlT AND REMEDIES
E ... ents. ot De1alltt Qe1ined................... ..................... .11
Remedies on Default •• ,.,. •••.... ....... ............ ........ ....... .1 7
No Remedy E:;(chJsi ... e ............... ,....... ........................ ................. . .. 18
Agreement ro Pay Attorneys' Fees and EJcpenses..... .................... . .................... 1 9
No Adcfltiooal Wajve! Impfied by One Wal\ler ........... .... ............. ..... . .. 19
AppIicailoo 0: Proceeds. ....... ........ ...... ..... ......... ..... ...... ....... ... . ...... 1 9
Trustee and certificate Ovmers to Exercise Rights ................................................... , 9
ARTV'.A..E X
PREPAYMENT OF LEASE PAYMENTS
Section '0.1. Securtly Depostt" ....... " ..... " .... "........ "" . .20
Section '0.2. ?repaymem Option........................ ........................ ................ . ..... .2Q
Section 1 n.3. Mandatory Prepayment From Net Proceeds of Ins urance, Trtle Insurance or
Eminent Dc.main... .......... .......... ..... ........ ....... . ..... .21
SectIon 10.4. Credit for Amounts on Deposit ................................................................................ 21
Section 11.1.
Section 1 ~ .~.
~0!'11~.3.
Section 11.4.
Section 11.5.
Section 11.6.
eecti~m 11.7.
Sectlon 11.9.
Section 11.9.
EXHIBIT A;
EXHIBIT B:
EXHIBITG:
EXHIBIT D:
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ARTlCLE Xl
MISCELlANEOUS
Notices.. ....... ... ......... .22
Binding Effect. .. .............. 22
Severabillt)' .... . .................... 2 2
Net-(let·net Lease ................. . ........... 22
Further Assurances and COrrective instruments .................................................... 22
EJcecution in Counterparts........... ................. . .......................... 22
Approeab1e Law... .... .... ................. . ..... ... .. ............ .22
CoiporaMn and Ci':y RepresentatJ'Ies ................................... .2 3
Captions ...............• ... .............. . ........ .23
Deflnittons
DeSCription of the Site
Descr1>tion of the Faci!ity
Sd"!edule of Lease Pa)lmcrm
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LEASE AGREEMENT
THiS LEASE .~GREEMENT (lhe "lease Agreement"). dated 10< convenience as 01 Macch
1. 1992, by and between the PALO ALTO puaLic IMPROVEMENT CORPOR.~TION, a
nonpro~rt:, pub~c benefit cOrpc1'atfon, organized and existing under the laws of tfle State ot
California, as lessor (thoe "Corporation"), and the CITY O!= PALO ALTO, a charter city and
municipal corporafrOn o~ganlzad and existing under the laws of the State 01 Caiifolnia. as lessee
(tile "Cily");
WIT ~J e SSE T H:
WHEAE~_S, Ihe Ccrporalion has herelolore leased certain real pro~rty (the "S:16") and
the Palo Aha Cfvrc Cen1ei and certajn improllemen1s thereto, including certain improvements
financed by tease transactions between ti',e parfles in 1983 (th e "1983 Project"), more parucularly
described in Exhibits Band C hereto, pursuant to that certain iease agreemerlt, da:ed as of
October 1, 1983, by and between the Corporat;on, as lessor, and the City, as lessee {the "Prior
Lease");
WHEREAS, the Prior Lease has, with certain exceptions, been du1y terminated pursuant
to a Terminaoon Agreement, dated as Of March 1. 1992, between the partles:
WHEREAS. Ihe City r.as delermined Ihat H is in lhe interesls of Ihe City al this lime 10
provide for the refinanclng of the 1983 Project and the City's existing obngations under the Prior
Lf';2Se and for the finandng of certain additional improvements to the Civic Center, by re-Ieas~ng
the same pursuant to 1his Lease .I\greement: ar.c1
'NHEREAS, the Corporation wiU cause to be deposited w!th the Trus1ee (as herelnafter
defined) funds k>r the refinancing of the 1983 Project and "the financing of the proposed add1tional
impmvements;
NOW. THEREFORE, IT IS HEREBY MUTU"LLY AGREED, 2S fOIiOws:
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ARTICLE I
DEFINITIONS AND EXHIBITS
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~~~~~~~!~. The terms defrned in Exhlb~ A at'.ached hereto and by this reference I used and cap~a"zed her.in, shan, 10( all purposes of this lease
Agreement a~ribed to them in said Exhibit A uoless the context cleany
requires some oIl1er meaning.
Secli0n 12. ~. The fonowing exhibhs are attached to, and by thiS reference made
a part of, this Lease Agreement:
Exhibit A: De~niti""s.
ExIlibil B: The description of the Stle.
LxIlib~ C: The description of the Facility.
Exhibll 0: The schedule of lease Payments to be paid by tM City hereunder with
,aspect 10 the Project, showing the Lease Payment Date and amount of each
such lease Payment
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRlINTIES
Section 2.'. ~emflsema~\Qo$ CQ'Jer.?jots. aDd \,\laH31lliE5 Of the Cit~. "Tt1e City
repr-esents, CQllenants and warrants 10 the Corpo,atfon as follows:
(a) Due Qrganization and E)(istenge. The Crty IS a charter eft}' and munfcipal corporation,
organi2ad and existir1g under the laws of the State.
(b) AuthorizatioD. Tr"Ie laws of the Sta~e 3uthcrize tile City to enter into the T.c.(minatlOrf
Agreement, the Site and Facility Lease, this lease Agreement. the Escrow Agreement, the
Agency Aoreement and the Trus1 Agreement and to enter into the transactlons conlemplated by
and to carry out its obHgations under all of the aforesaid agreements, and the City has duly
authoriZed and executed an of the aforesaid agreem ents and such agree "I ents constitute the lega I,
valid and binding agreements of t,e CI~y, enforceab~e against the City in-accordance with !heir
respective terms,
{c) NO Vjglatjons. Neither the €>:ecution and delivery o{ the Termination Agreement, the
Site and Facmty Lease, this Lease Agreemer.t, tile Escrow Agreement, the Agency Agreement, Of
the Trust Agreement,. the fuifHimen! of or compliance wrth the terms ar1d conditions hereof or
thereof. nor the consummatron of the transactions contemplated hereby or thereby, conflicts with
or resurts in a breach of the terms, conditions or provisions of any restriction, agreement or
instrument to which the City is now a party or by which the Cfty is bound, constj1utes a defauft
under any of the 10regoing, or results in the creation Q;" imposit[on of any lien, charge or
encumbrances whatsoever upon any of the property Or assets of the C:ty. or upon the Project,
except Permitted Encumbrances.
(d) ~m:L.a.nd Delivery. The City has duly authorized and executed th~s lease
Agret1ment in accordan.ce with the laws of the State.
Section 2.2. Representations Covenants and War'antics 01 Cpmorat:qn. The
CorporaUon represents; covenants and warrants to the C~y as 'onaws:
(a) Qua Qrganizatioo and fts1ence. The Corpol'ation is a nOrfprofrt, pubnc benefit
corporation organized and existing under and by vi'-:ue of the laws of the State; has power to
erner into the Termination Agreement, the Srte and FacHity Lease, this Lease Agreement, the
Agency Agreement, the Assignment Agreement and the Trust Agreemen!; IS possessed (If full
power to o'/m and "hoid, impro .... e and eqUiP rea1 and pe1sonal property and to lease and sell the
same; has du;~ aufhorlzed the 8)(ccution arid delivery of a~ of the aforesaid agreements and such
agreements constitute the lega', lIaHd and binding agreements of the Corporaiio;1, en;orceable
against the Corporation in accordance 'With their respective terms.
fbi NQ Encumb~ 1he Corporation wnl not pledge the Lease Paym~nts or other
amounts derived from the Projec1 and from its other righ1s under this Lease Agreement and will not
mortgage or encumber the Project, except as provided under the 1erms of this Lease Agreemerll
and the Tmst Agreement
(e) riQ y)otaiions Nehher tr·le execution and delivery of the Termlnatior1 Agreemenl, the
Site and Facility Lease, this Lease Agreement, the Assignment Agreement, the Agency
Agreement, or the Trust Agreement, the 1ulfJllmen1 Of or compriance whtl the terms and conditions
hereof Of t.hereof. nOf the consummation of the transactions contemplated hereby or thereby,
confHcts wtth or resuits in a breach of tne terms, conditions or provisions of any restricHon 0" an~·
agreement or instrlJf71ent to which the Corporation is now a party or by which the Corporation is
bound, constitutes a default under any of the foregoing, or results in. the creation or imposition of
any lien, charge Of encumbrance wf1atsoever upon any of the property or assets 01 the
Corporation, or upon the Project, exce~ Permtlted Encumbrances.
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(d) Np Assjgnments E'.(cept as prollided her-efn. lne Corporation wiH no, dssign this
Lease Agreement, its rigllt t'J receive lease Payments from the City or its duties and obrigations
hereunder to any other person. flrm or corporation so as to impair or \dolate the represen~atiDnS,
rovenants and warranties contained in this Section 22.
'e) Execytion and Deli ... .o'y The CO~ra11on has duly authorized and execu1ed this
lease Agreement in accordance with the !aVIIS 01 the State.
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ARTiCLE IIi
DEPOSIT OF MONEYS; PAYMENT OF DELIVERY COSTS;
CONSTRUCTION OF 1992 PROJECT
Section 3.1. Deoosft 9t Moneys.. On the Closing Date, ths Corpora11on shall cause to be
deposited with the Trustee the proceeds of sale 01 the Certificates. Pursuant to Section 2.07 of
the Trust Agreement. an amount of such p;oceeds equal to accrued interest to the Closing Dale
and capitalized interest from the Cl0Sing Date to _" • shari be deposited in the Lease
Payment Fund, an amount of such proceeds esUrTlated to be required to pay Del"lvery Costs snat!
be depOsited in the Derivery Costs Fund, an amour~t of said proceeds required 10 defease t~::
Prier Certificates shall be transferred to the Escrow BanK for application i11 accordar'ce with tl.:';
ESCfOW Agreement, and Itle remaininQ balance of 5aid proceeds shat! be deposited in tile
COnstruction Fund to pay 1992 Ploject Cosls.
Section 3.2. payment of peijyerv Costs Payment of D~jjll~ry Costs shall be made from
the moneys deposited in 1he Delivery Costs Fund. which monays shall be d[sbursed for such
PUrp056 in accordance and upon comp~al"lce with Section 3.0.2 of the Trust Agreement.
Section 3.3. Construction and Leaseback. In consideration of the paymen.t by City to
Corporation or its assignee of the Lease Payments, Corporation hereby agrees to cause the
Civic Center to be improved by the C!)nstruction Of the 1992 Project and leases the Slte and the
ImprOved Civic Center back to 1he City.
Section 3.4. Cpmi,nlClioD of 1he 1992 Project City, as agent of t'1e Corporal1on, shall
provide lor acquisition, construction and inS1.ai1ation of the 1992 Project pursuar}t to the terms of
1tle Agency Agreement and unciei contracts let pursuant 10 competitive bid. Disbursements fOf
acquisition, construction and instanation of the 1992 Project, including rei ir.bursemen1 to the City (Of
any 1992 Project Cosls paid on beha~ of the CorporaliDn by Citl prior 10 receipt of toe proceeds
of sale of the Cert.'ficales, shall be from thE Constr"cliDn Fund eSlabnshed and held by lhe
Trustee pursuant to the Trust-Agreement and in acco~dance wtttl tt.e procedures set forth in the
Trust Agreemerr. £or said disbursements.
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ARTiClE rv
AGREEMENT TO LEASE; TERM OF THIS LEAS:;
AGREEMENT; LEASE PAYMENTS
Section 4.1. l&Jlg. The Corporation hereby leases lhe Project 101he City, and Ihe City
t"lereby leases the Project from the Corporation, upon the terms and conditions set forth in thls
lease Agreement
Section 4.2. lew pI Agreement The Term of the lease Agreement shall commence on
the date hereof, and shall end on March 1,201.2., unless such term is e:<tended as hereinafter
provided. If, on March 1, 2012. the Trust Agreement shan not be di soha rged by ~s lerms or H fhe
lease Payments payable hereunder snan ha .... e been aba1ed at any time and fO( any reason,
then the Term of the Lease Agreement shall be sxtended untl there has been deposrted witt1 the
Trustee an amour.t suffiCient to vay al1 obligations due tmder L"1e Lease AgreEment, but in no
even! shan the Term of the Lease Agreemen! e>ctend beyond MarchI, 2022. ~,prior 10 March 1,
2012, the Trust Agreement shan be diSCharged by ~ lerms, the Term of the Lease Agreemen!
shan thereupon end.
Section 4.3 Ppssession. The City hereby agrees 10 take possession of the Project on
the Closing Date. The first Lease Paymenl shall be due on August 26, 1992.
Section 4.4. lease Paymgol§.
(a) ObligatiQo to Pay. Subject to the provisions of Articles VI and X hereof, the Cit~
agrees to pay to the Corporation, its successors and' assigns, as rental lor the use and
occupancy of the Project during each Hen!a\ ?eriod, the Lease Payments (denominated into
components of principal and interest) in the l'espectlve amo~J.nts specified in Exhibrt D hereto. to
bEl due and payable on the respec".!v2 Lease Payment Dates specified' in Exhi!:lit D hereto. A.n)'
amolJnt held in the le3se Payment Fund on any Lease Payment Date (oUler than amounts
resulting nom the jlfepayment of \h.l~ase Payments in part but nO! in wt>oIe pursuant 10 Article
X hereof and other than amounts required lor payment of Certificates not yel surrendered) shal1
be credHed lowards the Lease Payment ll1en due and payable; and no lease Paymenf need be
made on any lease Payment Ciate if the amounts then held in the Lease PaYITIent Fund are at
least equal 10 the Lease Paymen11hBn required to be paid. The Lease Payments fO! Ihe Project
payable in any Rental Period shan be forlhe use of Ihe Project for such Renlai Period.
(b) Et!ec1 of Prepayment !n the event that the City prepays all remaining 'Lease
Payments in full pursuant to Article X hereof, the City's obligations under tnis lease Agreement
shall thereupon cease and terminate inCludin~, but not limiled to, the Crty'S .)bHgation 10 pay
Lease Payments under Uli.s SE!C1ion 4.4; subject however, 10 the pro .... !sions of SectIon' 0.'
hereof in the case of prepayment by applicatioo of a securfty deposit. In the event that ttoe Crty
option any prepays the Lease Payments ir. part but not m whole pursuant to Secti,on 10.2 hereof
or pursuant to Section 10.3 hereof as a result of any insurance or condemnatIon award with
respect to any portion of the Project, such prepayment shall be credited entirely towards the
prepayment of the Lease Payments as follows: {il the principa! components of each remaining
such lease Payments shall be reduced upon such basis as the Ci1y shall determine (O(, rt the
City shall fail to make sud'1 determination, on a pro rata basis in il'1tegl'al mult'ples of $..0:;,(00); and
~~ the interest component of each remaining L..ease Payrr';;:nt shan be reduced by the aggregale
corresponding amount of in.lerest which wourd othCr-NiSe be pa~able Wlt~. respect 10 the
Certificates thereby redeemed pursuant to Sect'lons 4.01 (a) or (b). as \1'1e case rna)' be, o~ the
Trusl Agreemen!.
(c) Rate on Overdlle, Payments. In the evenl the City should fail to make an~ of the
payments reqUired in this Section 4.4, the payment in de'autt shall continue as an obhgatKln 01 tile
City until the amount in defauh shall ~eve been fully paid, and 1he City agrees to pay the same
with interest thereon, 10 the edent permitted b~ law, from the date of defau~ 10 the dale of I
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payment at the aV91age rate payable 00 Ole Ce:tfiCa1es. Such interest, if received, shaH be
deposited in the Lease PaYiTlE'nl Fund.
(d) FaIr Bental Value. The lease Paymen:s f()( 1~e ProjrY.-t for each Rental PerjQtj sr,aH
constitute the total tenta! lOr the Project for £lad! sLrll Ren~a~ Period and snaH be paid by the City
in each Rental Period for and in consideratior. of the flgi1t of Ine use and occupancy and the
contintJed quiet use and enjoyment of the Froject dur,ng each Renta! Pe:iod. 1 he partes he;elo
have agreed and determined that the to:al Lease Fayments f.of the Project rep~esenl the u~:[ rental
value of the Project In ma~ing suc~, deter~lllatl(in, consideration has beer; given to tt"le
obligations of the parties under this lease Agreerr~en!. the uses anlj pl.Irposes wh;ch 1T!2Y be
served by the Project and the benef[ts therE-from which will accrue 10 the CJly and the general
pubnc.
{e) Source of Payments· Budget and ApprooriaiiQI!. lease Paymen1!:i snail be payable
from any source of available funds of the Cj1y, subject 1~ the provis~ons of Articles VI and X
hereof.
ihe City covenants 10 take such act:on as may be necessaly10 include an lease
Payments due hereunder in each of 'rts budqets dwfng the Term of the lease Agreement and 10
make the necessary annual appropriations tor al' SUCh lease Pa)'men~s The covenants on the
part of the City nerei11 conta,ned shall be deemed \('1 be arlO 5ha~ be callstrued to be du!ies
imposed by law and ~ s1'1 all be the duty of each and every PUbt'iC ofhcial at the City to lake such
action and do such t",ngs as are required by law in the performance of the C'ltfieial du1y ~.f such
offiCials to enable the Cny 10 carry out and perform the covenanls arxJ ::greemen!s in tn[s Lease
Agreement agreed to be carried out and performed by the C~'"i.
(1) ASSignment. The City understands and agrees that an Lease Pavmen1s have been
assigned by the Corporation to the Trustee in trust, pursuant to the Assignmeml Agreemef}t, for
the benefit of 11le Owners of the Certmcales, and the City ~ereby assents 10 such assignmGnt.
The Corporation hereby directs 1he City, and the City hereby agrees to pay to the Trustee at the
Principal Corporate Trust Office of the Trustee, all payments payable by the Ci1y pursuant to
this Secti01 4.4 and art amounts payabJe by the City purswant 10 Article X tlereot
Section 4.5. Quie! Enjoyment During the Term orthe Lease Ag~eement, the Corporation
shall provide the City with quiel use and enj:;yment 01 the Project and the City shatt, during such
Term, peaceably and quietly have and hold and ertjoy the Project wfthout suit, troubre or
hindrance from the Corporallon. except as exp:essly set forth in this lease Agree;-nent. The
Corporation will, at the request of the City and at the City's cost, join in any legal action 'In ..... hich
1he Crty asser1s its righ! to such possess.ion and enjo,'ment 10 the extent the Corpor2.tiOrJ may
ta...vfully do so. Notwi!hs1andir1g the foregoing, the Corporation !';harl ha:ve ,he right 10 inspect the
Project as provided in SeClIOn 7.2. hereo(
Section 4.6. ~. During the Term of1h~ Lease Agreement, the Corporation shall hok1 fee
title to those portions of the Project which are newry acquired or constructed (the '"1 g92 Project")
and any and all addrtfons whictl comprise fixtures, repairs, replacements cr modificat~ons to t",9
Project, except for those fixtures. repairs, replacemen1S or modIfications which are added to the
Project by the City at its own expense and which may be removed without damaging the Project
and except for any i1ems added to the Project by the C'rty pJ..Jrsuan! to Section 5.10 hereof.
If 1he C~y prepays the Lease Payments ir. full pursuant 10 ArtJcle X hereof or makes the
security deposrt pemitted by Section 10.1 hereof, or pa,'s all Lease Paymei1ts dUring the Term of
the lease Agreement as the same become due anc payable, all right, ltljd and intere~t 01 the
Corporation in and to the Project shall be transferred 10 arKi vested in the Crty. The Corporalion
agrees 1(' 1aKe any and aU steps and execute ane! record any and all documents reasonab!y
required by the City to consummate any such transfer Qf trtle.
Section 4.7. Addltlpn:c!l Payments. In addi1iol1 to the lease Paymenls. the Crty shal.! pay,
when due, all costs and expenses incurred by the Crty and tr~e Corpora1Jon 10 compr)' witrl the
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provisims of the Trust Agreement, O!" Gtherwlse arising from the financing of the Project, including
without limi'iation all ~eli ... ery CoS!S (to the extent not pakj from amounts .on depcsit in the
Def.overy Costs Fund), compensation and indemnification due to tht;; Trustee and Escrow Bank
and an costs and expenses of trJe Corporation, audJtors, engineer.s, attorneys and accoumants.
The City shall pay compensation to the Trustee w~nin thirty (30) days of receipt of an invoice for
such compensation.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; USE lI\~ITATiONS;
AND OTHER MAnERS
$ectiOrt 5.1. Maintct"lan@ Utilrt!es Taxes and AMft,",,<;fTlenls. ThroughOut the Term of the
Lease Agreement, as part of the consideration for the renta.~ of the Project, an impro .... ement, repair
and main1enance of the Project shaH be the r.asponsibility of the City and the Crty shari pay, or
otherwise arrange, for the payment of air utility services supplied to the Praj€\jt which may
inGl ude , without ~mltatior.. janitor service, SeCllrity. power, gas, 1elep!1ane. flgnl, heating. wa1e~ and
ali other utility seMces, and shan pay for or otherwise arrange fOf the pa,'ment of the cost of the
iepair and repJar.ement oHhe Project resutting from ordinary wear ar.d tear or wan! of care on the
part of the City or any assignee or subressee 1l1ereof. In exchange for the Lease Pa~'ments
herein proyided, the Corporal ion agrees 10 provide only the Proj"3ci, as hereinbefore more
specifican" set forth. The City waives the benefits of subsections 1 and 2 of sectron 1932 of the
California C'lyi! Code, but such waiver s:'al1 not tim:t any of the rig'tlts of the City under the terms
of this Lease Agreement
The City shari also payor cause to be paid all taxRS and assessmen.ts of any type or
nsture. if any, charged to the Corpora1ion or the City aHeeting the Project Of the respective
interests cr estates therein; provlded that with respect to special assessments or ctne,
governmental charges tha1 may lawfufly be paid in installments over a period of years, the City
shall be obligaled to pay only such installments as are required to be paid during the Term of the
Lease Agreement 2S ana when the same become due.
The City may, at the City's expense and in its name, in good faith contest any such
taxes, assessments, utility and other charges arld, in Uie event Dr any suCh conlest, 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 Corpcra1iorl snail notify the City tha~, in tne opinion
of I ndependent Counsel, by nonpayment of any such ftems, the jn1erest 01 the Corporation in 11-,6
Project will be materially endan~ered or the Project or any part thereof will be subject to !-ass or
forlPrtLJre, in which event the City shari promptly pay such 1axes, assessments or charges or
prol.-ide: the Corporation with full security against any' loss which may re5u~ (ram nonpayment, in
form satisfactory to the Corporation.
Section 5.2. MQWficaljpo ot Project The City shan, a1 its own expense, have the rfg~! to
remodel the Projec1 OJ'' 10 make additions, modtficatiof'.s and improvements to the Pmjec! All
additions, modification~ and im.,1rovements to the Project, but not any add'[tiona! buildings or
improvements, shall V'lereafter comprise ,Part of t!'-re Project and be subjec1 to the provtsJJns 01 th:s
lease Agreement. Such adartiol1s, modlficaHons and improvements shall rlDI in any way damage
the Project, substantially al1m its natum, cause the intereS! componen1 of lease Payments to be
subject to federal income taxes or cause the Project to 00 used lor purposes other tnan those
authOrized under the provisions of S1ate and federal law; and the Project, upon completion of any
additions. modifications and improvements made therelo pursuant to this Section 5.2, shail be 01 a
.... alue which is not substantially less than the value of the Project immediatety prior to the making
0'; such additions, modiffcations and improvements. The Crty will no! permit any mechanic's or
other lien to be: established or remain against the Project for Jabor or mater[afs furnist".ed in
connection with any remodeling, addrtions, mOdi1icat,ons, improvements, repairs, rene'Nals or
replacements made cy the City pursuant to this Section 5.2; pr0vided that i1 any sucn lien is
established and the City shall firs! notrty tile Corporation 0' the City's intention to do so, the City
may in gOOd faith con(es! any lien filed. or est,:!b~shed aga,nst 1he Project, and in such event may
permit the items so cDntested to remain undischarged and unsat~sfied during the period Of such
contest and any appe:ai therefrom and shall provide the Corporation with full security aga~~st any
loss or forlen:ure which might arise from 1he nonpayment of any such item, in form satlslactory to
the Corporation_ The Corporation will coo~rate fully in any such cantest, upon the request and
at the expense of the Cijy.
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Section 5.3. Pub!)r Liability and Prmrtv Damage Insqrance. City shall malntain Of cause
10 be maintained', thro\..'9110ut the term of this Lease Agreement, a compre~ensive genera! and
alltomOOne pub1lc nabiitt¥ insurance pdicy ex POHC!6S against direct Of contingent loss Of li.alXhty far
damages for personal injury, death or property damage. occasiol1ed by reasons of the
construction of tha 1992 Projet..'1. Of oyeration of the Improved Qvic Center. Said poricy Of policies
shall prov:de coverage in the fol'lowirlQ mInimum amounts: compre!lensive general and automobile
pubHc fiability insurance with a total coverage of not less than $.5,000,000 combined singre r'mil or
bodily injury, persona! injury and property damage includir;g umbrella excess riability. AIlor a
portion of such insurance may be carried through seff-insurance carried by the eft)'.
Section 5.4. WQrIs.ers' Compensaljl)n In?iIHance, Cfty shan maintain Of cause 10 be
maintained, throughout tne Term of t'"tis Lease Agreement, Workers' Compensation Insurance to
cover all persons empioyed in connection wtth the construction of the ~ 992 Project and operatbn
of t!1e Improved Cr.ric Center ItihO are not otherwise co .... ered and to cover fun nabrlfly urrOer tJ"le
Workers' Compensation Insurance and Safety Act in force in the State of CaHlomia, or any act
herea'fter enacted as amendatory thereo1 OJ' s'Jw\~me!ita\ thereto or tn lieu 1hereot SIJch
ir'!$urance shall be issued by a responSible carrier 8u1horized under the laws of the State eof
Ganfomia 10 insure employers against such liability based upon death or claims made by, fO( or
on behalf of any person incurring or suffering injury or dea1h during or in connection with the
construction of the 1992 Project and operatJon of the Improved Civic Ct:nter. All or a portion of
such insurance may be carried through self-insurance carried by the City.
Sectlon 5.5. Eire and Special Extfmded Coyerage Endorsement City sha~ maintain Of
cause to be maintained j throughout the Term of this Lease Agreement, fiie and Ifghtning insurance
and spedaI extended coverage endorsement which tncludes vandalism and maliCious mischief
endorsement and elCtended coverage endorsement (Including earthquake damage, if Lr'1lhe cprnion
of City earthquake insurance is available at reasonable cost on the open market from reputable
insurance companies and in 1he event such earthquake damage insurance is oot so available,
such \nsurance Shall be carried through se"-i.nsurance Of the Crty) on all struCh.l!es consti1uting
any part of 1M Improved Civic Center in an amount equal 10 at least ninety percent (90%) of the
replacement cost of e~ch structures (leSS the approp~jate deductible amount). An insurance
required 10 be maintained pursuant to this Section may be subject to deductible clauses p!'O'/..,jing
10< deductible amounts 01 $10,000 fo, an~ :asses available 00 the date 01 purchase 01 such
insurance. Each such policy 01 insu ranee 'Sha ~ contain a standard replacemen! cost endorsement
providing for no deduction for depredaton and a stipulated arroun! endorsement
Section 5.6. BUSiness InterrqotjoQ Insmaoce. City shan maintain or cause to be
maintained throughout the Term of this Lease Agreement, business interruption or use and
occupancy insurance in en amount not less than 1he maximum total Lease Payments payable by
the City on any four consecuti .... e Lease Payment OatS's, to [nsuie against kiss of Lease
Payments to Corporation caused by perils covered by the insurance required by Section 5.5
hereof.
Section 5.7. nUe lns!!raoce ..
(a) On the Closing Dale, the Crty stlall provide, from moneys in lhe o"livery Cosls Fund
or at fts own expense, a ALTA title insurance policy col/ering, and m the arne-unt of not less than
the principal amount of the Certificates, insuring the City's leasehold estate in the Project, subject
ooly 10 Pennitted Encumbrances.
(b) 1lte Net Proceeds of such title insurance shari be applied as pmvided in Section
62(0) hereof.
Sectkin 5.8. !oSljfance Net Proceeds' Form Of Policies. Each poncy or other evidence of
insurance reQuired by SecUons 5.5, 5.6 and 5.7 hereof shall ~o\llde that all proceeds thereunder
shall be payable to the Trustee and applied as provided in Section 6.2 hereof. The Crt)' shall
have the adequacy of any insurance reserves reta1ing to self:insuranCf! reviewed at leas!
annuany by an independent insurance consultant and shall maintain reserves in accordance wtth
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the recommenda~ion5 of suc~ consultam. On or before Aug LIst 1 of each year, the City shan
certify to the Trustee that an policies of in~urance and any statements of self-insurance are in
conkJrmance with the requlrements of lhis lease Agreement and [he Truslee shall be enlltleo 10
rely on such certification without indopendent investigat:on. The City shaH pat or cause to be
pDld when due 1he pram\ums tor ali iosuraT't{;e requIred" by this LeaS€ Agreement /i..1( policle.s or
other eviden~ of insuranc€ 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
the'eby. The Trustee shall not be responsib'e for the sufficie(1cy or adequacy or amount of any
insUfance Or self-insurance herein required and snarl be fuUy protected in accepting payment or.
accounl of such insurance or any adjustment, compromise or sel1:1ement of any loss agreed to by
the Trustee.
Section 5.9, Advances, ff the Ctty shall fa~ to penorm any of tts obligations under this
Micre V, the Corporation may, bl,.1 shall not be obligated to, take such actfon as may be
necessary 10 cure such failure, including the advancement of money, and the Ci'y snail be
obligated 10 repay an sLlch advances a~ soon as possible, with interest at the average rate
payable on the Certificates from the date of the advance to the date of repayment
Section 5,10. lnslallatjmJ of City's Equipment The City may, at any time and born lime-to
time In its sole discretlun and at its own expense, insta!1 or permit to be installed items of
equipment or o!her personal property in or upon ar.y portion of the PrClject. Ar1 suctl items shaH
remain the sole property of the City In which nerther the Corporation nor the Trustee sha!1 have
any interest and may be modified 0( removed by the City at any time prOvided that L'le City sha!1
repair and restore any and an damage to tne Project resulting from the irlStallaUon, modiflcaHoli or
removal of any such items. Nothing in U'lis Lease Agreement shaH prevent the City from
purchasing or leasing Items to be insta!IQo pursuant to trliS Section 5.10 under a lease or
concfrtional sale agreement, or subject to a vendor's nen or securt'!}' agreement, as security fO( the
\..lnpaid portfon of the purclJase price thereof, provided thal no such IJen i)r security interest shall
attach to any part of the Project
Section 5.11. l.l.e.M. The City shan not. directly or indirectly, create, inclIr, assume or
suffer 10 e)(ist any mortgage, pledge, lien, charge, encumbrance or claim on or with rsspec110 the
Project. other thar. tne respect\'I~ rights ()~ the Corporation and the City as provided herein and
Permitted Encumbrances. Except as expressly providec in this Article V, the City shall promptly,
at its own expense, take such action as may be necessary to dulV dfscharge or remove any
such mortgage, pledge, nen, charge, encumbrance or claim, Jar which it is responsible, if the same
sha~ arise at any time, The City shall reimburse the Corporatloll for any expense incurred by It in
order to d'~rge Of remove any such mortgage, pledge, Ilen, charge, encumbrance or claim.
Section 5.12" P~ivaJe Busin-ess Us,; Umita~;Q"" 'The Citj shaD aSS\.li'e th2t
(3) not in excess ot ten percent (10%} of the Proceeds of the Cer!ifjcate~ is used for
Private Business Use if, in addrtiofi, the payment of the princ'par of, or the interest on more 1han
ten percent (1 0%) of the Proceeds of the Certfficates is (under 1he terms of the Certificates Of any
uooerlying arrangement) directly or indirectly, ti) secured by any in1erest 'In property, or paymen1~
in respect of property, used or 10 be used for a Pri"Jate Business Use, 0:-{iI) to be derived from
payments {whetrler Of not to the City) in respect of property, or borrowed money, used or to be
used for a Private Bllliifless Use; and
{b) In U;;:; event i;-Iat in excess 01 five percent {5%) of the Proceeds Of the Certrflcates is
used for a Private 6J.Jsin8SS Use, and, in addition, the paymenl of the princrpaf Dr the interes1 witt"j
respect to more than five percent (5':J/o) of the Proceeds of the Certificates is, {under the terms 01
1he Certificates or any under:ying arrangement) directly or indirectly, secured by any ir"ltere~t in
property, or payments in res~t 01 property, usee or to be used for said PrNat,e Business Use
Of is to be derived from payments (whether or not 10 the GUy) in respect of property, or borrowed
money, used or to be used for a Priva1e Business Use, then, (A) said excess over said five
percent (5%) Of the Proceeds of the Certitica1es whiCr-, is used tor a Pri ... ate BUSiness Usa shall
be used 'Of a Private BUSiness Use related to a government use of such Proceeds and (8) each
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.' such Private Business use of over five percent (5%) of the Proceeds 01 the Certlf~a1e3 whicl1ls
related to a govemment use of SlJ-Gh Proceeds shalt not exceed the amount of sue" Proceeds
which is used for the government use of Proooeds to which such Private Business Use is related.
Section S.13. Prfyi)1e loan I imitation. The City shall assure that not it! excess of the
"sser of five percent (5%1 01 Ihe Proceeds ollhe Certificates or 55,000,000 Is 10 b~ usod,
directly or indirectly, 10 make or finance Klans ,other Ihan loans which enable the borrower to
finance any governmental tax or assessment of genera1 appncation for a specific essential
govemmental func"Jon} to persons other than state Of local go ..... ernment unfts.
Section 5.14. Eedflral Gllaranlee ProhihU\Qn. The City shal: nol take any action or permrt
Of suffer any action 10 be taken it the result of the same would be 10 cause the Certificates or ihe
Lease Agreemant to be ~edcrany guarar.t&eer within the mealiing of section 149(0) of the COOs
and Regula~ons,
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ARilCLE VI
DAMAGE, DESTRLICTlor, AND EMINENT DOMAIN: U3E OF
NET PROCEE OS
Section 6.1. Eminent Domain. If atl of the Project shaH be ta~efi permanently under the
power of eminent domain or sa1d to a go ..... ernment threatening to exercise tne power or emjne~t
domain, the Term of this Lease Agreement s~la'll cease as of the day possession shall be so
taken. l(less than an of the Project shall be taken permanently. 01' if all oi the PiOJec1 or any part
thereof snail be takerl temporarily under t'le power of eminent domain, (1) this lease Agreement
ShCin contInue in fun force an'd effect and shall not be termina1ed by vjrtue of such taklng a.nd the
parties waive the benefit of any law to the contrary, and (2) there shall be a partiai abalement of
Lease Pa:,rmen1s as a result of the appnc:etkln of the Net Proceeds of any eminent doma]n awaro'
10 the prepayment of the lease Payments hereunder,_ifJ an amount 10 be agre'9d upon. by the
City and the Corporatlon such that the resurtmg Lease t'aj'ments represent fair cOr1siderati{;'n for
the use and occupancy of the rem&1ning usable portion of the Project.
Sec~on 62. AppUcat'fOn of Net prpceeds.
(a) From In§llrance Award. The Net Proceeds of ar~y insurance award resulting from any
dan,age to or des1ruction of any portion of the Project by fire or other casualty shall ce paid by
the City to the Trustee, as assignee of the Corporation under the Assignmellt Agreement,
~epos~ed in the lnsurance and Condemr.allon Fund hekl by 1he Trustee and applied as set forth
In SectJon 7.01 of the Trus1/lgreement.
(b) Erpm Eminent Domain Award. The Net Proceeds Of any emillenl domain award
resulting from any event described in Section 6.1 hereof stlan be paid by the City to the Tfl!stee.
as assignee of the Corporation under the ,4.5Signment Agreement, delXJsited in the Insurance and
Condemnation Fund and appHed as set forth in Section 7.02 of the Trus1 Agreement.
(c) From Tille ipsIJ!aOQA. The Net Proceeds 0' any tWe insurance award shal; be paid io
the Trustee, as assignee 01 the Corporation under the Assignment Agreement, deposlled in the
Insurance Gnd Condemnation Fund and appfied as set forth in Section 7.03 of the Trust
Agreement
Section 6.3. Abatemr;nt Of lease Payments in the Even! of Damage m Oes1ructiQr1.
Lease Payments sha!! be aoatoo during any period in which, by (easor. of dall-Iage or destruction
(other than by eminent domain wtlich is hereinbefore provided for). there is substantia!
interference with the beneficial use and occupancy by the City of the Project or 3ny portion
thereof (other than any portions of the Project described in Section S2 hereof) as s'ha~1 be agreed
upon bj' !he Ci1y and the Corporation suct'; that the reSlJttirrg lease Payments represent fair
consideratJor1 for the use and OCCUpailCY of the p::lrtklnS Of "the p[Oi~ no! damaged Of destroyed.
Such abatemer"l1 shall continue for the period cammencir1g with such damage or des1ruction and
ending wfth the slibstantrar completion oftne work of repair or reconstruction. In the event of any
such damage or destruction, this Lease Agreement shatl continue in full farce and eHec1 and the
City waives any ri~ht ~o 1erminate this lease Agreement by '.irtue of any such damage and
destruction. Notwithstanding the foregoing, there shall be no abatement 0' Lease Paymenls
under this Saction £1.3 to tl-Ie extent that thE' proceeds of rental interruptlon insurar1ce or amounts in
1he Reserve Fund and/or the Lease Palment Fund are ava~lable 10 pal Lease Payments w~lich
wou1d otherwise be abated under this veC1.lon 6_3, i1 being hereby declared that such piCceeds
and amounts constitute spedal funds fOf the payment of :he Lease Payments.
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ARTICLE VII
D:SCLAIMER Of WARRANTIES; ACCESS; INDEMNiFICATIOf.
Section 7.1. pi:idajmer of WarrantieS THE CORPORATION MAKES NO WARRANTY
OR REPRESENTATiON, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DEBIG'<,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPCSE OR
Fm~ESS FOR TEE USE CONTEMPLATED BY THE CiTY OF THE PROJECT OR ANY
OTHER REPRESENTATION OR WARRANTY WiTH RESPECT TO THE PROJECT. IN NO
EVENT SHALL THE CORPORATION BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL
OR CONSEOUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE
SITE AND FACILITY LEASE, THIS lEASE AGREEM:NT, THE ESCROW AGREEMENT OR
THE TRUST AGREEMENT FOR THE EXJSTENCE, FURNISHING, FUNCTIONING OR THE
CiTY'S USE OF THE PROJECT.
Section 7.2. Access to me Project. The Crty agrees tha1 the Corporation and -3r1y
Coqxmttion Representative, and the Corporation's successors or assigns. shan have the right at
all reasonable ~me. 10 en1er upqo and 10 exami"" and inspect the Project. The Crty further
agrees t'lat the Corporation, any Co"""atlon Representative, .nd the Corporation'. successors
or assigns sha!! have such fights of access 10 t:hB Prcject as may tie reasonabl,. necessary to
cause the p!'oper maintenance 01 the Project in the event of lanur. by the Crty to perform its
obf.ga1ions he,eunder.
Section 7.3. Release ami IndgmnfficB1i;:m Coyeoants. The City shan and hereby agrees
to indemnify and save tJ:le Corpor~ion and its ofh~rs. agents, directors, wccessors and assjgns
harm}ess from and agamsl. an eta1ms, losses and damages, inCiuding tegal fees and expenses,
arising out of (i) the lise, maintenance, concition ()( ma!"!ageffie!1t of, or !rom any work Of'thing dane
0<1 1M Project by the City, rn) any breach or defau" on tile pM of the CIty in 1M performance of
any of its obligatIOnS under thi. Lease Agreement, (ii~ any act or omissio n of the City or of any 01
its a~nts. contractors, servants, empJoyees or rlCensee5 with respect 10 the Project. [rv) any act
Of omission or any, sublessee of the City with respect to the Project,. Of (\I) the aU'th<l:~zatlo!1 Cif
payment 01 the Deirvery Costs. No indemnmc~on is made under this Section 7.3 or elsewhere in
this Lease Agreement for willfur misconduct or negligence under thls Lease Agreement by the
Corporation, its officers, agents, directors, employees, successors or assigns.
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ART ICLE VIII
ASSIGNMENT, SUBLEASiNG AND AMENDMENT
Section 8.1. As..sJ.gnmenl tw the Cmporat~on. The Corpora1ion's rignts ullder this Lease
Agreement, inclucflng the right to receive and enfQrce pa,'ment of the Lease Payments 10 be made
by 1he Cfty under this Lease ,Agreement, have been assigr.ed 10 the Trustee pursuant to the
ASSignment Agreement, except te 1he extent set forth therein.
Section 82. Assignment and Spbieasing by the Crtv. Tt~:s Lease Agreement may not be
assigned by the City. The City may ,sub!~,ase the Project Of ar~' portion thereof, bu1 only with
the written consent of the Corporation and subject to, and delivery to the Ccrporalion of a
certmcate 2S to. all 0: the fonowing cor.diticms:
(i) T~is Lease Agreement and the obr,gation of the Ci1~ to make Lease Payments
hereunder shal: remain ob!igatfons of the City;
(ii) The City shall, within thirty (3~) days after the denllery thereof, furr;ish or
c..ause to be furnished to H'.fl Corporation and the Trustee a true and complete COpj' of
such subfease;
(iii) No such sublease by the City shall c.::use the Project to be used fer a
purpose other tnan as may be authorized under the provisions of the Consmution and
laws of the State; and
(iv) The City shall furnish me Corporation and the Trustee with a written op!nion
of na1~onafly-recognized bond counsel, which sha~1 be an Independent Counsef, slating
Iha1such sublease does :1ot cause the interest components of the Lease Payments to
become subject to federal income taxes Of State personal income taxes,
Section B.3. Amendment of 'hi!? lease Agreement
(a) $uhstUlItjoo pf Site or facilfty, The City shan have. and is hereby granted, the option
at any lime ana from time 10 lime during the Term of the Lease Agreement to substitllte otller land
(a "SubstjtL.1e Site") and a substitute facility or substilute fadlit1es (a "Subs!1tute Facility") 'for the
Site (the "Former Site"), or a portion thereof, aM the FacfUty (trre "Former Facility"), or a portIOn
thereof, prcvided that the City shall sa!isfy all of t1'1e following requJrements whjct". are hereb,'
declared to be conditions precedent to !iucn slJbstitution:
(1) The City shalT flle wlll1 the Corporation 8'1d the Trustee an amended Extlibit A
to the S~e and Facillty Lease whk:h adds therE:to a description of such Substrtute SitE' and
deletes therefrom the description of the Farmer Site;
{ii} The City shall file with the Corporation Cind the TruS1ee an amended Exhibit B
to this lease Agreement which adds thereto a descrip1ion of such Substi1ute Srte and
rlP!etes therefrom the description of the F OJ mer Site;
(iJi) The Crti shall fije with the Corporation and the Trustee an a~ef)ded ExhibH B
10 the Srte and Facility lease which ados thereto a description of such Substitute Facilrty
and de~tes therefrom the descript;on of the i=ormer Facility;
~v) The City shall fije with t~e Corpof8Mn and the Trus1ee an amended txntbit C
10 this Lease Agreement which adds therelO a descrlp'don of such Substi:ute Facility and
deletes therefrom the descrlptlon of tile FOrT!l9i Facility;
(v} The Crty shari certify in writing to the Corporation and the Truslee that sucn
Substitute Site and SubsUtute Facility' serve the purposes of the Cny, consti1utes
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property that ts unencumbered. subject 10 Permitted Encumbrances, a:"\d constitLJt~S
property w"ich the City is permitted to lease onder the laws 01 the State;
(v~ The City delivers to the Trustee and the Corporation evidence that U:e
Subst~ute Site and SubsUtute Facility are of equal or greater value than the Former Site
aoo Fonner Fac;1","
(vii) The Subs1itute Site and Substitute Facilitv shall not cause the City to violale
any of its CO'.lenants, represPtntations and warranties made herein and in the Trust
Agreement; ar,j
'viii) ihe City shall obtain a!"'t amendment to the [itle insurance poncy required
pursuant to Section S.7 hereof which adds therelo a description o~ the Substitute Site and
deletes therefrom lhe descr1ptior, 01 the Former Sne.
(b) Release 0# Site. The CIty shan have, and is hereby granted. the option at any time
and from time 10 t~;ne during the Term of the Lease Agreement 10 release any portk>n of the Site,
prOVIded thaI the Gny shan SltJsfy all 01 the lo"owing requirements wIlich are hereby declared to
be conditions preceaent to such release:
~) The City shall file with the Corporation and the Trustee an amended Exhib~ A
to the Stte and Facilit~ Lease whk:h describes the Srte, as revised b~ such release;
~iJ The City shall file with the CorporatiO'1 and lhe Trustae an amended Exhib~ B
to 1tlis Lease Agreement which des~ibes ti'1e Site, as rev$ed by such release;
(iii) The City derivers to the Trustee and the Corporation evidence that the Site, as
revised t;'ly such re:ease, is of a value alleast eaual to the value of the Site as of the
Closing Date; and .
(iv) The Cay shall obtain an amendment to the title insurance poncy required
pursuanllo Section 5.7 hereof whidl describes L'1e Site, as revised by such release.
(c) Geperany. Neither the City nor the Corporation wm alier, modify Of" cancel, Of" agree or
consent 10 arter, mod~ or cancellhis Lease wreement, except In connection wfth a substitu1jon
or release permitted oy this Section 8.3 ana as may be permftted by Article X of the Trust
Agreement .
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ARTICLE IX
EVENTS OF DEFAULT AND REMED!ES
Section 9.1. Events or Defautl Deficed. The fo~ow'tng sllall be "events or defauN" under
thjs Lease Agl-eement and the terms "Events of Default" and "Default" sr!a:J mean, whenever they
are used in this Lease Agreement, with respect to the Project, anyone or more of the follow;ng
events:
{i) Fatlure by the City to pay any Lease Payment Of atrler payment required lobe
paid hereunder at the time specified herein, and the continuation of such failure fry a period
of ton 110) days.
(ij; Failure by the City to observe and perform any covenant, conditFon or
agT~nt on fts pan to be observed or performed une8rthis Lease Agreement or under
t'1e Trust Agreement, other1han as referroo to in clause (i) Of this Section 9.1. for a p€frod
of thirty (30) days after written notice specrtving suet; failure and requesting that it be
remedied has been given to the City by the Corporation, the Trustee, or the Owners of
not less 1han five percent (5%) in aggregate principal amount of Certificates then
outstanding; provided. how8~8r. if the tailure sta'ed in the not(;e can be correC1ed, but not
within the applicable period, the Corporatjon. tr.e Trustee and such Owners shall not
unreasonably wtthhold their cortsent to an extertsion of such time if corrective action is
instItuted by the City within the applicable period and diligentl)' pursued until the def9'Jtt is
corrected.
(iii) The filing by the City of a vo'untary petition in bankruptcy~ orfailure by the
City promptly to lift an~' execution. gamistu,lenl or attachment, or adjudication of the CI1y
as a bankrupt, Of assignment by the City for the benefit of creditors, or the entry by the
City into an agreement ot 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 Feceral• Bankruptcy Code, as amended, or under any similar
acts which may hereafter be enacted.
Section 9.2. Remedjes 9n Pefalltt. Menever any Event of Default referred 10 in SectlOr1
9.1 hereof shan have happened and be continuing. it shall be lawful for the Corporation to
exercise any and afl remecJies a ..... ai1able pursuant to law or granted pursuar.t to this Lease
Agreement; provided, however, that notwilhstandi;)g any1hing herein or in the Trust Agreement to
the contrary, tt'lere shall be no right under any clrcumstancE'.$ to accelerale the Lease Payments Of
'Otherwise declare any Lease Paymer1ts not then in default to be immedia!ely due and payable.
EaCh and every covenant hereof to be kept and performed by the CJty is expressly made a
condition and upon the bieacn thereof, the Ccrporation may exercise any' and an rights of entry
and re-entry upon the Project, and a!so. at its option, with or without such entry, may terminate
this Lease Agreement; pmvided, that no such termination shall be eHeeted either by operation of
iaw Of acts of the parties hereto, el(cept only in the manner herein expressly provided. In tlle
event of such detau~ and nO'twithstandlng any re·entr~ b~ the Corporal1on. the City shall, as
herein expressly provided, continue to remain liable for the payment O'f the lease Payments
andlor d~mages fO!' breach 'Of this lease Agreement and the performance of an condltlons herein
contained and, in any evenl such rent andior damages shan be payable 10 the Corporation at the
time and in the manner as herein prOVided, to wit;
(a) In the event the Corpcration does not elect to terminate this Lease Agreement in the
manner hereinafter provided for in subparagraph (b) hereof, the Crty agrees to and shall remain
fiable for the payment of aH Lease Payments and the performance of all conditions herein
contained and shari reimburse the Corporat~on for any defiCiency arising out of the re-teasing of
the Project, 01, in the event the Corporation is unable to re-tease the Proj'3'ct. then for the full
amount of afllease Payments to the end of the Term at the Lease Agreement, bL.rt said lease
Paymems and/or deficiency shall be payable only at the same Ume and in the same manner as
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hereinabove provided for the payment of Lease Payments hereunder, rwt"",ithstandh"19 such
entry Of re--en~ry by the Corporation Of any suit in unJawful detainer, or otherwise, brought by the
Corporation for the pUfpJS9 of effecting such rEH:ln!ry Of ob!aining possession of the Projem Of
the exercise of any other remedy by the Corporation. The City hareby irre .... ocabty appoints !he
Corpora.tfon as the agent ana attorney-in-fact of the City to er.!er upon and le-lease the Project in
the event of default by the City in the performance of any coverian1s herein contained to be
performed by the City and 10 remove ai1 persona! property whatsoever situated UPOil the Project,
to ptace such property in storage or other suitable place within Sail'a Clara County. for the
account of 2nd at the expense of the City, 8:10 the City hereby exempts ana' agrees to save
tlarmfess tt1e Corporatlon from any ctlst3, loss or damage whatso== ..... er arising Of occasioned by
any sucl1 entry upon and re-leaSing 01 the Proje-::t and the removal and storage 01 such property
by ttJe Corporation or Its duly authorized agents in accordance with the provisions herein
contained. The Clly hereby waives an~' and air claims for damages callsed Of ..... /hich may be
caused by the Corporation in re-entering arid taking possession of the Project as herein prov:ded
and an claims for dClma~s that ma,' result from the destruction of or injur)' to the Prolec~ and all
claims fa; damages to or loss 0: any propert~ belonging 10 the C~y tnat may be in or upon the
Project The City agrees that the terms of this Lease Agreement constitute full and suffiGient
notice of the right of the Corporation to re-lease the p;oject in the event of such re--entry wrth out
effecting a 5urrender of this Lease Agreement, and further agrees thai no ac~s of the Corporation
in effecting such re--Ieasing shall constitute a surrender or termination of this Lease Agreement
irrespective of tt1e term for which such re-leasing is marle 01' the terms and conditions of SUCh re
k:iasing, or o1herw1se, but that, on the contrary. in the event of suc'h de1au~ by the Ctty the rlght to
terminate t'lis lease Agreement shan vest in the Cvrpora1ion to be effected in the sore and
exciusi\'e manner hereinafter pro .... ided for in paragraph (b) hereof. The City further waives the
right to any rerital obtained by the Corporation tn excess of the Lease Payments and paymen1s
due pursuant to Section 4.7 hereof and hereby conveys and releases such excess to the
Corporation as corT'.pensation to the Corporaton for ~s services in re-Ieasing the Project.
(b) ~n an Event of Default hereunder, the Corporat;on at i1s option mal' terminate this
lease Agreement aoo reo-lease ar Of any portion of the Project. In the event of the terminaljon of
this Lease Agreem'9nt by the Corporation at its option and In the manner hereinafter provided on
aCCOuni of default by the City (and notwithstandin~ any re-entry upon the Project by the
Corporation in any manner whatsoever Of the re-Ieaslng of the Project). the City nevertheless
agrees to pay to the Corporation all costs, loss or damages 'howsoever arising or QCCufI'ing
payabfe at the same time and in the same manner as is hereln provided in 'the case of payment of
Lease Payments. Any surplus received bt the Corporation from such re-Ieasing shall be
crecited towards tt1e Lease Payments next coming due and payable. Nerthef notice to pay rent
Of' to deliver up possession of the premises gi ..... en pursuant to law nor any proceeding in unlavvful
detainer-taken by the Corporation shalf of itself operat~ to terminale th:s LeaS€! .b.greement. and no
termination of this Lease Agreement on account of defau~1 by the City shall be or become
effecHve by operation of law, Of otherwise, unless e~d until the Corporation snail have given
wr~en notice to the City of the election on tl'1e part cf the Corporation to 1erminate this lease
Agreement. The City covenants and agrees that r.o surrender of the Project and/or of the
remainder of the Term of the lease Agreement or any terminatfon of this Lease Agreement shan be
valid in ar;y manner or for al"'y purpose whatsoever l..Jnless stated or accepted by the
Corporation by such written. notice.
Section 9.3. ~edy Exclusiye, No remedy herein conferred upon or reserved to the
Corporation is intended to be e)'.ciusive and ellery such remedy shall be cumulaHve and shall be
jn addition to every other remedy given under tnis Lease Agreement now or herea11er existing at
law Of in equity. No delay or omission 10 exercise any right or power accruing upon any detautt
snan impair any such right Of power or shall be construed to be a waiver thereof, bu1 any such
right and power may be exercised from time to time and as often as ma~ be deemed expedient.
In order to entitle the Corporation to exercise any remedy reserved to it in thts Article LX it shall not
be necessary 10 give any notice, other than such notice as may be required in this Article LX or by
law.
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Sectkln S.4. Agrl!ement 10 Pay .Attorneys' Fees and expenses. In the even1 either party
to this Lease Agreement soolJld det8ult under any of the provisions hereof and tt1e nonde1auHir,g
party shoulJ employ atlorne,'s 0:-irlCUf other expenS9S for tr,e co!lection of moneys or the
enforcement or performance or obser...ance of any obligation or agreement on t~le part of the
defaurting party herein con:alned, the defaut!:ing party agrees that it Will on demarK:! therefor j:'ay te
the nonde1autting party the reasonable fees of such anorneys and such other expensss so
Inamed by the nondefaulting party. This Section does not appfy to the Trustee as assignee of
IDe Corporation,
Section 9.5. ~1iQnat Waiver tmpijed by Doe VVaiyer. tn the event ar:y agreement
comainoo in this Lease Agreement should be breached by either party and thereafter waived by
the other-part) .. suct1 wai\ler shall be limited to the particular breaC~1 so waived aoo shal1 not be
doomed to W31ve er',y ctti~ breach hereunder.
Section 9.6. Appljca1iQn of Proceeds. Af1 net proceeds rece1ved from tMe re-lease or ctner
disposition of the ?rD!ect under this Artic!e IX, and all other arTIounts derived by the Corporatlon or
the TrUSltlB as a result of an Ever,t of Oefauft hereunder, shall be trar,sferred to the Trustee
promptly upon receipt thereof and after payment of al! fees and expenses of the Trustee.
including indemnifications and attorneys fees, shall be deposited b) tile Trustee in the Lease
Payment Fund to be appfJed;o the Lease Payments in order of payment date,
Section 9.7. Trustee and Certificate Owoers 10 E)(ercis~ Rights. Such rights and
remedies as are given to the Corporation under this Article IX have oor.n assigned by the
Corporation to the Trustee under the Assfgnment Agreement, 10 which assignment the City
hereby consents. Such rights and remedies shall he exerCised by the Trustee and the Owners
of the Certificates as prov"kled in Lt,e Trust Agreement and herein.
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ARTICLE X
PREPAYME'JT OF LEASE PAYMEN·,·S
Section 10,1. Sectlrjty Dgposl1. Notwithsta:1ding any other provision of this Lease
Agreemen:. the City may, on any date, secure the payment of all or a portion of th,? Lease
Payments remaining due by an irrevocable deoposf1 with the Trustee or a:1 escrow holder under an
escrow deposit and trust agreement as referenced in Section 14.01 (h) of the Trust Agreement, of:
(a) in the case of a security deposrt relating to all Lease Payments, either {i) cash in an amOU:1t
which, together wi1h amounts on deposit in the Lease Payment Fund, the Insurance and
Condemnation Fund and the ReseNe Fund, is sufficient to pay an unpaid lease Payments,
inducting the prinCipal and interest componelits thereof, in accordance wfth t~e Lease Payment
schedule set forth in Exhibit 0, or Q:) Defeasance Obligations in such amount as will, in the written
opinion of an independent certified pubflc accountant or other firm of recogr.'zed exper1s in such
matters, together with interest to accrue theieon and, if requjred, all or a portion of rnoneys 0;
Federal Securities or C3$h then on deposit and interest earnings thereon in the LeaSE PaYrPent
Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully suffiCient to pay al!
unpaid lease Payments on their respective lease Payment Oates; or (b) tn the case of a
security deposit refating tQ a portion of 111e Lease Payments, a certificate ex~uied by a City
Representative designating the poroon of the Lease Payments to which the depos~ perlslnS, and
elthe; (i) cash in an amount which is sufficient to pay tt'1e portion of the lease Payments
designated in SIJCI'l Ciiy Represenlative's certificate, including the principal and inlerest
components theroo1, Of (ii) Oe1easance Ob~gaticns in sucll amount as will. together with Inter~
KI be received 1herevn. if an)!, in the written opinion of an 1ndependent certified public accountant
or other firm of recognized experts in sucrj maners, be furly sufijcient 10 pay the portion of the
Lease Payments designated in the afmesaid City Representative's certiHcate.
In the event of a deposit pursuant to t~is Section 10.1 as to all lease Payments and 111e
p3yment 01 all1ees, expenses and indemnifications owed to 1he Trustee, all obngations of it'e
City under this Lease Agreement shan cease and terminate, ex-ceptjng only the obligation of the
City to make, or ca~e to be made, all payments 1rom the deposft made by the City pursuant to
t~is Section i 0.1, and trtle to the Project shall vest in the City on the date of said deposit
alllomatlcally and without further action by 1he City or the Corporation. Said deposit and interest
earnings thereon shan be deemed to be and shall cons1~ute a special fund 10r the payments
proviOed lor by this Section 10.! and said obligaHon shallthereaher be deemed to be and shall
constrtute the installment porchase obligation of the City for Ihe Project Upon said deposit, Ihe
CotpOration wm execute Of cause to be e)(scuted any ar.d all doc.uments as mat 00 necessarj to
confirm title to the Project in accordance with the provisions hereof. 1r1 addi1ion, the Corporation
hereby appoints the City as its agent to prepare, exacu!e and file or record, in approprlate
offices, such documents as may be Ilecessary to place record \tHe 10 the Project ,n lhe City.
Section 10.2. prepayment Option. The Corporation hereby grants an op1ion to the City
10 prepay the principa~ component of the Lease Payments in full, by paying the aggregate
unpaid principal, components of the Lease Payments as &9t forlh in Exhibit D here~o, or in part,
but nat In an amount 01 tess than $20,000, together, in any event, wlih a premiuin computed as a
percelltage of the portion of such principal component of Lease Payments prepaid, as set forth
below:
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prepayme;,! Date
FoolUary 23,2001 and August 26,2001
Februa')l23, 2002 and August 26, 2002
Fetlruarv 23, 2003 and each August 26
and February 23111ereafier
2~'o
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Said option may be exercised wijh respect to Lease Payments due on and a!ler February
23, 2002 , in whole or in part on any Lease Payment Date commencing Februal)! 23, 20C! . Said
option shan ~ exercised by the Ctty by .giving written !"\otice 10 tJ'1e Corporation and the Trustee
01 the exercise of Such option at least sixty (60) deys prior 10 said Lease Peyment Date. Such
option shar. be exercised in the event of prepayment in full, by depesiting w~h said notice cash in
an amount, whlctl. together ..... ith amounts tIlen on depos1l in the ReS€.r~'e Fund. itle Insurance and
Condemnation Fund and the Lease Payment Fund, will be sufficiant to pay the 3SQregate unpaid
component of the lease PaymeT'lts on said Lease Payment Date as set forth in t:.hibit 0 herelo,
together with any Lease Payments then due but unpaid, or, in the e .... ent of pf!:~payment in part,
by depositi"Q with said no~ce c8sh itt an amount diviSIble by $5,000 equal to the amount des;red
to be prepaid together with any lease Payments then dua but unpaid. In the el/en! of
prepayment in par, Ihe panial prepayment shan be applied against Lease Payments in suc~
mal\l"ler as the City Sh3f1 determine and if the City shall fail 10 make such determmation, pro rata
among their payment dates.. Lease Payments due after any such partial prepayment shan be in
It·-amounts set forth in a revised Lease Payment schedule whic'h s~all be provlded by. or
~_Jsed k> be provided by, the City to l/1e TnJstee and which sr.a,!1 represent an adjustment 10 the
schedule set forth in ::xhiDrt D attached hereto taking into account said partiai ~repaymenL
Section 10.3. Mandatory Prepaymer1t From Net Pr9CefK1s of IOSIUgriiif T~\.e \;;5Ui"eilCe Of
Em!oent Oomain, The Ctty shall be c~llgated to prepay the Lease Paymenls allocable to the
Project, in whole on any date or W1 part 00 any Lease Payment Date, from and to the extent of
any Net Proceeds of an insurance, title insurance or condemnation award with respect to the
Project theretofore deposited 10 the Lease Payment Fund kx sucn purpose pursuant 10 Anict. VI
hereof and Article VII of 1I1e TruSl Agreement. The Cily and the Corporation hereby agree that
such Net Proceeds shan be applied first to Ina payment 01 any deflnquenl Lease Payments, and
thereafter shall be credHed towards the City's obngations under this Section 10.3. Lease
Payments due afte( any such partial prepayment shall be in the amounts set forth in a revised
Lease Payment schedule which shall be provided by, or caused 1.0 be provided by, toe CIl)' to
the Trustee and which shall represert an adjustment to the schedute sel 10'1h in Exhil>~ 0
attached hereto taking into account said partiat prepaymer,l.
Section 10.4. CreQrt10r Amounts 01'1 Deoosit. ln the event of prepayment of the pfi.,cipal
components of 1he Lease Payments in fun under this Article X. such th3.t the Trust Agreement Shari
be d1Scharged by itS terms as a result of such pfepayment, remain~ng arnounts on deposit ir: the
Lease Payment fund, if any. or the Reserve Fund shan be credit€d towards the amounts then
required to be so prepaid.
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ARTICLE XI
MISCELLANEOUS
Section 11.1. ~. An notices, certrncct.es or other communications t'leteunder shalT be
sufficiently gi .... en and shali be deemed to have been received 48 hours after deposit in the Uni!ed
States mail in first-class form w~M postage furly prepafd:
If to the Crty:
Iflu the Co rpora~on:
If to tM Trustee;
Crty of Palo Me
Civic Cen~er
250 Hamilton A .... enue
Palo AliO, CA 9 4 301
Attention: Crt)' Cieri<
Palo A~o PubiiC Improvement Corporation
Civic Center
250 Hamilton AvenLle
Palo Atto, CA 94~OI
Attention: Crt; Clerk
Bank of America Nationar Trust and
Savings Association
55 Hawthorne, 8111 Floor
San Francisco, CA 94105
Attention: Trust Officer
The Corporation, the City and the Trustee, by notice given hereunder. may designate
d[fferent addresses 10 which subsequent nat4ct:s, certtficates Of other cnmmurlications wI;! be sent.
Section 11.2. Binding Effect. This Lease Agreement shall inure to the benefrt of and shalT
be binding upon the Corporation and 1he City and their respective succeSSOrs and assigns.
Section 11.3. Severability. In the event any provision of this Lease Agreement shall be
hekf invend Of unenforceable by any court of competent juriSdictiDn, such holding sl1all not
invalidate or reoo'er unenforceab~e any other ~ro"iSjcn hereof.
Section 11.4. Net-net-net [ease. This Lease .Agreement s~a!l be deemed' and construed
to be a "net·nel-net lease" and the Crty hereby agr€:es thai the Lease Paj:ments shall be an
absolute net return 10 the Corporation, fr~ and crear of any expenses, charges or set-offs
whatsoever.
Section 11.5. Further AsstJrSlQceS and Corrective Instruments. The Corpoi'ation and the
City agree that they will, froril time to tJme, execute, acknowledge and denver, or cause 10 be
executed, acknowledged ano delivered, such supp!emer.ts hereto and such further instruments as
may reasonaUy be reqtJired for correcting any inadequa!e or incorrect description of the Project
hereby leased or jntended so to be or for carrying out the expressed fntenlions of this lease
Agreement
Section 11.6. Execution in Ccunteroarts, Ttils le2se Agreement may be executed in
several counterparts, each of which shaH be an original and all oi which shall constrtlIte but one
and the same instrument
Section 11.7. Applicable Law This lease Agreement s~lari be governed by and
construea in accordance wrth the laws of the State.
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Section 11.8. CQrporatkn and City Representatives. '\OVhenever under the provisions of
this Lease Agreement the awroval C>f the Corporation or the City is required, or the Ccrpolation
or the City is requirc<l to take some action at the request 01 the ether, such approval or such
request shan be 9iven lor the Corporation by a Corooralion Representative and for the City by a
City Representative, end each party herolo s~an be authorized te rely upon any sucM approval
or request
Section 11.9, Captions. The captions or headings in li1is Lease Agr~ment are for
convenience on!y and i~ no way define, limit or describe the scope or intent of any proy~sians or
Sectioo of this Lease Agreement
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IN WITNESS WHEREOF. the Corporation has caused t'is Lease Agreement to be
executed in its ccrJX)rate name by its du!y allihorizoo 'Officers and !eaiecl w~h its corporate seal;
and the Cfty has caused this lease Agreement Ie be executed in ~:s name by its duly au1horized
offioors and sealed with fts corporote seal, as of the date jirst above ·"'T:tten.
is E A l)
Attest
(S E A L)
Attest
Sectetary
City Clerk
APPROVED AS TO FORM;
Cfty Attorney
JONES HALL HILL & WHITE,
A ProfessiOfl8llaw Corporatlon
By ____ ~~~~~~~-----Kenneth I. Jones. Esq.
Special Coonsel
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PALO ".LTO PUBLIC IMPROvEMENT
CORPOf'.A TION,
as Lessor
B1 ________ ~~=---___
Presldent
CITY OF PALO ALTO. CAUFORrlIA.
as lessee
By ________ ~~ __ -----
Mayor
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STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
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On , before me, • a Notary pubnc in and for said
County and State. personally appeared ____ __ __ and ====:-:::=="",,,,,,,,,,,-' personalfy known to me ler proved ~o me 0,., the basiS of
satisfactory f!Videncsl to be th6 persons wtlo executed the within instrument as President and
Secretary. respecttvely, of the Palo Alto Public Improvemer1t Corpora!lol"1. the corporation that
executed the within instrument and known to me to be the persor1 who executed the Vlith~n
instrument on behalf of ~he corporation heiein named. and acknowledged to me that such
corporation e.x:ecuied Ille within instrument pursuant to its Bylaws or a Resolutlon of its Board of
Directors.
Notary Public in and for said County arId Slate
" STATE OF CALIFORNIA
COUNTY OF SA"'-ITA CL£.RA
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On , before me, , a r,otary PubUc in anc for said
County and State, pefs<mally appeared _ and
===="-~-..:::--,""'c:-:,,~ personally known to me 10 be the Mayor and C,ty Clerk,
r"¥.c1ively, of the C~y of Palo Mo and known to me (or proved to me on the basis of
GStielactory evidence) to be the persons who exect.~ed the w~hjn instrument on behaif of said
municipal corporation, aM adt:r.~wledged to me that $ucl"l municipaf oorporation executed the same.
Notary pubnc in and for said County and Stale
EXHIBIT A
DEFINITIONS
".Agency bgreemenf means the Agency Agreement Re!ating 10 Palo Arto Civic Center
Project dated as 01 March 1, 1992, by and between the Corpcration and City.
~As.slQnment Ameemen'" means the Assignment Agreeme:l1, dated as of March 1, ~ 992,
by and between the Corporation and the Trustee, together wjth any duly autho~;zed an.1j
e>.:ecuted amendments thereto.
"~~~ .. Qmt means a d8;.1 wnich ls not a Saturday, Sunday or !egal hoiiday on which
banking institutions in the state in which the Principal Corporate Trust Otfi<:e ~t the Trustee is
located or banks in New York, New York, af8 clored Of are required to close cr a day on which the
N .... YOlk Stock Exchange is closed.
"Certificates" means the $ aggregate principar amounl of certiffcates 01
participation to be executed and delivered pursuant to the Trust Agreement.
~~ means City at Palo AIt':), 2 charter city and mt.rn~cipa! corporatier; organized and
existing under the Constrtutjcn and laws at the State.
"CW Rwresentatlve~ means the Mayor, the C~ Manager,1he Director of Finance or any
other person alJthorized by resolution of the City Councri of the Crty delivered to the Trustee to
act on behalf of the City under or ...... ith respect to the Site and Facflit,' lease, the Lease
Agreement, the Escrow Agreement the Agency Agreen:ent and/or the Trust Agrwment.
"Civic Center" means the civic center structwe with a1l appurtepant 1ixtures which now
exists orl the Site. In certain contex1s, 1ne 1erms "Civic Center refers to the Civic Center as
Improved by the construction of the 1983 Project, the 1992 Project and otherwise.
"Closing Date" means the date upon which there is a physlcsl denvery of the Certificates
in exchange for Ihe amount representing tf'.e purchase price of the Certffica1es by tne Original
Purchaser.
~" means Ihe internal Revenue CocIe 01 1986.
"Compiel1Qo Date~ means the date of substantial comple1iar. of cor.struct:cn and
irlstanation 01 the 1.992 Project as evidenced b" the filing wtlh the City of a certificate of complet~or.
thereof executed by an Author'ized Officer of Crty and as more particularly descrIbe(! in the
Agency Agreement
"Construction Conitact" means the construction contract or contracts providll19 for :he
construction 01 !he 1992 Project
"Cvrnmation" means the Palo Alto Pub ric Improvemen.t Corporation a nonprofil, public
benefrt corporation organized and exisung urrder and by virtue of the laws of the State.
IICqrooratiDrr f1epresentative~ means ttie Presl'dent,the Vice PreSident, the Secretary, t~e
Treasurer, or any other person authorized by resolution of the Corpofation delivered to tne
Trustee to act on behalf ot the Corpora1ion under Of with respect to the Site and Facility Lease,
the Lease Agreement, the Assignment Agreement, the Agency Agreement and/or the Trusl
Agreement
"pefeasa.n.;eObli9atiQns~ means (a) cash, or (b) nOr1-<:allable Federal Securities.
Exhibit A - 1
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-Oelivery Cttsts" means a~1 items of expense directl~ or indirectly payab~e by or
reimbursat>le to the City or the Corporalion ielating to Ine 8Kecution ar}d delivery Of the
TSnTlination Agreement, tne Site and Fadlit y Lease, the Lease Agreement, the Trust Agreement
the Agency Agreement, the Escrow Agreement and the Assignment A~reement or U'le execution,
sale and delivery of the Certificates, including but not fimited to 1111119 and recording costs,
settlSr.1ant casts, .,rillting costs, reproduction and binding costs. initial fees and charges of the
T.rustee Qncluding the fees and expenses of its counse!), financi:lg discounts, legal fea::) and
charges, insurance fees and charges, financial and ,other prof8ssional consuHan! fees, COS15 of
rating agencies for credit ratings, fees for execution, regulatory agency fees, CUSIP fees,
transportation and safekeeping of the Certificates and charges ana fees in connection with the
1oregoir1g.
"Denverv Costs Fund'" means the fund by tr,at name established and held bj' the Trustee
pursuant to Article III of the Trust Ag~emenL
"Escrow Agreement" mgans Ute Escrow Deposit and Trust Agreement, dated the Closing
Date. by and between t',e CitX and the Escrow Bank, with respect to the eSlablishment and
administration of the Escrow rund for the purpose of providing for the payment of the City's
obflgationS under the Pri()( Leas.,
"Escrow Rank" means Bank of America National Tr\.Jst ar)d Savings Association, as
escrow bank pursuanl to the Escrow Ag~eement
"Escrow Fund" means the Escrow Fund estabfished and held by the Escrow Bank
pursuant to the Escrow Ag reement
"EVEnt Of Pefa~J!t" !:leans an event of default LInder the Lease Agreement., as defined' in
SecUon 9 1 the<eof.
"~" means the Palo Mo Civic Center, as improved by the 1983 Project
"Federal SeclJrhie," means any of the fol10wing which are noncanable and which at the
time of in'lo'estment are lega! investments under the laws of the State of California fOf ttle moneys
proposed to be invested theIein;
(a) direct obfigations 01 (including obligations issued or held in book entry
form on the books 01 the Department of the Treasury of the Untted States of
AMerica), or obligations the timely paymerrt of principal of and interest on which are
unconditionally guaranteea by, the UnFted States of America, including $181e and
Loca; Government Serfes obfig.atlons; or
(b) bcl1ds, debentures or notes payab~e in cash Issued by anyone or
more of tne following ledera! agencies whose obligations represent the fun farth
and crecfrt 01 the Unned States of America: Resolution Trust Corporation, Generai
Services Administration, Sman Buslness Administration, Farmer's Home
Administration, Federai Housing Acministration, United States Maritime
Administration, United States Department Of Housing and Urba!1 Development and
Government National Mortgage Association,
IIFj§Ca1 Year" means the t..yelve-month period begirtning on July 1 of any year and endlnC1
on June 2.0 of the nelrt succeeding year, or any ott~er twelve-month per'lod selected by the City
as its fiscal year.
"Improved CiVIC Center" means the C1vic Center as improved by the construction of the
1992 Project
Exhibit A ~ 2
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")nOOoeodem Cou~ meal1s an attorney duly admihed tome praC"iice 01 law before the
highest court 01 the state In whict1 s:...ct': attoiney :naiiltains an office and who is no: an employee
of the Co']X>raUcn, the Trustee or the Crty,
"ln f orma1'QD Seryjces" maans Financiallnfolmation, Inc.ls "Oei:y CaITed Bond Servjce.~ 30
Montgomery Street, 10th f:oor, Jersey City, New Jersey 07302, Attention: EdItor; KeM1Y
Information SeNices' ~Caned Bond Service,~ 65 Broadway. 161h Floor, New York, New York
'0006; Moody's "MuniCipal alid Government," 99 Churcn Street, 8th Floor, New York, New YOlk
10007, Attention: Municipal News Reports; and sap's "Ca~led Bor:d Record," 25 Broadway, 3rd
Floor \ New York, New Yorio; 10004; 01' lD such othei addresses andior 5UC1'1 other na!iOnar
~nformation serllices providJng information or dlssemlr13ting notices 01 redemption of obfiga1ioIis
simHar to 1fle C'.ertnicates.
I<lnsurancB and Condemn3f!qn Fund" means the fund by IIlat name estabiisned and ~191d
by tile Trustee pursuant to Sectkln 7.01 of the Trust Agreement
"Interest payment pate" means, .... ~t~ respect to the Certificates, the firs, (1st} day "r each
Septt:mber and March, commencing September 15, 1992, so iong as any Certiticates are
Outstanding,
"lease AQ~eement" means the Lease Agreement, dated a~ of March 1, 1992, by arld
between the Corporation and the Crty, together with any duly autnorized and execU1ed
amendments !heretn,
"Lease Payment Date" means, with respect to tlle Lease PaymBii1s, the twenty-SiX
(26th) day of Augu5I and the tweOly·third (23rd) day of February in each year during the Term of
tile Lease Agreement commencing Aug usl 26, 1992,
"Leasl=' payme[J1 Fund" means the fund by that name established and held by the
Trustee pursuant to Section 5.02 of the Trust Agreement.
"lgase Payments" means all payments reqlJired to be pald by the City pursuCint to
Section 4.4 of the Lease Agreement, including any prepaymen11he reof pursuant to Articte X of the
lease Agreement. which payments consist of 8(1 interest compcnent and a principal component
"~" means Moody's Investors Service, New YOrk, New York, Of its successors.
"Ngt Proceeds," when used with iespeC110 insurance or corn:le'11nation proceeds, means
any Insurance y;oceeds or condemnation award paid wfth respec110 the ProJect, 10 the eJie'1t
remaining after paymer1t therefrom of air expenses incurred in -the collection t'"lereof.
"1992 Project" means 1tl3 structural remodelllng of the poilce headquarters and the
retrofifjlng of ~he Civic C.enter for sp:fnkler system fjre prevention racil:tles and all incidental and
auxiliary work necessary' for oomple!ion thereof.
~1992 Project Costs" means a~r costs of payment of, or reimbursement for, construction,
installation and flnancl~ of the 1992 Project, including but not limited to, architoc\, engineering and
conS1ruction superviSion costs. construction contractor payments, cos1s of feasibility,
enllironmental and other reports, soil testil1g costs, ins~cUol"1 costs, permit fees, insurance
premiums, fil~ng and recording costs, ti1Je insurance costs and senJemenl costs.
"Origioal piHchaser~ mear1S the first purcnaser of the Certificates upon thelr delivery by
1he Trustee on the Closing Date.
"CMstanding", when used as of any particular time with respeC1 to Certificates, means
(subject to the provisions 01 Section 10.03 of the Trus1 Agreement) all Certificales theretofore
executed aoo delivered b~' the Trustee under L'1e Tru:31 Agreement except-
Exhibit/-. - 3
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(a) Certificates 1heretofare cancelled by the Trus!ee or surrendered to the Trustee for
cance!1ation;
(b) Certificates for the payment Of redemption of which funds or Oefeasance Obligations
In the necessary am~unt Si'l an havs the retolo re been deposited with the Trustee or arl esc rew
hOlder (whether upon or prior 10 the maturrty or redemption date of such C~rtificates), provided
that, If such Certtficates are 10 be redeemed p!'ior to maturfty, nottc~ of suc!; redemplior, sha~1 halle
been gi\len as provided in Section 4.03 of the Trust Agreement or provision satisfactory to the
Trustee shan have been made for the giving of such nQtice; and
(c} Certificates in lieu of Q( in exchange for whic~ ether Certificates shall have been
executed and denvered by the Trustee pcrsuant to Seelion 2.09 otthe Trust Agreement.
.. ~ ... or "Certificate Owner" or "Owner of a Certmeat?", or any similar term. when used
with respect to a Certificate means the person in whose name such Certjficate st".an be regis1ered
011 lhe Regis\rati on Books.
"permitted Encumbrances" means, as of any particular time: (a) nens for general ad
valorem taxes and assessments, if any, not tl1en dennquent, or which tt'oe CJt\j may, pursuant to
provisions of Article V of the Lease Agreement, permit to remain unpaid; ~) the Asstgnment
Agreement; Ie) the S~e and Facility Lease; ldi the Lease Agreement; Ie) any right or claim of any
mechanic, laborer, materialman. supplier ()( vendor not filed O! pertected in the manner prescnbed
by raw; and (f) easements, rights of way. mineral rlghts, drilllr1g rights and other r~his,
reservations, covenants, condItions or restrictions which exist of record as of the Closing Datc
aOO whlch the cn'l certif.as in writing will not material1y ~."pair the use of the Project.
II'Perm:Ued fnvestments" means any of the following which a1 the t1me of investment ale
legal investments under the laws of ~he State of CalifornIa for the mO!leys proposed 10 be
invested therein:
la) Federal Securities;
{b) U.S. Donar denominatec deposi1 accoun~s fully insured 10 the holder (up to the
$100,000 maximum coverage) by the Federal Deposl! Insurance Corporation if1 commercial
banks.
,c} U.S. Dollar denominated deposi't accounts, federal funds and banker's acceptances
with commercial banks (foreign or domestic) which have a rating on their short term cen.ificates of
depos~ on the date of purchase of 'A-I' or "A-l+' by S&P and "P·l" by Moody's and maturing
no more than 360 days aftBf the date of purchase.
(d) Money market funds which are rated in the top rating cat~ofY by S&P or comprlsed
solely of obligations rated "AAA'" by sap and "Aaa" by 'Moody's. which are monitored qual1eriy;
(e) Pre-refunooo municipal oongations defined as follolA'S'.
Any ':>onds or other obligations of any state of the United States of America or Of any
agency, instrumentalHy or iOcal govemmental unit of any such sta1e (i) which are not callable at
the option of the obngor prior to maturity or as to whlch ir;evocabla notice has been gi ..... en by the
obfigor to call or. the date spedfJOCf in the notice, and {ii) which are funy secured as 10 principal and
interest and redemption premlum, if any. by a fund consisting only of casl'1 or obl1gatiorls
des-::rfbed in paragraph (a} above, which lund may be applied only to the paymerit of such
principal of and interest and redemption premium, if any, on such bonds Of other obligations on
the maturity date or dates thereof or the speclfjed redemption date or dales pursuant 10 such
irrevocable instructions, as appropriate. and (ill) whictl fund is sufficient, as verified by an
independent certified public accountant. to pay principal of and ir.terest and redemption premium,
if any, on the bonds or other obligations described in th1s parayraph on the maturity da~e or dates
thereof or on the redemption date or da1es specified in the irrevocable instructions referred to in
Exhibit A - 4
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&JbclalJSe 0) 0' this %ragrapt:, 2S appropria1e, and 0v) which are ra1ed. based on the escrow, in me highest rating category of S&P and Moody's, or any successors thereto:
(i) Wrmen repurchase agreements wilh any bank, savings institution or trust C(Jmpany
'other than the Trustee) which is insured by the Federal Depos~ Insurance Corpora1jon or !tIe
!=ederaJ Savings and Loan tnsurance Corporation. Of with ally broker-de5ler wtth retan customers
which fans under Securf1jes Investors Proteclion Corporation protec1ior., provjded that such
repurc~ase agreements are fully secured by Federa! Securities or obligatiOns of any agency of
instrumentrurty of the United States 01 Americ.a. and provided further that {ij such collateral is h€-Id
by the Trustee or any agent ac1jng soleiy for the Trus!ee during tlie term o~ such repurchase
agreement. Oil such coOateraJ is not subjecr to ~ens Of claims of third parties, ntiJ such co~iateral hc:.s
a market value (determined at least once e' .. ery 14 days) at least equa~ 10 tl'1e amount iilvested in
'the repurchase agreement, 0v) the Trus1ee has a perfected first security interest in the colla1eral,
(II) the agreement shall be for a term not longer than 270 days and (vi) Ule fanure to mair.tarn suerl
coltateral at 1he level required in 0ii) above will require the Trustee to ~quidate the co!lateral.
"E;rjmipal CQ~r;w' TOIst Office" means the corporate trust office of tha Trustee at Bank
of America Nationatrust and Savings Association, 55 Ha\oV1.horne, 8th Floor, San Francisco,
California, or at such other address desigrlated by tne Trustee by wriHen notice filed with the City
and lh. CorporaUon.
"prjm Cer1ificates" means the certifica:es of participaHon BlIecuted' and delivered by the
Prk>r Trustee representing interest in Jease payments to be mace by the City tJnder the Prior
Lease.
"prior l ease" means the Sit~ Lease and lease Agreement Rela'ing to Palo AHa CiviC
Center, dated as of October 1, 1933, by a.'l{\ between the Corporation, as lessor, and Ille City,
as lessee, 10gether with any duly authOrized and executed amendment thereto.
"Prior [ ease pavm~nt Fund" means the fund by that name estabrlshed and mainta:ned b~
!he Prior Trustee under the Prior Trust Agreement
"PdQr Reserve Fund" means the fund by that name establishea aoo malntained by the
Pri()( Tr,,",ee under !he Prior Trust Agreement
"Prior Trust Agreement~ means that certain Trust Agreement Relating to Palo Atto Civic
Cenler ProjeCl, dated as of October 1, 1983, by and among Ille Prior Trustee, !he City and the
Corporaton.
"POor Trustee" means Bank of America r"'ationa1 T'1.Jst and Savina:; Association as trustee
with respect to 1he Prior Certhicates. ..
~Private Business Use" means use directly or indirectly' in a trade or business carried on
by a na~ural person or in any activ;:y carried on b~' a person other than a natural person.
excluding, however, use by a governmental unit and use as a member of the general pubr.c.
"PfsfCeedS,OI' when used with reference 10 the Certificates, ITleans the face amount of the
Certificates, plus accrued interest and original issue premium, if any, less original issue dIscount, if
any.
"fIojW" means, collectively, the Site and the Facility. together with the 1992 Project
"OllatiVe<! SWety Bond" means a surety Mnd issued by an insurance company rated in
!lle highest claims paying category by Moody's and S&p.
"Ba1inq Category" means, wrth respect to any Permitted Investmer.t, one of the generic
categories of rating tly Moody's ana S&P appflcable: to suell Permitted lnvestment, withou1 regard
to any refinement Of graduation of sucn rating category by a prus or minus sign or a numeral.
Exhib' A-5
-.. __ .-----·f;-->·L
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·Be~stratrQn ~ .. means t~e records maintained by the TruMee pursuar.t to Sec'I)on
2.12 of the rust AgloomBnt fOf registration o~ the owners~ip and transfer of ownership of the
Certificates.
"'Secular Record Date" rr~eans the close of business on the fmh (5th) day of the month
preceding each Interest Payment Date, whether 0' n01 such frtll1 (5th) day is 2 Business Day.
"SAAutafiqns" means temporary and permanent regulatiorls promurgated under the Code.
"Sema! Pertod" means each tweNo!HOOnlh period during the Tern-, 0' the Lease A9reemel1t
commencirtg on Marc'h 2 ~n an;-xear and' ending on Marc~ 1 '1[1 the next succeeding year;
provid8d, howeYer,:hat the initial Mentaf Period shan c:ommeoce on t~e Cfosing Date and shali
er.eI on Marcil 1, 1993.
·Reserve EIJorJ" means the fund by that name established 2nd held by the Trustee
pursuant to Sec!ior. 6.Ql of \lle Trust Agroom ent
"Resew ReQqirement" means a sum equal to the lesser of (i) ten percent of the
aggregate ori~inal prinCipal component of I~stanment Paymef1ts, Of Oi) the maximum amount of
pfi~r and mterest payments with respec110 1he Certificates due in the current or any future
year. The ReseN6 Requirement on the Closing Date is $ .
"ill" means Standard S Poor's Corporation, New Yorl<, New Yorl<, or ns successors.
"~~~~~~~jIf}~~~~~;~,Th. Deposttory Trust Company, 711 Stewan Avenue, ,l 227-4039 or 4190; Midwest SeGur"ies Trust Company,
LaSalle Street, Chicago, Illinois 60605, Fa,-(312)
!:~~~~~~:~~:,r.~i~,~!~~~~~1 Reorganization Dlvfsion, 1900 Market Department Fax-(215) 496-5058; or to
such other registered securities depositories holding substantial
1ypeS $jm~~r to the Certfficates.
"Si!lt" means all of 1I1at cartai n real property Iocafed in 1I1e Cily described in Exh ibit A to
the Site and Facuily Lease and Exhibit B to \lle Lease Agreement
·Site and Facility lease" means 1tle She and FaciHty Lease, dated as of Marct11, 1992.
by and betwee" the Cit,. and the Corporation, together with any duly authorized and executed amendments _0.
"Slalll" means \lle State of california.
"Term gf the Lease Agreement" means the time during which the Lease Agr~men! is in
effecl, "" provided in Section 42 of the Lease Agreement
'Il~~~~~~~means the Trust Agreement, dated as of March 1. 1992, by and among
1he City, and the Trustee, together wltn any duTy authorized amendmen.!S
thereto.
~" means Bank of Alnerfc8 National Trust and Savings Association, or any
SUcces50f thereto. acting as Trustee pursuant 10 the Trust Agreement.
exhibit A - 6
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EXHIBIT B
DESCRIPTION OF THE SITE
The land r~erred to here;~ is oescnbed as iolioW'5',
All that certain ,eal property in 1M City Of Palo Alto, County of SaMa Clara, Stale of
California, described as 101lows:
M of Lois 3510 68, inclusive, as S~cwn upon that certain map entilled, "WH, H. H. Han's
Subd"ivisioll 0( Block No. 11 Universrt,' Park: which map was 'llea for record in the Office of ,ne
Recoroe, 0\ Il1<l C<lunty of Santa Clara, Stale of Calrtornla, on May 23, 1986 in Bouk 1 0\ Maps,
at Page21.
EXHIBIT C
DESCRIPTION OF THE FACiliTY
.. ;
TM Facility =sists r,! the Ciy;c Cen1er !acilrty ""'aled cn the Srt., including the Swctural
Repairs as defined in the Prior Lease.
E:xtibil C--1
: .. '
EXHIBIT 0
SCHEDULE OF LEASE PAYM~NTS
Exhibit D -,
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A T T A C B N E N T r
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A TTACM'MENT F
TRUST AGREEMENT
Dated as of March 1. 1992
by and amoMg
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ."SSOC1ATION,
as Trustee
the
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
and the
CITY OF PALO ALTO. CALIFORNIA
(199Z CIVIC CENTER REF!NANCING AND IMPROVEMENT PROJECT)
Section 1.01. Oitfinitions ................ .
Section 1.02. Authorization ..••.........
Section 1,03. Exhibits ......... .
!ABLE OF CONTENTS
ARTIClE I
DEFINITIONS
ARTUEII
THE CERTIFICATES OF PARTICIPATION
. .. .2
. .. 2
Section 2.::)1. Al.1tnorization..................... »............... . ... :3
Section 2.02. Date; Paymertt of Interest ...... ___ ". ...... ....... . .... , ......... 3
Sectio., 2.03. Maturtty: Interest Rates........ . .......... ".... .......................... . ... 3
Section 2.04. Interest ...................................... _.. .........•.......... . ... 3
Section 2.05. F()I"TTI ...•••••• "....... .................. . •..• 3
Section 2.06. Execution... ............. ........ . ...................... , .................. _... . .... 4
5ection 2.07. ApprJCation of Proceeds and Other Moneys... ........................ . ............... 4
Section 2.08. Transfer and &change ....................................... . ........... .4
Section 2.09. Certmcatefi Mutilated, Lost, Destroyed' or Stolen.......... . ..... 5
Section 2.' 0, Payment ...... ........... .. ... ..... .... ......... .•.... ... .......... ..... . .......... 5
Sectr011 2.1'. Execution of Documents and Proo1 of ONnershlp....... . ...................................... 5
Section 2.12. Registration Books ...... ........................ ............... .. ...... 6
Section 2.13. CUSIP NI...!mbers ........... ........................... . .................................. 6
Section 2.14. Use of Oeposrtory .......... ........................... . ............................................... 6
5ectlon 2.15. i..etter of Representations ....................... . ..................................... 7
ARTIClE III
DEUVERY COSTS FUND AN D CONSTRUCTION FUND
SectiM 3.0~.
Section 3.02.
SeCliOl1 3.03.
De~ivery Costs Fund..... .............•.. , ................. . . ........ 8
Pi! yment of Oe!ivery Costs.. ... ........................ . ............. .
Appr.cation of ConstruC1:km Fund ........................... ..
ARTICLE IV
REDEMPTION OF CERTIFICATES
Secflon 4.01. Redemption... . ........ .
Section 4.02. Selection of Certilcates f.or Aedemptlon ..
SectlM 4.03. Notice of Redemption .............. .
Secticn 4.Q4. Partial Redemption 01 CertifICate
Section 4.050. Purchase of Certi1~ates .....
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
. .. 8
. .......................... 8
..10
. .......... 1 ,
" .. , 2
. .......... 12
Section 5.01.
5ec1ion 5.02.
Section 5.03.
Section 5.04.
Section 5.05.
Assignment of Rights in Lease Agreement. .. ............. ..................... ., 3
Establishment of lease Payment Fund .......... .
Deposits.. . ...... .
App Ilcation of Me neys
SiJrpfUS
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. ......... '3
. ...... '3
............. , :3
.. .....•• , :3
\Tl~ ..
~
Sec1ion ~.Q1.
Secticn 6,02.
Sec1iG" 6.03.
Section 5.04.
Section 6.05.
Section 6.06.
Section 6.07.
Sectioo 6.08.
Sec1ion 7.01.
Sec1ion 7.02.
Section 7.03.
Section 7.Q.4.
Section B.01.
Sec1ion 9.02.
Sectlon 8.03.
SectiOn 8.04.
Section 9.05.
Sec1ion 8.06.
Section 9.01.
Sec1ion 9.02.
Sec1ion 9.03.
Section 9.04.
Section 9.05
Sec1ion 9.06.
Section 9.07.
Section 9.0e,
Section 9.09,
Section 9.10.
ARTICLE \1
RESERVE FUND
Establishment of Reserve Fund .......................... .
DepositS ............... ..
Transfers of Excess ........... ..... ..... .. .......... .
Application In Event 01' Deficjency In lease Payment Fund
Transfer To Make AIl Lease Payments ..... .
L_ofOecfrt ..................................... ..
....... 14
, .... , "
. ........... 14
... 14
. .. 14
. .. '!4
Quarrfled Surety 60ncl... ... , .............. . .. .................................................. IS
Cash Ie tho Cily ................. .. .. ................................... 15
ARTlClE V11
INSURANCE AND CONDEMNATION FUND; INSURANCE; EMINENT
DCMAJN; TITLE INSURANCE
EstabrlShroont 01' Insurance and CondemnnnCfl Fund; Applicstior. 01 Net
Proceeds of Insurance Award ................ __ ......... . .. ................ 15
Appr.catiOn of Net Proceeds 01 Eminent Domain Award ....... . .. ................. 1 e
.................. 17
""', ......... " .. 17
Appfjcation of !\let Proceeds of Title lnsu ranee Award
Cooperation .... , ....... "..... . ... , .......... ,
ARTICLEV111
MONEYS 11'< FUNDS; IN\IESTMEKT
Held in Trust ............... .
Investments Authorized .... .
Accounting ...................... .
Allocation of Earnings ........ .
No Arbi1T&ge........ ........ ....... ...
.Rebate of ElIcess In\lestment Earnings to United States ..
Appoimmem. 01 Tn;S!ee
Acceptance of Trusts"-
AA'TlCLE!X
THE TRUSTEE
Fees, Charges and Expenses olTr"JS1:ee .....
Natioe to Certificate Owners of Defau rt
Intervention by Trustee ................... "
. ............ '8
.. .................................. '8
.. ................................... '8
.. .... '8
. ................................... 19
. ....................................... 19
. ...... 20
. ......... .20
.. ..... 23
.. .. 23
................ ..23
Removal of TruS1ee ....................................................... . .. ......... 23
Res;ignation by Trus1e-e
Appolntmem of Successor "1 rustee ....
'Merger or COn<Solidation ..
Conceming any SUccessor Trustee .....
ARTtCLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
...24
.. 24
.. 24
..24
Section HL01. Amendments Permitted ............... ................... ........................ . .... 25
$oction 10.{)2. Procedure for Amendmern wtttl Writ!M COnsent 01 CertifIcate Owners ........ .. ....... .25
Section 10.03. Oisquali1ied Certificates.. . ... 25
Section 10.Q4. Effect of Supplemental Agreement. ................ ...... ................ . ..... 25
Section 1Q.05. Endornement or Replacement of CertIficates Derl\l-ered After Amendments ............... .26
,s(t ~----
:; /~.~
... .,." ... ~;:)o<
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Section 10.06. Amendatory Endo;:lrsement of Certificates ... . ......................................... 27
ARTICLE Xl
COVENAN-rS
Sectior. 11.01. Compnance With and E:1forcement oj Lea~e Agreement ..
Section 11.02. Qtlservance of Laws and Regulatlons ...
Section 1~.OJ. ProseC\J1:icn and Defense ol Sutts
Section 11.04. Recordation and Fding ................. .
Section 11 .CS. Cfty Budgets .................. .
Section f1 ,oe. Further Assurances ................ ..
Section 11,07. Sc:tls1acti'Jn 01 Conditions Prec€dem
ARTICLE XII
UMITATIQN Of LIABILITY
.. ... 2B
. ..... 28
......... 28
. ........ .28
. ... .28
. .... 28
.......................... 29
Sectio., 12.01. Um~e<I Uall<lity of City ... .......... " ................ "" ...... ,,30
Section 12.02. No liabnity of City or Corporation for Trustee Performance .................................... , ... ,30
Section 12.03. lndemnrficaton of Trustee..... ............... . ......... 3;)
Section 12.04, UmrtatiOn 01 Rights to Parties and Certificate owners ........................... 30
AATlQeXll1
EVENTS OF DEFAULT AN D REME DIES OF CERTIFICATE OWNERS
Section 13,01. Assignment of Rights ................................ , ............. , .. ,. . ............... 31
Section 13.02. Remedies ......... ,. ............................................... ,.............. . .. 31
Section 13.03. J\Ppf.cat.'-on 01 F lJl'IOs .......... ........... ...... .. .......... .......... . ......... 3'
Section 13.04. Institution of Legal Proceedings ................ ................ . .. 31
Secti"~ , 3 .05. NOl1-waiver ........ .•.... ........... .......... ............ ....... ........ . .. 3 1
Section 13.06. Remedies Not ExClusr .... e ...................... , ....... .. ................... ". ...32
Section 13.07. Power 01 irustee \0 Control Proceedi~........... .. ..................................... 3-2
Section '3.08. Umitation on CertifICate Owners' Rrght W Sue ............................................ 3-2
section 13.09. Parties Int~re-s1ed Hereln.,............... . ........................... 32
AATICLEXJV
MISCELLANEOUS
Section 1401. Defeasance ............... . ... 33
Sectton 14.02. Records.. .. .... 33
Section 14.03. Norices ............. . ........... 33
Sectton 14.04. Go .... emmg Law.. ................ .. ......... 34
Section 14.05. Binding Effect Successors. .. ".......... . .............. ,,, ........ 34
Section 14)J6. ExecuMn In Counterparts.............. . .................. .. .... 34
Section 14.07. Destruction of Cancelled Certificates................. ................. .................. 34
Section 14.08, Headings ......................................... ............... . ................. " ....... , .......... 34
Sectil')n 14.09. Wai .... er of Notice... ................. .................... .. ....... 34
Section 14.10, Paymems Due or. Other "than Business Day. .... ............. .. ..................... 34
SwJon 14.11. Payment of Unclaimed Moneys........ . ............... : ....... 34
Section 14.12. Se .... erabilrty of InvallC1 Provisions ........ . .......... , ............ 35
EXHIBiT A
EXHIBIT B.
EXHIBiTC,
Definttions
Form of the CertifICates
RequtsH.ion No. ___ From COnstruction Fund
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TRUST AGREEMENT
THIS TRUST AGREEMENT, made and enlered inlo as of March " 1992, by and among
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a nalional banking
association oroanized and existing under the laws of the United States of Amer,ca, the PALO
ALTO PUBUO IMPROVEMENT CORPORATION, a nonprOfil, pubiic benefil corporation
organized and existing under the laws oltha State of Calrfornia (the ~Corporation"), and the CITY
OF PALO ALTO, a charter ctty and municipal corporation organiled and existing under the
ConsliMlon and laws of the State of Califorma (the 'Cily");
W IT N E SSE T H:
WHEFIEAS, the Corporation has heretofore leased certain real property and
improvements thereon including certain improvements financed by lease transBctfons between
the parties in 1983 (the "1983 Project"), pursuant to that certain lease agreement, dated as of
October 1, 1963, by and balween the Corporalion, as lessor, and Ihe City, as lessee, (the 'Prior
Lease");
WHEREAS, the PriOf lease has, wtttl certair, 2xceJ,.ltions. been duly termj~ated pursuant
to. Termination Agreement, dated as of March 1,1992, betweeo tile parties;
WHEREAS, the City has dotermined tMI ~ is in the inlerests of Ihe City at this time to
;y.ovicSe for 1he refinancing of the 1983 Project and the City's existing obligations under the P.ior
Lease and for fina'>Cing certain addWonal improvements 10 the civic center (tile "'992 Projecf"), by
re-feasing Ihe same pursuanf 10 Inat certain Lease Agreement, dated as of March 1, 1992, by and
between tile Corporation and the Ctty~ and
WHEREAS, for the purpose of obtaining th9 moneys recuired to be depos~Eld by ~ with
1he Trustee for .refinancing the 1983 Project and financing tt1e 1992 Project, the Corporation
proposes 10 aSSIgn and transfer certain of rts rights 'JrlQer the Lease Agreement to the T~ustee,
and t:le Trustee has agl'eed to e.xecute and deliver certificates of participation, each evidencing a
direct, undivided frattional interest in the lease payments made by the City under the Lease
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein. the parties hereto agret> as follows:
•
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ARTICLE I
DEFiNITIONS
Secti()n 1.01. Definitions. The terms defir1ed in Exhibit A attached hereto and by this
r~rence Ulcorporated her~in. as used and capitanzed herein, shall, for all purposes of this Trust
Agreement, have t~e meanings ascribed to them in said Exhibrt A unless the context clearly
rElC:luires some other meaning.
Sec"~on 1.02. Authoriza1iQD. Each of the parties hereby represe;,t!; and warrants that it
has fun legal authorization and is duly empowered to enter into this TrlJst Agreement, and t"Ias
taken an actions ner-...essary kJ authori:!e tt'Je execulion of 1hls T (lJ 51 Agreement by the otfiC9(S and
persons signing ~.
Section 1.03 . ..Exblhi1s. Th& fonowing exhibits are attached to, and by reference made a
part of, t'1is Trust Agreement
Exhib~ A: Oeflnitions.
Exhibit 8: Form of the Cenfficates.
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ARTICLE II
THE CERTIFICATES OF PARTiCIPATiON
Sectlar,2.01. Av1hodzallon. The TruS1ee is hereby authorized and direc1ed upon writter.
request from the Co;poration 10 execute and deijver, to the Original purchaser identifie::f, fn Slierl
written r!39.uest. CertifICates i:1 an aggregate princjpa! amount of not 10 exceed Eight Milhon Five
Hundred I housand doGars ($8.500,000) evidencing direct, undivided fractional interests of ~he
Owne rs thereof in ttl e lease Payments.
Section 2.02. Pale' PaYment of Interest, Each CertHicate sh311 be dated as o~ March 1,
1992. Interest wltll respect thereto shall be payable from the Interest Payment Date neld
preceding the date or e.xecu!ion thereof, unless: (i) it is exect.!1ed as of an Interest Payment Date.
in which event interest with respect t"ereto shall be payable from SUC~I Inlarest Payment Date; or
nil it is executed on Of before September 1. 1992, in which event interest with respect thereto
shan be payable from March I, 1992; provided, ~ow.ver,1hat if, as 01 the date of execution of
any Certificate, interest fs in defaurt with respect 10 any Outsta.nding Certi'ficates, interest
represenred by such Certificate shall be payable from !he Interest Payment Dale to which
intere~ has previousty been paid or :-nede ava~able fOf payment with respeC1 to the Outstandif1g
Certificates. Payment of defaufted Interest shan be paid by crleck onlle Truslee mai!ed to Ihe
ONners as of a special record date 10 be fixed by the Trustee in its sole discretion, notice ('11
which shan be given to Ille Owners not less than len 110) days Drior 10 such SjOecial reoord date.
Section 2.03. Ma1mfty·lnterest Rates. The Certificates shaM mature on March 1 in each of
the respective years, and in the respective amounts, EICcept that no Certificate may ha .... 2
principal maturing in more than one year, and interest represented thereby shan be computed at
the respective rates, as foJlows:
Maturity Date
(March "
1993
t 994
t 9&5
1996
t 997
1998
1999
200C
2001
2002
2003
2012
PrinCipal
AmoYnl
Interest
..Bale...
Section 2.04. lnlllwl. Interest represenled by the Certincates shan be p~yable on each
Interest Payment Date to and inc;uding the da1e of maturity or redemption, \lllhicllever is earlier, as
provided in Section 2.10 hereof. Sald interest shall represent the po'ition of Lease Fayments
designated as interest and coming due during the slx·month period preceding each Interest
Payment Dale. The portion of Lease Payments Oesignated as interest wilh respect 10 any
Certificate shall be computed by multiplying the portio" of lease Payments deSignated as
principal with respect 10 such Certif!cate by the rale 01 Interest app'icable to such Certificate (on
the basis of a 36Ck1ay year Of twelve 3Ck1ay months).
Section 2.05 . .f..Q..rm. The CerWicates shan be denvered in tne form of lutly registered
Certif,cates without coup:ms in the denomination of $5,000 or any in1egral multiple thereof. The
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Certificates shari be asslgned such alphabetica: and numerical designarfon es sr-e.lI lJe 1eemed
appropriate by the Trustee. The Certificates shall be suoslar:tlaily in the form set forth irt Exh,bit
B attached hereto and by this le1erence in(,;OTpora~ed herein.
Section 2.06. {;xec1l1ioo. The Cel1fficaies shall be ex€!ruted by and in the name Of the
Trustee by lhe manual signa1ura of an authorizE..-'(j officer or Signato!)' of tt,e Trustee. 11 any otfJcer
or signatory whose signature 2.ppears 011 any Certificate ceases to be such officer or signatory
before the date of delivery of said Certificate, suoh signature shari nevertheless be as ef1ective
as if the officer or signatory had rernc':ined trl OfikOO until such da1e.
Seclion 2.07. AooOr--atjgo of prpceeds ar,d Other Moreys. Tl'1e proceeds recei\ied by the
Trustee 1ram the sale ot the Certificates kn the aggregate amoun! 01 $ ,
incll;.'(fing accrued intaiest, shall forthwith be set aside by the Trustee in the following respective
funds and accounts:
{a} The Trustee sha\1 dep.osit io the Lease Palment Fund an amount equal to
$ _. representmg accrued [n~eres! of ;::. _____ received with
respect to the certiticates from March 1. 1992. to the Closing Dale and capitaHzed interest of
S representing a portion of the interest due from the Closing Date to
.199
(hj The Trustee shall deposit in the Delivsry Costs FJ.md an amoun~ equal to
$._----'
(c} The Trustee shan \1ans~el an amount equal to S ___________ to the Escrow Sank
for apprlCatlO!1 in accordance w~h the previsions of the Esc-l"O'W Agieement; and
(0) The Trustee shal depoSa the remainder of said proceeds ($ ____ --'l in the 1992
ConstruCiiOn Fund,
In addition, in accordance with 'the Escrow Agreement. (a) the Prior Trustee shall withdraw
amounts on deposit in the Prior R&Serve Fund, transfer a port;on 01 such amounts to the Trustee
for deposit tn the Reserve Fund and transfer t~ remaining amounts 10 the Escrow Ban'k for
deposit in the Escrow Fund and (b) the Prior Trustee shan withdraw amounts on deposf1 in the
Prior Lease Payment Fund and transfer such amounts to 1he Escrow Bank fOf dsposit in the
Escrow Fun<!.
Sectlon 2.08. T@nsfw and Exchange.
(a) Transfer Of Ceatficates. The registration of any CertJficale may, ir, accordance wifh hs
terms. be trans!erred up::m the Registration Books by the person in whose n.ame it is r~istered,
in person or by his attorney dtJly authorized in wrftlng upon surrender of such Certificate for
cancanation at the Principai Corporate Trust Oftlce of the Trustee, accompanied by delivery af a
duly executed written instrume:'ll of transfer in a fe"rm approved by the Trustee. Whenever any
Certificate or Certificates shan be surrendered for registration of trans!er, the Trwstee shall e)(ecute
and deliver a new CertWcate or Certificates for li!<.e aggregate prinC'lpa l amount in authorL<:ed
denominations. The Trustee may require the payment by the Certi1ica!e Owner requestiO"lg such
transfer of any tax or other govem mental charge required to be paid wit,"1 respect to such transfe r"
The City shari pay aoy costs of the Trustee incurred in connection with such transfer. The
Trustee Shall not be required to transfer (il an, Certificates or p0r110n L'1ereof during the period
between the date fift~n (15) days prior to the date of selection 01 Certificates for redemptlon and
such date of selection, or (ii) any Certificates selected for redemptjon; provided, !hat such
restriCllon shan not apply to the redeemed portkln of any Certificate.
(b) E)(change of Certrflcat es . Certificates may be exchanged, upon surrender thereof, at
the Principal Corporate Trust Otfjce 'or a like aggregate prirlCipal amount 01 Certilicales ~ .cother
aulhorized denominations of the same maturity" Whenever any Certjficate or Certi1icates shall be
surrendered ror exchange, the Trustee shall execute and deHver a new Certificate or Certificates
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klr like prindpal amol!r1t in au1horized denomi;,ations. The City snan pay any C?sts of the Trustee
incurred in connectiDn with such exchanae, except that t~le Trustee ~ay reqwre the payment by
the Cef1jficate Owner requestlng such exchange 01 any tax or other governmental cnarge required
to be paid wit;-. respect to such exchange, The Clly shall pay any costs of the Trus:ee incurred
In connect'on with any such exchange. The Trus~ee shaH not be required to exchange (1) any
Certifk:ale or any portion thereof during tt-;e period betlNeen the date fifteen (15) days prior to tle
d~e of selectlorr of CertificatE.s for redemptIon a:1d such da!e of se1edion, or Vi) any Cer11ficate
selected for redemption: provr,jed, 1i1at such restricUon shal1 not apply to the redeemed portior"J of
any Certificate.
Sect,on 2.09. Certiticates Mutilated Lost po=:stroyect or Staten. If any Certifjca1e shall
become mutilated, ll1e Trustee. at the expense of the Owner Df sa~d Certificate, shall ell8cute and
deliver a new Certificate of rike tenor. maturity and amount in exchange and substitution for the
Certificate so mutilated, but onry upon surrender to the Trustee of the Certificate so mutilated.
Every mutilated Certificate so surrendered to the Trustee shall be cance-I!ed by it and destroyed
wlth a certificate of destruction fumislled 10 the City. If any Certificate shall be iost, des1royed or
sto1en, evidence of such loss, destruction or Itleft shan be submitted to 1he Trustee, and, if SUCh
evidence is satisfactory to ~le Trustee and i1 an indemnity satisfactory to the Trustee snail be
gwen. the Trustee, at the expense of the Certtficate Owner, shall execute and deliver a new
Certfficate of like tenor, maturity and amount and nLJmbered as tr-"1e Trustee shan determrne in tieu
of and in substitutior. f.;), the Certificate so lost, destroyed or stolen. The Trustee may require
payment by the City of the expenses which may be ·lncLirred by the Trustee in carrying olf.: the
duties under this Section .2.09. Any' Certificate ey.ecuted and den .... ereo' under the provisions of
this S8<.."'1ion 2.09 in lieu of any Certificate a~eged to be lost, destroyc-d or stolen 5"tlali be equarly
and fractionany entrtled to 1he benefrts of this Trus1 Ag~eement wfth all other Certificates secured
by 1his Trust Agreement Tna Trustee shaH not be req\.<ii"ed to treat both the original Cer1lficate
and any replacement Certificate as being OLItS'".anding for the purpose of determining the prfncipal
amount of Certificates which may be executed" and denvered hereunder or for the purpose of
determining any percentage of C~rtificates Outstanding hereunder, but both Vle original and
rep~acement Certificate shan be treated as one and ttle same. l'Jotwithstanding any other
provision of this Section 2.09, in ~eu of delivering a new CerUficate 10 replace a Certif~cate which
has been mu1iIated, lost, d,=stroyed or stolen, and which Mas rna_urad or has ~en call'9d for
redemption Of is about to be caHed for redemption, the Trt.<S1ee may make payment with respect
to such Certificate upon receipt of the aforemefltio fled indem nit)'.
Section 2.10. Payment. Paymen.t of interest due with respect to any Certifica1e on any
Interest Pa~ment Date shall be made to the person appearing on the Regisuation Books as the
Owner thereof as ofttle Regular Record Date immedia1ely preced1l'1g such Interest Payment Date,
such interest to be paid by cheCK mailed on the Interest Payment Date by first class marl to SUCh
Owner at his address as 11 appears on the Registration Books as of such RegL.:far Record Date
or, upon written request filed with the Trustee prior 10 th-= P.egLJlar Record Date by an Owne-r of at
leasl $1,000,000 if\ aggregate principaf amount of Certlficates, by wire transfer in immediately
available funds to an account in the United States designated by such Owner in suer, written
request Any such written requ6s1 shall remain in effect until resclnded in writing by the Owner.
The principal and redemption price w·rth respect 10 the Certificates at maturity or upon prior
redemption shall be payable by check denominated in lawful money oi the Uni1ed S1ales of
America upon surrender oj the Certificates at the Principal Corporate Trust Office of the Trus,ee.
Section 2.11. E;':8cution pf DOCllmerfts and Proof of Ownership. Any request, direction,
con~nt, revocation of consent, or other instrument in wrJtmg required or perrnit1ed by this Trust
Agreement to be signed or eXF.!cuted by Certificate Owners may be in any number ot concurrent
instruments of simOar tenor, and may be signed or execu1ed by Such Owners in person or by
their attorneys or agents apPOinted by an instrumen.t in writing for that purpose, or by any bank,
trust company or other deposftory for such Certificates. Proo! of the execution of any such
instrument, or of any lnstrumen1 appoinflng any SJ..Jch attorney or agent, and of the oW;lership of
Certificates shari be sufficfen1 for any purpose of this Trusi Agreement (except as otr.erwise
herein provided), if made in the farrowing manner:
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,a) The fact and date of the execution bl any Owner or hiS at!:orney O( agent of an~
such instrument and of any ~nstrument appointing any such at10rney CI' ,agent, may be proved by
a cartWcate, whicn need not be aCknowled~ed or verified, ('If an officer of a~y bank or trust
comp3n~ located wIthin tl'1e United States 0, America, or ot any notary public, or o~her of!\cer
aut~lOrized to take acknowledgments of deeds to be recorded in such jurisdictio!1$. U:a1 the
persons signing such inSf.rumsnts acknowledged before hfm the execution thereof. Where any
such Instrument is execl,.1:~d by 8:1 officer oT a corporation or associatior. or 2 membe~ of a
partnership on behalf of such corporation, associa:ion or partnership. such certificate shall also
coilstrtute sufficient proof of his Ccirp:>ratlon.
(b) The fact of the Dwnerst'lip cf Certificates by any person and U'le amount, the maturtty
and the numbers of such Certificates and the date of his holding the same shar; be proved by the
RegistraUon Books.
Any request or consent of :he Owner of any Certificate shan bind every future Owner of
the same Certificate in respect of anything do;,e or suflered 10 be done by t"le Trustee pursuant
to s~h request or c')nsent
Section 2. "12. Re~ratiQn BqQks. The Trustee shall keep I)r cause to be kept, a.t its
Principal Corporate Trust Ice, sufficient records for the registration and registraticn of transfer of
the Certificates, which shall al all reasonable t~mes be open 10 inspection by the City and the
Corporation during regL!:ar business hours on any BUSiness Oay with reasonable prior nolice.
Upon presentation tor such purpose, the "Trustee shan, under such reasonabie regulat10ns as it
may prescr.ibe, reglster or trans1er or cause to be registered or transfarred, on t'1e Registration
Books, Certific.ales as 1lereinbefore pr'C)vk1ed.
Section 2.13. CUSI? Numbers. The Trustee, the City and the Corporatiorl shal1 not be
tiabie for any defect Of Inaccurac), in the CUSI? number thai appears on any Certflca1e or In any
redemption notice. The Trustee may, in its clscretion, include in any redemption notice a
sta1ement1o the effect that the CUSIP numbers on the Certmcates have been assigned by an
independent service and are included in such notice solely fOf the convenience of the Owners
and tha! netther the Trustee, the City nor the Corporation shall be nable for any inaccuracies in
such numbers.
Section 2.14. Use 01 Qeoosilory. Notwilhs1anding any provision oftnis Trust Agreement
to 1I1e contrary'
(a} The Cert'iticat% shat! be initia~1j issued' registered in the name of "Cede &. Co.," as
nominee of The Oeposnory Trust Company, arKl shar. be evidenced by one Certrticate maturing
on each of the maturity dates set forth in this TruS1 Agreement to be in a denomination
corresponding 10 the lata! principal amount therein d€sJgna'ed to mature on such date, Registered
ownership of such Certificates, or any portions ttlereof, may' not thereafter be transferred except
(1) to any succeSSOr of The Deposftory Trust Company or its nominee, or
of an,r. substitute depository designa1ed pursllan110 claus;3 (2) of this subsection
(a) ( substitu-te depository~); provided that any successor of Tna Depository
Trust Compan), or swbstttute depos:tory shan be qualified under any appljcable
taws to -pfovide tr,e service proposed to be provided by jt;
(2) to any substitute depos~ory not oIJjected to by the Crty. upon Ii) the
resi~nation of The Depository Trus1 Company Of rts successor (Of any subsl!tute
depositOf)' or its sllccessor) from its functions as depoSitory or (Ii) a determination
by the City that The DepoSitory Trust Companl' or its successor is no longer able
10 carry out its functions as depository; provided that any such subs1itute
deposttory shari be qualified under any apphcabre laws to provide the se;vfces
proposed 10 be provided by ~: or
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(3) to any person as provided below, upon (i) the resignatro;, of The
Depository Trust Company or its succaSSQr (or any subsmu1e depository or rts
succeSSor) from its functions as depository of (iiJ a determ!nation by the Crt)! that
The Depository Trust Company or its $1.lCCeSSOf is no longer able tD carry ou1its
functions as depcsftory; provided that no substitute depo~ltory which is not
objecteJ to by thcl" City and the Trustee can be obtained,
(b) ~n 1h€ case of any trans'er pursuant!o clause (1} or clause {2} of Section 2.14(a)
hereof, upon receipt of an Outstanding Certificates by the Trustee, together with a Request of the
City 10 the Trustee, a single new Certificate shall be executed and deihrered 1m each maturity of
such Certificate than outstanding, reglstered in the name 01 su:::h successor or such subs:itute
depos~ory, or their nominees, as the case may be, all as specified in such Request Of the City.
111 the case of any transfer pursuan1 to clause (3) 01 Section 2.14(a) hereof, upon receipt of all
OL!tstanding Certificates by the T~.stee together with a Request of tl1e City, new CertWca1es
shall be executed and delivered in such denominations and registered in the names of such
persons as re requ~red 10 deliver such new CertJf.'C'Q;tes within a pe(fod less than 60 days from the
date of receip!: of suetl Request of L'Ie Cjty.
(e) In the casa of partial prepayment or an advance refunding of any Certificates
evidencing all of the principal maturing in a parttcu!ar year, The Depository Trust Company shari
denver the Certific;ltes to the Trustee fOf canceiJation a~d re-reglstiation to reflect t.he 8rPount of
such reduction in principal.
(d) The Cfty and the Tru5te-e sha~1 be entit~ed to tre3t the person in whose name any
Certificate is registered as the ab~Or101e Owner thereof for all purposes of this Trust Agreement
and any applicable laws, notwithstanding any not!ce to the contrary received by tl18 Trustee o~
the City, and L"e City and the Trustee shali flave no resPOr1sib~lity for Iransm1l1ing payments 10,
communicati on wjth, natlfyfng or otherwise deali ng with any benefi cial Owners of the Certfifcates.
Neither the City nor the Trustee witl ~Iave any res~nsibility or obligations, regal or otherwise, to
the beneficial Owners or to any other party inc.uding The Depository Trust Company or its
successor (Of Substitute depository or ns successor), except for the registered Owner of any
Certifica!e.
(e} So long as an outstandlng Certificates are registered in the name of Cede & Co. or fis
registered assign, the Crty and the Trust8€: shall reasonably cooperate with Cede & Co., as sole
registered Owner, or its registered assign ·In efteC"Jng payment of the pnncipal of and prepayment
premium, Ff any, 800 interest on the Certificates by arranging for payment in such manner that
funds for such payments are properly iden1~ied and are made immediately a ..... ailable on the date
they are due.
(f) 11 in the event of an invitation to tender the Ceriiflcates, notice to the OHner by the
:ru~ee specifying the terms of teoo'er and the date of such notice is to be mai!ed Of published
(the "Publication Date") shal! be in the possession afthe regfstered Owner no later than tht! dare
01 business of the day before the Publication Oa1e.
(g) So long as a~ outstanding C6rtificates are registered in the name of Cede &. Cc., or its
registared assigr. (here~nafter, for pUiposes of this subsection (g), the "Owner"), the Owner shan
provide the Trustee with written examples of signatures of those authoriz.ed to ac1 on its bena!f,
which shan be subject 10 change, and the Trustee snell accept direction in wrfting from such
persons or their designated successors on behalf of the Owner.
Section 2.15. Letter of ReQleser!j:}tiQos. Reference is r"1e r eby made to tne letter of
Representatiol1:s directed 10 The Depository Trust Company in 101m hereto attached and
incorporated herein by reference, providing for certain actions by the City and the Trustee under
specffied circumstances; in the event of conflict between the provisrons of 1his Trust Agreement
and said letter of Representations, the latter shal! control. The Director of Finance, on behalf of
the City, and the Trustee are hereby authorized to exe-cute said Letter of Representations and to
deliver it to The Depository Trust Company.
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ARTICLE III
DELIVERY COSTS FUNCl
AND CONSTRUCTION FUND
Section 3.01. peliyery Costs. Fung. The Trustee s~laH establish a special fund
ljesignatec:t as the "Delivery Costs Fund"; shall keep Such tund separate and apart from all othe.
funds and moneys held by it; and shaH administer such fund as provk:led herein. There shar! be
deposited in the Oelivery Costs Fund the proceeds of sale of the Certlflcates required 10. be
deposited therein pursuant to Section 2.07(b) hereof and any other funds from 1Ime to time
deposited with the Trustee fof such purpose and identJ1ied in wrIting to the Trustee.
Sechon 3,02. Payment of Denverv Costs. The moneys in the Delivery Costs Fund shan
be disbursed b1 the Trustee to pa1 the Delivery Costs.
The Trustee shall disburse moneys in the Delivery Costs Fund only UpOJ'1 a receipt of 8
e-.equenlia!ly numbered requiSrtioIi, wtth bills, invoices or statements attached, Sigl1ed by a GH:y
Representa1ive settir.g forth the amounts 10 be dlsbursed for payment or reimburseme:1t of
Delivery Costs and the name and address of the person or persons to whom said amounts are to
be cflsbursed, stating that the amounts to be disbursed are for Delivery Costs properly
chargeable to the Delivery Costs Fund.
The Trustee shalT be responsible for the safekeeping and investment (in accordance with
Section 8.02 hereof) at ttle moneys held in the Delivery Costs Fund and the payment thereof In
accordance with this Section 3.02, but the Trustee shari not be responsible for such requisitions
and may condusNely rely thereon without any independerlt inves1igation.
Upon written notice from a City Representative that all Delivery Costs have been paid,
but trr no event later than Ju~y 1, 1S92;lt1e Trustee shal' transfer any rnoneys then remaining in
ttle Delivery Costs Fund to the Lease Pa~'1T1ent Fund and applied to pay the-lease Paymer.~s as
the same become due and payable, tJ1e Delivery Costs Fund sha11 be c~osed arld the Trustee
shaH 00 longer be obflgated Ie make payments for Delivery Costs.
Section 3.03. Aooljr.atiQo of Construction EIJOd.
(a) There is hereby established, the Palo Alto Civic Center 1992 Project Construction
Fund {the "Construction Fund"), to be held and mainta~ned by the Trustee, separate and apart
from all other funds held by tt.
(b) AfT10unts in ~he CoostruG.1ion Fund sMail be disbursed 10; payment and reimbursement
of 1992 Project Costs. D,sbursements fromthe Construcflon Fund shall be made by the 'Trustee
upon receipt 01 a requisItion, substantially in the form he r e10 anached as Exhibit C, requesHng
disburzement and executed by a City Representati ..... e. Subject to Sl.Jb&ections (c) and (d)
hereof, each such requisition shan
~) set forth the amounts to be disburSed fOf pa,ment or reimbursement cf
previOUS payments of 1992 Projet.'1 Costs and the person or persons 10 whom
said amounts are to be disbursed;
(il) state that the amounts 10 be dIsbursea' cons'llute 1992 Projecl Costs,
tna', said amounts are required 10 be d~sbursed pursuant to a contract entered Into
the ref Of by City as agent of CorporaUon pursuant to the Agency Agreement, and
were necessar~y and reasonably incurred; and that said amounts are not being
paid in advanca of the time, t: any, flxed for payment;
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(iii) state tha1 no amount set forth in the requisition VIas inc'uded in any
requisrtion requesti~fg disbursement previously filed with tt,e Trustee pursuanl to
this Section;
C1 .... ) state thal either (1) no mechanics liens or stop r,otices with respt'ct 10
the claim described in the requisition t"lave been filed. or (ill that sufficient flJ!"Ids
have been wtthheld (after accounting for all remaining 1992 Project Costs as then
estimated) to cover any such ~ens or no:;ces 1hat have been filed; and
(v) state that the amount remaining in the C.onSlruction i="lmd, toge1her with
interest earnings thereon, wiil, after payment of the amount set fanl1 in the
r~uisition request;ng dIsbursement, be sufficient!,:, pay all remair'lir'lg 1992 Projec.1
Costs as then es~ima~ed.
(e) Subject 10 subsection (b), disbursement of funds from the Cor.strLJction Fund to
reimburse the City for 1992 Proiect Costs pc;;id priofto executlon of this Agreemen: may be paid
immediately upon csen .... ery of the Certificates. Prior to the initial (j;sbL!rsement of an~' other funds
from 1he Cor,.~'(ruction Fund following the recordation of the Lease Agreement, the City shall
depos~ wl\!1 the Trustee:
(Q the ~~rtificate of a City Representative stating that al1 approvals,
consents. licenses, certllCate$, Of permlls, which are conditions preceden110 the
construction and instanation of the 1992 Project, of any governmen,t or agency or
bureau thereof having jurisdiction with respect to the 1992 Project f1a\le been
obtained;
(ii) 1tle certificate of a CM:y Representative statif10 the plans and
specificatiOns providing for the conslruction portions of the 1992 Project have been
completed and approved by the City;
(iii) the certiftcate of the City Engineer s~ating that the site on w'hic~ the
1 m Project are to be constructed pu rsua nt to 1he plans and spec ificatlon s is the
Site descn1>ed in E>hibit B aaached to the Lease Agreement; and
(iv) the certi1ic~te of the City Engineer stating that the City Engineer has
prepared or re\liewed the plans and speciffCa1lons for the construction of th'9 1992
Project and that the construction contract therefor provides for the cons1fUction of
the 1992 Project m accordance 'Nith the p~ans and speclffcatlons the refer.
(d) Each requisiticn requesting d1sbursement which is submitted pursuant to subsection
(b) and which relates 10 disbursement for construction or installa1ion of a portion of the 1992
Projec~ shall be accompanied by the certificate of the City Engineer approvir.g the requisition
requesting dlsrAJrsement arx1 certifying that insofar as such requisition relates to payment fO(
work, materials, equipment or supplies, such work was actually performed. or such materials.
equipment or supplies were actuai1y installed in furtherance of the constructlon and instatlation of
the 1992 Project or delivered to the Srte for sucll purpose, or delivered for storage or faoncatjon at
a place approved by the City.
(e) Any amounts remaining in the Construclion Fund upon payment c.f the entire 1992
Project Costs shall be deposited by the Trustee in the Lease Payment Fund and the
Construction Fund sl1a!1 be closed.
{'t1 The Tn;stee shaii not be responsib1e for 1he representations made in such requisition
and may conclusrveli rely thereon withD~ any independent m .... esligaHon.
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ARTICLE IV
REDEMPTION OF CERTIFICI>.TES
Section 4.01. Redemption.
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{a) Ogljona) Redf!mDtior.. The Certificates matur'll'1g on or before March 1,2001, are not
subj&Ct to optional redemption prior to maturity. The Certrficates maturing on or after MarC~ 1,
2002, a~e subject 10 redemption in whole or in part on any Interest Payment D8te (but not In a
!otar redemption amount of tess ti1an $20,000 in prtnclpal at anyone tirT',e) on or after March 1,
2C01, at the redemption price set forth belOw (ex.pressed as a percentage ot the total princ;ipal
amount 10 be rOOeemed), together wfth accrued interest ur.pa~d with respect thereto to the 6at'3
fixed for redemption, from the proceeds of optional prepayments of LeEse Payrnen1s made b,' the
City pursuant to Section 10..2 of the Lease Agreement
E edem ptiQ!') 0 gte
March 1,2001 aoo September 1,2001
March I, 2002 and September I , 2002
March I, 2003 and each September 1
and Marci1 1 thereafter
Redemptioo Price
102%
101
100
(b) BedempttQn From Ne! Proceeds Of Insurance Tille rnsurance Condemnation or
Eminent t'Xlmarn Award. The Certificates are subJ~ct to extraord1naij mandatory redemption in
whole on any date or in par\. on any interest Payment Date (but not in a total redemptian a,(10unt
of less than $20,000 in principal at anyone time) from the Net Proceeds of arl insurance, title
insurance, co!'ldemnation, Of em inent domain award to the extent crearted towards the prep3yment
of the Lease Payment. by the City pursuant to Section 10.S of 1he ~ease Agreemen~ sl a
redemption prlce eq1lal to the prinCipal amount thereof to be redeemed, together with accrued
interest to the date lL<ed fa< redemplioo, withOtJI premium.
(c) Mandatpry Redemption.
~) Certificatps Maturing March 1 . The Certificates maturing on March 1,
__ , are subject to mandatory redemption in part on March 1 in each year on and after
March 1, ----' from the principal components of schedu!ed Lease Payments required 10
be paid by the City pu,"uant 10 Section 4,4 of tl1e Lease Agreement with respect 10 each
such redemption date, at a redemption price equal to the principal amount thereof to 00
redeemed, together w~h accrued imerest to the date fixed lor redemption, wtthout p~emiu:m.
as follows:
Redem ption Dale
(March 1)
Principal AmolJnt
of Cerofica:tes
10 be Redeemed
Redemption Date
(Mard'11)
Prncipal Amount
of Certificates
to be Redeemed
11'1 tt1e evenlthat the Trustee shan redeem the Certifica1es maturing on March 1,
__ , in part but not in whole pursuant to subsections (a) or (b) 01 this Section 4.01, the
amount of the Certificates to be redeemed in each subsequent year purSuant to this
subsection (el shall be reduced pro rara to correspond to the principal components of the
Lease Payments prevailing following such redemption, determined as set forth in Section
4.401 the Lease Agreement.
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(Ii) Certificates Maturing Marr.l1 i . The Certificates maturing Or"! March',
__ , are subject 10 !'l1andatory (edemption in par! on March 1 in eactl year on 2r1d after
March ~, __ , from the princ;pa~ comporlen1s of schedured Lease Paym€nts required to
be: pa~'Cl. by the Crty pursuant to Section 4.4 of the Lease Agreament with respect to eac~,
such redemption date, at a redemption pdce equal to the prfncipal amounl thereot to be
redaemed, together wfth accrued interest 10 the date fixed for redemption, without piemium,
as follows:
qedemption Date
(Marc;, 1)
Principal Am ou rrt
of Certfficates
to b£ Redeemed
Redemption Coate
(March 1)
Principal Amoum:
of cert!flCates
to be Redeemed
in the event that ths Trustee shan redeem the CerWicates maturing on March 1,
__ , in part but not in wilDie pursuant 10 subse<:Uons (al or (hI ,,1 tRis Section 4.01, I~e
amount of the Certifica1es to be redeemed jn each subsequent year pursuant to thls
subsection 'c) shan be reduced pro rata to correspond to the principal componel'1ts of the
Lease Payme::ts prevailing ionawing such redemption, determined: as set ionh In SeC1ion
4.4 of ~e Lease Agreement
Section 4.02. Selection of Ge1ificates for Redamotioo. Vifhenever provision is mClde In
this Trust Agreement for the redemption of Certificates .and less than al! Outstand1ng Cert[ficates
are to be redeemed, the Trustee stlan select Certificates for redemption from the OutstanoJng
CertifICates not previousl¥ called for redemption m such manner as the City shan determine. The
Trus1ee sha~ select Certificates for redemption within a maturity by klt in any maimer whlctltha
Trustee shan, in its sole discretion, ooom appropriate and fair. FOfthe purposes of such selection,
Cerlrncales shall be deemed 10 be composed of $5,000 portions and any suc~ portion mal 00
separately redeemed, The TrlJStee shal~ promptl~' notify the City and tt~e COrporation in wriHng
of the certificates so selected for redemption. Selection by the Trustee ot Certiflcates for
,edemption shall be !nal and conclusive.
Section 4.03. Notice of Redemption. Unless waived in writing by any Owner of a
Certtficate to be redeemed, notice of any sucl'1 redemption shaH be given by tM Trustee on
behalf and at the expense of the Ctfy by mailing a copy of a redemption notice by flrs1 dzss mail
at least ~irty (30) days aoc' 001 more tf1an sixty (60) days prior 10 tr,e date ~xed for redempUon to
such Owner of the Certi1lc.ate or Certi1lcates 10 be redeemed at the address shown on trle
Certificate registration books maintained by the Trustae or at suCh Ottj8T aDdress as is furnishEd in
writing by such Owner to the Trustee; provided, however, 1hat ne'fher the faHllre 10 receive such
notice nor any defect in an]' notice shall affect thE:: SuffiC'8l'1CY 0: the proveedings for the
rederrpticn of tile Certifica1es.
AIl notices cf (edempt1on shal! be dated and shari state: (i) the redemption date; (i~ the
redempticn price; (iii) if tess than all OutstaOOlng Cert[f~cates are to be redeemed, the Cert[ficate
numbers ,and, in the case of partial redemption, the respective principal amounts) of the
Certificates to be redeemed; (iv) that an the redl9mpt~on date the redemption prlce wilt become
due and ~yable upon each such Certificate or portion thereof called for redemp1ion and that
interest with respect thereto shall cease 10 accrue from and after said date: III) the place where
such Certificales are to be surrendered for payment 0' the redemption pr;,:::e, which place of
payment shan be U1e Principal Corporate Trust Office of the Trustee; (vQ the CUSIP numbers of
an Certl1icates being redeemed; {vii) the original date of execution and delivery of the Cen,Jiicates;
(viiO the rate of Lnter~t payabie with respect to eaC~1 Certificate being redeemed; (ix) the maturity
date of each Cf''1.ificate being redeemed; and ():) any other descriptive information needed 10
identify accuratel} the Certlfica1es being redeemed.
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Prior to any redemption dalE:, the City shaU deposit, or cause to be deposited, wtth the
Trustee an amoul,t of mone,' sufficlent to pay the redemption pdCB of arl the Certif~ca:es or
portions of Certificates which are to be redeemed ,:m ttlat date.
Notice of redemption havIng been given as afore::said and tlie deposit ()~ the redemption
price having been made by the City, the Certificates or portions of Certificates so to be
redeemed sfian, on the redemptIon date, become due and payable at the redemption price t~lerein
specif}ed, and from and after such dale (unless the City shall defa!J11 in t~le pa,.ment of the
redemptiOrl price) interest wr1h rpspect to such Certificates or por1l0ns of Certificates shal1 cease
to be payable. upon surrender of sucli CertifiCa1es for redemption in accordance with said not~ce,
such Certificates shall be paid by the Trustee at the redemption price. Upon the payment of the
redemption Plica (If Certificates being redeemed, each checloo:. or other transier of fl1nOS Issued 10r
SUCt""1 purpose shalJ bear the CUSIP number ~ntifling, by .issue and maturity, the Certificates
being redeemed wTth the proceeds of ~uch check or other trar~sfer, to the extent possibre.
Installments of interest due on Dr prior 10 the redemption date shall be payable as hereir. provided
fOf payment of interest All Certmcates which have baen redeemed snail be cancelled b~' the
Trustee, shall not be reissued' and shall be destroyed pursl.!an! to Soction 14.07.
[n addttion to H',e foregoing notice, notice st\a11 be given by the Trustee, by terec.~y Of
first class ma~, to all SecuriIies Deposrtcries two BU2ifness Dqys prior to the date of rnaillng of
notice to the Owners and to an Informa1ion Service on the date such notice is mailed to the
Owners, which shall state the informa1\on set forth above, b1.r! no defect in said r.otice nor any
failure to gh/e an or any portion of such further notice shan in any manner defeat the effectiveness
of a call tx redemption If notice thereof ls given as prescrit.ed above.
The Trustee shall have no responsibinty for a defect in the CUSIP number 1hat appears
on any Certificate or in the redemption notice. The redemption notice may provide 1hat the
CUS!P numbers; have been assigned by an independent servlce and are included ill O1e rrotice
solery for the convenience of Certificate Owners and 1hat the Trustee and the City ~hall not be
rl3ble in any way for lnaccura~es in said numbers.
Section 4.04. radial BedcmoUoo Qf Certificate. Upon surrender of any Certificate
redeemed in part cnly. 1he Trus1ee shall execute and deliver to Ihe Owner thereof, at the
expense of the City. a new Certificate or Certificates of authorized denominations equal in
aggregate principal amoun'i. to the unredeemed portfon 01 the Cer1i!icate surrendered and 011he
$Sme interest rate and lhe same maturity.
Section 4.05. ~.urchase of Ce~. In ~eu 01 redemption of Cert1f1cates as provided in
thi~ I'.rticle IV, amounts held by tne Trustea for such redemption may also be used on an~'
Interest Payme>ll Date, upo~ receipt by the Trustee at least ninety, (90) day'S prior to the next
scheduled Inte~est Payment Date of the written request of a City Rep r esenlative, for the
purchase of Certificates at public or private sale as and when and at suerl prices (including
brokerage, accrued interest and other charges) as 1he City may in ~s discreUon direct, but not to
exceed the redemption price which would be payable if such Ceruficates were redeemed;
provided, however, 1ha1 no Certificates shall be purchased in lieu of redemptlon wtth a trade
settlement date less than sel,lenty~fil,le (75) days prior to the relevant redemptio:1 date. The
aggregate princ~a1 amount of Certrficates o~ the same maturity purchased in fieu of iedemptkm
pursuant 10 1hlS Section 4.05 shali no1 exceed the aggJegate principal amount of Certificates of
such maturtty which would otherwise be subject to such redemption. Remaining moneys, if any,
shan be depos~ed in the Lease Payment Fund.
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ARTiCLE V
LEASE PAYI-.'ENTS; LEASE PAYMENT FUND
Section 5.C1. Assignment Of Rights in Lease Agreement. The Corporation has, 1n. the
Assignmenl Agreement, transferred, assjgned and se1 over to the Trus1ee certain of its rights but
only those obligalians set forth in the lease Agreement, including but not limited to aJi of the
Corporation's rights 10 receive and coilect Lease Payments and al! olher amounts required to be
deposited 111 1he lease Payment Fund pursuant to the Lease Agreement or pursuanl herelo. AH
Lease Payments and such ottler amounts to which the Corporation may at ar.y rime be en1jtled
shaH be paid direc~y 10 the Trustee and all at the tease Paymenls collected or re:eeh'ed by the
Corporation ~hall be deemed 1.0 be held and to have been colieeled or received by the
Corporation as the agent of the Trustee, and if received by the Corpcratiorl at any time shan be
deposrted by the Corporation with the Trustee within one BUSiness Day after the receipt thereof,
and all SLIch Lease Payments and such other amouflts shall be forthwith deposi!ed by the
Trustee upon the receipt thereof in the lease Payment Fund (except as provided ~n Section 6.04
hereo~.
S~::lon 5,02. Estabnshmflnt Of lease Pa'lment Fund. The Trustee sha!1 establish a
special flmd designated as the "Lease Payment Fund". Arl mOrfeys al any time deposited by the
Trustee in 1he Lease Pa~ment Fund sha!1 be held by the Trustee in trust for the benefit of the
Owners of the Certificates. So lon9 as any Certificates are Outstandirlg, neither the City nor the
Corporation sha!1 nave any belleffCial right or interes: in the Lease Payment Fund or the mone,'s
deposited therein, e)(cept only as provided in this Trust Agreement, ar.d suctl moneys shal1 be
used and applied by the Trustee as tlereinafter set forth.
Section 5.u3 . .tl1lll.C..Sl1.S:. There shan be depas;'!ed in the Lease Payment FUM alT Lease
Payments received by the Trust~ (except as provided in SectJon 6:04 hereof), including any
moneys received by the Trustee for deposit therein pUiSuant to Sectons 2.07(a), 4.01, 5.01 or
Article VII hereof, or Article X of the Lease Agreement, and any other moneys required 10 be
deposited therern pursuant to the Lease Agreement or pursuant to thiS Trust Agreement
Sect'lon 5.04. AppIjcalioo of Moneys. All amounts in the Lease Payment fund sfiatl be
used and Wlthctrawn by the Trustee solely for the DLlroose of paying the principal, interest ar.d
redemption premiums (if any) with respect to the Certificates as the same shall become due and
payable in accordance wtth the provisions of Article II and Article rv hereof.
SeC1ion 5.05. SllrpllJs. Any sLlrplus remaining 111 the Lease Paymen! Fund after
redemption andlor payJ":"'lent of all Certjficate~, including premiums and accrued interest (if any) and
payment of any appllcab!e fees a"d expenses to the Trustee, or provisi;:m for sucn redemption
or pa~'!T1ent ha\llTlg been made to the satisfaction of lr,e TTuslee, shall be withdrawn by Ifl€
Trustee and rem!tted to the Cjty.
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ARTICLE VI
RESERVE FUND
Seclion 6.01. EstabOsbmenf 01 ResefVe 8J.n.d. The Trustee shall est.a.bfish a spec~al fUi"ld
d~s!gnated as the "Aes9rve Fur.c." Ail moneys a1 af1Y time on deposit in the Reserve Fund shar!
be held by the Trustee in ti'ust for the benefit of the Owners of the Certificates, and aprHed
solely as provided herein.
Section 6.02. DeQOsits. In accordance with the Escrow Agreement, the Prlor Trustee shail
transfer amounls on deposf1 in the Prior Reserve Fund to the Trustee 1m deposit in the Reserve
Fund.
Amounts on deposit in the Reserve Fund shall, at an times, be invested in Permitted
investments, 0( a combinatton thereof, which shari be heid in trust as a reserve fer the payment
when due of the lease Paymen1s.
Section S.03. Transfers Qf Excess. The Trustee shall, on each February 23 and Augus1
26, transfer any moneys in 1he Reserve Fund then in Blfcess of the Reserve Requirement lo the
Lease Payment Fund, 10 be crearted to 111e Lease Paymer.1s due and payable on said dates.
Section 0.04. Appr.calioo in Eyenl of Deficiency in Lease PaymeTit Fund. If, on any
Interest Payment Dale, the moneys availabJe in the Lease Payment Fund do not equal1he
amount of the principal, interest and redemption premium (if any) with respe~1 to the Certificates
1hen corning due arId pa~able; the Trustee shall apply the moneys s'Jai\ab\e in the Reserve
Fund to make delinquent Lease Payments on behalf of the City by transferring UIB amC'unt
necessary for this purpose 10 the Lease Payment Fund.
Upon receipt ot any delinquent lease Payment or portion thereof or other funds w1\h
respectto wnich moneys have been advanced from the Reserve Fund, such lease Pa,'ment or
portion thereof a r other funds shall be deposited by the Trustee in the Reserve Fund
Se..."'tion 6.05. Transfer TO Make AlileasB Payments, If, on any lnterest Payment Date,
the moneys on deposit in the ReseNe FJ..md and the lease Payment Fund (excluding amoun1S
required for payment of principal, interest and redemption premium (if any) With respect to
Certificates not presented for payment) are suffiCient to pay all Outstanding CertWcates, including
all principal, interest and redemption premiums (rf any), the Trustee sharr, upon the written
direction of a City Representative, transfer all amounts then on depostt in the Reserve Fund to
the Lease Payment Fund to be app~ed to the paymenl of the Lease Payments on behalf of tt"l.€
Cny, and such moneys shall be dlstribu1ed to the Owr.ers of Certificates i,l accordance with
Articles II and IV of tllis Trust Agreement. Any amounts remain.ing in the Reserve Fund Up0rl
payment ir"l fun of an Ou1standing Certlffc&tes and all amounts due the Trustee hereunder, or upon
provision for such payment as provided in Section 14.01. shan be wrthdrawn by 1he Trus!ee and
paid to the City.
Section 6.06. Letter of Credit in lieu of making the Reserve Requlremeni deposit in
compliance with Section 6.02, Of in subst!tl!!ion therefor, the City ma~ deliver to the Trus1ee an
irrevocable letter of credit issued by a financial institution hav!("Ig unsecured debt obliga1ions ra1ed
In one of the two nighest rating categories of Moody's and SSP, in an amount, together whh
moneys, Federal Securities or Qualified Surely Bonds on oeposi1 in the Reserve Fund, equal to
the Reserve Requirement. Such letter of credit shalt have a term no less than three (3) years Ai.
least one year 'priDe" to the stated expiration of such letter of credit, the City shall deliver to the
Trustee either (I) a replacement letter of credlt, (ii) an extension of the letter o~ credit for at least aT1
additional year, or {iii) a Qualified Surety Bond. Upon deli .... ery 01 such replacement ~tter 01 credit,
elrct:ension of the letter of crea'it, or bond, the Trustee shall deliver the then-effectlve letter ot credit
to or upon 1hfl order of the City. If tne Cl1y sha!! fa~ to deposit a replacemerH leNer of credh,
extension of the letter of credit. or bond wtth the Trustee, the City shall immediatety commence to
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make quarterly deposits ~ith the Trustee so that an amount equal to the ReseNB Requfremerrt is
on deposit in the Reser"e Fund no-later than the stated expiration date of the letter 01 credit. If no
such deposits are made, the Twstee shall draw on the let!er ot credit in ar: amountsuch tha' the
Reserve Recjuirement will be met If a drawing is made en the leller 01 ereclit, the Crty s."all ma":e
such payments as may be requlred by the terms of the letter of credit or any obligations related
thereto (bl/t no less than quarterly pro rata paymen1E) so tllat the letter of creel! sha~. absent the
delivery to the Trustee of • Qualitied Surety 60nd or the d~posit in the Reserve Fund of an
amount sufficier1t to inc~e3se the balance in 1he ReselVG Fund to the Reserlle Requirement, be
reinsta1ed to the amount of such drawing within one yea! oft~e date of such Drawing.
Section 6.07. Qqa!jfied Surety Bond. Ir, lieu of making the Reserve Requirement in
compliance with SectiOn 6.02 or SectiOn 5.OS, Of in substitution therefor, at an1 time and from time
to time, the City may deliver to tne Trustea one or mOTe Qualified Surety Bonds. Any such
Qualified Surety Bond shan provide that the Trt;S1ee is entitled to draw amounts the.eunder when
required by the provisions of tnis Trust Agreement to make transfers trom the Reserve Funa to
the Lease Payment Fund in the Client of a deficiency in any such account, provided the!, in any
such event, the Trustee shall first apply to any such deficiency the amoun1 of cash 0riCiuding
cash represented by investments) then on depos1t in the Reserve FUM.
Section 6.OB. Cash 10 lhe.Qh:. To the extent that the Reserve Requirement has been
satisfied by delivery of a letter of creart undef Section 6.06. a Quafified Surety Bond under
SecfJon 6.07, or any combinatlor. thereof, any cash or Permitted JnvestmenlS on deposit in the
Res&Ve Fund shan be paid by the Trustee to the C~y .
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ARTICLE VII
INSURANCE AND CONDEMNATION FUND; INSURANCE;
EMINENT DOMAIN; TITLE INSURANCE
Section 7.01. Establishment of InsllfanGe at1d Condemnation Fund' Aoplication of ~
proceeds pf rnswacce Award.
(a) A"'IY Net Proceeds of Insurance against acck1ent to or destruction of any part of the
Project conected by the City in the even! ot any such accident or destr;,.JC110il sha!1 be pard to lhe
Truslee by the City pursuant to Section 6.2(a) of the Lease Agree",e,t and deposited by the
Trustee promptly upon receipt thereof in a special fund des~gnated as the "jnsurance and
Condemnation Fund" to be crea1ed by the Trustee upon receipt of any such Net Proceeds.
{b) Within ninety (90) days following the date of such deposit, Ihe City shall delermiM
and notify the Trustee 1n writing of Fts. determinaticn either (i) that the rep~aCemE:ilt repair,
restora1ion, mooilcation or improvement of the Project is not economfcany feasible or in the best
interest of 1he City, or OQ that an '" a portion of such Net Proceeds are 10 t>e applied 10 !he prompt
replacement. repair, restoration. mocfrficaUOn Of rnprovement of the damaged (J( destroyed portions
of !he Project .
(e) In the event the City's determination is as set forth in ciause (i) of paragraph (0)
above, such Net Proceeds shall t>e promptly transferred by the Trustee 10 the Lease "ayment
Fund, applied 10 the prepayment of Lease Payments pU"rsuant to Section 10.3 of the Lease
Agreemen1 and appfled to the redemption of Certificates as provided in Sectio" 4.01 (b) hereof;
provided, however, that in the event of damage or destruction of the Project in. full, St.Jch Net
Proceeds may be transferred to the lease Payment Fund on~y if suff~cient, 10gether with other
moneys available tt,erefor. to cause the prepayment of the principal components 01 a~1 unpaid
lease Payments allocable 10 trje Project pursuant to Section 10.3 01 the lease Agreement;
provided further, however, that in 1he event of damage Of destruction of the Project in part, such
Net Pf~s may be transferred to the Lease Payment Fund and appl1ed to the prepayment of
Lease ?aj'1T'lents only tf the resulting Lease Payments represent fair consideration for the
remaining poruons of 1I1e Project, evidenced by a oeruflCate signed by a City Represeotalive and
a Corpot'ation Representative
(dJ In the event the City'S determination is as set forth 'In clause eH) of paragrapn {bJ
above. Net Proceeds deposited ir. the Insurance and Condemnation Fund shall be applied to ~hC
prompt re:placement. repair, restoration, modification or improvement of tne damaged Q( destroyed
portions 01 the Project by the City, and disbursed by the Trustee vpon receipt of requisitiJnS
signed by a City Representative stating with respect ~o eacll payment to be made (I} the
requisition number, ~i} the name and address of the person, 'firm Of Corporation to whom payment
is due, (iii) the amount to be pafd and (iv) that eacll obligation men!io.,ed therein has been
p."oper1y incurred. fs a proper charge against the fnsul"ance and Condemnation Fund, has flat
been the basis of any previous withdfawal, and specifyIng in reasonable detail the nature of the
obIigaHon, accompanied by a bill or a statement of account lor such obHgation. The Trustee shall
I"IOt be responsible 10( such requisnions and may conclusively rely thereon. Any balance of the
Net Proceeds remaining after sucl1 work has been compleled shall t>e paid 10 !he City.
Secflon 7.02. hppjication'Qf Ne1 Proceeds of Eminenl Domain Award. tf all or any part of
the Project shan be taken by eminent domaln proceedings (or sold to a govemmenl rnreatenfng to
exercise the power of emInent domain) 1he Net Pmceeds there!rom shall be deposited witt11he
Trustee in the Insurance and Condemnation Fund pursuant to Sec1ion 6.2(b) of the Lease
Agreement and sha!1 be applied and disbursed by the Trustee as foilows:
(a) If the City has given written noHce t.J the Trustee of its dewrmina1ion that ti) such
eminent domain oroceedlngs hal/e not maTerially a1iectBd the operation of the Project or the ability
of the City to meet any of its obligations wit~ respect to the Project under the Lease Agreement,
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and (ii) such proceeds are not needed for repair or rehabilitation of the Project, the City shall so
certtfy to the Trustee and the Trl.lstee, a1 the C1!y's written request shall transfer such proceeds
to tJlB Lease Payment Fund to be credited towards tne prepayment of the Lease Payments
pursuant to Section 10.3 of the lease Agreement and applied to the redemption of Certificates in
the manner prollJded in Section 4.01 (0) t.ereof.
(b) If the City has given written notice to the Trustee of its de1erminati0l1 that {r) such
eminent domain proceedings have not materiatly affected the operation of the Project Of the abiHty
of the City to m€la~. any of its obHgations with respe~ t.o the Project. under the lease Ag~eement,
aod Oil suci1 proceeds are needed (or repair, rehabilrtation or replacement of the ?rojec!, the: City
shall so certify to the Trustee and the Truste-e, at the City's written request, shari pay to t~e CJty,
or 10 its order, from said proceeds such amounts as the City may expend for such repair or
rehal>tTrta~on, upon 111<! filing with!he TruS!ee Of rsquisitions of the City Representative in the form
and containing the provisions set 10rth in Section 7.01.
(c) H (i) less than all of the Project shall have been taken in such emir,ent domain
proceedings or saki to a government threatening the use of eminent domain powers, and if the
City has given written notice to the Trustee 01 its determination that suell eminent domain
proceedings have materially affected t/1e operation 01 the Project or the abilitY of the City to meet
",.y 01 its Obligations wi!h respect to the Project under 1I1e Lease Agreement 0( Iii) all 01 the Project
sha~ have been taken in such eminent domain proceedings, then the Trus'ee shall transfe; such
proceeds to the Lease Payment Fund to be cre-:1ited toward the prepayment of the Lease
Payments pursuan1 to SectIon 10.3 of tile Lease Agreement and applied to the redemption of
Certificates in the manner provided i/14.01 (b) hereof.
(d) In making any determination under lIlis Section 7.02, the Coy may, but shall not be
required to, obtain at its expense, the report of an independent engineer or other independent
protessional consultant, a copy of which sha!] be f!l00 wltl1 th€ Trustee. Any slJch determir.atlol1
by the Cijy sil an be final.
Section 7.03. Appiicatign of Net proceeds pf Trtle IOSurance Award. The Net Proceeds
from a title insuranc9 award shall be depoSited with the Trustee in the Insurance and
Condemnation Fund pursuant 10 Section 6.2(0) of the Lease Agreement and shall be transferred
to the Lease Payment Fund to be credited towards the prepayment of Lease Payments required
to be paid pursuan110 Section 10.3 of the Lease Agreement and applied 10 the redemption of
CertiflCates in the manner proOOed in Section 4.0iCb).
Section 7.04. Cooperation. The Corporation and the Trustee st"lali coopera1e fuily with
!he City. at the expense of the City. in fili r.g any proof of foss wit h respect to any jnsu r ance
polley maintained pursuant 10 Article \' of the Lease Agreement and in the prosecution 0( defense
of any prospectrve or pending CCYldemnaiion proceeding wilh respect to the Project or any purtion
ihereof. Neftht!f the Trustee nor the Corpola110rl shar. be obligated to join in suer, action tit
reasonably beneves it wilJ be exposed to liabifity or has not been indemnified to its satisfaction
from any loss, flability Of expense including. but not limited to, attorneys "tees.
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ARTICLE VIII
MONEYS IN FUNDS; INVESTMENT
SectiO(\ 8.0'. Held in Trust The moneys and investments held by the Trustee under th!s
Trtlst Agreement are irrevocably held in trust for the ben~fjt of the Owners of the Certificaies and
for 1he purposes herein specified and such moneys, and any income or interest earned tr-.ereon.
shail be expended only as provided in this Trust Agreement and shall not {except as set forth in
Section 9.03 hereof} be subject to levy, attachment or Iler. by or '0( the benefit of any creditor of
t'":e Corporation, the Tn.Jstee, tho City or any Owner of Certificates.
Section 8.02. Investments AuthQrized. Moneys held by the Trustee hereunder sh3H,
upon wriHen order of a City Representative received by the Trustee at least two (2) Business
Days prior 10 investment, be invested and reinvested by the Trustee in Permitted Investments.
If a Crty Representative shait fa~ 10 SO cfrreci investments, the Trustee shaH invest the aHected
moneys in Permttted Investments described in paragraph (d) of the def:nitfon thereof. Such
investments, if registrable. shall be registered in the name of and herd by the Trustee or Hs
nominee. The Trustee may purchase or sell to it5el1 aT any at1"lIta1e. as principal or agent,
investments authorized by this Se=tlon 8.02. Such in .... estments and reinvesiments .shall be
made gMng fun consideration ~o the time at which fwnds are required 10 be avanable. The Trustee
may act 8S principal or agent in the making or disposing of any investment For investment
purposes, the Trustee may torr-min.gle the funds and accQunts established hereur,oef but shall
account separately ror each fund and account.
Section 8.C3. ACC9IJoting. The Trustee shari fUfOish to the City, at least monthly, an
accounting which may be in the form of fls customary accounting statements of an investments
made by the Tw:::tee. The Trustee shall not be responslble or liable for e.ny loss suHered in
connection with any investment of funds made by it in accordance with Section 8.02 hereof.
Section 8.04. NlocatiQn gr earnings' V..a.!.l.Le. An inleres1 or income received by the Trustee
on lnvestment 01 the lease Payment FWrd hereof shall, as recehted, be retained in the lease
Payment Fund. Amounts retained or depos~ed in the Lease Payment Fund pursuant to thls
Section 8.04 shall be applied as a crOOij against the Lease Payment due by tl1e City pursuant to
the Lease Agreement on the Lease Payment Date follOWing the date of depos1t. All interest Of
ir::come received by the irustee on investment of the Reserve Fund shali priOT 10 the Completion
Date, be transferred 10 the Construct~on Fund and 1hereafter be retained in the Reserve Fund in
1he event that amouo1s on deposit in ttle Reserve Fund are fess than the Reserve Requirement.
Pursuant to Section 6.03 hereof, in the event 1hat amounts tr,en on depostt in the Reserve Fund
equa~ Of exceed the Reserve Requir~ment, such e~(;eS5 shan, as rBeeNed, be tr;::.n.~~erred to the
Lease Pa~ment Fund. Transfers to the Lease Payment Fund from the Reserve Fund shall be
made by the Trustee on or priOf to each February 23 and August 26. An in1erest or income in the
Defivery Costs Fund shall be retained ir.1he Delivery Cos1s Fund until the DeHvery Costs Fund
is closed pursuant 10 SecfKln 3.02 h "'oot.
"V~ue" as, of any partiCt.llar time of determina11on, means that the val!Je 01 an~ Permitted
Investments shan b:5! calculated as foJlows:
(a) as to investments 1he bid and asked prices 01 which are publiShed on a regular basis
in The Wall Street Journal (or, if not therE, then in The New York T,mes 0'" in computerized
info;matlon services that report such information), the average of the Nd and asked prices for
such irwestrnents so pul)11stled an or mos1 recently prior to such time of determInation;
(b) as to inyestments the b~d and asl<ed prices of which are not pubnshed on a re~l.J:ar
bas[s in The Wart Street Jouma/or The New York T!mes or in computerized infurmation services,
the average bid price at such time of determination for such investments by any two nationally
rBcogniz-ed govemmer.t sccur(ties deale.rs (se1ected b':l the "Trustee In (ts abso!U1e discretion) at
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the time making a market in such investments or the bid price pubnsf'1ed by a natio r1ally
fecognized pricing service;
(c) cC; to certificates of deposit and bankers acceptances, the ~ace amount therE!ol, plus
accruad interest; and
,d) as to any investment net specified above, ,the value there'Jf establisheo' by prior
agreement among the City and the Trustee.
If more than O!"le prOViSlO!1 of this definition o~ "\talue" sha!1 apply at any time to any
parocular investment, the value tt'lereo! at suc~ time shall be determined in accorljance witr~ the
provisjoll estabrtshing tr,e lowest vahJe for such invesbnenl
Section B.05. NQ Artlitroge. The City shall not taxe, or p"rm~ or suffer 10 be taken by the
Trostee Of' otherwise, any action with respect to the gross proceeds of ttle Certificates which if
such aelion had been reasonabfy expected to have been taken. N had been deliberately and
intentlonany taken, on the Closing Date would have caused 1he Certificates or the Lease
Agreement to be "artl~rage OOnds· within the meaning of section 146(a) of the Cooe and
Regulations.
Section 8.06. Rebate of Excess Investment Earnjngs 10 United Stales The City
covenants that :t wHi assure compliance with reqviremFmts for rebate 0' excess if1vestment
earnings 10 the federal government in accordance with section 148{f) -of the Code and
Regulations, to ttre extent appiicable. Under flO circumstances shan the Trustee be responsibfe
b'the caIculation 01 rebale.
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ARTICLE IX
THE TRUSTEE
Sec110n 9.01. Appointment of Trustee. Tne Trustee is hereby a~?Ointed 10 serve as
trustee, registrar orld paying agent by the Corpcraticn and the Ci:y for the purpose of receiving
an moneys required 10 be depos'ted with the Irustee hereunder and '0 anocate, use and apply
the same as pro .... idad in thiS Trust Agreement. The Corpara!lon arxl tne City agree that they will
maif'ltain a Trustee which snail be a corporailon Oi association organized and doing business
uode-r the taws of any state of the United States of America or1he Drstr~r.:1 of Columbia, aLrthorized
under such laws to exercise corporate trust powers, which sna!1 have (or, in the case or a
COrporation included in a bank holding compar,y system, the rela!ed banK liordfng company shari
have) a COmbined capfi:at and surplus of at least seventy-five million dollars {$75,OOQ,OOO),
subiect to supervision Of examination by federal or State au1nori:y, so lang as any Certlfica:es
are Outstanding. If such corporation or associa1ion publishes a repar1 of conjition at leas1
annuaIly pursuanll!> jaw or 10 the reqUirements of any supmvisrna or examining Corporatfon
above referred 10 then for the purpose of this Section 9.01, the combirled capital and surplus of
such corporation shall be deemed to be lis combined capital and surph.lS as set forth in its most
recent report of concfrjon SO poblished, In case at any time the T!usteE! snail cease to be ertgible
in accordance with the provisions of this Section 9.01, the Trustee sha!1 resign immediate!)' in 1.J'le
marmer and with the effect s:pec~fl€d in Se:;tion 9.07.
The Trustee is hereby authorized to pay the Cer:Jfica1es when duly presented for
payme:nt at maturity, or on redemption, or on purchase by the Trustee prfm to maturity in
accordance w!th Section 4.05 hereof, and tn cancel all Certificates upon paymeflt thereof. The
Trustee shaH keep reccrd~ in accordance with industry standards of ali 'funds adm\n\s~ered b~ it
and 01 an Certificates paid and cfischarged. The Trustee shall be compensated for ~s ser'..':ces
rendered pursuant :0 the provisions of this Trust Agreemerit.
Section 9.02. Acceplance of TfllSls. The Trtlstee hereby accepls the trusts imposoo
upon it by this Trust Agreement i:'.nd agrees to perform sald trusts, but only upon ana' subject to
the ioiiowing express tmms and co nd"rtions:
Ca) The Trustee. prior to the occurrence of an Event of De1ault and after the curing 0(
waiver of all Events of Default whlch may have occurred, undertakes to perform such duties and
onty such duties as are specmcany set forth in tni5 Trust Agreement and no imp!ied duties Of
obligations, fiduciary or othenwise, 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) ihe Trustee may
exercise such of the rights and powers vested in i1 tJy this Trust Agreement and shall use the
same degree of ~are and skill In their exercrso as a F!(;dent a'1d reasonable person would
exercise Of use under the orcumstances in the conduct 0 such person's own affairs.
{b) No provision in this Twst Agreement shan require the Trustee to e:q::end Of risk its
own funds or otherwise incur any financial Ilability in the performance 01 any of its duties
hereunder, or in the exercise of any of as fights or powers, n ft shall t'1ave reasonable grounds for
beneving tha1 repayment of such funds Of adequate indF.lmnity against such risk or l:abiHty ~s not
reasonably assured to it.
(c) The Trustee may execute any' of the trusts Ot' powers heroot an.d pertcrm the duties
requited of it hereunder eittlerdlrectJy Of by Of through attorneys or agents and snaH be entitled to
acJ\liCe of counsel concerning aJl matters of trUSl and its duty hereunder a~d shall oe absolu1ely
protected ir. re~ytng thereon.. The Tr\Jstee shall not be responsible for the misconduct of such
persons se;ected by it with r£asonabte care.
(d) The T(ust~ shall not be responsible for any recital herein, in the Assig~ment
Agreement or in the Certif~Gates, Dr for any of the supplements thereto or instruments of further
assurance, Of for the sufficiency of t.~e security ior the Certiflcates delivered hereunder or intended
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to be secured hereby And the Trl)stee shalt not be bour.d to ascertain or j""quire as to the
observance or performance of any coy"enants, condllions or agreements on the part of the
Corpora/.kln or the City under the Lease Agreem ent
(e) The Trustee shalt not ~e accountable for 'J".e use of any Certif'.;ales delivered
hereunder or the proceeds thereof. The Trustee, in its individual or any other capacity, may
become the Owner Of pJed.gee of Certif:cates secured 1'1ereby with the same rights whic~1 it would
have if it were no'( the Trustee; may acquire and 6\spose of other bonds or evidence of
indebtedness of the City with the same righ1s it would have if it were not the Trustee; and may
act B!: a deposit0fY. for and pemlit any of its officers or directors fa act as a member of, or in any
othal' capacity With respeC1 to, any commi~ge formed to pr0tect the r~ghts of Owners of
Certmcates, whether or not such commTttB€ shall represent the O .... meis o~ Uie majority in principal
amount of the Certificates then Outstanding.
(f) In the absence of negrige'10e or bad faith on its part, the Trustee shan be protected il1
acting Of retraining from acting upon any notice, request, consent, requ"ls'r'tion, certificate, craer,
affidavH., letter, teregram or other paper or document believed by it 10 be genuine and to halle
been signed Of sent by the proper person or person5. Any zelion taken or omit1ed to be taken
by the Trustee in good fa~h pursuant to this Trust Agreement upon the request or authority or
consent ot any person who at the tlme Of making such reques: or giving such authorrty or consent
is the Owner of any Certfficste. shall be conclusive and binding upon an future Owners of ttJe
same Ce,1ificate and upon Certificates executed and de~i\lered in exchange therefor or in place
thereof. The Trustee shan not be bound 10 recognize any person as an Ovmer of any Certificate
OliO take any action at his request unless such persun IS the registered owner as shawn on the
Registration Books.
(g) As 10 the existence or non-existence of an)' fact Of as 10 the sufficiency Of validity of
any iP.stnJment, paper or proceeding, the Trustee shan be entitled to rely upon a certifkGale signed
by a Corporation Representative or a Cit,. Represdntat,ve as sufficient evidence of the facts
1herefn ccntained and priOf' to the DGCurrence of-an Evant of Defauft of which the Trustee has been
given notice or is deemed to have notice, shall also be at riberty to acce~ a slm~ar certifica1e to
1he effect that any particufar deaiing, transaction or ac1ion is necessary or expedient. The Trustee
may accept a certificate of a Corporation Representative Of a City Representative to the effect
that an authorization in the form therein set forth has bee., adopted by the Corporation or the
Cfty, as the case may be, as conclusi .... e evidence that such autr,orization has been duly
adop!ed. and is in tuU force and effect
(h) The permissive iight of the Trustee to do things enumerated ~n this Trust Agreement
shall not be construed as a duty and the Trustee shail net be answeraole for other 1han its
negngence Of wilr.ul misconduct The jmmuniti~ and e,;cepUons from Il2bility of the Trustee sha!l
extend to fts officers, directors, employees and agenls.
til The. Trustee shall not be required to take notice Of be deemed to halle notice of any
Event of Defaurt hereunder e~cept fanure by the Crty to make any of the Lease Payments 10 the
Trustee required to be made by the City pursuant 10 the lease Agreement or failure by the
Corporation Of the Crty to file wfth the Trustee any Gocumen! required by this Trust Agreemnnt or
the Lease Agreement 10 be so filed subsequent to the delil/ery ot the Certificates, unless the.
Trustee shalrbe specifically notified in wr~mg of such default by the Col'poraticm, the City or by
the Owners of at least twenty-five percent (.25%1 in aggregate principal amOIJnt of Cer1lficates
ther: Otrtstancfmg and an notices or other instruments required by this Trust AgreemerLt to be
deflvered to the Trustee must. in order to be eHec\ive, 00 delil/ered a' the Principal Corpora\e
Trust Office of tne Trustee, and in the absence of sucn notice so delivered the Trustee may
conclusively assume 1nere is no Everft of Default e)(cepl as aforesaid
G) Th-e Trustee shaH not be requIred to gi'lo'e any bon.o or surety in respect ot the
execution of the said trusts and powers or ot~elVl'ise in respect of the premisE:!S.
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(K) Notwith~1anding anythiny elsewhere In this Trus~ Agteemenl with respect to the
execution of any Certiiicates, the wrthdrawal of any cash, t~e release of any property, or any
action whatsoever w~hin the purview of thi'S Trust Agrf:ement, the Trustee shall have the right.
blri sh.all not be required, to demand an.y snowin.gs, certiflcate&. opinIons, appraisals 00:' atr,ef
information, or corporate a.ction or e ..... 'dence thereof, in addition to that by the terms hereof required
as a conditior: of such action. deemed desirable by tile Trur.!ee for 11:e purpose of establisr,ing
the right of the City to Ine withdrawal of any cash, Of the :akin£; of any other action by the
Tru~1:ee.
!I) All moneys rece~ved by ~he Trustee-s~al!. until used or app~ed or invested as hereJn
provided, be held Ln trust for the purposes fO( whiGh they were received but n.eed not be
segregated from other funds except to the extent required by law. The Trustee shari OIJt be
responSlble. or liable fOf any lOSS suffered in connection with any investment of moneys made by
n in accordance with Article VIII of thls Trust Agreement
(m) The Trustee s~all not be fiab:e 'Nith respect to any actlc/1 taken or omitted to be taken
by It in good fattJi in accordance with the cfirection of the Owners of a majority ~n aggrega1e
principaf amount 01 the Outstanding Certificates relating to the time, method and place of
conducting any proceeding fO( any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, unoor this Trust Agreemelit.
(n) Before taking any action 'Jnder Article XI~I hereof or this s9ctfon 9,02 at the requeS1 or
eflractiOn of the Certificate Owne~, the Trustee may require thal an indemnity bond satisfactory to
the Trustee be tl.Jrnished 10 the Trustee by 1he Cerimcate Q\.vnsrs for the reimbursement of all
expenses 10 which it ma~' be put and to pro~ect it against all liability, except Hability which is
adjudicated to have resulted from its own negligence or willful misconduct in connection with an~'
action so ta'k.en. Be10rebeing required to take any action, the Trustee may require an opinion of
lndependent Counsel acceptable to the Trustee, which opinion shalT be made available to the
other partJes hereto upon request, which counsel may be counsel to any of the parties nereto, or
a verified certinr"ate of any party hereto, or both, concerning the proposed action. If it does so in
good fa~h, the Trustee shan be absolutely protected in relying thereon"
(o) Under no circumstances st"lal1' the Trustee be nable in fts individual capacity for the
obfigations evidenced by the Ce rtificates.
(P) The Trustee shail not be accountable. for the use Of appticabol1 by tne City cr the
Corporation or any other party of any funds which the Trustee has refeased in accordance wfth
the terms of thi' T'Ust Agrooment
(q) The Trus1ee makes no 'epresentation UI" warranty, express or implied, as to the title,
value, deSign, compflance with specrllcatlons orlegaT requirements, quality, curability, operation,
condition, merchantabill1y or fitness for any particular purpose or frtness for the use contemplated
by 1he City or the Corporation of the Projec1. In no e\len! shall the Trustee be liable for incidenta!,
indirect. special Of conseqllen~ar damages in connection w~n or arisIng from the Lease Agreement
Of this Trust Agreement ~Q( the extst13oce, furnishing or use of the p(oject.
(r) The Trustee makes no representations as to the validity or 5uHicienc~· of the
Certfficate~ and shall incur no responsibility in respect thereof, other ltian in connection with the
dIJiies Of obfigal1ons hereill or tn the Certificates assigned to or imposed upon ft. The Trustee
shall not be responsible to; the validity or sufficiency at the Lease Agreement Of tne assignment
unaer the Assignment Agreement. The Trustee shari not be nable for the sufficiency or collection
of an.y lease Pa~'ments or other moneys required to be paid to ~ under the lease Agreement
(except as provided in this Tiust Agreement), ~s r'g~t to receiVE moneys pursuant to the lease
Agreement.. Of the value of or title to the premtses LJp::ln which the Project is bca1ed or the Project.
The Trustee makes no representations and shari have no responsibility fOf any official statement
or other offen"ng mater~al prepared or distributed w~h respect to the Certificates.
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(5) In accepting tho trust hereby created, the Trustee acts so:er~ as Trustee for the
ONners and not in its indh,:idu.al capa~ity and all ~r30ns.' incluCing w!thOLJt I!rr:itation the ~)ymers
and the City or the CorporatIOn, hailing any claim against the Trustee ans~ng from this Trust
Agree~en1 snarl ook only tD th9 funds and accounts held by the Trustee hereunder for payment
except as otherv.ise provided herein.
,t) The Trusiee shall not be liable for any error 01 judgment made in good faith by a
responsible oftlcer, ur.less it shall be proved tnat the Trustee was negrigenl in ascertaiflirfg the
pertinent facts.
(u) Whe!her Of not therein expressly so provided, every provision of this Trust
Agreement relating 10 the conduct or affectlng 'the liabilrty of cr affordng protection to the Trustee
shan be subject 10 !he provisions of this Article IX.
{II) Tha Trustee shan nave no responsibility for or liability ill connection wnh assuring that
an of the procedures or corrditfons to closing set forth in the con!ract of purchase with rBspect ~o
the Certificates t'1av8 been met on the Closing Date Of that art documents required to be delivered
on the Cosing Date to Ll')e parties are actuany delivered, e)(cept llS own re~ponslb[iity to rece~ve
1he proceeds of the sate, exec-ute and der.ver the Certifi~tes and execute and deliver any other
certificates expressly required to be delivered by it Of tts counsel. .
(w) The Trustee may assume that parties to the contract of purchase with respect to tile
Certificates have waived their rights to receive documents or to require the perfor~ance of
procedures if the parties to whom such documents are to be de;iv€red or for whom such
procedures are to be performed do not require de~iyery or pertormance on or prior to the Closing
Date.
Section 9.03. Fees Charges aod E:cpen<:".es Of Tmstee. The Trustee shall be entitled to
payment and reimbursement for reasonable fees fof its services rendered hereunder and under
the Asstgnment Agreement and all advances and expenditures, including but not Ijmited to,
advances 10 and fees and expenses of independent appraisers, accountams, consultants,
counsel, agents and attorneys or other experts employed by Ole Tw&1ee in connection with such
sef\1ces and the Trustee shan, in the Even! of Dataun, ha ..... e a first and prior nen or. the funds neld
hereunder to deCure the same. The Trustee's rigNs hereunder, includino its righ1s : .. Hlder Section
12 .. 03 hereof, shaD suMve its resignatIOn or removal and final payment of1he Certificates.
Section 9 .. 04. Noticg to Certificate Owners of petau". If an E .... ent of Default occurs of
which the Trustee has been given or is deemed to haye notice, then the Trustee shall, within
ninety (90) days of the occurrence thereof. 9i\le written notice tr.ereof at the elCpense of the Crty
by first class mail, postage prepaid, 10 1he Owner of eacr-, Cenificate, unless suet, Event of
Default shaU have been cured before the giving of such n011ce; provided, /Jowevef tha' unless
such Event cf Defauft cor.ssts of 1he failure by the Cfty to make any leaSE Payment when due,
the Trustee may elect not 10 give sucn notice if and 5:;) long as troe Trustee in good fal:h
detennines 1hat it is in the oost interests of the Certffica!e Owners not to giye such notice ..
SectiCH'. 9.05. In1fl'CyeptlQO by TDistee. In an,( judicial procee<flng 10 which the
Corporation or the City is a party which, in the opinion 0 1he Trustee and its counsel, has a
substantial bearing on the inleres1s of OYIners of the Certificates, the Trustee may intervene on
behalf of the Certificate Owners, and sha~1 do so if requested in writing by the Owners of at least
twenty-fi\'e percent (25%) of the aggregate principal amount of Certificates then Outstanding.
provided the Trustee shall ha ..... e 00 du~y to take such aC110n uf11ess it has been indemnified to fts
satisfaction against all risk or liabin1y arising from such actlort
Section 9.06, R~mQvar Of Truslee. Upon thirty (30) days' written notice and with or
without cause, the City (so long as no Event of OefauN shall have occurred and be continuing) Q(
the Owners 01 at least a majority 01 the aggregate principal amount of Certificates then
Outstanding may, with the consent of the Corporation, remOve the Trustee initially appointed,
and any successor thereto, by an instrument or concurrent instrl,;ments in writing delivered to the
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Trustee and the Corporation, and may appoint a successor or Successors thereto; Pfovided that
any such successor shall be a corporation or association meetiifg the requirements set 10rth in
Section 9.01 OOreof.
The Trustee may be removed at anytime, stthe request cfthe City, fO( any oreach 01 the
trust set forth hcre:r'J.
Section 9.07. Resigf'la1ioo by TrIJsleF' .. The Trustee and any succe.ssor Truste.e may, at
any time, resign by giving thirty (30) days' written notice by registered or cert;ried ma~ 10 the City
and the Corpora~on.
Section 9.08. Appointment of Successo( TrYstF'e, In the (went of the removal or
resignation of 1he Trustee pursuant 10 Sections 9.06 or 9.07 hereof, the City shal1 promptly
appoint a successor Trustee. 1!'11he event t~e City shall, for any reason whe:soever, fai! to
appoint a succesSQ( Tmstee within thirty (30) days foHowing the denvery to the Trustee of the
fn~JUment described in Secoon 9.06 here:)~ or within thirty (30) days fo!lowfng the receipt of notice
by the City pursuant to Section 9.07 hereof, \he Trustee may apply to a coun 01 ccmpe~en!
jurisdiction at the e~pense of the City lor the appointment of a successOf Trustee mee1Jng the
requirements of Section 9.01 hereof. Any such succesSQ( Trustee appointed by .suet. court shari
become the successor Trustee hereunde.r notwlths1anding any action by the Crty purpcrtir19 to
appoint a successor Trustee followil1g 1he exp~ration of such thirty (30) day period. Any
resignation or removal of the Trus~ee and appointment of a successor Trustee shan become:;
effective upon acceptance of appointment by ihe successor TfUstee,
Notwfthstandlng any other pfOvislon of this Trust Agreement. no removal, tesignatiQt1 or
1erminatioo of 'the Trustee shal\ taKe effect until a successor shan be appointe.1.
Section 9.09. Marget or Consolidation. Any company or association into which the
Trustee may be merged or convertc.o(j or with whJch i'! may be consolidated or any company
resulting from any merger, conversion or conso~dation 10 whicn it shari be a par!Y or any oompany
or association to which the Trustee may sell or transfer all or substantiaHy an of tis cO!pOrate trust
business, provided 1hat S;JCh cDmpany or associallon shal: be engible under Sect~on 9.01 hereof,
shall be the SL;CCessor to the Trustee and vested with all of the title to the trust es1ate and an of
the trusts, powers, discretions, immunities, privileges and all other matters as was its
predecessor, wnhcut the e .... ecution or filing 01 any paper Of h..lrther acL anything herein \0 tt,e
Cllntrary notwithstanding"
Section 9.10. Concerning anI,' Successor Tn.;~.1.e.e.. EveI)' succesSQ( Trustee appointed
hereunder shali e)(Bcute, acl<nowledge and deriver 10 i1s 0, his predecessor and also the
Corporation and the eif)' an instrumer,! in wri1Jng acceptrng such appointment hereunder and
thereupon such succeSSOi, withou1 any fur:her act. deed or conve,'ance, shatl become fully
vested wittl aJI the estates, properties, rights, powers, truslS, dut~es and obfigations of its
predecessors; but such predecessor shall, nevertheless, on the written request of the City, or of
its SUCCE:SSOT, execute and deliver an ins~rumen7 trans1erring 10 suth successor ali the estates,
properties, rights, powers and trusts of such p(edecessor hereunder; and evel)/ predecessor
Trustee shall deliver afl securities and moneys held by it as the Trustee hereunder to ns
successor. Upon such acceptance, tr,e City shall man, by firsl class mail, po.stage prepaid, Of
cause the maillnQ of, notice thereof to the Certlica!e Owners at their respect[ve addresses set
forth on the Reglsttat1oT1 Books. Should any instrument in writir1g from the Crty be required by
any succes.sor Trustee for more furly and certain.ly vesting in such successor the estate, rigr.1s,
powers and dlJties here'Py ves1ed or intended to be ves1ed 1n the predecessor, any and 2f1 such
Il1strumer.ts in writing snail, on request, be executed, aclt;nowledged and delivered b)' the City.
The resignation of any Trustee and the Instrument 0' iilS1ruments removing any Trustee and
appointing a SUccessOf hereunder, together with all other instruments provided fOf in this An.icle IX,
shan be fHed Of recorded by tile SJJccessor Trus1ee in each recording oNica where the Assignment
Agreement shan have been filed or recorded
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ARTICLE X
MODIFICATION OR AMENDMENT OF AGREEMENTS
Section 10.01. Amendme:1ts Permitted, This Trust Agreenlsnt and rne fights and
obliga!ions of the Owners of the Certificates ar"ld the Lease Agreement and the righ1s and
obngations of the parties there!o, may be modified or amended at any tlme by a suppJemental
agieement Wllich shan become effective wMn the written consents of the Owners 'Of at ieast
sixty percent {6Dt..M in aggregate prjncipa: aMOunt of the Certifi~atesthen Outstanding. exclusive
of Certificates disqualified as provided in SecUon 10.03 hereof, shaH haVe been med wllh the
Trustee. No such modification or amendment shan (1} extend or have the eHect of extending the
fixed maturity of any Certificate or reducin-g the interes1l'ale with respect there10 or extending the
time of payment of interest, or redu-clr.g the amount of p~lncipar thereof or reducing any premium
payable upon the redemption thereof, withOU! the express consent of ~ne Owner of sucr~
Certificate. or (2) reduce or have the eHeet of reducing Die percento.ge of Certificates reqJtrect (or
t'r1e affirmative vote or wrttten consent to an amendment or rrlodifica:ion of the Lease Agreement, or
(3) modify any of 1he rights or oifIgations of the Trustee without its written assen! t1erelo, Any
such supplemental agreement shaM become effective as provided in Section 10.02 he~eDf.
This Trust Agreement and the rights and obrigations of the Owners of the CertJfica1es and
the Lease Agreemen! and the rights and obligations of the reSPective parties there10, may be
modified or amended at any time by a supplemental agreement, without the C0nsent of any such
Owners, but only to the extent permftted by taw and only (1) to add to the covenants arid
agreemen1s of the Corporation Dr the City, (2) to cure, correct or supplement ony ambiguous or
defective provision contained herein or therein and which shall nat, in the opinion 01 nationally
recognized bond counsel, adversely affect 1he interests of the Owners of the Certificates, (3) in
regard to questions ar:sing hereuooer or tnerelJooer, as th~ parties. hereto or thereto may deem
necessary or desirable and which shall not, in the opinion of natioM;ny recognized bond counser,
adversely affect the inlerests of the Owners of Lile Certificates; (4) to substltLJte the Site or the
Facifity. or a portion thereof, or to release a portion of :he Site, in accordance with Sect~on 8.3 of
the Lease Agreemer,t, (5) to make suer, adiitic!1s, deletions Of mOO:fr:.3ticns as may be necessaf)!
or appropriate to assure th~ exclusion from gross income for federal income tax pwrposes of the
interest component of Lease Payments and the interest payable with respect 10 the Certificates,
(6) to provide for delivery of a Reserve FUM crOOJt instrument. (7) to add' 10 the rights at the
Trustee, or (8) to maintain the rating Of ratirlgs assigned to the Cert.(~icates. I-.flY such
suppfemen1al agreement sllall become effective upon execution and delivery by 1he parties
hereto or thereto, as the case may be.
The Trustee may obtairi an opinion of tndependeClt Counsel that any ameooment entered
into hereunder complr9s with the provision.s of this Article X and the Trustee may rely concll.'sivel~·
on such opinion. No such modification or amern:lment shan mcdKy any of tha iights or obligations
of the Trustee without rts written consent thereto.
Section 10.02. procedlJ[e for Amendment wHh Wrrtfcn Consent Of Cer'jficatp Owners.
This Trust Agreement and the Lease Agreement may be amended by suppiemental agreement
as provided in this Section 10.02 in the event the consent of the Owners of trle Certificates 15
required pursuant to Section 10.01 hereof. A copy 01 such supplemental agreemen,t, together
with a reques1 to the Certificate Owners for their consen1 thereto, shall be maHed b~' first class
mail, paslage prepaid, by the Trustee at the expense Df the City 10 each Owner of a Certifk:ate
at his addres"S as set TOrt~ on the Registration BOOKS, but failure 10 mail copies of such
sllpplemep,tat agfeement and request s~all not affect the vaEdi'JI of the supplemental agreement
when assented 10 as in: this Section 10.02 provided.
Such supplemental agreement snarl not become effective unless there shall be filed with
tile Trustee the written cons.ents. ot the OWilers. of at least S(xt~ percent (60(){';l} in aggregate
principal amount of the Certificates then Outstanding (e~ciusive at Certificates disqualified as
provided in. Section 10.03 hereof) and a notice shaH have been mailed as tlereinatter in this
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Section 10.02 prov~. Each sucheonsem s~""n be elted;ve only it accompanied by prool 01
ownership of the Certificates for whiCh such conssn: IS gillEm, whd1 proof s:"1all be SilCh as IS
permrtted by Section 2.11 hereof. Any such conscn: shall be binding upon the Owner cf the
Certifica'e g:ving such consent and on Clny subsequent O\¥ner (whether or no~ such subsequent
Owner has nctice thereof) unless such consent is revoked in wjiMg by the Owner gil.ling suet!
consent or a subsequen: Owner by filing such re .... ocation with tl1~ Trustee prior 10 the date when
the notice hereinafter in this ~ion 10,02 provlcled f'or has been mailed.
Aftel the Owners of the required percensge of Certif;cates s'nal1 have filed their consen1s
to such sIJppleme!1\at agreement. the Trustee shan mail by firs' class ma~. posta.ge prepaia, a
notice a1 the eX.RCf1Se of the Ctty to the Owners of the Certificates in the manner hereinbefore
provlded Ln this Section 10.02 fOr the mailing of such supplemental agreement of the notice of
adoption thereof. stating in substance that such supplemental a~reement has been consented to
by the Owners of the required perce!'lta~e of Gerl:ilicates and WII! be .:fiective as provided in this
Section 10.02 (but fanure to mail copies 01 said notice shall not affect the validity ot such
supptementar agreement or CtJnsents thereto}. A record, consisting of the papers required by this
Section 10.02 to be flied with the Trustee, shan be conclusive proof of trle matters therein stated.
Such supplemental agreement shall become effective upon the maii::"1g of such last·mef1ti::med
notice, and such sUPfllemental agreement shall be deemed conclusively binding upon the parties
hereto ar1d the Owners of an Certificates a! the expira110f1 of sixty {60) ,days after such filing,
excep! in tMe event of a finaf decree of a court of competent jurisdiction setting aside such consent
In a legal action or equitable proceeding for such purpose commenced within such sixty (60) day
period.
Section 10.03. ~Iified Certificgtes. Certificates cwnedGt held by rn far the account
of the City or by any person directly or indirectly controlled or controiled by. or under direct Of
indirect common contro~ with the City (except any Certificates held in any penSion or relirement
fund) shall not be deemed Outstandlng for the purpose of any vote, consent, waiver or other
action or any calculation o~ Outstanolng Certi1icates. provided 10r in this 'Trust Agreement, and
shari not be entitled to vole upon, consent to, or take any other action provided 101' iTl this Trust
Agreement; provided, however, that the Trustee shall not b6 liable for determir1ing whether
Certificates are owned or heia by the City or any such other persorL unless such Certifica1es are
registered in the name of the City 0( such other person on the Registration Books.
Section 10.04. Effect Of Supplemental Agreement. From and aftef the time any
supp:emental 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 rigl1ts. duties aoo obflgations of the parties hereto or there10
and an Owners of Cert'ficates Outstanding, as the case may be, shari thereafter be determined,
exercised and enforced hereunder subject.in a~ respects to such mocfjficatiofl and amendment, and an the terms and conditions of any supplemental agreement shall be deBmed to be part of the
terms and conditions Of thfS Trust Agreement or the lease Agreement, as the case may be, for
any aod an purposes.
Section 10.05. Endorsement or Replacemerrt Of Certjficates DeJtyered After Am8odmenls.
The City may determine tha1 CertifiC;3.tes delivered after the efteC1l ..... e date of any action taken as
provided in ttlis Article X shal' bear a notation, by endorsement or otherwise, in form appro ..... ed by
the Trustee, as to such action. In that case, upon demand oi the Owner Df any Certi1icate
Outstanding at such effective date and presentation of his Certificate fOf such purpose at the
Principal Corporate Trust Office of the Trustee, a suitable notation. shall be made on such
CerJficate. The City may delermine that the delivery 01 stJbstitu1e Certlfica1es, so modified as in
the opinion of the City ~s necessal)' to conform to such Certlficate Owners' action, as necessary
and such substitute Certificates shari thereupon be prepared, executed and denvered, in that
case, upon demand of the Owner of any Certificate then Outstanding, such substitute Certiftcale
shall be exchanged at the Principat Corporate Trust Office of the Trustee, at the expense of the
City, fOf a Certfficate of the same character then Outstandlng, upon surrender of such
Outstanding Certificate.
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S6Ction 10.06. Amendatory.EDdQrsemenl Qr Certifigates. The provfslons of t,"tS Article X
shan not pre .... ent any Certificata Owner from acc€:'pting any amendment as to the particular
CertiflCa1es held by him, prOvided that proper nDta~ion tnereof is made: on such Cert~ficates.
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ARTICLE XI
COVEN,e..NTS
Sec1ion 11.01. Cpmpliance With and EnfQ~l Q(Lea~e Agreement The City
covenants and agre€!s wtth the Owners of :he Certificates to p&riorm arl obllgatlons and dulll£S
Imposed on it t.mder the lease Ag~eement The Corporation covenanls and agrees wm"'t the
Owners ot the Ceruficates 10 perform all obl"lgations and duties imposed on 1!. under the Lease
Agreement
The City will not do Or permn: anything to be done, or omit or refrain from doing anyVliI1g. in
any case wtleTe any such act oone Of permil1edto be done. OT any HlCh omissior. 01 or refraining
from action, wouid or might be a grOJ.md for cancel1ation orlerminatiofl of the Lease Agreement by
the Corporation thereunder. The Corporatiol1 and the City, immediat~ly upon receiving or gi"j:lg
any notice, communication o. other document in any wa~' relating 10 or affectlng their respective
estates, cr either o11>")em, in the ?lOject, wtich mayor can in any manner affec1 Sl.lctl es-tate of the
City or the Corporation, wili de:jver the same, or a copy thereof, to the Trustee.
Section 11.02. Observancg of laws and Rpgu~ations, The City wiJIwer: and truly keep,
Vbse!\le and perform all valKi aOO \a-mul obl"igations or regu',at\ons. now or herea11er imposed on it
by contract, or ~rescrib9:j by any law of the United Stales, or of the State, or by" any offtce~.
board Of commission hayjng jurisdiction or cor.trol, as a concltion of the continued enjoyment of
any and every right, privilege or franchise now owned Of hereafter acquired by thp. City, Including
its right to exist and carrt on t>usines.'S as a munitipa\ COf?ora1iorl, to thta end that suen rights,
privileges and franchises snan be majntained and preserved, and shall rJot become abandorled,
forfe~ed or in. any manner impair~.
Section i 1.03. P[csel"'lSljQO ami Oe~ense at Slli1:). The CiW shan promptly, upon request
of the TnJstee Of any Certificate Owner, from time to 1ime take such act~on as may be necessary
or proper to remedy or cure an.y defect in or CKJud upon the t!tle 10 the ProJect, wrlether now
exis1ing or hereafte: developing and stlal! prosecute all such suits, actions and other proceedings
as may be appropriate for such purpose and shatl indemnify and save the Trustee and every
CertifICate Owner harmless from all toss, cost, damage and expense, including attorne)'s' fees,
which 1hey or any of them may incur by reason of ar>y such defect, cloud, suit, action Of
proceeding.
Section 1 r .04, Recordation and Fjiing, The City shall record arlO file, or cause to be
recorded a!1d filed, the SIte and Facility Lease, 1he i..eCJse Agr&emen! (or a memorandum thereof),
the Asstgl'1ment Agreement and an such documenls as may ba required by law (and shall take all
further 8ctior,s I,NfhiCh may be necessary m be reasonab1'f r~uired' by \tIe Trus.tee;, alt in such
manner, at such times and in such places 35 may be require ... by law in order fully 10 preserve,
proiect and' per1e(j the securrty at the TrJ5tee and the Certificate Owners,
Sectton 11,05. City Budgets. The City sna!t supply to the Irustee as soon as
p,-ac1icable, but not later than Jury 15 in each year, a wrinen de:erm~llat~on b J' a City
Representative that the City has made adequate provision in "its annl.'ar budget fOf the payment
of Lease Paymems due under the Lea.se Agreement in the fiscal year covered by such budget.
The determinat,an given by the Clty;,O the Trustee shall be that the amounts so budgeted are
tuny adequate for the payment of aU Lease Payments due under the Lease Agreement in the
annDal period COVEred by such budg9t.
Sectiof"l11.06. Ellrtber ASS!lranw.. The Corpora!ion and tt1e City 1N1~1 make, execute and
de"V8r any and all such further resolutions, inslrumenls and assurances as may be reas(Jnably
necessary or proper 10 carry out the int€:ntion or to facihtale; the performance of this Trust
AlJreement and the Lease Agreement, or as may be requested b~' U·le Trustee and for the bener
assuring and confirmfrlg unto the Owners of the Certificates and the Trus~ee the rights and
benefits provided n erein,
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Section 11,07. Satjsfaction of Condttions Precedenl. The City hereby certifies, iecites
and declares tr-at an acts, concfltions and Llings requkred by the constltutfon and' statutes of Ole
Slate of Califomia, the Lease Agreement and thi.8 Trus~ Agreement to exist. to hay'e happenec
and to have bee~ performed precedent to and in 'he delivery of the Certificates, do el;i.st, have
happened and have beef1 perfcrmed in due time, form and manner as required by l(lIw .
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ARTICLE XII
LlMITHION OF LIABILITY
Secti on 12.01-
when due in
and agreements
shall have no peN::uniary "","g',",o·"
Certif.caies wtth respect 10 I
Certifica1 es, or the distribution o~
express~y SF.!t1orth here~n.
oavmen! of lease Payments
I the other covenai'tts
AQI'oolme,nt and th,s Trust Agreement. the Gtty
;C. '-""a'-ny of the other parties Of to !he Owners of the
Aar .. ,m·ent or the terms. execution. denvery or transfer oJ the
Payments 10 the Owners by the Trustee. except as
Section 12.C2. No Liabilily of QiN Qr ComgrBtlnn for Trustee Performance. Neither !he
City nor ti1e Corporation shan have any obligation or habifity 10 any of the other parties or 10 the
Owners of the Certtflcates with respect to the performance by the Trustee of any duty impoSe(!
upon it urKfer ttlis Trust AgroorMnt
Section 12.03. Indemnification of TnJeM;e. The City shall 10 the extent permitted by law
indemnify and save the Trustee. us officers, employees, directOiS and agents harmless from and
against all claims, kY"->ses, costs. expenses, liability and damages, inc:udlng reas0nabie legal fet>.s
and expenses actuafly iliCurred, arising 0111 of [J} the use, maintenance, condition or managemant
of, or from any wDrk or thing done on, the Project by !he Corporation or the City, (ii) any breach Of
defauH: on the part of 1he Corporation or the City in the perlormance of any anheir respective
obligations undp.r the lease Agreement, the Ar.signment Agreement, fnis Trust Agreamer;t and
any otner agreement made and entered into for purposes of the Project. (iii) any act of the
Corporation or the Ct1y Of of any of their respective agents, contractors. servants, employees,
licensees wi:th respect 10 the Project, (iv) any 3ci ot any assignee of. or purcrlaser from the
Corporation or the City Of of a:1y Of its or their raspeclive agents, contract0rs, servants,
employees Of ficensees with respect to the Project, (v) the authonzation of payment of Delrvery
Costs Of Acquisition and Construction CO'S1S, (vi) the achons of any other party. JneilJding but not
limfted to the ownership, operation or use of the Project by the COrporatior. or the City. (vii) Ule
Trustee's exercise and pertormance of its powers and duties hereunder, or under the Assignment
Agreement, the Lease Agreement or related documents, (viii) the offering and sale of 1he
Certificates, including any cause of action arising from any oHering or documents prepared in
connection with such SaJe; or (ix) any untrue statement Of alleged untrue statement of any materia!
1ac1 or omission or aneged omission to state a material fact necessary to maKe the sta1ements
made, in the nght of the circumstances under which they were made, not misleading! in any officfar
statement Of ott1er offering c:Socument utilized in connec1fon wrth the sale of the Certificates, Suen
indemnmcaUDn shan include the cos1s and expenses of defenaing against any cla~m or liab!lity
arising under this TruS1: Agreement. No indemnificaffon will be made under this Section 12.03 or
~wf:ere in 1f',is Trust Agreement 10( will!ul mlsconduC1 or negligence-, under this Trusl Agreoemenl
by the Trustee, fts officers or empkJyees. The City's obr~ations hereunder shatl remain \rand and
binding nol:wi1hstanding maturity' and payment 01 the Certificates Of resigr.a1ion Dr removar of the
Trustee.
Section 12.04. Llm~at1Qn of Bights to PaOles and Ce,rtjficate Owners, Nothing in this
TruS1 Agreement or in tt"!e Certificates expressed or !.mplied l.s mtended or shall be construed to
give any person other than the City, the Corporation, the Trustee and the Owners of the
Certificates, any legal or equttable right, remedy or cli1lm under or in respect of this Trust
Agreement Of any oovenanf, condltion or provislon hereof; and arl such covenan~s. cortditions and
provisions ara and shall be for the sole and exclusive benefit of the City, the Corporation, the
Trustee and saJd Owners.
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ARTICLE XIII
EVENTS OF DEFAUU AND REMEDIES 0, CERTIFICATE
OWNERS
Section 13.01. Assignment of Rights. Pursuant to the Assignment Agreement. the
Corporatkln has transferred, as..signea and se: o .... er to th':! TrLJ:stee al~ of the Corporation's rights in
and to the Lease Agreement (excepting on!y the Corporatlon's rights ur,der Sections 5.8, 7.3 and
9.4 thereof), including wtthcLrt rimit2tion all of U1e Corporation's rights to m:erdse suc1'1 rights and
remedies conferred on Ina Corporatron ptJfsuant to the Lease Agreement as may Ve necessary or
convenient (i) to enforce payment oftne Lease Pa:r'ments and ar.y other amounts iequired 10 be
depoSited tn the Lease Payment Fund Of the Insurance and Condemnation Fund, and (tj)
otherwise to exercise the Corporation's rights and take any action 10 protect L"e interesls of the
Certificate Owners in an Event of DefauH.
Section 13.02. Remedies. If an Event of Defaurt shari happen, then and in eaen and
every such case during the continuance of such Event of Oefautt. the Trustee may, and upon
request of the Owners of a majority 'In aggregate principal amount of the Certificates then
Outstanding 2nd upon belng indemnified to its satisfaction therefor shari, exercise any and all
remedies avai!able pursuant to law or gran1ed pursuant 10 t~e Lease Agreement; provided,
nowever, that r,otwithstand1ng any1hing herein or in the lease Agreement to tile contrarj, there
shan be no light under any circumstances 10 accelerate the maturit,es of the Certificates or
otherwise to declare any Lease Payment not thell in default to be immediatefy due and payable
Scetlon 13,03. AooTiql1ol"! of Funds. All moneys rece;ved by the Trustee pursuant to
any right given Of actio1 taken under 1he .orO\lisions of this Article XIIi or Article IX of the Lease
Agreement shaii be appljed by the Trustee in the following order upon presenlation of the several
Certilicates:
.Eit.S, to the payment of the fees, costs and expenses of1he Trustee and of the Certif:cate
Ownem in declaring such Event of Defautt, including reasonable ~:T1pensatlon 10 Its or their
agents, attorneys and counsel, including an fees and expenses past due; and
Second. to the paymenf of the whole amount then owing and unpaki with respect to the
Certificates for principal and' inlerest, with interest on the overdue prinCipal and instaHments of
interest al the rate of twelve percent (12%) per annum (but sudi L1terest on overdue installments
of in1erest shall be paid only to the extent ft.:nds ar9 available tr.ersfor following payment of
principal and interest and interest on overdue prinCipal, o!s aforesaid), and in case such moneys
sf1al~ be insufficient to pay ~'l full the whore amount so owing and unpaid' with respect to the
Certificates, then to tha payment of such pri~cfpal and interest without preference or priority of
prioopaf ovel" interest, or of interest over principa'l, or of any lnstanment of interest over any other
instanment of interest, ratably 10 the aggrega'e of such principaf and interest
Section 13.04. InStitution 01 'ega! ProceediDQS. If one or more Events {)t Default shall
happen and be continuing, the Trustee in lis discretion may, and upvi1 the written request of the
Ow-ners of a majority in principal amount of the Certiticates then Outstanding, and upon being
irldemnlfied 10 its sa11sfaction therefor, shal!, proceed to protect Of enforce its rights or the rights 01
the Owners of Certificates by a surt in equity or action at law, either for the specific performance
of any covenant or agreement contained herein, or in aid of the eXo?Cution of any power herein
gfanted, or by mandamus or other appropriate proceedlng for the enforcement of any other regal
or equitable remedy as the TruS1ee s~all deem most effectual in support of any of 11s rights or
du1ies hereunder.
Section 13.05. Non-walver. Nothing in this A.rticle XIII or in an~ other provtsion of this
Trust J.greement or in the Cenlfica1es, shan affect or impair the obhgatlOn of the City to payor
prepay the lease Payments as provided in the Lease Agreement. Of affec1 or impair the right of
action, which is absolute and unconditional, of thf'. Certificate Owners to lnstrtute suli 10 enforce
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and collect such payment No delay or omission of the Trl1stse or of any Owner of any of the
Certificates to exercise any right or power arising uj:'O" the happening Df any Event of Default
shan Impair any SL.!Ch right Of power or shall be const;ued 10 be a w,'3;l .... er of any SL.'Ch E\,!'ent of
Oefault 0( arl acqui~sc6nca therein, and ever; power and remedy given by this Article XII! (0 the
Trustee Of to the Owners of Certificates may be exercised from tJme to time and as often as shari
be deemed expedient by the nust'3S or the Certificate O'nllers.
Section 13.06. Bemedi es Noi Exclusive, No remedy herein conferred upon Or reserved 10
the Trustee or to the Certificate Owners is. intended teo be exclusive 01 any otner remedy, and
every such remedy shari be cuonu1ati ..... e and shall be in addWon to every other remedj' given
hereunder ()( OOW Of' hereafter exis'Jng, at la'!'-,: or in equity Of' by statl1!e ()( otl'1eiWise
Section 13.07. POwer of Trpstee to COnlrol Proceedir1Qs. In the event that the Trustee,
upon the happening of an Event of Default. shaJ! !:a::e taken any adion, by judicial proceedings
or othervi.se, pursuant 10 its duties hereunder. whether upon its own jiscret:on or upon the
request of t"a Owners ot a majority in princ~pal amounl of the Cer1Jficates then OtJ!s1anding. it
shari have futl power, in tM exercise of its discretion for the bes1 interests of the Ovmers of the
Certfficates, wtth respect to the continuance. diSCOntinuance, withdrawal, compromise, settlement
or o1.I-Jer disposal 01 such action; provided, however, that the Trustee shan not discontinue,
withdraw, oompromise Of' settle. or ot1erwise dispose of any litigation: pending at law or in equity,
withcx..1 the consent of a majority in aggreg2!e principal amount of the Certificates Outstanding.
Section 13,08. lirnjt"'ipn on Certif1r;a1e Owners' Right \0 Sue. No Owner of any
Certificate issued hereunder shall have the right to institute any suit acMn Of proceeding at law cir
ir' :oquity, for any remedy under Dr upon this Trust Agreement, unless (a) such Owner shan have
p: -:-.... iously given to the Trustee wrinen no'ice of the occunence of an Event of Default hereunder;
(b) the Owners of at least twenty,flve percent (25%) in aggregate principal amount of all the
Certfficates then O'Jtstanding shall have made written request upon the Trustoo 10 exercise the
powers hereinbefore granl.ed Of to institute 5UC~ action, su1! or proceeding in its own name; (c)
said Owners shall have tendered to the Trustee reasonable indemnity against the costs,
expenses and nabilities to be incurred in compfiance with such request; and (d) the Trustee shan
have refutM or omttted to comply with Such requ~st tor a period 01 s\x~'i (60) days after such
written request shall have been received by, and said tender of indemnity shall have been made
to, !he Trustee.
Suctl notffication, r~uest. tender of indemnify and refusal or omission are hereby declared,
in every case, to be conditions precedent to tne exerCise by any Owner of Certmcates of any
remedy hereuncSer; it being understood anlj intended that no one or more Ovw'flers of CertJfi~tes
stlall have any right in any mannt:f -whatever by hiS or their 3ction 10 enforr:e any right under this
Trust Agreement, e:rcept in the manner herein provided, and thaI a'i proceedings at law Q( in
equity with respect to an Event of Detauti stlail be instrtuted. had and maii11ained in the mariner
herein pro0ded and "for the equal benefrt (;f all o.vners of the Outstancfing Certif~ates.
The right of any (NIner Of any Certifica1e to recei .... e payment of said Owner's ffactional
mterest In the lease Paymen:s as the same become due, Of to institute suit fof the enforcement of
such payment, shall not be lmpaired or affected w11hout the consent ot such Owner.
not'Nfthstand1ng the foregoing provisions of this Section 13.08 or any other pro ..... ision o~ this Trust
Agreement
Section 13.09. Parties Interested Herein. Nottling in thiS Trust Agreement ex:pres.~ed or
impned is intended Of shall be construed to confer upon, or to gjve to, any person or entity. other
than me Ci1y. the Corporation, the TnJstee and the Owners any right, remedy or claim under or
by reason of thls Trust Agreement, or any covenant, condrtion or s:~pulation hereof, and all
covenants. stipulations, promises and agreements in this irust Agreement contained by and on
behaH of the City shafl be for the so~e and exclusive benefrt of the City. the Corporat~on. the
Trustee and the Owners.
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ARTICLE XrV
MISCELLANEOUS
Section 14.01. De1easanCf.. If and when all Outstanding Certif!Gates shaM be paid ar.d
discharged In any ana or more of the fo~owing ways and all oth-er amounts due arid owir'lQ
hereunder h.alle beer paid a
(a} by well and tTL.!!, paying or caus1ng 10 be paid the p,lncipal, and interest and
redemption premiums (if any) wrth (espect to al! Certificates Outstanding, as and when the same
become duB a nd payable, or
(b) by Irrevocably d<>pos~ing w[h Ihe Truslee Of an escrow holder se<;ur~y for the
payment of Lease Payments as more particuiarly dE'sc~ibed in Section 10.1 of the Lease
Agreement, to be applied to pay the lease Fayments as the same be"vOme due and p3yable
and prepay the Lease Payments ~n full on any prepayment date, pursuant 10 Section .; 0.1 of the
Lease Agreement and shall payor c'Juse to be paid all otl'ler sums payable r,ereunder by the
Clty. then, notwithstan<1!ng that any Certifica1es shall not halle been surrendered 'Of payment, all
obligations of tn& Corporation, the Trustee and 1he City with respect 10 all Outstanding
Certfficates shall cease and terminale, except only the obligation of the City 10 P3Y or cause to
be paid, from Lease Payments paid by or on behaH of the C;'y troll', funds deposij(>d pursuant to
paragraph (b) ofthis Section t4.01, 10 Ihe Owners of the Certificates not so surrendered and
paid all sums due wi1h respect thereto.
Any funds herd by the irus:!3e, at the Hme of one of tile events described in psra9raphs
(a) or (b) of this Section 14.01, which are not requ;red for the payment \0 be made to Owners,
shan, after payment of alt fees end expenses of t'1e Trustee, inciuding attorneys fees, tie pald
over to the C~y.
Section 14.02. RecQrds. The Trustee s:'lafi keep records In accordance with industry
standards of an moneys leceil/ed srd disbursed by H under this Trust Agl"eement, which shan be
available for Lnspection by the City. the Corporation. and any Owner, or the agent of any of
them. at any time during regular buSiness hours on any Business Day upon reasonable priOr
notice.
Section 14.03. ~. All written notices 10 be given under ttlis Trust Agreement shan
be g·lVen by first class mail, postage prspaid, 10 the party enti1lec thereto a1 ~s address set forth
below, or at such address as the party may provide to the other party in writing from time 10 time.
Noti~ shall be effective upor. deposft in the Unfted States first class mail. postag'3 prcpaK1 to t~e
address set (OM below:
HIO Ihe City:
It to the Corporalion:
City of Palo Mo
Civic Cen1er
250 Hamilton Avenue
Palo Mo, CA 94301
Attention; Cit! Clerk
Paro Alto Pub(ic Improvement COi'pOraffOn
Civic Center
250 Hamrhon A\I€'nue
Palo A~o, CA 94301
AttentIOn: City Clerk
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11 to the Trustee: Bank of America Ncrtional Trust and
Savir.g~ Associal1on
Corporate Trust Admin~stra!ion
55 Hawthorne, 8111 Floor
San Francisco, CA 94 j 05
Attention: Trust Officer
Section 14.04. ~~. This Trust Agreement shall be construed and governed
in accordance with the laws of the State.
Section 14.05. 8fodjng Effect· Successors This Trust Agreement shall be binding Upor1
and inure to the benefrt 01 t"e partJes hereto and their :"espective succassors and ass,'gns.
V{t;eilever in this Trust Agreement the Corporation, the City or the Trustee is named or referred
101 such reference shari be deemed to !ilCh.id'e the succeSSors or assigns thereof, and atl the
covenants and agreements in this Trust Agrooment contained by or or! behal! of 1he CorporaUun,
the City or the Trus1ee shafl bind and inure 10 t"'e benefrt of the respectbe successors and
assigns 1hereof whether so expressed or not.
Section 14.06. ~on in C.cjJnlemarts. This Trust Agreement may be executed in
several counterparts, each of which shaO be an original and all of which shall constitute but cr.e
and the same agreement
Section 14.C7. Destruction of Cancefled Cerl[lCates. Whenever in this Trust Agreement
proviSion is made fer the surrender to or cancenation by the Trustee and Lr,e denvery to ine City
of any Certificates, the Trus1ee may, in iieu of such cancellation and delivery, destroy such
Certificates and deliver a certificate of such destruClion to the City.
Section 14.08. Headings. The head!ngs or titles of the several Articles and Sections
hereof. and any table of contents appended to copies hereof, shan be solely for convenience of
reference and shall not affect the meaning, construction or eftect of thiS Trust Agreement. An
references herein to ~Articles," "Sections." and other subdivisions are to the corresponding
Articles, Sections or subdIvisions of this Trust Agreemef1t; and the words "herein," "hereof,"
"hereunder" and other words of similar import refe~ to this Trust Agreement as a whole and not 10
any partic\Jlar Mete, Section Of sulxfNision hereol.
Section 14.09. WaiVer Of Notice. Whene .... er in this Trust Ag~eeme:1t1he giving of not~ce
by first cl'ass mail, postage prepaid. or otherwise is Jequ i red, the gi .... ing of sucn notice may be
waived in writing by the person entitled to recelve such notice and in ailY case the giving or
receipt of SUCh notice shan not be a COMtjOr. precedent to the .. ,"afidlty of any action taken in
reliance upon such waNer.
Section 14.10. Payments Due on OU-',er ,han Business Pay. Iftfle date for making any
payment as provided in this Trust Agreement is not a Business Day, such paymen! may be
made on the next succeeding 8usiness Day with the same force and effect as i1 done on tt1e date
provided therefore herein.
Section 14.11. Payment of Unclaimed Moneys. Anything con!ained herein 10 the cor1trary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of the
interest Of premium (tf any) or principal with respect to the Certtficates which remains unciaimed fOf
two (2) years after 1he date when the payments of such interest, premium and principal have
become payable, if such money was held by the Trustee at such date, Of for two (2) years after
the date of deposrt cf such money if deposited with the Twstee after the date when Ine interest
and premium 'if any) and principal with respect to such Certificates have become pajable, shall
be repaid by the Trus1ee to the elly as its absolLl1e property free from trust. and the Trus1ee
shall thereupon be released and drsc'harged with respect thereto and the O¥wners shaillooi<; only
to the City for the payment of the interest and premium (if any) and principal with respect to such
Certificates; pro'vided, however, that before the repaymen1 0; such moneya to the City as
aforesaid, the Trustee may (at the cost and request of the City) first mail to the Owners to whom
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suCh amounts have not yet boon paid. at I~e addresses shown on the Reg~stration Books, Ci
notiCe, in such Jorm as may be deemed appropriate by the Trustee with resp€-ct to the amounts
SO payable and v.,"ith res~ct to the proitrsions relaling to the repayment to the City of the
moneys held lor the payment thereof. The Trustee shall not be liable lor any Interest on funds
held by n. The City shan not be liable for any interest on the sums paid to ij pursuant 10 l~is
Seclion 14. I I and shall not t>e regarded as a trustee ot such mvney.
Section 14. ~2. SaverabiHty Qf Inxalid Provisigns. In case an,' one or more of the
provisions contained in this Trust Agreement or in the Certificales Shan for a:1Y reason be held 10
be invarld, Illegal or unenfc,cp.ab!e in any r6SpeCI. then such invalidity, illegamy or unenforceability
shan n'"Jt affect any other provision of this Trust Agreement, and th:S Tru~t Agna\3'ment .sha!1 be
construed as If such invafid or illegal or unenforce~ provision had never been contained Ii erein.
The parties hereto hereby declare that they would have entered into this Trust Agreement and
each and eve-it other section, pa rag raph. sentence, clause or pt1 r aSG hereof and authorized the
denvery of the Certificates pursuant thereto irrespect:ve of the tact t~at anyone or more sections.
paragraphs, senienccs, dauses Of' phrases otthi~ Trust Agreement may be held illegal, invalid or
unenforceable.
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IN WITNESS WHEREOF, the parUes Mr.t 0 have exeo.rted this Tru'it Agreement as of
the date and year first above W!'"itten.
(8 E A L)
Attest
(S E A l)
Attest
Secretary
Ci1)<" Clerk
APPROVED AS TO FORM:
JONES HALL HILL & WHITE,
A Professional Law Corporation
By---~~~'-=~r.=-----Kenneth I. Jones. Esq.
Special Counsel
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as inJstee
By ____ ~~~"'~~-------AlIthor[Zed Officer
PAcO ALTO PUBLIC IMPROVEMENT
CORPOR".TION
Sy ______ -,;==;--____ _
Pmsk:Jen.t
CITY OF PALO ALTO, CALIFORNIA
By ________ ~~~---------
Mayor
1 • J; ... ~-,'---"~'" -----.---.".
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EXHIBIT A
DEFINITIONS
"'Agency Agreement" means the Agency Agreement Relating 10 Palo 1.110 C~vic ~enter
Project dated as of March 1. 1992. by aod b€tNeen the Corporation and City.
"&sigomenl Agreement" means the Assignmen.t Agreemerct, dated as of March 1, 1992,
by and betw9EiO the Corpora1ion and tJ'1e Trustee. 10gether with any duly authorized and
executed amendments thereto.
"Bysiness pal(" means a do r which is not a Saturday. Sunday or legal ~oljday on whfcll
banking mstitutions in the ~tate in which the Principal Ccrpcrate Trust Ctflce of the Trustee 15
IOcatec1 or banks in N6'N York, New York, are closed or a,e required to close or a day 0f1 v.'hicI11he
New York Stock Exchange is closed.
"Certificates" means the not 10 exceed $8,500,000 aggregate principal amount of
certfficates of participation to be executed and delivered pursuant to the Trust Agfeement
"~" means City of Palo Afto, a charter city and IT'unidpa! corporation organized and
existing under the Constitution and laws of the Slate.
the Mayor, the Crty Manager, the DirectOf of Finance or any
other bire:solu1ii"n or the City Council of the City delivered to the Trustee to
act on of the or w[th respect to the Sh:e and Facility Lease, "e Lease
Agreement. the Escrow AgreemenL the Agenc! Agreement and/or the TfI!s1 Agreement
"Ciyic Center" means the Civic cen1er structure with an appurtenant fixtures which now
eJCists on the Site. In certain contexts. the terms "Civic Center" refers to the CiviC Center as
ImproYed by the Ct.oflStruciion of the \ 98:3 Project. the 1992 Project and otherwise.
"Closing Oat{!" means the date upon which there Is a phrsical delivery of the Cer1ificates
in exchartge tor tne amount representing the purchase price 0 the Certificates by the Oiiginal
Purchaser .
.. ~ .. means the I ntemal Reven ue Code of 1986.
"Completioo Date" means the da,e of ~ubs'.antial comple~ion of construction and
instanation of the 1992 Prolect as e .... idenced by the firing 'Mth the Crty of a ce:1ifica!e of comrre:ion
thereof executed by a C~ty Representative ar:d as more parJcularl~ descllbed in the Agency
Agreement.
"ComrtOlP1iQD CoDlrac," means the construction contract or contracts providing fOf ',he
co~on of the 1992 Project
"Corporation" means the Palo Afto PubHc lmprovement Corpoia1ion a nonprofrt. public
benefit oorporatfon organized and exis~ng under and by virtue of the laws of the State.
"Corporation Remesentatiye" means t1e Pres[dent, the VK:e Presfdent, the Secre1arf, the
Treasurer, or any other person authorized by resolution of the Corporation dellver.eo to the
Trustee 10 act on behaH of the Corporetion under or with respect to the Stte and Fac~h1y Lease,
the LeaSe Agreement, the ASSig:'lment Agreement, the Agency Agreement andlor the Trust
Agreement
"Defeasance ObHgaftOos" means tal cash. or (b) non-callabie Federal Securit~es.
Exhibrt A . , -
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"peliyery CQsa" means all items of experse dlre:::tiy or ir'ldlrectly payable by or
reimbursable to the City or the Corporation relating to the execu1ion 8i"ld de!iver)' of the
Terrr.ination Agreement, the Site and Facilny Lease, ttle Lease Agreement, the Trusl Agreement,
the Agency Agraement. thp. Escrow Agreement and the Assignment A~recmen! cr the 8Xc-Guiion,
sale and deli ..... ery of the Certificates, including bu1 not limited to tiling and recording costs,
settlement costs, printing costs, reproducticn and binding costs, initial fees alld charges of !he
Trustee {including the fees and e.:.:penses of its counse:), flflwlcing discou!1ts, legal fe(:;5 and
charges, lnsurance fees and charges, financial and ether professional consuttant fees, costs of
rEltlng agencies for credit ratings, fees for execution, regwfatc.ry 6genc~' fees, CUSI?, fees,
transportation and safeheeping of tl1e Certmca.tes and charges aM fees in connection with the
foregoing.
"De~\lerv Costs Fund" means the fund by that name estabflshed and" held by the Trustee
pursuant to Miele III or \1"", Trust Agreement
"ESCrow Aoree menf" means the Escrow Deposit and Trust Agreement, dats-<l the Closing
Datc. by and between the City and the Escrow Bank, with respect !o the estdbnsilrnent and
administration of the Escrow Fund for the purpose of providing for the payment of L'le CHy's
obflQations under lIle PO", Lease.
"EscjoW Bank" means Bank of America National Trust and Savings Association, as
escrow ban;; pursuanllo the Escrow Agreeme,lt
"Escrow Fund" means the Escrow Fund estabnsned and held by U1e Escrow Bank
pursuant to the Escrow Agre£:ment
-Eyent Of petal fit" means an event of defau'tl: under the lease Agreement, as defined in
Section 9.1 thereof.
'~' means the Palo Mo CMc Center, as improved by the 1983 Project.
"Federal Securities" means any of the followin:g which are noncanable and which at the
time of investment are ~gal investmen1! under the laws of the State of California for the moneys
proposed to be invested 1herein:
{a} direct obligations of Oncluding obligations issued Of heid in book entry
form on the books of the Department of t'"le Treasury of the United States of
America), or obligations the1imely pavment of pfincipa! of and interest on which are
uncondftionany guaranteed by, the United States of America, including State and
Local Gcvemmen! Series obIiga1ions; or
(b) bonds, debentures or notes payable in casf'1 issued by anyone or
more of the ~onowing federal agencies whose ob~gations ~epresent the fu~ faHh
and credit of the United States of America: Resolution Trust Corpora1ion, Genefal
Services Administration, Sman 6ustness Administration, Farmer's Home
Administration, Federal Housing Administration, United States Maritime
Administratlon, United States Department ot Houslng and Uman Deveiopment and
Government National MMgage Associa!;on.
'"Fiscal year means the tw"elve-month period beginning on July 1 of any year and ending
on June 30 of the next succeeding year. Of any other twelve-month periocl selected by the City
as its flSCa1 yea r.
i'llmproyed Ctvic Cen!er>' means the Crvic Center as improved by the construction of lhe
1992 Project.
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Exnibit A
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"Independent Coqnser means a~ attorney duly admttted to the practice of taw before the
higr,est court of the stale in which such at10rney maintains an office and wt",o is not an emp:oyee
of the Corporation, the Trustee ('or the City.
"Information SeNUs" means F~nancial Jnforma.tion, Inc.'s "Daily Called BO:l0 Service," 30
Montgomery Streel, 10th Floor, Jersey C,ty, New Jersey 07302, AttentiDn: EditDr; Kenny
~nformatian Services' ~Caned Bond Servlce," 65 Broadway, 16th Floor, New YorK, New York
10006; Moody's "Municipal and G¢vernment: S9 Church Street, 8th Floor, New York, New York
10007. Attention: MuniCipal News Reports; and sap's "Caned 8Dr"ld Record," 25 Broadway, 3rd
Floor, New YorK. New York 10004; or 10 such other addressee and/or s~ch other naflonaJ
ir,:formation services providing information or oJssemina~ing notices 01 redemption of obliGations
similar to tr~ Certmcates.
"\nSIJfance and Condemnal1on. Fllnd" means tne fund by tria! name eslabl1s!1ed and held
by t~le Trustee pursuant to Sectlcn 7.01 of the Trust Agreement.
"lnterest payment Pate" mea~5, wi!!1 respect to ~he Certificales, the firs1 (1 st) day of eacli
March and Seplembei. commencing September 1, 1992, so long as any Certitica1es are
Outstanding.
"Lease Agreement" means the lease Agreement, dated as of March 1,1992, by and
between the Corporation and the City, toge!her with any duly authorized and executed
amendments 1herelo.
"Lease Payment pate" means, with respect to the Lease Payments, the twenty-third
(23ro') day of February and the twenly-sjxtn (26thl..day of Auguslln each year during the Term of
!he ~ease Agreemen~ commencing August 26, 19"".
"learf! Payment EunC~ maar.s :he fund by that name establisfled and "eld by the
Trustee pursuant to Section 5.02 of the Trust Agreement.
"Lease Payments" means all payments required to be paid by the City pursuanl to
SectJon 4.4 of the Lease Agreement, inc1o.;dlng any prepayment tr.tereof pursuani to Article X of the
lease Agreement. which payments consist of an mteresl component and a principal component.
~~" means Moody's investors Service, New York, New YorK, or Its successors.
"'Net Proceeds," when used with respect to insurance Of condemnation proceeds, means
anJ insurance proceeds or condemnation aw.srO pdid with respect to 1he Prolect, to the exte~t
remain:ng after payment 1herefrom of an expe1'1ses incuITOO in the conection thereof.
"i992 Pr'2lect" means the structwral remr,deli:ng of the pofice head'qL:arters and tile
retrofitting of the civiC Center for sprinkler system fire pl-eventi,::;.n facil~tjes and all incid£:ntal anc
auxWary work n9Cessa~y for completio~ thereof.
"1992 Pmjed emus" r!leans all coS1s of pay'menl of, Dr reimbursement fOf, construction,
installation aOO financing of the 1992 PiOject. iooud'ing but not limhed 10, architect, englneering and
construction supervtsion costs, construction contractor payments, costs of feasibility,
environmental and other reports, soil lesting costs, inspection costs, permit fees, insurance
premiums, ~Iing and recording costs, title insurance costs and settlement costs.
tho
T_,:f~~~~fE;~l[~ means the first purchaser of the Certificates upon their deliver") by
~Qulstandinq", when used as of any particular time with respect to Certificates, means
(subject to the provisions of Secflon 10.03 of the Trust Agreement) arl Certificates theretolore
executed and delivered by the Trustee unoo; t"'ae Trust Agreement except-
Exhibl! A
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(a) Certiflcc:tes 1herelofore cancenoo by the Tru:Jtee or surrendered to the Trustee fer
cancettatkoi1;
~) Certiflcates for the paymem Of redemption 01 which funds or Defeasance Obligatio,1s
In the necessary amount shall have theret010re been depostted' with the Trustee or an escrow
holder (whether upon Of priOf to 1he ma'urity or redemption date of such Certificates), pro ..... ided
1hat, If such C.ertfficates are 10 be redeemed prior to maturity. notic.a of such redemption shall r,ave
been given as provfded in Section 4.03 of the Trust Agreement OJ provision satisfac~ory to the
Trustee shan have been made for the giving of such notice; and
(e) Certificates in lieu of 0( in exchange for wnic1'1 other Cert~fica~es shall ha'ie beer.
executed and dellve.ed by the Trustee pursuant 10 Section 2,09 01 tl'1e Trust Agreement.
-~ or "'Certificale Owner" Of ~Qwner pf? Cerjificate", or any simitar 1erm. whet, used
with respec! to a Certrt;cate means the person in whose name such Certiffcate shell be registered
on the Reg~tration Books.
-permitted Ef1cllmbrance;:;~ means, as of any panicular time: {a} li8ns 1m general ad
valorem ta,;:es and assessments, if any, not then dennquent, or which the Crty may, pwsuant 10
provis~s of Article V of the Lease Agreement, permit to remain: unpaid; (b) Ule Assignment
Agreement; (c) the Site and Facility Lease; (d) the lease Agr~ment (e} any right or claim of any
mechanic, moore!", materialman, supp~er Of vendor not filed or perfected in the manner prescribed
by law; and (1) easements, rights of way, mineral rights, ori!1ing rights and other rtghts,
reservations, co ..... enants. conditions 0( reS1rictlons which e.:dst of record as of the Closing Date
and wtlich the C~y certifies in wr11Jrg win not materian~' impair the use of the Project
"Perroi!Jed lnyestments'" means any of _he following which at the time of investment are
tegal investments und.er the laws of the State of California for the moneys proposed to be
inv<osled therein:
(a) Federal Secur"ies;
(b) U.S. Dollai denominated deposit accounts funy insured :0 1he holder (up to the
$100,000 maximum coverage) by the Federal Deposit Insurance Corporation in commercial
banks.
(c) U.S. Dollar denominated deposit accounts, federal funds and banker's acceptances
with commercial banks {foreign or domestiC) which have a rating on their short term certificates of
d€!X>Stt on the date of p'.Hchase 01 "A-1'" or -A-i+" by S&P and "P-1" by Moody's and maturing
no more 1han 360 days after the date of purchase.
{d) Money maJic;et 1ui1ds which are '3ted in the 10p ra!ing ca19'Jory by S&P or comprised
solely of obngations rated "AA4." by S&P and ~Aaa" by Moody's, whlch are monitored quarteri'j:
{e) PrlHefunded munlcipal obligations defined as follows:
Any bonds or other obl1gations of any state of ttle Ur.rted Stal.?s of America Of of any
agency, instrumenlarrty or local gOllernmental unit of 8r1y such state (i) which are not canable a1
the option of L'le obligor prior to ma1urity Of as to which irrevocable n01jce has been given by the
obligor to cali on the date specftied in the notice, and Oil wt1ich are funy secured as 10 principal and
interest and redemption premium, if any, by a fund consisting olliy of cash or obhgat~ons
described ir) paragraph (a) abo ..... e, which fund may be applied only to the payment of such
principal of and interest and redemption premium, i1 any, on sucti bands or other obiigations on
the maturfty date or dates thereof or the specified redemp!ion date or dales pursuant 10 sucn
irrevocable instructions, as appropriate, and (iii) which fund is sufficient, as verified by an
i..,cJependent certified publjc accountant, to pay princlpai of and interest and redemplion premium,
if any, on the bonds or other obligations described in this paragraph on the maturity date o( dates
thereof or on the redemption date or dates specified in the Irrevocable instructions feferred to in
Exhibh A
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subclause (1) of this paregraph, as appropriate, and 0v) which are raled, based on the escrow, in
1he highest rating category of sap and Mood~'s or a<:JY $UCCeSSOfS thereto;
<f) Written repurchase agreements with any bank. savings insUtution or trus1 company
(other ihan the Trustee) which is insured by the :=ederal OePDs~ Insurance Corporation or the
Federal Sa'tings and Laan InSllrance Corporatiori, or with any, bro~er..tjea~ei wit'1 retail customerB
which fans under Securities Investors Protection Corporation protection, provided that suc~
repurchase agreements are fully secured b~' Federal Securities or obligations of any agency of
instrumentality of the Untted States of America, and provided iurther that (i) suc~ colla1eraJ is held
by the Trustee Of any agent acting solely for the Tru~,tee during the term of such repurcha~e
agreement, Qi) S~ collateral is nOI subject 10 liens Of claims at third piJrties, (iii) such c!)flateia! has
a market value (determined at least once every 14 days) at least eqtJat to the amount invested in
the repurchase ag~eement, (hI) the Trustee has a perfected first security interest in the collateral,
, .... ) the agreement sha!1 be for a term not longer than 270 days and ( .... ~ the failure 10 maln1ain such
oollaterai at the level required In 0tD above will require me Trus1ee to rrqu'Cate itle cc~atefaL
"principal Corporare TruS! Office" means t~le corporate trust otijce of the Trus1ee at Bank
of America Natjonal Trust and SavJngs AssoGia1~on, 55 Ha'Nthorne, Bth FIOOf, San Francisco,
Cali1ornfs, Of a! such ot'ner addless. deSignated by the Trustee by written noti~e tiled with the City
and the CorporatiOl1.
"Prior CertificajflS" means t!le certJficates of participalio;1 ell:ecu1ed and delivered by the
Prior Trustee rapresenting interest il1 lease payments to be 'T\ade by the City under the Prior
Lease.
"prior bea5e" means the Site Lease and Lease Agreement Relating 10 Pale> Alto Civic
Center, dated as of October I, 1983, by and betw""n the Corporation, as leSSO'. and the City.
~s Jessee, together w~h an~' duty authorized aJld executed amendmenl tMreto.
"Prjgr lease Payment Fund" means the fund by that name estaO.f1sh-ed and maintairfed bv
1he PriOl Trustee under the Prior Tru~t Agreement ~
-Prior Bwerve FuocJ means the fund by that name estabr.shed and maintained by the
Prior Trustee under the Prior TrJst Agreement
"'Pr'.prTruSl Agreement~ means that certain Trust Agreement Relating to Palo Alto Civic
Center Project, dated as of Octot>er 1,1983, by and among tne Prior Trus:ee. the Cl1y and the
Corporation.
"Prior Trus1fj1'" means Bank of Nneri,:a National iru~ aile:' Sa'Jings. Association, as trustee
with respect to the P (iQr Ce rti'ficates.
"f~Llsiness Use" means U5e directly or ind;recUy in a, trade or business carried on
by a na1ural person or in any activity carried on by a person other than a naiural person,
excluding, however, use by a gD .... ernmental un rt and use as a member 01 the general pubric.
"Proceeds," when used wtth ref8rence to the Cenificates, means t'1e face amount of the
Certif.ca!es, plus accrued interest and original issue premium, tf any, lesS original issue discount, f1
any.
..~ means, collectively, the Sfte and the FaCility, log€t~le~ with the 1992 Prcject.
"-o"a1Wled Smety BQIlif means a surP.ty bond issued by an insurance company rated in
the highest claims paying category by Moody's and S&P.
-Baling Categor'..l" means, witrl respect to 3r1y Permitted In .... estment, one of the generic
categor)es 01 ratir.g by Moody's and S&P a~jlcab\e to such Permitted Investment, without regard
to any refinement or gradua1ion of such rating category by a plus or minus sign or a numeral.
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"Registratfpo Books" means the records maintained b)' the Tius1ee pursuant to Secti..)n
2.12 of the Trust Agreement lor registrat~of1 of the ownership and transfer of ownership of the
c.rtfficates.
"Rugular BeGPfd pale" means the close of bUSiness on the fifteenth (15ttl) cay of the
month preceding each Interest Payment Date, whether or flot such fifteenth (15th) day is a
Bu'Siness Day.
"Regulatioos· means 1ernporary and permar1ent regula1io n s promulgated under !he Code.
"Bental Perlpet' me.ans each tweJv~ontt1 period during the TenTl of 1he Lease Agreement
commencing on March 2 In any year ar..d ending on March 1 in the ne:ct succeeding year;
provided. however, that the initial P.ental PeriOd shalf commence on the Closing Date and shall
end on March I, 1993.
"Reserve Fund" means the 1und by that name establlshed and held by the Trustee
pursuant 10 Section 6.01 of the Trusl Agrsem8llt
"Reserve Requirement"' means a sum equal to the Jesser of (i) ten percent of 1he
aggregate orj~jnal prinCipal component of !nstallment Payments, or (ii) the maximum amount o~
Pfincipal and m:erest payments with respect 10 the Certificates due in t'1e current or any !uture
year. rhe Reserve Requirement on the Closlng Date is $ >
".s£E" means Standard & Poor's CorpDfation, New York, New York, Of its successors.
r~'~jt~~~~;~~.Trust Company, 711 Stewart Avenue, 2 Mjdwest Secur-rues T!"ust Company,
Chicago,l!linois60605, Fa,-(312)
Department, Fax-(215) 49&-5058; orto ~:~~~r~::~~ eorganizalion Drvislon, 1900 Market
SUCh other ~ecurities depositories holdinG substanuar
amounts of obngafions of t'fP8& similar to the rtificates,
"Sill:" means all of lhat certain re.1 property Iocaled in !he City described in Exhibij A to
the Site and Facility Lease and Exhibit B 10 the lease Ag:ecment.
"Site and Far;i1ity Lease" means the Site and Facility lease, dated as of March 1, 1992,
by and between the City and the Corporation, together witll any duly al..1horized and executed
ameooments thereto .
• ~" means the State of Carifornia.
'Term of Itle Lease Aqreement~ means the time during whlc" the Lease Agrei:imenl is tri
effect, as prOVided in Section 4.2 of the lease Agreement
"Trust Agreemenr mear)S the Trust Agreement, dated as Of March 1, 1992, by and among
1he City, 1he Co,poratlon and the Trustee, together with any duly authorized amendments
thereto.
"Trustee" means Bank of America National Trust and Savings Association, or any
successor "thereto, acting as Trustee pursuant to the TrwS1 Agreement..
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Exhibit A
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EXHIBIT B
FORM OF THE CERTIFICATES
CERTIFICATE OF PARTICIPATION
(1992 Ovic Center Refinancing and fmprovement Project)
Evidencing t"'e Direct, UndivkSecj Fractional Interest Gf the Owner
Hereof in Lease Payments to be Made by 1he
CITY OF PALO ALTO, CALI"ORNIA
As the Rental for Certain Property Pursuant
10 • Lease Agreeme"t Wrth the
Pato Alto Pubrr.: Imp ravement Corporation
NUMBER _ $,------
RATE OF lKTEFlEST
REGISTERED OWNER;
PRINCIPAL AMOUNT:
MATURITY DATE O"TED DATE
Marcl11. 1992
CUSIP
DOLLARS
THIS IS TO CERTIFY THATth. registered OViner iden@edabove, 0< registered assigns
(the 'Owne!,,), as the registered owner of this Cenilicate of Participation (the "Certi1icatej, is the
owner of a direct, undivided, fractional il"ltereS1 in lease payments (the "lease Payments")
payable unaer and defined in the lease Agreement (the "Lease Agreemenl"), dated as of Marc'
I, 1992, by and between 1I1e Palo Mo Public Improvement COrporation, a no,'proflt, pUblo
benefrt corporation organized and existing under the laws of 1he State of California (the
'Corporation"), and 1he City of Palo Alto, a municijJal cmporation and chartered crty organized and
existing under Ina laws of 1he State of California (the "Clty"). which lease Payments,
prepayments and certam other rights and interests under the lease Agreemept ~ave been
assigned 10 Bank of America National Trust and Savings Assooia~on, as trustee (the "Trusteej,
having a corporate trust office in San FranGisoo, California (Ille 'Prtncipal Co<porate Trust 0Ifi<;e")"
The Owner is entitled 10 receive, sublect 10 the terms of the lease Agreement, on the
Maturity Date kfen1i!ied above, 1he Principal Amount identified above, representing a direct,
und"lVided fractionaf portion of the le..ase Payments designated as pr!nCfpal coming due 01: SLlch
date, and to receive on September 1 and March 1 of each year. commencing September I, 1992
(each, an -Interest Payment Date"), untH paymen1ln fuB of said' Pr~ncipal Amount, the Owner's
direct, ur.Q;vided tractional' sI1are of the Lease Payments designated as interest coming due during
the six months immediately precading each of the In1erest Payment Dates; provided that interest
repr"""nted hereby shall be payable from the Interest Payment DOle next preceding !he date of
execution of th~ certificate unless (i) this Certificate is executed as of an ~nterest Paxment Da1e,
in which event interest shan be payable from such Interest Payment Date, or 0i) this Certificate is
executed on or before September " 1992, in which eventinterest shall be parable from March "
1992: provided, however. that if, as of the date of execution of any Certr.~cate, interest is in
default with respect to any Outstanding Certifica1es, interest represented by such Certificate
shan be payable from 1he Interest Payment Date to which interest has previously beoe;n paid or
made avajlable for payment with raspect to the OLrtstanding Certjfjcates. Payment of defaulted
interest shall be paid by check of the Trustee mailed to the reg<lslered owners at the Certifica1es
as of a s~al record date to be fixed b~ the Trustee in its sale discretion, notice of which shall
be given 10 the registered owners of me Certmcates not less than ten (10) days prior to SUCh
special record date. Said direct, undivided fractional share of too port'lon of the Lease Payments
deslgnated as interest is ille resurt of the multiplication of tt1e Principal Amount by the Rate of
Interest per annum identified above. Interest represented hereby is payable in lawful money of
the United States of America by check mailed by 1.l1e Trustee on each Interest Payment Date by
Exhibit 8
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first class man to the OYme~ at his addTess as ~ ap~3rs on t,e registration books 0' the Trustee
as 01 the clese of bus~n.ess. on the fdteenth (1Str<) da~ of the month immediately preceding each
Inleresl Payment Date or, upon written request filed w~h the TruS1ee prior to t~. fifteenth (15th)
day of the month immediately prececHng th~ Interest Paymen~ Date by 0 regis1ered owner of at
least $1.000,OOC In aggregate prir,cipai amount of Certificates, by wire transfer i11 immed~a~ely
avanabfe funds to an account in the Unrtad States designated b~ SI.lCIl r.ggistered owner in such
wrlt\en request Principal reores.ented hereby i~ payable i('l lawful money of the United States of
AmerIca t.y checic: of the frustes upon presentation and SUiJender hereof a1 the Principal
Corporate Trust Office of the Trustee.
This Certificate has been executed and deHvered by Ole Trustee pursuant to the terms of
a Trust Agreement, dated as of Marc~ " '992, by and among the Tru"ee, 'he Corporation and
the City (the "Trust ~,greement"). Reference is hereby made to the Lease Agreement and the
Trust .A.greement (copies of which are on file a: the Principal Corporate Trust Ofilce of the
Trustee) for a description of the terms on which the Certificates are delivered, the rights
thereunder of the reg~:ered owners of the Certificates, the righ!s, duties and immunities of the
Trustee and the rights and obtigatior\s o( the City utider the Lease Agreement, all of the
provision5'Ofwhich 1he ('Niner of thi,s Certifica1e, by aCCBptallC'e t1ereof, assents arid agrees.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
CERTIFICATE SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS
SHALL, FOR ALL PURPOSES, HAVE THE SAME EFFECT AS iF SET FORTH IN THtS
PLACE.
The Trustee has no obFigation or liability to the registered owners of the Certificates 10
make payments of principal Of Interes1 with respect 10 the Certificates eJi:.cep! from amounts
rece[ve<i 1rom the City pursuant to the Lea.s.e Agreement. The Tru~ee's obGgations are to
administer, for the benefit of the registered owners o~ 1he Certificates, the various funds and
accounts estahnshe-under the Trust Agre9ment. The Trustee makes no representatiQn
oonceming the recilal" contained In the Trust Agreement or in this Cerlificate.
The CIt'j nascertifled, re<:~ed and declared that an acts, COO<litlons and things requlrsd by
the constitution and statutes of the Stale of California, the Lease Agreemen1 and the Trust
Agreement to exist, to have happened and 10 ha\,le been perlo~med precedent to and in tne
delivery of this Certiticate, do ex!st., have happened and Mve been p-E::rformed in due time, form
and man!'W!"f as (equired by law.
IN WITNESS WHEREOF, lhls Certificate has b€en executed by BanK of America
NatiOnal Trust and Savmgs ASsOOation. as trustee, acting pursuar.tto the Tru~t Agreement.
Date 01 Execu',JOn: ____ _
L
SANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCiATION,
as Trustee
8y ___ ......,;==""'=;:;::-___ _
Authorized Signa10rj
Exhibit B
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(FORM OF REV:RSE OF CER,IFICATE)
The Crty is obHgated t.J~der the lease Agreement to pay Lp,ase Paymert's from any
source of legaIly available funds -and the Cily has covenanted in the Lease Agreement 10 make
the necessary annuaf appropriations therefor. The obligation of the Oty to pay the Lease
Payments does not constitute an obligat;o~. debt or liabllit~, of the City far whi<:;h the City is
obligated directly, indirilctJy or contingenUy to levy or pledge any form ot taxation 0; fOf whfch the
City has levied or pledged any form of taxation. Neither this Cer1J1icate nOf t'1e obligation. of the
City to pay Lease Payments consi!tutes an Indebtedness wltnln the meanlng 01 any
constitutional Of statutor; debl lim ~ation or restriction.
To the exte!11 and in the manner permitted by the terms of the Trust Agreement, the
provisions of the irust Agreement may be amended by nle parties thereto wltl'1 the written
consent of the registered owners of at least sixty percent (SO('/o) In aggregate principal amount of
the Certifica1es then 0l,,1standlng (excllisive of certain Certificates owned or controlled by the
Gity) and may be amended without such consent under certain circumstances; provided that no
such amendment shall imps'lf the (Ight of any registered owner to recelve, in any cas'3, such
registered owner's fractional share of any lease Payment or prepayment tJ1ereof in accordance
with such registered owners Certificate. without the consent of .sucn registered owner.
'Thi,s Cert'ficate is transfera"Die and exchangeable by the Owner, in person or by his
aUomey 001)' authorized in writing, at the Principal COrporate Trust Ofke of the Trustee, but onll'
in the manner, subject to the rimi:ations and upon payment of any charges provided in the Trust
Agreement and upon surrender J3nd cancellallon of this Certificate. Upon .such transfer, a new
Certificate or Certificates of an authorized denomination or denominations tor the same aggregate
principaf amc,unt wil! be delivered to the transferee in exchange for this Certfflcate. The City, trle
Corporation and the Trustee may treat the Owner as ttle absolu1e owner hereo' for 311 purposes,
whether or not the payments represented by this Certificate shaH be overdue and the Cay, the
Corpcra1ion and the Trustee shall not be aHeeted by any nDnce to the contrary.
The Certificates maturing on or after March 1, 2002, are subject!o optional redemption in
whole or in part on any Interest Payment Date (but not in a total redemption amount of Jess than
$20,000 81 anyone 1\me} in in"Je1se order of maturity and by lot within a maturity, on or aher
March 1,2001, al lhe redempllon price sel forth below (expressed as a percenlage of the lolal
amount to be redeemed), together wfth interest accrued and unpaid 10 the date fixed for
redemption, from the proceeds of optiona' prepaymenls of lease Paymenls made by Ihe City
pursuant to !he Lease I'.g'eement:
~pti9nP£le
Morcl1 1,2001 and September 1,2001
Marcl1 1, 2002 and Seplember I , 2002
Marcl11. 2003 and each September 1
and March I thereafter
R?demp!ion Price
102%
101
100
The Certifk:ates are subject to extraordinary mandatory redemption in whol.e on any date,
()( in part on any Interest Payment Dale (but not in a total redemption arrount of less tnan
$20.000 at anyone tJme) , by lot within a maturity, from the net proceeds of an iTlsUiance or
condemnation award 10 the erlent credited towards the prepayment of the Lease Payments by
the City p.Jfsuant to the lease Agreement, at a redemption price equal to the princ~pal amount
1hereoho be redeemed. together wi1h accrued L..,terest to the date fixed for redemption. without
pternium.
The Certificates maturing on March 1, _______ , are subject 10 mandalory redemption in part
by lot on March 1 j(1 eacn year on and after March 1, __ , from the principal components of
schedulod Lease Payments required to be paid by the City pursuant to the Lease Agreement
with respect 10 each such redemption date, at a redemptfon price equal to the principal amount
thereof to be redeemed, together with accrued inter~ 10 the date fixed 10f redemption, wrthout
premium, as follows:
Exliiblt B
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.:c.::.. ___ ... ____ . .._ .. _._
Redem pti-?n Date
(Marcl11 !
Princlpal Amount
of Certificates
10 be Redeemed
Redemption Date
(M'M 1)
Princ;-pal Amount
of CertiflCa1es
to be Re<feemed
In the event trial any Certificates ma1uring Oil March 1, __ , are redeemed in part bu1 noi.
in wllole pursuant to 1he optional or ex1raordinary mandatory redemption pio ... ·is~onsj each such
redemption shan reduce 1he amount of Cer1Jficates to be redeemed in eac~ subseq:.Jent year
pursuant 10 the mandatory redemption provisions pro rata to correspond to the principal
components of the Lease Payments prevailing followi n 9 such redemption.
The Certificates maturing or. March 1, __ , are subject to man6alory redemp!~on in part
by iot on March 1 in each year on and after Ma,ch 1, , from the prfncipat components 01
seh<>duled Lease Payments required to be paid by theCliY pursuant 10 the Lease Agreement
wIth respect to each such redemption date, at a redemption price equal to the principal amount
thereof to be redeemed, together with accrued interest to H"le d!'3-te fixed fO( redemption, WitJlDut
premium. as JoIlows:
ReOOmption Date
(M.rcI11)
Principal Amour.t
at Certifcales
to be Redeemed
Redempt!on Date
(M_')
Principal A.."'I'IOoi,,mt
of Gertificates
to be Redeemed
ln1he eventtnat any Certificates maturing on March t. __ . are redeemed in part but not
In whofe pursuant to the optional or extraordinary mandatory redemption provisions, each such
redemption shall reduce the amount of Certificates to be rooeemed in each subsequent year
pursuam to the mandatory redemption provisions pro rata 10 correspond to the principal
componar:t:s of the Lease Payments prella iii rig following such redemption.
Notice of redemption is!o be given by tl;e Trustee by mailing a redemption notlce by first
dass mail at least thirty {30) days and not mNe than six!'j (60) days prior to trle date fixed for
redemption '0 the registered owner of the Certlffcate or CertJfi cates 10 be redeel'Tled a: the address
Shown on the Certi1icate registration bc'Oks maintained by tlIe Trustee. Notice of redemption
hailing teen given as aforesaid, Ihe Certificates or portions of Certl"ca!es so to be redeemed
shan, on the redemption date, become due and payable at the redemption price therein specified,
and from and after such date (unless the City shall default in t~e payment of th e redemption price)
imerest with fespec110 such Certlflca~e.s or portiDns of Certificates shall cease to accrue and be
payable.
Exhibft B
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EXHIBIT C
CITY OF PALO ALTO
1992 CERTIFICATION OF PARTICiPATION
REQUISmON No, ___ FROM CONSTRUCTION FUND
The unool'signed hereby states and certmes:
(~ !nat ha is Ihe duly elec1ed or appoinled, qualified and acling ___ ~ __ ollhe Crty
of Palo Alto, Q\lifomia, a generat few city of the Sta1e of Califomia, organized and eXisttr.g under
the Constitution and laws of the State of California {the "Ci!y";. and as SIJCh, is 1am:llar with the
facts herein certffied and is aUlhoMzed 10 cert11y the same;
(ii) that he is a duly designated "Crty Represen1atlve\ as s.uch term is defined in Exh'bit
"A' oj thai certain Trust Agreemenl, dated as of March 1, 1992 (the 'Trust Agreement"), by and
.moog the City, the Palo Alto Public Improvement Corporation (the "Corporation") and Bank of
America Natklnal Trust and Savings Association, as Trustee;
(jj~ that the amounts shown below, set forth the portion, ~ any, of the Ne! Proceeds 01 the
Certificates to be used for a Prtvate Business Use or to make or finance a "'an (as those terms
are defin&:l in 'the TrWfL Agreement) to other than a state Dr local governmental unit;
flY) that the City is in compliance with Sections 5.12 and 5.13 of thp. Installment Sale
Agreement, dated as 01 March 1, 1992, by and between the Cijy aM the Corporalion, which
sections rafatElto the Private Business Use nmttatlDn and the private loan fir.1rtation;
(vl that the amounts 10 be disbursed as shown herein are proper charges against the
ConstruCtion Fund;
DESCRIPTION AMOUNT
PRIVATE BUSINESS
USEIMAKE OR
FINANCE A LO!>,N
(TO BE INSERTED]
(vl) that no amOl'nt set forth herein has b€-en included in an'l ottler certificate requesting
disbursemen.t previously filed with tne DIrector 0; Finar.ce pu~suant to Section 3.03 Dfthe Trust
Agreemem;
{vii} that sufficient moneys will remain !n the Construction Fund or are otherwise available
10 the CRy fo!lowing such disbursei11enls 10 complete the 1992 Project; and
(viii) tha! no liens or stop notices have been fiied reiaflng 10 the con~1ructron that have not
been discharged,
Dated: _____ _
CITY OF PALO ALTO
By:
Tl1Ie:-==========
Exhibrt C
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A T T A C H X • M T G
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ATiACi1MENT G
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AGENCY AGREEMENT
RELATING TO 1992 PALO ALTO CIVIC CENTER PROJECT
by and between
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
and
CITY OF PALO ALTO, CALIFORNIA
Dated as of March 1, 1992
(1992 CIVIC CENTER REFIN ... NCING ... ND IMPROVEMENT PROJECT)
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AGENCY AGREEMENT
RELATING TO CONSTRUCTION OF 1992 PALO ALTO CIVIC CENTER PROJECT
THIS AGENCY AGREEMENT RELATING TO CONSTUCTION OF t 992 PALO ALTO
CIVIC CENTER PROJECT, made and enlered into as of Ihe first clay of March 1,,1992, by and
between PALO ALTO PUBLIC IMPROVEMENT CORPORATION, (the "Corporation"). anclthe
CITY OF PALO AL "0. a charter cfty and municipal corporation organized and operating under
the constrtlltion and Jaws of the Stal.a of California (herein cal1ed "City");
WIT N E SSE T He
WHEREAS. the Corporation and City have entered into a Si1e lease and lease
Agreement (the "Lease Agreemenr) clated as of the dale hereof, whereb)' the C"y has leased to
tl1e Corporation the s.1e of the PalO Mo Civic Center (the "Site") and the Palo Mo Civic Center
(the "Civrc Center,,) and the Corporation has agreed to cause the improvement of the Gi ..... ie
Center through the construction of certain improvements (the "1992 Project'') to the Civic Center
and to lease the improved CivIc Center (the "Improved Ci .... ie CeMer",) back to Ule Cily: and
WHEREAS, ii is in the interest of the Corporation and City itlat the Corporation appoint
City as its agent for the purposes of construction of the 1992 Project, and the Corporation has
agreed in tile Lease Agreement to appoint City as hs agent for oaid purposes;
NOW, THEr.EFORE, in the joint and mutual exercise of their power, and in conslderation
of the above premises and 01 the mutua! coyenants herein contained and 10r other valuable
consideration, the pathies Mreto DO HEREBY AGREE as follows:
Section 1. Defir1itions. The terms capftalized in this Agency Agreement shari have the
meanings asc!ibed to them in Exhibit A attached to the Lease Ag reement
SectiOn 2. Appointment of Ctty, The Corporation hereby ~ppajnts City as its agertt to
carry out an phases of the design, supervision and construction of the 1992 ?rOjeo1 and City, as
agent of the Corporation, assumes an rights, dl ... ti~s, respo!1sibiiities and liabilities of Corporation
regarding design, supervision and construction of the 1992 Pmject, except as limited herein.
Sectkln 3. Contracts and P~. Cfty, as agent Of the Corporation, may enter lnto
any purchase ordef, construction managemerlt agreement. archM:ecture or etlgineering contract,
insurance contract, cr conslrucl:lon contract requlred 10; cor.struc11an and completion of the 1 ~2
Project upon being assured that moneys suffiCient for the P<3yrnent thereof are then on deposn. in
the 1992 Conslruction Fund created pursuant to Section 3.03 01 t~e TrwS1 Agreement An}' such
purchase order, agreement, or contract heretofore executed by City in furtherance of the 1992
Project and incIuded in 1992 Project Costs nave been and shall be deemed e.ecuted on beholf of
the Corporation by the C~y as its agent; no such document need ~ecfte Of refer to th~s provision in
order for the agency relationship contemplated by this sentence to be effective. If, subsequent to
the execuHon l1ereof, C~y shat! enter into arlY such contract or order for which such moneys are
not a ..... ai1ab1e. it shaH be solely responsible for payment thereof.
Section 4. 1992 Project Descrlptipn. City, as age"t of the Corporation, shal1 have the
right to make any changes in the descrlption of tne 1992 Project or 01 any component thereof,
whenever C~ deems such changes to be necessary and appropriate; provided, however" thaI
any such change shan not aNer the eSS€rltial nature of the 1992 Project, or impair the ability 01
City 10 make Lease Payments under the Lease Agreement and that no increase in the 1992
Project Costs shan resuft from such change, which will cause tlie total of such 1992 ProjeC1 Costs,
actual and then esfirnated, to exceed amoun1s available in the Construction Fund, unless there is,
or City deposfts in, the Construc1ion Fund an: amouni sufficient 10 pay such increase. AIl action
_____ ... _____ " 4--
taken by the ~ in connecl;an with the planning and design of the 19fi"2 Project and tne incurring
of the 1992 Projoct Costs is hereby ;atffied, approved and confinned.
Section 5. SupervisioD of CoOo::tf';rtjoo end Inslailatipo. City, 8S agent of the
Corporation, shall have sole responsibHrty for and shall supervise construction of the 199.2
PrOJect and the purchase and installa!;on of any personal property const~utjng a pan of tne 1992
PrOject. Ctty shall monitor the perlorrna"1Ce by any construction manager and by the cor.str uction
contractors 10 the extent City deems appropriate. C1!y shall permit the Corporation or its
assignee to inspect construction at any and all reason3ble times which are deemed appmprlate
by the Ccrpof8tion or its assignees.
Section 6. Enforcement of C.onlract. The Corporatiorl hereby assigns te City al! rigt-,ts
and powers to enforce in its own name N tI"le name of the Corporation such purchase orders or
contracts as are required for construction, purchase and comp~etlon of the 1992 Project which
enforcement may be at law or in equity; provi~d, however, that the assignr.lent made: by the
CorporaOOn herein shan not prevent 1119 Corporation or ~s assignee from asserting said rights and
powers in lis own behalf.
Section 7. EJxed Coo§IDlclioo Price. The Corporation shall no' be responsibie for, nor
shaM it pay nor permit to be paid by the TruStee pursuant to the Trust Agreement, more than
~~~ ____________ Do~ars ($ ____ ) for tne construction of llie 1992
Prqect
Section 8. Inspection 01 Records. Tl1e Corporation shan have the right 10 inspect
pariodlcany the books and records of Crty relating to construction, and City shari permit the
Corpor~tion to make such Inspections thereof 81 all reasonable times as Gfty shall deem
a~ropflale.
Section 9. NQrrdjscrlmlnaljon. Each contract entered into between City, as the a~ent for
the Corporation, and any contractor shall provide that such ct'ntractor shan not diSCriminate
against any other contractor Of any employee or appr.cant fof" employment because of the race,
rengious creed. color, national ongin, or sex of such person, unless b2Sed upon a bona fide
occupational qualifIC6!ion. In aMrtion, in determining r.orrtractors, or in emOloying persons for tr.e
purposes of construction ()( construction mar1agement, City shan not discriminate on the basis of
race, (eftgiolJs creed, color, national origin, or sex of such person. unless basEd upon a bona fide
occupationai qualifICation.
Sect~on 10. Penorr,ance Ser;urilv. Each contractor hired by City on bahalf of the
Corporation, shall be reqUired to provide payment and performance bonds in amounts equal to
tt;e maximum price under the contracts.
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IN WITNESS WHEREOF, the Corporatioo and City have ""used this Agreement to be
executed in their respectJve ~ames by theIr dur~ auH'lOrized officers, ai' as 01 !~e date flrs1 above
written.
APPROVED AS TO FORM:
Crty AtlOfoey
JONES HALL HILL & WHITE,
A F'To1essional Law Co~ration
8y ____ ~~~~~~~------Kenneth L Jl)ne..c:;, Esq.
SpecJai Counsel
CITY OF PALO ALTO
By ________ -.~~---
Mayor
PALO ALTO PUBLIC IMPROVEMENT
CORPO.'lA nON
By ____ -==;;;-______ _
President
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A T T A C a K B H T B
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AfTER A ECOR ::lATION RETURN TO:
JONES HAlL Hill & \\'HITE.
A PROFESSIONAL LAW CORPORATION
FOlif Embarcadero Cemer. 19th Floor
S8fI Francisco, California 941 11
AtlenUOn; Kenneth L Jones, Esq
ATTACHHENT K
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION ,1929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
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ASSIGNMENT. AGREEMENT
Dated as of Ma,ch 1, 1992
by and between the
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
and
aANK OF AMERICA NATIONAL TRUST AND SA"1NGS ASSOCIATION.
as Trustee
(1992 CIVIC CENTER REFINANCING AND IMPROVEMENT PROJECT)
,
\
ASSIGNMENT AG~EEMENT
THIS ASSIGNMENT AGREEM~NT, made and entered into as oj March 1,1992, by and
between the PALO ALTO PUBLIC IMPROVEMENT CORPORATION, a nonprofit, public
beneftt corporation organized and existing under the laws of the State 01 Californla (1he
"Corporation'), and BANK OF AMERICA NATION,~L TRUST AND SAVINGS ASSOCIATION,
a national banking association organfzed and existinQ ur:der the laws of the Ijnfted States of
America, as tomee (the 'Trustee"); -
WIT N E SSE T H:
In 1he joint and mutua' exercise of their p::>wers, in consideration o(the mutual covenants
herein contained', arld for other valuable consldaration, the parties hereto recite and agree as
fol!ows:
Section 1. ~.
(a! The Corporation and the City of Palo Alto, Ca;;lorni. (the "Cit~'), Mve entered into a
lease agreement, dated as of March 1, t992 (the "l eaoe Agreement"), and recorded concurrentl,
herewtth, whereby the Corporation has agreed to lease to the City, ano the City has agreed to
lease from the Corporation, certain rear property more partiCUlarly described in £:.xhibit A hereto
attached and incorporated herein by reference, and improvements thereon {coflectivefy. the
"Project"}. in the manner and on the terms set forth in the lease Agreement. which terms ir1Clude.
wfthout limitation, the obligation of the City 10 pay Lease Payments (as defined in the lease
Agreement) to the Corporation in consideration of the Q1y'S use and enjoymellt of th-a Project
{b} Under the Lease Agreement, the Corporation is required 10 cause to be deposited
with the Trustee certain sums of money 10 be credited. neld and applied in accordance with the
Lease Agreement and wtth a tn~st agreement, dated as of March I, 1992 (the 'Trust Agreemenf'l,
by and among the Corporationj the City aoo the Trustee.
(e) Upon derlVery of the Lease Agreement, the CorporaUon is required 10 dopas. wrth the
Trustee, fn aMmon 10 other moneys to be deposiied with the Trustee, moneys for the financing of
the Project. For the ~urpose of obtaining such moneys, the Corporation IS willing to convey to
certain perscns (the "Owners") direct. und1vided fractional in!ereS1s in the Lease Payments, such
direct, undivided 1ractionat interests to be evidenced by certificates of participation therein (the
'"Certfficates",. In o~der to ma~e such fractional interests marketable on terms acceptable to the
Corporation, the Corporation is willing to assign and transfer tts rights under the Lease Agreement
to the Tru~tee for the benefit of the Q\vners. Concurrently wtth the delivery of this ASSignment
Agreement, the Trustee is executing and oonvering Cen:i'~cates in c:n aggregate princ'lpal amount
of not to exceed Eight M~Hion Five Hundred Thousand dollars ($8,500,000). The proceeds of
such sale are antiCipated to be sufficient to permit the Corporation to make the deposrts required
under the Lease Agreement and the Trust Agreement and to perm11 the Corporation 10 pay
1herewTth the cost of financlng of the Project
(d) Each of the parties has authority to enter into this Assignment Agreement and has
taken all actions necessary to authorize Its officers 10 execute It.
Section 2. Assignment The Corporation hereby transfers, assigns and sets over to the
Trustee, for the bene1it of the Owners of the Certihcates, all of the Corpora1ion's rights arid
interests under the Lease Agreement (excepting only the Corporation's rigl"~~s under Sections 5,9,
7.3 and 9.4 of the Lease Agreement), inciuding withom limitatioo til the right to ;eceNe and collect
all of the Lease Payments from the City under the Lease Agreement, {ii) the right to receive and
COllect any proceeds of any insurance maintained thereuntjer and of any condemnation award
rendered with respect to the Project, and (iii) the righl to exercise such rights and remedies
con1erred on the, CorporatIon pursuant to the Lease Agreement as may be necessart or
[
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• convenient (A) 10 enforce payment oIl11e Lease Payments a"d any olher amounts required,lO be
deposJled in too Laase Payment Fund or the Insurance and Condemnation Fund established
under 100 Trust A~reement, or (8) otherwi3e 10 protect the Interests of the O"mgrs in the event of
a clafau~ by the City undec the Lease Agreement All righls assigned by the Corporation 511011 be
adm:nistered t?Y the Trustee in accordance with the provisions of the Trust Agreement and for the
equal and fraclooal booefrt of ttle Owners of lI1e Certificales.
Section 3. ~otance. The Trustee ",,areby accepts the assignments made herein for
the purpose of securirl9. equally and kactionatly. the paymer1ts Clua pursuant to the Leaae
Agreement and the Trust Agreem~ni te, and the rights ur.der tne Lease Agreement and Trust
Agreement of, "he Owners of the Certiflcales delivered pursuant \0 the Trusl Agreement, all
subject to the provisions of lI1e Trust AgreemenL
Section 4. Cons1itjpns. This Assignment Agreement shall neither confer rights nOf impose
duties '4JOIl1he Trustee beyond those e<prBssty provided in lI1e Trust Agreement. The Trustee
assumes no respon:slbfl!ty iO! the accuracy of the recitals herein.
Section 5. E;recllljon jn CountArnarts. This Assignment Agreement may ba execu1ed in
sevei'a1 counterparts, each of which shall be em OfiginaJ and all of whicM shall constitute but one
and the sarne instrument
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lN WITNESS WHEREOF, the parties have exect.1ed this Assignment A9'ee,"~nt by iheir
officers tharSl!ntD duiy authorized as cf the day and year firsl written above.
(S E A L)
Attest
Secretary
APPP.OVED AS TO FORM:
JONES HALL HILL /I WHITE,
A Professional Law Corporation
8y ____ ~~."'~~~-------Kennel'> I. Jones, Esq.
Special Counsel
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PALO ALTO PUBLIC IMPROVEMENT
CORPORATION
By _______ ~~~~---------
President
BANK OF AMERICA NATIONAL TRUSr
AND SAVINGS ASSOCIATION,
as Trustee
8y ____ ~~~~~--------Authorized Officer
STATE OF CALIFORNIA
CCUNTY OF SANTA CLARA
55.
On 1 before me, • a Nota~ Public in and for sald
County and State, personally appeared and
::::;"":;;:;"",",,==::;;;"'-.0;-:' personally known :0 me (or proved to me on the basis of
satis!actory evidence) to be the persons who exec~ed the wtthln instrument as President and
Secretary. respectively. of the Palo Alto Pubfic Improvement Corporation, the corporation that
executed the within instrumen! and 'known ID me 10 t>e the persons who executed the within
instrument on behalf of the corporatior\ herein named, and acknowledged to me that sucn
corporation executed the within fnstrumen! pursuant to its Bylaws or a ResollJ1ion of its Board of
Directoro.
Notary Publtc tn and ior said Coun'y and State
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STATE OF CALIFORNIA )
) $5.
COUNTY OF SAN FRANCISCO )
On1l1is __ day of ., in the year 1992, bafor. me, the undersigned
Notary PuIl,c, personally appeared , persona"y known to me ()(
proved to me on the basis of satisfactory evideoce! 10 be the person ';;ho executed the within
Instrument as a 01 , !he
national banJ<i"9 association therein named, and acknowledged to me thot said national banking
association executed the same pursuant to tls Bylaws ()( a Resolution ot its Board of Dlrect()(s.
WITNESS my hand and aflicial seal.
(S E A L)
Notary Public in and f()( said Stale
My Commission Expires: _______ _
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EXHIBIT A
DESCRIPTION OF CIVIC CENTER SITE
The land' referred to i'l€irein i,. .... descnbed as foJ!mw:
An 1M! certain real property in tJ1e City of Palo Alto, County of Santa Clara, State of
California, descrbed as fonows:
All 01 Lots 35 to 68, indusive, as shown ufX?n that certair, map entmad, "WH, H. H. Hart's
Subdivfsjo" of Block No. 11 Universit~ Park,· whIch map was fiJed for (eeord in the Office of U1e
Recorder olt"e County of Santa CI ara, State of California, on May 23, 1 Sa!) in Book t of Maps,
at Page 21.
Exhibit A
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A T T A C B M Z H T I
ATTACHMENT
ESCROW DEPOSIT AND TRUST AGREEMENT
by and between the
CITY OF PALO ALTO, CALIFORNIA
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION.
as Escrow Bank
Da1ed Marc h 1, 1992
(1992 CIVIC CENTER REFINANCING AND !MPROVEMENT PROJECT)
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ESCROW DEPOSIT AND TRUST AGREEMENT
ThiS ESCF'OW DEPOSIT AND TRUST AGREEMENT, mads and entered'into this 1st
day of March, 1992, by and between the CITY OF PALO ALTO, a charter cHy and municipal
corporation organized and existing by virtLJe of Constitution end laws of the State Df Calitom:a
(the "City"), orod SANK OF AMERICA NATIONAL TRUST AND SAVINGS ,.sSOCIATION. a
nationa1 banking association organtzed and exJs!lng under lhe laws of the United States of
America. as EscrOYi Bank (the ~Escrow Bank");
WIT N E SSE T H:
WHEREAS, the CHy ha., entered into a S~e Lease and Lease Agreement Relating to Palo
AHa CiviC Center, dated as of October 1. 1983, by and between the Palo Alto Public
Improvement Corporation (the "Corporation") and 1he City (the ~Prlor lease"), pur:s.uant 10 which
the Corpofation agreed to lease certain real property iir-d improvements 10 the City, and the City
agreec to make certain lease payments (the 'Prier Lease Payments") to 1he Corporation;
WHEREAS, the Prior lease provides that in the event tflat the City deposMs, or causes
the deposit on Its behalf of, moneys or certain Federal SectJriUes {as defined in Ule Prior Lease,
and which may include Unfted States Treasury notes, bands, bills or certificates of indebtedness
Of obligaljons for which the full faith and credn of the Unned States are pledged for the pal'ment of
principal and in;erest. including UnUed States Treasury (book entry) certificates, notes and
bonds, stale and local governmefit series), in an amount, toget~ler wiln irlvestmenl earnings.
suff~cient to make 1he Prior Lease Payments when and as due witn prepayment thereof in
accordance wi1h instructions of tne City, then all of the obligatiC'.r1s of the City under troe Prior
Lease and all of the security provided by the City for such obli~ations. excepting Oi'1ly the
obrigation of the City to make the Prior Lease Payments from said depOSit, shari cease and
1erminate. and unencumbered title 10 the PrClject shan be veffied in 1he City without further action
by the CHy Of the Corporation;
fVHEREAS. pursuant 10 a Trust Agreement Relating to Palo Afto Civic. Center Project,
dated as of October I, 1983, (the 'Prior Trust Agreement"), by and among the City, the
Corporation 800 Bank of America Nationa.l Trust and Sii-nngs Associatlon, as trustee (the "Prior
Trustee"). the Corporation assigned to 1he Prior Trustee its rights to receive Prior Lease
Payments from the City under the Prior lease and the right to axercise suc'h rights and remedies
~nferred on the Corporation under the Prior lease 10 enforce payment of the Prior lea~
Payments;
WHEREAS, pl..Jrsuant to the Prior Trust Agreement, the Prio:' Trustee agreed, amofl~ other
matters, to execute and detiver $5,920,000 certificates of partic:pation, of which $4,900,000
~ndpal amount is currently 'Outstanding {the "Prior Certificates~). representing undiv~ded fractional
Interests of the owners thereof 10 receive Prior lease Payments made by Ule City and to apply
such Prior Lease Payments 10 1he payment of principal and interest with respect to the Prior
Certificates, and to administer certain funds and accounts, created pursuant to the Prior Trust
Agreement, including a lease Payment Fund and a Reserve Fund;
WHEREAS} the Ci1y has determined that. as a resurt of favorable financial market
conditions, it is in the best in1erests of the CJty at 1his time to refinancs the City's obligat'lon to
make 1he Prior Lease Payments under 1he Prior Lease aild, as a resutt thereof. to p1o .... ide for the
~yment of the Prior Certificates 1hrougfl Octobe .. 1. 1998, and to redeem an outstanding Prior
Certificates in futl on October 1, 1993, a1 the redemption price of 102% of the prlncipal amount
thereof, plus accrued interest, and 10 tha, end, the City proposes to lease the Project kl the
Corporation and 10 lease-back 'the Project from the Corporatiorl pursuant to that certain Lease
Agreeme"', dated as of March 1, 1992 (U,e "Lease Agreamen!");
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WHEREAS, the City pmposes to make the deposit of moneys and Federal Securi!ies
referenced in Section 312 of the prior Lease and to appoint the ~scrow BS:lK as its agent for trle
purpose of applying said depos1t to the pa~ment of Prior Lease Payments iii accordance with the
Instructions provided by this Escrow De~it and Trust Agreement and of applying said Prior
Lease Payments 10 the payment and redemption of the Pr,or Certificates in accordance wilh Die
FOOr Trust Agreement, 8nd the Escrow Bank desires to acr.:ept said appoi ntment;
WHEREAS. to obtair. mOMYs to make such de;xlsit. the Corporalion proposes to assign
and tran~ certain 01 its rights under the U~ase Agreeme;1t to Ba!1k of AITIsrica Nation.al Trust and
Savings Association, as trustee (tl1e "Tru~ee"), pursuant to that cer1ain Assignmenl Agreement.
dated as of March 1, "1992, by and between the Corporation anj' the Trustee, arid to enter into
t"atcertain Trust Agreement, dated as of March 1, 1992 (the "Trust Agreement"), by and among
t~je Corpof'3tion, the City and the Trustee, whereby the TflJstee agrees 10 execute a.,d de~l/er
certifICates Of participation in ttl. principal amount of not to exceec S8.500.000 (the 'Certinc.!es,,).
each evk:lencJng a direct, undivided fractional interest in the lease payments made by th~ City
under !ha Lease Agreemen~
WHEREAS. the C~y wishes to make such a deposrt with the Escrow BanI< and to enter
into 1his Escrow Deposit and Trust. Agreement for the purpose of providinQ the 1errr,s and
cortcf,wns for t:--18 deposit and appficotion of amounts so deposited; and -
WHEREAS, the Escrow Ban.k has full powers to act with respect to tt'le irrevocable
escrow and trust created herein and to perform the duties and obligations 10 be undertaken
pursuant to this Escrow Deposit and Trust Agreernent;
NOW. THEREFORE. in consideration ofthe above premises and of the mutual promises
and covenants t":erein contained and fO( other vafuable consideratiorl, the parties nereto do
hereby agiee as fofloVlS:
Section 1. pefinition of Federal Securities. As used l'1ereln, the term "Federal Securities"
shall mean non-caflab!e, direct general obliga1ions of tl'1e Un1ted States of America {including
obHgations issued' or hekl in book entry form on the books of the Department of the Treasuri of
ttle UMed States of America).
Section.2. AQpojn1ment Of Escrow Bank. The City hereby <.'Ippt:lints the Escrow Bank as
escrow bank for an pUfPO-o::es of this Escrow Deposij and Trust Agreement and in accordance witll
the terms and provisions of this Escrow Deposit and Trust A~reemer.t. and the Escrow Bank
hereby accepts such appointment. The Escrow Banloc; is entering !rilo this Escrow Deposit and
Trust Agreement in its capacrty as Prior Trustee.
Section 3. EstabBshmeof Of ESC'OW Fund. There is he"eby crealed by the City with, and
to be held by, the :escrow Bank, as security for the paymen1 of V'le Pr]Qf Lease Payments as
hereinafter set forth, an irrevocable escrow to be maintained in trust b~' the Escrow Bank on
behalf of the Ctty aod ror the benefit of the owners cf 1he Prior Certificates. said escrow to be
designated the "Escrow Fund.1I All moneys and Federal Securities deposited in the Escrow Fund
which is a special fund for the payment of the principal and interesl due With respect to the PriOf
Certificates in accordance wtth the provisions of 1he Prior Trust Agreemef'1t. If at any 1ime the
E.scrow Bank shall reoei't'e actual k.n·· ',1ledge that the moneys aM Federal Securities in the
Escrow Fund will not be sufflCtent 10 mC.l\e any payment required by Section 5 hereof, the Escrow
Bank sha:1 notify the City of such fact and the City shan immediately cure such deficiency.
The Escrow Sank may rely upon the conclusiorl of Ernst & Young that the Federa!
Securities listed on E~htbil A, together wtth interest to accrue thereon, and cash wit! be fully
sufficient to pay all principat and interest due with respec1 to tne Prior Certificates due and
payable 10 and including October 1,1993, and 10 re6eem all Olrtstanding Prior Certificates in full
on October 1. 1993, at the redemption price of 102% of the principal amount thereof, plus accrued
interest
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S£;c\ion 4. Deoosij in1Q ~SCrgW EjJnd' \n\leslment Q1 "'moun's. Concurrently with delivery
of the Certificates, the Gill shari cause to be transferreci to the Escrow Bank for de:posit into the
Escrow Fund the 3mouni of $ _________________ in fmmediately avaHable funds, derived as
Iollows: (a) from the proceeds of sale of the CMlflcates In the amount 01 $ ,
!b) from the lease parrmenl fund estab~shed pursuan: to the Prior Trus1 Agreement (trle "Prior
lease Payment Fund 1 in the amount of S pursuantto Section 8 Mereot. and
(c} from the reserve tJnd established pursuant to the Prio( Trust Agreement (the "Prior Reserve
Fund") in t'le amount of $_____ pursuant to Section a hereof.
The Escrow Bank sha~1 invest $ of the moneys depo~ited in10 the
Escrow Fund pursuant 10 the precedtng para~rapt-I in the Federal Securitles set forth in Exhibit A,
Part 1, attached hereto and by this reff;rence Incorporated herein, shall invest $ __
of the moneys depos~ed In the E""row Fund pursuant to the preceding paragraph in trle Federal
Securities set forth in Exhibit A, Part 2, attached hereto and by this reference incorporated herfl'in
(collectively, the "Escr~ Federal Securities,,), and shall Mid the remaining moneys depoSITed
in the Escrow Fund pursuant to the preceding paragraph ($ _ ) in cash uninvested.
The Escrowed Federai Securities shall be deposrted with and field by the Escrow Bank in the
Escrow Fund solely for the uses and P"rposes set Iorth herel n.
The Escrow Bank shail not be liabfe Of res.ponsible 10f any ~DSS resulting hom any
investment or reinvestment made PUisuant to 1his Escrow Deposit a~d Trus1 Agreement and in full
compfian-:;e with the pro ..... isions hereof.
Se...."1ion 5. Ins1ntc!igns as to Aoor.cation of peposit, The City hereby irre ... ·ocably dfrects
and instructs lhe Escrow Bank. to apply the matu,"lng princ'lp.:<1 amount of the EscroWed Federal
Securities and (;ash 10 pay an of the principal and interest due with respect to the Prior Ct~tificates
as the same shan become due and payable 10 and including October I, 1993, and upon call and
redemption of the Poof Certificates prior 10 maturity an Qc!ober 1, 1993, as mere partfcularly sel
forth in Exhibit 8 attached hereto and hereby made a part hereof. For such purpose of call and
redemption pt'iorto maturity. t"e Ctty ~ereby Instructs the Escrow Bank, as PnOf Trustee, and the
Escrow Bank, as Prior Trustee, hereby agrees to give notice of redemptlon of the Prior
Certifir.ates, such notlce of redemptlon to be gwen timely for redemption of the PriOf Certificates on
October 1, 1993, in accordance wtth the appficabfe provisions of the Prior Trust Agreement
Section 6. "westmeot of Any Remaining MPDfW:;. PJ. the wrftten direction of the City, the
Esc;'ow Sank shan invest and reinvest the proceeds received frorrl any of the Escrowed Federal
Securities, and the cash originafly depoSited into the Escrow Ftlnd, for a period ending not later
than the next succeeding interest payment date relating to the Prlof Cert~hcates. in federal
Securitie'S; provided, however, that {aj such wrttten directions of the City shan be accompanied
by an opinion of nationally recognized bond counsel ("Bond Counsel") that investment in
accordance with such arrectio"s wni l10t affect. for federal income tal( plJrposes, the exci usian from
gross income of inter~st due ..... tth respect to 1he Prior Certificates Of the Certificates, and (b) it the
City directs such investment or reinvestment to be made in United States Treasury Securities
State and lc-cal GcvBrnment Series, the City shall, a\ its cos\., cal.l~e to be prepared a(\
necessary subscr~on forms 1herefor In sufficient time to enable the Escrow Ban~ to acquire such
securnies. In the ellent thatthe City shan 18:110 file any such written d1rections wrth the Escrow
Sank concerning the reinvestment of any such proceeds, SUCh proceeds shatl be held unin .... ested
by 1he Escrow Sank. Any jrltp-rest Income resulting from investment or reinvestment of moneys
pursuant \0 this Section S and not required 10r 'the purposes set 10rth in Section 5 shall be paid 10
the City promptly upon the receipt of such interest income by the Escrow Bank.
Section 7. SJJD.stttqljQV or Wilhdrawal of Fede~al SecIJrjtfes The Cfty may, at any time,
direct the Escrow Bank. in writing to substitute Federal SecurttJes 10r an~ or all of the Escrowed
fe:jeral Secur'itles then deposited in the Escrow fund, or to withdraw end transfer to tne City arfY
portion of the Federal Securities 1hen depostted in U'le Escrow Fund, provided t'1at any suc'h
direction and substitLJtion or withdrawal shall be simultaneous arid shall,be accompanied by: (a) a
certification of an Independent certified pubnc accountant or firm of certified pubhc accountants of
favorable .national reputation experienced in the refunding of obligations of pol11cal subdivisions
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that the Federal Securities then to be so deposited in the Est::row Fund together with interes1 to be
derr.'ed therefrom, or in the case o! withd!"awa~ the Federal Securities to be remaining in the
Escrow Fund fo!lowlng such wtthdrawal lcJgether wfth the interes~ to be derived therefrom, shall M
tn an amoLInt at all tlmes at least sufficient to make the payments specified in Section 5 hereof;
and (bj an opinion of Bond Counsel that the substrtution or withdrawal wi:! not sfiect, for Federa~
income tax purposes, the exclusion from gross income of interest eue with respect to the Prior
Certificates Dr the Certif:cates. In the event tt'lat, foflowing any 5lIch substitution ot Federal
Securities pursuant to this Section 7, there: is an amount of moneys or Federal Securities in
excess of a~ amount nece.ssaiY to mak.e the payments required by Section 5 hereof, such
e"cess shall be paid 10 the C~),
Sectton 8. Aooncation 01 Prior Funds., On U'\e date 01 original delivery o~ the ~rtifjcates
and the depostt of a portion of the proceeds thereof in t'le Escrow Fund pursuant to SeCDon 4, the
Prior Trustee shall w!thdraw {a) alI amounts on deposit in the Pi;or lease Payment Fund
S and transler such amounts 10 the Escrow Fund. (b) S of
amounts on deposit in the PriOf Resenre Fund and transfer such sum to the Escrow Fund, and (c)
S of amounts on deposit in the Prior Reserve Fund and trar.sfer such sum 10
the reserve fund created pursuant to the Trust Agreement. Any amounts remaining in any other
lund or accounl crsate<! with respeel to the Prior Cettificales shall be remilled 10 the CitY. and any
amounts representing Interest earnings posted to the Pr,Of Lease Payment Fund 01' Prior Aes8rve
Fund after 1he date 01 original delivery of the Cenmca1es shali be trans1eHed to the Delivery
Costs Fund established f&the Certificates,
~(~~;~:~~~!~~~~:~~~~~~~~~~ All 01 the terms of the w~h respect 10
AQr'eeloorllas ~ set lanh in
the resignation and removal of
Trust Agreement as if set forth ~~r~~~!~~:~~~:~~~~~~~~~:~~~D~~~~~ 10 any resignation or removal Trustee in Section 503 of tile
and Trust Agreement as if set
Section 10. Comoem:,a1ioD to Escrow Banis. The Cit)I snaIl pay 1.tie Escrow Bank 1IJII
compensation 10r fts duties under this Escrow Deposit and Trust Agreement, including out-of
~et costs such as pubfication costs, p;-c;:payment expenses, legal fees and other costs and
expenses relating hereto and, in addition, fees, costs and expenses relating to the purchase of
any Federal $ecurittes after the date hereof. pursuant to a separate agreement between the City
and the Escrow Sank. Under no circumstances shan amounts deposited in the Escrow Fund be
deemed 10 be available lor said purposes.
Section 11, LiabilttJft'i and Obligajions of Escrow Bani<:. The Escrcw Sank shall have no
obiigation to maxe any payment Of disbursement of any type or incur any flflancia\ liability in the
performance of its dulies under this Escrow Deposit and Trust Agreement unless the City shall
have deposited' sufftcient funds wnh the Escrow Bartl<.. The Escrow Bank. may rely and sha!1 be
protected in acting upon the written or oral instriJC1ions of the City or ns authorlzed agents relating
to any matter or action as Escrow Bank unde! this Escrow Ceposit and Trust Agreement.
To the extenl pennitled by law, Ihe Crty hereby assumes flabiiity for. and hereby aorees
(whether or not any of the transactions contemplated hereby are consummated) to indemnify.
protect, save and hold harmress the Escrow Bank artd ,its respecti .... e successors, assigns,
agents and servants from and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, expenses and disbursements ~nclucflng legal fees and
disbursementsj of whatsoever j(ind and nature which may be imposed on, incurred by, or
asserted againsl, at any time, the Escrow Bank (whether ()( not also indemnified against by any
O\her person under ar.~ other agreement or instrument} and in any way re\atlng to Of arising out of
the execution and deHvery of this Escrow Depos~ and Trust Agreement, the establishment of the
Escrow Fuoo, the reten1lon of the moneys therein and an, payment, transfer or other appncatiorL
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of moneys or securities by tt=e Escrow Bank in accordance wi1t1 the provisions of this Escrow
Deposit and Trust Agr8smeflt, or as may arise b~ reason of any act, omission or erwr of the
Escrow Bank .. nade in good faith in the conduct of its duties; provided, however, th8~ the City
shall not be required to indemnify the-Escrow Bank against its own neg~gence or miscocduct.
The Escrow Bank shall not hail'S an,. I:at,flity hereunder except 10 Lle extent or its own
negligence or misconduct The indemnities contained in this Section 11 shal! survive the
termination of th~ Es..""TOW Deposit and Trust Agreement.
Section 12. Amendment. This Escrow Deposrt and Trust Agreement may be modified or
amended at any 'time by a supplemental agreement which shail become effective when the
written consents of the owners of cne hUOOl'ed percent (100'lfo) [!l aggregate prIncipal amolint of
the Prior Certmcates tl1en outstandi:lg shalll"laY6 been filed w:th the EsciOw Sank. This Escrow
Deposit and Trust Agreement may be modIfied or amended at any time by a 5upplementa!
agreement, withOut the consent 01 any such owners, bL.rt only (1) 10 add to the co\{enal"}~s ar,d
agreements of any party, other covenants to be observed, or to surrender any right or power
here!!') or therem reserved to the C~ty, (2) to cure, (;orrect or supplement any ambiguous or
defectille provision contained !lerein, (3) in regard to questions arisIng tlereunder or the~eunder, as
the parties hereto or thereto may deem necessary or desirable and which. in the opinion of
counsel, shan not adversely affect 1he interests of the owners of the Prior Certificate~ or the
Certificates, and that such amendment wi!! not caua;e inleresl on the Prim' CertJficates or
represented by the Certificates 10 become subject to federal income taxation.
Section 13. Termination' Unclajmed Money. This Escrow Depos~ and Trust Agreement
shari 1ermtnate when the principal of and jnt~res! on all Prior Certificates ha ..... e been paid;
provided, however, that money held by the Escrow 6an~ if) the Escrow Fund for the p2yment
and cfischarge of any 01 the Prtor CertjffC~tes which remain unclaimed for two (2) years after such
payments were d~e, shall be repaid by the Escrow Sank to the Crty free from the trust created
by the Prio':' Trust Agreement and this Escrow Dspasi1 Clnd Trust Agreemerft, and U1e Escrow
Bank shall thereupon be released and diSCharged with respect thereto and hereto and ailliabliny
of the Escrow Bank: with respect to such money shall thereupon cease. Tne Prior Trust
Agreement shatl be deemed to be amended by this Section to the elrter.t of any conflict between
this Sectio n anti the provisions of the Prior Trust Agreement
Section 14. Severahility. If any section, pdragraph, sentence, cl2use or provision of this
Escrow Deposft and Trust Agreement shall for any reason be held to be invalid or unenforceable,
the inyalidity or ur1enforceabilJty of such section, paragraph, sentence clause or provision shall
not affec1 any of the remaining prollisions of this Escrow Deposft arld Trust Agreement
Section 15. Notice of ~scrow Sank and CIty. Any notk:e to ordemaoo U~rl Ule Escrow
Bank may be served and presented, a,ld such demand may be made, at the Principal Corpara1e
Trust Office of the Escrow Banlc; as specified by the Escrow Bank as Prio( Trustee in accordance
with the prO ..... ·lsions of the PrJo( TruS1 Agreement f,ny rfotJce to or demafld upon the Cn)' sha'i be
deemed to have been suffiCiefl1ty gl...-erf or served for all pu:poses by being mailed by registered
or certified mdll, and deposited, postage prepaid, in a post office leMer box, addressed 10 such
party as prollided in the Prior Lease (or such other address as ma~' have been filed in writing by
lhe City with the Escrow Bank).
Section 16. Merger or Consolidation of Escrow Bank. Any company into which the
Escrow Bank may be merged or converted or wi1h which may be consvndated or any company
resulting from any merger, conversion or consorldatian to which r:: shail be a part;, or any company
10 which the Escrow Bank may sell or trans'er ali or substantially all of its corporate trust
business, provided such company shall be er,gib1e to act as Trustee under the Trust Agreement
and t'le Prior Trust Agreement, shall be the sucr.:essor hereunder to the Escrow Sank Without the
execution or filing of any paper Of any fur1t1er act.
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IN WITNESS WHEREOF, lhe City and lhe Escrow Sank have each caused this Escrow
Oeposit and Trusl Agreement to be executed by the~r duly autrJoriloo cffic-ers all as 01 ttle date
~rst above v.'rl1ten.
(S E A L)
Attest:
CIty Clerk
APPROVED AS TO FORM:
Crty At10rney
JONES HALL HILL & WHITE.
A. Professional Law Corporation
By ____ ~~~~~~~------Kenne!t1 L Jones, Esq.
Special Counsel
CITY OF PALO ALTO, CAlh'ORNJA
Sy ________ -..~~---------
Mayor
as Escrow Bank
By ____________________ _
T~ ____________________ ___
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EXHIBIT A
PAYMENT SCHEDUL.E OF "SCROWED FEDERAL. SECURITiES
E::xhtbit A
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EXHIBIT B
PAYMENT SCHEDULE OF PRIOR CERTIFICATES
Interest
Paymerrt Redemption Total
tae ~ ~ .Ere!!llli.!ll ~
April " 19&2 $239.011.25 $239,0'1.25
October " 1992 !185,OOO.OO $239,011.25 $424,011.25
April " 1993 $231,148.75 $231,148.75
October 1,1993 $4,935,000.00 $231,149.75 $98,700.00 $5,2~',8'B.75
Exhibit B
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A T T A C B X B • T J
ATTAC~MENT 0
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CERTIFICATES OF PARTICIPATION
(l992 Civic Center Refinancing and Improvement Project)
EvIdencing the Dir«t, Undivided Fractional Interests of
the Owners Thereor In Lease Payments to be made by the
CI1Y OF PALO ALTO, CALIFORNIA
As the Rental tor Certain Property
Pursuant to a Lease Agreement with the
Palo Alto Pnbllc Improvement Corporation
PURCHASE AGREEMENT
Marcb -,1992
Ladies and Gentlemen:
The UIldersigncd (Ihe "UndelWriter"), acting on behalf of itselC, offe" to enter intO
this agreement with the City of Palo Alta, CaIifonti. (the "City"), which, upon your
acceptance hereof, will be binding upon the City.nd the UndelWriler. This offer is made
subjett to the written acceptance of this Purchase Agreement by the delivery of such
acceptance to us at or prior 10 H)O p.m, Pacific Time, on the date hereol.
L Pun:hast and Sak cftlw Grtifiaz1ts~ Upon the terms and conditions and in
reliance upon the reprt!SeDtatJons, warranties and agreemems herein set forth, we her~by
agree to purchase, for reoffering to the public, and the City hereby agrees 10 cause Bank of
America National Trust and Savings Association, San Francisco, CaIiforrja (the "Trusleerr
).
to execute and deliver to the Undenvriter for sllch purpo5C, all (but not less than aU) of S
in aggregatO! principal amount of the certificates of participation
descnbed in the title 10 lhis Purchase Agreement (the "Certificates") pu"uant to the Trust
Agreement to be dated as March 1, 1992, among the City. the Palo Alto Public
Improvement Corporation (the "Corporation") and the Trustee (the "Trust Agreement").
The aggregate purchase price. to be paid by !he Undervmter for the Certificate.s shall be
S L-% of the principal amount thereof). plus accrued interest The
Certificates shall mature and shall represent intC"rest at the rates, as more particularly set
forth in Ihe Official Statement and in Appendix A herelo.
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2. 1M C(~j&l'C. The: Certificates shaD be dated 2.S of March 1, 1m shall
mature on the dates and :s.hail otherwise be as described in l and shall be executed and
delivered and s~cured pursuant to the pnvisions of the Trust Agrecro~nt. At the time of
Oosing (as be=einafter defined) the Underwriter .... ll, if necessary, acoept delivery of
temporary Certificate. pending re~ipt of Certificates in finaJ farm.
3, UB of lJpgImrnLr, The City berel!)< authorize> the Underwriter to use, in
connection with the offer and s.a.le of the Certificates, Wi> Purchase Agree",ent and an
0fIiciaJ Statement in B form a=ptable to Jo ... HaD Hill & White, a Professional Law
Corporation ("Special C",,,,,el") ond the City (which, together with all appe"dices L"ereta
and with such cllanges therein and supplem~Dts thereto as are consented :0 by the
Underwriter, is herein caned the "Official Statement"). Resolution No. __ , adopted by the
City Council of the City on February -' 1992 (!be "Resolution"), and all L'lionnation
contained herein and therein. and aD of the documents,. certificates or statements furnished
by the City to the Underwriter in connection with the transactions contemplated by Wi>
Purl:hase Agreement.
4+ Puhlicotrmrr,oIrlK Cmi6rakI The Undenmter Cigree5 to make a bona fide
public offering of all the Certificates at the initial public offering pri= or )ie!ds to be set
forth on the cover page of the Official Statement. Subsequent to such initial public offering,
we reserve the right to change such public offering prices or yieids as we deem necessary in
connection with the marketing of the Certificates.
S. D</iym gf QffjdpJ StpJnnmI. At least one day prior to the Oosing you shaD
deliver to the Underwriter three caples or the Official Statement in a form satisfactory to
the UndeIwriter, duly =<outed, and as promptly as practical the,.aft~r, such reasonable
number of conformed copies as tbe Unde",";ter shall request.
Within seven business days following the exealtion and delivery of this Agreement,
the City ,hall deliver or cause to be delivered to Ibe Underwriter, promptly after acceptance
hereo~ such number of copies of the Official Statement descnbing the Certificates (the
"Official Statement"), in a form satisfactory to Ibe Unde:writer as may he required by Ibe
Underwriter, and all amendments or supplements. thereto,ln order to comply with paragraph
(b) (4) of Rule 1502·12 of the Securities Exchange Act of 1934 (tlte "Rule") and with Rule
0-32 and an otber applicable rules of the Municipal Securities Rulemaking Beard.
The Underwrittr shall give notice to the City on the date after which DO participating
undenvriter, as such term is defined in the Rule, remains obligated to deliver final Offici",i
Statements p=uant to paragrapb (h) (4) of the Rule.
Prior ~o the earlier of (i) receipt of notice from the Under-""Titer pursuant to the
immediately prece~ing paragraph that final Official Statements are nc longer required under
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the Rule or (il) 90 daY' after the Oosing Date, the City shall provide tile Undorwriter wiL~
such information regarding the City, its current financiaj condition and ongoing cperations
as the Underwriter may reasonably request
Tb~ City hereby authorizes the Underwriter to t.:Se, in conneaion with the offer and
sale of the Certificates, the feDewing: the Official Statement; the Trust Agreement; .he Site
and Facility Lease; the Lease Agreement; tbe Assignment Agreement; the Agency
Agreem,nt; and an information contained herein and therein and all other documents,
agreements, certificates or statements furnisbcd by the City to the Underwriter or catered
into ill connection with there transactions contemplated by tru. AgreemenL
The Underwriter agrees to make a boca fide public offering oithe Certificates at the
initial offering prices or yields set forth in the Official Statement; bowever, the Underwriter
reserves t!J.e right to make concessions to dealers and to change Sl.lch initial offer prices or
yields as the Underwriter shall deem neces.s.&.ry in connection with the marketing of the
Certificates.
6. Qaring. At 9:00 a m ... Pacific time, on March • 1992, or on such other date
or al such other time as shaD have been mutually agreed upon by the City and the
Underwriler (the "Closing"), the City will cause the Trustee to deliver to the Underwriter
al such place as the City and the Underwriter may mutually agree upon, the Certificates in
temporary form duly executed, together with the other dOC\llDenlS hereinafter lDentioned.
The Certificales shall be in registered form in dODominations permitted under the Trust
Agreement and registered in the names desigoaled by us at least two (2) business daY' prior
to the Oosing. The Underwriter will accept delivery and pay the purchase price of the
Certificates as sel forth in paragraph 1 above by certified official bank checl< or checks
payable in immediately a,-ailable funds or by interbank fund transfers to the order of the
Trustee in an amount equal to the purchase price. The Certificates wiD be made available
to the Underwriter for inspection and packaging, at an office which may be mutually agreed
upon, not Jess than one (1) business day prior to the Oosing. As soon as possIble after
delivery as aforesaid, the City shaD cause the Trustee to replace the temporary Certificates
"'ith definitive Certificates (which shall be lithograpbed, printed or reproduced in another
manner acceptable 10 the UndcNT'iter). NOtwithstanding anything to me conrrary herein
contained, if for any reason whatsoever the Certificates shall not ha .... e been delivered to the
Underwriter prior to lhe close of business, Pacific time, or... March -' 1992, thee the
obligation of the City to cause the Trustee to execute and deliver the Certifica tc:s and of the
Underwriter to purchase Certificates hereunder shan terminate and be of no funh~r force
or effect except wilh respect to the obligations of the City and the Underwriter under
Section 10 hereof.
7. Rtpmrntatinns. Hlaf'1'tlntits and Aerront'ntJ' of lhL£i!L. The City hereby
represents, warrants and agrees with the UndeI"'Nf"iter that:
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a. The City is validly existins as a municipal corporation and charter C:ty
of L~ Slate of California;
b. (i) At or prior to the CIosiIlg, the City will ha'e tal:::n all actions
required to be taken by it to authorize the execution and delivery of the Lease Agreement,
dated as of Marcb 1, 1992 between the Corporation and the City (the "Lease Agreement"l
and the Trust Agreement and to cause the Trust .. to ex«:ute aod delivery the Certificates;
<iil the Dty has tun legal righ~ power and authorit:' to adopt the Resolution and to enter
into this Purcbase Ag;eement, the Trust Agre<menl, the Lease Agreement, the Siu: and
Facility l.=se, dated as of MiUch 1, 1992, between the City and the C<lrporation (the 'Site
and Facility Lease"), and the Escrow Deposit and Trust Agreement, dated as of the Oosing
Date, be1ween the City and Bank of America National Trust and Saving> Association, as
escrow baDk (the "Escrow Aer=ent"). and tun legal right, power and authority to cause
tbe Certi5catos to be executed and tlelive~ to the Underwriter and to perform its
obligations under each su:h document or instrument, and to carr)' out and effectuate the
transactions contemplated by this Purchase Agreement; (ill) the execution a."d delivery or
adopticl' of, and the performance by :he City of the obbg-;tions contained in this Purchase
Agreement, the Trust Agreement, the Lease Agreemeu" the Site and Facility Lease and the
Escrow Agreement have been duly autbor'.zed and such authorization shoO be in fuO force
and effect at the time of the OOSing; (iv) this Purchase .4,greement has been dviy ,"""oted
and delivered and oonstitutes z vabe\, lega.! and binding oblig.tion of the City; (v) the City
has duly authorized the consummation by it of the transactions contemplated by this
Purchase Agreement; and (Vl) at the time of Oosing. the Lease Agreement, the Site and
Facility Lease, the Trust Agreement and the Escrow Agreement will have been duly
executed and delivered and will con.titute Iepl. vaIid and binding obligations of the ('il)'.
The Trust Agreement, the Lease Agreement, Ibe Sill: and Facility Lease and Ill. Escrow
Agreement are b~reinafter roDeetively referred to as the "Documents".
Co No consent, approvaJ, authorizatioo, order, filing, registration,
qualification, election or referendum, of or by any person, organizatioo, coun or
gO'\lerrunenta1 agency or public body whatsoever ~ iequirtd in connection with the execution,
delivery or 'Sale of the Certificates or the conscmmation of the other transactiOI1S effected
or contemplated herein or hereby, ex:.ept for such actioru. as may be: nece.ss.aIJ to be ta}.::en
to qualify the Certificates for offer and sale under the Blue Sky or other securities laws and
~egulations of such states and jurisdictions of the United States as the Underv.Tiler may
designate;
d The execution, delivery and performance of the Purchase Agreement
and the documents., and compliance 'With tl'.e provisions hereof and thereof do not conf1ict
with or constitute on the pan of the City a vioiatian of or default under the Constitution of
the State of Califorrua or any existing law, chaner, ordinance, regulation, decree, ordt:r or
resolution and do not conflict with or result in a violation or breach of. or constitute a
default under, any agreement, Ll1denturc, mortgage, lease or other instrument to which the
Cit)" is a party or by which it is 'bound or to which it is subject;
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c. A:I of the time 0( acceptance hc:cof. no actiC'n, suit, proceeding, hearing
or inv<:stigation i5 pending or (to the Imcwledge of the City) threatened against the City:
(i) in any way affecting the existence of th~ City or in any way challenging the respective
powers of the several offices of the Ci ty 0< the titles of the officials of the City to such
offices; (ii) seeking to restrain or enjoln the sale. execution or deUvtcl)' of any cf the
Certificates, the application of the proceeds of the sale 0( the Certificates, or the collection
or revenues or assets of the City pledged or to be pledged or available to pay lease
payments under the Lease Aj;n:ement, or the pledge thereof, or in nay way ronresti."g or
affeamg the wIidity or enforceability of the Certificates, this Purchase Agreement or the
do..-uments, or contesting the powers 0( the City or its authority with respect to the
Resolution, the Documonts or this Purchase Agreement; or (iii) in which a final adverse
decision rouJd (Al mater'.ally adversely affea !he operations of the City or the
oonrummation of the transactions oontempL&ted by this Pureba>e Agreement, (B) ded .. e
this Pure""'" Agreement or any of the documents to be invalid or unenforceable in whole
or in material part, or (e) adversely affect the exclusion of the in'erest paid with respect to
the Certificates from gross income for purposes of Federal income taxation or California
per>om] income taxation;
!. Between the date hereof and the Oasing. \\ithout prior written
notification to the Underwriter, the City will not have i!~ued any bonds, notes or other
material obligations for borrowed money except for such borrowings as may be descnbed
in or contemplated by the Official Statement;
g. The City has not been notified or any listing or proposed listing by the
InternBl Revenue Service to the effect that the City is • bond issuer whose arbitrage
certificates may I!{)I. be relied upon; and
h. Any certificate signed by any officer 0( Lie City and dem'ered to the
Underwriter shall be deemed a representation and warranty by the City to the Und~rwriter
85 to the statements made therein but not of the person signing the same.
8. CoytMntt oCt'" City. The City covenants and agrees with the Undel"'N'liter
that:
a. The City 1Nill furnish such information, e.,eCllte such instruments,. and
take such other action in cooperation "With the Underwriter if and as it may reasonably
request in order (il to qualify the Certificates for offer and sale under the Blue Sky 0' other
securities la:ws or regulations of such stales and jurisdictions of me United States as the
Underwriter may designate and (ll) to determine the eliglbility of the Certificates for
investment under the laws of such states and other jurisdiction. and wiI1 use its best efforts
to con~inue such qualifications in effect so long as required for distrIbution of the
Certificates:
b. The City will apply the proceeds from the sale of 'he Certificates for
the purposes specific in the Documents; and
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c. For a period of 90 days after the aosfng or until such time (if earlier)
as the Underwriter shall no lunger hold My of the Certificates for sale, the City will (i) not
adopt any amendment of or supplement to the Official Stalemenl to which. after having
been ~ with a copy, lhe UndelWri1er sball object in writing or which ,hall he
disapproI'ed by the Und<rwriter and (til if any even1 relating to or affecting the City shall
occur u a result of which it is necessary, in the opinion of the Underwriter, to amend or
... pplemenl the Official Slalemenl in order to mili !l>e Official Statement not misleadfng
fn light of the circumstances existing al the time it is delivered 10 • purchaser, forthwith
prepare and furnish (at the expense of the City) • reasonable numher of copies of an
amendmeut of our supplemenlto the Official Statemenl (in form and substance satisfactory
10 the Underwriter) which will amend or lupplement t~e Official Statel!l~nl so thaI il will
not contaiD 8!lIIDlr""Je statemenl of a malerial fact or omit tc stale a material fact necessa,y
in o.,*," 10 mate the st..tements therein, in light of !be circumstaDceJ existfng at the time the
Official Sta1emenl is de livered 10 a purchaser, nOI misleading.
9~ Cnn4itions lD lJosing. The Underwriter bas entered into this Purchase
Agreement in reliance upon the representations and warranties of the City cDn~ineci herein
and the performance by the City of its obligations hereunder, both as of the date hereofand
as of the date of Oosing. The Underwriter's oolig2tions under this Purchase Agreement are
and sh&ll be subj~~ at the option of the UndeI"'Nriter, to the following further conditions as
of the Closing:
a. The representations and wa.-ranties of the City herefn shall he true,
complete and correct in all material respects at the date hereof and at and as of the aDOmg,
.. if made al 8!ld as of the Oosfng, and the staremo.nls made iD all certificates and oilier
documents delivered to the Underwriter al the Closing pumuml hereto shaD he true,
complete and COrTect in all material respects on the date of the Oosing; and the City shall
he in <amptiance with each of the agroements made by it in this Purchase Agreement;
h. AI the time of the Oosing, (i) the Official Statement, this Purchase
A.gn:emenlt the RC'rol1.1tian and the Documents shall be in full force and effect and shall not
have been amended, modified or supplemented except as may have been agreed to by us;
(ii) ail actior..s which in the oplnion of Special Coume~ shaD be neCC!'..Sary in connection with
the transactions contemplated hereby, .hall ha.e heen duly taken and shall he fn full force
and effect; and (iii) the City and the Cmporation shall each perform or have performed an
of its obligations required .. ndet or specific in the Resolution, this Purchase Agreement, the
Officia.l Statement or the Documents to be performed at or prior to the a~ing;
c. No decision, ruling or findfng shall have heeD entered by any competent
court or governmental authority since the dale 0{ this Purchase Agreement (and not
reversed on appeal or othen.vise set aside) or, 10 the best knowledge of the City, be pending
or threatened which has any of the effects descnbed in Section 7( e) hereof or which contests
in any way the completeness or accuracy oi the Official Statement;
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d. No Orcif"f, decree or injunction of any court of competent jurisdiction,
and no order, ruling or regulation of the s,...curities and Eu:bange Commission, ,hall have
been issued or made with the purpose or effect of prolubiting the """"ution and delivery.
offeriDs or sale at the Certificates as conlemplaWl hereby, and no legislation shall ha,-e
been ell8CUd, or a bill favorably reported for adoption. or a deci!ion by a ",un established
under Article III of tile ConstiTUtion of tho United States rendered, or • ruli.og, regulation,
proposed or official ... tement by or on behalf of the Securities and Excl'.a."gt Commission
or ol.her pernmental agency having jurisdiction of the subject matter ohail be made or
issued, to the effect that the Certificates or any securities at the City or of any similar body
of the type contemplated herein are IKlt exempt from the registration, quaIifi<-ation or other
rt.quirements of the SeewitiC$ Act ()f 1933, as amended and as then in effect, or of the Trust
Indenture Act of 1939, as amended and as then in effect;
e. AI or prior to the date of the Oosing. the Underwriter ohail reee;ye
~ee copies of the following document" in each case dated on and as of the date of the
Cosing and satisfactory in form and substance to the UndeNTiler:
(i)
Underwriter Ill2.y rely;
An approving opL'lioo of Special Counsel on which the
(li) A supplemental opinion of Special CoUll5C~ addressed to the
Underwriter, to the effect that: (A) this Purchase Agreement has been duly author'=d,
executed and delivered by the City and the Corporation and constiTUtes the le~ valid and
binding obligation of the City and the Corporation; (B) under existing la~ the Certificates
are not required to be registered under the SecuriliC$ Act of 1933, as amended, and the
Trust Agreement is IlllI required to be quaHfied under the Trust L,denture Act of1939, as
amended; (C) without having undertaken tojetermine independently the a=cy or
CQmplctencss of the .statements contained in the Official Statement, but on the basis of their
conferences with representatives of the City and their ex.amination DC certain documents
referred to in the Official Stalement, nothing has come to their attention which bas led them
to believe that the Official Statement {other than the financial and statistical information
contained therein as to which such counsel needs express no view) contains. any untr;.]e
statement of material fact or omits to state any material fact required to be stated therein
or nccessilt')' to make the slatement therein. in the 6gbt of the circumstances una'!:r which
they are made, not misleading; and (D) there has been compliance with the provisions of
the Prior Trust Agreement relating to satisfaction and discharge of the Prior Trust
Agreement, the Prior Lease Agreement and the Prior Certificates (as each such capitalized
term is defined in the Trust Agreement).
(iii) A certificate signed by an appropriate official of the City 10 the
effect that (A) its representations. agreements and warranties herein arc tru~ and correct
In ail material respecu as or the date of Oasing; (B) there is no action, suit., proceeding,
inquiry or investigation. al law or in equity, before or by any wmpctcnl court or pubtic body,
pending Of, to his or her knowledge , threatened which has any effects descnbed in Section
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i(r-) hereof, or whicb contests i!l any way the compJeten~ or accuracy of the Official
Statement (but in lieu of or ill conjunction with such a:rtificatioD the Underwrit<t may, at
its ",Ie dlscrt:tio .. accept a:rtificates or opin'ons of the City Attorney to the effect that the
issues raised in lUI)' St!Cit pending or threateDed Iitigaticn are without substance and that the
conten:ioDs of aD plaintiffs therein are without merit); (C) ,uch official has reviewed the
Official Statement and on s.uch basis cenifies thai the Official Statement does not contain
any untnx: ItaCement of a material fact or omit to state any malerial fact required to be
stated thereiD or n=ssary to make the statements therein, in light of the circumstances
under..tDch they were made, not misleading; (0) eaclI of the eonditions in Section 9 of this
Purcbaoe Agreement to be satisfied by it bas been satisfied as oi the date of the CIosins and
it is not aware of aJl)I other conditions of this Purr.hase AjreemeDt that bas DOl been
satisfied as of the date of Closing; (El the Certificates and the sources of payment thereof
conform to the descriptions thereof contained in the Official Statemen~ and (F) there has
be.:n no material a<!vern: change in its financial condition or results of operation from the
date of the Official Statement to the date of the Closing.
(iv) A non-arbitras;e certificate of the City, in farm 5~tisfactory to
Special Counse~ signed by an appropriate official of the City;
(v) Evidence satisfaclOry to the Underwriter t.i.at the Cc"1ificates
shall have been rated' • and • " or better by Moody"s Investors Service, Inc. and
Standard &0 Poor's Corporation, respectively, ar.d that sucb ratings bave not been revoked
or downgraded; and
(Vl) An opinion af the City Attorney, addressed to the Underwriter,
to the effect that: (A) neither the transactions contempl.ted by this Purch .... Agreement nor
the transactions contemplated by the Documents are subject to any competitive bidding
r~ts; (B) tile documents have been duly authorized, executed and delivered by the
City oed constitute legal, valid oed binding obligations of the City; (C) there is no action,
suit, proa:eding, inquiry or im-mgation, at law or in equity, before or by any court or
public body, pending, or to such =.sel's knowledge, threatened. against the City which has
any of the effects described in Section 7(e) oi this Pm-chase Agreement or con~esting in any
way the completeness or accuracy of the Official Stalemcc[ (but in lieu of or in conjunction
'Nith such certification the U r.derwriter may, in its: sole discretion. aca: pt certificates or
opinions 0( the City Attorney to the effect that tOe issues raised in any such pending or
threatened litigation are without substance and that the contentions of all plaintiffs therein
are without merit); and (D) without having undenaken to determi,e independently the
accuracy or completeness of the statements conLained in the Official Statement, but on the
basis of his conferences with representatives of the City and his examination of certain
documents referred to in the Official Statement, nothing has corne to his attention which has
led him to believe that the Official Statement (other than the financial and statistical
information contained therein as to which such counsel need express no view) contains arl}
untrue statement of material fact or omits to Slate any material fact required to be stated
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therein or necessary to make the SL3tement ther~ln, to the light of the circumstances under
whicb they an: made, not misleading.
(vi.!) An opinion of cOUIlSel to the Trus.tee, addressed !o the
Underwriter, to the effect that: CA) the Truste~ has fulllegoJ right, power and authnrity to
enter into .:1d perform its obligatioru. under the Trust Agreement and the Assignment
Agr--..ement, dated .. of March 1, 1992, be"",eeD the Corporation and the Trustee (the
"Assignment ~ement"); (B) the Trust Agreement and the Assignment Agreement have
been duly authoriz:d, executed 2nd delivered by the Trustee 2nd constitute the legal, valid
and binding obligatio ... of the Trustee, enforceable agaln.st the Trustee in accordance with
their terms; and (C) the Certificates have been duly executed and delivered by th~ Trustee.
(viii) An opinion of tho City Attorney, actiog as counsel to the
Corporation, ad<\re$.<e<l IC' the Underwriter, to the effect that: (A) me Corporation has full
legal right, power and autho.;ty to enter into and perform its obligations under the
Documents; ""d (B) the document! have been duly authorized, exeClJted and delivered by
the Corporation and constitute legal, valid and binding obligations of the ~rporation,
enforceable agaiml the Corporation in accordance with their fCspective terms.
(Dt) A certificate, together with a fully eJl:ccuted ropy of the Resolution,
of t4 City Quk, to the effect that such copy is a tn •• and correct copy of the Resolution
and that the Resolution is in full force and effect and has not been modified or repealed.
(x) The con.sent of Coopers & Lybrand t~ inclusion ofits opinion, dated
lune 30, 1991, on the City'. financial statements in the Official StatemenL
(J<i) A report, prepared by Erruit & Young, independent oertified
accountants, verifying certain computations based on assumptions provided to it by the
Underwriter, which show: (a) the sufficiency of forecasted principal ma.urities of and
interest on the Federal S=curities (as defined in Lie Escrow Agreement) togelher with an
initial casb deposi~ if a.,)", and other aVa:Jlable funds to pay~ when due, the principal and
interest requirements of the presenlly outstanding Prior Certificates (as defined in the
Escrow Agreement), arc (b) the comput>,tions of "yield·' on the Certifica'es and Federal
Securities depooitcd to the Escrow Fund (as defined in the Escrow Agreement) which
support Special Counsel's conclusion th.t the Certificates are not "arbitrage bonds" within
the meaning of Section 148 of the Internal Revenue Code of 1986.
(xii) Such addition.; legal opinions, certificates, proceedings,
instruments and other documents as the UndeI'"W1'"iter or Special Cmms.e.l may reasonably
request to evidence compUance by the City with legal requirements, the trUth and accuracy.
as of the time of Closing, of the repreSf:'ntallons contai..T'lcd herein and in the Official
Statemcr.t and the due performance or saTisfaction by the City and the CorporatioIl, at or
prior 10 such time, of all agreements then to be perfonned and all conditions then to be
.. tisfied by the City or the Corporation, as the ca,e m.y be.
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(xiii) Evidence of the issuana: of an ALTA ti~c insurana: policy on
the Site (as. defined in the LeMe Agreement in an amouct nol less than the sta:ed amount
of the Certificates).
If the City ohaI! be unable to satisfy the conditions to the Underwriter', obligations
contained in this Purchase Agreemont or if the Undorwriter', obligations ,hall be terminated
for any rcuotI per.nitted by this Purchase Agreem~t, this Purchase Agreement may be·
c:anoeled by the IJ nderwriter '1, or at any time prior 10, the time of Closing. Notice of such
canceIlatioD IhaIl be given to the City in writing. or by telephone or teJegraph confirmed in
writing. Notwithstanding any provision herein to the contrary, the performance of any and
all oblJgations of the City hereunder an.! the performance of any and all conditions contain
herein for the benefit of the Underwriter may be waived by the Underwriter in its scle
discretion.
The Underwriter ,hall also haye the right to cancel its obligation to purchase the
Certificates, by wrillen notice to the City, If between the date hereof and the closing; (A)
any e\lent oc:c:un or information becomes known, which, in the reasonable professionai
judgment of the Underwriter, makes untrue any statement of a material fact set forth in 1..ite
Official Statement or results in an omission to state a material fact necessary to make the
statements ~ therein, in light of the circumstances under which they were made, not
mi<JeadMg, (13) the market for the Certificales or the market price of tile Certificates or the
ability of the Underwriter to enforce contracts for the sale of the Certificates sha!l have been
materially and adversely affected, in the reasonable professional judgment of the
Underwriter, by (2) legislation enacted by the Congress of the United States, or passed by
either house: of the COngr .... or fayorably reported for passage to either DOuse of the
Congress by any committee of such house to which such legislation has heen referred for
consideration, or by the legislature of the State of California (\he "State"), or a deci<ion
rendered by any court of the United States or of tile Stal< or by the United States Tax
Court, or a ruling, order, or reg-.lation (final or temporary) issued by the Treasury
Department of the United States or the Internal Revenue Service or other federal or State
authority, whicb would haYe the effect of changing. directly or indirectly, the Federal income
tax treatml!:nt or State tax treatment of interest on obligations of the general character of
the Certificates in the hands of the bolders thereo~ or (2) any new outbreak of hostilities
or other national or international calamity or cruis in the financial markets of the United
States which, in the reasonable professional judgment of the Underwriter, would materially
and adverserj affect the ability of the Underwritor to market the Certificates, or (3) a
general suspenslon of trading on the New York Stock E'(change, or fixing of minimum or
maximum prices for uading or maximum ranges of prices for securities on the New York
Stock Exchange, whether by vinue of a determination by the New York Stock Exchange or
by order of the Securities and Exchange Commission or any other governmental authority
having jurisdiction, or (4) a general banking r.::Ioratorium deciared by ellher federal or Stale
or "cw York authorities having jurisdiction; or (C) additional ma~eriaI restrictions (lot in
fo .. .;.e or being enforced as of the date hereof shalJ have been imposed upon trading in
~curities generally by an governmental authority or by any national securities exchange
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which,. in the reasonable professional judgment of the Undc:rwriU:r, mate::ially ar.d adversely
affea the market pri<:e for the Certifu:ates.
10. CmyIjtigns to QbUmtiLm of lilt en lhl Corpflration and tM Twa.
.. The performan~ by the City and the Corporation of their respective
obligations is conditioned upon (i) the performance by the Underwriter of its obligations
hereunder and (ii) receipt by the City and the Underwriter of opinions and certificates being
deImml at :ne Closing by pe"""" and entiti .. other than the City.
h. If the City, the Corporation or tile Trustee shall be unable to satisfy the
conditions 10 the Underwriter', obligations contained in this Purchase Agreement or if the
Undetwriter', obligations ,hall be tel1llin;!ted far any reason permitted herein, all obligations
of the Underwriter hereunder may be ",rminated by the Underwriter at or at any time prior
to the Closing dale by written notice to the Trustee, the Corporation and the City and
neither the Underwriter nor the City or the Corporation shaD have any further obligations
hereunder. In the event lhal the Underwriter f&iJ.; (other than for reason permitted by this
Pun:hase Agreement) to accept and pay for the Certificates at uosing, an amount equal 10
the difference between the aggregate purchas< price to paid for the Certificates ar,d the
aggregate purchase price to be paid by:ne Underwriter as shOWIl in pa. ... grapb 1 above shall
be payable by the Underwriter as and for full liquidated damages for such failure and for
any and all defaults hereunder on the part of the Underwriter and the acceptance of such
amount shall oonstitute a full release and discharge of all claims and rights of the City or the
Corporation against the Underwriter.
11. EmnnQ.
a. If the Underwriter accepts delivery of and pays for the Certificates as
provided herein, the foDewing expenses shaD be paid from amounts deposited in the
Delivery Costs Fund established under the Trust Agreement 'Jr. to Lie: extent such amounts
are insufficient for such pu..-rposc:, the: Underwriter shall pay such expenses; (i) the costs of
preparation, printing a."d delivery of the Certificates. (ti) the fees of any rating agency rating
the Certificates, (iii) the cost of printing and distnouting Lie Preliminary Omcial Statement
and the Official Statemen~ (iv) the fee, and expenses of Special OJunsei and City Counse~
and (v) an other costs and di'i:bursements of the City incident 10 the performance of tbe
City" obtigatioll! hereunder.
b. If the City defaults on its obligations hercunder~ the City shall pay .. he
expenses descnbed in Section 11(a) from any source of lega~'y avail.bie fund,.
c. The UndCNTIter shalJ pay its costs and expenses L'l connection ~;:th its
pllrthase of the Certificates hereur.de:r and the f~es reqUITed to be paid to the California
Debt Advisory Commission.
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12. l:iRIiIIril Any notice or other communication 10 be given under this
PurtbaJe Agreement (other than the acap= hereof as specified in lbe fint paragraph
hereoI) may be given by deli\ering the same in writing, if 10 the City to the City Manager,
aty of Pale AIle, P.O. Box 102S0, 2SO Hamilton Avenue, Palo Alto, CalifolI'ia. 94303; or
if to the Uodclwriter, Ie the Pubfic Fmance Departmcut, Security PacIfic Natiorull Bank, 300
South Gnmd Avenue, 23rd Floor, Los Angeles, Califomia, 90071.
13. Pqrdq in '1Itft'C:#" surrirq! pfRn'TY'WiorL! tmd Wgmrlllig. This Purch4i.sc
Aireemenl, when -=pled lri the Oty in writing as heretofore speciiied, .W constitute the
entire apcement between the City and the Underw.iter (including the SU=I1 or assigns
of the UDCletwritcr). No other penon shall &:quire or have any righl hereunder or by Wtuc
hereof. All the represeotations and W"..mmti .. of the aly in this Purchase Ap'eement shall
survioe repnIIcss of (a) aD)' investigation or any stalement in respeOl thereof made by or
on behalf <>f the Underwriter, (b) delivery of, and paymenl by the Underwriter for, tho
Certifica .... hereunder, .nd (c) any termi.,ation of this Purchase Agreement.
14. EzrqaiIm ill Gwnlrrp<Vt! Tt,is Purchase Agreement may be. e>:ecuted in
.everaJ roUDterpam each of .. hich shall be regarded as an origmal and all of which shall
constitute one and same document.
IS. Apoligzkk Lzw. This Purchase Agreemenl sball be interpreted, governed
and enforc:ed in accordance "'ith the laws of the State.
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The foregoiDg is hereby agreed to and
accepted .. of the date fint above written:
Cl'IY OF PALO ALTO. CALIFORNIA
~--~~-----------City Manager
Receipt of the foregoing is hereby
acknowledge;
Vcry truly youn,
SECUlUTY I'ACUlC NA TIONALBANK.
By.~ ______ . ____________ __
Title ___________ _
BANK OF AMERIC.\ NATIONAL TRUsr AND SAVINGS ASSOCIATION
~-~~~~------Authorized O!!icer
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APPENDIX A
';MA'l1JlmTDATE .
···')))'(MA:R.Clll) PlUNCIPAL AMOUJII'T INTEREST RATE
1993 S S
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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