HomeMy WebLinkAboutRES NO 36-98RESOLUTION NO. 3 6 "' 9 8
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAKERSFIELD
AUTHORIZING AND APPROVING THE ISSUANCE OF $1,570,000 OF
THE ClTY'S HISTORICAL REHABILITATION REFUNDING REVENUE BONDS
TO REFINANCE AND REFUND THE $1,570,000 AGGREGATE PRINCIPAL
AMOUNT OF UNPAID CITY OF BAKERSFIELD, CALIFORNIA, HISTORICAL REHABILITATION
FLOATING RATE REVENUE BONDS
(BELL TOWER PROJECT), 1981 SERIES A, FOR BELL TOWER ASSOCIATES;
AUTHORIZING AND APPROVING AN INDENTURE, LOAN AGREEMENT AND
RELATED DOCUMENTS IN CONNECTION THEREVVlTH;
APPOINTING BOND COUNSEL; AND
AUTHORIZING AND APPROVING RELATED ACTIONS AND MATTERS
WHEREAS, the City of Bakersfield Ordinance No. 2675 New Series (the "Ordinance") authorizes the
City to issue its historical rehabilitation refunding revenue bonds for the purpose of refinancing historical
rehabilitation projects in the City of Bakersfield;
WHEREAS, the Ordinance provides that such revenue bonds shall be limited obligations of the City of
Bakersfield (the "City") payable from all or any part of the revenues, moneys and assets pledged therefor and that
neither the faith and credit nor the taxing power of the City shall be pledged to the payment of such bonds;
WHEREAS, Bell Tower Associates, a partnership (the "Company"), applied for financial assistance of
the City in financing the rehabilitation of Old Church Plaza (the "Project") and paying costs of issuance, and, after
due investigation and deliberation, the City approved said application and authorized the issuance of its City of
Bakersfield, California, Historical Rehabilitation Floating Rate Revenue Bonds (Bell Tower Project), 1981 Series
A (the "1981 Bonds");
WHEREAS, the City Council has received the application of the Company for the financial assistance of
the City in refinancing and refunding the 1981 Bonds;
WHEREAS, the City desires to issue $1,570,000 aggregate principal amount of its Historical
Rehabilitation Refunding Revenue Bonds (Bell Tower Project) Series 1998 (the "Bonds") pursuant to the
Ordinance in order to assist the Company in the refinancing and refunding of the 1981 Bonds;
WHEREAS, the Bonds are to be issued pursuant to an Indenture, dated as of Mamh 1, 1998 (the
"indenture"), between the City and Union Bank of California, N.A., as trustee (the '~'rustee"), and the proceeds
thereof are to be loaned to the Company pursuant to a Loan Agreement, dated as of March 1, 1998 (the "Loan
Agreement"), by and between the City and the Company;
WHEREAS, the Company will covenant and agree under the Loan Agreement to make payments
directly to the Trustee which are sufficient to provide for the payment of the principal of and interest and premium,
if any, on the Bonds, as and when the same become due and payable;
WHEREAS, it is proposed that the Bonds will be sold by the City to Union Bank of California, pursuant to
a private placement;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Bakersfield, as follows:
1. The City Council finds and determines that the foregoing recitals are true and correct.
In order to refinanca and refund the 1981 Bonds, the Bonds are hereby authorized and ordered
to be issued in the aggregate principal amount of $1,570,000 pursuant to the Indenture in
substantially the form attached hereto as Exhibit A and containing substantially the terms and
provisions set forth therein, and the Mayor and the City Clerk are hereby authorized and
directed to execute, attest, seal and deliver the Indenture with such additions or changes in said
form as such officers may recommend or approve upon consultation with the City Attorney and
--- Page 1 of 3 Pages ---
10.
11.
12.
bond counsel to the City, the approval of such additions or changes to be evidenced
conclusively by the execution and delivery of the Indenture.
The Mayor and the City Clerk are hereby authorized and directed to execute, attest,
countersign, seal and deliver the Bonds as provided in the Indenture, including the use of
facsimile signatures on the Bonds. The Bonds shall (i) be in such denominations, (ii) bear such
date, (iii) mature at such time or times, (iv) be payable at such time or times, (v) bear interest at
such interest rates, (vi) be in such form, (vii) carry such registration privileges, (viii) be executed
in such manner, (ix) be payable at such place or places, (x) be subject to such terms of
redemption and (xi) be subject to such other terms and conditions, all as provided in the
Indenture, as finally executed.
The City shall lend the proceeds of the Bonds to the Company to refinance and refund the 1981
Bonds pursuant to the Loan Agreement in substantially the form attached hereto as Exhibit B
and containing substantially the terms and provisions (including repayment provisions) set forth
therein, and the Mayor is hereby authorized and directed to execute and deliver the Loan
Agreement with such additions or changes in said form as such officer may recommend or
approve upon consultation with the City Attomey and bond counsel to the City, the approval of
such additions or changes to be evidenced conclusively by the execution and delivery of the
Loan Agreement.
The sale of the Bonds to Union Bank of California, as placement agent, at a pdca of $1,570,000
is hereby authorized.
It is hereby found, determined and declared that the Bonds and interest and premium, if any,
thereon shall never constitute the debt or indebtedness of the City within the meaning of any
constitutional or statutory provision or limitation and shall not constitute or give rise to a charge
against its general credit or taxing powers, but the Bonds and interest and premium, if any,
thereon shall be payable solely and only from the revenues derived from the Loan Agreement.
The Mayor, the City Clerk and the City Treasurer, or any of them, are hereby authorized and
directed to execute, attest, seal and deliver any and all documents, and to do any and all things,
deemed necessary to effect the issuance and delivery of the Bonds and the execution and
delivery of the Indenture and the Loan Agreement, and to carry out the intent and purpose of
this resolution, including the preamble hereto.
All consents, approvals, notices, orders, requests and other actions permitted or required by
any of the documents authorized by this resolution, including without limitation any of the
foregoing which may be necessary or desirable in connection with any default under or
amendment of such documents, any substitution of securi~ for the Bonds or any redemption of
the Bonds, may be given or taken by the Mayor without further authorization by the City Council,
and the Mayor is hereby authorized and directed to give any such consent, approval, notice,
order or request and to take any such action which such officer may deem necessary or
desirable to further the purposes of this resolution.
The law firm of Musick, Peeler & Garrett LLP is hereby appointed Bond Counsel to the City with
respect to the issuance of the Bonds and the proceedings therefor. The fees and expenses of
said firm shall be payable solely from funds provided for such purpose by the Company and not
fi'om the City's funds.
The provisions of this resolution are hereby declared to be severable and if any section, phrase
or provision shall for any reason be declared to be invalid, such declaration shall not affect the
validity of the remainder of the sections, phrases and provisions.
All resolutions or parts thereof in conflict herewith, if any (of which none is known to the City),
are hereby repealed to the extent of such conflict.
This resolution shall become effective immediately upon adoption.
--- Page 2 of 3 Pages ---
I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by the Council of the City
of Bakersfield at a regular meeting thereof held on March 25, 1998, by the following vote:
Noes: Councilmember
Abstain: Councilmember
Absent: Councilmember
CITY CLERK AND EX OFFICI(~'~ the
Council of the City of Bakersfiel~
APPROVED
Mayor
APPROVED AS TO FORM AND SUBSTANCE:
MUSICK, PEELER & GARRE'Fr LLP,
as Bond Counsel
By Edsell M~
COUNTERSIGNED:
JUDY K. SKOUSEN
City Attorney
~UOY K. SK~EN
A omey/
--- Page 3 of 3 Pages ---
MUSICK, PEELER & GARRETT LLP APPROVAL DRAFT OF 03.13.98
City of Bakersfield
and
UNTON BANK OF CAL:[FORN]~A, N.A.,
as Trustee
TNDENTURE
dated as of March 1, 1998
$1,570~000
C'rTY OF BAKERSFI'ELD, CALTFORNZA
HTSTORI'CAL REHABZLZTATTON REFUNDI'NG REVENUE BONDS
(BELL TOWER PRO3ECT)
SERTES lg98
TABLE OF CONTENTS
RECITALS ..................................................................................................................................1
ARTICLE I: DEFINITIONS ......................................................................................................... 2
Section 1.01. Definitions ..........................................................................................................................2
Section 1.02. Content of Certificates and Opinions .................................................................................7
ARTICLE I1: THE BONDS ......................................................................................................... 8
Section 2.01. Authorization of Bonds ......................................................................................................8
Section
Section
Section
Section
Section
Section
Section
Section
2.02. Terms of Bonds .................................................................................................................8
2.03. Execution of Bonds ............................................................................................................9
2.04. Transfer of Bonds ..............................................................................................................9
2.05. Exchange of Bonds ............................................................................................................9
2.06. Bond Register ....................................................................................................................9
2.07. Temporary Bonds ..............................................................................................................9
2.08. Bonds Mutilated, Lost, Destroyed or Stolen ....................................................................10
2.09. Book-Entry-Only System .................................................................................................10
ARTICLE II1: ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; ESTABLISHMENT
OF COSTS OF ISSUANCE FUND AND PROJECT FUND ...................................................... 11
Section 3.01. Authentication and Delivery of Bonds .............................................................................. 11
Section 3.02. Application of Proceeds of Bonds ....................................................................................11
Section 3.03. Establishment of Costs of Issuance Fund ....................................................................... 12
Section 3.04. Validity of Bonds ..............................................................................................................12
ARTICLE IV: REDEMPTION ................................................................................................... 12
Section 4.01. Terms of Redemption ......................................................................................................12
Section 4.02. Selection of Bonds for Redemption ................................................................................. 12
Section 4.03. Notice of Redemption ......................................................................................................12
Section 4.04. Partial Redemption of Bonds ...........................................................................................13
Section 4.05. Effect of Redemption .......................................................................................................13
ARTICLE V: PLEDGE AND ASSIGNMENT OF REVENUES AND FUNDS; ESTABLISHMENT
OF BOND FUND AND REBATE FUND ................................................................................... 13
Section 5.01. Pledge and Assignment of Revenues ............................................................................. 13
Section 5.02.
Section 5.03.
Section 5.04.
Section 5.05.
Section 5.06.
Bond Fund .......................................................................................................................14
Rebate Fund ....................................................................................................................14
Insurance and Condemnation Proceeds Fund ................................................................ 15
Investment of Moneys in Funds .......................................................................................15
Amounts Remaining in Funds and Accounts .................................................................. 16
ARTICLE Vl: COVENANTS .................................................................................................... 16
Section 6.01. Punctual Payment ............................................................................................................16
Section 6.02.
Section 6.03.
Section 6.04.
Section 6.05.
Section 6.06.
Section 6.07.
Section 6.08.
Section 6.09.
Extension of Payment of Bonds ......................................................................................16
Encumbrance upon Revenues ........................................................................................16
Power To Issue Bonds and Make Pledge and Assignment ............................................ 17
Accounting Records and Financial Statements ............................................................... 17
Tax Covenants .................................................................................................................17
Other Covenants; Amendment of Agreement or Deed of Trust ...................................... 17
Waiver of Laws ................................................................................................................18
Further Assurances .........................................................................................................18
ARTICLE VII: EVENTS OF DEFAULT; REMEDIES ON DEFAULT ........................................ 18
Section 7.01. Events of Default; Acceleration; Waiver of Default .......................................................... 18
Section 7.02.
Section 7.03.
Section 7.04.
Section 7.05.
Section 7.06.
Section 7.07.
Section 7.08.
Section 7.09.
Institution of Legal Proceedings by Trustee ....................................................................19
Application of Moneys Collected by Trustee ...................................................................19
Effect of Delay or Omission To Pursue Remedy ............................................................. 20
Remedies Cumulative ......................................................................................................20
Covenant To Pay Bonds in Event of Default ...................................................................20
Trustee Appointed Agent for Bondholders ......................................................................20
Power of Trustee To Control Proceedings ......................................................................20
Limitation on Bondholders' Right To Sue ........................................................................21
ARTICLE VIII:
Section 8.01.
Section 8.02.
Section 8,03.
Section 8.04,
Section 8.05.
Section 8,06.
TRUSTEE ........................................................................................................21
Duties. Immunities and Liabilities of Trustee ...................................................................21
Merger or Consolidation ..................................................................................................22
Rights of Trustee .............................................................................................................22
Right of Trustee To Rely on Documents .........................................................................23
Preservation and Inspection of Documents .....................................................................24
Compensation of Trustee ................................................................................................24
ARTICLE IX: MODIFICATION OF INDENTURE ..................................................................... 24
Section 9.01. Modification without Consent of Bondholders ................................................................. 24
Section 9.02. Modification with Consent of Bondholders ...................................................................... 25
Section 9.03. Effect of Supplemental Indenture ....................................................................................25
Section 9.04. Opinion of Counsel as to Supplemental Indenture .......................................................... 26
Section 9.05. Notation of Modification on Bonds; Preparation of New Bonds ...................................... 26
ARTICLE X: DEFEASANCE ................................................................................................... 26
Section 10.01. Discharge of Indenture ..................................................................................................26
Section 10.02. Discharge of Liability on Bonds .....................................................................................26
Section 10.03. Deposit of Money or Securities with Trustee ................................................................. 27
Section 10,04. Payment of Bonds after Discharge of Indenture ........................................................... 27
ARTICLE Xh MISCELLANEOUS ............................................................................................ 28
Section 11.01. Liability of City Limited to Revenues ..............................................................................28
Section 11.02.
Section 11.03.
Section 11.04.
Section 11.05.
Section 11.06.
Section 11,07.
Section 11.08.
Section 11.09,
Section 11.10.
Sect[on 11.11.
Section 11,12.
Section 11.13.
Section 11.14.
Section 11.15.
Successor Is Deemed Included in all References to Predecessor ............................... 28
Limitation of Rights to Parties and Bondholders ...........................................................28
Waiver of Notice ............................................................................................................28
Destruction of Bonds .....................................................................................................28
Severability of Invalid Provisions ...................................................................................28
Notices ...........................................................................................................................29
Evidence of Rights of Bondholders ...............................................................................29
Disqualified Bonds .........................................................................................................29
Money Held for Particular Bonds ...................................................................................30
Funds and Accounts ......................................................................................................30
Article and Section Headings and References ..............................................................30
Waiver of Personal Liability ...........................................................................................30
Execution in Several Counterparts ................................................................................30
Governing Law ...............................................................................................................30
EXHIBIT A: FORM OF BOND ............................................................................................... A-1
EXHIBIT B: REQUISITION FOR COSTS OF ISSUANCE ..................................................... B-1
ii
ORh'i,NA;.
THIS INDENTURE, made and entered into as of March 1, 1998, by and between the CITY OF
BAKERSFIELD, a municipal corporation and charter city of the State of California (the "City"), and UNION
BANK OF CALIFORNIA, N.A., a national banking association organized and existing under and by virtue
of the laws of the United States, being qualified to accept and administer the trusts hereby created, as
Trustee (the "Trustee"),
WITNESSETH:
WHEREAS, the City is a municipal corporation and charter city duly organized and existing under
a freeholder's charter pursuant to which the City has the right and power to make and enforce all laws
and regulations in respect of municipal affairs and certain other matters in accordance with and as more
particularly provided in the Constitution of the State of California and the Charter of the City of
Bakersfield; and
WHEREAS, the City is duly authorized by its Ordinance No. 2675 New Series, entitled, "An Ordi-
nance of the Council of the City of Bakersfield Relating to the Financing of the Rehabilitation of Historical
Properties within Said City in the Interests of the Public Health, Safety and Welfare", enacted by the City
Council of the City on October 29, 1981 (the "Ordinance"), to issue its bonds for the purpose of financing
the rehabilitation of historical properties within the City, all as more fully provided in the Ordinance; and
WHEREAS, pursuant to the Ordinance and the Indenture of Trust, dated as of November 19,
1981 (the "1981 Indenture"), by and between the City and Wells Fargo Bank, National Association, as
initial trustee thereunder, the City issued its bonds designated City of Bakersfield, California, Historical
Rehabilitation Floating Rate Revenue Bonds (Bell Tower Project), 1981 Series A, in the original aggre-
gate principal amount of $3,000,000 (the "1981 Bonds"), for the purposes of the Ordinance and for fund-
ing a loan to Bell Tower Associates, a general partnership (the "Company") for financing the rehabilitation
of Old Church Plaza (the "Project"); and
WHEREAS, the Company has now applied for the financial assistance of the City in refinancing
the Project and refunding the 1981 Bonds through the issuance of the Bonds (as such term is hereinafter
defined); and
WHEREAS, the City has duly entered into a loan agreement, dated as of the date hereof (the
"Agreement"), with the Company specifying the terms and conditions of a loan by the City to the Com-
pany of the proceeds of the Bonds for the refinancing of the Project and the refunding of the 1981 Bonds
and of the payment by the Company to the City of amounts sufficient for the payment of the principal of
and premium, if any, and interest on the Bonds and certain related expenses; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and
declare the terms and conditions upon which the Bonds are to be issued and to secure the payment of
the principal thereof and the premium, if any, and the interest thereon, the City has authorized the execu-
tion and delivery of this Indenture; and
WHEREAS, the Bonds, the certificate of authentication and registration to be executed thereon
and the form of assignment to appear thereon are to be in substantially the forms set forms set forth in
Exhibit A hereto and made a part hereof with necessary or appropriate variations, omissions and inser-
tions, as permitted or required by this Indenture; and
WHEREAS, all acts and proceedings required by law necessary to make the Bonds, when exe-
cuted by the City, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal
limited obligations of the City, and to constitute this Indenture a valid and binding agreement for the uses
and purposes herein set forth, in accordance with its terms, have been done and taken; and the execution
and delivery of this Indenture have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order further to secure the pay-
ment of the principal of and premium, if any, and interest on all Bonds issued and Outstanding (as here-
inafter defined) under this Indenture, according to their tenor, and further to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and further to declare the
terms and conditions upon and subject to which the Bonds are to be issued and received, and for and in
consideration of the premises and of the mutual covenants herein contained and of the purchase and ac-
ceptance of the Bonds by the Holders thereof, and for other valuable consideration, the receipt and suffi-
ciency whereof are hereby acknowledged, the City covenants and agrees with the Trustee, for the equal
and proportionate benefit of the respective Holders from time to time of the Bonds, as follows:
ARTICLE I: DEFINITIONS
Section 1.01. Definitions.
Unless the context otherwise requires, the terms defined in this Section 1.01 shall, for all pur-
poses of this Indenture and of any indenture supplemental hereto, have the meanings herein specified, to
be equally applicable to both the singular and plural forms of any of the terms herein specified:
"Additional Payments" means the payments to be made by the Company to the Trustee or the
City in accordance with Section 6 of the Agreement.
"Agreement" means that certain loan agreement, dated as of the date hereof, between the City
and the Company, as originally executed or as it may from time to time be supplemented, modified or
amended subject to and in accordance with the terms thereof and of Section 6.07(B) of this Indenture.
"Authorized Representative" means (1) with respect to the City, the City Manager or a deputy
thereto or the City Treasurer or a deputy thereto, and (2) with respect to the Company, any general part-
ner of the Company.
"Base Loan Payments" means the payments required to be made by the Company to the
Trustee for the account of the City in accordance with Section 5 of the Agreement for the payment of the
principal (whether at maturity or upon redemption) of and interest to the date of maturity or redemption
and premium, if any, on the Bonds.
"Bond Fund" means the fund by that name established pursuant to Section 5.02.
"Bondholder" and "Holder" mean, with respect to any Bond, the person in whose name such
Bond is registered.
"Bonds" means all of the City of Bakersfield Historical Rehabilitation Refunding Revenue Bonds
(Bell Tower Project), Series 1998, issued hereunder.
"Business Day" means any day other than a Saturday, a Sunday or a day on which banking
institutions in the city in which the Principal Corporate Trust Office of the Trustee is located are authorized
or obligated by law or executive order to be closed.
"Certificate of the Company'~ "Request of the Company'~ "Requisition of the Company"
and "Statement of the Company" mean, respectively, a certificate, request, requisition or statement of
the Company executed by any of its general partners or such other person as may be designated by any
of such partners to sign for the Company.
"Certificate of the City'; "Consent of the City'; "Order of the City" and "Request of the
City" mean, respectively, a written certificate, consent, order or request of the City signed by or on behalf
of the City by its City Manager or a deputy thereto, its Treasurer or a deputy thereto or by any other per-
son who is specifically authorized in writing by the City Manager to execute such a document on its be-
half.
"City" means the City of Bakersfield, a municipal corporation and charter city of the State of
California.
2
"Code" means the Internal Revenue Code of 1986, or any successor code or law, and any
regulations in effect or promulgated thereunder.
"Company" means Bell Tower Associates, a general partnership, and its successors or assigns
or any co-obligor permitted pursuant to Section 11 of the Agreement.
"Consent of the City"- see "Certificate of the City" above.
"Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable
to the Company and related to the original authorization, execution, sale and delivery of the Bonds, in-
cluding but not limited to costs of preparation and reproduction of documents, fees and expenses of the
City, initial fees, expenses and charges of the Trustee, legal fees and charges of bond counsel and coun-
sel to the Company, the premium for a policy of title insurance, recording fees and any other cost, charge
or fee in connection with the original delivery of the Bonds.
"Costs of Issuance Fund" means the fund by that name established pursuant to Section 3.03.
"Deed of Trust" means the Deed of Trust, Security Agreement and Assignment of Rents, dated
as of March 1, 1998, by the Company, as trustor, to the Trustee as trustee and beneficiary thereunder.
"Depository~' means (a) initially, DTC, and (b) any other Securities Depositories acting as
Depository pursuant to Section 5.14.
"Depository System Participant" means any participant in the Depository's book-entry system.
"DTC" means The Depository Trust Company, New York, New York, and its successors and
assigns.
"Eligible Securities" means any of the following obligations as and to the extent that such obli-
gations are at the time legal investments under the Ordinance for moneys held hereunder and then pro-
posed to be invested therein:
(1)
direct obligations of the United States of America (including obligations issued or held in
book-entry form on the books of the Department of the Treasury of the United States of
America or any Federal Reserve Bank) or obligations the timely payment of the principal
of and interest on which are fully guaranteed by the United States of America;
(2)
obligations, debenture, notes or other evidence of indebtedness issued or guaranteed by
any of the following: Federal Home Loan Bank System, Government National Mortgage
Association, Federal Home Loan Mortgage Corporation, Federal National Mortgage As-
sociation or Federal Housing Administration;
(3)
bonds of any state in the United States or of any county or city of the State for which a
Rating Agency is maintaining a rating at least equal to "A" (or the equivalent);
(4)
interest-bearing bankers acceptances and demand or time deposits (including certificates
of deposit) in banks (including the Trustee), provided such deposits are either (a) secured
at all times, in the manner and extent provided by law, by collateral security described in
clauses (1) or (2) of this definition of a market value no less than the amount of moneys
so invested, or (b) fully insured by the Federal Deposit Insurance Corporation;
(5)
receipts representing direct interests in Eligible Securities described in clauses (1) and
(2) of this definition;
(6)
taxable government money market portfolios issued or guaranteed as to payment of prin-
cipal and interest by the full faith and credit of the United States of America;
3
(7)
commercial paper rated in the highest rating category of a Rating Agency and issued by
corporations organized and operating within the United States and having total assets in
excess of $500,000,000;
(8)
shares in a California common law trust established pursuant to Title 1, Division 7,
Chapter 5 of the Government Code of the State which invests exclusively in investments
permitted by Section 53635 of Title 5, Division 2, Chapter 4 of said Government Code, as
it may be amended; and
(9) any other investment approved in writing by the City.
"Event of Default" means any of the events specified in Section 7.01.
"Indenture" means this indenture, as originally executed or as it may be from time to time sup-
plemented, modified or amended by any supplemental indenture entered into pursuant to the provisions
hereof.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30
Montgom,e, ry Street, 10~h Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information
Services' 'Called Bond Service", 65 Broadway, 20th Floor, New York, New York 10006; Moody's "Munici-
pal and Government", 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal
News Reports; and Standard & Poor's Corporarich's "Called Bond Record", 25 Broadway, 3rd Floor, New
York, New York 10004; or to such other addresses and/or such other services as the City may designate
to the Trustee in writing.
"Insurance Consultant" means an independent person having experience and a favorable
reputation in consulting on insurance requirements of facilities in the State of the same general size and
character as the Project and selected by the Company.
"Interest Payment Date" means May 1 and November 1, commencing November 1, 1998.
"Loan Default Events" means any of the events of default specified in Section 17 of the Agree-
ment.
"1981 Bonds" means the City's Historical Rehabilitation Floating Rate Revenue Bonds (Bell
Tower Project), 1981 Series A.
"1981 Indenture" means the Indenture of Trust, dated as of November 19, 1981, by and be-
tween the City and the 1981 Trustee.
"1981 Trustee" means Chase Manhattan Bank and Trust Company, as successor trustee under
the 1981 Indenture.
"Nominee" means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the
Depository designated pursuant to Section 5.14(a).
"Opinion of Bond Counsel" means an Opinion of Counsel by a nationally recognized bond
counsel firm experienced in matters relating to the exclusion from gross income for federal income tax
purpose of interest payable on obligations of state and political subdivisions.
"Opinion of Counsel" means a written opinion of counsel (which may be counsel for the City)
appointed by the City. If and to the extent required by the provisions of Section 1.02, each Opinion of
Counsel shall include the statements provided for in Section 1.02.
"Order of the City" - see "Certificate of the City" above.
4
"Ordinance" means Ordinance No. 2675 New Series, entitled "An Ordinance of the Council of
the City of Bakersfield Relating to the Financing of the Rehabilitation of Historical Properties within Said
City in the Interests of the Public Health, Safety and Welfare", adopted by the City Council of the City on
October 29, 1981.
"Outstanding" means, when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being, authenticated and
delivered by the Trustee under this Indenture except (a) Bonds theretofore cancelled by the Trustee or
surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the City shall
have been discharged in accordance with Section 10.02; and (c) Bonds for the transfer or exchange of
which, or in lieu of or in substitution for which, other Bonds shall have been authenticated and delivered
by the Trustee pursuant to this Indenture.
"Permitted Encumbrances" means:
(1)
undetermined liens and charges incident to construction and maintenance, and liens and
charges incident to construction or maintenance now or hereafter filed of record which
are being contested in good faith and have not proceeded to final judgment (and for
which all applicable periods for appeal or review have not expired), provided that the
Company shall have set aside reserves with respect thereto which, in the opinion of an
Authorized Representative of the Company, are adequate;
(2)
notices of Ils pendens or other notices of or liens with respect to pending actions which
are being contested in good faith and have not proceeded to final judgment (and for
which all applicable periods for appeal or review have not expired), provided that the
Company shall have set aside reserves with respect thereto which, in the opinion of an
Authorized Representative of the Company, are adequate;
(3)
the lien of taxes and assessments which are not delinquent, or which are being contested
in good faith, provided (a) that the Company shall have set aside reserves with respect
thereto which, in the opinion of an Authorized Representative of the Company, are ade-
quate, and (b) that nonpayment of such taxes and assessments will not result in any loss
of property;
(4)
minor defects and irregularities in title which in the aggregate do not materially adversely
affect the value or operation of the Project for the purposes for which the Project is or
may reasonably be expected to be used;
(5)
easements, exceptions or reservations for the purpose of ingress and egress, parking,
pipelines, telephone lines, telegraph lines, cable television lines, power lines and substa-
tions, roads, streets, alleys, highways, railroad purposes, drainage and sewerage pur-
poses, dikes, canals, laterals, ditches, the removal of oil, gas, coal or other minerals, and
other like purposes, or for the joint or common use of real property, facilities and equip-
ment, which in the aggregate do not materially interfere with the operation of the Project
for the purposes for which the Project is or may reasonably be expected to be used;
(6)
rights reserved to or vested in any municipality or governmental or other public authority
to control or regulate or use in any manner any portion of the Project which do not mate-
rially impair the operation of the Project for the purposes for which the Project is or may
reasonably be expected to be used;
(7) present or future valid zoning laws and ordinances;
(8)
the rights of the City, the Company and the Trustee under the Indenture, the Agreement
and the Deed of Trust, together with the Deed of Trust;
OqiG!N;',L
(9)
liens securing indebtedness for the payment, prepayment or satisfaction of which money
(or evidences of indebtedness) in the necessary amount shall have been deposited in
trust with a trustee or other holder of such indebtedness;
(10)
purchase money security interests and security interests arising after the date of execu-
tion and delivery hereof and existing on any property not acquired or rehabilitated with
proceeds of the 1981 Bonds prior to the time of its acquisition through purchase, merger,
consolidation or otherwise, whether or not assumed by the purchaser thereof, or placed
upon property being acquired to secure a portion of the purchase price thereof, or les-
sor's interests in leases required to be capitalized in accordance with generally accepted
accounting principles, provided such purchase money security interests and security in-
terests shall not secure an obligation in excess of $250,000 in aggregate principal
amount;
(11) statutory liens arising in the ordinary course of business which are not delinquent or
which are being contested in good faith;
(12)
all assignments, leases, subleases, licenses and allocation of space in the Project exist-
ing on the date of execution and delivery hereof and any future assignment, lease, sub-
lease, license or allocation of space permitted under Section 17 of the Agreement; and
(13)
other liens or encumbrances existing as of the date of the issuance of the Bonds as
shown on Exhibit B to the Agreement.
"Principal Corporate Trust Office" means the corporate trust office of the Trustee, which at the
date of execution of this Indenture is that specified in Section 11.07.
"Project"- see Exhibit A to the Agreement.
"Rating Agency" means either Moody's Investors Service or Standard & Poor's Ratings Serv-
ice, or their respective successors and assigns.
"Rebate Fund" means the fund by that name established pursuant to Section 5.03.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar day of
the month immediately preceding such Interest Payment Date, whether or not such day is a Business
Day.
"Request of the City"- see "Certificate of the City" above.
"Request of the Company"- see "Certificate of the Company" above.
"Requisition of the Company"- see "Certificate of the Company" above.
"Responsible Officed' of the Trustee means and includes the chairman of the board of direc-
tors, the president, every vice president, every assistant vice president, the cashier, every assistant
cashier, every trust officer and every officer and assistant officer of the Trustee, other than those specifi-
cally above mentioned, to whom any corporate trust matter is referred because of his or her knowledge
of, and familiarity with, a particular subject.
"Revenues" means all payments received by the City or the Trustee from the Company (except
Additional Payments paid by the Company pursuant to Section 6 of the Agreement and any amounts paid
by the Company pursuant to Section 20 of the Agreement), including, without limiting the generality of the
foregoing, Base Loan Payments (including both timely and delinquent payments), payments received and
all income derived from the investment of any money in any fund or account established pursuant to this
Indenture, but not including amounts received for or on deposit in the Rebate Fund, and the net proceeds
of the exercise of any remedy under the Deed of Trust or any sale in lieu thereof.
6
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden
City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Struc-
tures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax-(312)663-2343; Philadel-
phia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania
19103, Attention: Bond Department, Fax-(215) 496-5058; or to such other addresses and/or such other
securities depositories as the City may designate to the Trustee in writing.
"Special Record Date" means the date established by the Trustee pursuant to Section 2.02(D)
as a record date for the payment of defaulted interest on Bonds.
"State" means the State of California.
"Statementof the Company"-- see "Certificate of the Company" above.
"Supplemental Indenture" and "Indenture Supplemental Hereto" whether or not capitalized
herein, mean any indenture hereafter duly authorized and entered into between the City and the Trustee
in accordance with the provisions of this Indenture.
"Trustee" means Union Bank of California, NA., a national banking corporation organized and
existing under the laws of the United States, or its successor as Trustee hereunder as provided in Section
8.01 or 8.02.
Section 1.02. Content of Certificates and Opinions.
Every certificate (other than the certificate provided for in Section 11.05) or opinion with respect to
compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that
the person or persons making or giving such certificate or opinion have read such condition or covenant
and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the exami-
nation or investigation upon which the statements or opinions contained in such certificate or opinion are
based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such ex-
amination or investigation as is necessary to enable them to express an informed opinion as to whether
or not such condition or covenant has been complied with; and (d) a statement as to whether, in the
opinion of the signers, such condition or covenant has been complied with.
Any such certificate or opinion made or given by an officer of the City may be based, insofar as it
relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer
knows that the certificate or opinion or representations with respect to the matters upon which his or her
certificate or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care
should have known that the same were erroneous. Any such certificate or opinion made or given by
counsel may be based, insofar as it relates to factual matters (with respect to which information is in the
possession of the City) upon the certificate or opinion of or representations by an officer of the City, un-
less such counsel knows that the certificate or opinion or representations with respect to the matters upon
which his or her opinion may be based as aforesaid are erroneous or in the exercise of reasonable care
should have known that the same were erroneous.
Any written representation given by the City in accordance with Section 6.07(B) (regarding the
amendment of the Agreement) or Article IX (regarding amendment of the Indenture) may, at the option of
the City, be based solely on the written representation of a financial consultant or advisor selected by the
City and not objected to by the Trustee.
7
ARTICLE I1: THE BONDS
Section 2.0'1. Authorization of Bonds.
The Bonds are designated generally as the "City of Bakersfield Historical Rehabilitation Refund-
ing Revenue Bonds (Bell Tower Project) Series 1998," in the aggregate principal amount of One Million
Five Hundred Seventy Thousand Dollars ($1,570,000). This Indenture constitutes a continuing agree-
ment with the Trustee and the Holders of all of the Bonds Outstanding, subject to the covenants, agree-
ments, provisions and conditions herein contained.
Section 2.02. Terms of Bonds.
(A) The Bonds shall be issued as registered Bonds in denominations of $110,000 and any inte-
gral multiple of $5,000 in excess of $110,000. The Bonds shall be dated March 1, 1998, and shall bear
interest from the Interest Payment Date to which interest has been paid as of the date on which it is
authenticated or, if it is authenticated on or before the Record Date for the first Interest Payment Date,
from its dated date; provided, however, that if, at the time of authentication of any Bond, interest is in de-
fault on Outstanding Bonds, such Bond shall bear interest from the Interest Payment Date to which inter-
est has previously been paid or made available for payment on the Outstanding Bonds. Interest on the
Bonds will be calculated on the basis of a 360-day year and twelve 30-day months.
(B) The Bonds shall bear interest at the following rates and mature on the following dates in
the following amounts:
Maturity Date
(November 1)
Principal Amount
(in United States dollars)
Interest Rate
(percent per annum)
1998 110,000 4.750
1999 110,000 5.050
2000 110,000 5.100
2001 110,000 5.300
2002 110,000 5.400
2003 110,000 5.500
2004 110,000 5.600
2005 110,000 5.700
2006 110,000 5.800
2007 110,000 5.900
2008 110,000 6.000
2009 110,000 6.100
2010 110,000 6.200
2011 140,000 6.300
(C) The principal of and premium, if any, on the Bonds shall be payable in lawful money of
the United States of America upon surrender at the Principal Corporate Trust Office of the Trustee. The
interest on any Bond shall be payable to the person whose name appears on the registration books of the
Trustee as the registered owner thereof as of the close of business on the Record Date for each Interest
Payment Date, such interest to be paid by check mailed by first class mail, postage prepaid, on such In-
terest Payment Date, to the registered owner at his or her address as it appears on such registration
books.
(O) Any such interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Bondholder on such Record Date and shall be paid to the person in whose name the Bond
is registered at the close of business on a Special Record Date for the payment of such defaulted inter-
8
est. The Special Record Date shall be fixed by the Trustee, notice thereof being given to the Bondhold-
ers not less than ten days prior to such Special Record Date.
Section 2.03. Execution of Bonds.
The Bonds shall be signed in the name and on behalf of the City with the manual or facsimile sig-
nature of the City Manager of the City, attested by the manual or facsimile signature of the City Clerk, un-
der the seal of the City. Such seal may be in the form of a facsimile of the City's seal and may be im-
printed or impressed upon the Bonds. The Bonds shall then be delivered to the Trustee for registration
and authentication by it. In case any of the officers who shall have signed or attested any of the Bonds
shall cease to be such officer or officers before the Bonds so signed or attested shall have been authenti-
cated or delivered by the Trustee or issued by the City, such Bonds may nevertheless be authenticated,
delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the City
as though those who signed and attested the same had continued to be such officers of the City. Also,
any Bond may be signed and attested on behalf of the City by such persons as on the actual date of the
execution of such Bond shall be the proper officers although on the nominal date of such Bond any such
person shall not have been such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication and registration in the
form set forth in Exhibit A hereto, manually executed by the Trustee, shall be valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive
evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are
entitled to the benefits of this Indenture.
Section 2.04. Transfer of Bonds.
The registration of any Bond may, in accordance with its terms, be transferred, upon the books
required to be kept pursuant to the provisions of Section 2.06, by the person in whose name it is regis-
tered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly exe-
cuted. No registration of transfers of Bonds shall be required to be made during the period established by
the Trustee for selection of Bonds for redemption and after a Bond has been selected for redemption.
Section 2.05. Exchange of Bonds.
Bonds may be exchanged at the Principal Corporate Trust Office of the Trustee for a like aggre-
gate principal amount of the Bonds of the same maturity of other authorized denominations. The Trustee
shall require the payment by the Holder requesting such exchange of any tax or other governmental
charge required to be paid with respect to such exchange, and there shall be no other charge to any
Holder for any such exchange. No exchanges of Bonds shall be required to be made during the period
established by the Trustee for selection of Bonds for redemption and after a Bond has been selected for
redemption.
Section 2.06. Bond Register.
The Trustee will keep or cause to be kept, at its Principal Corporate Trust Office, sufficient books
for the registration of transfer of the Bonds, which shall at all reasonable times during normal business
hours upon reasonable notice be open to inspection by the City; and, upon presentation for such purpose,
the Trustee shall, under such reasonable regulations as it may prescribe, register the transfer or cause to
be registered the transfer, on said books, of Bonds as hereinbefore provided.
Section 2.07. Temporary Bonds.
The Bonds may be initially issued in temporaW form exchangeable for definitive Bonds when
ready for delivery. The temporaw Bonds may be printed, lithographed or typewritten, shall be of such
denomination as may be determined by the City, shall be in registered form and may contain such refer-
ence to any of the provisions of this Indenture as may be appropriate. Every temporaw Bond shall be
executed by the City and authenticated by the Trustee upon the same conditions and in substantially the
9
ORIGIN&;.
same manner as the definitive Bonds. If the City issues temporary Bonds, it will execute and furnish de-
finitive Bonds without delay, and thereupon the temporary Bonds may be surrendered, for cancellation, in
exchange therefor at the Principal Corporate Trust Office of the Trustee, and the Trustee shall authenti-
cate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive
Bonds of authorized denominations, of the same maturity or maturities. Until so exchanged, the tempo-
rary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated
and delivered hereunder.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen.
If any Bond shall become mutilated, the City, at the expense of the Holder of said Bond, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange
and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so muti-
lated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and delivered to, or
upon the order of, the City. If any Bond issued hereunder shall be lost, destroyed or stolen, evidence of
such loss, destruction or theft may be submitted to the City and to the Trustee and, if such evidence be
satisfactory to both and indemnity satisfactory to them shall be given, the City, at the expense of the
Holder, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor
in lieu of and in substitution for the Bond so lost, destroyed or stolen. If any Bond mutilated, lost, de-
stroyed or stolen shall have matured or shall have been called for redemption, instead of issuing a sub-
stitute Bond the Trustee may pay the same without surrender upon receipt of indemnity satisfactory to the
Trustee. The City may require payment from the Holder of a sum not exceeding the actual cost of pre-
paring each new Bond issued under this Section and of the expenses which may be incurred by the City
and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be
lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City
whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone,
and shall be entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.
Section 2.09. Book-Entry-Only System.
(a) Orioinal Delivery. The Bonds shall be initially delivered in the form of one fully registered
Bond (which may be typewritten) for the full principal amount of each maturity of the Bonds. Upon initial
delivery, the ownership of each such Bond shall be registered on the Bond Register in the name of the
Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds shall be
registered in the name of the Nominee on the Bond Register.
With respect to Bonds the ownership of which shall be registered in the name of the Nominee, the
City and the Trustee shall have no responsibility or obligation to any Depository System Participant or to any
person on behalf of which the Nominee or the Depository System Participant holds an interest in the Bonds.
Without limiting the generality of the immediately preceding sentence, the City and the Trustee shall have no
responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or
any Depository System Participant with respect to any ownership interest in the Bonds, (ii) the delivery to
any Depository System Participant or any other person, other than a Bond Owner as shown in the Bond
Register, of any notice with respect to the Bonds, including any notice of redemption, (iii) the payment to any
Depository System Participant or any other person, other than a Bond Owner as shown in the Bond
Register, of any amount with respect to principal, premium, if any, or interest represented by the Bonds or
(iv) any consent given or other action taken by the Depository as Owner of the Bonds. The City and the
Trustee may treat and consider the person in whose name each Bond is ragisterad as the absolute owner of
such Bond for the purpose of payment of principal of, premium, if any, and interest on such Bond, for the
purpose of giving notices of prepayment and other matters with respect to such Bond, for the purpose of
registering transfers of ownership of such Bond, and for all other purposes whatsoever. The Trustee shall
pay the principal, interest and premium, if any, on the Bonds only to the respective Owners or their
respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully
satisty and discharge all obligations with respect to payment of principal of, premium, if any, and interest on
the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a
Bond evidencing the obligation of the City to make payments of principal, interest and premium, if any,
pursuant to this Indenture. Upon delivery by the Depository to the Nominee of written notice to the effect
10
that the Depository has determined to substitute a new Nominee in its place, such new nominee shall
become the Nominee hereunder for all purposes; and upon receipt of such a notice the City shall promptly
deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository's book-entry
system, the City and the Trustee shall execute and deliver to such Depository a letter representing such
matters as shall be necessary to so qualify the Bonds. The execution and delivery of such letter shall not in
any way limit the provisions of subsection (a) above or in any other way impose upon the City or the Trustee
any obligation whatsoever with respect to persons having interests in the Bonds other than the Bond
Owners. In addition to the execution and delivery of such letter, the City may take any other actions, not
inconsistent with this Indenture, to qualify the Bonds for the Depository's book-entry program.
(c) Transfers Outside Book-Entry System. In the event that either (i) the Depository
determines not to continue to act as Depository for the Bonds, or (ii) the City determines to terminate the
Depository as such, then the City shall thereupon discontinue the book-entry system with such Depository.
In such event, the Depository shall cooperate with the City and the Trustee in the issuance of replacement
Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the
Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before
the date such replacement Bonds are to be issued. The Depository, by accepting delivery of the Bonds,
agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository
acting as such, the City fails to identify another Securities Depository to replace the Depository, then the
Bonds shall no longer be required to be registered in the Bond Register in the name of the Nominee, but
shall be registered in whatever name or names the Owners transferring or exchanging Bonds shall
designate, in accordance with the provisions hereof.
In the event the City determines that it is in the best interests of the beneficial owners of the Bonds
that they be able to obtain certificated Bonds, the City may notify the Depository System Participants of the
availability of such certificated Bonds through the Depository. In such event, the City will issue, and the
Trustee will transfer and exchange Bonds as required by the Depository and others in appropriate amounts;
and whenever the Depository requests, the Trustee and the City shall cooperate with the Depository in
taking appropriate action (y) to make available one or more separate certificates evidencing the Bonds to
any Depository System Participant having Bonds credited to its account with the Depository, or (z) to
arrange for another Securities Depository to maintain custody of a single certificate evidencing such Bonds,
all at the Compeny's expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this Indenture to the
contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to
principal, interest and premium, if any, represented by such Bond and all notices with respect to such Bond
shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or
as otherwise instructed by the Depository.
ARTICLE II1: ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; ESTABLISHMENT OF COSTS OF IS-
SUANCE FUND AND PROJECT FUND
Section 3.01. Authentication and Delivery of Bonds.
At any time after the execution of this Indenture, the City may execute and the Trustee shall
authenticate and, upon the Order of the City, deliver Bonds in the aggregate principal amount set forth in
Section 2.01, in each case exclusive of Bonds executed and authenticated as provided in Section 2.07.
Section 3.02. Application of Proceeds of Bonds.
The proceeds received by the City from the sale of the Bonds, together with the sum of
$ delivered to the Trustee by the Company, shall be deposited with the Trustee, who shall
forthwith set aside or transfer such proceeds and additional funds as follows:
11
(1) The Trustee shall immediately transfer to the 1981 Trustee the sum of
$ , which sum shall be held uninvested and applied to the redemption in full of the
1981 Bonds on May 1, 1998;
(2) The Trustee shall deposit in the Bond Fund the sum of $
; and
(3) The Trustee shall deposit in the Cost of Issuance Fund the remainder of said funds, be-
ing the sum of $
Section 3.03, Establishment of Costs of Issuance Fund.
The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Costs
of Issuance Fund." Moneys deposited in said fund shall be used to pay Costs of Issuance with respect to
the Bonds upon Requisition of the Company filed with the Trustee, which shall be in substantially the form
attached hereto as Exhibit B. At the end of six months from the date of initial execution and delivery of
the Bonds, or upon earlier receipt of a Statement of the Company that amounts in said fund are no longer
required for the payment of such Costs of Issuance, said fund shall be terminated, and any amounts then
remaining in said fund shall be transferred to the Bond Fund.
Section 3.04. Validity of Bonds.
The validity of the authorization and issuance of the Bonds is not dependent on and shall not be
affected in any way by any proceedings taken by the City or the Trustee with respect to or in connection
with the Agreement. The recital contained in the Bonds that the same are issued pursuant to the Ordi-
nance and the Constitution and laws of the State shall be conclusive evidence of their validity and the
compliance with the provisions of law in their issuance.
ARTICLE IV: REDEMPTION
Section 4.01. Terms of Redemption.
The Bonds shall not be subject to optional redemption in whole or in part.
Section 4.02. Selection of Bonds for Redemption.
Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the
Trustee shall select the Bonds to be redeemed, from the Outstanding Bonds not previously called for re-
demption, in inverse order of maturity or, in such other order as shall be specified in a Request of the
Company, and by lot within a maturity. The Trustee shall promptly notify the City in writing of the num-
bers of the Bonds so selected for redemption.
Section 4.03. Notice of Redemption.
Notice of redemption shall be given by the Trustee as hereinafter provided to (i) the respective
Holders of any Bonds designated for redemption at their addresses appearing on the Bond registration
books of the Trustee, (ii) the Information Services and (iii) the Securities Depositories. Each notice of
redemption shall state the date of such notice, the redemption date (which redemption date shall be not
less than 60 days (or such shorter period as shall be acceptable to the Trustee) after notice of redemption
shall have been delivered to the Trustee by the City at the request of the Company), the redemption price
(including any premium), the place or places of redemption (including the name and appropriate address
or addresses of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all
the Bonds of any maturity are to be redeemed, the distinctive certificate numbers of the Bonds of such
maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of
the principal amount thereof to be redeemed. Each such notice shall also state that on said date there
will become due and payable on each of said Bonds the redemption price thereof or of said specified por-
tion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with inter-
est accrued thereon to the redemption date, and that from and after such redemption date interest
12
thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or
addresses of the Trustee specified in the redemption notice.
Any notice of redemption shall be mailed by first class mail, postage prepaid, to Bondholders not
less than thirty (30) days or more than sixty (60) days prior to the date fixed for redemption. Notices to
the Information Services shall be mailed by the Trustee by certified, registered or overnight mail or fac-
simile transmission at the time of the mailing of notices to Bondholders. Notices to the Securities De-
positories shall be given by telecopy or by certified, registered or overnight mail at least one (1) Business
Day before the mailing of notices to Bondholders. Notice of redemption of Bonds shall be given by the
Trustee, at the expense of the Company, for and on behalf of the City. Failure by the Trustee to give no-
tice pursuant to this Section 4.03, or the insufficiency of any such notice, shall not affect the sufficiency of
the proceedings for redemption of any Bond for which notice was properly given.
Section 4.04. Partial Redemption of Bonds.
Upon surrender of any Bond redeemed in part only, the City shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the City, a new Bond or Bonds of
authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond
surrendered.
Section 4.05. Effect of Redemption.
Moneys for payment of the redemption price of, together with interest accrued to the redemption
date on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the re-
demption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall
become due and payable at the redemption price specified in such notice and interest accrued thereon to
the redemption date, interest on the Bonds so called for redemption shall cease to accrue from and after
the redemption date, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security
under this Indenture, and the Holders of said Bonds shall have no rights in respect thereof except to re-
ceive payment of said redemption price and accrued interest to the redemption date. All Bonds re-
deemed pursuant to the provisions of this Article shall be cancelled upon surrender thereof and delivered
to or upon the Order of the City.
ARTICLE V: PLEDGE AND ASSIGNMENT OF REVENUES AND FUNDS; ESTABLISHMENT OF BOND FUND
AND REBATE FUND
Section 5.01. Pledge and Assignment of Revenues.
(A) Subject only to the provisions of this Indenture permitting the application thereof for the
purposes and on the terms and conditions set forth herein and subject to the rights of the Holders of the
Bonds, there are hereby pledged and assigned to secure the payment of the principal of and premium, if
any, and interest on the Bonds in accordance with their terms and the provisions of this Indenture, all of
the Revenues and any other amounts (including proceeds of the sale of Bonds but excluding Additional
Payments paid by the Company pursuant to Section 6 of the Agreement and any amounts paid by the
Company pursuant to Section 20 of the Agreement) held in any fund or account established pursuant to
this Indenture other than the Rebate Fund. Said pledge shall constitute a lien on and security interest in
such assets and shall attach, be perfected and be valid and binding from and after delivery of the Bonds,
without any physical delivery thereof or further act.
(B) The City hereby assigns to the Trustee, for the benefit of the Holders from time to time of
the Bonds, all of the Revenues and other amounts pledged in paragraph (A) of this Section and all of the
right, title and interest of the City in the Agreement (except for the right to receive any administrative fees
and expenses payable to the City, the right to receive any indemnification and the right to receive any
notices and reports). The Trustee shall be entitled to and shall receive all of the Revenues, and any
Revenues collected or received by the City shall be deemed to be held, and to have been collected or
received, by the City as the agent of the Trustee and shall forthwith be paid by the City to the Trustee.
13
The Trustee also shall be entitled to and shall (subject to the provisions of this Indenture) take all steps,
actions and proceedings following any Event of Default reasonably necessary in its judgment to enforce,
either jointly with the City or separately, all of the rights of the City assigned to the Trustee and all of the
obligations of the Company under the Agreement.
(C) All Revenues shall be held in trust for the benefit of the Holders from time to time of the
Bonds but shall nevertheless be disbursed, allocated and applied solely for the uses and purposes here-
inafter in this Article V set forth.
(D) If the Trustee has not received any payment required to be made by the Company under
the Agreement to pay principal or redemption price of or interest on the Bonds by the due date, the Trus-
tee shall immediately notify the Company and the City of such insufficiency by telephone, telecopy or
telegram and confirm such notification by written notice. Failure of the Trustee to mail notice pursuant to
this paragraph or the insufficiency of any such notice shall not affect the payment obligations of the Com-
pany under the Agreement, including without limitation the timing thereof.
(E) The Bonds shall not constitute a debt or liability, or a pledge of the faith and credit, of the
State or of any political subdivision thereof, other than the City, which shall be obligated only to pay the
Bonds solely from the Revenues and funds herein provided therefor. The issuance of the Bonds shall not
directly or indirectly or contingently obligate the State or any political subdivision thereof, including the
City, to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their
payment.
Section 5.02. Bond Fund.
(A) Upon the receipt thereof, the Trustee shall deposit all Revenues in the Bond Fund, which
the Trustee shall establish and maintain and hold in trust. The Trustee shall disburse and apply amounts
in the Bond Fund only as hereinafter in this paragraph (A) authorized:
(1) The Trustee shall apply moneys in the Bond Fund to pay the interest on the
Bonds as such interest shall become due and payable (including accrued interest on any Bonds pur-
chased or redeemed prior to maturity pursuant to this Indenture).
(2) The Trustee shall apply moneys in the Bond Fund to pay the principal of the
Bonds as such principal becomes due and payable.
(B) At least six (6) but not more than twenty (20) Business Days before each Interest Pay-
ment Date, the Trustee shall determine the amount, if any, credited or to be credited to the Bond Fund
during the period from the day after the last Interest Payment Date to the next succeeding Interest Pay-
ment Date pursuant to Section 5.05 (investment earnings) or from any other source. The Trustee shall
give notice to the Company of such amount and the amount due, which notice shall be mailed, telecom-
municated or delivered in such a manner that the Company will receive such notice by the fifth Business
Day before such next succeeding Interest Payment Date. Any telephonic notice shall be supplemented
by notice given in accordance with the preceding sentence. Failure by the Trustee to give notice pursu-
ant to this paragraph, or the insufficiency of any such notice, shall not affect the payment obligations of
the Company under the Agreement, including without limitation the timing thereof.
Section 5.03. Rebate Fund.
(A) The Trustee shall establish and maintain a fund separate from any other fund established
and maintained hereunder designated as the Rebate Fund. Subject to the transfer provisions provided in
paragraph (E) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee in
trust, to the extent required to satisfy the rebate requirement, for payment to the federal government of
the United States of America. Neither the City, the Company nor the Holder of any Bonds shall have any
rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be
governed by this Section and by the Code (which is incorporated herein by reference). The Trustee shall
be deemed conclusively to have complied with such provisions if it follows the written directions of the
14
City or the Company and shall have no liability or responsibility to enforce compliance by the City or the
Company with the terms of this Section or of the Agreement.
(B) Upon receipt of and pursuant to a Request of the Company, an amount shall be depos-
ited to the Rebate Fund by the Trustee from deposits by the Company or from available investment
earnings on amounts held in the Bond Fund if and to the extent required, so that the balance of the Re-
bate Fund after such deposit shall equal the rebate requirement. Computations of the Rebate Require-
ment shall be furnished by or on behalf of the Company and the City in accordance with the Agreement.
(C) The Trustee shall have no obligation to rebate any amounts required to be rebated pur-
suant to this Section, other than from moneys held in the Rebate Fund or from other moneys provided to
it by the Company.
(D) The Trustee shall invest all amounts held in the Rebate Fund in Eligible Securities pursu-
ant to the Request of the Company. All interest, profits and other income received from the investment of
moneys in the Rebate Fund shall be credited to such fund.
(E) Upon receipt of a Request of the Company, the Trustee shall remit part or all of the bal-
ances in the Rebate Fund to the United States, as so directed. In addition, if the Company so directs, the
Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or
funds as directed in a Request of the Company. Any funds remaining in the Rebate Fund after redemp-
tion and payment of all of the Bonds and payment and satisfaction of any Rebate Requirement, or provi-
sion made therefor, and payment of all fees and expenses of the Trustee shall be withdrawn and remitted
to the Company.
(F) Notwithstanding any other provision of this Indenture, including in particular Article X
hereof, the obligation to remit the rebate to the United States and to comply with all other requirements of
this Section and the Agreement shall survive the defeasance or payment in full of the Bonds.
(G) Without limiting the generality of the foregoing, the City agrees that there shall be paid
from time to time all amounts required to be rebated to the United States pursuant to Section 148(0 of the
Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds from
time to time, but only from funds furnished by the Company or otherwise available to the Trustee for such
purpose. This covenant shall survive payment in full or defeasance of the Bonds. Subject to the forego-
ing limitations, the City specifically covenants to pay, or cause to be paid, all required rebate to the United
States at the times and in the amounts determined above, as described in the Agreement. The Trustee
agrees to comply with all written instructions of the City or the Company which such party states in writing
are given in accordance with the Agreement.
(H) Notwithstanding any provision of this Section, if the Company shall provide to the City
and the Trustee an Opinion of Bond Counsel to the effect that any action required under this Section or
the Agreement is no longer required, or to the effect that some further action is required, to maintain the
exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the City
and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the
covenants hereunder shall be deemed to be modified to that extent.
Section 5.04. Insurance and Condemnation Proceeds Fund.
In the event the Trustee receives, from the Company or other named insured, insurance or con-
demnation proceeds with respect to the Project pursuant to Section 12(F) of the Agreement, such pro-
ceeds shall be deposited in the Insurance and Condemnation Proceeds Fund, which the Trustee shall
establish and maintain hereunder. Amounts held in the Insurance and Condemnation Proceeds Fund
shall be applied as provided in Section 12 of the Agreement.
Section 5.05. Investment of Moneys in Funds.
Except as otherwise provided in Section 10.03, all moneys in any of the funds and accounts
(other than the Rebate Fund) established pursuant to this Indenture shall be invested by the Trustee
solely in Eligible Securities specified in a Request of the Company, provided, however, that, if the Com-
pany does not file such a Request with the Trustee, the Trustee shall invest to the extent practicable in
investments described in clause (6) of the definition of the term "Eligible Securities" in Section 1.01 and
otherwise in whatever investment it then generally uses for overnight investments. Subject to Sec-
tion 10.03, investments in any and all funds and accounts established pursuant to this Indenture (other
than the Rebate Fund) may be commingled for purposes of making, holding and disposing of invest-
ments, notwithstanding provisions herein for transfer to or holding in a particular fund amounts received
or held by the Trustee hereunder, provided that the Trustee shall at all times account for such invest-
ments strictly in accordance with the particular funds to which they are credited and otherwise as pro-
vided in this Indenture. The Trustee may act as principal or agent in the making or disposing of any in-
vestment. The Trustee may sell at the best price obtainable, or present for redemption, any securities so
purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer,
withdrawal or disbursement from the fund or account to which such securities are credited, and the Trus-
tee shall not be liable or responsible for any loss resulting from such investment.
Section 5.06. Amounts Remaining in Funds and Accounts,
Any amounts remaining in the Bond Fund or any other fund or account established hereunder
after payment in full of the Bonds (or after provision for payment thereof as provided herein), the fees,
charges and expenses of the Trustee and the City and all required rebate shall belong and be paid to the
Company by the Trustee.
ARTICLE VI: COVENANTS
Section 6.01. Punctual Payment.
The City shall punctually pay, but only out of Revenues and pledged funds as herein provided,
the principal and premium, if any, of and interest to become due on every Bond issued hereunder at the
times and places and in the manner provided herein and in the Bonds, according to the true intent and
meaning thereof.
Section 6.02. Extension of Payment of Bonds.
The City shall not directly or indirectly extend or assent to the extension of the maturity of any of
the Bonds or the time of payment of any of the claims for interest by the purchase or funding of such
Bonds or claims for interest or by any other arrangement and, if the maturity of any of the Bonds or the
time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall
not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the
prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest
thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right
of the City to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall
not be deemed to constitute an extension of maturity of Bonds.
Section 6.03. Encumbrance upon Revenues.
The City shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance
upon the Revenues and other assets pledged or assigned under this Indenture while any of the Bonds
are Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation,
the City expressly reserves the right to enter into one or more other indentures for any of its corporate
purposes, including other programs under the Ordinance, and reserves the right to issue other obligations
for such purposes.
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Section 6.04. Power To Issue Bonds and Make Pledge and Assignment.
The City is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and
to pledge and assign the Revenues and other assets purported to be pledged and assigned, respectively,
under this Indenture in the manner and to the extent provided in this Indenture. The Bonds and the provi-
sions of this Indenture are and will be the legal, valid and binding limited obligations of the City enforce-
able in accordance with their terms, and the City shall at all times, to the extent permitted by law, defend,
preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the
Bondholders under this Indenture against all claims and demands of all persons whomsoever.
Section 6.05. Accounting Records and Financial Statements.
(A) The Trustee shall at all times keep, or cause to be kept, proper books of record and ac-
count, prepared in accordance with the Trustee's accounting practices for books of record and account
relating to similar trust accounts and in accordance with the customary standards of the industry for such
books of record and account, in which complete and accurate entries shall be made of all transactions
made by it relating to the proceeds of Bonds, the Revenues, the Agreement and all funds and accounts
established pursuant to this Indenture. Such books of record and account shall be available for inspec-
tion by the City, the Company and any Bondholder, or his agent or representative duly authorized in writ-
ing, at reasonable hours, upon reasonable notice and under reasonable circumstances.
(B) The Trustee shall furnish to each Bondholder who shall have filed his name and address
with the Trustee for such purpose a copy of the most recent audited financial statements of the Company,
as furnished to the Trustee pursuant to Section 13 of the Agreement.
(C) The Trustee shall furnish to the City and the Company, at intervals acceptable to such
parties but in any event at least quarterly, a complete financial statement (which may be in the form of its
regular statements) covering receipts, disbursements, allocation and application of Revenues and the
proceeds of the Bonds made by the Trustee.
Section 6.06. Tax Covenants.
(A) The City covenants that it shall not take any action, or fail to take any action, if such ac-
tion or failure to take such action would result in the interest on the Bonds not being excluded from gross
income for federal income tax purposes under Section 103 of the Code. This covenant shall survive the
payment in full or the defeasance of the Bonds.
(B) If at any time the City is of the opinion that for purposes of this Section it is necessary or
helpful to restrict or limit the yield on the investment of any moneys held by the Trustee under this Inden-
ture, the City shall so instruct the Trustee in a Request of the City accompanied by a supporting Opinion
of Bond Counsel, and the Trustee shall take such action as may be necessary in accordance with such
instructions.
(C) Notwithstanding any provisions of this Section, if the City shall provide to the Trustee an
Opinion of Bond Counsel to the effect that any specified action required under this Section is no longer
required or that some further or different action is required to maintain the exclusion from federal income
tax of interest on the Bonds, the Trustee may conclusively rely on such opinion in complying with the re-
quirements of this Section, and the covenants hereunder shall be deemed to be modified to that extent.
Section 6.07. Other Covenants; Amendment of Agreement or Deed of Trust.
(A) Subject to the provisions of this Indenture, the Trustee shall promptly collect all amounts
due from the Company pursuant to the Agreement and diligently enforce and take all steps, actions and
proceedings reasonably necessary for the enforcement of all of the rights of the City under the Agreement
and assigned to it pursuant to Section 5.01(B) hereof
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(B) The City shall not amend, modify or terminate any of the terms of the Agreement or the
Deed of Trust, or consent to any such amendment, modification or termination, without the prior written
consent of the Trustee. The Trustee shall give such written consent if but only if (1) it has received a
written representation from the City to the effect that such amendment or modification will not materially
and adversely affect the interests of the Holders of the Bonds (which written representation may be based
on representations of other parties in accordance with the provisions of Section 1.02); provided that, if an
Event of Default has occurred and is continuing, the Trustee rather than the City shall make a determina-
tion that such amendment or modification will not materially and adversely affect the interests of the
Holders of the Bonds (provided that, in making such determination, the Trustee may conclusively rely on
written representations of financial consultants or advisors or the opinion or advice of counsel), or (2) the
Holders of a majority in aggregate principal amount of the Bonds then Outstanding consent in writing to
such amendment, modification or termination, provided that no such amendment, modification or termi-
nation shall reduce the amount of Base Loan Payments to be made to the City or the Trustee by the
Company pursuant to the Agreement, or extend the time for making such payments, without the written
consent of all of the Holders of the Bonds then Outstanding.
Section 6.08. Waiver of Laws.
The City shall not at any time insist upon or plead in any manner whatsoever, or claim or take the
benefit or advantage of, any stay or extension of law now or at any time hereafter in force that may affect
the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of
any such law or laws is hereby expressly waived by the City to the extent permitted by law.
Section 6.09. Further Assurances.
The City will make, execute and deliver any and all such further indentures, instruments and as-
surances as may be reasonably necessary or proper to carry out the intention or to facilitate the perform-
ance of this Indenture and for the better assuring and confirming unto the Holders of the Bonds of the
rights and benefits provided in this Indenture.
ARTICLE VII: EVENTS OF DEFAULT; REMEDIES ON DEFAULT
Section 7.01. Events of Default; Acceleration; Waiver of Default.
If one or more of the following events ("Events of Default") shall happen, that is to say--
(1) if default shall be made in the due and punctual payment of the principal of, or premium
(if any) on, any Bond as the same shall become due and payable (whether at maturity, by proceedings for
redemption, by declaration or otherwise) and shall have continued for five Business Days thereafter;
(2) if default shall be made in the due and punctual payment of any installment of interest on
any Bond when and as such interest installment shall become due and payable and shall have continued
for five Business Days thereafter;
(3) if default shall be made by the City in the performance or observance of any other of the
covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, and such
default shall have continued for a period of thirty (30) days after written notice thereof, specifying such
default and requiring the same to be remedied, shall have been given to the City by the Trustee, or to the
City and the Trustee by the Holders of not less than a majority in aggregate principal amount of the Bonds
at the time Outstanding; or
(4) if a Loan Default Event has occurred and is continuing;
then and in each and every such case during the continuance of such Event of Default, unless the princi-
pal of all the Bonds shall have already become due and payable, the Trustee, by notice in writing to the
18
City, may and, upon the written request of the Holders of not less than a majority in aggregate principal
amount of the Bonds at the time Outstanding, shall declare the principal of all the Bonds then Outstand-
ing, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable, anything in this Indenture or in the
Bonds contained to the contrary notwithstanding.
This provision, however, is subject to the condition that if, at any time after the principal of the
Bonds shall have been so declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter provided, there shall have been
deposited with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such decla-
ration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue
installments of principal at the rate borne by the respective Bonds, and the reasonable fees and expenses
of the Trustee (including but not limited to those of its attorneys), and any and all other defaults known to
the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by
reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or pro-
vision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such
case, the Holders of at least a majority in aggregate principal amount of the Bonds then Outstanding, by
written notice to the City and to the Trustee, may, on behalf of the Holders of all of the Bonds, rescind and
annul such declaration and its consequences and waive such default; but no such rescission and annul-
merit shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power
consequent thereon.
Section 7.02. Institution of Legal Proceedings by Trustee.
If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may,
and upon the written request of the Holders of a majority in aggregate principal amount of the Bonds then
Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce
its rights or the rights of the Holders of Bonds under the Ordinance or under the Agreement, the Deed of
Trust or this Indenture by a suit in equity or action at law, either for the specific performance of any cove-
nant or agreement contained herein or therein, or in aid of the execution of any power herein or therein
granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equi-
table remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder
or thereunder.
Section 7.03. Application of Moneys Collected by Trustee,
Any moneys collected by the Trustee pursuant to Section 7.02 shall be applied in the following
order, at the date or dates fixed by the Trustee and, in the case of distribution of such moneys on account
of principal (or premium, if any), upon presentation of the Bonds, and stamping thereon the payment, if
only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of costs and expenses of collection and reasonable compensation to the
Trustee for its own services and for the services of counsel, agents and employees by it properly en-
gaged and employed, and all other expenses and liabilities incurred, and for advances made ~ursuant to
the provisions of this Indenture.
Second: In case the principal of none of the Bonds shall have become due and remains unpaid,
to the payment of interest in default, such payments to be made ratably and proportionately to the per-
sons entitled thereto without discrimination or preference.
Third: In case the principal of any of the Bonds shall have become due by declaration or other-
wise and remains unpaid, first to the payment of interest in default in the order of maturity thereof, and
then to the payment of the principal of all Bonds then due and unpaid and the premium thereon, if any; in
every instance such payment to be made ratably to the persons entitled thereto without discrimination or
preference.
Whenever moneys are to be applied pursuant to the provision of this Section, such moneys shall
be applied at such times, and from time to time. as the Trustee shall determine, having due regard to the
19
amount of such moneys available for application and the likelihood of additional moneys becoming avail-
able for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date
(which shall be an Interest Payment Date unless the Trustee shall deem another date more suitable)
upon which such application is to be made and upon such date interest on the amounts of principal and
past-due interest to be paid on such date shall cease to accrue.
Subject to Section 5.03, whenever all principal of and interest on all Bonds have been paid under
the provisions of this Section and all fees, expenses and charges of the Trustee (including without limita-
tion those of its attorneys) have been paid, any balance remaining in the funds and accounts hereunder
shall be paid to the Company.
Section 7.04. Effect of Delay or Omission To Pursue Remedy.
No delay or omission of the Trustee or of any Holder of Bonds to exercise any right or power
arising from any default shall impair any such right or power or shall be construed to be a waiver of any
such default or acquiescence therein, and every power and remedy given by this Article VII to the Trustee
or to the Holders of Bonds may be exercised from time to time, and as often as shall be deemed expedi-
ent. In case the Trustee shall have proceeded to enforce any right under this Indenture, and such pro*
ceedings shall have been discontinued or abandoned because of waiver or for any other reason, or shall
have been determined adversely to the Trustee, then and in every such case the City and the Trustee,
and the Holders of the Bonds, severally and respectively, shall be restored to their former positions and
rights hereunder in respect to the trust estate; and all remedies, rights and powers of the City, the Trustee
and the Holders of the Bonds shall continue as though no such proceedings had been taken.
Section 7.05. Remedies Cumulative.
No remedy herein conferred upon or reserved to the Trustee or to any Holder of the Bonds is in-
tended to be exclusive of ar~y other remedy, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity.
Section 7.06. Covenant To Pay Bonds in Event of Default.
The City covenants that, upon the happening of any Event of Default, the City will pay, but only
out of Revenues, to the Trustee, upon demand, for the benefit of the Holders of the Bonds, the whole
amount then due and payable thereon (by declaration or otherwise) for interest or for principal and pre-
mium, or both, as the case may be, and all other sums which may be due hereunder or secured hereby,
including reasonable compensation to the Trustee and its agents and counsel and any expenses or li-
abilities incurred by the Trustee hereunder and its agents and counsel. In case the City shall fail to pay
the same forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled to institute proceedings at law or in equity in any court of competent jurisdiction to re-
cover judgment for the whole amount due and unpaid, together with costs and masonable attorneys' fees,
subject, however, to the condition that such judgment, if any, shall be limited to, and payable solely out of,
Revenues as herein provided and not otherwise. The Trustee shall be entitled to recover such judgment
as aforesaid, either before or after or during the pendency of any proceedings for the enforcement of this
indenture, and the right of the Trustee to recover such judgment shall not be affected by the exercise of
any other right, power or remedy for the enforcement of the provisions of this Indenture.
Section 7.07. Trustee Appointed Agent for Bondholders,
The Trustee is hereby appointed, upon an Event of Default, the agent and attorney-in-fact of the
Holders of all Bonds Outstanding hereunder for the purpose of filing any claims relating to the Bonds.
Section 7.08. Power of Trustee To Control Proceedings.
If the Trustee, upon the happening of an Event of Default, shall have taken some action, by judi-
cial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon
the request of the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, it
shall have full power, in the exercise of its discretion for the best interests of the Holders of the Bonds,
20
with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of
such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of
Default hereunder, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation
pending at law or in equity, if at the time there has been filed with it a written request signed by the Hold-
ers of at least a majority in aggregate principal amount of the Bonds Outstanding hereunder opposing
such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
Section 7.09. Limitation on Bondholders' Right To Sue.
Notwithstanding any other provision hereof, no Holder of any Bond issued hereunder shall have
the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this
Indenture, unless (a) such Holder shall have previously given to the Trustee written notice of the occur-
rence of an Event of Default hereunder; (b) the Holders of at least a majority in aggregate principal
amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise
the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said
Holders shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabili-
ties to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to
comply with such request for a period of sixty (60) days after such written request shall have been re-
ceived by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request,
tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions prece-
dent to the exercise by any Holder of Bonds of any remedy hereunder; it being understood and intended
that no one or more Holders of Bonds shall have any right in any manner whatever by his or their action
to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings
at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all Holders of the Outstanding Bonds. The right of
any Holder of any Bond to receive payment of the principal of and premium, if any, and interest on such
Bond out of Revenues and the funds pledged and assigned herein, as herein provided, on and after the
respective due dates expressed in such Bond, or to institute suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without the consent of such Holder,
notwithstanding the foregoing provisions of this Section or Section 7.08 or any other provision of this In-
denture.
ARTICLE VIII: TRUSTEE
Section 8.01. Duties, Immunities and Liabilities of Trustee.
(A) The Trustee shall, prior to an Event of Default, and after the curing of all Events of De-
fault which may have occurred, perform such duties and only such duties as are specifically set forth in
this Indenture. The Trustee shall, during the existence of any Event of Default which has not been cured,
exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under the circumstances in the con-
duct of his or her own affairs.
(B) Upon written request of the Company, the City shall remove the Trustee at any time un-
less an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at
any time requested to do so by an instrument or concurrent instruments in writing signed by the Holders
of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys
duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with sub-
section (E) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insol-
vent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control
or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liqui-
dation, in each case by giving written notice of such removat to the Trustee, and thereupon shall appoint,
with the consent of the Company, a successor Trustee by an instrument in writing.
21
(C) The Trustee may at any time resign by giving written notice of such resignation to the City
and by giving the Bondholders notice of such resignation by mail at the addresses shown on the Bond
registration books maintained by the Trustee. Upon receiving such notice of resignation, the City shall
promptly appoint, with the consent of the Company, a successor Trustee by an instrument in writing.
(D) Any removal or resignation of the Trustee and appointment of a successor Trustee shall
become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee
shall have been appointed and have accepted appointment within forty-five (45) days of giving notice of
removal or notice of resignation as aforesaid, the resigning Trustee or any Bondholder (on behalf of him-
self and all other Bondholders) may petition any court of competent jurisdiction for the appointment of a
successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, ap-
point such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its ac-
ceptance of such appointment by executing and delivering to the City and to its predecessor Trustee a
written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or con-
veyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and
obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nev-
ertheless at the Request of the City or the request of the successor Trustee, such predecessor Trustee
shall execute and deliver any and all instruments of conveyance or further assurance and do such other
things as may reasonably be required for more fully and certainly vesting in and confirming to such suc-
cessor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it
under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money
or other property subject to the trusts and conditions herein set forth. Upon request of the successor
Trustee, the City shall execute and deliver any and all instruments as may be reasonably required for
more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a succes-
sor Trustee as provided in this subsection, the City shall mail a notice of the succession of such Trustee
hereunder to the Bondholders at the addresses shown on the bond registration books maintained by the
Trustee. If the City fails to mail such notice within thirty (30) days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the
city.
(E) Any Trustee appointed under the provisions of this Indenture shall be a trust company or
bank having trust powers, doing business and having a principal corporate trust office in California or, if it
shall not have a principal corporate trust office in California, having the power under California law to
perform all the duties of the Trustee hereunder as evidenced by an opinion of its counsel, having a com-
bined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 and subject to supervi-
sion or examination by state or national authorities. In case at any time the Trustee shall cease to be eli-
gible in accordance with the provisions of this subsection (E), the Trustee shall resign immediately in the
manner and with the effect specified in this Section.
Section 8.02o Merger or Consolidation.
Any company into which the Trustee may be merged or converted or with which it may be con-
solidated or any company resulting from any merger, conversion or consolidation to which it shall be a
party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust
business, provided such company shall be eligible under subsection (E) of Section 8.01, shall be the suc-
cessor to such Trustee without the execution or filing of any paper or any further act, anything herein to
the contrary notwithstanding.
Section 8.03. Rights of Trustee.
(A) The recitals of facts herein and in the Bonds contained shall be taken as statements of
the City, and the Trustee does not assume any responsibility for the correctness of the same, or make
any representations as to the validity or sufficiency of this Indenture, the Agreement, the Deed of Trust or
the Bonds, or incur any responsibility in respect thereof, other than in connection with the duties or obli-
gations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsi-
ble for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not
be liable in connection with the performance of its duties hereunder, except for its own negligence or
willful misconduct.
(B) The Trustee shall not be liable for any error of judgment made in good faith by a respon-
sible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(C) The Trustee shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and place of conduct-
ing any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee under this Indenture. The permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty.
(D) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request, order or direction of any of the Bondholders pursuant to the provisions
of this Indenture unless such Bondholders shall have offered to the Trustee reasonable security or in-
demnity against the costs, expenses and liabilities which may be incurred therein or thereby.
(E) The Trustee shall not be deemed to have knowledge of any Event of Default or Loan
Default Event unless and until it shall have actual knowledge thereof, or shall have received written notice
thereof, at its Principal Corporate Trust Office. Except as otherwise expressly provided herein, the Trus-
tee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or of any of the documents executed in connection with the
Bonds or as to the existence of an Event of Default hereunder or under the Agreement.
(F) No provision of this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise
of its rights or powers. The Trustee has no obligation or liability to the Bondholders for the payment of
interest, principal or redemption premium, if any, with respect to the Bonds.
(G) The Trustee shall not be bound to ascertain or inquire as to the validity or genuineness of
any collateral given to or held by it. The Trustee shall not be responsible for the recording or filing of any
document relating to this Indenture or of financing statements (or continuation statements in connection
therewith) or of any supplemental instruments or documents of further assurance as may be required by
law in order to perfect the security interests in any collateral given to or held by it.
(H) The Trustee shall not be concerned with or accountable to anyone for the subsequent
use or application of any moneys which shall be released or withdrawn in accordance with the provisions
hereof.
(I) The Trustee makes no representation or warranty, express or implied, as to the title,
value, design, compliance with specifications or legal requirements, quality, durability, operation, condi-
tion, merchantability or fitness for any particular purpose for the use contemplated by the City or the
Company of the Project. In no event shall the Trustee be liable for incidental, indirect, special or conse-
quential damages in connection with or arising from the Agreement or this Indenture for the existence,
furnishing or use of the Project.
(J) The rights given the Trustee under the Agreement are subject in all respects to the privi-
leges and immunities afforded the Trustee under this Indenture.
Section 8.04. Right of Trustee To Rely on Documents.
The Trustee shall be protected in acting upon any notice, requisition, resolution, request, consent,
order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties. The Trustee may consult with counsel,
who may be counsel of or to the City, with regard to legal questions, and the opinion of such counsel shall
be full and complete authorization and protection in respect of any action taken or suffered by it
hereunder in good faith and in accordance therewith. The Trustee shall not be bound to recognize any
23
person as the Holder of a Bond unless and until such Bond is submitted for inspection, if required, and his
title thereto is satisfactorily established, if disputed. Whenever in the administration of the trusts imposed
upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or es-
tablished prior to taking or suffering any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a
Certificate of the City, and such Certificate shall be full warrant to the Trustee for any action taken or suf-
fered in good faith under the provisions of this Indenture in reliance upon such Certificate, but in its dis-
cretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such addi-
tional evidence as to it may deem reasonable.
Section 8.05. Preservation and Inspection of Documents,
All documents received by the Trustee under the provisions of this Indenture shall be retained in
its possession and shall be subject at all reasonable times to the inspection of the City and any Bond-
holder, and their agents and representatives duly authorized in writing, at reasonable hours, upon rea-
sonable notice and under reasonable conditions.
Section 8.06. Compensation of Trustee.
The Trustee shall be entitled to payment for its reasonable fees and expenses for all services
performed under this Indenture, subject to the provisions of any agreement between the Trustee and the
City and the Company. Such fees and expenses shall be paid solely from Additional Payments.
ARTICLE IX: MODIFICATION OF INDENTURE
Section 9.01. Modification without Consent of Bondholders.
Subject to the conditions and restrictions in this Indenture contained, the City and the Trustee,
from time to time and at any time, may enter into an indenture or indentures supplemental hereto, which
indenture or indentures thereafter shall form a part hereof, including, without limitation, for one or more of
the following purposes, provided that the City and the Trustee shall have received the written consent of
the Company and an Opinion of Bond Counsel to the effect that such amendment or modification will not
cause interest on the Bonds to be included in the gross income of the Holder thereof for federal income
tax purposes and the Trustee shall have received a written representation from the City to the effect that
such amendment or modification will not materially and adversely affect the interests of the Holders of the
Bonds (which written representation may be based on representations of other parties in accordance with
the provisions of Section 1.02); provided that, if an Event of Default has occurred and is continuing, the
Trustee rather than the City shall make a determination that such amendment or modification will not
materially and adversely affect the interests of the Holders of the Bonds (provided that, in making such
determination, the Trustee may conclusively rely on written representations of financial consultants or
advisors or the opinion or advice of counsel):
(a) to add to the covenants and agreements of the City in this Indenture contained, other
covenants and agreements thereafter to be observed, or to assign or pledge additional security for the
Bonds, or to surrender any right or power herein reserved to or conferred upon the City;
(b) to make such provisions for the purpose of curing any ambiguity, inconsistency or omis-
sion, or of curing, correcting or supplementing any defective provision, contained in this Indenture, or in
regard to such matters or questions arising under this Indenture as the City may deem necessary or de-
sirable and not inconsistent with this Indenture;
(c) to modify, amend or supplement this Indenture or any indenture supplemental hereto in
such manner as to permit the qualification hereof or thereof under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect, and, if they so determine, to add to this Inden-
24
ture or any indenture supplemental hereto such other terms, conditions and provisions as may be per-
mitted by said Trust Indenture Act of 1939, as amended, or similar federal statute; or
(d) in connection with an amendment of the Agreement or the Deed of Trust permitted by
Section 6.07 hereof for the purpose of conforming the terms, conditions and covenants of this Indenture
to the corresponding or related provisions of such amended Agreement or amended Deed of Trust.
Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed by
the City and the Trustee without the consent of the Holders of any of the Bonds at the time Outstanding,
notwithstanding any of the provisions of Section 9.02, but the Trustee shall not be obligated to enter into
any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise. The Trustee shall mail an executed copy of a supplemental indenture authorized
by this Section 9.01 to the Company promptly after execution by the City and the Trustee.
Section 9.02. Modification with Consent of Bondholders.
With the written consent of the Company and the Holders of not less than a majority in aggregate
principal amount of the Bonds at the time Outstanding, the City and the Trustee may from time to time
and at any time, with an Opinion of Bond Counsel to the effect that such amendment or modification will
not cause interest on the Bonds to be included in the gross income of the Holder thereof for federal in-
come tax purposes, enter into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of
any supplemental indenture; provided, however, that no such supplemental indenture shall (1) extend the
fixed maturity of any Bonds or reduce the rate of interest thereon or extend the time of payment of inter-
est, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption
thereof or (2) reduce the aforesaid percentage of Holders of Bonds whose consent is required for the
execution of such supplemental indentures or extend the time of payment or permit the creation of any
lien on the Revenues or the funds pledged herein prior to or on a parity with the lien of this Indenture or
deprive the Holders of the Bonds of the lien created by this indenture upon the Revenues or the funds
pledged herein, without the consent of the Holders of all the Bonds then Outstanding. Upon receipt by
the Trustee of a Certificate of the City authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the Company and the Bondholders, as
aforesaid, the Trustee shall join with the City in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights, dufies or immunities Under this Indenture or oth-
erwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such sup-
plemental indenture. It shall not be necessary for the consent of the Company and the Bondholders un-
der this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the City
and the Trustee of any supplemental indenture pursuant to the provisions of this Section 9.02, the City
shall mail a notice, setting forth in general terms the substance of such supplemental indenture, to the
Company and the Bondholders at the addresses shown on the Bond registration books maintained by the
Trustee. Any failure of the City to give such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture. The Trustee shall mail an executed copy
of such supplemental indenture and any amendment to the Agreement or the Deed of Trust to the Com-
pany prompfiy after execution by the City, the Trustee, and in the case of the Agreement or the Deed of
Trust, the Company.
Section 9.03. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX this
Indenture shall be and shall be deemed to be modified and amended in accordance therewith, and the
respective rights, duties and obligations under this Indenture of the City, the Trustee and all Holders of
outstanding Bonds shall thereafter be determined, exercised and enforced hereunder subject in all re-
spects to such modifications and amendments, and all the terms and conditions of any such supplemen-
tal indenture shall be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.04. Opinion of Counsel as to Supplemental Indenture.
Subject to the provisions of Section 8.04 and the requirement in Sections 9.01 and 9.02 for an
Opinion of Bond Counsel, the Trustee may receive an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to the provisions of this Article IX complies with the re-
quirements of this Article IX.
Section 9.05. Notation of Modification on Bonds; Preparation of New Bonds.
Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to
the provisions of this Article IX may bear a notation, in form approved by the City, as to any matter pro-
vided for in such supplemental indenture, and if such supplemental indenture shall so provide, new
Bonds, so modified as to conform, in the opinion of the City, to any modification of this Indenture con-
tained in any such supplemental indenture, may be prepared by the City, authenticated by the Trustee
and delivered without cost to the Holders of the Bonds then Outstanding, upon surrender for cancellation
of such Bonds, in equal aggregate principal amounts.
ARTICLE X: DEFEASANCE
Section 10.01. Discharge of Indenture.
Bonds may be paid by the City in any of the following ways, provided that the City also pays or
causes to be paid any other sums payable hereunder by the City:
(a) by paying or causing to be paid the principal of and premium, if any, and interest on the
Bonds Outstanding, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money or securities in the
necessary amount (as provided in Section 10.03) to pay or redeem Bonds Outstanding; or
(c) by delivering to the Trustee, for cancellation by it, Bonds Outstanding;
If the City shall pay all Bonds then Outstanding as provided above and shall also pay or cause to
be paid all other sums payable hereunder by the City, then and in that case, at the election of the City
(evidenced by a Certificate of the City, filed with the Trustee, signifying the intention of the City to dis-
charge all such indebtedness and this Indenture}, and notwithstanding that any Bonds shall not have
been surrendered for payment, this Indenture and the pledge of Revenues made under this Indenture and
all covenants, agreements and other obligations of the City under this Indenture shall cease, terminate,
become void and be completely discharged and satisfied, except only as provided in Section 10.02. In
such event, upon request of the City, the Trustee shall cause an accounting for such period or periods as
may be requested by the City to be prepared and filed with the City and shall execute and deliver to the
City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction,
and the Trustee shall pay over, transfer, assign or deliver to the Company all moneys or securities or
other property held by it pursuant to this Indenture which are not required for the payment or redemption
of Bonds not theretofore surrendered for such payment or redemption and which are not required for the
payment of fees and expenses of the Trustee.
Section 10.02. Discharge of Liability on Bonds.
Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the
necessary amount (as provided in Section 10.03) to pay or redeem any Outstanding Bond, whether upon
or prior to its maturity or the redemption date of such Bond (provided that, if such Bond is to be redeemed
prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or
provision satisfactory to the Trustee shall have been made for the giving of such notice), then all liability
of the City in respect of such Bond shall cease, terminate and be completely discharged, except only that
26
thereafter the Holder thereof shall be entitled to payment of the principal of and interest on such Bond by
the City, and the City shall remain liable for such payment but only out of the money or securities depos-
ited with the Trustee as aforesaid for its payment, provided further, however, that the provisions of Sec-
tion 10.04 shall apply in all events.
The City or the Company may at any time surrender to the Trustee for cancellation by it any
Bonds previously issued and delivered, which the City or the Company may have acquired in any manner
whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and re-
tired.
Section 10.03. Deposit of Money or Securities with Trustee.
Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust
by the Trustee money or securities in the amount necessary to pay or redeem any Bonds, the money or
securities so to be deposited or held may include money or securities held by the Trustee in the funds
established pursuant to this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to the principal amount
of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to
be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as
provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such
notice, the amount to be deposited or held shall be the principal amount of such Bonds and all unpaid
interest thereon to the redemption date, together with the redemption premium, if any; or
(b) noncallable direct obligations of the United States of America (including without limitation
obligations issued or held in book-entry form on the books of the Department of the Treasury) or obliga-
tions the principal of and interest on which are unconditionally guaranteed by the United States of Amer-
ica (including without limitation the interest component of Resolution Funding Corporation strips for which
separation of principal and interest is made by request to the Federal Reserve Bank of New York in book
entry form) the principal of and interest on which when due will provide money sufficient to pay the princi-
pal of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Bonds to
be paid or redeemed, as such principal and interest become due, provided that, in the case of Bonds
which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given
as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of
such notice;
provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this In-
denture or by Request of the City) to apply such money to the payment of such principal and interest with
respect to such Bonds and provided, further, that the City and the Trustee shall have received (1) an
Opinion of Bond Counsel to the effect that such deposit shall not cause interest on the Bonds to be in-
cluded in the gross income of the Holder thereof for federal income tax purposes and (2) a verification
report of a firm of certified public accountants or other financial services firm acceptable to the City veri-
fying that the money or securities so deposited together with earnings thereon will be sufficient to make
all payments of principal of and premium, if any, and interest on the Bonds to be discharged to and in-
cluding the earlier of their respective maturity dates or the date they are to be redeemed.
Section 10.04. Payment of Bonds after Discharge of Indenture.
Notwithstanding any provision of this Indenture, and subject to applicable escheat laws, any
moneys held by the Trustee in trust for the payment of the principal of or premium, if any, or interest on
any Bonds and remaining unclaimed for one year after the principal of all the Outstanding Bonds has be-
come due and payable (whether at maturity or upon call for redemption or by declaration as provided in
this Indenture), if such moneys were so held at such date, or two years after the date of deposit of such
moneys if deposited after said date when all of the Bonds became due and payable, shall be repaid to the
Company free from the trusts created by this Indenture, and all liability of the Trustee with respect to such
moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the
Company as aforesaid, the Trustee may (at the cost of the City) first mail to the Holders of Bonds which
have not yet been paid, at the addresses shown on the registration books maintained by the Trustee, a
27
notice, in such form as may be deemed appropriate by the Trustee, with respect to the Bonds so payable
and not presented and with respect to the provisions relating to the repayment to the Company of the
moneys held for the payment thereof.
ARTICLE XI: MISCELLANEOUS
Section 11.01. Liability of City Limited to Revenues.
Notwithstanding anything in this Indenture or in the Bonds contained, the City shall not be re-
quired to advance any moneys derived from any source other than the Revenues and other assets
pledged under this Indenture for any of the purposes in this Indenture mentioned, whether for the pay-
ment of the principal or redemption price of or interest on the Bonds or for any other purpose of this In-
denture. Nevertheless, the City may, but shall not be required to, advance for any of the purposes hereof
any funds of the City which may be made available to it for such purposes.
Section 11.02. Successor Is Deemed Included in all References to Predecessor.
Whenever in this Indenture either the City or the Trustee is named or referred to, such reference
shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in
this Indenture contained by or on behalf of the City or the Trustee shall bind and inure to the benefit of the
respective successors and assigns thereof whether so expressed or not.
Section 11.03. Limitation of Rights to Parties and Bondholders.
Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to
give to any person other than the City, the Trustee, the Company and the Holders of the Bonds any legal
or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or pro-
vision therein or herein contained; and all such covenants, conditions and provisions are and shall be
held to be for the sole and exclusive benefit of the City, the Trustee, the Company and the Holders of the
Bonds.
Section 11,04. Waiver of Notice.
Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such
notice may be waived in writing by the person entitled to receive such notice and in any such case the
giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reli-
ance upon such waiver.
Section 11.05. Destruction of Bonds.
Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery
to the City of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds
(in the presence of an officer of the City, if the City shall so require) and at the request of the City deliver a
certificate of such destruction to the City.
Section 11.06. Severability of Invalid Provisions.
If any one or more of the provisions contained in this Indenture or in the Bonds shall for any rea-
son be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall
be deemed severable from the remaining provisions contained in this Indenture and such invalidity, ille-
gality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be
construed as if such invalid or illegal or unenforceable provision had never been contained herein. The
City hereby declares that it would have entered into this Indenture and each and every other Section,
paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto
28
irrespective of the fact that any one or more Sections, paragraphs, sentences clauses or phrases of this
Indenture may be held illegal, invalid or unenforceable.
Section 11.07. Notices.
All notices, certificates or other communications hereunder shall be sufficiently given and shall be
deemed given (i) if hand delivered, when delivered to the appropriate notice address, (ii) if mailed by first
class mail, postage prepaid, three Business Days after deposit in the United States mail addressed to the
appropriate notice address or (iii) if delivered by courier providing receipt of delivery, when delivered to
the appropriate notice address. The parties listed below may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates or other communications shall be
sent. Any notice required or permitted hereunder shall be directed to the following notice address:
If to the City
City of Bakersfield
1501 Truxtun Avenue
Bakersfield, California 93301
Attention: City Manager
(with a copy to
Musick, Peeler & Garrett LLP
One Market Plaza, Steuart Tower 1300
San Francisco, California 94105
Attention: Edsell M. Eady, Jr., Esq.)
If to the Company
Bell Tower Associates
1200 Truxtun Avenue, Suite 200
P,O. Box 2205
Bakersfield, California 93303
Attention: William C. Kuhs, Esq.
If to the Trustee
Union Bank of California, NA.
475 Sansome Street
San Francisco, California 94111
Section 11.08. Evidence of Rights of Bondholders.
Any request, consent or other instrument required or permitted by this Indenture to be signed and
executed by Bondholders may be in any number of concurrent instruments of substantially similar tenor
and shall be signed or executed by such Bondholders in person or by an agent or agents duly appointed
in writing. Proof of the execution of any such request, consent or other instrument or of a writing ap-
pointing any such agent, or of the holding by any person of Bonds transferable by delivery, shall be suffi-
cient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the City if
made in the manner provided in this Section. The fact and date of the execution by any person of any
such request, consent or other instrument or writing may be proved by the certificate of any notary public
or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, cer-
tifying that the person signing such request, consent or other instrument acknowledged the execution
thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other
officer. The ownership of Bonds shall be proved by the Bond registration books held by the Trustee. Any
request, consent, or other instrument or writing of the Holder of any Bond shall bind every future Holder of
the same Bond and the Holder of every Bond issued in exchange therefor or in lieu thereof, in respect of
anything done or suffered to be done by the Trustee or the City in accordance therewith or reliance
thereon.
Section 11,09. Disqualified Bonds.
In determining whether the Holders of the requisite aggregate principal amount of Bonds have
concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are
owned or held by or for the account of the City or the Company or by any person directly or indirectly
29
controlling or controlled by, or under direct or indirect common control with, the City or the Company shall
be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds so
owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this
Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such
Bonds and that the pledgee is not a person directly or indirectly controlling or controlled by, or under di-
rect or indirect common control with, the City or the Company. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee.
Section 11.10. Money Held for Particular Bonds.
The money held by the Trustee for the payment of the interest, principal or redemption price due
on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part
only) shall, on and after such date and pending such payment, be set aside on its books and held in trust
by it for the Holders of the Bonds entitled thereto, subject, however, to the provisions of Section 10.04.
Section 11.11. Funds and Accounts.
Any fund required by this Indenture to be established and maintained by the Trustee may be es-
tablished and maintained in the accounting records of the Trustee, either as a fund or an account, and
may, for the purposes of such records, any audits thereof and any reports or statements with respect
thereto, be treated either as a fund or as an account; but all such records with respect to all such funds
shall at all times be maintained in accordance with customary standards of the industry, to the extent
practicable, and with due regard for the requirements of Sections 5.03 and 6.06 and the Agreement and
for the protection of the security of the Bonds and the rights of every Holder thereof.
Section 11.12. Article and Section Headings and References.
The headings or titles of the several Articles and Sections hereof, and any table of contents ap-
pended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning,
construction or effect of this Indenture. All references herein to "Articles," "Sections" and other subdivi-
sions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean
and include words of the feminine and neuter genders.
Section 11.13. Waiver of Personal Liability.
No officer, agent or employee of the City shall be individually or personally liable for the payment
of the principal of or premium, if any, or interest on the Bonds or be subject to any personal liability or ac-
countability by reason of the issuance thereof; but nothing herein contained shall relieve any such officer,
agent or employee from the performance of any official duty provided by law or by this Indenture.
Section 11.14. Execution in Several Counterparts.
This Indenture may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the
City and the Trustee shall preserve undestroyed, shall together constitute but one and the same instru-
ment.
Section 11.15. Governing Law.
This Indenture shall be construed in accordance with and governed by the Constitution and laws
of the State of California.
30
IN WITNESS WHEREOF, the CITY OF BAKERSFIELD has caused this Indenture to be signed in
its name by its City Manager and its seal to be hereunto affixed and attested by its City Clerk, and UNION
BANK OF CALIFORNIA, N.A., in token of its acceptance of the trusts created hereunder, has caused this
Indenture to be signed in its corporate name by one of its officers thereunto duly authorized, all as of the
day and year first above written.
CITY OFBAKERSFIELD
[SEAL]
By
Mayor
Attest:
By
City Clerk and Ex-Officio Clerk of
the Council of the City of Bakersfield
Approved as to form and substance:
MUSlCK, PEELER & GARRETT LLP,
As Bond Counsel
By
Edsell M. Eady, J~,t..~a~er
UNION BANK OF CALIFORNIA, N.A.,
As Trustee
COUNTERSIGNED:
By
Authorized Officer
By
Finance Director
31
EXHIBIT A: [FORM OF BOND]
NEITHER THE STATE OF CALIFORNIA NOR THE CITY OF BAKERSFIELD SHALL BE OBLIGATED TO
PAY THE PRINCIPAL OF OR THE PREMIUM, IF ANY, OR THE INTEREST ON THE BONDS EXCEPT
FROM REVENUES (AS DEFINED), AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER
OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE
PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THIS BOND
REGISTERED
REGISTERED
No. R .... $
CITY OF BAKERSFIELD
HISTORICAL REHABILITATION REFUNDING REVENUE BOND
(BELL TOWER PROJECT)
SERIES 1998
Maturity Date I
Rate of Interest (November 1.) Dated Date J CUSIP
.................. ** ......................................................................... .........../ ..............
Registered Owner:
Principal Amount:
DOLLARS
The City of Bakersfield, a municipal corporation and charter city of the State of California (the
"City"), for value received, hereby promises to pay (but only out of Revenues and other amounts pledged
therefor as hereinafter provided) to the Registered Owner identified above, or registered assigns, on the
Maturity Date specified above (subject to any right of prior redemption hereinafter mentioned), the Princi-
pal Amount specified above, in lawful money of the United States of America and to pay interest thereon
in like money from the interest payment date to which interest has been paid or, if this Bond is authenti-
cated on or before October 15, 1998, from the Dated Date specified above (provided that, if interest on
this Bond is in default, it shall bear interest from the last interest payment date to which interest has been
paid or made available for payment), until payment of such principal sum shall be discharged as provided
in the Indenture hereinafter mentioned. Interest shall be computed at the Rate of Interest per annum set
forth above, payable on November 1 and May 1 in each year commencing on November 1, 1998, based
on a 360-day year and twelve 30-day months. The principal hereof is payable upon surrender hereof at
the principal corporate trust office of Union Bank of California, N,A, (together with any successor as trus-
tee under the Indenture, herein called the "Trustee"), initially located in Los Angeles, California. Except
as otherwise provided in the Indenture, the interest hereon is payable to the person whose name appears
on the Bond registration books of the Trustee as the registered owner hereof as of the close of business
on the applicable Record Date, such interest to be paid by check mailed by first class mail to such regis-
tered owner at his or her address as it appears on such registration books.
This Bond is one of a duly authorized issue of bonds of the City designated as the "The City of
Bakersfield Historical Rehabilitation Refunding Revenue Bonds (Bell Tower Project), Series 1998" (the
"Bonds"), in the aggregate principal amount of One Million Five Hundred Seventy Dollars ($1,570,000),
issued pursuant to the provisions of Ordinance No. 2675 New Series of the City (the "Ordinance") (the
"Ordinance"), and pursuant to an Indenture, dated as of March 1, 1998, between the City and Trustee (as
it may be supplemented, modified or amended by any supplemental indenture, herein called the "Inden-
ture"). The proceeds of the Bonds are being loaned to Bell Tower Associates, a general partnership (the
"Borrower") for the purposes and on the terms and condition set forth in a loan agreement, of even date
with the Indenture, between the City and the Borrower (as it may be supplemented, modified or amended
by any supplemental indenture, herein called the "Loan Agreement").
A-!
Reference is hereby made to the Indenture (a copy of which is on file at said office of the Trustee)
and to the Ordinance for a description of the rights thereunder of the registered owners of the Bonds, of
the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights
and obligations of the City thereunder, to all of the provisions of which Indenture and supplemental in-
dentures the registered owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds and the interest thereon are payable from the Revenues (as that term is defined in the
Indenture) and are secured by a pledge and assignment of said Revenues and of amounts held in the
funds and accounts established pursuant to the Indenture (other than the Rebate Fund), subject only to
the provisions of the Indenture permitting the application thereof for the purposes and on the terms and
conditions set forth in the Indenture.
The Bonds are subject to redemption only as set forth in the Indenture, which provisions are
summarized below.
The Bonds are subject to redemption prior to their respective stated maturities, in whole or in part,
on the redemption date specified in the notice of redemption, which date will be the first practicable date
for which applicable notice can be given, from insurance or condemnation proceeds received by the
Trustee from the Borrower pursuant to the Loan Agreement, at a redemption price equal to 100% of the
principal amount of the Bonds being redeemed plus accrued interest to the redemption date.
Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the
Trustee shall select the Bonds to be redeemed, from the Outstanding Bonds not previously called for re-
demption, in inverse order of maturity or in such other order as shall be specified in a Request of the Bor-
rower, and by lot within a maturity.
Notice of any redemption, identifying among other things the Bonds or portions thereof to be re-
deemed, shall be given by the Trustee not less than 30 and not more than 60 days before the date fixed
for redemption by first class mail to each of the registered owners of Bonds designated for redemption at
their addresses appearing on the bond registration books of the Trustee. Receipt of such notice by such
registered owners shall not be a condition precedent to such redemption. Failure by the Trustee to give
notice of redemption, or the insufficiency of any such notice, shall not affect the sufficiency of the pro-
ceedings for redemption.
If this Bond is called for redemption and payment is duly provided herefor as specified in the In-
denture, interest shall cease to accrue hereon from and after the date fixed for redemption.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds may be
declared due and payable upon the conditions, in the manner and with the effect provided in the Inden-
ture. The Indenture provides that in certain events such declaration and its consequences may be re-
scinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then
outstanding.
The Bonds are issuable as registered Bonds in denominations of $110,000 and any integral mul-
tiple of $5,000 in excess of $110,000. Subject to the limitations and upon payment of the charges, if any,
provided in the Indenture, Bonds may be exchanged, at the principal corporate trust office of the Trustee,
for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his or her attorney
authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and
upon payment of the charges provided in the Indenture and upon surrender and cancellation of this Bond.
Upon such transfer a new registered Bond or Bonds, of the same maturity and of authorized denomina-
tion or denominations, for the same aggregate principal amount will be issued to the transferee in ex-
change herefor.
The City and the Trustee may treat the registered owner hereof as the absolute owner hereof for
all purposes, and the City and the Trustee shall not be affected by notice to the contrary.
A-2
The City and the Trustee may amend the Indenture for certain purposes without the consent of
the registered owners of the Bonds but with the consent of the Borrower and an opinion of bond counsel
to the effect that such amendment will not cause interest on the Bonds to be included in the gross income
of the registered owners thereof for federal income tax purposes. With the consent of the Borrower and
the registered owners of not less than a majority in aggregate principal amount of the Bonds at the time
outstanding and with such an opinion of bond counsel, the City and the Trustee may amend the Inden-
ture; provided, however, that no such amendment shall (1) extend the fixed maturity of any Bond or re-
duce the rate interest thereon or extend the time of payment of interest, or reduce the amount of the prin-
cipal thereof, or reduce any premium payable on the redemption thereof, or (2) reduce the aforesaid per-
centage of registered owners of Bonds whose consent is required for the execution of supplemental in-
dentures or extend the time of payment or permit the creation of any lien on the Revenues or the funds
pledged in the Indenture prior to or on a parity with the lien of the Indenture or deprive the registered
owners of the Bonds of the lien created by the Indenture upon the Revenues or the funds pledged
therein, without the consent of the Borrower and the registered owners of all the Bonds then Outstanding.
No member or officer of the City shall be individually or personally liable for the payment of this
Bond or the interest hereon or be subject to any personal liability or accountability by reason of the issu-
ance hereof.
Neither the State of California or the City shall be obligated to pay the principal of or the premium,
if any, or the interest on the Bonds except from the Revenues, and neither the faith and credit nor the
taxing power of the State of California or of any political subdivision thereof is pledged to the payment of
the principal of or the premium, if any, or the interest on the Bonds.
It is hereby certified that all of the conditions, things and acts required to exist, to have happened
and to have been performed precedent to and in the issuance of this Bond do exist, have happened and
have been performed in due time, form and manner as required by the Constitution and statutes of the
State of California and the Ordinance, and that the amount of this Bond, together with all other indebted-
ness of the City, does not exceed any limit prescribed by the Constitution or statutes of the State of Cali-
fornia or the Ordinance.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory
for any purpose, until the certificate of authentication and registration hereon endorsed shall have been
signed by the Trustee,
IN WITNESS WHEREOF, the City of Bakersfield has caused this Bond to be executed in its
name and on its behalf by the facsimile signature of its City Manager, and its seal to be reproduced
hereon and attested by the facsimile signature of its City Clerk, all as of the Dated Date set forth above.
CITY OFBAKERSFIELD
[SEAL]
Attest:
By
City Manager
By
City Clerk
A-3
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture which has been
authenticated this
UNION BANK OF CALIFORNIA, N.A., as Trustee
By:
Authorized Signatory
[ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
(print or type name, address, taxpayer identification number and zip code of assignee)
the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed By:
Signature
NOTE: The signature to the assignment must correspond to the
name as written on the face of this Bond in every particular,
without any alteration or change whatsoever.
NOTE: The signature to the assignment must be guaranteed by an eligible guarantor institution.
A-4
EXHIBIT B
REQUISITION OF THE BORROWER
(COST OF ISSUANCE FUND)
(SECTION 3.03 OF THE INDENTURE)
CITY OF BAKERSFIELD HISTORICAL REHABILITATION REFUNDING REVENUE BONDS
(BELL TOWER PROJECT) SERIES 1998
Request No.: (to be sequentially numbered)
Amount to be paid: $
Name and address of party to whom payment is to be made:
Purpose for which obligation was incurred:
If the payment is to be made to the Borrower for amounts that it has paid or will pay to third parties,
the Borrower certifies that it either has made payment prior to the date of this Requisition or will make
payment within three business days of receipt of moneys requisitioned hereunder and that the aggre-
gate number of business days during this calendar year during which it has held such amounts before
making payment does not exceed twenty.
Attached hereto is an original invoice or invoices or evidence of the Borrower's payment of any invoice
when such requisition is in reimbursement thereof.
Date: ,199_
BELL TOWER ASSOCIATES
By:
General Partner
B-1
MUSICK, PEELER & GARRt:i i LLP APPROVAL DRAFT 03.13.98
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of March 1,1998, between the CITY OF BAKERSFIELD, a
municipal corporation and charter city of the State of California (as further defined in Section 1.01 of the
Indenture hereinafter referenced, the "City"), and BELL TOWER ASSOCIATES, a general partnership (as
further defined in Section 1.01 of the Indenture hereinafter referenced, the "Company"),
WITNESSETH:
WHEREAS, the Company has duly filed its application with the City for a loan under the City of
Bakersfield Ordinance No. 2675 New Series to refinance an historical rehabilitation project originally
financed by the City in 1981, as described in Exhibit A hereto;
WHEREAS, the City, after due investigation and deliberation, has duly adopted its resolution
approving said application of the Company;
WHEREAS, in order to provide funds for such loan the City proposes to issue its City of
Bakersfield Historical Rehabilitation Refunding Revenue Bonds (Bell Tower Project) Series 1998 (the
"Bonds") in the aggregate principal amount of $1,570,000 pursuant to an indenture, dated as of the date
hereof, between Union Bank of California, NA. (as further defined in Section 1.01 therein, the "Trustee"),
and the City (as further defined therein, the "indenture"); and
WHEREAS, the City and the Company desire to enter into this loan agreement (as further defined
in Section 1.01 of the Indenture, this "Agreement") to specify the terms and conditions of the loan from the
City to the Company of the proceeds of the Bonds and to require and confirm the obligation of the
Company to make payments at such times and in such manner as may be necessary to provide for full
payment of the debt service on the Bonds, as such debt service becomes due and for certain other
purposes specified herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. Definitions of Certain Terms.
Unless otherwise defined in this Agreement, all terms used herein which are defined in the
Indenture shall have the meanings assigned to such terms in the indenture.
SECTION 2. Representations and Warranties of the Company.
The Company makes the following representations and warranties to the City:
(a) The Company is a general partnership duly organized under the laws of the State, has full
legal right. power and authority to enter into this Agreement and to carry out and consummate all
transactions contemplated by this Agreement, and by all proper action has duly authorized the execution
and delivery of this Agreement.
(b) The execution and delivery of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or constitute a breach of or default under the partnership
agreement of the Company, any law or administrative rule or regulation applicable to the Company, any
court or administrative decree or order applicable to the Company or any material loan agreement, bond,
debenture, note or other evidence of indebtedness or any material contract, agreement or lease to which
the Company is a party or by which any of the Company's property is bound.
(c) The officers of the Company executing this Agreement are, at the date of execution and
delivery of this Agreement, duly and properly in office and fully authorized to execute the same.
(d) There are no actions, suits or proceedings which have been served on the Company or,
to the knowledge of Company, are otherwise pending or threatened against the Company (other than
which the Company has disclosed in writing to the City):
(1) to restrain or enjoin the issuance or delivery of any of the Bonds or the collection
of Revenues pledged under the Indenture;
(2) in any way contesting or affecting the authority fer the issuance of the Bonds or
the validity of the Bonds, the Indenture, this Agreement or the Deed of Trust;
(3) in any way contesting the existence or powers of the Company; or
(4) which, if determined adversely to it, would materially adversely affect the
consummation of the transactions contemplated by this Agreement or the financial condition, assets or
properties of the Company;
(e) The balance sheet of the Company as of December 31, 1997, and the related statements
of income and expenses, changes in fund balances and changes in financial position for the year then
ended (copies of which, have been furnished to the City) present fairly, in all material respects, the
financial position of the Company as of December 31, 1997, and its income and expenses, changes in its
fund balances and changes in its financial position for the year then ended in accordance with generally
accepted accounting principles, and since December 31, 1997, them has been no material adverse
change in the assets, operations or financial condition of the Company other than any such change which
the Company has disclosed in writing to the City.
(f) To the best knowledge of the Company, no written information, exhibit or report
containing current or historical information which was furnished to the City or by the Company in
connection with the negotiation of this Agreement and the consummation of the transactions contemplated
hereby and thereby, taken together, contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
(g) The Company:
(1) is in compliance with all laws, ordinances, governmental rules and regulations to
which it is subject and which are material to its properties, operations or finances; and
(2) has obtained all licenses, permits, franchises or other governmental
authorizations necessary and material to the ownership of its property or to the conduct of its activities,
and agrees to obtain all such licenses, permits, franchises or other governmental authorizations as may
be required in the future for its operations in all cases where failure to obtain such licenses, permits,
franchises or other governmental authorizations could reasonably be expected to materially and adversely
affect the condition (financial or otherwise) of the Company or its ability to perform its obligations under
this Agreement.
(h) This Agreement and the Deed of Trust have been duly authorized, executed and
delivered by the Company and constitute legal, valid and binding agreements of the Company,
enforceable in accordance with their terms.
(i) No event of default under this Agreement has occurred and is continuing, and no event
has occurred and is continuing which, with the lapse of time or the giving of notice or both, would
constitute such an event of default.
(j) The Company is not in default with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental agency which default could
reasonably be expected to have consequences that would materially and adversely affect the asset§~
operations or financial condition of the Company. There are no tax claims or liens pending against the
Company other than such, if any, as are not delinquent or may be actively contested by the Company.
(k) The Company is not in default under and is not violating any provision of its partnership
agreement or any material provision of any material indenture, mortgage, lien, administrative regulation,
order, judgment, decree or other instrument or restriction of any kind or character to which it is a party or
by which it is bound or to which it or any of its assets is subject (other than which the Company has
disclosed in writing to the City). Neither the execution and delivery by the Company of this Agreement nor
compliance with the terms, conditions and provisions hereof or contemplated hereby will conflict with or
result in a material breach of, or constitute a default under, any of the foregoing.
SECTION 3. Representations and Warranties of the City,
The City makes the following representations and warranties to the Company:
(e) The City is a duly organized and validly existing municipal corporation and charter city
under a fleeholders' charter and the Constitution and the laws of the State. The City has the requisite
legal right, power and authority to enter into this Agreement and the Indenture and to carry out and
consummate all transactions contemplated of the City by this Agreement and the Indenture and by proper
action has duly authorized the execution and delivery of this Agreement and the Indenture.
(b) The execution and delivery of this Agreement and the Indenture and the consummation of
the transactions herein and therein contemplated will not in any material respect conflict with or constitute
on the part of the City a breach of or default under any agreement or other instrument to which the City is
a party or by which it is bound or any existing law, regulation, court order or consent decree to which it is
subject.
SECTION 4. Application of Proceeds of Bonds.
The proceeds of the sale of the Bonds shall be deposited as set forth in Section 3.02 of the
Indenture.
SECTION 5. Payment of Bonds.
(A) The Company agrees that it will pay to the Trustee, for the account of the City, all sums
necessary for the payment of the debt service on the Bonds, as follows (the "Base Loan Payments'l:
(1) Commencing October 15, 1998, and continuing until the principal of and premium,
if any, and interest on the Bonds shall have been fully paid (or provision for the payment thereof shall have
been made as provided in the Indenture), the Company shall pay on each October 15, as an installment in
repayment of the loan from the City under this Agreement, a sum equal to (a) the amount of interest
scheduled to be payable on the Bonds on the next succeeding Interest Payment Date, plus (b) the amount
of principal scheduled to be payable on the Bonds on the next succeeding November 1.
(2) By 9 a.m. Pacific time on each date on which principal of the Bonds is due by
reason of redemption or acceleration as provided in the indenture, the Company shall pay in funds which
will be immediately available as of such time and date, as an installment in repayment of the loan from the
City under this Agreement, a sum equal to the aggregate amount payable on such date as principal of,
premium, if any, and interest on the Bonds.
(3) Any amount at the time held by the Trustee in the Bond Fund (including any
investment income credited to the Bond Fund pursuant to Section 5.05 of the Indenture) for the payment
of debt service on the Bonds shall be credited against the aforesaid Base Loan Payments then required to
be made by the Company (except Base Loan Payments required to be made pursuant to subsection (1)
above), to the extent such amount is in excess of the amount required for payment of (i) any Bonds
theretofore matured or called for redemption and (ii) interest accrued to the date of redemption or maturity,
in all cases where the Bonds have not been presented for payment. In accordance with Section 5.02(B)
of the Indenture, the Trustee shall give the Company notice of the amount in the Bond Fund to be so
credited against such Base Loan Payments.
(4) Any amount at the time held by the Trustee in any special fund established in
connection with any refunding, which amount is available and designated for payment of debt service on
the Bonds on such Interest Payment Date, may also, at the election of the Company, be credited against
such Base Loan Payments.
(B) If on any Interest Payment Date the balance in the Bond Fund is insufficient or
unavailable to make required payments of principal of (whether at maturity, by redemption or by
acceleration as provided in the Indenture) and premium, if any, and interest due on the Bonds on such
date, the Company shall forthwith pay any such deficiency to the Trustee for deposit in the Bond Fund.
(C) The Company acknowledges that the Trustee shall give notice:
(1) to the Company in accordance with Section 5.02(B) of the Indenture at least five
(5) Business Days before each Interest Payment Date of the amount, if any, credited or to be credited to
the Bond Fund by such next Interest Payment Date and the amount of the Base Loan Payment then due
from the Company; and
(2) to the Company and the City in accordance with Section 5.01(D) of the Indenture
if the Company fails to make any payment required hereunder by the due date, such notice to be given by
telephone, telecopy or telegram followed by written notice.
SECTION 6. Additional Payments.
In addition to the Base Loan Payments required to be made by the Company, the Company shall
also pay to the Trustee or to the City, as the case may be, the following (the "Additional Payments'l:
(1) All taxes and assessments of any type or character charged to the City or to the
Trustee affecting the amount available to the City or the Trustee from payments to be received hereunder
or in any way arising due to the transactions contemplated hereby (including taxes and assessments
assessed or levied by any public agency or governmental authority of whatsoever character having power
to levy taxes or assessments) but excluding any taxes based upon the capital and/or income of the
Trustee or any other person other than the Company; provided, however, that the Company shall have the
right to protest any such taxes or assessments and to require the City or the Trustee, as the case may be,
at the Company's expense, to protest and contest any such taxes or assessments assessed or levied
upon them and that the Company shall have the right to withhold payment of any such taxes or
assessments pending disposition of any such protest or contest unless such withholding, protest or
contest would materially adversely affect the rights or interests of the City or the Trustee;
(2) The reasonable annual (or other regular) fees and expenses of the Trustee, and
all reasonable fees, charges and expenses of the Trustee for any extraordinary services rendered by the
Trustee under the Indenture, as and when the same become due and payable;
(3) The reasonable fees and expenses of such accountants, consultants, attorneys
and other experts as may be engaged by the City or the Trustee to prepare audits, financial statements or
opinions or provide such other services as are reasonably required under this Agreement or the Indenture;
(4) Reasonable expenses of the City and any agent of the City selected by the City to
act on its behalf in connection with the loan to the Company under this Agreement or the Bonds, including
without limitation reasonable expenses incurred by the City Attorney in connection with any litigation which
may at any time be instituted involving such loans or the Bonds and reasonable expenses incurred by the
City in supervision and inspection of the Company and its operations with respect to the use and
application of such loans; and
OR~G;NA;
(5) Such amounts as may be necessary to satisfy the rebate requirements in
accordance with the Tax Agreement.
Such Additional Payments shall be billed to the Company by the City or the Trustee from time to time,
together with (i) a statement executed by a duly authorized officer or agent of the City or the Trustee, as
the case may be, certifying that the amount billed has been incurred or paid by the City or the Trustee for
one or more of the above items and (ii) a copy of the invoice or statement for the amount so incurred or
paid. Amounts so billed shall be paid by the Company within thirty (30) days after receipt of the bill by the
Company. Payment by the Company to either the City or the Trustee of the amount so billed by either
such party shall fulfill such payment obligation of the Company.
SECTION 7. Obligations of the Company Unconditional.
The Company pledges its full faith and credit to the payments it is required to make under this
Agreement. The obligations of the Company to make the Base Loan Payments and Additional Payments
and to perform and observe the other agreements on its part contained in this Agreement shall be
absolute and unconditional and shall constitute general obligations of the Company. Until the principal of
and premium, if any, and interest on all Bonds shall have been fully paid (or provision for the payment
thereof shall have been made as provided in the Indenture), the Company (i) will not suspend or
discontinue any Base Loan Payments or Additional Payments, (ii) will perform and observe all of its other
agreements contained in this Agreement and (iii) will not terminate this Agreement for any cause,
including, without limiting the generality of the foregoing, any change in the laws of the United States of
America or of the State or any political subdivision of either or any failure of the City to perform and
observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or
connected with this Agreement. This Agreement shall be deemed and construed to be a "net contract,"
and the Company shall pay absolutely net the Base Loan Payments, Additional Payments and all other
payments required thereunder, free of any deductions, without abatement, diminution or set-off other than
those herein expressly provided.
SECTION 8. [Reserved.].
SECTION 9. Investments.
The Company, by its written request to the Trustee, may direct the investment by the Trustee of
moneys in the funds and accounts established pursuant to the Indenture, subject to the limitations set
forth in Section 5.05 of the Indenture. The Company covenants that it will not direct the Trustee to make
any investments and itself will not make any investments of the proceeds of the Bonds, or any other funds
in any way pledged to the security of or reasonably expected to be used to pay the Bonds, which would
cause any of the Bonds to be "arbitrage bonds" subject to federal income taxation by reason of
Section 103 of the Code. The Company shall not purchase any obligations of the City, pursuant to an
arrangement, formal or informal, in an amount related to the amount of the loan made to the Company
under this Agreement. Nothing in this Agreement shall prohibit the Company from receiving Bonds by gift,
bequest or devise or from purchasing Bonds in the secondary market other than pursuant to an
arrangement related to the loan.
SECTION 10. No Liability of the State or the City.
The Company shall be solely responsible for the payment of the Bonds. Neither the State nor the
City shall be obligated to pay the Bonds or the interest thereon except from revenues provided by the
Company, and neither the faith and credit nor the taxing power of the State or of any political subdivision
thereof shall be pledged to the payment of the principal of or the interest on the Bonds. The issuance of
the Bonds shall not directly or indirectly or contingently obligate the State or any political subdivision
thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their
payment. No officer of the City nor any person executing the Bonds shall be liable personally on the
Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.
SECTION 11. Maintenance of Existence; Consolidation, Merger, Sale or Transfer Under Certain
Conditions.
(A) The Company covenants and agrees that, so long as any of the Bonds are Outstanding, it
will maintain its existence as a partnership in the State and will not dissolve, sell or otherwise dispose of all
or any substantial part of its assets or consolidate with or merge into another entity or permit one or more
other entities to consolidate with or merge into it. Notwithstanding the foregoing, the Company may,
without violating the covenants contained in this Section, consolidate with or merge into another entity, or
permit one or more other entities to consolidate with or merge into it, or sell or otherwise transfer to
another entity all or substantially all of its assets as an entirety and thereafter dissolve, if:
(1) Such actions are permitted by law;
(2) The surviving, resulting or transferee entity, as the case may be:
(a) assumes in writing, if such entity is not the Company, all of the
obligations of the Company under this Agreement; and
(b)
is not, after such transaction, otherwise in default under any provisions of
this Agreement;
(3) The City and the Trustee shall have received a Certificate of the Company to the
effect that the covenants hereunder will be met after such consolidation, merger, sale or transfer; and
(4) The Trustee and the City shall have received an Opinion of Bond Counsel to the
effect that such merger, consolidation, sale or other transfer will not cause interest on the Bonds to be
included in gross income for federal income tax purposes under Section 103 of the Code.
(B) If a merger, consolidation, sale or other transfer is effected, as provided in this Section,
the provisions of this Section shall continue in full force and effect, and no further merger, consolidation,
sale or transfer shall be effected except in accordance with the provisions of this Section.
(C) Another entity may also agree to become a co-obligor and jointly and severally liable with
the Company (without the necessity of merger, consolidation or transfer of assets) under this Agreement if
the foregoing provisions (other than (A)(2)(a)) are satisfied. In such event, references in this Agreement
to indebtedness of the Company shall apply to the combined indebtedness of the Company and such
other entity, references to the financial condition or results of operation of the Company shall apply to the
combined financial condition and results of operation of the Company and such other entity, and the
Company and such other entity shall be considered to be the Company for all purposes of this Agreement.
SECTION 12. Insurance.
(A) The Company covenants and agrees that, subject to subsection (B) of this Section, it will
keep the Project and all of the properties and operations of the Company thereon adequately insured at all
times and carry and maintain such insurance in amounts that are customarily carried and against such
risks as are customarily insured against by other entities in connection with the ownership and operation
of facilities of similar character and size in the State to the extent it is commercially available. The
Company further covenants and agrees that it will pay or cause to be paid in timely fashion the premiums
for such insurance. Such insurance coverage shall, at a minimum, include the following:
(1) Insurance against loss or damage by fire, lightning, vandalism, malicious mischief
and all other risks covered by the extended coverage insurance endorsement then in use in the State,
subject to a deductible of not more than $25,000 per accident or casualty, in an amount equal to at least
the lesser of the full replacement value of the property insured or the aggregate principal amount of the
Bonds. The Company shall from time to time (but not less frequently than once every 24 months) cause
6
the replacement value of the Project to be determined by an Insurance Consultant or by an architect,
contractor, appraiser or appraisal company selected by the Company. During the course of substantial
addition, extension, alteration or improvement to the Project, the Company shall maintain or cause to be
maintained builder's risk insurance in the amount of the full completed value of such construction work,
subject to deductibles of not more than $25,000 per accident or casualty, covering loss by fire, lightning
and removal from the premises endangered by fire and lightning, and all other risks covered by the
extended coverage endorsement then in use in the State.
(2) Comprehensive public liability and property damage insurance for the Project in
the minimum amount of $1,000,000 for damages arising out of any one accident, and automobile liability
and property insurance in the minimum amount of $500,000 for damages arising out of any one accident.
(3) Business interruption insurance (to the extent commercially available and
economically practicable) covering actual losses to the Company of gross operating earnings which result
directly from necessary interruption of business caused by damage to or destruction of any real or
personal property constituting part of the Project from the risks mentioned in the first sentence of (A)(1)
above, less charges and expenses which do not necessarily continue during such interruption of business,
for such period of time as may be required, with exercise of due diligence, and dispatch, to reconstruct,
repair, or replace such damages or destroyed property, with limits equal to at least the aggregate principal
amount of Outstanding Bonds.
(B) The Company shall employ an Insurance Consultant to review the insurance
requirements of the Company from time to time (but not less frequently than annually). If the Insurance
Consultant makes recommendations for the increase of any of the coverage required by subsection (A) of
this Section, the Company shall increase such coverage in accordance with such recommendations,
subject to a good faith determination of the general partners of the Company that such recommendations,
in whole or in part, are in the best interests of the Company. Notwithstanding anything in this Section to
the contrary, the Company shall have the right, without giving rise to a default hereunder solely on such
account, (1) to maintain insurance coverage below that required by subsection (A) of this Section, if the
Company furnishes to the Trustee a certificate of the Insurance Consultant that the insurance so provided
affords the greatest amount of coverage available for the risk being insured against at rates that in the
judgment of the Insurance Consultant are reasonable in connection with reasonable and appropriate risk
management, or (2) to adopt alternative risk management programs that the general partners of the
Company determine to be reasonable, including, without limitation, to setf-insure in whole or in part, to
participate in programs of captive insurance companies, to participate in state or federal insurance
programs, or to establish or participate in other alternative risk management programs; all as may be
approved in writing as reasonable and appropriate risk management by the Insurance Consultant,
provided, that no such change in the amount or type of insurance required by subsections (A)(1) and
(A)(2) of this Section shall be permitted without the prior written approval of the Purchaser, if there is a
Purchaser at that time, which approval shall not be unreasonably withheld. A copy of any such approval
shall be furnished to the Trustee.
(C) The Company will at all times comply with the Worker's Disability Compensation Law of
the State, or any successor statute or statutes.
(D) To the extent that the Company obtains such insurance coverage in the form of
commercially provided insurance, such coverage shall be carried by stock, reciprocal or mutual insurance
companies authorized to do business (or subject to service of process) in the State which are financially
responsible and capable of fulfilling the requirements of such policies. All policies (except liability policies)
shall name the Company and the City and the Trustee, as insured parties, beneficiaries or loss payees as
their interest may appear. Each policy shall be in such form and contain such provisions as are generally
considered standard for the type of insurance involved and shall contain a provision to the effect that the
insurer shall not cancel or substantially modify the policy provisions without first giving at least thirty (30)
days' prior written notice thereof to the Company and to the Trustee. In lieu of separate policies, the
Company may maintain blanket policies which cover any one or more risks required to be insured against
so long as the minimum coverage required herein are met. The Company shall file at least annually on or
before March 1 of each year with the Trustee a statement certifying that all requirements of this
Agreement related to insurance have been met and setting forth the policies of insurance maintained
pursuant to this Agreement, the names of the insurers and insured parties, the amounts of such insurance
and applicable deductibles, the risks covered thereby and the expiration dates thereof and a similar
description of any self-insurance or alternative risk management program adopted by the Company, and
stating whether the insurance described therein satisfies the requirements of this Agreement. The Trustee
shall be protected in relying upon such statement without independent investigation into the matters
covered therein.
(E) The proceeds of insurance maintained by the Company against loss or damage by fire,
lightning, vandalism, malicious mischief and all other risks covered by the extended coverage insurance
endorsement then in use in the State or against loss or damage by risks covered by builder's risk
insurance, and the proceeds of any condemnation awards with respect to the Project shall be paid
immediately upon receipt by the Company or other named insured parties to the Trustee, as assignee of
the City, for deposit in a special fund which the Trustee shall establish and maintain and hold in trust
pursuant to the Indenture, to be known as the "Insurance and Condemnation Proceeds Fund." If the
Company elects to repair or replace such property, the Trustee shall pay such proceeds to the Company
and the Company shall proceed reasonably promptly to repair or replace such property. If the aggregate
net proceeds of insurance for any one occurrence or any one condemnation exceeds $1,000,000, the
Company shall so notify the Purchaser in writing. The Purchaser agrees to meet promptly with the
Company upon receipt of such notice, whereupon the Purchaser shall have the right, exercisable within
ninety (90) days after the date of such meeting, to elect that such proceeds be applied to the prepayment
of the Base Loan Payments and redemption of the Bonds, in accordance with subsection (F) below. If the
Purchaser does not elect within such ninety (90) day period to require such proceeds to be used to prepay
the Base Loan Payments and redeem the Bonds, the Company may elect to repair or replace the property
damaged, destroyed or taken. In the event the Company elects to repair or replace the property
damaged, destroyed or taken, it shall furnish to the Trustee plans of the contemplated repair or
replacement, accompanied by a certificate of an architect or other qualified expert estimating the
reasonable cost of such repair or replacement and a Statement of the Company stating that amounts in
the Insurance and Condemnation Proceeds Fund, together with investment income reasonably expected
to be received with respect thereto and any other funds available or reasonably expected to become
available therefor (and which the Company shall agree to deposit in said fund when so available), shall be
sufficient to repair or replace the property damaged, destroyed or taken in accordance with said plans.
After deducting therefrom the reasonable charges and expenses of the Trustee in connection with the
collection and disbursement of such moneys, moneys in the Insurance and Condemnation Proceeds Fund
shall be disbursed by the Trustee at the written request of the Company for the purpose of repairing or
replacing the property damaged, destroyed or taken.
SECTION 13. Financial Statements of the Company and Reporting of Other Information.
The Company wilt furnish the following to the City and the Trustee so long as any Bonds remain
Outstanding:
(a) its balance sheet as of the end of each of its fiscal years and the related statements of
general fund revenues and expenses. changes in fund balances and changes in financial position for the
year then ended, within one hundred fifty (150) days after the end thereof, and to the Trustee each year
such additional copies of its financial statements as the Trustee shall reasonably request;
(b) on such date as the financial statements are furnished pursuant to paragraph (a) of this
Section, a Certificate of the Company stating that:
(1) the Company has in all respects complied with the provisions of the Ordinance
with respect to the use and application of the proceeds of the loan; and
8
(2) there does not exist on the date of such certificate any event of default or any
event which, with the passage of time or the giving of notice or both, would constitute an event of default,
or, if any such event then exists, setting forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto and further stating that, except as otherwise described
therein, the Company is in compliance with the covenants contained herein; including without limitation the
insurance requirements in Section 12 hereof; and
(c) promptly upon the request of the City and the Trustee, such other information regarding
the financial position, results of operations, business or prospects of the Company as the City, the Trustee
may reasonably request from time to time.
SECTION 14. Inspection.
The Company shall, at any reasonable time, and from time to time, permit the City and the
Trustee, and their respective representatives and agents, to (1) inspect the premises and the books and
records of the Company for the purpose of verifying compliance by the Company with the covenants
contained herein and all of the terms of the Ordinance, (2) examine and make copies of and abstracts
from the records and books of account of the Company, (3) discuss the affairs, finances and accounts of
the Company with any of its officers or directors and (4) communicate with the Company's independent
certified public accountants.
SECTION 15. Tax Covenants.
(A) The Company covenants that it shall not take any action, or fail to take any action, if such
action or failure to take such action would result in the interest on the Bonds not being excluded from
gross income for federal income tax purposes under Section 103 of the Code. This covenant shall survive
the payment in full or the defeasance of the Bonds.
(B) If at any time the Company ~s of the opinion that for purposes of this Section it is
necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee
under the Indenture, the Company shall so instruct the City and the Trustee in a Request of the Company
accompanied by an Opinion of Bond Counsel.
(C) Notwithstanding any provisions of this Section, if the Company provides to the Trustee
and the City an Opinion of Bond Counsel to the effect that any specified action required under this Section
is no longer required or that some further or different action is required to maintain the exclusion from
federal income tax of interest on the Bonds, the Trustee may conclusively rely on such opinion in
complying with the requirements of this Section, and the covenants hereunder shall be deemed to be
modified to that extent.
(D) Money on deposit in any fund or account held or controlled by the Company in connection
with the Bonds, whether or not such money was derived from other sources, shall not be used by or under
the direction of the Company in a manner which would cause the Bonds to be "arbitrage bonds" within the
meaning of Section 148 of the Code, and the Company specifically agrees that the investment of money in
any such fund shall be restricted as may be necessary to prevent the Bonds from being "arbitrage bonds"
under the Code.
(E) The average maturity of the Bonds shall not exceed 120% of the average reasonably
expected economic life of the Project;
(F)
Bond; and
No substantial user of the Project or any related person thereof shall own or hold any
(G) No Costs of Issuance shall be paid from proceeds of the Bonds.
9
SECTION 16. Other Covenants of the Company.
The Company covenants as follows so long as any Bonds are Outstanding:
(A) The Company will use its best efforts to cause the Project to be maintained in good
condition and repair, will maintain, operate and use the Project, during the useful life thereof, and (except
as otherwise provided in Section 11 hereof) will not alienate, sell, convey or transfer the Project unless it
provides to the Trustee and the City an Opinion of Bond Counsel to the effect that such alienation, sale,
conveyance or transfer will not cause interest on the Bonds to be included in the gross income of the
Holders thereof for federal income tax purposes.
(B) The Company will comply with all material laws, statutes, ordinances, regulations,
covenants, conditions and restrictions now or hereafter affecting the Project, the Company or the
operations thereof, and it will not commit, suffer or permit any act to be done in violation of any law,
ordinance or regulation, except, in each case, where such noncompliance or act would not have a material
adverse effect upon the Company's assets, operations or financial condition.
(C) The Company will pay and discharge all taxes, assessments, governmental charges of
any kind whatsoever, water rates, meter charges and other utility charges which may be or have been
assessed or which may have become liens upon the Project, and will make such payments or cause such
payments to be made, respectively, in due time to prevent any delinquency thereon or any forfeiture or
sale of the Project or any part thereof, provided, however, that the Company shall not be required to pay
any tax, assessment, rate or charge as herein provided as long as it shall in good faith contest the validity
thereof by a proceeding which operates to prevent any forfeiture or sale of the Project or any part thereof.
(D) The Company will furnish, as soon as practicable and in any event within ten (10) days
after it has knowledge thereof, to the City and the Trustee notice of any event which constitutes, or which
with the giving of notice or the passage of time or both would constitute, an event of default hereunder,
which notice shall set forth the nature of such event and the action which the Company proposes to take
with respect thereto.
SECTION 17. Events of Default.
The following shall be "events of default" under this Agreement, and the terms "events of default"
or "default" shall mean, whenever they are used in this Agreement, any one or more of the following
events:
(A) The Company fails to make any Base Loan Payment or Additional Payment by its due
date or within five Business Days thereafter; or
(B) The Company fails to observe and perform any material covenant, condition or agreement
on its part to be observed or performed under this Agreement other than as referred to in paragraph (A)
above for a period of forty-five (45) days after written notice speci~ing such failure and requesting that it
be remedied is given to the Company by the City; provided, however, if the failure stated in the notice is
correctable but cannot be corrected within the applicable period, the City will not unreasonably withhold its
consent to an extension of such time if corrective action is instituted by the Company within the applicable
period and diligently pursued until the default is corrected; or
(C) Any of the representations or warranties of the Company made herein or in any other
document, certificate or writing furnished by the Company to the City in connection with the application for
or the negotiation of this Agreement or the issuance of the Bonds is false or incorrect in any material
respect; or
(D) There is an unexcused default by the Company under any agreement or instrument to
which it is a party relating to the borrowing of money (excluding trade debt), either (1) in failing to P~..!: ~l~k~K,_~.~.!
10 ..,. ~.
installment of principal or interest in an amount of $50,000 or more, which default shall not have been
waived or excused within 90 days after the Company received notice of such default or (2) as a result of
which indebtedness in an amount of $500,000 or more shall have been accelerated and declared to be
due and payable prior to its date of maturity; or
(E) The Company applies for or consents to the appointment of any receiver, trustee, or
similar officer for it or for all or any substantial part of its property or admits in writing its inability to pay its
debts as they mature; or such a receiver, trustee or similar officer is appointed without the application or
consent of the Company and such appointment continues undischarged for a period of sixty (50) days; or
the Company institutes (by petition, application, answer, consent or otherwise) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or any such proceeding is instituted (by petition,
application or otherwise) against the Company and remains undismissed for a period of sixty (60) days; or
the Company makes a general assignment for the benefit of creditors.
SECTION 18. Remedies on Default.
(A) In the event any of the Bonds shall at the time be Outstanding and unpaid (and provision
for the payment thereof shall not have been made as provided in the Indenture) and any event of default
referred to in Section 17 hereof shall have happened and be continuing the City or the Trustee may take
any one or more of the following remedial steps:
(1) Either the City or the Trustee may, at its option, declare all installments of Base
Loan Payments payable for the remainder of the term of this Agreement to be immediately due and
payable, whereupon the same shall become immediately due and payable.
(2) Either the City or the Trustee may take whatever action at law or in equity may
appear necessary or desirable to collect the payments then due and thereafter to become due hereunder,
or to enforce performance and observance of any obligation, condition or covenant of the Company under
this Agreement.
The term "all installments" shall mean an amount equal to the entire principal amount of the then
Outstanding Bonds, together with all interest accrued or to accrue on and prior to the next succeeding
redemption date or dates on which the Bonds can be and actually are redeemed alter giving notice to the
Holders thereof as required by the Indenture (less moneys available for such purpose then held by the
Trustee) plus any other payments due or to become due under this Agreement, including, without
limitation, any unpaid fees and expenses of the City, the Trustee and any paying agents of the Bonds
which are then due or will become due prior to the time that the Bonds are paid in full and the trust
established by the indenture is terminated.
(B) No remedy herein conferred upon or reserved to the City or the Trustee is intended to be
exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at
law or in equity or by statute. No delay in exercising or omission to exercise any right or power accruing
upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any
such right or power may be exercised from time to time and as often as may be deemed expedient. In
order to entitle the City or the Trustee to exercise any remedy reserved to it by this Section, it shall not be
necessary to give any notice, other than such notice as may be herein expressly required. The Trustee
shall be deemed a third party beneficiary of all covenants and conditions herein contained.
(C) In the event the Company should default under any of the provisions of this Agreement
and the City or the Trustee should employ attorneys or incur other expenses for the collection of the
payments due under this Agreement or the enforcement of performance or observance of any obligation
or agreement on the part of the Company herein contained, the Company agrees that it will on demand
therefor pay to the City or the Trustee the reasonable fees of such attorneys and such other reasonable
expenses so incurred by the City or the Trustee.
SECTION 19. Expenses; Indemnification.
The Company will pay Costs of Issuance and all other expenses reasonably incurred by the City
and the Trustee by reason of the execution of this Agreement or the offer, sale or delivery of the Bonds
and will hold the City and the Trustee free and harmless of and from any craims of any kind for such or
similar fees and expenses.
The Company agrees to indemnify and hold harmless the City and the Trustee and the officers,
directors, employees and agents of each (each an "Indemnified Party") from and against any and all
losses, claims, damages, liabilities or expenses of every conceivable kind, character and nature
whatsoever, including, but not limited to, losses, claims, damages, liabilities or expenses arising out of,
resulting from or in any way connected with (1) the Project to be financed, or (2) the sale of any Bonds
and the carrying out of any of the transactions contemplated by the Bonds, the Indenture or this
Agreement and the acceptance and administration by the Trustee of its duties under the Indenture, or (3)
any investigation, audit or other proceeding of a governmental agency or body relating to the Bonds or the
Project; provided that such indemnification pursuant to this Section shall not apply to losses, claims,
damages, liabilities or expenses resulting because of the negligence or willful misconduct of any
Indemnified Party. The Company further agrees, to the extent permitted by law, to pay or to reimburse
such Indemnified Parties for any and all reasonable costs, reasonable attorneys' fees, reasonable
liabilities or reasonable expenses incurred in connection with investigating, defending against, responding
to or otherwise in connection with any such losses, claims, damages, liabilities, expenses, audits,
investigations or actions (other than losses, claims, damages, liabilities, expenses or actions resulting
because of such Indemnified Party's negligence or willful misconduct).
Promptly after receipt by an Indemnified Party of notice of the commencement of any action, audit
or investigation, such Indemnified Party shall, if a claim in respect thereof is to be made against the
Company under this Section, notify the Company in writing of the commencement thereof. In case any
such action, audit or investigation shall be brought against or otherwise involve any Indemnified Party, and
such Indemnified Party shall notify the Company of the commencement thereof, the Company shall be
entitled to participate in and, to the extent that it wishes, to assume the defense thereof or otherwise
participate with the Indemnified Party in the response thereto, with counsel, accountants and other experts
reasonably satisfactory to such Indemnified Party, and after notice from the Company to such Indemnified
Party of its election so to assume the defense thereof or otherwise participate with such indemnified Party,
such Indemnified Party shall cooperate with respect thereto and the Company shall not be liable to such
Indemnified Party under this Section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than the costs of any investigation and of
any response to any audit or investigation; provided, however, that if the named parties to any such action
(including any impleaded parties) or the subjects of any audit or investigation include the Indemnified Party
and the Company, and the Indemnified Party reasonably concludes that representation of such
Indemnified Party and the Company by the same counsel would be inappropriate (whether or not such
representation by the same counsel has been proposed) under applicable standards of professional
conduct due to actual or potential differing interests between them, the Indemnified Party shall have the
right to select separate counsel to assume such legal defense and to otherwise participate in the defense
of such action or response to such audit or investigation on behalf of the Indemnified Party. The Company
shall not be liable for any settlement of any such action effected without its prior written consent, but if
settled with the prior written consent of the Company or if there is a final judgment for the plaintiff in any
such action, the Company will indemnify and hold such indemnified Party harmless from and against any
loss or liability by reason of such settlement or judgment.
SECTION 20. Notices.
All notices, certificates or other communications hereunder shall be sufficiently given and shall be
deemed given (i) if hand delivered, when delivered to the appropriate notice address, (ii) if mailed by first
class mail, postage prepaid, three Business Days after deposit in the United States mail addressed to the
appropriate notice address or (iii) if delivered by courier providing receipt of delivery, when delivered to the
appropriate notice address. The parties listed below may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates or other communications shall be
sent. Any notice required or permitted hereunder shall be directed to the following notice address:
If to the City
City of Bakersfield
1501 Truxtun Avenue
Bakersfield, California 93301
Attention: City Manager
(with a copy to
Musick, Peeler & Garrett LLP
One Market Plaza, Steuart Tower 1300
San Francisco, California 94105
Attention: Edsell M. Eady, Jr., Esq.)
If to the Company
Bell Tower Associates
1200 Truxtun Avenue, Suite 200
P.O. Box 2205
Bakersfield, California 93303
Attention: William C. Kuhs, Esq.
If to the Trustee
Union Bank of California, N.A.
475 Sansome Street
San Francisco, California 94111
SECTION 21. Governing Law.
This Agreement shall be construed in accordance with and governed by the laws of the State of
California.
SECTION 22. Binding Effect.
This Agreement shall inure to the benefit of and Shall be binding upon the City, the Company and
their respective successors and assigns.
SECTION 23. Severability.
In the event any provision of this Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render unenfomeable any other provision
hereof.
SECTION 24. Amounts Remaining in Funds and Accounts.
Any amounts remaining in the funds and accounts established pursuant to the Indenture, after
payment in full of the Bonds (or alter provision for payment thereof as provided in the Indenture), shall be
subject to the provisions of Section 5.06 of the Indenture.
SECTION 25. Agreement Represents Complete Agreement; Amendments.
This Agreement, together with the Indenture and the Deed of Trust, represents the entire contract
between the parties. This Agreement may not be effectively amended, changed, modified, altered or
terminated without the concurring written consent of the Trustee, given in accordance with the provisions
of Section 6.07(B) of the Indenture. The City hereby agrees that it will not consent to an amendment of
the Indenture pursuant to Section 9.01 or 9.02 thereof without the approval of the Company.
13
SECTION 26. Execution of Counterparts.
This Agreement may be simultaneously executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the same instrument.
SECTION 27. Section Headings and References.
The headings or titles of the several Sections hereof, and any table of contents appended to
copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construct[on
or effect of this Agreement. All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement; the words "herein," "hereof," "hereby,"
"hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular
Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of
the feminine and neuter genders.
SECTION 28. Term of Agreement.
Except as otherwise provided herein, this Agreement shall remain in full force and effect from the
date of execution hereof until no Bonds remain Outstanding under the Indenture.
IN WITNESS WHEREOF, the City and the Company have caused this Agreement to be executed
in their respective names as of the date first above written.
CITY OF BAKERSFIELD
APPROVED AS TO FORM AND SUBSTANCE:
MUSICK, PEELER & GARRETT LLP,
As Bond Counsel
By
Mayor
By Edsell M~ner
BELL TOWER ASSOCIATES
COUNTERS IGNED
By
General Partner
By
Finance Director
14
EXHIBIT A
Project Site
The term "Project" means the refinancing from Bond proceeds of the following: the buildings,
improvements and land located on Lots 1 through 8, inclusive, together with those portions of the vacated
alley, 33 feet in width, adjacent to said lots 1 through 8, as vacated by Resolution No. 82-71 of the Council
of the City of Bakersfield, Recorded December 3, 1971, in Book 4605, Page 715 of official records, all in
Block 288 in the City of Bakersfield, County of Kern, State of California, as per map recorded November
25, 1898, in Book 1, Page 13 of maps, in the office of the County Recorder of said County.