HomeMy WebLinkAboutReso SSF 170-1996 (CIFA) RESOLUTION NO. SSF-170-96
BOARD OF DIRECTORS, CITY OF SOUTH SAN FRANCISCO CAPITAL
IMPROVEMENTS FINANCING AUTHORITY
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE CITY OF SOUTH SAN FRANCISCO
CAPITAL IMPROVEMENTS FINANCING AUTHORITY
APPROVING, AUTHORIZING AND DIRECTING
EXECUTION OF CERTAIN LEASE FINANCING
DOCUMENTS, APPROVING THE FORM AND
AUTHORIZING DISTRIBUTION OF A
PRELIMINARY OFFICIAL STATEMENT, AND
AUTHORIZING AND DIRECTING CERTAIN
ACTIONS WITH RESPECT THERETO
RESOLVED, by the Board of Directors (the "Board") of the
City of South San Francisco Capital Improvements Financing
Authority (the "Authority"), County of San Mateo, California, that
WHEREAS, the City of South San Francisco wishes to acquire
fee title to certain land and improvements used and operated as a
convention center (the "Property") and to construct and acquire
certain other public improvements within the City (together with
the Property, the "Project"); and
WHEREAS, the Authority has been formed for purposes which
include assisting the City in financing the acquisition,
construction, and improvement of public improvements such as the
Project, and the City has requested the Authority to assist it in
financing the acquisition and construction of the Project; and
WHEREAS, in order to provide funds to enable the City to
finance the Project, the Authority proposes to sublease the
Property from the City pursuant to the Site Lease dated as of
January 1, 1997, by and between the City, as sublessor, and the
Authority, as sublessee (the "Site Lease") and to sub-sublease the
Property back to the City, pursuant to a Lease Agreement dated as
of January 1, 1997, by and between the Authority, as sub-
sublessor, and the City, as sub-sublessee (the "Lease Agreement");
and
WHEREAS, the Authority has agreed to assign and transfer to
First Trust of California, National Association, as trustee (the
"Trustee"), certain of its rights under the Lease Agreement
pursuant to the Assignment Agreement dated as of January 1, 1997,
and in consideration of such assignment and the execution of the
Trust Agreement dated as of January 1, 1997, by and among the
Authority, the Authority and the Trustee (the "Trust Agreement"),
the Trustee has agreed to execute and deliver Certificates of
Participation in the maximum principal amount of not-to-exceed
$6,300,000, each evidencing a direct, undivided fractional
interest in the Lease Payments to be paid by the Authority under
the Lease Agreement (the "Certificates"); and
WHEREAS, the Board of Directors of the Authority wishes at
this time to authorize all proceedings relating to the issuance
and sale of the Certificates for the purpose of financing the
acquisition and construction of the Project, and the execution and
delivery of all agreements and documents relating thereto;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors
of the City of South San Francisco Capital Improvements Financing
Authority as follows:
SECTION 1. Approval of Site Lease. The Authority hereby
approves the Site Lease in substantially the form on file with the
Secretary together with any changes therein or additions thereto
deemed advisable by the Chairperson or Treasurer (each, an
"Authorized Official"), and execution thereof by the Authorized
Official shall be conclusive evidence of his or her approval of
any such changes or additions. The Authority hereby authorizes
and directs the Authorized Official to execute, and the Secretary
to attest and affix the seal of the Authority to, said form of the
Site Lease for and in the name of the Authority. The sublease of
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the Project by the City from the Authority shall be upon the terms
and conditions set forth in the Site Lease.
SECTION 2. Approval of Lease AGreement. The Authority
hereby approves the sub-sublease of the Property by the Authority
to the City pursuant to the Lease Agreement in substantially the
form on file with the Secretary together with any changes therein
or additions thereto deemed advisable by the Authorized Official,
and execution thereof by the Authorized Official shall be
conclusive evidence of his or her approval of any such changes or
additions. The Authority hereby authorizes and directs the
Authorized Official to execute, and the Secretary to attest and
affix the seal of the Authority to, said form of the Lease
Agreement for and in the name of the Authority. The sub-sublease
of the Property by the City back to the Authority shall be upon
the terms and conditions set forth in the Lease Agreement.
SECTION 3. Approval of AssiGnment AGreement. The Authority
hereby approves the Assignment Agreement in substantially the form
on file with the Secretary together with any changes therein or
additions thereto deemed advisable by the Authorized Official, and
execution thereof by the Authorized Official shall be conclusive
evidence of his or her approval of any such changes or additions.
The Authority hereby authorizes and directs the Authorized
Official to execute, and the Secretary to attest and affix the
seal of the Authority to, said form of the Assignment Agreement
for and in the name of the Authority.
SECTION 4. Approval of Trust AGreement. The Authority
hereby approves the Trust Agreement in substantially the form on
file with the Secretary together with any changes therein or
additions thereto deemed advisable by the Authorized Official, and
execution thereof by the Authorized Official shall be conclusive
evidence of his or her approval of any such changes or additions.
The Authority hereby authorizes and directs the Authorized
Official to execute, and the Secretary to attest and affix the
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seal of the Authority to, said form of the Trust Agreement for and
in the name of the Authority.
SECTION 5. Official Statement. PaineWebber Incorporated, as
Underwriter for the Certificates (the "Underwriter"), has caused
to be prepared and has presented to the Authority a preliminary
form of Official Statement describing the Certificates. The
Authority hereby approves such preliminary Official Statement, and
hereby authorizes the Authorized Official to deem such preliminary
Official Statement final within the meaning of Rule 15c2-12 of the
Securities Exchange Act of 1934 except for permitted omissions.
Distribution of such preliminary Official Statement by the
Underwriter to prospective purchasers of the Certificates is
hereby ratified and approved. The Authority hereby authorizes the
distribution of the final Official Statement by the Underwriter.
SECTION 6. Official Actions. The Chairperson, Treasurer,
Secretary and any and all other officers of the Authority are
hereby authorized and directed, for and in the name and on behalf
of the Authority, to do any and all things and take any and all
actions, including execution and delivery of any and all
assignments, certificates, requisitions, agreements, notices,
consents, instruments of conveyance, warrants and other documents,
which they, or any of them, may deem necessary or advisable in
order to consummate any of the transactions contemplated by the
documents approved pursuant to this Resolution.
SECTION 7. Effective Date. This Resolution shall take
effect from and after the date of its passage and adoption.
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I hereby certify that the foregoing Resolution was regularly
introduced and adopted by the Board of Directors of the City of
South San Francisco Capital Improvements Financing Authority at a
special meeting held on the 18th day of December, 1996, by the
following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Boardmembers Eugene R. Mullin, John R. Penna, Robert Yee
and Chairman Joseph A. Fernekes
None
None
None
ATTEST:
Secretary
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29070-20
JHHW:DJO:brf
EXHIBIT TO RESOLUTION NO. 190-96
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall Hill & White
A Professional Law Corporation
Four Embarcadero Center, 19th Floor
San Francisco, California 94111
Attention: David J. Oster, Esq.
12/10/96
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND T~kXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
SITE LEASE
Dated as of January 1,1997
by and between
CITY OF SOUTH SAN FRANCISCO,
as sublessor
and
CITY OF SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS
FINANCING AUTHORITY,
as sublessee
Relating to
1997 Certificates of PartiCipation
(Conference Center and Public Facilities Project)
- ,. SITE LEASE
THIS SITE LEASE (this "Site Lease"), dated for convenience as of January 1, 1997, is by
and between the CITY OF SOUTH SAN FRANCISCO, a municipal corporation, duly organized
and existing under the laws of the State of California, as lessor (the "City"), and the CITY OF
SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY, a joint
exercise of powers authority organized and existing under the laws of the State of California, as
lessee (the "Authority");
WITNESSETH:
WHEREAS, the Authority has been formed for purposes which include assisting the
City in financing the acquisition, construction and improvement of public improvements; and
WHEREAS, the City wishes to acquire fee title to certain land and improvements used
and operated as a convention center (the "Property") and to construct and acquire certain other
public improvements within the City (together with the Property, the "Project"); and
WHEREAS, in order to provide funds to enable the City to finance the Project, the City
has agreed to sublease to the Authority, and the Authority has agreed to sublease from the City,
the land and improvements constituting the Property as more fully described on Exhibit A,
attached hereto, and incorporating herein by reference; and
WHEREAS, the Authority has agreed to sub-sublease the Property back to the City
pursuant to that certain Lease Agreement dated as of January 1, 1997, by and between the
Authority, as sub-sublessor, and the City, as sub-sublessee (the "Lease Agreement"), and to
assign its rights to receive lease payments payable by the City thereunder to First Trust of
California, National Association as trustee (the "Trustee"), and to enter into that certain Trust
Agreement dated as of January 1, 1997, by and among the Authority, the City and the Trustee
(the "Trust Agreement") under which the Trustee agrees to execute and deliver 1997 Certificates
of Participation (Conference Center and Public Facilities Project) in the aggregate principal
amount of $ (the "Certificates") representing the direct, undivided
fractional interests of the owners thereof in such lease payments; and
WHEREAS, the City and the Authority are authorized to enter into this Site Lease; and
WHEREAS, the Authority and the City wish to enter into this Site Lease to provide the
terms and conditions relating to the sublease of the Property by the Authority from the City;
NOW, THEREFORE, in consideration of the above premises and of the mutual
covenants hereinafter contained and for other good and valuable consideration, the parties
hereto agree as follows:
SECTION 1. Site Lease. The City hereby subleases the Property to the Authority and
the Authority hereby subleases the Property from the City, on the terms and conditions
hereinafter set forth.
SECTION 2. Term; Possession. The term of this Site Lease shall commence, on
January 1, 1997, and, subject to the terms of the Conference Center Use Agreement (as such
term is defined in the Trust Agreement), the~ Authority shall be entitled to possession of the
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Property on the Closing Date. This Site Lease shall end, and the right of the Authority
hereunder to possession of the Property shall thereupon cease, on August 1, , or such
earlier date on which the Lease Payments (as such term is defined in the Lease Agreement) are
paid in full or provisions made for such payment.
SECTION 3. Rental. The Authority shall pay to the City as and for rental of the
Property hereunder, the Site Lease Payment in the amount of $4,300,000 which shall become
due and payable upon the execution and delivery hereof. The City covenants that it shall use
the Site Lease Payment to acquire fee title to the Property or in the event title can not be
acquired to prepay the Certificates in accordance with Section 3.01(d) of the Trust Agreement.
SECTION 4. Lease Back to City. The Authority shall sub-sublease the Property back to
the City pursuant to the Lease Agreement.
SECTION 5. Assignments and Subleases. Unless the City shall be in default under the
Lease Agreement, the Authority may not assign its rights under this Site Lease or sublet all or
any portion of the Property, except as referenced in Section 4, above, and provided in the Lease
Agreement, without the prior written consent of the City.
SECTION 6. Right of Entry. The City reserves the right for any of its duly authorized
representatives to enter upon the PrOperty, or any portion thereof, at any reasonable time to
inspect the same or to make any repairs, improvements or changes necessary for the
preservation thereof.
SECTION 7. Termination. The Authority agrees, upon the termination of this Site
Lease, to quit and surrender the Property in the same good order and condition as the Property
was in at the time of commencement of the term hereof, reasonable wear and tear excepted, and
agrees that all buildings, improvements and structures then existing upon the Property, shall
remain thereon and title thereto shall vest thereupon in the City for no additional consideration.
SECTION 8. Default. In the event the Authority shall be in default in the performance
of any obligation on its part to be performed under the terms of this Site Lease, which default
continues for thirty (30) days following notice and demand for correction thereof to the
Authority, the City may exercise any and all remedies granted by law, except that no merger of
this Site Lease and of the Lease Agreement shall be deemed to occur as a result thereof;
provided, however, that so long as the Lease Agreement remains in effect, the lease payments
payable by the City under the Lease Agreement shall continue to be paid to the Trustee.
SECTION 9. Ouiet Enjoyment. The Authority at all times during the term of this Site
Lease Agreement shall peaceably and quietly have, hold and enjoy all of the Property, subject
to the provisions of the Lease Agreement and subject only to Permitted Encumbrances (as such
term is defined in the Lease Agreement).
SECTION 10. Waiver of Personal Liability. Ail liabilities under this Site Lease on the
part of the Authority are solely corporate liabilities of the Authority, and the City hereby
releases each and every member and officer of the Authority of and from any personal or
individual liability under this Site Lease. No member or officer of the Authority or its governing
board shall at any time or under any circumstances be individually or personally liable under
this Site Lease for anything done or omitted to be done by the Authority hereunder.
SECTION 11. Taxes. The City covenants and agrees to pay any and all assessments of
any kind or character and also all taxes, including possessory interest taxes, levied or assessed
upon the Property and any improvements thereon.
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SECTION 12. Eminent Domain. In the event the whole or any part of the Property or
any improvements thereon shall be taken by eminent domain proceedings, the interest of the
Authority shall be recognized and is hereby determined to be the amount of the then unpaid
principal components of the lease payments payable under the Lease Agreement and the
balance of the award, if any, shall be paid to the City.
SECTION 13. Partial Invalidity. If any one or more of the terms, provisions, covenants
or conditions of this Site Lease shall to any extent be declared invalid, unenforceable, void or
voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or
decree of which becomes final, none of the remaining terms, provisions, covenants and
conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease
shall be valid and enforceable to the fullest extent permitted by law.
SECTION 14. Notices. Any notice, request, complaint, demand or other communication
under this Site Lease shall be given by first class mail or personal delivery to the party entitled
thereto at its address set forth below, or by telecopy, telex or other form of telecommunication,
at its number set forth below. Notice shall be effective either (a) upon transmission by telecopy,
telex or other form of telecommunication, (b) 48 hours after d. eposit in the United States mail,
postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The
City and the Authority may, by written notice to the other parties, from time to time modify the
address or number to which communications are to be given hereunder.
If to the City:
City of South San Francisco
315 Maple Avenue
South San Francisco, CA 94080
Attention: Finance Director
Telecopier: (415) 871-7318
If to the Authority:
City of South San Francisco Capital Improvements
Financing Authority
315 Maple Avenue
South San Francisco, CA 94080
Attention: Treasurer
Telecopier: (415) 871-7318
If to the Trustee:
First Trust of California, National Association
One California Street, Suite 400
San Francisco, CA 94111
Attention: Corporate Trust Department
Telecopier: (415) 273-4592
SECTION 15. Governing Law. This Site Lease shall be construed in accordance with
and governed by the laws of the State of California.
SECTION 16. Binding Effect. This Site Lease shall inure to the benefit of and shall be
binding upon the Authority, the City and their respective successors and assigns, subject,
however, to the limitations contained herein.
SECTION 17. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Site Lease shall for any reason be held to be invalid, illegal or unenforceable in
any respect, then such provision or provisions shall be deemed severable from the remaining
provisions contained in this Site Lease and such invalidity, illegality or unenforceability shall
not affect any other provision of this Site Leas~, and this Site Lease shall be construed as if
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such invalid or illegal or unenforceable provision had never been contained herein. The
Authority and the City each hereby declares that it would have entered into this Site Lease and
each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the
fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Site Lease
may be held illegal, invalid or unenforceable.
SECTION 18. Section Headings. Ail section headings contained herein are for
convenience of reference only and are not intended to define or limit the scope of any provision
of this Site Lease.
SECTION 19. Execution in Counterparts. This Site Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original but all together shall
constitute but one and the same lease. It is also agreed that separate counterparts of this Site
Lease may be separately executed by the Authority and the City, all with the same force and
effect as though the same counterpart had been executed by both the Authority and the City.
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IN WITNESS WHEREOF, the CitY and the Authority have caused this Site Lease to be
executed by their respective officers thereunto duly authorized, all as of the day and year first
above written.
CITY OF SOUTH SAN FRANCISCO,
as sublessor
By:
- City Manager
[S E AL]
Attest:
City Clerk
CITY OF SOUTH SAN FRANCISCO
CAPITAL IMPROVEMENTS FINANCING
AUTHORITY, as sublessee
By:
Treasurer
Attest:
Secretary
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State of California
County of San Mateo
)
) ss
)
On , before me, , Notary Public for the
State of California, personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(les), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature:
State of California
County of San Mateo
)
) ss
)
On , before me, , Notary Public for the
State of California, personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
persons) whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature:
EXHIB~A
DESCRIPTION OF THE PROPERTY
A-1
29070-30 JHHW:DJO:brf 12/10/96
EXHIBIT TO RESOLUTION NO..190-96
LEASE AGREEMENT
Dated as of January 1,1997
by and between
the
CITY OF SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS
FINANCING AUTHORITY,
as sub-sublessor
and
CITY OF SOUTH SAN FRANCISCO,
as sub-sublessee
Relating to
1997 Certificates of Participation
(Conference Center and Public Facilities Project)
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1.
Section 1.2.
Definitions .......................................................................................................... 2
Interpretation ..................................................................................................... 3
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 2.1.
Section 2.2.
Covenants, Representations and Warranties of the City ..................................4
Covenants, Representations and Warranties of. the Authority ......................... 5
ARTICLE III
DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION
OF THE IMPROVEMENTS; PAYMENT OF COSTS OF
ISSUANCE
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Deposit of Moneys ............................................................................................. 7
Payment of Site Lease Payment ........................................................................ 7
Payment of Delivery Costs ................................................................................ 7
Substitution of Property .................................................................................... 7
ARTICLE IV
SUB-SUBLEASE OF PROPERTY; TERM OF THIS LEASE;
LEASE PAYMENTS
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
Section 4.6.
Section 4.7.
Lease .................................................................................................................. 9
Term. ........... .... ........... ..... ........ ..... ........... ..... ........ ........ .... .......... ........... ........ ..... 9
Possession .......................................................................................................... 9
Lease Payments ................................................................................................. 9
Quiet Enjoyment .............................................................................................. 10
Title; No Merger ............................................................................................... 10
Additional Payments ....................................................................................... 11
ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER
Section 5.1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
Section 5.6.
Section 5.7.
Maintenance, Utilities, .Taxes and Assessments ............................................. 12
Modification of Property ................................................................................. 12
Public Liability and Property Damage Insurance ............................................ 13
Fire and Extended Coverage Insurance ........................................................... 13
Rental Interruption Insurance ........................................................................... 13
Recordation Hereof, ......................................................................................... 13
Insurance Net Proceeds .................................................................................... 14
Section 5.8.
Section 5.9.
Section 5.10.
Page
Installation of City's Equipment ...................................................................... 14
Liens ................................................................................................................. 14
Advances ........................................................... .............................................. 14
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF
NET PROCEEDS
Section 6.1.
Section 6.2.
Section 6.3.
Application of Net Proceeds ........................................................................... 16
Termination or Abatement Due to Eminent Domain ...................................... 16
Abatement Due to Damage or Destruction ..................................................... 16
ARTICLE VII
OTHER COVENANTS OF THE CITY
Section 7.1.
Section 7.2.
Section 7.3.
Section 7.4.
Section 7.5.
Section 7.6.
Disclaimer of Warranties .................................... ~ ............................................ 17
Access to the Property ..................................................................................... 17
Release and Indemnification Covenants .......................................................... 17
Assignment by the Authority ........................................................................... 17
Assignment and Subleasing by the City .......................................................... 17
Amendment of Lease Agreement ..................................................................... 18
ARTICLE VIII
EVENTS OF DEFAULTS AND REMEDIES
Section 8.1.
Section 8.2.
Section 8.3.
Section 8.4.
Section 8.5.
Section 8.6.
Section 8.7.
Events of Default Defined ............................................................................... 20
Remedies on Default ........................................................................................ 20
No Remedy Exclusive ...................................................................................... 21
Agreement to Pay Attorneys' Fees and Expenses ........................................... 22
No Additional Waiver Implied by One Waiver .............................................. 22
Application of Proceeds .................................................................................. 22
Trustee and Certificate Owners to Exercise Rights ......................................... 22
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
Section 9.1.
Section 9.2.
Section 9.3.
Security Deposit ............................................................................................... 23
Optional Prepayment ...................................................................................... 23
Mandatory Prepayment ................................................................................... 23
ARTICLE X
MISCELLANEOUS
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 10.5.
Notices ............................................................................................................. 24
Binding Effect ................................................................................................... 24
Severability ....................................................................................................... 24
Net-net-net Lease ............................................................................................. 24
Further Assurances and Corrective Instruments ............................................. 24
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Section 10.6.
Section 10.7.
Section 10.8.
Section 10.9.
EXHIBIT A
EXHIBIT B
Page
Execution in Counterparts ....................................... : ....................................... 25
Applicable Law ............................................................................................... 25
Authority and City Representatives ................................................................ 25
Captions ........................................................................................................... 25
DESCRIPTION OF LEASED PREMISES ............................................................. A-1
SCHEDULE OF LEASE PAYMENTS .................................................................. B-1
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LEASE AGREEMENT
This Lease (this "Lease"), dated as of January 1, 1997, is by and between the CITY OF
SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY, a joint
exercise of powers authority organized and existing under the laws of the State of California, as
sub-sublessor (the "Authority"), and the CITY OF SOUTH SAN FRANCISCO, a municipal
corporation duly organized and existing under the laws of the State of California, as sub-
sublessee (the "City");
WITNESSETH:
WHEREAS, the Authority has been formed for purposes which include assisting the
City in financing the acquisition, construction and improvement of public improvements; and
WHEREAS, the City wishes to acquire fee title to certain land and improvements used
and operated as a convention center (the "Property") and to construct and acquire certain other
public improvements within the City (together with the Property, the "Project"); and
WHEREAS, in order to provide funds to enable the City to finance the Project, the City
has agreed to sublease to the Authority, and the Authority has agreed to sublease from the City,
the land and improvements constituting the Property as more fully described on Exhibit A,
attached hereto, and incorporating herein by reference; and
WHEREAS, the Authority has agreed to assign and transfer to the Trustee certain of its
rights under this Lease, and in consideration of such assignment and the execution of the Trust
Agreement dated as of January 1,1997, by and among the City, the Authority and First Trust of
California, National Association, as trustee (the "Trustee"), the Trustee has agreed to execute
and deliver the $ aggregate principal amount of 1997 Certificates of
Participation (Conference Center and Public Facilities Project), each evidencing a direct,
undivided fractional interest in the Lease Payments to be paid by the City under this Lease;
NOW, THEREFORE, for and in consideration of the premises and the material
covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind
themselves as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms in this Lease shall have the respective meanings
specified in Section 1.01 of the Trust Agreement. In addition, the following terms heretofore
defined in this Lease and the following terms defined in this Section 1,1 shall, for all purposes
of this Lease, have the respective meanings herein specified.
"Event of Default" means any of the events of default defined as such in Section 8.1.
"Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending
on June 30 of the next. succeeding year, or any other twelve-month period established by the
City as its fiscal year pursuant to written notice filed with the Trustee.
"Lease Payment Date" means, with respect to any Interest Payment Date, the twenty-
fifth (25th) calendar day of the month immediately preceding such Interest Payment Date.
"Lease Payments" means the amounts payable by the City pursuant to Section 4.4(a),
including any prepayment thereof pursuant to Article IX and including any amounts payable
upon a delinquency in the payment thereof.
"Permitted Encumbrances" means, as of any time: (a) liens for general ad valorem taxes
and assessments, if any, not then delinquent, or which the City may permit to remain unpaid
pursuant to Article V; (b) the Conference Center Use Agreement, the Site Lease, this Lease, the
Assignment Agreement and any other agreement or document contemplated hereunder to be
recorded against the Project; (c) the various encumbrances, leases and other items shown of
record against the Project in the Preliminary Report of dated
; (d) any right or claim of any mechanic, laborer, materialman, supplier or
vendor not filed or perfected in the manner prescribed by law; and (e) easements, rights of way,
mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions
which exist of record and which the City certifies in writing will not materially impair the use of
the Property for their intended purposes.
"Property" means the Convention Center Property as described in Exhibit A attached
hereto and by this reference incorporated herein, including all fixtures, facilities and other
improvements at any time situation thereon or made a part thereof.
"Site Lease" means the Site Lease dated as of January 1, 1997, by and between the
Authority as sublessor and the City as sublessee, as originally executed or as thereafter
amended pursuant to any duly authorized and executed amendments thereto.
"Site Lease Payment" means the amount of $4,300,000 which is payable by the Authority
to the City on the Closing Date as rental for the Property pursuant to the Site Lease.
"Term of this Lease" means the time during which this Lease is in effect, as provided in
Section 4.2.
"Trust Agreement" means the Trust Agreement dated as of January 1, 1997, by and
among the Trustee, the Authority and the City, together with any duly authorized and executed
amendments thereto.
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"Trustee" means First Trust of California, National Association or any successor thereto
acting as Trustee pursuant to the Trust Agreement.
Section 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall
include the plural and vice versa and the use of the neuter, masculine, or feminine gender
is for convenience only and shall be deemed to include the neuter, masculine or feminine
gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and shall not affect
the meaning, construction or effect hereof.
(c) All references herein to "Articles", "Sections" and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Lease Agreement; the words
"herein", "hereof", "hereby", "hereunder" and other words of similar import refer to
this Lease as a whole and not to any particular Article,.Section or subdivision hereof.
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 2.1. Covenants, Representations and Warranties of the City. The City makes
the following covenants, representations and warranties to the Authority as of the date of the
execution and delivery of this Lease:
(a) Due Organization and Existence. The City is a municipal corporation duly
organized and validly existing under the laws of the State of California, has full legal
right, power and authority under the laws of the State of California to enter into this
Lease, the Site Lease, and the Trust Agreement and to carry out and consummate all
transactions contemplated hereby and thereby, and by proper action the City has duly
authorized the execution and delivery of this Lease, the Site Lease and the Trust
Agreement.
(b) Due Execution. The representatives of the .City executing this Lease and the
Trust Agreement have been fully authorized to execute the same pursuant to a resolution
duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. This Lease, the Site Lease, and the
Trust Agreement have been duly authorized, executed and delivered by the City and
constitute the legal, valid and binding agreements of the City enforceable against the
City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Lease, the Site Lease, the
Trust Agreement, the consummation of the transactions herein and therein contemplated
and the fulfillment of or compliance with the terms and conditions hereof, do not and
will not conflict with or constitute a violation or breach of or default (with due notice or
the passage of time or both) under any applicable law or administrative rule or
regulation, or any applicable court or administrative decree or order, or any indenture,
mortgage, deed of trust, lease, contract or other agreement or instrument to which the
City is a party or by which it or its properties are otherwise subject or bound, or result in
the creation or imposition of any prohibited lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of the City, which conflict, violation,
breach, default, lien, charge or encumbrance would have consequences that would
materially and adversely affect the consummation of the transactions contemplated by
this Lease, the Site Lease and the Trust Agreement or the financial condition, assets,
properties or operations of the City or its properties.
(e) Consents and Approvals. No consent or approval of any trustee or holder of
any indebtedness of the City or of the voters of the City, and no consent, permission,
authorization, or'der or license of, or filing or registration with, any governmental
authority is necessary in connection with the execution and delivery of this Lease, the
Site Lease or the Trust Agreement, or the consummation of any transaction herein or
therein contemplated, except as have been obtained or made and as are in full force and
effect.
(f) No Litigation. Other than the Eminent Domain Action, there is no action,
suit, proceeding, inquiry or investigation before or by any court or federal, state,
educational or other governmental authority pending or, to the knowledge of the City
after reasonable investigation, threatened against or affecting the City or the assets,
properties or operations of the City which, if determined adversely to the City or its
interests, would have a material and adverse effect upon the consummation of the
transactions contemplated by or the validity of this Lease, the Site Lease or the Trust
Agreement, or upon the financial condition, assets, properties or operations of the City,
and the City is not in default with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, educational or other governmental
authority, which default might have consequences that would materially and adversely
affect the consummation of the transactions contemplated by this Lease, the Site Lease
or the Trust Agreement or the financial conditions, assets, properties or operations of
the City or its properties.
Section 2.2. Covenants, Representations and Warranties of the Authority. The
Authority makes the following covenants, representations and warranties as the basis for its
undertakings herein contained:
(a) Due Organ&ation and Existence. The Authority is a joint exercise of powers
authority duly organized and existing under the laws of the State of California, has full
legal right, power and authority to enter into this Lease, the Site Lease, the Trust
Agreement and the Assignment Agreement and to carry out and consummate all
transactions contemplated hereby and thereby, and by proper action the Authority has
duly authorized the execution and delivery of this Lease, the Site Lease, the Trust
Agreement and the Assignment Agreement.
(b) Due Execution. The representatives of the Authority executing this Lease, the
Site Lease, the Trust Agreement and the Assignment Agreement are fully authorized to
execute the same pursuant to official action taken by the governing body of the
Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease, the Site Lease, the
Trust Agreement and the Assignment Agreement have been duly authorized, executed
and delivered by the Authority and constitute the legal, valid and binding agreements of
the Authority, enforceable against the Authority in accordance with their respective
terms.
(d) No Conflicts. The execution and delivery of this Lease, the Site Lease, the
Trust Agreement and the Assignment Agreement, the consummation of the transactions
herein and therein contemplated and the fulfillment of or compliance with the terms and
conditions hereof, do not and will not conflict with or constitute a violation or breach of
or default (with due notice or the passage of time or both) under any applicable law or
administrative rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or
instrument to which the Authority is a party or by which it or its properties are
otherwise subject or bound, or result in the creation or imposition of any prohibited lien,
charge or encumbrance of any nature whatsoever upon any of the property or assets of
the Authority, which conflict, violation, breach, default, lien, charge or encumbrance
would have consequences that would materially and adversely affect the consummation
of the transactions contemplated by this Lease, the Site Lease, the Trust Agreement and
the Assignment Agreement or the financial condition, assets, properties or operations of
the Authority or its properties.
(e) Consents and Approvals. No consent or approval of any trustee or holder of
any indebtedness of the Authority, and no consent, permission, authorization, order or
license of, or filing or registration with, any governmental authority is necessary in
connection with the execution and delivery of this Lease, the Site Lease, the Trust
Agreement or the Assignment Agreement, or the consummation of any transaction herein
or therein contemplated, except as have been obtained or made and as are in full force
and effect.
(f) No Litigation. Other than the Eminent Domain Action, there is no action,
suit, proceeding, inquiry or investigation before or by any court or federal, state,
educational or other governmental authority pending or, to the knowledge of the
Authority after reasonable investigation, threatened against or affecting the Authority or
the assets, properties or operations of the Authority which, if determined adversely to
the Authority or its interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of this Lease, the Site
Lease, the Trust Agreement or the Assignment Agreement, or upon the financial
condition, assets, properties or operations of the Authority, and the Authority is not in
default with respect to any order or decree of any court or any order, regulation or
demand of any federal, state, educational or other governmental authority, which
default might have consequences that would materially and adversely affect the
consummation of the transactions contemplated by this Lease, the Site Lease, the Trust
Agreement or the Assignment Agreement or the financial conditions, assets, properties
or operations of the Authority or its properties.
ARTICLE III
DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION
OF THE IMPROVEMENTS; PAYMENT OF COSTS OF
ISSUANCE
Section 3.1. Deposit of Moneys. On the Closing Date, the Authority shall cause the
proceeds of sale of the Certificates to be deposited with the Trustee. Pursuant to Section 4.01
of the Trust Agreement, from the proceeds of sale of the Certificates the amount of
$ shall be deposited in the Reserve Fund, accrued interest in the amount of
$ shall be deposited in the Delivery Costs Fund, and shall be deposited in the
Lease Payment Fund, and the amount of $ shall be deposited in the Acquisition
and Construction Fund.
Section 3.2. Payment of Site Lease Payment.
(a) The Authority hereby agrees that a portion-of the amount deposited into the
Acquisition and Construction Fund pursuant to Section 3.1 shall be disbursed pursuant
to Section 4.03(a) of the Trust Agreement for the purpose of paying the Site Lease
Payment to the City on the Closing Date. The City shah deposit the Site Lease Payment
into the Condemnation Deposit Fund of the State Treasury in connection with the
Eminent Domain Action.
Section 3.3. Payment of Delivery Costs. Payment of Delivery Costs shall be made from
a portion of the moneys deposited in the Acquisition and Construction Fund, which moneys
shall be disbursed for such purpose in accordance and upon compliance with the Trust
Agreement.
Section 3.4. Substitution of Property. The City shah have, and is hereby granted, the
option at any time and from time to time during the Term of this Lease after it has given written
notice to Moody's and S&P, to substitute a parcel of land (a "Substitute Property") for the
Property or portion thereof (a "Former Property"), provided that the City shall satisfy all of the
following requirements which are hereby declared to be conditions precedent to such
substitution:
(a) The City shall file with the Authority and the Trustee an amended Exhibit A
to this Lease which adds thereto a description of such Substitute Property and deletes
therefrom the description of such Former Property, and the City shall cause this Lease
Agreement, as so amended, to be recorded in the Office of the San Mateo County
Recorder;
(b) The City shall file with the Authority and the Trustee a written certificate of
the City, such certificate to be based upon an appraisal prepared by an independent
appraiser, stating that the estimated fair market value of such Substitute Property shah
not be less than the estimated fair market value of such Former Property as of the date
of such substitution;
(c) the City shall certify in writing to the Authority and the Trustee that such
Substitute Property serves the public purposes of the City and constitutes property
which the City is permitted to lease under the laws of the State of California; and
(d) Such Substitute Property shall not cause the City to violate any of its
covenants, representations and warranties made herein and in the Trust Agreement and
shall not cause the existing rating on the Certificates to be downgraded or withdrawn.
ARTICLE IV
SUB-SUBLEASE OF PROPERTY; TERM OF THIS LEASE;
LEASE PAYMENTS
Section 4.1. Lease. The Authority hereby sub-subleases the Property to the City and the
City hereby sub-subleases the Property from the Authority, upon the terms and conditions set
forth in this Lease.
Section 4.2. Term. The Term of this Lease shall commence on January 1, 1997 and shall
end on the earliest of the date on which the Trust Agreement shall be discharged pursuant to
and in accordance with Section 13.01 thereof, but under any circumstances not later than
August 1, __ The provisions of this Section 4.2 are subject to the provisions of Section 6.2
relating to the taking of the Property in eminent domain proceedings or under the threat thereof.
Section 4.3. Possession. The City has agreed to acquire fee title to the Property through
the Eminent Domain Action, and the parties hereby declare their expectation that such
acquisition will be completed by January 31, 1998. The City is in possession of the Property as
of the Closing Date.
Section 4.4. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the
provisions of Article IX hereof, the City agrees to pay to the Authority the Lease
Payments (denominated into components of principal and interest) in the respective
amounts specified in Exhibit B hereto, to be due and payable in immediately available
funds on the Interest Payment Dates immediately following each of the respective Lease
Payment Dates specified in Exhibit B, and. to be deposited by the City with the Trustee
on each of the Lease Payment Dates specified in Exhibit B. Any amount held in the
Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the
prepayment of the Lease Payments in part but not in whole pursuant to Article IX and
other than amounts required for payment of past due principal or interest represented
by any Certificates not presented for payment) shall be credited towards the Lease
Payment then required to be paid hereunder; and no Lease Payment need be deposited
with the Trustee on any Lease Payment Date if the amounts then held in the Lease
Payment Fund are at least equal to the Lease Payment then required to be deposited
with the Trustee. The Lease Payments payable in any Fiscal Year shall be for the use of
the Property during such Fiscal Year.
(b) Effect of Prepayment. In the event that the City prepays all Lease Payments in
full pursuant to Sections 9.2 or 9.3, the City's obligations under this Lease shall
thereupon cease and terminate, including but not limited to the City's obligation to pay
Lease Payments under this Section 4.4. In the event that the City prepays the Lease
Payments in part but not in whole pursuant to Sections 9.2 or 9.3, the principal
components of the remaining Lease Payments shall be reduced in integral multiples of
$5,000 as determined by the City; and the interest component of each remaining Lease
Payment shall be reduced by the aggregate corresponding amount of interest which
would otherwise be payable with respect to the Certificates thereby prepaid pursuant to
Sections 3.01(a) or 3.01(b) of the Trust Agreement, as the case may be.
(c) Rate on Overdue Payments. In the event the City should fail to make any of
the payments required in this Section, 4.4, the payment in default shall continue as an
obligation of the City until the amount in default shall have been fully paid, and the City
agrees to pay the same with interest thereon, from the date of default to the date of
payment, at the rate of eight percent (8%) per annum.
(d) Fair Rental Value. The Lease Payments during each Fiscal Year shall
constitute the total rental for the Property for such Fiscal Year, and shall be paid by the
City in each Fiscal Year for and in consideration of the right of the use and occupancy
of, and the continued quiet use and enjoyment of the Property during each Fiscal Year.
The parties hereto have agreed and determined that the total Lease Payments represent
the fair rental value of the Property. In making such determination, consideration has
been given to the estimated fair market value of the Property, other obligations of the
parties under this Lease, the uses and purposes which m_ay be served by the Property
and the benefits therefrom which will accrue to the City and the general public.
(e) Source of Payments; Budget and Appropriation. The Lease Payments shall be
payable from any source of available funds of the City, subject to the provisions of
Sections 6.2, 6.3 and 9.1. The City covenants to take such action as may be necessary to
include all Lease Payments in each of its annual budgets during the Term of this Lease
and to make the necessary annual appropriations~ for all such Lease Payments.
Annually, the City will furnish to the Trustee a certificate of the City Representative
stating that the Lease Payments have been included in the final budget of the City for
the current Fiscal Year, to the full extent required hereunder, such certificate to be filed
within thirty (30) days after the adoption of such budget and in any event no later than
September 1 in the calendar year in which the City adopts such budget. The covenants
on the part of the City herein contained shall be deemed to be and shall be construed to
be duties imposed by law and it shall be the duty of each and every public official of the
City to take such action and do such things as are required by law in the performance of
the official duty of such officials to enable the City to carry out and perform the
covenants and agreements in this Lease agreed to be carried out and performed by the
City.
(f) Assignment. The City understands and agrees that all Lease Payments have
been assigned by the Authority to the Trustee in trust, pursuant to the Assignment
Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents
to such assignment. The Authority hereby directs the City, and the City hereby agrees to
pay to the Trustee at its Office, all payments payable by the City pursuant to this
Section 4.4 and all amounts payable by the City pursuant to Article IX.
Section 4.5. Ouiet Enjoyment. From and after the Closing Date, and continuing
throughout the Term of this Lease, the Authority shall provide the City with quiet use and
enjoyment of the Property and the City shall peaceably and quietly have and hold and enjoy
the Property, without suit, trouble or hindrance from the Authority, except as expressly set
forth in this Lease. The Authority will, at the request of the City and at the City's cost, join in
any legal action in which the City asserts its right to such possession and enjoyment to the
extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority shall
have the right to inspect the Property as provided in Section 7.2.
Section 4.6. Title; No Merger. At all times during the term of the Site Lease and subject
to all of the terms and provisions thereof, the City shall hold either a leasehold interest in or fee
title to the Property. Upon the termination of this Lease, other than upon the termination
hereof pursuant to Section 8.2(b), all right, title and interest of the Authority hereunder in and
to the Property shall be transferred to and vested in the City. Upon the payment in full of all
Lease Payments allocable to the Property, or upon the deposit by the City of security for such
Lease Payments as provided in Section 9.1, al!.interest of the Authority hereunder in and to the
Property shall be terminated. The Authority agrees to take any and all steps and execute and
record any and all documents reasonably required by the City to consummate the termination of
its interests hereunder.
It is the express intention of the parties hereto that this Lease and the obligations of the
parties hereunder, shall be and remain separate and distinct from the Site Lease and the
Conference Center Use Agreement, and the obligations of the parties thereunder, and that,
during the term of the Site Lease and the Conference Center Use Agreement, no merger of title or
interest shall occur or be deemed to occur as a result of the position of the City as sublessor
under the Site Lease and as sub-sublessee hereunder, or the position of the Authority as
sublessee under the Site Lease and as sub-sublessor under this Lease or either of them as parties
to the Conference Center Lease Agreement.
Section 4.7. Additional Payments. In addition to the Lease Payments, the City shall
pay when due all costs and expenses incurred by the Authority to comply with the provisions
of the Trust Agreement, including without limitation all Delivery Costs (to the extent not paid
from amounts on deposit in the Acquisition and Construction Fund), indemnification and
annual compensation due to the Trustee and all of its reasonable costs payable as a result of
the performance of and compliance with its duties under the Trust Agreement, and all costs and
expenses of attorneys, auditors, engineers and accountants. Such costs and expenses shall be
payable as additional amounts of rental hereunder in consideration of the right of the City to
the use and occupancy of the Property.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER
MATI'lq. RS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of
this Lease, as part of the consideration for the rental of the Property, all improvement, repair
and maintenance of the Property shah be the responsibility of the City, and the City shall pay
for or otherwise arrange for the payment of all utility services supplied to the Property, which
may include, without limitation, janitor service, security, power, gas, telephone, light, heating,
water and all other utility services, and shall pay for or otherwise arrange for the payment of
the cost of the repair and replacement of the Property resulting from ordinary wear and tear or
want of care on the part of the City or any assignee or lessee thereof. In exchange for the Lease
Payments herein provided, the Authority agrees to provide only the Property, as hereinbefore
more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932,
Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver shall
not limit any of the rights of the City under the terms of this L~ase.
The City shall also pay or cause to be paid all taxes and assessments of any type or
nature, if any, charged to the Authority or the City affecting the Property or the respective
interests or estates therein; provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of years, the City
shah be obligated to pay only such installments as are required to be paid during the Term of
this Lease as and when the same become due.
The City may, at the City's expense and in its name, in good faith contest any such
taxes, assessments, utility and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during the period of such
contest and any appeal therefrom unless the Authority shall notify the City that, in its
reasonable opinion, by nonpayment of any such items the interest of the Authority in the
Property will be materially endangered or the Property or any part thereof will be subject to loss
or forfeiture, in which event the City shall promptly pay such taxes, assessments or charges or
provide the Authority with full security against any loss which may result from nonpayment, in
form satisfactory to the Authority.
Section 5.2. Modification of Property. The City shall, at its own expense, have the fight
to remodel the Property, or to make additions, modifications and improvements thereto. All
additions, modifications and improvements to the Property shall thereafter comprise part
thereof and be subject to the provisions of this Lease. Such additions, modifications and
improvements shall not in any way damage the Property, or cause the Property to be used for
purposes other than those authorized under the provisions of state and federal law; and the
Property, upon completion of any additions, modifications and improvements made thereto
pursuant to this Section, shah be of a value which is not substantially less than the value thereof
immediately prior to the making of such additions, modifications and improvements. The City
will not permit any mechanic's or other lien to be established or remain against the Property for
labor or materials furnished in connection with any remodeling, additions, modifications,
improvements, repairs, renewals or replacements made by the City pursuant to this Section;
provided that if any such lien is established and the City shall first notify or cause to be
notified the Authority of the City's intention to do so, the City may in good faith contest any
lien filed or established against the Property, and in such event may permit the items so
contested to remain undischarged and unsatisfied during the period of such contest and any
appeal therefrom and shall provide the Agthority with full security against any loss or
forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the
Authority. The Authority will cooperate fully in any such contest, upon the request and at the
expense of the City.
Section 5.3. Public Liability and Property Damage Insurance. The City shall maintain or
cause to be maintained prior to the acquisition of the Property and throughout the remaining
Term of this Lease, but only if and to the extent available from reputable insurers at reasonable
cost in the opinion of the City, a standard comprehensive general insurance policy or policies in
protection of the Authority, the Trustee, the City, and their respective members, officers, agents,
employees and assigns. Said policy or policies shall provide for indemnification of said parties
against direct or contingent loss or liability for damages for bodily and personal injury, death or
property damage occasioned by reason of the operation of the Property. Such policy or policies
-shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death
of each person and $3,000,000 for personal injury or deaths of two or more persons in each
accident or event (subject to a deductible of not to exceed $250,000), and in a minimum amount
of $150,000 (subject to a deductible of not to exceed $50,000) for damage to property resulting
from each accident or event. Such insurance may, however, be in the form of a single limit
policy in the amount of $3,000,000 covering all such risks, subject to a deductible of not to
exceed $250,000. Such insurance may be maintained as part of or in conjunction with any other
insurance coverage carried by the City, and may be maintained in whole or in part in the form of
self-insurance by the City, subject to the provisions of Section 5.7, or in the form of the
participation by the City in a joint powers agency or other program providing pooled insurance.
The Net Proceeds of such liability insurance shall be applied by the City toward extinguishment
or satisfaction of the liability with respect to which paid.
Section 5.4. Fire and Extended Coverage Insurance. The City shall procure and
maintain, or cause to be procured and maintained, prior to the acquisition of the Property and
throughout the remaining Term of this Lease, insurance against loss or damage to any
improvements constituting part of the Property by fire and lightning, with extended coverage
and vandalism and malicious mischief insurance. Said extended coverage insurance shall, as
nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle
damage, smoke and such other hazards as are normally covered by such insurance. Such
insurance shall be in an aggregate amount at least equal to the replacement cost of the
improvements insured thereunder. All policies of such insurance may be subject to deductible
clauses of not to exceed ten percent (10%) of the value of the insured improvements for any one
loss. The Net Proceeds of such insurance shall be applied as provided in Section 6.1. Such
insurance may be maintained as part of or in conjunction with any other insurance coverage
carried by the City, and may be maintained in whole or in part in the form of the participation
by the City in a joint powers agency or other program providing pooled insurance.
Section 5.5. Rental Interruption Insurance. The City shall procure, and maintain or
cause to be maintained, prior to the acquisition of the Property and throughout the remaining
Term of this Lease, rental interruption or use and occupancy insurance to cover loss, total or
partial, of the use of the Property as a result of any of the hazards covered in the insurance
required by Section 5.4, in an amount at least equal to the maximum Lease Payments coming
due and payable during at least two (2) Fiscal Years. Such insurance may be maintained as
part of or in conjunction with any other insurance coverage carried by the City, and may be
maintained in whole or in part in the form of the participation by the City in a joint powers
agency or other program providing pooled insurance. The Net Proceeds of such insurance shall
be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited towards
the payment of the Lease Payments as the same become due and payable.
Section 5.6. Recordation Hereof; Title Insurance. On or prior to the Closing Date, the
City shall, at its expense, (a) cause this Lease,..or a memorandum thereof in form and substance
approved by Bond Counsel, the Site Lease, and the Assignment Agreement to be recorded in the
office of the San Mateo County Recorder with respect to the Property; and (b) obtain one or
more CLTA title insurance policies insuring the City's sub-subleasehold estate hereunder in the
Property, subject only to Permitted Encumbrances, in an amount at least equal to the aggregate
principal amount of the Certificates. All Net Proceeds received under any such title insurance
policy shall be deposited with the Trustee in the Lease Payment Fund and shall be credited
towards the prepayment of the remaining Lease Payments pursuant to Section 9.3.
Section 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance required
by Sections 5.4, 5.5 and 5.6 shall name the Trustee as loss payee so as to provide that all
proceeds thereunder shall be payable to the Trustee. The City shall pay or cause to be paid
when due the premiums for all insurance policies required by this Lease. All such policies shall
provide that the Trustee shall be given thirty (30) days' notice of each expiration, any intended
cancellation thereof or reduction of the coverage provided thereby. The Trustee shall not be
responsible for the sufficiency of any insurance herein required and shall be fully protected in
accepting payment on account of such insurance or any adjustment, compromise or settlement
of any loss. The City shall cause to be delivered to the Trustee annually, no later than
September 1 in each year, a certificate stating that all of the insurance policies required by this
Lease are in full force and effect.'
In the event that any insurance required pursuant to Section 5.3 or 5.4 shall be provided
in the form of self-insurance, the City shall file with the Trustee annually, within ninety (90)
days following the close of each Fiscal Year, a statement of the risk manager of the City or an
independent insurance adviser engaged by the City identifying the extent of such self-insurance
and stating the determination that the City maintains sufficient reserves with respect thereto. In
the event that any such insurance shall be provided in the form of self-insurance by the City, the
City shall not be obligated to make any payment with respect to any insured event except from
such reserves.
Section 5.8. Installation of City's Equipment. The City may at any time and from time
to time, in its sole discretion and at its own expense, install or permit to be installed other items
of equipment or other personal property in or upon the Property. All such items shall remain
the sole property of the City, in which neither the Authority nor the Trustee shall have any
interest, and may be modified or removed by the City at any time, provided that the City shall
repair and restore any and all damage to the Property resulting from the installation,
modification or removal of any such items. Nothing in this Lease shall prevent the City from
purchasing or leasing items to be installed pursuant to this Section under a lease or conditional
sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid
portion of the purchase price thereof, provided that no such lien or security interest shall attach
to any part of the Property.
Section 5.9. Liens. The City shall not, directly or indirectly, create, incur, assume or
suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the
Property, other than as herein contemplated and except for such encumbrances as the City shall
certify in writing to the Trustee do not adversely affect the leasehold estate in the Property
hereunder. Except as expressly provided in this Article, the City shall promptly, at its own
expense, take such action as may be necessary to duly discharge or remove any such mortgage,
pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at
any time. The City shall reimburse the Authority for any expense incurred by it in order to
discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
Section 5.10. Advances. If the City shall fail to perform any of its obligations under this
Article V, the Authority shall take such action as may be necessary to cure such failure,
including the advancement of money, and the City shall be obligated to repay all such advances
as additional rental hereunder, with interest at the rate of equal to the average interest rate on
the Certificates.
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF
NET PROCEEDS
Section 6.1. Application of Net Proceeds. The Net Proceeds of any insurance award
resulting from any damage to or destruction of the Property by fire or other casualty, or from
any title insurance award, shall be paid to the Trustee, as assignee of the Authority under the
Assignment Agreement, and deposited in the Insurance and Condemnation Fund to be applied
as set forth in Section 6.01 of the Trust Agreement. The Net Proceeds of any eminent domain
award with respect to the Property resulting from any event described in Section 6.2 shall be
paid by the City to the Trustee and deposited in the Insurance and Condemnatibn Fund to be
applied as set forth in Section 6.02 of the Trust Agreement.
Section 6.2. Termination or Abatement Due to Eminent Domain. If the Property shall be
taken permanently under the power of eminent domain or sold to a government threatening to
exercise the power of eminent domain, the Term of this Lease shall cease with respect thereto as
of the day possession shall be so taken. If less than all-of the Property shall be taken
permanently, or if the Property shall be taken temporarily, under the power of eminent domain,
(a) this Lease shall continue in full force and effect with respect thereto and shall not be
terminated by virtue of such taking and the parties waive the benefit of any law to the contrary,
and (b) there shall be a partial abatement of Lease Payments allocated thereto, in an amount to
be agreed upon by the City and the Authority such that the resulting Lease Payments represent
fair consideration for the use and occupancy of the remaining usable portions of the Property.
Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this
Section 6.2 to the extent that amounts in the Reserve Fund are available to pay Lease Payments
which would otherwise be abated under this Section 6.2, it being hereby declared that such
proceeds and amounts constitute a special fund for the payment of the Lease Payments.
Section 6.3. Abatement Due to Damage or Destruction. The amount of Lease Payments
shall be abated during any period in which by reason of damage or destruction (other than by
eminent domain which is hereinbefore provided for) there is substantial interference with the use
and occupancy by the City of the Property or any portion thereof. The amount of such
abatement shall be agreed upon by the City and the Authority such that the resulting Lease
Payments represent fair consideration for the use and occupancy of the portions of the Property
not damaged or destroyed. Such abatement shall continue for the period commencing with such
damage or destruction and ending with the substantial completion of the work of repair or
reconstruction. In the event of any such damage or destruction, this Lease shall continue in full
force and effect and the City waives any right to terminate this Lease by virtue of any such
damage and destruction. Notwithstanding the foregoing, there shall be no abatement of Lease
Payments under this Section 6.3 to the extent that the proceeds of hazard insurance, rental
interruption insurance or amounts in the Reserve Fund, are available to .pay Lease Payments
which would otherwise be abated under this Section 6.3, it being hereby declared that such
proceeds and amounts constitute a special fund for the payment of the Lease Payments.
-16-
ARTICLE VII
OTHER COVENANTS OF THE CITY
Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO AGREEMENT,
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE
PROPERTY OR ANY PORTION THEREOF, OR ANY OTHER REPRESENTATION OR
WARRANTY WITH RESPECT TO THE PROPERTY OR ANY PORTION THEREOF. THE
CITY ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY
PORTION OF THE PROPERTY OR A DEALER THEREIN, THAT THE CITY LEASES THE
PROPERTY AS-IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE
TO BE BORNE BY THE CITY. In no event shall the Authority be liable for incidental, indirect,
special or consequential damages, in connection with or arising out of this Lease or the Trust
Agreement for the existence, furnishing, functioning or City's use of the Property.
Section 7.2. Access to the Property. The City agrees that the Authority and any
Authority Representative, and the Authority's successors or assigns, shall have the right at all
reasonable times to enter upon and to examine and inspect the Property or any portion thereof.
The City further agrees that the Authority, any Authority Representative and the Authority's
successors or assigns shall have such rights of access to the Property or any portion thereof as
may be reasonably necessary to cause the proper maintenance of the Property in the event of
failure by the City to perform its obligations hereunder.
Section 7.3. Release and Indemnification Covenants. The City shall and hereby agrees
to indemnify and save the Authority and the Trustee and their respective officers, agents,
successors and assigns harmless from and against all claims, losses and damages, including
legal fees and expenses (including the allocated costs of in-house counsel), arising out of (a) the
use, maintenance, condition or management of, or from any work or thing done on the Property
by the City, including but not limited to the presence on, under or about, or the release from, the
Property of any substances, materials or wastes which are or which become regulated or
classified as hazardous or toxic under state, federal or local law, (b) any breach or default on
the part of the City in the performance of any of its obligations under this Lease, (c) any
negligence or willful misconduct of the City or of any of its agents, contractors, servants,
employees or licensees with respect to the Property, or (d) any intentional misconduct or
negligence of any lessee of the City with respect to the Property. No indemnification is made
under this Section or elsewhere in this Lease for willful misconduct or negligence, under this
Lease by the Authority or the Trustee, or their respective officers, agents, employees, successors,
(other than a Successor Trustee) or assigns.
Section 7.4. Assignment by the Authority.. The Authority's rights under this Lease,
including the right to receive and enforce payment of the Lease Payments, have been assigned to
the Trustee pursuant to the Assignment Agreement, to which assignment the City hereby
consents.
Section 7.5. Assignment and Subleasing by the City. This Lease may not be assigned by
the City. The City may sublease the Property, or any portion thereof, but only with the written
consent of the Authority (which consent shall not be unreasonably withheld), and subject to all
of the following conditions:
(a) This Lease and the obligation of the City to make Lease Payments hereunder
shall remain obligations of the City.
(b) The City shall, within thirty (30) days after the delivery thereof, furnish or
cause to be furnished to the Authority and the Trustee a true and complete copy of such
sublease.
(c) No such sublease by the City shall cause the Property to be used for a
purpose other than as may be authorized under the provisions of the laws of the State
of California.
(d) The City shall furnish the Authority and the Trustee with a written opinion
of Bond Counsel stating that such sublease does not cause the interest components of
the Lease Payments to become includable in gross income for purposes of federal or
State of California personal income taxation.
Section 7.6. Amendment of Lease Agreement. The Authority and the City may at any
time amend or modify any of the provisions of this Lease, but only (a) with the prior written
consent of the Trustee (which consent shall not be unreasonably withheld) or with the prior
written consent of the Owners of a majority in aggregate principal amount of the Outstanding
Certificates; or (b) without the consent of the Trustee or any of the Certificate Owners, but only
if such amendment or modification is for any one or more of the following purposes-
(i) to add to the covenants and agreements of the City contained in this
Lease, other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power herein reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective provision contained herein,
or in any other respect whatsoever as the Authority and the City may deem
necessary or desirable, provided that, in the opinion of Bond Counsel, such
modifications or amendments shall not materially adversely affect the interests
of the Owners of the Certificates;
(iii) to amend any provision thereof relating to the Tax Code, to any
extent whatsoever but only if and to the extent such amendment will not
adversely affect the exclusion from gross income of interest represented by the
Certificates under the Tax Code, in the opinion of Bond Counsel;
(iv) to amend the description of the Property set forth in Exhibit A
hereto to reflect accurately the property originally intended to be included
therein; or
(v) to obligate the City to pay additional amounts of rental hereunder for
the use and occupancy of the Property, provided that (A) such additional
amounts of rental do not cause the total rental payments made by the City
hereunder to exceed the fair rental value of the Property, as set forth in a
certificate of a City Representative filed with the Trustee and the Authority, (B)
the City shall have obtained and filed with the Trustee and the Authority an
appraisal of the Property showing that the estimated fair market value thereof is
not less than the aggregate unpaid principal components of the Lease Payments
and the aggregate principal components of such additional amounts of rental,
and (C) such additional amounts of rental are pledged or assigned for the
payment of any bonds, notes, leases or other obligations the proceeds of which
shall be applied to finance the construction or acquisition of land, facilities or
other improvements which are authorized pursuant to the applicable laws of the
State of California.
-19-
ARTICLE VIII
EVENTS OF DEFAULTS AND REMEDIES
Section 8.1. Events of Default Defined. Any one or more of the following events shall
constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment required to
be paid hereunder at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as referred to in the
preceding clause (a), for a period of thirty (30) days after written notice specifying such
failure and requesting that it be remedied has been given to the City by the Authority or
the Trustee; provided, however, that if in the reasonable opinion of the City the failure
stated in the notice can be corrected, but not within such (30) day period, such failure
shall not constitute an Event of Default if the City shall commence to cure such failure
within such thirty (30) day period and thereafter diligently and in good faith shall cure
such failure in a reasonable period of time.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure by the
City promptly to lift any execution, garnishment or attachment, or adjudication of the
City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by
the City into an agreement of composition with creditors, or the approval by a court of
competent jurisdiction of a petition applicable to the City in any proceedings instituted
under the provisions of the Federal Bankruptcy Code, as amended, or under any similar
acts which may hereafter be enacted.
Section 8.2. Remedies on Default. Whenever any Event of Default shall have happened
and be continuing, it shall be lawful for the Authority to exercise any and all remedies available
pursuant to law or granted pursuant to this Lease; provided, however, that notwithstanding
anything herein or in the Trust Agreement to the contrary, there shall be no right under any
circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not
then in default to be immediately due and payable. Each and every covenant hereof to be kept
and performed by the City is expressly made a condition and upon the breach thereof the
Authority may exercise any and all rights granted hereunder; provided, that no termination of
this Lease shall be effected either by operation of law or acts of the parties hereto, except only
in the manner herein expressly provided. Upon the occurrence and during the continuance of
any Event of Default, the Authority shall have and is granted each and every one of the
following remedies.
(a) Enforcement of Payments Without Termination. In the event the Authority
does not elect to terminate this Lease in the manner hereinafter provided for in
subparagraph (b) of this Section, the City agrees to and shall remain liable for the
payment of all Lease Payments and other amounts payable hereunder, and the
performance of all conditions herein contained, and shall reimburse the Authority for
any deficiency arising out of the re-leasing of the Property; or, in the event the Authority
is unable to re-lease the Property, then for the full amount of all Lease Payments and
such other amounts to the end of the Term of this Lease, but the Lease Payments and
such other amounts and/or deficiency shall be payable only at the same time and in the
same manner as hereinabove provided for the payment of the Lease Payments and such
other amounts hereunder, notwithstanding such entry or re-entry by the Authority or any
suit in unlawful detainer, or otherwise~ brought by the Authority for the purpose of
effecting such re-entry or obtaining possession of the Property or the exercise of any
other remedy by the Authority. The City hereby irrevocably appoints the Authority as
the agent and attorney-in-fact of the City to enter upon and re-lease the Property in the
event of default by the City in the performance of any covenants herein contained to be
performed by the City and to remove all personal property whatsoever situated upon
the Property, to place such property in storage or other suitable place in the County of
San Mateo the account of and at the expense of the City, and the City hereby exempts
and agrees to save harmless the Authority from any costs, loss or damage whatsoever
arising or occasioned by any such entry upon and re-leasing of the Property and the
removal and storage of such property by the Authority or its duly authorized agents in
accordance with the provisions herein contained. The City agrees that the terms of this
Lease constitute full and sufficient notice of the right of the Authority to re-lease the
Property in the event of such re-entry without effecting a surrender of this Lease, and
further agrees that no acts of the Authority in effecting such re-leasing shall constitute a
sUrrender or termination of this Lease irrespective of the term for which such re-leasing is
made or the terms and conditions of such re-leasing, or otherwise, but that, on the
contrary, in the event of such default by the City the Eight to terminate this Lease shall
vest in the Authority to be effected in the sole and exclusive manner hereinafter
provided for in subparagraph (b) of this Section. The City further waives the right to
any rental obtained by the Authority in excess of the Lease Payments and hereby
conveys and releases such excess to the Authority as compensation to the Authority for
its services in re-leasing the Property.
(b) Termination of Lease. If an Event of Default occurs and is continuing
hereunder, the Authority at its option may terminate this Lease and re-lease all or any
portion of the Property. In the event of the termination of this Lease by the Authority at
its option and in the manner hereinafter provided on account of default by the City (and
notwithstanding any re-entry upon the Property by the Authority in any manner
whatsoever or the re-leasing of the Property), the City nevertheless agrees to pay to the
Authority all costs, loss or damages howsoever arising or occurring payable at the same
time and in the same manner as is herein provided in the case of payment of Lease
Payments and other amounts payable hereunder. Any surplus received by the Authority
from such re-leasing shall be deposited in the Lease Payment Fund. Neither notice to
pay rent or to deliver up possession of the premises given pursuant to law nor any
proceeding in unlawful detainer taken by the Authority shall of itself operate to
terminate this Lease, and no termination of this Lease on account of default by the City
shall be or become effective by operation of law, or otherwise, unless and until the
Authority shall have given written notice to the City of the election on the part of the
Authority to terminate this Lease. The City covenants and agrees that no surrender of
the Property, or of the remainder of the Term hereof or any termination of this Lease
shall be valid in any manner or for any purpose whatsoever unless stated or accepted by
the Authority by such written notice.
(c) Proceedings at Law or In Equity. If an event of default occurs and continues
hereunder, the Authority may take whatever action at law or in equity may appear
necessary or desirable to collect the amounts then due and thereafter to become due
hereunder or to enforce any other of its rights hereunder.
Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon the occurrence of any
Event of Default shall impair any such right, o~ power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in
this Article VIII it shall not be necessary to give any notice, other than such notice as may be
required in this Article VIII or by law.
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. In the event either party
to this Lease should default under any of the provisions hereof and the nondefaulting party
should employ attorneys or incur other expenses for the collection of moneys or the enforcement
or performance or observance of any obligation or agreement on the part of the defaulting party
herein contained, the defaulting party agrees that it will on demand therefor pay to the
nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred
by the nondefaulting party.
Section 8.5. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Lease should be breached by either party and thereafter waived by the other
party, such waiver shall be limited to the particular breach so waived and shall not be deemed
to waive any other breach hereunder.
Section 8.6. Application of Proceeds. All net proceed~ received from the re-lease of the
Property under this Article VIII, and all other amounts derived by the Authority or the Trustee
as a result of the occurrence of an Event of Default, shall be transferred to the Trustee promptly
upon receipt thereof and shall be deposited by the Trustee and applied as set forth in Section
12.03 of the Trust Agreement.
Section 8.7. Trustee and Certificate Owners to Exercise Rights. Such rights and
remedies as are given to the Authority under this Article VIII have been assigned by the
Authority to the Trustee under the Assignment Agreement. Such rights and remedies shall be
exercised by the Trustee and the Owners of the Certificates as provided in the Trust Agreement.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
Section 9.1. Security Deposit. Notwithstanding any other provision of this Lease, the
City may on any date secure the payment of the Lease Payments in whole or in part by
depositing with the Trustee an amount of cash which, together with other available amounts on
deposit in the funds and accounts established under the Trust Agreement, is either (a) sufficient
to pay such Lease Payments, including the principal and interest components thereof, in
accordance with the Lease Payment schedule set forth in Exhibit B, or (b) invested in whole or
in part in non-callable Federal Securities in such amount as will, in the opinion of an
independent certified public accountant, together with interest to accrue thereon and together
with any cash which is so deposited, be fully sufficient to pay such Lease Payments when due
pursuant to Section 4.4(a) or when due on any optional prepayment date pursuant to Section
9.2, as the City shall instruct at the time of said deposit. In the event of a security deposit
pursuant to this Section with respect to all unpaid Lease Payments, and notwithstanding the
provisions of Section 4.2, (a) the Term of this Lease shall contifiue, (b) all obligations of the City
under this Lease, and all security provided by this Lease for said obligations, shall thereupon
cease and terminate, excepting only the obligation of the City to make, or cause to be made all
of the Lease Payments from such security deposit, and (c) pursuant to Section 4.6, title to the
Property shall vest in the City on the date of said deposit automatically and without further
action by the City or the Authority. Said security deposit shall be deemed to be and shall
constitute a special fund for the payment of Lease Payments in accordance with the provisions
of this Lease.
Section 9.2. Optional Prepayment. The City shall have the option to prepay the
principal components of the Lease Payments in whole, or in part in any integral multiple of
$5,000, on any Business Day on or after 1, , by paying a prepayment price
equal to the aggregate principal components of the Lease Payments to be prepaid, together with
the interest component of the Lease Payment required to be paid on such date and together
with a premium equal to the amount of premium (if any) required to paid upon the
corresponding prepayment of the Certificates pursuant to Section 3.01(a) of the Trust
Agreement. Such prepayment price shall be deposited by the Trustee in the Lease Payment
Fund to be applied to the prepayment of Certificates pursuant to Section 3.01(a) of the Trust
Agreement. The City shall give the Trustee written notice of its intention to exercise its option
not less than seventy-five (75) days in advance of the date of exercise.
Section 9.3. Mandatory Prepayment.
(a) The City shall be obligated to prepay the principal components of the Lease
Payments in whole or in part on any date, from and to the extent of any Net Proceeds of
insurance award or eminent domain award with respect to the Property theretofore deposited
in the Lease Payment Fund for such purpose pursuant to Article VI hereof and Article VI of the
Trust Agreement. The City and the Authority hereby agree that such Net Proceeds, to the
extent remaining after payment of any delinquent Lease Payments, shall be credited towards
the City's obligations under this Section 9.3.
(b) The Lease Payments shall be prepaid from funds held under the Trust Agreement,
and other funds of the City legally available therefore, upon an extraordinary mandatory
prepayment under Section 3.01(d) of the Trust Agreement. Lease Payments so made from
funds other than those held under the Trust Agreement shall be deemed rental for the Property.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. Any notice, request, complaint, demand or other communication
under this Lease shall be given by first class mail or personal delivery to the party entitled
thereto at its address set forth below, or by telecopier or other form of telecommunication, at its
number set forth below with an original forwarded by first class mail, postage prepaid on the
next business day. Notice shall be effective either (a) upon transmission by telecopier or other
form of telecommunication, (b) 48 hours after deposit in the United States of America first class
mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt.
The Authority, the City or the Trustee may, by written notice to the other parties, from time to
time modify the address or number to which communications are to be given hereunder.
If to the City:
City of South San Francisco
315 Maple Avenue
South San Francisco, CA, 94083
Attention: Finance Director
Telecopier: (415) 871-7318
If to the Authority:
City of South San Francisco Capital Improvements
Financing Authority
315 Maple Avenue
South San Francisco, CA 94083
Attention: Treasurer
Telecopier: (415) 871-7318
If to the Trustee:
First Trust of California, National Association
One California Street, Suite 400
San Francisco, CA 94111
Attention: Corporate Trust Department
Telecopier: (415) 273-4592
Section 10.2. Binding Effect. This Lease shall inure to the benefit of and shall be binding
upon the Authority and the City and their respective successors and assigns.
Section 10.3. Severabilitv. In the event any provision of this Lease shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.
Section 10.4. Net-net-net Lease. This Lease shall be deemed and construed to be a
"net-net-net lease" and the City hereby agrees that the Lease Payments shall be an absolute net
return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.
Section 10.5. Further Assurances and Corrective Instruments. The Authority and the
City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further instruments
as may reasonably be required for correcting any inadequate or incorrect description of the
Property hereby leased or intended so to be or for carrying out the expressed intention of this
Lease.
Section 10.6. Execution in Counterparts. This Lease may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
Section 10.7. Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State of California.
Section 10.8. Authority and City Representatives. Whenever under the provisions of
this Lease the approval of the Authority or the City is required, or the Authority or the City is
required to take some action at the request of the other, such approval or such request shall be
given for the Authority by an Authority Representative and for the City by a City
Representative, and any party h~reto shall be authorized to rely upon any such approval or
request.
Section 10.9. Captions. The captions or headings in this Lease are for convenience only
and in no way define, limit or describe the scope or intent of any provisions or Section of this
Lease.
IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be
executed in their respective names by their duly authorized officers, all as of the date first
above written.
CITY OF SOUTH SAN FRANCISCO
CAPITAL IMPROVEMENTS FINANCING
AUTHORITY,
as sub-sublessor
Attest:
By:
Treasurer
Secretary
CITY OF SOUTH SAN FRANCISCO,
as sub-sublessee
By:
CityManager
IS E A L]
Attest:
City Clerk
-26-
EXHIBIT A
DESCRIPTION OF PROPERTY
A-1
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
Lease Principal Interest Aggregate
Payment Date Component Component Lease Payment
B-1
29070-30
JHHW:DJ~.brf
12/10/96
EXHIBIT TO RESOLUTION NO. 190-96
TRUST AGREEMENT
Dated as of January 1,1997
by and among
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
as Trustee
the
CITY OF SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS
FINANCING AUTHORITY
and the
CITY OF SOUTH SAN FRANCISCO
Relating to
$
1997 Certificates of Participation
(Conference Center and Public Facilities Project)
TABLE OF CONTENTS
Page
Section 1.01.
Section 1.02.
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
Section 2.06.
Section 2.07.
Section 2.08.
Section 2.09.
Section 2.10.
Section 2.11.
Section 2.12.
Section 2.13.
Section 2.14.
Section 2.15.
Section 3.01.
Section 3.02.
Section 3.03.
Section 3.04.
Section 3.05.
Section 3.06.
Section 4.01.
Section 4.02.
Section 4.03.
Section 4.04.
Section 4.05.
Section 4.06.
ARTICLE I
DEFINITIONS
Definitions ........................................................................................................... 2
Legal Authority .................................................................................................... 7
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Authorization ....................................................................................................... 8
Date ..................................................................................................................... 8
Terms of Certificates ............................................................................................. 8
Book Entry System ............................................................................................... 8
Payment of Certificates ....................................................................................... 10
Form of Certificates ............................................................................................. 10
Execution of Certificates ...................................................................................... 10
Transfer and Exchange ....................................................................................... 11
Certificates Mutilated, Lost, Destroyed or Stolen ................................................... 11
Execution of Documents and Proof of Ownership ................................................. 12
Temporary Certificates .......................... .............................................................. 12
Registration Books .............................................................................................. 12
Payments Under the Municipal Bond Insurance Policy ......................................... 13
Additional Covenants Regarding Municipal Bond Insurance ................................ 13
Written Consent ................................................................................................. 13
ARTICLE Ill
PREPAYMENT OF CERTIFICATES
Prepayment ....................................................................................................... 13
Selection of Certificates for Prepayment ............................................................... 14
Notice of Prepayment ......................................................................................... 14
Partial Prepayment of Certificates ........................................................................ 14
Effect of Notice of Prepayment ............................................................................. 15
Purchase of Certificates ....................................................................................... 15
ARTICLE IV
DISPOSITION OF PROCEEDS; ACQUISITION AND
CONSTRUCTION FUND AND RESERVE FUND
Application of Proceeds ....................................................................................... 16
Acquisition and Construction Fund ..................................................................... 16
Disbursement of Amounts in Acquisition and Construction Fund ......................... 16
Reserve Fund ..................................................................................................... 17
Delivery Costs Fund ........................................................................................... 18
Payment of Delivery Costs .................................................................................. 18
Section 5.01.
Section 5.02.
Section 5.03.
Section 5.04.
Section 5.05.
Section 6.01.
Section 6.02.
Section 7.01.
Section 7.02.
Section 7.03.
Section 7.04.
Section 7.05.
Section 8.01.
Section 8.02.
Section 8.03.
Section 8.04.
Section 8.05.
Section 8.06.
Section 8.07.
Section 8.08.
Section 8.09.
Section 8.10.
Section 8.11.
Section 8.12.
Section 9.01.
Section 9.02.
Section 9.03.
Section 9.04.
Section 9.05.
Page
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Assignment of Rights in Lease ............................................................................ 19
Establishment of Lease Payment Fund ................................................................ 19
Deposits ............................................................................................................. 19
Application of Moneys ........................................................................................ 19
Surplus .............................................................................................................. 19
ARTICLE VI
INSURANCE AND CONDEMNATION FUND
Establishment of Insurance and Condemnation Fund; Application of Net
Proceeds of Insurance Award .............................................................................. 20
Deposit and Application of Net Proceeds of Eminent Domain Award .................... 20
ARTICLE VII
MONEYS IN FUNDS; INVESTMENTS
Held in Trust ...................................................................................................... 22
Investments Authorized ...................................................................................... 22
Accounting ......................................................................................................... 22
Allocation of Earnings ......................................................................................... 22
Acquisition, Disposition, and Valuation of Investments ........................................ 23
ARTICLE VIII
THE TRUSTEE
Appointment of Trustee ...................................................................................... 24
Acceptance of Trusts ........................................................................................... 24
Fees, Charges and Expenses of Trustee ................................................................ 26
Notice to Certificate Owners of Default ................................................................ 27
Removal of Trustee ............................................................................................. 27
Resignation by Trustee ....................................................................................... 27
Appointment of Successor Trustee ....................................................................... 27
Merger or Consolidation ..................................................................................... 27
Concerning any Successor Trustee ....................................................................... 27
Non-Liability of Trustee ...................................................................................... 28
Actions Through Agents ..................................................................................... 28
Nature of Trust Engagement ............................................................................... 28
ARTICLE IX
MODIFICATION OR AMENDMENT
Amendments Permitted ...................................................................................... 30
Procedure for Amendment with Written Consent of Certificate Owners ................ 30
Effect of Supplemental Agreement ...................................................................... 31
Endorsement or Replacement of Certificates Delivered After Amendments ........... 31
Amendatory Endorsement of Certificates ............................................................. 31
-ii-
Section 10.01.
Section 10.02.
Section 10.03.
Section 10.04.
Section 10.05.
Section 10.06.
Section 10.07.
Section 11.01.
Section 11.02.
Section 11.03.
Section 11.04.
Section 11.05.
Section 12.01.
Section 12.02.
Section 12.03.
Section 12.04.
Section 12.05.
Section 12.06.
Section 12.07.
Section 12.08.
Section 12.09.
Section 13.01.
Section 13.02.
Section 13.03.
Section 13.04.
Section 13.05.
Section 13.06.
Section 13.07.
Section 13.08.
Section 13.09.
Section 13.10.
Section 13.11.
Section 13.12.
Section 13.13.
EXHIBIT A
page
ARTICLE X
OTHER COVENANTS
Compliance With and Enforcement of Lease ........................................................ 32
Observance of Laws and Regulations .................................................................. 32
Prosecution and Defense of Suits ......................................................................... 32
Recordation and Filing ....................................................................................... 32
Tax Covenants .................................................................................................... 32
Further Assurances ............................................................................................. 33
Eminent Domain Action ..................................................................................... 33
LIMITATION OF LIABILITY
Limited Liability of City ..................................................................................... 34
No Liability of the Authority for Trustee Performance .......................................... 34
Indemnification of Trustee .................................... ~ .............................................. 34
Opinion of Counsel ............................................................................................. 34
Limitation of Rights to Parties and Certificate Owners .......................................... 35
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE
OWNER
.Assignment of Rights ......................................................................................... 36
Remedies ........................................................................................................... 36
Application of Funds .......................................................................................... 36
Institution of Legal Proceedings ........................................................................... 36
Non-waiver ........................................................................................................ 37
Remedies Not Exclusive ...................................................................................... 37
Power of Trustee to Control Proceedings .............................................................. 37
Limitation on Certificate Owners' Right to Sue ..................................................... 37
Possession of Certificates by Trustee Not Required ............................................... 37
ARTICLE XIII
DISCHARGE; ADMINISTRATIVE PROVISIONS
Discharge Hereof ................................................................................................ 39
Records .............................................................................................................. 39
Notices ............................................................................................................... 39
Disqualified Certificates ...................................................................................... 40
Payment of Certificates After Discharge of Trust Agreement ................................ 40
Governing Law .................................................................................................. 41
Binding Effect; Successors .................................................................................... 41
Authority and City Representatives .................................................................... 41
Execution in Counterparts ................................................................................... 41
Delivery of Cancelled Certificates ........................................................................ 41
Headings ........................................................................................................... 41
Waiver of Notice ................................................................................................. 41
Separability of Invalid Provisions ........................................................................ 41
FORM OF CERTIFICATE OF PART~Ci~ATION ................................................ A-1
TRUST AGREEMENT
THIS AGREEMENT, dated as of January 1, 1997, is by and among FIRST TRUST OF
CALIFORNIA, NATIONAL ASSOCIATION, a national banking association duly organized
and existing under the laws of the United States of America (the "Trustee"), the CITY OF
SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY, a joint
exercise of powers authority organized and existing under the laws of the State of California
(the "Authority"), and the CITY OF SOUTH SAN FRANCISCO, a municipal corporation duly
organized and existing under the laws of the State of California (the "City");
WI TN E S S E TH:
WHEREAS, the City wishes to acquire fee title to certain land and improvements used
and operated as a convention center (the "Property") and to construct and acquire certain other
public improvements within the City (together with the Property, the "Project"); and
WHEREAS, the Authority has been formed for purposes which include assisting the
City in financing the acquisition, construction and improvement of public improvements such as
the Project; and
WHEREAS, in order to provide funds to enable the City to finance the Project, the
Authority has agreed to sublease the Property from the City pursuant to the Site Lease dated as
of January 1, 1997, by and between the City, as sublessor, and the Authority, as sublessee (the
"Site Lease"), and to sub-sublease said Property back to the City pursuant to the Lease
Agreement dated as of January 1, 1997, by and between the Authority, as sub-sublessor and the
City, as sub-sublessee (the "Lease"); and
WHEREAS, for such purposes the Authority proposes to assign and transfer to the
Trustee certain of its rights under the Lease, and in consideration of such assignment and the
execution of this Trust Agreement, the Trustee has agreed to execute and deliver 1997
Certifcates of Participation in the aggregate principal amount of $ , each
evidencing a direct, undivided fractional interest in the Lease Payments to be made by the City
under the Lease;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section shall, for all purposes of this Trust Agreement, have the meanings herein specified.
In addition, all terms defined in the Lease and not otherwise defined herein shall have the
respective meanings specified in the Lease.
"Acquisition and Construction Costs" means all costs of payment of, or reimbursement for,
acquisition, construction, installation and equipping of the Project, including but not limited to,
architect and engineering fees, construction contractor payments, costs of feasibility and other
reports, further acquisition costs of the Property, inspection costs, performance bond premiums
and permit fees.
"Acquisition and Construction Fund" means the fund b)~ that name established and held
by the Trustee pursuant to Section 4.02 hereof.
"Assignment Agreement" means the Assignment Agreement, dated as of January 1, 1997,
by and between the Authority as assignor and the Trustee as assignee, as originally executed or
as thereafter amended pursuant to any duly authorized and executed amendments thereto.
"Authority" means the City of South San Francisco Public Facilities Authority, a joint
exercise of powers authority organized and existing under the laws of the State of California.
"Authority Representative" means the Chairperson, Vice Chairperson, Executive Director,
Treasurer or Secretary of the Authority, or any other person authorized by resolution of the
governing body of the Authority to act on behalf of the Authority under or with respect to this
Trust Agreement.
"Bond Counsel" means (a) Jones Hall Hill & White, A Professional Law Corporation, and
(b) any other attorney or firm of attorneys of nationally recognized expertise with respect to
legal matters relating to obligations the interest on which is excludable from gross income
pursuant to Section 103 of the Internal Revenue Code of 1986, as amended.
"Business Day" means a day other than a Saturday, Sunday or legal holiday, on which
banking institutions in the State of California, or in any state in which the Office of the Trustee
is located, are not closed for corporate trust business, or a day on which the Federal Reserve
System or the New York Stock Exchange is closed.
"Certificates" means the $ aggregate principal amount of 1997
Certifcates of Participation, executed and delivered and at any time Outstanding hereunder.
"City" means the City of South San Francisco, a municipal corporation duly organized
and existing under the laws of the State of California.
"City Representative" means the City Manager or the Director of Finance of the City or
any other person authorized by resolution of the City Council of the City to act on behalf of the
City under or with respect to this Trust Agreement.
"Closing Date" means the day when th~ Certificates, duly executed by the Trustee, are
delivered to the Original Purchaser.
"Delivery Costs" means all items of expense directly or indirectly payable by or
reimbursable to the City or the Authority relating to the execution and delivery of the Lease or
the execution, sale and delivery of the Certificates, including but not limited to filing and
recording costs, settlement costs, printing costs, reproduction and binding costs, initial fees and
charges of the Trustee (which shall include legal fees and the first annual administration fee of
the Trustee), financing discounts, legal fees and charges, insurance fees and charges, financial
and other professional consultant fees, costs of rating agencies for credit ratings, fees for
execution, transportation and safekeeping of the Certificates and charges and fees in connection
with the foregoing.
"Delive~'y Costs Fund" means the fund by that name established and held by the Trustee
pursuant o Article IV of the Trust Agreement.
"Depository" means (a) initially, DTC, and (b) any other Securities Depositories acting
as Depository pursuant to Section 2.04.
"Depository System Participant" means any participafft in the Depository's book-entry
system.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Eminent Domain Action" means City of South San Francisco v. Josephine A. Mayer, et
al., San Mateo County Superior Court No. , in which the City is seeking to acquire
fee title to the Property.
"Event of Default" means an event of default under the Lease, as defined in Section 8.1
thereof.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding) if the investment is traded
on an established securities market (within the meaning of section 1273 of the Tax Code) and,
otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired
in accordance with applicable regulations under the Tax Code, (ii) the investment is an
agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically
negotiated interest rate (for example, a guaranteed investment contract, a forward supply
contract or other investment agreement) that is acquired in accordance with applicable
regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State
and Local Government Series that is acquired in accordance with applicable regulations of the
United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment
Fund of the State of California but only if at all times during which the investment is held its
yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable
direct obligation of the United States.
"Federal Securities" means any of the following which at the time of investment are legal
investments under the laws of the State of California for the funds purported to be invested
therein: (a) direct general 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); and (b) obligations of any agency, department or instrumentality of the
United States of America the timely payment of principal of and interest on which are fully
guaranteed by the United States of America.
"Information Services" means Financial Information, Inc.'s "Daffy Called Bond Service",
30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny
Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York
10006; Standard & Poor's Ratings Group "Called Bond Record," 25 Broadway, 3rd Floor, New
York, New York 10004; and, in accordance with then current guidelines of the Securities and
Exchange Commission, such other addresses and/or such other services providing information
with respect to called bonds as the City may designate in a written request delivered to the
Trustee.
"Insurance and Condemnation Fund" means the fund by that name to be established and
held by the Trustee pursuant to Section 6.t)l.
"Interest Payment Date" means, with respect to any Certificate, August 1, 1997, and the
first day of each February and August thereafter to and including the date of maturity or
prepayment of such Certificate.
"Lease" means the Lease Agreement dated as of Dece/nber 1, 1996, by and between the
Authority as sub-sublessor and the City as sub-sublessee, as originally executed or as thereafter
amended pursuant to any duly authorized and executed amendments thereto.
"Lease Payment Fund" means the fund by that name established and held by the Trustee
pursuant to Section 5.02.
"Lease Payments" means all payments required to be paid by the City pursuant to
Section 4.4(a) of the Lease including any prepayment thereof pursuant to Article IX of the
Lease.
"Moody's" means Moody's Investors Service, New York, New York or its successors.
"Net Proceeds" means any title insurance proceeds, casualty insurance proceeds or
eminent domain award (including any proceeds of sale to a governmental entity under threat of
the exercise of eminent domain powers), paid with respect to the Property, to the extent
remaining after payment therefrom of all expenses incurred in the collection thereof.
"Nominee" means (a) initially, Cede & Co. as nominee of DTC, and (b) any other
nominee of the Depository designated pursuant to Section 2.04(a).
"Office" means the principal corporate trust office of the Trustee in San Francisco,
California or at such other address or addresses designated by the Trustee in written notice
filed with the City and the Authority; provided, however, that for purposes of maintenance of
the Registration books and presentation of Certificates for transfer, exchange or payment such
term shall mean the office of First Trust National Association in St. Paul, Minnesota.
"Original Purchaser" means the original purchaser of the Certificates at the public sale
thereof.
"Outstanding", when used as of any particular time with respect to Certificates, means
(subject to the provisions of Section 13.04) all Certificates theretofore executed and delivered
by the Trustee hereunder except (a) Certificates theretofore cancelled by the Trustee or
surrendered to the Trustee for cancellation; (b) Certificates for the payment or prepayment of
which funds or Federal Securities in a sufficient amount shall have theretofore been deposited
with the Trustee (whether upon or prior t9 the maturity or prepayment date of such
Certificates), provided that, if such Certificates are to be prepaid prior to maturity, notice of
such prepayment shall have been given as provided in Section 3.03 or provision satisfactory to
the Trustee shall have been made for the giving of such notice; and (c) Certificates in lieu of or in
exchange for which other Certificates shall have been executed .and delivered by the Trustee
pursuant to Section 2.09.
"Owner", or "Registered Owner", when used with respect to a Certificate, means the
person in whose name the ownership of such Certificate shall be registered on the Registration
Books.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein,
but only to the extent that the same are acquired at Fair Market Value:
(a) Federal Securities;
(b) any of the following direct or indirect obligations of the following agencies of
the United States of America and other entities: (i) direct obligations of the Export-
Import Bank; (ii) certificates of beneficial ownership issued by the Farmers Home
Administration; (iii) participation certificates issued by the General Services
Administration; (iv) mortgage-backed bonds or pass-through obligations issued and
guaranteed by the Government National Mortgage Association, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal
Housing Administration; (v) project notes issued by the United States Department of
Housing and Urban Development; and (vi) public housing notes and bonds guaranteed
by the United States of America; provided, that at no time shall the amount of
Permitted Investments of the type described in this paragraph (b) exceed 10% of the
original principal amount of the Certificates;
(c) interest-bearing demand or time deposits (including .certificates of deposit) in
federal or State chartered savings and loan associations or in federal or State banks
(including the Trustee), provided that: (i) in the case of a savings and loan association,
such demand or time deposits shall be fully insured by the Federal Deposit Insurance
Corporation, or the unsecured obligations of such savings and loan association shall be
rated "A" or better by Moody's and S&P; and (ii) in the case of a bank, such demand or
time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the
unsecured obligations of such bank (or the unsecured obligations of the parent bank
holding company of which such bank is the lead bank) shall be rated 'A" or better by
Moody's and S&P;
(d) commercial paper rated in the highest rating category by Moody's and S&P;
(e) obligations the interest on which is excludable from gross income pursuant to
Section 103 of the Tax Code and which are either (a) rated "A" or better by Moody's
and S&P; or (b) fully secured as to the payment of principal and interest by Federal
Securities;
(f) obligations issued by any corporation organized and operating within the
United States of America having assets in excess of $500,000,000, which obligations are
rated "A' or better by Moody's and S&P; and
(g) money market funds the policy of which is to invest solely in Federal
Securities or in obligations which are fully guaranteed or collateralized by Federal
Securities (including those managed or ~dvised by the Trustee or its affiliates);
(h) the Local Agency Investment Fund; and
(i) investment agreements with institutions rated "A' or better by Moody's and
S&P.
"Project" means the acquisition of the fee title to the Property and the acquisition,
construction and improvement by the City of other public capital improvements.
"Property" means the Convention Center Property, as described in the Lease Agreement.
"Qualified Reserve Fund Credit Instrument' means an irrevocable standby or direct-pay-
letter of credit or surety bond issued by a commercial bank or insurance company and
deposited with the Trustee pursuant to Section 4.04, provided that all of the following
requirements are met: (a) the long-term credit rating of such bank or insurance company is in the
highest rating category by Moody's and S&P; (b) such letter of credit or surety bond has a term
of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at
least equal to the portion of the Reserve Requirement with respect to which funds are proposed
to be released pursuant to Section 4.04; and (d) the Trustee is~authorized pursuant to the terms
of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies
which may exist from time to time in the Lease Payment Fund for the purpose of making
payments required pursuant to Section 4.04.
"Rating Category" means, with respect to any Permitted Investment, one or more of the
generic categories of rating by Moody's or S&P applicable to such Permitted Investment,
without regard to any refinement or gradation of such rating category by a plus or minus sign or
otherwise.
"Record Date" means the close of business on the fifteenth (15th) day of the month
preceding each Interest Payment Date, whether or not such fifteenth (15th) day is a Business
Day.
"Registration Books" means the records maintained by the Trustee pursuant to
Section 2.12 for registration of the ownership and transfer of ownership of the Certificates.
"Reserve Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.04.
"Reserve Requirement" means an amount equal to $ , provided, however,
that if the Certificates are partially refunded, such amount shall be reduced to an amount equal
to the maximum annual Lease Payments due in the current or any future fiscal year relating to
the Certificates not so refunded.
"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 Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois
60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division,
1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Fax-(215)
496-5058; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other securities depositories as the City may
designate in a written request of the City delivered to the Trustee.
"Site Lease Payment" means the amount of $4,300,000 which is payable by the Authority
to the City on the Closing Date as rental for the?roperty pursuant to the Site Lease.
"S&P' means Standard & Poor's Ratings Group, its successors and assigns.
"Tax Code" means the Internal Revenue Code of 1986. Any reference herein to a
provision of the Tax Code shall include all applicable Tax Regulations promulgated with
respect to such provision.
"Tax Regulations" means temporary and permanent regulations of the United States
Department of the Treasury promulgated under the Tax Code.
"Term Certificates" means the Certificates maturing on August 1, ~
"Trust Agreement" means this Trust Agreement, as originally executed or as thereafter
amended pursuant to any amendments hereto permitted to be made hereunder.
"Trustee" means First Trust of California, National Association, or any successor thereto
acting as Trustee pursuant to this Trust Agreement.
Section 1.02. Legal Authority. Each of the parties hereby represents and warrants that
it has full legal authority and is duly empowered to enter into this Trust Agreement, and has
taken all actions necessary to authorize the execution of this Trust Agreement by the officers
and persons signing it.
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization. The Trustee is hereby authorized and directed upon
written request from the Authority to prepare, execute and deliver to the Original Purchaser,
Certificates in the aggregate principal amount of
Dollars ($ ). The Certificates shall evidence direct, undivided fractional
ownership interests of the Owners thereof in the Lease Payments.
Section 2.02. Date. Each Certificate shall be dated January 1, 1997 and interest
represented thereby shall be payable from the Interest Payment Date next preceding the date of
execution thereof, (a) unless it is executed following a Record Date and on or before the next
succeeding Interest Payment Date, in which event interest represented thereby shall be payable
from such Interest Payment Date, or (b) unless it is executed on or before the first Record Date,
in which event interest represented thereby shall be payable from January 1, 1997; provided,
however, that if, as of the date of any Certificate, interest represented by such Certificate is in
default, interest represented thereby shall be payable from the Interest Payment Date to which
interest has previously been paid or made available for payment with respect to such
Certificate.
Section 2.03. Terms of Certificates. Principal represented by 'the Certificates shall be
payable on August 1 in each of the respective years and in the respective amounts, and interest
represented thereby shall be computed at the respective rates, as follows:
Maturity Date Principal Interest
(August 1) Amount Rate
The Certificates shall be delivered in the form of fully registered Certificates without
coupons in the authorized denominations of $5,000 or any integral multiple thereof, except that
no Certificate shall represent principal payable in more than one year. The Certificates shall be
assigned such alphabetical and numerical designation as shall be deemed appropriate by the
Trustee.
Section 2.04. Book Entry Sysfem.
(a) Original Delivery. The Certificates shall be initially delivered in the form of a
separate single fully registered Certificate (which may be typewritten) for each maturity
of the Certificates. Upon initial delivery, the ownership of each such Certificate shall be
registered on the Registration Books in the name of the Nominee. Except as provided in
subsection (c), the ownership of all of the Outstanding Certificates shall be registered in
the name of the Nominee on the Registration Books.
With respect to Certificates the ownership of which shall be registered in the
name of the Nominee, the City and the Trustee shall have no responsibility or obligation
to any Depository System Participant or to any person on behalf of which the City
holds an interest in the Certificates. 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
Certificates, (ii) the delivery to any Depository System Participant or any other person,
other than a Certificate Owner as shown in the Registration Books, of any notice with
respect to the Certificates, including any notice of redemption, (iii) the selection by the
Depository of the beneficial interests in the Certificates to be redeemed in the event the
City elects to redeem the Certificates in part, (iv) the payment to any Depository System
Participant or any other person, other than a Certificate Owner as shown in the
Registration Books, of any amount with respect to principal, premium, if any, or interest
represented by the Certificates or (v) any consent given or other action taken by the
Depository as Owner of the Certificates. The City and the Trustee may treat and
consider the person in whose name each Certificate is registered as the absolute owner of
such Certificate for the purpose of payment of principal, premium, if any, and interest
represented by such Certificate, for the purpose of giving notices of redemption and
other matters with respect to such Certificate, for the purpose of registering transfers of
ownership of such Certificate, and for all other purposes whatsoever. The Trustee shall
pay the principal, interest and premium, if any, represented by the Certificates only to
the respective Owners or their respective attorneys d~ily authorized in writing, and all
such payments shall be valid and effective to fully satisfy and discharge all obligations
with respect to payment of principal, interest and premium, if any, represented by the
Certificates to the extent of the sum or sums so paid. No person other than a Certificate
Owner shall receive a Certificate evidencing the obligation of the City to make payments
of principal, interest and premium, if any, pursuant to this Trust Agreement. Upon
delivery by the Depository to the City of written notice to the effect that the Depository
has determined to substitute a new Nominee in its place, such new nominee shall become
the Nominee hereunder for all purposes; and upon receipt of such a notice the City shall
promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Certificates for the Depository's
book-entry system, the City and the Trustee shall execute and deliver to such
Depository a letter representing such matters as shall be necessary to so qualify the
Certificates. The execution and delivery of such letter shall not in any way limit the
provisions of subsection (a) above or in any other way impose upon the City or the
Trustee any obligation whatsoever with respect to persons having interests in the
Certificates other than the Certificate Owners. Upon the written acceptance by the
Trustee, the Trustee shall agree to take all action reasonably necessary for all
representations of the City in such letter with respect to the Trustee to at all times be
complied with. In addition to the execution and delivery of such letter, the City may
take any other actions, not inconsistent with this Trust Agreement, to qualify the
Certificates for the Depository's book-entry program.
(c) Transfers Outside Book-Entry System. In the event that either (i) the
Depository determines not to continue to act as Depository for the Certificates, or (ii)
the City determines .to terminate the Depository as such, then the City shall thereupon
discontinue the book-entry system with such Depository. In such event, the Depository
shall cooperate with the City and the Trustee in the issuance of replacement Certificates
by providing the Trustee with a list showing the interests of the Depository System
Participants in the Certificates, and by surrendering the Certificates, registered in the
name of the Nominee, to the Trustee on or before the date such replacement Certificates
are to be issued. The Depository, by accepting delivery of the Certificates, agrees to be
bound by the provisions of this subsection (c). If, prior to the termination of the
Depository acting as such, the City fails to identify another Securities Depository to
replace the Depository, then the Certifi .cates shall no longer be required to be registered
in the Registration Books in the name of the Nominee, but shall be registered in whatever
-9-
name or names the Owners transferring or exchanging Certificates shall designate, in
accordance with the provisions hereof.
In the event the City determines that it is in the best interests of the beneficial
owners of the Certificates that they be able to obtain certificated Certificates, the City
may notify the Depository System Participants of the availability of such certificated
Certificates through the Depository. In such event, the Trustee will issue, transfer and
exchange Certificates as required by the Depository and others in appropriate amounts;
and whenever the Depository requests, the Trustee and the City shall cooperate with the
Depository in taking appropriate action (y) to make available one or more separate
certificates evidencing the Certificates to any Depository System Participant having
Certificates credited to its account with the Depository, or (z) to arrange for another
Securities Depository to maintain custody of a single certificate evidencing such
Certificates, all at the City's expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this Trust
Agreement to the contrary, so long as any Certificate is registered in the name of the
Nominee, all payments with respect to principal,, interest and premium, if any,
represented by such Certificate and all notices with respect to such Certificate shall be
made and given, respectively, as provided in the letter described in subsection (b) of this
Section or as otherwise instructed by the Depository.
Section 2.05. Payment of Certificates. Interest represented by the Certificates shall be
payable on each Interest Payment Date, and shall represent the portion of Lease Payments
designated as interest and coming due on such Interest Payment Date pursuant to the Lease
Agreement. The share of the portion of Lease Payments designated as interest with respect to
any Certificate shall be computed by multiplying the portion of Lease Payments designated as
principal represented by such Certificate by the rate of interest represented by such Certificate
(calculated on the basis of a 360-day year of twelve 30-day months).
Interest represented by each Certificate shall be paid on each Interest Payment Date by
check of the Trustee mailed on such Interest Payment Date by first class mail, postage prepaid,
to the person appearing on the Registration Books as the Owner thereof as of the close of
business on the preceding Record Date, at such Owner's address as it appears on the
Registration Books; provided, however, that at the written request of the Owner of Certificates in
an aggregate principal amount of at least $1,000,000, which written request is on file with the
Trustee as of any Record Date, interest represented by such Certificates shall be paid on each
succeeding Interest Payment Date by wire transfer in immediately available funds to such
account within the United States of America as shall be specified in such written request.
The principal and prepayment price represented by any Certificate at maturity or upon
prior prepayment shall be payable in lawful money of the United States of America upon
presentation and surrender of such Certificate at the Office of the Trustee.
Section 2.06. Form of Certificates. The Certificates shall be substantially in the form set
forth in Exhibit A attached hereto and by this reference incorporated herein. The Certificates
shall be delivered in printed, lithographed or engraved form, subject to the provisions of
Sections 2.04 and 2.11.
Section 2.07. Execution of Certificates. The Certificates shall be executed by and in the
name of the Trustee by the manual signature of an authorized officer or signatory of the Trustee.
If any officer or signatory whose signature appears on any Certificate ceases to be such officer
or signatory before the date of delivery of said Certificate, such signature shall nevertheless be
as effective as if the officer or signatory had remained in office until such date. Any Certificate
may be executed on behalf of the Trustee by such person as at the actual date of the execution
of such Certificate shall be the proper signatory of the Trustee.
Section 2.08. Transfer and Exchange.
(a) Transfer of Certificates. The registration of any Certificate may, in accordance
with its terms, be transferred upon the Registration Books by the person in whose name
it is registered, in person or by his duly authorized attorney, upon surrender of such
Certificate for cancellation at the Office of the Trustee, accompanied by delivery of a
written instrument of transfer in a form approved by the Trustee, duly executed. The
City shall pay all costs of the Trustee incurred in connection with any such.transfers,
except that the Trustee may require the payment by the Certificate Owner requesting
such transfer of any tax or other governmental charge required to be paid with respect to
such exchange. Whenever any Certificate or Certificates shall be surrendered for
registration of transfer, the Trustee shall execute and deliver a new Certificate or
Certificates representing the same maturity, interest rate and aggregate principal
amount, in any authorized denominations.
(b) Exchange of Certificates. Certificates may be exchanged at the Office of the
Trustee, for a like aggregate principal amount of Certificates representing other
authorized denominations of the same interest rate and maturity. The City shall pay all
costs of the Trustee incurred in connection with any such exchange, except that the
Trustee may require the payment by the Certificate Owner requesting such exchange of
any tax or other governmental charge required to be paid with respect to such exchange.
(c) Limitations on Transfer or Exchange. The Trustee may refuse to transfer or
exchange either (i) any Certificate during the period established by the Trustee for the
selection of Certificates for prepayment, or (ii) the portion of any Certificate which the
Trustee has selected for prepayment pursuant to the provisions of Section 3.02.
Section 2.09. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall
become mutilated, the Trustee, at the expense of the Owner of such Certificate, shall execute
and deliver a new Certificate of like principal amount, interest rate and maturity in replacement
for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so
mutilated. Every mutilated Certificate so surrendered to the Trustee shall be cancelled by it and
destroyed by the Trustee, in accordance with its retention policy then in effect. If any
Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft must be
submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and, if an
indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the
Certificate Owner, shall execute and deliver a new Certificate of like principal amount, interest
rate and maturity and numbered as the Trustee shall determine in lieu of and in replacement for
the Certificate so lost, destroyed or stolen. The Trustee may require payment of an appropriate
fee for each replacement Certificate delivered under this Section 2.09 and of the expenses which
may be incurred by the Trustee in carrying out the duties under this Section 2.09. Any
Certificate issued under the provisions of this Section 2.09 in lieu of any Certificate alleged to be
lost, destroyed or stolen shall be equally entitled to the benefits of this Trust Agreement with all
other Certificates secured by this Trust Agreement. The Trustee shall not be required to treat
both the original Certificate and any replacement Certificate as being Outstanding for the
purpose of determining the principal amount of Certificates which may be execu, ted and
delivered hereunder or for the purpose of determining any percentage of Certificates
Outstanding hereunder, but both the original and replacement Certificate shall be treated as one
and the same. Notwithstanding any other provision of this Section 2.09, in lieu of delivering a
replacement for a Certificate which has been mutilated, lost, destroyed or stolen, and which has
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matured, the Trustee may make payment with respect to such Certificate upon receipt of
indemnity satisfactory to the Trustee.
Section 2.10. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Trust
Agreement to be signed or executed by Certificate Owners may be in any number of concurrent
instruments of similar tenor, and may be signed or executed by such Owners in person or by
their attorneys or agents appointed by an instrument in writing for that purpose, or by any
bank, trust company or other depository for such Certificates. Proof of the execution of any
such instrument, or of any instrument appointing any such attorney or agent, and of the
ownership of Certificates shall be sufficient for any purpose of this Trust Agreement (except as
otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any oWner or his attorney or agent of
any such instrument and of any instrument appointing any such attorney or agent, may
be proved by a certificate, which need not be acknowledged or verified, of an officer of
any bank or trust company located within the United States of America, or of any
notary public, or other officer authorized to take acknowledgments of deeds to be
recorded in such jurisdictions, that the persons signing such instruments acknowledged
before him the execution thereof. Where any such instrument is executed by an officer of
a corporation or association or a member of a partnership on behalf of such corporation,
association or partnership, such certificate shall also constitute sufficient proof of his
authority.
(b) The fact of the ownership of Certificates by any person and the amount, the
maturity and the numbers of such Certificates and the date of such person's ownership
thereof shall be proved by the Registration Books.
Nothing contained in this Section 2.10 shall be construed as limiting the Trustee to such
proof, it being intended that the Trustee may accept any other evidence of the matters herein
stated which the Trustee may deem sufficient. Any request or consent of the Owner of any
Certificate shall bind every future Owner of the same Certificate in respect of anything done or
suffered to be done by the Trustee pursuant to such request or consent.
Section 2.11. Temporary Certificates. The Certificates may be issued in temporary form
exchangeable for definitive Certificates when ready for delivery. Any temporary Certificates
may be printed, lithographed or typewritten, shall be of authorized denominations, shall be in
fully registered form without coupons and may contain such reference to any of the provisions
of this Trust Agreement as may be appropriate. Every temporary Certificate shall be executed
by the Trustee upon the same conditions and in substantially the same manner as the definitive
Certificates. If the Trustee delivers temporary Certificates it will execute and deliver definitive
Certificates as promptly thereafter as practicable, and thereupon the temporary Certificates
shall be surrendered, for cancellation, in exchange therefor at the Office of the Trustee who shall
execute and deliver in exchange for such temporary Certificates an equal aggregate principal
amount of definitive Certificates of authorized denominations. Until so exchanged, the
temporary Certificates shall be entitled to the same benefits under this Trust Agreement as
definitive Certificates executed and delivered hereunder.
Section 2.12. Registration Books. The Trustee shall keep or cause to be kept sufficient
records for the registration and registration of transfer of the Certificates, which shall at all
reasonable times be open to inspection by the City and the Authority during regular business
hours and upon prior notice; and, upon presentation for such purpose, the Trustee shall, under
such reasonable regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on the Registration Books, Certific~ites as hereinbefore provided.
ARTICLE III
PREPAYMENT OF CERTIFICATES
Section 3.01. Prepayment.
(a) Optional Prepayment. The Certificates maturing on or before August 1, ,
are not subject to optional prepayment prior to the respective stated maturities. The
Certificates maturing on or after August !, , are subject to optional prepayment in
whole or in part, on any Business Day on or after August 1, , from prepayments of
the Lease Payments made at the option of the City pursuant to Section 9.2 of the Lease,
at a prepayment price (expressed as a percentage of the principal amount to be
prepaid), as set forth in the following table together with accrued interest represented
thereby to the date fixed for prepayment.
Prepayment Dates
Prepayment Price
(b) Prepayment From Net Proceeds of Insurance or Eminent Domain. The
Certificates are also subject to mandatory prepayment on any date, in whole or in part,
from the Net Proceeds of insurance or eminent domain proceedings credited towards the
prepayment of the Lease Payments pursuant to Section 9.3 of the Lease, at a
prepayment price equal to 100% of the principal amount to be prepaid, together with
accrued interest represented thereby to the date fixed for prepayment, without premium.
(c) Sinking Fund Payment. The Term Certificates maturing on August 1, ~ are
also subject to mandatory sinking fund payment by lot on August 1 in each year
beginning August 1, , from the principal components of the Lease Payments
required to be paid with respect to each of such dates, at a prepayment price equal to
100% of the principal amount to be prepaid, together with accrued interest represented
thereby to the prepayment date, without premium, as follows:
Prepayment Date
(August 1)
Principal Amount of
Term Certificates
To Be Paid
Notwithstanding the foregoing provisions of this subsection (c), in the event that some
but not all of the Term Certificates have been prepaid pursuant to any of the preceding
provisions of this Section 3.01, the aggregate principal amount of such Term Certificates to be
prepaid in each year thereafter pursuant to this subsection (c) shall be reduced by the aggregate
principal amount of such Term Certificates so prepaid, to be allocated among sinking fund
installments on a pro rata basis as directed by the City in integral multiples of $5,000 such that
the resulting amount of principal represented by such Term Certificates subject to prepayment
on any date pursuant to this subsection (c) is equal to the aggregate principal components of the
Lease Payments coming due and payable on such date.
(d) Extraordinary Mandatory Prepayment. In the event the City fails to acquire
title to the Property in connection with the Eminent Domain action, the Certificates are
subject to extraordinary mandatory prepayment, in whole or in part, on any Business
Day from amounts, if any, returned to the City from the Condemnation Deposits Fund
of the State Treasury in connection with the Eminent Domain Action and any additional
available funds of the City, as follows: (i) prior to at the principal amount
thereof to be prepaid together with interest thereon to the date of prepayment without
premium; and (ii) on or after at a prepayment price (expressed as a
percentage of the principal amount to be prepaid) as set forth in the following table
together with interest thereon to the date of prepayment.
Section 3.02. Selection of Certificates for Prepayment. Whenever provision is made in
this Trust Agreement for the prepayment of CertificatYs and less than all Outstanding
Certificates are called for prepayment, the Trustee shall select Certificates for prepayment
among maturities in any manner as directed by the City, and by lot within a maturity. For the
purposes of such selection, Certificates shall be deemed to be composed of $5,000 portions,
and any such portion may be separately prepaid. The Trustee shall promptly notify the City
and the Authority in writing of the Certificates or portions thereof so selected for prepayment.
Section 3.03. Notice of Prepayment. When prepayment is authorized or required
pursuant to Section 3.01, the Trustee shall give notice of the prepayment of the Certificates on
behalf and at the expense of the City. Such notice shall state the publication date, the Trustee's
name and address, the date of issue, the prepayment date and prepayment price and, if less
than all of the then Outstanding Certificates are to be called for prepayment, shall designate the
CUSIP numbers, the Certificate numbers, and the amounts of the Certificates to be prepaid by
giving the individual number of each Certificate or by stating that all Certificates between two
stated numbers, both inclusive, have been called for prepayment or by stating that all of the
Certificates of one or more maturities have been called for prepayment, and shall require that
such Certificates be surrendered on the prepayment date at the Office of the Trustee for
prepayment at said prepayment price, giving notice also that further interest represented by the
Certificates will not accrue after the prepayment date. Such notice shall further state that on
the prepayment date there shall become due and payable, the principal and premium, if any,
represented by each Certificate together with accrued interest represented thereby to said date,
and that from and after such date interest represented thereby shall cease to accrue and be
payable.
Notice of such prepayment shall be mailed by first class mail with postage prepaid, to
one or more of the Information Services, and to the Owners of Certificates designated for
prepayment at their respective addresses appearing on the Registration Books, at least thirty
(30) days but not more than sixty (607 days prior to the prepayment date. Such notice shall, in
addition to setting forth the above information, set forth, in the case of each Certificate called
only in part, the portion of the principal represented thereby which is to be prepaid; provided,
however, that neither failure to receive such notice so mailed nor any defect in any notice so
mailed shall affect the sufficiency of the proceedings for the prepayment of such Certificates or
the cessation of accrual of interest represented thereby from and after the date fixed for
prepayment.
Section 3.04. Partial Prepayment of Certificates. Upon surrender of any Certificate
prepaid in part only, the Trustee shall execute and deliver to the Owner thereof, at the expense
of the City, a new Certificate or Certificates of authorized denominations equal in aggregate
principal amount to the unprepaid portion of the Certificate surrendered and of the same
interest rate and the same maturity.
Section 3.05. Effect of Notice of Prepayment. Moneys for the prepayment (including
the interest to the applicable date of prepayment) of Certificates having been set aside in the
Lease Payment Fund shall become due and payable on the date of such prepayment, and, upon
presentation and surrender thereof at the Office of the Trustee, said Certificates shall be paid at
the unpaid principal amount (or applicable portion thereof) represented thereby plus interest
accrued and unpaid to said date of prepayment.
If, on said date of prepayment, moneys for the prepayment of all the Certificates to be
prepaid, together with interest represented thereby to said date of prepayment, shall be held by
the Trustee so as to be available therefor on such date of prepayment, then, from and after said
date of prepayment, interest represented by the Certificates shall cease to accrue and become
payable. All moneys held by the Trustee for the prepayment of Certificates shall be held in
trust for the account of the Owners of the Certificates so to be.prepaid, and shall be held by the
Trustee in cash uninvested.
All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions
of this Article III shall be cancelled upon surrender thereof and destroyed in accordance with the
Trustee's retention policy then in effect.
Section 3.06. Purchase of Certificates. In lieu of prepayment of Certificates as provided
in this Article III, amounts held by the Trustee for such prepayment shall, at the written request
of the City Representative, at least 90 days before the date of prepayment of the Certificates be
applied by the Trustee to the purchase of Certificates at public or private sale as and when and
at such prices (including brokerage, accrued interest and other charges) as the City may in its
discretion direct, but not to exceed the prepayment price which would be payable if such
Certificates were prepaid. The aggregate principal amount of Certificates of the same maturity
purchased in lieu of prepayment pursuant to this Section 3.06 shall not exceed the aggregate
principal amount of Certificates of such maturity which would otherwise be subject to such
prepayment.
ARTICLE IV
DISPOSITION OF PROCEEDS; ACQUISITION AND
CONSTRUCTION FUND AND RESERVE FUND
Section 4.01. Application of Proceeds. The proceeds received .by the Trustee from the
sale of the Certificates on the Closing Date shall forthwith be set aside by the Trustee in the
following respective funds and in the following order of priority:
(a) The Trustee shall deposit the amount of $ in the Lease Payment
Fund, constituting accrued interest paid by the Original Purchaser with respect to the
Certificates.
(b) The Trustee shall deposit the amount of $
Fund, constituting the full amount of the Reserve Requi~,ement.
in the Reserve
(c) The Trustee shall deposit the amount of $
Fund.
in the Delivery Costs
(d) The Trustee shall deposit the amount of $ in the
Acquisition and Construction Fund, constituting the remainder of such proceeds.
For record keeping purposes, the Trustee may establish such accounts as may be
necessary to reflect such transfer of proceeds.
Section 4.02. Acquisition and Construction Fund. The Trustee shall establish a special
fund designated as the "Acquisition and Construction Fund"; shall keep such fund separate
and apart from all other funds and moneys held by it; and shall administer such fund as
provided herein. There shall be deposited in the Acquisition and Construction Fund from the
proceeds of sale of the Certificates the amount required to be deposited therein pursuant to
Section 4.01 (d) hereof, together with any other amounts from time to time deposited with the
Trustee for such purpose as may be identified in writing to the Trustee by a City Representative.
Section 4.03. Disbursement of Amounts in Acquisition and Construction Fund.
(a) On the Closing Date, the Trustee shall disburse from the Acquisition and
Construction Fund the amount of $4,300,000 to the City in payment of the Site Lease
Payment.
(b) Amounts in the Acquisition and Construction Fund shall be disbursed for
Acquisition and Construction Costs by the Trustee upon receipt of a sequentially
numbered requisition requesting disbursement executed by a City Representative. Each
such requisition shall:
(i) set forth the amounts to be disbursed for payment or reimbursement of
previous payments of Acquisition and Construction Costs, the Project to which
each such amount relates, and the person or persons to whom said amounts are
to be disbursed;
(ii) state that the amounts to be disbursed constitute Acquisition and
Construction Costs, that said a~ounts are required to be disbursed pursuant to
a contract entered into therefor by or on behalf of the City, or were necessarily
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and reasonably incurred, and that said amounts are not being paid in advance of
the time, if any, fixed for payment;
(iii) state that no amount set forth in the requisition was included in any
requisition requesting disbursement previously filed with the Trustee pursuant to
this Section 4.03;
(iv) state the portion, if any, of the Net Proceeds of the Certificates to be
used for a private business use or to make or finance a loan (other than a loan to
a state or local governmental unit); and
(v) state that there has been compliance with this Trust Agreement
relating to the private business use limitation and the private loan limitation;
(c) The Trustee shall be responsible for the safekeeping and investment (in
accordance with Section 7.02 hereof) of the moneys held in the Acquisition and
Construction Fund and the payment thereof in accordance with this Section 4.03, but the
Trustee shall not be responsible for such requisitions and shall be under no duty to
investigate or verify any statements made therein.
(d) The Trustee shall maintain the Acquisition and Construction Fund until the
last known Acquisition and Construction Costs have been paid, and then as directed in
writing by a City Representative shall transfer any moneys remaining therein, including
any investment earnings thereon to the Lease Payment Fund and applied to pay the
Lease Payments as the same become due and payable, and the Acquisition and
Construction Fund shall be closed.
Section 4.04. Reserve Fund. The Trustee shall establish a special fund designated as the
"Reserve Fund" to be held by the Trustee in trust for the benefit of the City and the Owners of
the Certificates, and applied solely as provided herein. Moneys in the Reserve Fund shall be
held in trust as a reserve for the payment when due of the Lease Payments on behalf of the
City. All amounts on deposit in the Reserve Fund in excess of the Reserve Requirement, and all
amounts derived from the investment of amounts in the Reserve Fund which are not required to
be retained therein to maintain the Reserve Requirement, shall be transferred by the Trustee to
the Lease Payment Fund on or before each Interest Payment Date.
If on any Interest Payment Date the moneys available in the Lease Payment Fund do not
equal the amount of the Lease Payment then coming due and payable, the Trustee shall apply
the moneys available in the Reserve Fund to make such payments on behalf of the City by
transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of
any delinquent Lease Payment with respect to which moneys have been advanced from the
Reserve Fund, such Lease Payment shall be deposited in the Reserve Fund to the extent of such
advance.
If on any Interest Payment Date the moneys on deposit in the Reserve Fund and the
Lease Payment Fund (excluding amounts required for payment of principal, interest and
prepayment premium, if any, represented by any Certificates theretofore having come due but
not presented for payment) are sufficient to pay or prepay all Outstanding Certificates,
including all principal, interest and prepayment premiums (if any) represented thereby, the
Trustee shall, upon the written request of a City Representative, transfer all amounts then on
deposit in the Reserve Fund to the Lease Payment Fund to be applied for such purpose to the
payment of the Lease Payments on behalf of the City. Any amounts remaining in the Reserve
Fund on the date of payment in full, or proyision for such payment as provided in Section
13.01, of all obligations represented by the Outstanding Certificates and upon all amounts then
due and owing to the Trustee, shall be withdrawn by the Trustee and at the written request of
the City applied towards such payment or paid to the City.
The City shall have the right at any time after it has given written notice to Moody's and
to S&P to release funds from the Reserve Fund, in whole or in part, by tendering to the Trustee:
(1) a Qualified Reserve Fund Credit Instrument, and (2) an opinion of Bond Counsel stating
that such release will not, of itself, cause the portion of the Lease Payments designated as and
comprising interest to become includable in gross income for purposes of federal income
taxation. Upon tender of such items to the Trustee, the Trustee shall transfer such funds from
the Reserve Fund to the City. Prior to the expiration of any Qualified Reserve Fund Credit
Instrument, the City shall be obligated either (a) to replace such Qualified Reserve Fund Credit
Instrument with a new Qualified Reserve Fund Credit Instrument, or (b) to deposit or cause to
be deposited with the Trustee an amount of funds equal to the Reserve Requirement.
Section 4.05. Delivery Costs Fund. The Trustee shall establish a special fund designated
as the "Delivery Costs Fund"; shall keep such fund separate and apart from all other funds
and moneys held by it; and shall administer such fund as provided herein. There shall be
deposited in the Delivery Costs Fund the proceeds of sale of the Certificates required to be
deposited therein pursuant to Section 4.01(c) hereof and any other funds from time to time
deposited with the Trustee for such purpose and identified in writing to the Trustee.
Section 4.06. Payment of Delivery Costs. The moneys in the Delivery Costs Fund shall
be disbursed by the Trustee to pay the Delivery Costs.
The Trustee shall disburse moneys in the Delivery Costs Fund only upon a receipt of a
sequentially numbered requisition, signed by a City Representative, setting forth the amounts to
be disbursed for payment or reimbursement of Delivery Costs and the name and address of the
person or persons to whom said amounts are to be disbursed, stating that the amounts to be
disbursed are for Delivery Costs properly chargeable to the Delivery Costs Fund.
The Trustee shall be responsible for the safekeeping and investment (in accordance with
Section 7.02 hereof) of the moneys held in the Delivery Costs Fund and the payment thereof in
accordance with this Section 4.06, but the Trustee shall not be responsible for the truth or
accuracy of such requisitions and shall be under no duty to investigate or verify any statements
made therein.
Upon written notice from a City Representative that all Delivery Costs have been paid,
but in no event later than June 1, 1997, the Trustee shall transfer any moneys then remaining in
the Delivery Costs Fund to the Acquisition and Construction Fund, the Delivery Costs Fund
shall be closed, the Trustee shall no longer be obligated to make payments for Delivery Costs
and all further Delivery Costs shall be paid by the City.
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease. Pursuant to the Assignment Agreement,
the Authority has in the Assignment Agreement transferred, assigned and set over to the
Trustee certain of its rights under the Lease, including but not limited to all of the Authority's
rights to receive and collect all of the Lease Payments and all other amounts required to be
deposited in the Lease Payment Fund. All Lease Payments and such other amounts to which
the Authority may at any time be entitled shall be paid directly to the Trustee, and all of the
Lease Payments collected or received by the Authority shall be deemed to be held and to have
been collected or received by the Authority as the agent of the Trustee, and all such Lease
Payments and such other amounts shall be forthwith deposited by the Trustee upon the receipt
thereof in the Lease Payment Fund, except as provided in Section 4.04.
Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish a
special fund designated as the "Lease Payment Fund." All moneys at any time deposited by
the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the
City and the Owners of the Certificates. So long as any Certificates are Outstanding, neither
the City nor the Authority shall have any beneficial right or interest in the Lease Payment Fund
or the moneys deposited therein, except only as provided in this Trust Agreement, and such
moneys shall be used and applied by the Trustee as hereinafter set forth.
Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all Lease
Payments received by the Trustee (except as provided in Section 4.04), including any moneys
received by the Trustee for deposit therein pursuant to Sections 4.01(a) or 5.01 or pursuant to
Article VI hereof, or Article IX of the Lease, and any other moneys required to be deposited
therein pursuant to the Lease or pursuant to this Trust Agreement.
Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund shall be
used and withdrawn by the Trustee solely for the purpose of paying the principal, interest and
prepayment premiums (if any) represented by the Certificates as the same shall become due
and payable, in accordance with the provisions hereof.
Section 5.05. Surplus. Any surplus remaining in the Lease Payment Fund, after
prepayment and payment of all Certificates, including premiums and accrued interest (if any)
and payment of any applicable fees and expenses to the Trustee, or provision for such
prepayment or payment having been made to the satisfaction of the Trustee, shall be
withdrawn by the Trustee and remitted to the City.
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ARTICLE VI
INSURANCE AND CONDEMNATION FUND
Section 6.01. Establishment of Insurance and Condemnation Fund; Application of Net
Proceeds of Insurance Award. Any Net Proceeds of insurance collected by the City in the event
of accident to or destruction of the Property shall be paid to the Trustee pursuant to Section 6.1
of the Lease and deposited by the Trustee promptly upon receipt thereof in a special fund
designated as the "Insurance and Condemnation FUnd" which the Trustee shall thereupon
establish. If the City determines and notifies the Trustee in writing of its determination, within
ninety (90) days following the date of such deposit, that the replacement, repair, restoration,
modification or improvement of the Property is not economically feasible or in the best interests
of the City, then such Net Proceeds shall be promptly transferred by the Trustee to the Lease
Payment Fund and applied to the prepayment of Lease Payments pursuant to Section 9.3 of
the Lease and the corresponding prepayment of Certificates pursuant to Section 3.01(b). In the
event of damage or destruction of the Property in full, such N.et Proceeds may be transferred by
the City to the Lease Payment Fund to be used to prepay Outstanding Certificates only if such
Net Proceeds, together with other available moneys, are sufficient to cause the corresponding
prepayment of all Lease Payments. All Net Proceeds deposited in the Insurance and
Condemnation Fund and not so transferred to the Lease PaymEnt Fund shall be applied to the
prompt replacement, repair, restoration, modification or improvement of the damaged or
destroyed portions of the Property by the City, and shall be disbursed by the Trustee at the
direction of the City upon receipt of written requisitions of a City Representative stating with
respect to each payment to be made (a) the name and address of the person, firm or
corporation to whom payment is due, (b) the amount to be paid and (c) that each obligation
mentioned therein has been properly incurred, is a proper charge against the Insurance and
Condemnation Fund, has not been the basis of any previous withdrawal, and specifying in
reasonable detail the nature of the obligation, accompanied by a bill or a statement of account
for such obligation. The Trustee shall not be responsible for such requisitions and shall be under
no duty to investigate or verify any statements made therein. Any balance of the Net Proceeds,
including all interest or income received on the investment thereof, remaining after the City shall
file a written certificate with the Trustee stating that the Property has been replaced, repaired or
restored to the satisfaction of the City and accepted by the City, shall be paid to the City.
Section 6.02. Deposit and Application of Net Proceeds of Eminent Domain Award. If
all or any part of the Property shall be taken by eminent domain proceedings (or sold to a
government threatening to exercise the power of eminent domain) the Net Proceeds therefrom
shall be deposited with the Trustee in the Insurance and Condemnation Fund, pursuant to
Section 6.1 of the Lease, and shall be applied and disbursed by the Trustee as follows:
(a) If the City has given written notice to the Trustee of its determination that (i)
such eminent domain proceedings have not materially affected the interest of the City in
the Property, or the ability of the City to meet any of its financial obligations under the
Lease, and (ii) that such proceeds are not needed for repair, replacement or
rehabilitation of the Property, and the City has given written notice to the Trustee of
such determination, the Trustee shall transfer such proceeds to the Lease Payment Fund
to be credited towards the payment of the Lease Payments as the same become due and
payable.
(b) If the City has given written notice to the Trustee of its determination that (i)
such eminent domain proceedings have not materially affected the interest of the City in
the Property, or the ability of the City.to meet any of its financial obligations under the
Lease, and (ii) such proceeds are needed for repair, replacement or rehabilitation of the
Property, the Trustee shall pay to the City, or to its order, from said proceeds such
amounts as the City may expend for such repair or rehabilitation, upon the filing of
requisitions of the City Representative meeting the requirements of Section 6.01. The
balance of such proceeds not needed for repair, replacement or rehabilitation of the
Property shall be transferred by the Trustee to the Lease Payment Fund to be credited
toward the payment of the Lease Payments as the same become due and payable.
(c) If (i) less than all of the Property shall have been taken in such eminent
domain proceedings or sold to a government threatening the use of eminent domain
powers, and if the City has given written notice to the Trustee of its determination that
such eminent domain proceedings have materially affected the interest of the City in the
Property, or the ability of the City to meet any of its financial obligations under the
Lease, or (ii) all of the Property shall have been taken in such eminent domain
proceedings, then the Trustee shall transfer such proceeds to the Lease Payment Fund to
be credited toward the prepayment of the Lease Payments pursuant to Section 9.3 of
the Lease and applied to the corresponding prepayment of Certificates in the manner
provided in Section 3.01(b) on a prepayment date, designated by the City, at least 75
days after such notice by the City to the Trustee.
In making any such determination whether to repair, replace or rehabilitate the Property
under this Section 6.02, the City may obtain, but shall not be required to obtain, at its expense,
the report of an independent engineer or other independent professional consultant, a copy of
which shall be filed with the Trustee for information purposes only. Any such determination by
the City shall be final.
ARTICLE VII
MONEYS IN FUNDS; INVESTMENTS'
Section 7.01. Held in Trust. The moneys and Permitted Investments held by the Trustee
under this Trust Agreement shall be irrevocably held in trust for the benefit of the City and the
Certificate Owners solely for the purposes herein specified and as described herein, and such
moneys, and any income or interest earned thereon, shall be expended only as provided in this
Trust Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of
any creditor of the Authority, the Trustee, the City or the Owner of any Certificates.
Section 7.02. Investments Authorized. Upon the written request of a City
Representative filed with the Trustee not less than two (2) Business Days prior to the proposed
investment date, moneys held by the Trustee in any fund or account hereunder shall be invested
and reinvested by the Trustee in Permitted Investments selected by the City and specified in
such written request of the City, which mature not later than the date such moneys are required
or estimated by the City to be required to be expended hereunder. In the absence of any written
request of the City directing the investment of uninvested moneys held by the Trustee hereunder,
the Trustee shall invest such moneys in Permitted Investments described in clause (g) of the
definition thereof. Such investments, if registrable, shall be registered in the name of the Trustee,
as trustee or in the name of its nominee, and shall be held by the Trustee or its agent. The
Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments
authorized by this Section 7.02. Such investments and reinvestments shall be made giving full
consideration to the time at which funds are required to be available.. The Trustee may act as
principal or agent in the making or disposing of any investment. Whenever in this Trust
Agreement any moneys are required to be transferred by the City to the Trustee, such transfer
may be accomplished by transferring a like amount of Permitted Investments. For purposes of
acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder
upon the written request of the City. The Trustee shall not be responsible or liable for selection
or liquidation of investment or any loss suffered in connection with any investment of funds
made by it in accordance with this Section 7.02.
Section 7.03. Accounting. The Trustee shall furnish to the City, not less than monthly,
an accounting (in the form customarily used by the Trustee) of all investments and other
transactions made by the Trustee pursuant to this Trust Agreement.
Section 7.04. Allocation of Earnings. All interest or income received by the Trustee on
investment of the Lease Payment Fund shall be retained in the Lease Payment Fund. Amounts
retained or deposited in the Lease Payment Fund pursuant to this Section 7.04 shall be applied
as a credit against the Lease Payment due by the City pursuant to the Lease Agreement on the
Lease Payment Date following the date of deposit. All interest or income received by the
Trustee on investment of the Reserve Fund shall be retained in the Reserve Fund in the event
that amounts on deposit in the Reserve Fund are less than the Reserve Requirement. In the event
that amounts then on d~posit in the Reserve Fund equal or exceed the Reserve Requirement,
such excess shall be transferred to the Lease Payment Fund. Such transfers to the Lease
Payment Fund from the Reserve Fund shall be made by the Trustee on or prior to each Interest
Payment Date. All interest or income in the Acquisition and Construction Fund and the
Delivery Costs Fund shall be retained in such Fund until it is closed pursuant to Section 4.03 or
Section 4.05 hereof respectively.
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Section 7.05. Acquisition, Disposition, and Valuation of Investments.
(a) Except as otherwise provided in subsection (b) of this Section, the City
covenants that all investments of amounts deposited in any fund or account created by
or pursuant to this Trust Agreement, or otherwise containing gross proceeds of the
Certificates (within the meaning of section 148 of the Tax Code) shall be acquired,
disposed of, and valued (as of the date that valuation is required by this Trust
Agreement or the Tax Code) at Fair Market Value. The Trustee shall have no duty in
connection with the determination of Fair Market Value other than to follow the
investment directions of the City Representative.
(b) The City further covenants that investments in funds or accounts (or
portions thereof) that are subject to a yield restriction under applicable provisions of the
Tax Code and (unless valuation is undertaken at least annually) investments in the
Reserve Fund shall be valued at their present value (within the meaning of section 148 of
the Tax Code).
ARTICLE VIII
THE TRUSTEE
Section 8.01. Appointment of Trustee. First Trust of California, National Association is
hereby appointed Trustee by the Authority and the City for the purpose of receiving all moneys
required to be deposited with the Trustee hereunder and to allocate, use and apply the same as
provided in this Trust Agreement. The Authority and the City agree that any successor Trustee
shall have a corporate office in California, shall have (or its parent holding company shall have)
a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and shall be
subject to supervision or examination by Federal or state authority, so long as any Certificates
are Outstanding. If the Trustee (or its parent holding company) publishes a report of condition
at least annually pursuant to law or to the requirements of any supervising or examining
authority above referred to then for the purpose of this Section 8.01 the combined capital and
surplus of such bank or trust company shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.,
The Trustee is hereby authorized to pay or prepay the Certificates when duly presented
for payment at maturity, or on prepayment, or on purchase by the Trustee as directed by the
City prior to maturity in accordance with Section 3.06, and to cancel all Certificates upon
payment thereof. The Trustee shall keep accurate records of all funds administered by it and of
all Certificates paid and discharged. The Trustee shall be compensated for its services rendered
and its expenses incurred pursuant to the provisions of this Trust Agreement.
Section 8.02. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed
upon it by this Trust Agreement, and agrees to perform said trusts, but only upon and subject
to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after curing
of all Events of Default which may have occurred, undertakes to perform, such duties
and only such duties as are specifically set forth in this Trust Agreement, and no implied
duties or obligations shall be read into this Trust Agreement. In case an Event of Default
has occurred (which has not been cured or waived) the Trustee may exercise such of the
rights and powers vested in it by this Trust Agreement, and shall use the same degree of
care and skill in their exercise, as a prudent and reasonable man would exercise or use
under the circumstances in the conduct of his own affairs.
(b) No provision in this Trust Agreement shall require the Trustee to advance,
expend or risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(c) The Trustee may execute any of the trusts or powers hereof and perform the
duties required of it hereunder by or through attorneys, agents, or receivers and the
Trustee shall not be responsible for any willful misconduct or negligence on the part of
any attorney, agent or receiver appointed with due care. The Trustee shall be entitled to
advice of counsel (including counsel to the City or to the Authority), concerning all
matters of trust and its duty hereunder and shall be fully and completely protected in
any action taken or suffered by it hereunder in reliance on such advice.
(d) The Trustee shall not be responsible for any recital herein, or in the
Certificates, or for any of the supplements thereto or instruments of further assurance, or
for the sufficiency of the security for the Certificates issued hereunder or intended to be
secured hereby and the Trustee shall not be bound to ascertain or inquire as to the
observance or performance of any covenants, conditions or agreements on the part of the
Authority or the City under the Lease or, except as provided in Section 8.02(i),
hereunder. The Trustee shall not be responsible or liable for any loss suffered in
connection with any investment of funds made by it in accordance with Article VII of
this Trust Agreement.
(e) The Trustee shall not be accountable for the use of any Certificates delivered
hereunder. The Trustee may become the Owner of Certificates secured hereby with the
same rights which it would have if not the Trustee; may acquire and dispose of other
bonds or evidence of indebtedness of the City with the same rights it would have if it
were not the Trustee; and may act as a depository for and permit any of its officers or
directors to act as a member of, or in any other capacity with respect to, any committee
formed to protect the rights of Owners of Certificates, whether or not such committee
shall represent the Owners of the majority in aggregate principal amount of the
Certificates then Outstanding.
(f) In the absence of bad faith on its part, the Trustee shall be protected in acting
upon any notice, request, consent, certificate, order, affidavit, report, opinion, letter,
telegram or other paper or document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons. Any action taken or omitted to be
taken by the Trustee in good faith pursuant to this Trust Agreement upon the request or
authority or consent of any person who at the time of making such request or giving such.
authority or consent is the Owner of any Certificate, shall be conclusive and binding
upon all future Owners of the same Certificate and upon Certificates issued in exchange
therefor or in place thereof. The Trustee shall not be bound to recognize any person as
an Owner of any Certificate or to take any action at his request unless such person shall
be shown as the Owner of such Certificate on the Registration Books.
(g) As to the existence or non-existence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely
upon a certificate signed by an Authority Representative or a City Representative as
sufficient evidence of the facts therein contained and prior to the occurrence of an Event
of Default of which the Trustee has been given notice or is deemed to have notice, as
provided in Section 8.02(i) hereof, shall also be at liberty to accept a similar certificate
to the effect that any particular dealing, transaction or action is necessary or expedient,
but may at its discretion secure such further evidence deemed by it to be necessary or
advisable, but shall in no case be bound to secure the same. The Trustee may accept a
certificate of an Authority Representative or a City Representative to the effect that an
authorization in the form therein set forth has been adopted by the Authority or the
City, as the case may be, as conclusive evidence that such authorization has been duly
adopted, and is in full force and effect.
(h) The permissive right of the Trustee to do things enumerated in this Trust
Agreement shall not be construed as a duty and it shall not be answerable for other than
its negligence or willful misconduct. The immunities and exceptions from liability of the
Trustee shall extend to its officers, directors, employees and agents.
(i) The Trustee shall not be required to take notice or be deemed to have notice
of any Event of Default hereunder except failure by the City to make any of the Lease
Payments to the Trustee required to be made by the City pursuant to the Lease or failure
by the Authority or the City to file with the Trustee any document required by this Trust
Agreement or the Lease to be so file~d subsequent to the delivery of the Certificates,
unless the Trustee shall have actual .knowledge thereof or shall be specifically notified in
writing of such default by the Authority, the City or the Owners of at least twenty-five
percent (25%) in aggregate principal amount of Certificates then Outstanding and all
notices or other instruments required by this Trust Agreement to be delivered to the
Trustee must, in order to be effective, be delivered at the Office of the Trustee, and in the
absence of such notice so delivered the Trustee may conclusively assume there is no
Event of Default except as aforesaid.
(j) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, engineers, accountants and representatives, shall have the right fully
to inspect the Property, including all books, papers and records of the Authority or the
City pertaining to the Property and the Certificates, and to take such memoranda frorh
and with regard thereto as may be desired.
(k) The Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the premises.
(1) Notwithstanding anything elsewhere in this Trust Agreement with respect to
the execution of any Certificates, the withdrawal of any cash, the release of any
property, or any action whatsoever within the purview of this Trust Agreement, the
Trustee shall have the right, but shall not be required, to demand any showings,
certificates, opinions, appraisals or other information, or corporate action or evidence
thereof, in addition to that by the terms hereof required as a condition of such action,
which may be deemed desirable by the Trustee for the purpose of establishing the right
of the Authority or the City to the execution of any Certificates, the withdrawal of any
cash, or the taking of any other action by the Trustee.
(m) Before taking any action referred to in Section 12.02, the Trustee may require
that a satisfactory indemnity bond be furnished by the Owners of the Outstanding
Certificates, or any of them, for the reimbursement of all expenses to which it may be
put and to protect it against all liability, except liability which is adjudicated to have
resulted from its negligence or willful misconduct in connection with any such action.
(n) All moneys received by the Trustee shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received but need
not be segregated from other funds except to the extent required by law. The Trustee
shall not be under any liability for interest on any moneys received hereunder, other than
interest derived from investments made pursuant to Section 7.02.
(o) The Trustee shall not be responsible for the sufficiency of the Lease, its right
to receive moneys pursuant to the Lease, or the value of or title to the Property.
(p) The Trustee shall not be liable with respect to any action taken or omitted to
be taken by it in good faith in accordance with the direction of the Owners of a majority
in aggregate principal amount of the Outstanding Certificates relating to the time,
method and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this Trust Agreement.
Section 8.03. Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to
payment and reimbursement by the City for fees for its services rendered hereunder as
separately agreed, and all advances (together with interest at the rate of 10% per annum),
counsel fees (including expenses and allocated costs of in-house counsel) and other expenses
reasonably and necessarily made or incurred by the Trustee in connection with such services.
Upon an Event of Default, but only upon an l~vent of Default, the Trustee shall have a first lien
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with right of payment prior to payment on account of principal, premium, if any, and interest
represented by any Certificate upon the amounts held hereunder for the foregoing fees, charges
and expenses incurred by it .respectively.
Section 8.04, Notice to Certificate Owners of Default. If an Event of Default occurs of
which the Trustee has been given or is deemed to have notice, as provided in Section 8.02(i),
then the Trustee shall within thirty (30) days give written notice thereof by first class mail,
postage prepaid, to the Owner of each Outstanding Certificate, unless such Event of Default
shall have been cured before the giving of such notice; provided, however that unless such Event
of Default consists of the failure by the City to make any Lease Payment when due, the Trustee
may elect not to give such notice to the Certificate Owners if and so long as the Trustee in good
faith determines that such Event of Default does not materially adversely affect the interests of
the Certificate Owners or that it is otherwise not in the best interests of the Certificate Owners
to give such notice.
Section 8.05. Removal of Trustee. So long as no Event of Default (or any event which, if
not cured, with the passage of time would become an Event of Default) shall have occurred and
be continuing, the City may, upon at least thirty (30) days' prior written notice and with the
consent of the Authority, remove the Trustee initially appointed, and any successor thereto, by
an instrument or concurrent instruments in writing delivered to the Trustee and the Authority,
and may appoint a successor or successors thereto; provided that any such successor shall be a
bank or trust company meeting the requirements set forth in Section 8.01.
Section 8.06. Resignation by Trustee. The Trustee and any successor Trustee may at
any time resign by giving written notice by registered or certified mail to the City and the
Authority. Upon receiving such notice of resignation, the City shall promptly appoint a
successor Trustee. Any resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon
such acceptance, the City shall mail notice thereof to the Certificate Owners at their respective
addresses set forth on the Registration Books.
Section 8.07. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 8.05 or 8.06, respectively, the City shall
promptly appoint a successor Trustee. In the event the City shall for any reason whatsoever
fail to appoint a successor Trustee within thirty (30) days following the delivery to the Trustee
of the instrument described in Section 8.05 or within thirty (30) days following the receipt of
notice by the City pursuant to Section 8.06, the Trustee may apply to a court of competent
jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 8.01.
Any such successor Trustee appointed by such court shall become the successor Trustee
hereunder notwithstanding any action by the City purporting to appoint a successor Trustee
following the expiration of such thirty-day period.
Section 8.08. Merger or Consolidation. Any company or association into which the
Trustee may be merged or converted or with which it may be consolidated or any company
resulting from any merger, conversion or consolidation to which it shall be a party or any
company or association to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided that such company or association shall be eligible under
Section 8.01, shall be the successor to the Trustee and vested with all of the title to the trust
estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as
was its predecessor, without the execution or filing of any paper or further act, anything herein
to the contrary notwithstanding.
Section 8.09. Concerning any Successor-Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also the Authority and
the City an instrument in writing accepting such appointment hereunder and thereupon such
successor, without any further act, deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the written request of the Authority, or of its successor,
execute and deliver an instrument transferring to such successor all the estates, properties,
rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall
deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should
any instrument in writing from the Authority be reasonably required by any successor Trustee
for more fully and certainly vesting in such successor the estate, rights, powers and duties
hereby vested or intended to be vested in the predecessor, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Authority. The
resignation of any Trustee and the instrument or instruments removing any Trustee and
appointing a successor hereunder, together with all other instruments provided for in this
Article VIII, or a memorandum thereof, shall be filed or recorded by the successor Trustee in
each recording office where the Assignment Agreement shall have been filed or recorded.
Section 8.10. Non-Liability of Trustee. The recitals, statements and representations by
the City and the Authority contained in this Trust Agreement or in the Certificates shall be
taken and construed as made by and on the part of the City and the Authority, as the case may
be, and not by the Trustee, and the Trustee does not assume, and shall not have, any
responsibility or obligation for the correctness of any thereof.
The Trustee makes no representation or warranty, express or implied as to the title,
value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose or fitness for the use
contemplated by the City or Authority of the Property. In no event shall the Trustee be liable
for special or consequential damages in connection with or arising from the Lease for the
existence, furnishing or use of the Property.
The Trustee shall not be: (a) responsible for the sufficiency or enforceability of the Lease
or the assignment under the Assignment Agreement of its rights to receive Lease Payments; (b)
deemed to have knowledge of any Event of Default except as provided in Section 8.02(i); or (c)
accountable for the use or application by the City or Authority of any funds which the Trustee
has released under this Trust Agreement.
Section 8.11. Actions Through Agents. The Trustee may execute any of the trusts or
powers hereof and perform the duties required of it hereunder by or through attorneys, agents,
or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its
duty hereunder~ and the Trustee shall not be answerable for the default or misconduct of any
such attorney, agent, or receiver selected by it with reasonable care. The Trustee shall not be
liable for any action taken by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights and powers conferred on it or answerable for the exercise of any
discretion or power under this Trust Agreement or for anything whatever in connection with the
funds and accounts established hereunder, except only for its own negligence or willful
misconduct.
Section 8.12. Nature of Trust Engagement. The Trustee undertakes to perform such
duties and only such duties as are specifically set forth in the Trust Agreement and no implied
covenants or obligations shall be read into the Trust Agreement against the Trustee. In
accepting the trusts hereby created, the Trustee acts solely as Trustee and not in its individual
capacity. All persons, including without limitation the Owners, the City and the Authority
having any claim against the Trustee arising from the Trust Agreement shall look only to the
funds and accounts hereunder for payment ..except as otherwise provided herein; provided,
however, that nothing in this sentence is intended or shall be construed to apply to, or limit the
source of payment of, claims against the Trustee arising from the negligence or willful
misconduct of the Trustee. Under no circumstances shall the Trustee be liable in its individual
capacity for payment of the obligations represented by the Certificates.
The permissive right of the Trustee to do things enumerated in this Trust Agreement shall
not be construed as a duty.
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ARTICLE IX
MODII~ICATION OR AMENDMENT
Section 9.01. Amendments Permitted. This Agreement and the rights and obligations of
the Owners of the Certificates may be modified or amended at any time by a supplemental
agreement which shall become effective when the written consents of the Owners of a majority
in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates
disqualified as provided in Section 13.04, shall have been filed with the Trustee. No such
modification or amendment shall (a) extend or have the effect of extending the fixed maturity of
any Certificate or reducing the interest rate represented thereby or extending the time of
payment of interest, or reducing the amount of principal represented thereby or reducing any
premium payable upon the prepayment thereof, without the express consent of the Owner of
such Certificate, or (b) reduce or have the effect of reducing the percentage of Certificates
required for the affirmative vote or written consent to an amendment or modification hereof, or
(c) modify any of the rights or obligations of the Trustee withoht its written assent thereto. Any
such supplemental agreement shall become effective as provided in Section 9.02.
This Agreement and the rights and obligations of the Owners of the Certificates may be
modified or amended at any time by a supplemental agreement, without the consent of any
such Owners, but only to the extent permitted by law and only (a) to add to the covenants and
agreements of any party, other covenants to be observed, or to surrender any right or power
herein reserved to the Authority or the City, (b) to cure, correct or supplement any ambiguous or
defective provision contained herein, (c) in regard to questions arising hereunder, as the parties
hereto or thereto may deem necessary or desirable and which shall not, in the opinion of Bond
Counsel, materially adversely affect the interests of the Owners of the Certificates, (d) for the
purpose of conforming to or accommodating any amendment to the Lease which is made in
accordance with Section 7.6 thereof, or (e) if and to the extent permitted in the opinion of Bond
Counsel filed with the Trustee, the City and the Authority, to delete or modify any of the
provisions hereof or thereof relating to the exclusion from gross income of interest represented
by the Certificates for federal income tax purposes. Any such supplemental agreement shall
become effective upon execution and delivery by the parties hereto.
Section 9.02. Procedure for Amendment with Written Consent of Certificate Owners.
This Agreement may be amended by supplemental agreement as provided in this Section 9.02 in
the event the consent of the Owners of the Certificates is required pursuant to Section 9.01. A
copy of such supplemental agreement, together with a request to the Certificate Owners for their
consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as
set forth on the Registration Books, but failure to mail copies of such supplemental agreement
and request shall not affect the validity of the supplemental agreement when assented to as in
this Section provided.
Such supplemental agreement shall not become effective unless there shall be filed with
the Trustee the written consents of the Owners of a majority in aggregate principal amount of
the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section
13.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such
consent shall be effective only if accompanied by proof of ownership of the Certificates for
which such consent is given, which proof shall be such as is permitted by Section 2.10. Any
such consent shall be binding upon the Owner of the Certificate giving such consent and on any
subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such
consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing
such revocation with the Trustee prior to the date when the notice hereinafter in this Section
provided for has been mailed. Any such revocation received by the Trustee after notice has
been mailed shall be of no force and effect.
After the Owners of the required percentage of Certificates shall have filed their
consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of the
Certificates in the manner hereinbefore provided in this Section for the mailing of such
supplemental agreement of the notice of adoption thereof, stating in substance that such
supplemental agreement has been consented to by the Owners of the required percentage of
Certificates and will be effective as provided in this Section (but failure to mail copies of said
notice shall not affect the validity of such supplemental agreement or consents thereto). A
record, consisting of the papers required by this Section to be filed with the Trustee, shall be
conclusive proof of the matters therein stated. Such supplemental agreement shall become
effective upon such filing, and such supplemental agreement shall be deemed conclusively
binding upon the parties hereto and the Owners of all Certificates at the expiration of sixty (60)
days after such filing, except in the event of a final decree of a court of competent jurisdiction
setting aside such consent in a legal action or equitable proceeding for such purpose commenced
within such sixty (60) day period.
Section 9.03. Effect of Supplemental Agreement. From and after the time any
supplemental agreement becomes effective pursuant to this Article IX, this Trust Agreement
shall be deemed to be modified and amended in accordance therewith, the respective rights,
duties and obligations of the parties hereto and all Owners of Certificates Outstanding, as the
case may be, shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modification and amendment, and all the terms and conditions of any
supplemental agreement shall be deemed to be part of the terms and conditions of this Trust
Agreement for any and all purposes.
Section 9.04. Endorsement or Replacement of Certificates Delivered After Amendments.
The Trustee may determine that Certificates delivered after the effective date of any action
taken as provided in this Article IX shall bear a notation, by endorsement or otherwise, in form
approved by the Trustee, as to such action. In that case, upon demand on the Owner of any
Certificate Outstanding at such effective date and presentation of his Certificate for the
purpose at the Office of the Trustee, a suitable notation shall be made on such Certificate. The
Trustee may determine that the delivery of substitute Certificates, so modified as in the opinion
of the Trustee is necessary to conform to such Certificate Owners' action is necessary or
desirable, which substitute Certificates shall thereupon be prepared, executed and delivered. In
that case, upon demand on the Owner of any Certificate then Outstanding, such substitute
Certificate shall be exchanged at the Office of the Trustee, without cost to such Owner, for a
Certificate of the same character then Outstanding, upon surrender of such Outstanding
Certificate.
Section 9.05. Amendatory Endorsement of Certificates. The provisions of this Article
IX shall not prevent any Certificate Owner from accepting any amendment as to the particular
Certificates held by him, provided that proper notation thereof is made on such Certificates.
ARTICLE X
OTHER COVENANTS
Section 10.01. Compliance With and Enforcement of Lease. The City covenants and
agrees with the Owners of the Certificates to perform all obligations and duties imposed on it
under the Lease. The Authority covenants and agrees with the Owners of the Certificates to
perform all obligations and duties imposed on it under the Lease.
The City will not do or permit anything to be done, or omit or refrain from doing
anything, in any case where any such act done or permitted to be done, or any such omission of
or refraining from action, would or might be a ground for cancellation or termination of the
Lease by the Authority thereunder. The Authority and the City, immediately upon receiving or
giving any notice, communication or other document in any way relating to or affecting their
respective estates, or either of them, in the Property, which may or can in any manner affect
such estate of the City, will deliver the same, or a copy thereof, to the Trustee for its
information.
Section 10.02. Observance of Laws and Regulations. The City will well and truly keep,
observe and perform all valid and lawful obligations or regulations now or hereafter imposed on
it by contract, or prescribed by any law of the United States, or of the State, or by any officer,
board or commission having jurisdiction or control, as a condition of the continued enjoyment of
any and every right, privilege or franchise now owned or hereafter acquired by the City,
including its right to exist and carry on business as a public agency, to the end that such rights,
privileges and franchises shall be maintained and preserved, and shall not become abandoned,
forfeited or in any manner impaired.
Section 10.03. Prosecution and Defense of Suits. The City shall promptly, upon request
of the Trustee or any Certificate Owner, from time to time take such action as may be necessary
or proper to remedy or cure any defect in or cloud upon the title to the Property, whether now
existing or hereafter developing and shall prosecute all such suits, actions and other proceedings
as may be appropriate for such purpose and shall indemnify and save the Trustee and every
Certificate Owner harmless from all loss, cost, damage and expense, including attorneys' fees,
which they or any of them may incur by reason of any such defect, cloud, suit, action or
proceeding.
Section 10.04. Recordation and Filing. The City shall record and filethe Site Lease, the
Lease or a memorandum thereof, the Assignment Agreement and all such documents as may be
required by law (and shall take all further actions which may be necessary or be reasonably
required by the Trustee), all in such manner, at such times and in such places as may be required
by law in order fully to preserve, protect and perfect the security of the Trustee and the
Certificate Owners.
In furtherance thereof, the City shall record, or cause to be recorded, the Assignment
Agreement, the Site Lease, and the Lease Agreement and any amendment thereto in connection
with the acquisition of the Property.
Section 10.05. Tax Covenants.
(a) Generally. The City shall not take any action or permit to be taken any action
within its control which would cause or..which, with the passage of time if not cured
would cause, interest represented by the Certificates to become includable in gross
income for federal income tax purposes.
(b) Federal Guarantee Prohibition The City shall not take any action or permit or
suffer any action to be taken if the result of the same would be to cause any of the
Certificates or the Lease Agreement to be "federally guaranteed" within the meaning of
Section 149(b) of the Tax Code.
(c) Private Activity Bond Limitation The City shall assure that the proceeds of
the Certificates are not so used as to cause the Certificates or the Lease Agreement to
satisfy the private business tests of Section 141(b) of the Tax Code or the private loan
financing test of Section 141(c) of the Tax Code.
(d) Maintenance of Tax-Exemption The City shall take all actions necessary to
assure the exclusion of interest with respect to the Certificates from the gross income of
the Owners of the Certificates to the same extent as such interest is permitted to be
excluded from gross income under the Code as in effect on the Closing Date.
(e) Rebate Requirement. The City shall take any and all actions necessary to
assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess
investment earnings to the federal government.
Section 10.06. Further Assurances. The Authority and the City will make, execute and
deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Trust
Agreement and the Lease, and for the better assuring and confirming unto the Owners of the
Certificates the rights and benefits provided herein.
Section 10.07. Eminent Domain Action. The City shall use its best efforts to acquire fee
title to the Property through the Eminent Domain Action. In the event that any of the amounts,
including interest thereon, previously deposited by the City in the Condemnation Deposits Fund
in the State Treasury in connection with the Eminent Domain Action are returned to the City,
the City shall immediately transfer such amounts to the Trustee to be used to prepay
Certificates pursuant to Section 3.01(d) hereof.
ARTICLE XI
LIMITATION OF LIABILITY
Section 11.01. Limited Liability of City. Except for the payment of Lease Payments
when due in accordance with the Lease and the performance of the other covenants and
agreements of the City contained in the Lease and this Trust Agreement, the City shall have no
pecuniary obligation or liability to any of the other parties or to the Owners of the Certificates
with respect to this Trust Agreement or the terms, execution, delivery or transfer of the
Certificates, or the distribution of Lease Payments to the Owners by the Trustee, except as
expressly set forth herein.
t
Section 11.02. No Liability of the Authority for Trustee Performance. Neither the City
nor the Authority shall have any obligation or liability to any of the other parties or to the
Owners of the Certificates with respect to the performance by ,the Trustee of any duty imposed
upon it under this Trust Agreement.
Section 11.03. Indemnification of Trustee. The Authority and the City, jointly and
severally, shall indemnify and save the Trustee, its directors, officers, agents and employees
harmless from and against all claims, losses, costs, expenses, liability and damages, including
legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or
from any work or thing done on, the Property by the Authority or the City, (b) any breach 'or
default on the part of the Authority or the City in the performance of any of their respective
obligations under this Trust Agreement or the Lease and any other agreement made and entered
into for purposes of the Property, (c) any act of negligence of the Authority or the City or of any
of their respective agents, contractors, servants, employees, licensees with respect to the
Property, (d) any act of negligence of any assignee of, or purchaser from the Authority or the
City or of any of its or their respective agents, contractors, servants, employees or licensees with
respect to the Property, (e) the authorization of payments from the Acquisition and
Construction Fund, or the Insurance and Condemnation Fund, (f) the actions of any other party,
including but not limited to the ownership, operation or use of the Property by the Authority or
the City, including but not limited to the presence on, under or about, or the release from, the
Property of any substances, materials or wastes which are or which become regulated or
classified as hazardous or toxic under state, federal or local law, (g) the Trustee's exercise and
performance of its powers and duties hereunder; or (h) the offering and sale of the Certificates,
(i) any untrue statement or alleged untrue statement by anyone other than the Trustee of any
material fact, or omission or alleged omission to state a material fact necessary to make the
statements made, in light of the circumstances under which they were made, not misleading, in
any official statement or other offering circular utilized in connection with the sale of the
Certificates. No indemnification will be made under this Section 11.03 or elsewhere in this
Trust Agreement for willful misconduct or negligence under this Trust Agreement by the Trustee,
its officers, agents, employees, successors (other than by a successor Trustee) or assigns. The
Authority's and the City's obligations hereunder shall remain valid and binding notwithstanding
the resignation or removal of the Trustee or maturity and payment of the Certificates and
discharge of this Trust Agreement.
Section 11.04. Opinion of Counsel. Before being required to take any action, the Trustee
may, at the expense of the City, require an opinion of counsel acceptable to the Trustee, or an
opinion of Bond Counsel acceptable to the Trustee with respect to any federal tax matters, or a
verified certificate of any party hereto, or both, concerning the proposed action. If it does so in
good faith, Trustee shall be absolutely protected in relying on any such opinion or certificate
obtained by the Trustee.
Section 11.05. Limitation of Rights to Parties and Certificate Owners. Nothing in this
Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to
give any person other than the City, the Authority, the Trustee and the Owners of the
Certificates, any legal or equitable right, remedy or claim under or in respect of this Trust
Agreement or any covenant, condition or provision hereof; and all such covenants, conditions
and provisions are and shall be for the sole and exclusive benefit of the City, the Authority, the
Trustee and said Owners.
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE
OWNER
Section 12.01. Assignment of Rights. Pursuant to the Assignment Agreement the
Authority has transferred, assigned and set over to the Trustee certain of the Authority's rights
in and to the Lease, including without limitation all of the Authority's rights to exercise such
rights and remedies conferred on the Authority pursuant to the Lease as _may be necessary or
convenient (a) to enforce payment of the Lease Payments and any other amounts required to be
deposited in the Lease Payment Fund or the Insurance and Condemnation Fund, and (b)
otherwise to exercise the Authority's rights and take any action to protect the interests of the
Trustee or the Certificate Owners in an Event of Default.
Section 12.02. Remedies. If an Event of Default shall happen, then and in each and
every such case during the continuance of such Event of Default, the Trustee may, and at the
written direction of the Owners of a majority in aggregate principal amount of the Certificates
then Outstanding, and upon being indemnified to its satisfaction therefor, shall, exercise any
and all remedies available pursuant to law or granted pursuant to the Lease; provided, however,
that notwithstanding anything herein or in the Lease to the contrary, there shall be no right
under any circumstances to accelerate the maturities of the Certificates or otherwise to declare
any Lease Payment not then in default to be immediately due and payable.
Section 12.03. Application of Funds. All moneys received by the Trustee pursuant to
any right given or action taken under the provisions of this Article XII or Article VIII of the Lease
shall be applied by the Trustee in the order following upon presentation of the several
Certificates, and the stamping thereon of the payment if only partially paid, or upon the
surrender thereof if fully paid -
First, to the payment of the fees, costs and expenses of the Trustee for the
performance of its duties hereunder and in declaring such Event of Default and in taking
any remedial action with respect thereto, including reasonable compensation to its or
their agents, attorneys and counsel;
Second, to the payment of the whole amount then owing and unpaid with respect
to the Certificates for principal and interest, with interest on the overdue principal and
installments of interest at the rate set forth in Section 4.4(c) of the Lease (but such
interest on overdue installments of interest shall be paid only to the extent funds are
available therefor following payment of principal and interest and interest on overdue
principal, as aforesaid), and in case such moneys shall be insufficient to pay in full the
whole amount so owing and unpaid with respect to the Certificates, then to the payment
of such principal and interest without preference or priority of principal over interest, or
of interest over principal, or of any installment of interest over any other installment of
interest, ratably to the aggregate of such principal and interest.
Section 12.04. Institution of Legal Proceedings. If one or more Events of Default shall
happen and be continuing, the Trustee in its discretion may, and upon the written request of the
Owners of a majority in aggregate principal amount of the Certificates then Outstanding, and
upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights
or the rights of the Owners of Certificates by a suit in equity or action at law, either for the
specific performance of any covenant or agreement contained herein, or in aid of the execution
of any power herein granted, or by mand~amus or other appropriate proceeding for the
enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in
support of any of its rights or duties hereunder.
Section 12.05. Non-waiver. Nothing in this Article XII or in any other provision of this
Trust Agreement or in the Certificates, shall affect or impair the obligation of the City, which is
absolute and unconditional, to pay or prepay the Lease Payments as provided in the Lease.
No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any
right or power arising upon the happening of any Event of Default shall impair any such right or
power or shall be construed to be a waiver of any such Event of Default or an acquiescence
therein, and every power and remedy given by this Article XII to the Trustee or to the Owners of
Certificates may be exercised from time to time and as often as shall be deemed expedient by
the Trustee or the Certificate Owners.
Section 12.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee or to the Certificate Owners is intended to be exclusive of any other remedy, and
every such remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing, at law or in equity or by statute or otherwise.
Section 12.07. Power of Trustee to Control Proceedings. In the event that the Trustee,
upon the happening of an Event of Default, shall have taken any action, by judicial proceedings
or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the
request of the Owners of a majority in aggregate principal amount of the Certificates then
Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the
Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action; provided, however, that the Trustee
shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation
pending at law or in equity, without the consent of a majority in aggregate principal amount of
the Certificates Outstanding.
Section 12.08. Limitation on Certificate Owners' Right to Sue. No Owner of any
Certificate issued hereunder shall have the right to institute any suit, action or proceeding at law
or in equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner shall
have previously given to the Trustee written notice of the occurrence of an Event of Default
hereunder; (b) the Owners of a majority in aggregate principal amount of all the Certificates
then Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said
Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses
and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have
refused or omitted to comply with such request for a period of sixty (60) days after such
written request shall have been received by, and said tender of indemnity shall have been made
to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Certificates
of any remedy hereunder; it being understood and intended that no one or more Owners of
Certificates shall have any right in any manner whatever by his or their action to enforce any
right under this Trust Agreement, except in the manner herein provided, and that all
proceedings at law or in equity with respect to an Event of Default shall be instituted, had and
maintained in the manner herein provided and for the equal benefit of all Owners of the
Outstanding Certificates.
Section 12.09. Possession of Certificates by Trustee Not Required. Ail fights and
remedies granted to or exercisable by the Trustee hereunder or under the Lease may be exercised
by the Trustee without possession of any of~the Certificates or the production thereof at the
trial or other proceeding relative thereto, and any suit, action or proceeding instituted by the
Trustee hereunder or under the Lease shall be brought in its name for the benefit of all of the
Owners of such Certificates, subject to the provisions of this Trust Agreement.
ARTICLE )(III
DISCHARGE; ADMINISTRATIVE PROVISIONS
Section 13.01. Discharge Hereof. If and when the obligations represented by any
Outstanding Certificates shall be paid and discharged in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest
and prepayment premiums (if any) represented by such Certificates Outstanding, as
and-when the same become due and payable; or
(b) by depositing with the Trustee or any other fiduciary, under an escrow
deposit and trust agreement, security for the payment of Lease Payments relating to
such Certificates as more particularly described in Section 9.1 of the Lease, said security
to be held by the Trustee on behalf of the City to be applied by the Trustee or by such
other fiduciary to pay or prepay such Lease Payments as the same become due,
pursuant to Section 9.1 of the Lease,
then, notwithstanding that such Certificates shall not have been surrendered for
payment, all rights hereunder of the Owners of such Certificates and all obligations of the
Authority, the Trustee and the City with respect to such Certificates shall cease and terminate,
except only the obligations of the Trustee under Section 2.08, the obligation of the City to assure
that no action is taken or failed to be taken if such action or failure adversely affects the
exclusion of interest represented by the Certificates from gross income for federal income tax
purposes, and the obligation of the Trustee to pay or cause to be paid, from Lease Payments
paid by or on behalf of the City from funds deposited pursuant to paragraph (b) of this
Section, to the Owners of such Certificates not so surrendered and paid all sums represented
thereby when due and in the event of deposits pursuant to paragraph (b), such Certificates
shall continue to represent direct, undivided fractional interests of the Owners thereof in the
Lease Payments.
Any funds held by the Trustee, at the time of discharge of the obligations represented by
all Outstanding Certificates as a result of one of the events described in paragraphs (a) or (b) of
this Section, which are not required for the payment to be made to Owners, shall, upon
payment in full of all fees and expenses of the Trustee (including attorneys' fees) then due, be
paid over to the City.
Section 13.02. Records. The Trustee shall keep complete and accurate records of all
moneys received and disbursed under this Trust Agreement, which shall be available for
inspection by the City, the Authority, and any Owner, or the agent of any of them, at any
reasonable time during regular business hours upon prior notice.
Section 13.03. Notices. Any notice, request, complaint, demand or other
communication under this Trust Agreement shall be given by first class mail or personal delivery
to th.e party entitled thereto at its address set forth below, or by telecopier or other form of
telecommunication, at its number set forth below. Notice shall be effective either (a) upon
transmission by telecopier or other form of telecommunication (with an original forwarded by
first class mail, postage prepaid on the next business day), (b) 48 hours after deposit in the
United States of America first class mail, postage prepaid, or (c) in the case of personal
delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by
written notice to the other parties, from time .~to time modify the address or number to which
communications are to be given hereunder.
If to the City:
City of South San Francisco
315 Maple Avenue
South San Francisco, CA 94083
Attention: Finance Director
Telecopier: (415) 871-7318
If to the Authority:
City of South San Francisco Capital Improvements
Financing Authority
315 Maple Avenue
South San Francisco, CA 94083
Attention: Treasurer
Telecopier: (415) 871-7318
If to the Trustee:
First Trust of California, National Association
One California Street, Suite 400
San Francisco, CA 94111
Attention: Corporate Trust Department
Telecopier: (415) 273-4592
If to S&P:
Standard & Poor's Ratings Group
25 Broadway
New York, NY 10004
Attention: Municipal Department
Telecopier: (212) 412-0506
If to Moody's:
Moody's Investors Service
99 Church Street
New York, NY 10007
Attention: Public Finance Department
Telecopier: (212) 553-0309
Section 13.04. Disqualified Certificates. In determining whether the Owners of the
requisite aggregate principal amount of Certificates have concurred in any demand, request,
direction, consent or waiver under this Trust Agreement, Certificates which are owned or held
by or for the account of the City (but excluding Certificates held in any employees' retirement
fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such
determination, provided, however, that for the purpose of determining whether the Trustee shall
be protected in relying on any such demand, request, direction, consent or waiver, only
Certificates which the Trustee knows to be so owned or held shall be disregarded.
Section 13.05. Payment of Certificates After Discharge of Trust Agreement.
Notwithstanding any provisions of this Trust Agreement, but subject to any applicable laws of
the State of California relating to the escheat of funds or property, any moneys held by the
Trustee in trust for the payment of the principal or interest represented by any Certificates and
remaining unclaimed for two (2) years after the principal represented by all of the Certificates
has become due and payable (whether at maturity or upon call for prepayment as provided in
this Trust Agreement), if such moneys were so held at such date, or two (2) years after the date
of deposit of such moneys if deposited after said date when all of the Certificates became due
and payable, shall be repaid to the City upon written request free from the trusts created by
this Trust Agreement upon receipt of an indemnification agreement acceptable to the City and
the Trustee indemnifying the Trustee with respect to claims of Owners of Certificates which
have not yet been paid, and all liability of ~the Trustee with respect to such moneys shall
thereupon cease; provided, however, that before the repayment of such moneys to the City as
aforesaid, the Trustee may (at the cost of the City) first mail, by first class mail postage
prepaid, to the Owners of Certificates which have not yet been paid, at the respective
addresses shown on the Registration Books, a notice, in such form as may be deemed
appropriate by the Trustee with respect to the Certificates so payable and not presented and
with respect to the provisions relating to the repayment to the City of the moneys held for the
payment thereof.
Section 13.06. Governing Law. This Trust Agreement shall be construed and governed
in accordance with the laws of the State of California, without giving effect to principles of
conflicts of law of the State of California.
Section 13.07. Binding Effect; Successors. This Trust Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and assigns. Whenever in
this Trust Agreement either the Authority, the City or the Trustee is named or referred to, such
reference shall be deemed to include the successors or assigns thereof, and all the covenants and
agreements in this Trust Agreement contained by or on behalf of the Authority, the City, the
Trustee shall bind and inure to the benefit of the respective successors and assigns thereof
whether so expressed or not.
Section 13.08. Authority and City Representatives. Whenever under the provisions of
this Trust Agreement the Authority or ~he City is required or permitted to take some action,
including but not limited to the giving of any approval or the execution of some request,
direction or other instrument, such action shall be made on behalf of the Authority by a
Authority Representative and on behalf of the City by a City Representative, and any party
hereto shall be fully authorized to rely upon any such action by an Authority Representative or
a City Representative.
Section 13.09. Execution in Counterparts. This Trust Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but one
and the same agreement.
Section 13.10. Delivery of Cancelled Certificates. Whenever in this Trust Agreement
provision is made for the surrender to or cancellation by the Trustee of any Certificates, the
Trustee shall cancel and, unless otherwise directed in writing by the City Representative,
destroy such Certificates in accordance with its retention policy then in effect.
Section 13.11. Headings. The headings or titles of the several Articles and Sections
hereof, and any table of contents appended to copies hereof, shall be solely for convenience of
reference and shall not affect the meaning, construction or effect of this Trust Agreement. All
references herein to "Articles", "Sections", and other subdivisions are to the corresponding
Articles, Sections or subdivisions of this Trust Agreement; and the words "herein", "hereof",
"hereunder" and other words of similar import refer to this Trust Agreement as a whole and not
to any particular Article, Section or subdivision hereof.
Section 13.12. Waiver of Notice. Whenever in this Trust Agreement the giving of notice
by mail or otherwise is required, the giving of such notice may be waived in writing by the
person entitled to receive such notice and in any case the giving or receipt of such notice shall
not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Section 13.13. Separability of Invalid Provisions. In case any one or more of the
provisions contained in this Trust Agreement or in the Certificates shall for any reason be held
to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or
unenforceabillty shall not affect any other p~ovision of this Trust Agreement, and this Trust
Agreement shall be construed as if such invali'd or illegal or unenforceable provision had never
been contained herein. The parties hereto hereby declare that they would have entered into this
Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof
and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any
one or more sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be
held illegal, invalid or unenforceable.
IN WITNESS WHEREOF, the parties have executed this Trust Agreement as of the date
and year first above written.
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
as Trustee
By
Assistant Vice President
Attest:
Authorized Officer
CITY OF SOUTH SAN FRANCISCO
CAPITAL IMPROVEMENTS FINANCING
AUTHORITY
By
Treasurer
Attest:
Secretary
CITY OF SOUTH SAN FRANCISCO
By
CityManager
IS E AL]
Attest:
City Clerk
EXHIBIT A
FORM OF CERTIFICATE OF PARTICIPATION
1996 CERTIFICATE OF PARTICIPATION
(CONFERENCE CENTER AND PUBLIC FACILITIES PROJECT)
Evidencing the Direct, Undivided Fractional Interest of the
O~4-ner Hereof in Lease Payments to be Made by the
CITY OF SOUTH SAN FRANCISCO
(San Mateo County, California)
to the
CITY OF SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS
FINANCING AUTHORITY
RATE OF INTEREST:
MATURITY DATE:
DATED DATE: CUSIP:
January 1, 1997
REGISTERED OWNER:
CEDE & CO.
PRINCIPAL AMOUNT:
THIS IS TO CERTIFY THAT the Registered Owner identified above, or registered
assigns, as the registered owner (the "Registered Owner") of this Certificate of Participation
(the "Certificate") is the owner of a direct, undivided fractional interest in lease payments (the
"Lease Payments") payable under the Lease Agreement dated as of January 1, 1997 (the
"Lease") by and between the CITY OF SOUTH SAN FRANCISCO CAPITAL
IMPROVEMENTS FINANCING AUTHORITY, a joint exercise of powers authority, duly
organized and existing under the laws of the State of California (the "Authority"), as sub-
sublessor, and the CITY OF SOUTH SAN FRANCISCO, a municipal corporation duly
organized and existing under the laws of the State of California (the "City"), as sub-sublessee,
with respect to certain land and existing improvements which are used for the municipal
purposes of the City (the "Property"). The Lease Payments and certain other rights and
interests under the Lease have been assigned to FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as trustee (the "Trustee"), having a corporate trust office in the locations
described in the Trust Agreement referred to below.
The Registered Owner of this Certificate is entitled to receive, subject to the terms of the
Lease, on the Maturity Date identified above, or any earlier prepayment date, the Principal
Amount identified above representing a direct, undivided fractional share of the portion of the
Lease Payments designated as principal, and to receive on August 1, 1997, and semiannually
thereafter on February 1 and August 1 of each year (the "Interest Payment Dates") until
payment in tull of said principal, the Registered Owner's direct, undivided fractional share of
the Lease Payments designated as interest coming due during the interest period immediately
preceding each of the Interest Payment Dates. Interest represented hereby shall be payable from
A-1
the Interest Payment Date next preceding the date of execution of this Certificate unless (a) this
Certificate is executed after the close of business on the fifteenth (15th) day of the month
immediately preceding an Interest Payment Date (a "Record Date") and on or before such
Interest Payment Date, in which event interest shall be payable from such Interest Payment
Date, or (b) unless this Certificate is executed on or before August 1, 1997, in which event
interest shall be payable from the Dated Date identified above. The Registered Owner's share
of the portion of the Lease Payments designated as interest is the result of the multiplication of
the aforesaid share of the portion of the Lease Payments designated as principal by the Rate of
Interest per annum identified above, calculated on the basis of a 360-day year comprised of
twelve 30-day months. Principal represented hereby is payable in lawful money of the United
States of America upon surrender hereof at the Office of the Trustee, and interest represented
hereby is payable by check mailed by first class mail by the Trustee on each Interest Payment
Date to the Registered Owner at such Owner's address as it appears on the registration books
of the Trustee as of the preceding Record Date; provided, however, that at the written request of
the Registered Owner of Certificates in an aggregate principal amount of at least $1,000,000,
which written request is on file with the Trustee as of any Record Date, interest represented by
such Certificates shall be paid on each succeeding Interest Payment Date by wire transfer in
immediately available funds to such account within the United States of America as shall be
specified in such written request.
This Certificate has been executed and delivered by the Trustee pursuant to the terms of
a Trust Agreement by and among the Trustee, the Authority and the City, dated as of
December 1, 1996 (the "Trust Agreement"). The City has certified that it is authorized to enter
into the Lease and the Trust Agreement under the laws of the State of California, for the
purpose of paying and reimbursing the payment of the costs of certain public capital
improvements. Reference is hereby made to the Lease and the Trust Agreement (copies of
which are on file at the Office of the Trustee) for a description of the terms on which the
Certificates are delivered, the rights thereunder of the owners of the Certificates, the rights,
duties and immunities of the Trustee and the rights and obligations of the City under the Lease,
to all of the provisions of the Lease and the Trust Agreement the Registered Owner of this
Certificate, by acceptance hereof, assents and agrees.
The City is obligated under the Lease to pay the Lease Payments for the Property from
any source of available funds, subject to certain exceptions as set forth in the Lease. As more
fully described in the Lease, the Lease Payments are subject to abatement during any period in
which by reason of damage or destruction to the Property in whole or in part, or by reason of
eminent domain proceedings with respect to the Property in whole or in part, there is
substantial interference with the use and occupancy by the City of the Property or any portion
thereof; such abatement shall be in an amount agreed upon by the City and the Authority such
that the resulting Lease Payments represent fair consideration for the use and occupancy of the
remaining portions of the Property. The obligation of the City to pay the Lease Payments does
not constitute an obligation of the City for which the City is obligated to levy or pledge any
form of taxation or for which the City has levied or pledged any form of taxation. The
obligation of the City to pay the Lease Payments does not constitute a debt of the City, the
State of California or any of its political subdivisions, and does not constitute an indebtedness
within the meaning of any constitutional or statutory debt limitation or restriction.
The Certificates maturing on or before August 1, , are not subject to optional
prepayment prior to the respective stated maturities. The Certificates maturing on or after
August 1, , are subject to optional prepayment in whole, or in part, among maturities in the
manner directed by the City and by lot within a maturity, on any Business Day on or after
August 1, , from prepayments of the Lease Payments made at the option of the City
pursuant to the Lease, at a prepayment p~ice (expressed as a percentage of the principal
A-2
amount to be prepaid), as set forth in the following table together with accrued interest
represented thereby to the date fixed for prepayment.
Prepayment Dates
Prepayment Price
The Certificates are subject to mandatory prepayment (a) on any date, in whole, or in
part, among maturities in the manner directed by the City and by lot within a maturity, from the
net proceeds of insurance or eminent domain proceedings with respect to the Property, which
are credited towards the prepayment of the Lease Payments pursuant to the Lease, and (b) on
any Business Day prior to if the City is unable to acquire fee title to the
Property, in either case at a prepayment price equal to 100% of the principal amount to be
prepaid, together with accrued interest represented thereby to the date fixed for prepayment,
without premium.
The Certificates maturing on August 1, , are also subject to mandatory sinking fund
Payment by lot on December 1 in each year beginning on August 1, , from the principal
components of the Lease Payments required to be paid with respect to each of such dates, at a
prepayment price equal to 100% of the principal amount to be prepaid, together with accrued
interest represented thereby to the Payment date, without premium, as follows:
Payment Date
(August 1)
Principal Amount of
Term Certificates
To Be Paid
The Certificates are subject to extraordinary mandatory prepayment in the event the
City fails to acquire title to the Property in connection with the Eminent Domain action, in
whole or in part, on any Business Day, from amounts, if any, returned to the City from the
Condemnation Deposits Fund of the State Treasury in connection with the Eminent Domain
Action and any additional available funds of the City, as follows: (i) prior to at the
principal amount thereof to be prepaid together with interest thereon to the date of prepayment
without premium; and (ii) on or after at a prepayment price (expressed as a
percentage of the principal amount to be prepaid) as set forth in the following table together
with interest thereon to the date of prepayment.
As provided in the Trust Agreement, notice of prepayment shall be mailed by the
Trustee by first class mail, postage prepaid, not less than thirty (30) nor more than sixty (60)
days before the prepayment date, to the registered owners of the Certificates to be prepaid, but
neither failure to receive such notice nor any defect in the notice so mailed shall affect the
sufficiency of the proceedings for prepayment or the cessation of accrual of interest represented
thereby. If this Certificate is called for prepayment and payment is duly provided herefor as
specified in the Trust Agreement, interest represented hereby shall cease to accrue from and
after the date fixed for prepayment.
A-3
This Certificate is transferable by the Registered Owner hereof, in person or by his
attorney duly authorized in writing, at the Office of the Trustee, but only in the manner· subject
to the limitations and upon payment of the charges, if any, provided in the Trust Agreement
and upon surrender and cancellation of this Certificate. Upon such transfer a new Certificate
or Certificates· of authorized denomination or denominations, representing the same aggregate
principal amount and representing the same rate of interest and maturity date, will be delivered
to the transferee in exchange herefor. The City, the Authority and the Trustee may treat the
Registered Owner hereof as the absolute owner hereof for all purposes, whether or not this
Certificate shall be overdue, and the City, the Authority and the Trustee shah not be affected by
any notice to the contrary.
To the extent and in the manner permitted by th_e terms of the Trust Agreement, the
provisions of the Trust Agreement may be amended by the parties thereto with the written
consent of the owners of a majority in aggregate principal amount of the Certificates then
outstanding, and may be amended without such consent under certain circumstances; provided
that no such amendment shall extend the fixed maturity of any Certificate or reduce the interest
or principal represented thereby· without the express consent of the owner of such Certificate.
The Trustee has no obligation or liability to the registered owners of the Certificates to
make payments of principal, premium, if any, or interest with respect to the Certificates except
from amounts on deposit for such purposes with the Trustee. The Trustee's sole obligations are
to administer for the benefit of the registered owners of the Certificates the various funds and
accounts established under the Trust Agreement and to perform the other duties expressly
imposed upon it under the Trust Agreement.
Unless this Certificate is presented by an authorized representative of The Depository
Trust Company to the issuer or its agent for registration of transfer· exchange or payment, and
any Certificate issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment is made
to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
The City has certified, recited and declared that all things, conditions and acts required
by the laws of the State of California, the Lease and the Trust Agreement to exist· to have
happened and to have been performed precedent to and in the delivery of the Certificates, do
exist· have happened and have been performed in due time, form and manner as required by
law.
IN WITNESS WHEREOF, this Certificate has been executed and delivered by · as trustee, acting pursuant to the Trust Agreement.
Execution Date:
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
as Trustee
By
Authorized Signatory
A-4
.... ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within registered Certificate and hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the
registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor.
Note: The signature(s) on this Assignment must
correspond with the name (s) as written on the
face of the within Certificate in every particular,
without alteration or enlargement or any change
whatsoever.
A-5
EXHIBIT TO RESOLUTION NO. 190-96
OM&M DRAFT
OF 12/10/96
CITY OF SOUTH SAN FRANCISCO
1997 CERTIFICATES OF PARTICIPATION
(Convention Center and Public Facilities Project)
Evidencing the Fractional Undivided Interests
of the Owners Thereof in Lease Payments to be Made by the
CITY OF SOUTH SAN FRANCISCO
to the
CITY OF SOUTH SAN FRANCISCO
CAPITAL IMPROVEMENTS FINANCING AUTHORITY
CERTIFICATE PURCHASE AGREEMENT
,1997
City of South San Francisco
315 Maple Avenue
South San Francisco, California
94080
Ladies and Gentlemen:
The undersigned, PaineWebber Incorporated ("Underwriter"), hereby offers
to enter into this Certificate Purchase Agreement (this "Purchase Agreement") with the City
of South San Francisco, California (the "City"), for the purchase by the Underwriter of the
City's 1997 Certificates of Participation (Convention Center and Public Facilities Project)
(the "1997 Certificates"). This offer is made subject to written acceptance by the City at or
prior to 5:00 p.m., California time, on the date set forth above and, if not so accepted, will
be subject to withdrawal by the Underwriter upon notice delivered to the City at any time
prior to the acceptance hereof by the City. Upon the City's written acceptance of this offer,
the Purchase Agreement shall be in full force and effect in accordance with its terms and
shall be binding upon the City and the Underwriter. The Underwriter has been authorized
to execute this Purchase Agreement and to take any action hereunder by and on behalf of
the Underwriter. All capitalized terms used herein not otherwise defined herein shall have
the respective meanings ascribed thereto in the Trust Agreement hereinafter described.
Section 1. Purchase and Sale. Upon the terms and conditions and in
reliance on the representations, warranties and agreements set forth herein, the
Underwriter, jointly and severally, hereby agree to purchase from the City, and the City
hereby agrees to cause the Trustee (as hereinafter defined) to execute and deliver to the
Underwriter, all (but not less than all) of the 1997 Certificates in an aggregate principal
8FI-250803
amount indicated on Schedule I hereto, consisting of serial and term certificates, all at the
principal amounts indicated on Schedule I, at a purchase price of $ (the
principal amount of such certificates less an underwriter's discount of $ and an
original issue discount of $ ) plus accrued interest to the Closing (as hereinafter
defined). The date of payment for and delivery of the 1997 Certificates and the other
actions contemplated hereby to take place at the time of such payment and delivery, shall
hereinafter be called the "Closing".
The 1997 Certificates are being issued (i) to finance the acquisition of certain
land and improvements used as a convention center and the construction and installation
of certain other public facilities and capital improvements, (ii) to fund a reserve fund for the
1997 Certificates and (iii) to pay the costs of issuance of the 1997 Certificates (the "Project").
The 1997 Certificates evidence fractional undivided interests in lease payments
("Lease Payments") to be made by the City pursuant to a Leash Agreement, dated as of
January 1, 1997 (the "Lease"), by and between the City and ~he City of South San Francisco
Capital Improvements Financing Authority (the "Authority"). The Lease relates to the City's
land and improvements used as a convention center (the "Property"). The City will sublease
the Property to the Authority, pursuant to a Site Lease, executed and entered into as,of
January 1, 1997 (the "Site Lease"), by and between the City and the Authority.
Section 2. The 1997 Certificates. The 1997 Certificates will be described
in and will be executed, .delivered and secured under and pursuant to a trust agreement
dated as of January 1, 1997 (the "Trust Agreement"), by and among the City, the Authority
and First Trust of California, National Association, as trustee (the "Trustee"). The Authority
will assign all of its rights, title and interest in and to the Lease, including the right to
receive Lease Payments to be made by the City under the Lease, to the Trustee pursuant
to an Assignment Agreement, dated as of January 1, 1997 (the "Assigflment Agreement"),
by and between the Authority and the Trustee.
The execution and delivery of the 1997 Certificates, the Site Lease, the Lease,
the Trust Agreement, the Assignment Agreement and the Continuing Disclosure Certificate
relating to the 1997 Certificates, (the "Continuing Disclosure Certificate") have been
authorized by resolution of the City (the "City Resolution") and resolution of the Authority
(the "Authority Resolution"). The 1997 Certificates shall be payable and shall be .subject
to prepayment as provided in the Trust Agreement.
The Site Lease, the Lease, the Trust Agreement, the Assignment Agreement,
the Continuing Disclosure Agreement, the City Resolution, the Authority Resolution and
this Purchase Agreement are collectively referred to herein as the "Legal Documents".
Section 3. Official Statement and Other Documents.
(a) The City has delivered or will deliver to the Underwriter, without
charge, copies of the Preliminary Official Statement dated , 1997 (including all
SF 1-2.~0803 2
documents incorporated by reference therein) and any amendment or supplement thereto
(the "Preliminary Official Statement"), in such quantities as the Underwriter have requested
or may hereafter reasonably request.
(b) The City agrees to deliver to the Underwriter, within seven (7) business
days after the date of this Purchase Agreement, copies of the Official Statement dated
, in final form (including all documents incorporated by reference therein)
and any amendment or supplement thereto (as supplemented and amended from time to
time, the "Final Official Statement"), in such quantities as the Underwriter may reasonably
request in order to comply with the obligations of each of the Underwriter pursuant to the
rules of the Municipal Securities Rulemaking Board and Rule 15c2-12(b)(4) under the
Securities Exchange Act of 1934 (the "Rule").
(c) As soon as practicable following receipt thereof from the City, the
Underwriter shall deliver the Final Official Statement, and .any supplement or amendment
thereto, to a nationally recognized municipal securities information repository (as such term
is defined by the Rule).
(d) The City hereby authorizes the approval of the Final Official Statement
by execution thereof by a duly authorized officer of the City. By execution of this Purchase
Agreement, the City confirms that the Preliminary Official Statement was deemed final for
purposes of the Rule on the date thereof. The Preliminary Official Statement and the Final
Official Statement are herein collectively referred to as the "Official Statement".
(e) Pursuant to the Rule, the Underwriter shall send no later than the next
business day, by first class mail or other equally prompt means, to any potential customer,
on request, a single copy of the Final Official Statement from the time the Final Official
Statement becomes available until the earlier of: (i) 90 days fr6m the end of the
underwriting period, or (ii) the time when the Final Official Statement is available to any
person from a nationally recognized municipal securities information repository, but in no
case less than 25 days following the end of the underwriting period.
(f) Prior to the earlier of (i) the end of the period during which the
Underwriter are obligated to deliver the Final Official Statement in accordance with the
Rule or (ii) twenty-five (25) days after the Closing, the City shall provide the Underwriter
with such information regarding the City, its current financial condition and ongoing
operations as the Underwriter may reasonable request.
(g) The City hereby authorizes the use by the Underwriter of the Legal
Documents and the Official Statement, including any supplements or amendments thereto,
and the information contained in each of such documents, and all other documents,
certificates and statements furnished by the City and the Underwriter, in connection with
the public offering and sale of the 1997 Certificates. The City consents to the use by the
Underwriter prior to the date hereof of the Preliminary Official Statement in connection
with the public offering of the 1997 Certificates.
$F1-250803 3
Section 4. Closing. At 8:00 a.m., California time, on , 199_,
or at such other time or on such earlier or later date as may be mutually agreed upon by
the City and the Underwriter (the "Closing Date"), the City will, subject to the terms and
conditions hereof, deliver or cause to be delivered to the Underwriter the duly executed
1997 Certificates in book-entry form through the facilities of The Depository Trust Company
("DTC") and the other documents hereinafter mentioned. The Underwriter will accept the
delivery of the 1997 Certificates and pay the purchase price of the 1997 Certificates as set
forth in Section 1 hereof by check payable in clearinghouse funds to the order of the
Trustee. Delivery and payment as aforesaid shall be made at the offices of Jones Hall Hill
& White, A Professional Law Corporation ("Special Counsel") in San Francisco, California,
or such other place as shall have been mutually agreed upon by the City and the
Underwriter.
Section 5. Public Offering. It shall be a condition to the City's obligations
to sell and deliver the 1997 Certificates to the Underwriter and to the Underwriter's
obligations to purchase, to accept delivery of and to pay for the 1997 Certificates that the
entire principal amount of the 1997 Certificates shall be executed by the Trustee, sold and
delivered by the City and purchased, accepted and paid for by the Underwriter at the
Closing. Subject to the terms and conditions hereof, the Underwriter agrees to make a bo.na
fide public offering of all of the 1997 Certificates at prices not in excess of the initial public
offering prices set forth on Schedule I hereto. The Underwriter reserves the right to change
such initial offering prices as the Underwriter shall deem necessary in connection with the
marketing of the 1997 Certificates and to offer and sell the 1997 Certificates to certain
dealers (including dealers depositing such Certificates into investment trusts) and others at
prices lower than the initial offering prices set forth on the inside of the cover page of the
Official Statement. The Underwriter also reserves the right to (i) overallot or effect'
transactions which stabilize or maintain the market prices of the 1997 Certifica~tes at levels
above those which might otherwise prevail in the open market and (ii) discontinue such
stabilizing, if commenced, at any time.
Section 6. Representations. Warranties and Agreements of the City. The
City hereby represents, warrants and agrees as follows:
(a) Due Organization and Authority: Legal. Valid and Binding Obligations.
The City is and will be on the Closing Date a municipal corporation duly organized
and existing pursuant to the Constitution and laws of the State of California, and has
all necessary power and authority to enter into and perform its duties under the
Legal Documents to which the City is a party, and, when executed and delivered by
the respective parties thereto, such Legal Documents will constitute legal, valid and
binding obligations of the City enforceable in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws or equitable principles relating to or limiting creditors' right
generally.
SFI-250803 4
(b) No Conflict. The execution and delivery of the Legal Documents to
which the City is a party, and compliance with the provisions thereof, have been duly
authorized by all necessary official action on the part of the City and will not conflict
with or constitute a breach of or default under any law, administrative regulation,
court decree, resolution, charter, bylaw or any agreement to which the City is subject
or by which it is bound or by which its properties may be affected, a consequence of
which could be to materially and adversely affect the ability of the City to perform
its obligations under the Legal Documents to which it is a party.
(c) No Litigation. To the best knowledge of the City, except as disclosed
in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law
or in equity, before or by any court, regulatory agency, or public board or body is
pending or threatened against the City, or seeking to restrain or to enjoin the
execution, sale or delivery of the 1997 Certificates, the payments to be made
pursuant to the Lease, the application of the proceeds thereof in accordance with the
Trust Agreement, or in any way contesting or affectihg the validity or enforceability
of the 1997 Certificates, the Legal Documents, any.other applicable agreements, or
any action of the City contemplated by any of said documents, or in any way
contesting the completeness or accuracy of the Official Statement or the powers .of
the City or its authority with respect to the 1997 Certificates, the Legal Documents,
any other applicable agreements, or any action of the City contemplated by any of
said documents, or which would adversely affect the exclusion of interest paid with
respect to the 1997 Certificates from gross income for purposes of federal income
taxation, or which if determined adversely to the City would have a material and
adverse effect upon the City's ability to make the Lease Payments.
(d) Official Statement Correct and Complete. The Official Statement
pertaining to the 1997 Certificates has been duly authorized' by the City. The
information contained in the Preliminary Official Statement as of its date was, and
the Official Statement is, true and correct in all material respects and such
information (including any financial and statistical data) does not and will not contain
any untrue or misleading statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances under
they were made, not misleading.
(e) Due Approval of Official Statement Distribution. By official action of
the City prior to or concurrently with the execution hereof, the City has duly
approved the distribution of the Preliminary Official Statement and the distribution
of the Official Statement, and has duly authorized and approved the execution and
delivery of, and the performance by the City of the obligations on its part contained
in the Legal Documents to which the City is a party and the consummation by it of
all other transactions contemplated by the Official Statement and the Legal
Documents to which the City is a party, including this Purchase Agreement.
$F1-250803 5
(0 Agreement to Notify Underwriter Regarding Official Statement. The
City will advise the Underwriter promptly of any proposal to amend or supplement
the Official Statement and will not effect any such amendment or supplement
without the consent of the Underwriter, which consent shall not be unreasonably
withheld. The City will advise the Underwriter promptly of the institution of any
proceedings known to it seeking to prohibit or otherwise affect the use of the Official
Statement in connection with the offering, sale or distribution of the 1997
Certificates.
(g) Agreement to Amend Official Statement. If at any time between the
date of this Purchase Agreement and up to twenty-five (25) days following the "end
of the underwriting period" (as defined in Section 14 hereof) an event occurs, of
which the City has knowledge, which might or would cause the information relating
to the City, its functions, duties and responsibilities contained in the Official
Statement, as then supplemented or amended, to contain an untrue statement of a
material fact or to omit to state a material fact re~tuired to be stated therein or
'necessary to make the information therein, in the light of the circumstances under
which it was presented, not misleading, the City will notify the Underwriter, and if
in the reasonable opinion of the Underwriter, such event requires the preparatign
and publication of a supplement or amendment to the Official Statement, the City
will cooperate with the Underwriter in the preparation of an amendment or
supplement to the Official Statement in a form and in a manner approved by the
Underwriter, provided all expenses thereby incurred will be paid for by the City.
(h) Amendments to Official Statement Correct and Complete. If the
information relating to the City, its functions, duties and responsibilities contained
in the Official Statement is amended or supplemented pursuant to the immediately
preceding paragraph, at the time of each supplement or amendment thereto and
(unless subsequently supplemented or amended pursuant to such paragraph) at all
times subsequent thereto up to and including the date twenty-five (25) days after the
end of the underwriting period, the portions of the Official Statement so
supplemented or amended (including any financial and statistical date contained
therein) will be true and correct in all material respects and, such information will
not contain any untrue or misleading statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make such information
therein, in the light of the circumstances under which it was presented, not
misleading.
(i) Blue Sky Cooperation. The City will furnish such information, execute
such instrufiqents and take such other action in cooperation with the Underwriter as
the Underwriter may reasonably request in order (1) to qualify the 1997 Certificates
for offer and sale under the Blue Sky or other securities laws and regulations of such
states and other jurisdictions of the United States as the Underwriter may designate
and (2) to determine the eligibility of the 1997 Certificates for investment under the
laws of such states and other jurisdictions, and will use its best efforts to continue
$FI-250803 6
such qualification in effect so long as required for distribution of the 1997
Certificates; provided, however, that the City shall not be required to execute a
special or general consent to service of process in any jurisdiction in which it is not
now so subject or to qualify to do business in any jurisdiction where it is not now so
qualified.
(j) No Breach or Default. The City is not, and at the Closing Date will
not be, in breach of or default under any law or administrative rule or regulation of
the State of California, the United States of America, or of any department, division,
agency or instrumentality of either thereof, or any applicable court or administrative
decree or order or any loan agreement, note, bond, resolution, indenture, contract,
agreement or other instrument to which the City is a party or is otherwise subject or
bound and which would materially impair the ability of the City to perform its
obligations under the Legal Documents to which the City is a party.
(k) Approvals and Authorization. All app,:ovals, consents, authorizations,
elections and orders of or filings or registrations with any governmental authority,
board, agency or commission having jurisdiction which would constitute a condition
precedent to, or the absence of which would materially adversely affect, the
performance by the City of its obligations hereunder and under the Legal Documents
to which the City is a party and any other applicable agreements, have been obtained
and are in full force and effect.
(1) No Action. The City will take no action and will cause no action to be
taken that would cause the interest with respect to the 1997 Certificates to be
includable in gross income for federal income tax purposes.
(m) No Violation of Debt Limitations. The City h~ts not l~een, is not
presently and as a result of the sale and delivery of the 1997 Certificates will not be
in violation of any debt limitation, appropriation limitation or any other provision of
the California Constitution.
(n) No Issuance of Obligations. Between the date hereof and the Closing
Date, without the prior written consent of the Underwriter, the City will not have
issued any bonds, notes or other obligations for borrowed money on behalf of the
City except for such borrowings as may be described in or contemplated by the
Official Statement.
(o) No Listing as Bond Issuer. The City has not been notified of any
listing or proposed listing by the Internal Revenue Service to the effect that the City
is a bond issuer whose non-arbitrage certificates may not be relied upon.
(p) Certificates of City Officers. Any certificate signed by any authorized
officer of the City and delivered to the Underwriter on or prior to the Closing in
connection w/th the execution, sale and delivery of the 1997 Certificates and the
$FI-250803 7
execution and delivery of the Legal Documents shall be deemed a representation and
warranty by the City to the Underwriter as to the statements made therein but not
of the person signing the same.
Section 7. Closing Conditions. The Underwriter has entered into this
Purchase Agreement in reliance upon the representations and warranties of the City
contained herein, the representations, warranties and agreements to be contained in the
documents and instruments to be delivered at the Closing, the performance by the City of
its obligations hereunder, and the opinions of Special Counsel, counsel to the Trustee, the
City Attorn_ey, and counsel to the Underwriter, described hereafter. Accordingly, the
Underwriter's obligations under this Purchase Agreement to purchase, to accept delivery of
and to pay for the 1997 Certificates shall be conditioned upon and subject to (i) the
performance by the City, the Authority and the Trustee of their obligations to be performed
hereunder and under such documents and instruments at or prior to the Closing, (ii) the
accuracy in all material respects, in the reasonable judgm.ent of the Underwriter, of the
representations and warranties of the City herein as of the date hereof and of the time of
the Closing and the accuracy in all material respects of the representations, warranties and
agreements to be contained in the documents and instruments to be delivered at the Closing
as of the time of the Closing, and (iii) shall also be subject to the following additional
conditions:
(a) Bring-down of Representations. The representations and warranties
of the City contained herein shall be true, complete and correct on the date hereof
and on and as of the date of the Closing, as if made on the date of the Closing (the
"Closing Date").
(b) Authorization. Execution and Delivery of Documents.. As of the
Closing Date, the 1997 Certificates, the Legal Documents and the Official Statement
shall have been duly authorized, executed and delivered by the respective parties
thereto, in substantially the forms heretofore submitted to the Underwriter with only
such changes as shall have been agreed to in writing by the Underwriter, and said
agreements shall be in full force and effect and not have been amended, modified
or supplemented, except as may have been agreed to in writing by the Underwriter,
and there shall have been taken in connection therewith, with the issuance of the
1997 Certificates and with the transactions contemplated thereby and by this
Purchase Agreement, all such actions as Special Counsel shall deem to be necessary
and appropriate to render the opinion set forth in Appendix D to the Official
Statement.
(c) No Amendment of Official Statement. At the Closing, the Official
Statement shall not have been amended, modified or supplemented, except as may
have been agreed in writing by the Underwriter.
$FI-2.~803 8
(d) .On or prior to the Closing Date, the Underwriter shall have received
copies of the following documents, in each case satisfactory in form and substance
to the Underwriter and its counsel:
(1) Agreements. The Site Lease, the Lease, the Trust Agreement,
the Assignment Agreement, the Continuing Disclosure Certificate and this
Purchase Agreement, each duly executed and delivered by the respective
parties thereto, with such amendments, qualifications or supplements as may
have been agreed to in writing by the Underwriter;
(2) Official Statement. The Official Statement duly executed and
delivered on behalf of the City by the City Manager, with such amendments,
qualifications or supplements as may have been agreed to in writing by the
Underwriter;
(3) Opinion of Special Counsel. An' approving opinion satisfactory
to the Underwriter, dated the Closing Date and addressed to the City, of
Special Counsel, in substantially the form attached as Appendix D to the
Official Statement, together with an opinion of such Special Courks. el
satisfactory in form and substance to the Underwriter, dated the Closing Date
and addressed to the Trustee and the Underwriter, to the effect that such
opinion addressed to the City may be relied upon by the Underwriter and the
Trustee to the same extent as if such opinion was addressed to them.
(4) Supplemental Opinion of Special Counsel. A supplemental
opinion of Special Counsel in form and substance satisfactory to the
Underwriter, dated the Closing Date, addressed to the City, the Au. thority and
the Underwriter to the effect that:
(i) Specified Sections of Official Statement Correct
and Complete The statements set forth under the captions
"INTRODUCTION," "THE CERTIFICATES," "SECURITY AND
SOURCES OF PAYMENT FOR THE CERTIFICATES" and "TAX
EXEMPTION" and in Appendix C - "SUMMARY OF PRINCIPAL
LEGAL DOCUMENTS" insofar as such statements purport to
summarize certain provisions of the 1997 Certificates, the Trust
Agreement, the Lease, the Site Lease, the Assignment Agreement and
such counsel's opinion concerning certain federal tax matters relating
to the 1997 Certificates, are accurate in all material respects; and
(ii) Due Authorization, Execution and Delivery; Legal
Valid and Binding Agreement - This Purchase Agreement has been
duly authorized, executed and delivered by the City and, assuming due
authorization and execution thereof by the Underwriter, constitutes a
legal, valid and binding obligation of the City, enforceable against the
$FI-250803 9
City, in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally and that the
enforceability of the Legal Documents is subject to the effect of
general principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief,
regardless of whether considered a proceeding in equity or at law;
(iii) 1993 Revenue Bonds .- The City of South San
Francisco Capital Improvements financing Authority 1993 Revenue
Bonds (South San Francisco Conference Center) are not payable from
the proceeds of any insurance obtained with respect to the Property;
(5) Opinion of City Attorney. An opinion the City Attorney,
dated the date of Closing, in form and 'substance satisfactory to the
Underwriter, addressed to the City, the Trustee and the Underwriter, to the
effect that:
(i) Due Organization and Existence - The City is a
municipal corporation of the State of California duly organized and
validly existing under the Constitution and the laws of the State of
California;
(ii) City Resolution - The City Resolution approving
and authorizing the execution and delivery of the Legal Documents to
which the City is a party and approving the Official Stateme. nt was duly
adopted at a meeting of the City Council of the City which was called
and held pursuant to law and with all public notice required by law
and at which a quorum was present and acting throughout;
(iii) No Litigation - Except as disclosed in the Official
Statement, to the best of such counsel's knowledge, there is no action,
suit, proceeding or investigation at law or in equity before or by any
court, public board or body, pending or threatened against or affecting
the City, which would materially and adversely impact the City's ability
to complete the transactions described in and contemplated by the
Official Statement, to restrain or enjoin the payments under the Lease
or in any way contesting or affecting the validity of the Legal
Documents to which the City is a party or the 1997 Certificates or the
transactions relating to the Project as described in the Official
Statement;
(iv) No Conflict - The execution and delivery of the
Legal Documents to which the City is a party and the approval of the
m.2~o~o3 10
Official Statement, and compliance with the provisions thereof and
hereof, under the circumstances contemplated thereby, do not and 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 the
City is subject, a consequence of which could be to materially and
adversely affect the ability of the City to perform its obligations under
the Legal Documents to which it is a party;
(v) Due Authorization. Execution and Delivery. Legal
Valid and Binding Agreements - The Legal Documents to which the
City is a party have been duly authorized, executed and delivered by
the City, and, assuming due authorization, execution and delivery by
the other parties thereto constitute lega. 1, valid and binding agreements
of the City enforceable in accordance with their respective terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors rights generally and by t.he
application of equitable principles if equitable remedies are sought and
by the limitations on legal remedies imposed on actions against cities
in the State of California;
(vi) No Consents Required - Official Statement. Legal
Documents - No authorization, approval, consent, or other order of the
State of California or any other governmental authority or agency
within the State of California, other than the City Council,. is required
for the valid authorization, execution and delivery of the Legal
Documents to which the City is a party and the approval of the Official
Statement;
(vii) Official Statement - Based upon examinations
which the City Attorney has made and the City Attorney's discussions
in conferences with certain officials of the City and others with respect
to the Official Statement and without having undertaken to determine
independently the accuracy, completeness or fairness of the statements
contained in the Official Statement (including the Appendices attached
thereto), nothing has come to the City Attorney's attention which
would lead the City Attorney to believe that the Official Statement
(other than (i) financial and statistical data therein and incorporated
therein by reference, as to which no opinion need be expressed and (ii)
information concerning the book-entry-only system contains an untrue
statement of a material fact or omits to state a material fact necessary.
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
sF~-2~o~o~ 11
(6) Opinion of Counsel to the AuthoriW. An opinion of
counsel to the Authority, dated the Closing Date, in form and substance
satisfactory to the Underwriter, addressed to the City, the Trustee and the
Underwriter, to the effect that:
(i) Due Organization and Existence - The Authority
is a joint exercise of powers authority duly organized, validly existing
and in good standing under the laws of the State of California;
(ii) Full Authority - The Authority has full legal
pOwer and adequate corporate authority to enter into the Legal
Documents to which the Authority is a party, and to own its properties
and to carry on its business as now conducted and as contemplated by
the Official Statement;
(iii) Authority Resolution - The Authority Resolution
approving and authorizing the execution and delivery of the Legal
Documents to which the Authority is a party, was duly adopted at a
meeting of the governing body of the Authority which was called and
held pursuant to law and with all public notice required by law and at
which a quorum was present and acting throughout;
(iv) Due Authorization. Execution and Delivery:
Legal. Valid and Binding Agreements - The Legal Documents to which
the Authority is a party have been duly authorized by all necessary
corporate action on the part of the Authority, have been duly
authorized, executed and delivered by the Authority and, assuming due
authorization, execution and delivery by the other parties thereto,
constitute the legal, valid and binding agreements of the Authority,
enforceable against the Authority in accordance with their respective
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws or equitable
principles relating to or limiting creditors' rights generally and by the
application of equitable principles if equitable remedies are sought;
(v) Description of Authority in Official Statement
Correct and Complete - The description of the Authority in the
Official Statement is correct and does not omit any statement which
should be included or referred to therein in order to make such
description not misleading in any material respect;
(vi) No Liti~,ation - To the best of such counsel's
knowledge, there are no legal or governmental proceedings pending or
threatened against the Authority which are required to be disclosed in
the Official Statement, other than those disclosed therein; and
sm.~o~o3 12
(vii) No Conflict - The execution and delivery of the
Legal Documents to which the Authority is a party by the Authority
and performance by the Authority of its obligations thereunder will not
conflict with or result in a breach of any of the terms, conditions or
provisions of any agreement or instrument to which the Authority is a
party or constitute a default thereunder, a consequence of which could
be to materially and adversely affect the ability of the Authority to
perform its obligations under the Legal Documents to which it is a
party, and all consents, approvals, authorizations and orders of a
governmental or regulatory authority, if any, which are required to be
obtained by the Authority for the consummation of the transactions
contemplated by the Official Statement or as conditions precedent to
the execution and delivery of the Certificates have been obtained
(provided no opinion need by expressed as to any action required
under state securities or blue sky laws in connection with the purchase
or distribution of the 1997 Certificates' by the Underwriter).
(7) Opinion of Counsel to Trustee. An opinion, satisfactory
in form and substance to the Underwriter, of counsel to the Trustee, dated
the Closing Date and addressed to the Underwriter, the City and the
Authority, to the effect that:
(i) Due Organization and Existence - The Trustee is
a duly organized and validly existing banking corporation in good
standing under the laws of the State of California and has full power
and authority to undertake the trust of the Trust Agreement and enter
into the Assignment Agreement and Continuing Disclosure Certificate
(ii) Corporate Action - The Trustee has duly
authorized, executed and delivered the Trust Agreement, the
Assignment Agreement and the Continuing Disclosure Certificate and
by all proper corporate action has authorized acceptance of the duties
of the Trustee under of the Trust Agreement, the Assignment
Agreement and the Continuing Disclosure Certificate and has
authorized in such capacity the execution and delivery of the 1997
Certificates;
(iii) Due Authorization. Execution and Delivery
Assuming the corporate power and legal authority of, and the due
authorization, execution and delivery by the other parties to the Legal
Documents, the Trust Agreement, Assignment Agreement and
Continuing Disclosure Certificate are valid, legal and bin¢in.g
obligations of the Trustee, enforceable against the Trustee ~n
accordance with their terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
sF~-2~o~o3 13
laws or equitable principles relating to or limiting creditors' rights
generally;
(iv) Execution and Delivery of 1997 Certificates - The
1997 Certificates have been validly authorized, executed and delivered
by the Trustee pursuant to direction from the City~
(v) Consents - Exclusive of federal or state securities
laws and regulations, other than routine filings required to be made
with governmental agencies in order to preserve the Trustee's authority
to perform a trust business (all of which routine filings counsel
believes, after reasonable inquiry and investigation, to have been
made), no consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over the
Trustee is or will be required for the ~ execution and delivery by the
Trustee of the Trust Agreement, Assignment Agreement or Continuing
'Disclosure Certificate or the execution and delivery of the 1997
Certificates; and
(vi) No Litigation - There is no litigation pending or,
to the best of its knowledge, threatened against or affecting the
Trustee to restrain or enjoin the Trustee's participation in, or in any
way contesting the powers of the Trustee with respect to the
transactions contemplated by the 1997 Certificates, the Trust
Agreement, the Assignment Agreement and the Continuing Disclosure
Certificate.
(8) Opinion of Underwriter' Counsel: The opinion of
O'Melveny & Myers LLP, San'Francisco, California, counsel for the
Underwriter, dated the date of Closing and addressed to the Underwriter, to
the effect that (i) the 1997 Certificates are exempt from registration pursuant
to the Securities Act of 1933, as amended, and the Trust Agreement is exempt
from qualification as an indenture pursuant to the Trust Indenture Act of
1939, as amended, and (ii) based upon discussions in conferences with certain
officials of the City and others with respect to the Official Statement and
without having undertaken to determine independently the accuracy,
completeness or fairness of the .statements contained in the Official Statement
(including the cover page and the Appendices attached thereto), nothing has
come to the attention of the attorneys providing legal services in connection
with the transaction which would lead them to believe that the Official
Statement (other than information pertaining to DTC, financial and statistical
data therein and incorporated therein by reference and the appendices
thereto, as to which no opinion need be expressed) contains an untrue
statement of a material fact or omits to state a material fact necessary to
sF~-2~oso3 14
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(9) City Certificate. A certificate, dated the Closing Date
and signed by a duly authorized official of the City, in form and substance
satisfactory to the Underwriter, to the effect that:
(i) Representations and Warranties - The
representations and warranties of the City contained herein are true
and correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date;
(ii) Complied with All Agreements - The City has
complied with all agreements and satisfied all the conditions on its part
to be performed or satisfied at an prior to the Closing Date under the
Legal Documents to which the City' is a party and the Official
Statement;
(iii) No Litigation - To the best of such official's
knowledge, no action, suit or proceeding is pending or threatened
against the City (a) to restrain or enjoin the execution or delivery of
any of the 1997 Certificates or the Legal Documents or the payment
of Lease Payments under the Lease, (b) in any way contesting or
affecting the validity of the 1997 Certificates, the Legal Documents or
the authority of the City to enter into the Legal Documents to which
the City is a party or (c) in any way contesting or affecting the powers
of the City in connection with any action contemplated by .the Official
Statement or this Purchase Contract;
(iv) No Change in Events - To the best knowledge of
said individual, no event has occurred since the date of the Official
Statement which should be disclosed in the Official Statement for the
purpose for which it is to be used or which it is necessary to be
disclosed therein in order to make the statements and information
therein not misleading in any material respect;
(v) No Untrue or Misleading Statements The
information contained in the Official Statement pertaining to the City
is true and correct and does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading in any
material respect; and
m-2~o~o3 15
(vi) 1993 Revenue Bonds - The City of South San
Francisco Capital Improvements financing Authority 1993 Revenue
Bonds (South San Francisco Conference Center) are not payable from
the proceeds of any insurance obtained with respect to the Property;
(10) Authority Certificate. A certificate of the Authority,
dated the Closing Date and signed by a duly authorized official of the
Authority, in form and substance satisfactory to the Underwriter, to the effect
that:
(i) Due Organization and Authority: Legal. Valid and
Binding Obligations - The Authority is a nonprofit public benefit
corporation duly organized and validly existing pursuant to the laws of
the State of California and has all necessary power and authority to
enter into and perform its duties under'the Legal Documents to which
the Authority is a party and, when executed and delivered by the
respective parties thereto, such Legal Documents will constitute legal,
valid and binding obligations of the Authority in accordance with their
respective terms except as enforcement against the Authority may be
limited by bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally and by the application of
equitable principles if equitable remedies are sought;
(ii) No Conflict - The execution and delivery of the
Legal Documents to which the Authority is a party and compliance
with the provisions thereof, will not in any material respect conflict
with, or constitute a breach of or default under, the terms~ conditions
or provisions of any agreement or instrument to which the Authority
is a party or any law, administrative regulation, court decree,
resolution, charter, by-laws or other agreement to which the Authority
is subject or by which it or any of its property is bound, a consequence
of which could be to materially and adversely affect the ability of the
Authority to perform its obligations under the Legal Documents to
which it is a party;
(iii) No Consents Required Except as may be
required under Blue Sky or other securities laws of any state, or except
with respect to any permits or approvals heretofore received which are
in full force and effect or the requirement for which is otherwise
disclosed in the Official Statement, there is no consent, approval,
authorization or other order of, or filing with, or certification by, any
governmental authority, board, agency or commission or other
regulatory authority having jurisdiction over the Authority, required for
the execution, delivery and sale of the 1997 Certificates or the absence
sm-2~o~o3 16
of which could be to materially and adversely affect the consummation
by the Authority of the other transactions contemplated by the Official
Statement or the Legal Documents to which the Authority is a party;
(iv) No Litigation - To the best of such official's
knowledge, there is no action, suit, proceeding or investigation at law
or in equity before or by any court or governmental agency or body
pending or threatened against the Authority to restrain or enjoin the
delivery of the 1997 Certificates, or the assignment of the payments to
be made pursuant to the Lease or in any way contesting or affecting
the validity of the Legal Documents to which the Authority is a party
or the 1997 Certificates or contesting the powers of the Authority to
enter into or perform its obligations under any of the foregoing;
(v) Official Statement Correct and Complete - The
information relating to the Authority contained in the Preliminary
Official Statement as of its date was, and in the Official Statement is,
true and correct in all material respects and such information does not
contain any untrue or misleading statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(vi) No Breach or Default - The Authority is not in
breach of or in default under any applicable law or administrative
regulation of the State of California or the United States or any
applicable judgment or decree or any loan agreement, indenture, bond,
note, resolution, agreement or other instrument to which the Authority
is a party or is otherwise subject which breach or' default would have
a material and adverse impact on the Authority's ability to perform its
obligations under the Legal Documents to which the Authority is a
party, and no event has occurred and is continuing which, with the
passage of time or the giving of notice, or both, would constitute a
default or an event of default under any such instrument;
(vii) Agreement to Notify Underwriter Regarding
Official Statement - The Authority will advise the Underwriter
promptly of any proposal to amend or supplement the Official
Statement and will not effect any such amendment or supplement
without the consent of the Underwriter; the Authority will advise the
Underwriter promptly of the institution of any proceedings known to
it seeking to prohibit or otherwise affect the use of the Official
Statement in connection with the offering, sale or distribution of the
Certificates;
17
(11) Trustee Certificate. A certificate of the Trustee dated
the Closing Date, signed by a duly authorized officer of the Trustee, in form
and substance satisfactory to the Underwriter, to the effect that:
(i) Due Organization and Existence - The Trustee is
a banking corporation duly organized and in good standing under the
laws of the State of California and has all necessary power and
authority to enter into and perform its duties under the Trust
Agreement, the Assignment Agreement and Continuing Disclosure
Certificate;
(ii) Corporate Action - The Trustee is duly authorized
to enter into the Trust Agreement, Assignment' Agreement and
Continuing Disclosure Certificate and to execute and deliver the 1997
Certificates to the Underwriter pursu.ant to the terms of the Trust
Agreement and, when executed by the other parties thereto, the Trust
Agreement, Assignment Agreement and Continuing Disclosure
Certificate will constitute legal, valid and binding obligations of the
Trustee enforceable in accordance with their terms; .
(iii) Execution and Delivery of 1997 Certificates - The
1997 Certificates have been duly executed and delivered to the
Underwriter pursuant to direction from the City;
(iv) No Breach or Default - The Trustee is not in
breach of or default under any law or administrative rule or regulation
of the United States of America or of any department, diviaion, agency
or instrumentality thereof, or any applicable court or administrative
decree or order, or any other instrument to which the Trustee is a
party or is otherwise subject or bound and which would materially
impair the ability of the Trustee to perform its obligations under the
Trust Agreement, Assignment Agreement and Continuing Disclosure
Certificate; provided, however, that the Trustee need not certify to
compliance with any federal or state securities laws;
(v) No Litigation - No action, suit, proceeding, inquiry
or investigation, at law or in equity, before or by any court, regulatory
agency, public board or body, is pending or, to the best of its
knowledge, threatened in any way affecting the existence of the
Trustee or the titles of its directors or officers to their respective
offices, or seeking to restrain or enjoin the execution, sale or delivery
of the 1997 Certificates, the application of the proceeds thereof in
accordance with the Trust Agreement, or in any way contesting or
affecting the validity or enforceability of the 1997 Certificates; and
m-2~o~o~ 18
(vi) No Conflict - The execution and delivery by the
Trustee of Trust Agreement, Assignment Agreement and Continuing
Disclosure Certificate, and compliance with the terms thereof will not,
in any material respect, conflict with, or result in a violation or breach
of, or constitute a default under, any loan agreement, indenture, bond,
note, resolution or any other agreement or instrument to which the
Trustee is a party or by which it is bound, or any law or any rule,
regulation, order or decree of any court or governmental agenCy or
body having jurisdiction over the Trustee or any of its activities or
properties, or (except with respect to the lien of the Trust Agreement)
result in the creation or imposition of any lien, charge or other security
interest or encumbrance of any nature whatsoever upon any of the
property or assets of the Trustee.
(12) Trustee Resolution. Certified copies of the general
resolution of the Trustee authorizing the execution and delivery of certain
documents by certain officers of the Trustee, which resolution authorizes the
execution and delivery of the 1997 Certificates and the Trust Agreement;
(13) City Resolution(s). Certified copies of resolutionsis)
adopted by the City Council of the City authorizing the execution and delivery
of the Legal Documents to which the City is a party;
(14) Authority Resolution(s). Certified copies of resolution(s)
adopted by the Board of Directors of the Authority authorizing the execution
and delivery of the Legal Documents to which the Authority is a party;
(15) Non-Arbitrage Certificate. A non-arbitrage c~ertificate in
form satisfactory to Special Counsel;
(16) IRS Form 8038-G. Internal Revenue Service Form 8038-
G, executed by an authorized officer of the City;
(17) Ratings. Evidence from Moody's Investors Service and
Standard & Poor's Ratings Group that the 1997 Certificates have been rated
" "and" ," respectively; and
(18) Miscellaneous. Such additional legal opinions,
certificates, proceedings, instruments and other documents as Co-Special
Counsel or counsel for the Underwriter may reasonably request to evidence
compliance with legal requirements, the truth and accuracy, as of the time of
Closing, of the representations and warranties contained herein, in the Legal
Documents and in the Official Statement and the due performance or
satisfaction by the Trustee, the Authority and the City at or prior to such time
of all agreements then to be performed and all conditions then to be satisfied.
m-2~oso3 19
(e) The required fees shall have been paid for the Insurance issued by the
Insurer with respect to the 1997 Certificates, and such Insurance shall be in full force
and effect.
(f) All matters relating to this Purchase Agreement, the 1997 Certificates
and the sale thereof, the Official Statement, the Legal Documents and the
consummation of the transactions contemplated by this Purchase Agreement shall
have been approved by the Underwriter and counsel for the Underwriter, such
approval not to be unreasonably withheld.
If the City and the Authority shall be unable to satisfy the conditions to the
obligations of the Underwriter to purchase, to accept delivery of and to pay for the 1997
Certificates contained in this Purchase Agreement, or if the obligations of the Underwriter
to purchase, to accept delivery of and to pay for the 1997 Certificates shall be terminated
for any reason permitted by this Purchase Agreement, this Purchase Agreement shall
terminate and neither the Underwriter, the City nor the Autl'/ority shall be under any further
obligation hereunder, except that the respective obligations of the City, the Authority and
the Underwriter set forth in Sections 9 and 11 hereof shall continue in full force and effect.
Section 8. Termination. The Underwriter shall have the right to terminate
their obligations under this Purchase Agreement to purchase, to accept delivery of and to'
pay for the 1997 Certificates by notifying the City of their election to do so if, between
the date hereof and the Closing Date, the market price or marketability, at the initial
offering prices set forth in the Official Statement, of the 1997 Certificates has been
materially adversely affected in the reasonable judgment of the Underwriter by reason of
any of the following:
(a) Legislation. Judicial Decisions or Rulings. An amendn~ent to the
Constitution of the United States or the constitution of the State of California shall
have been passed or legislation enacted or introduced in the Congress or
recommended for passage by the President of the United States, or a decision
rendered by a court established under Article III of the Constitution of the United
States or by the United States Tax Court with any of the effects listed in clauses (i),
(ii), (iii) or (iv) below, or an order, ruling, regulation (final, temporary or proposed)
or official statement issued or made:
(i) by or on behalf of the United States Treasury Department, or
by or on behalf of the Internal Revenue Service, with the purpose or effect, directly
or indirectly, of imposing federal income taxation upon payments of the general
character of the Lease Payments as would be received by the Authority or the
Trustee or upon such interest as would be received by the Owners of the 1997
Certificates; or
(ii) by or on behalf of the State of California or the California
Franchise Tax Board, with the purpose or effect, directly or indirectly, of imposing
sF,.2~o~o3 20
California personal income taxation upon payments of the general character of the
Lease Payments as would be received by the Authority or the Trustee or upon such
interest as would be received by the Owners of the 1997 Certificates; or
(iii) by or on behalf of the Treasury Department of the United States
or the Internal Revenue Service or by or on behalf of the State of California or the
California Franchise Tax Board, with the purpose or effect, directly or indirectly, of
changing the federal or State of California income tax rates, respectively; or
(iv) by or on behalf of the Securities and Exchange Commission, or
any other governmental agency having jurisdiction over the subject matter thereof,
to the effect that the 1997 Certificates, or obligations of the general character of the
1997 Certificates, including any and all underlying arrangements, are not exempt
from registration under the Securities Act of 1933, as amended, or the Trust
Agreement is not exempt from qualifications under the Trust Indenture Act of 1939,
as amended;
(b) War. The declaration of war or engagement in major military
hostilities by the United States or the occurrence of any other national emergency
or calamity relating to the effective operation of the government or the financial
community in the United States;
(c) Banking Moratorium. The declaration of a general banking
moratorium by federal, New York or California authorities, or the general suspension
of trading on any national securities exchange;
(d) Securities Exchange Restrictions. The imposition by the New York
Stock Exchange, other national securities exchange, or any government~.l authority,
of any material restrictions not now in force with respect to the 1997 Certificates, or
obligations of the general character of the 1997 Certificates or the material increase
of any such restrictions now in force, including those relating to the extension of
credit by, or the charge to the net capital requirements of, underwriters;
(e) Changes to Federal Securities Law. An order, decree or injunction of
any court of competent jurisdiction, or order, filing, regulation or official statement
by the Securities and Exchange Commission, or any other governmental agency
having jurisdiction oVer the subject matter thereof, issued or made to the effect that
the issuance, offering or sale of obligations of the general character of the 1997
Certificates, including any or all underlying obligations, as contemplated hereby or
by the Official Statement, is or would be in violation of any federal securities law as
amended and then in effect;
(f) Amendment to Federal or State Constitution. Any amendment to the
federal or California Constitution or action by any federal or California court,
legislative body, regulatory body or other, authority materially adversely affecting the
s~n-2~so3 21
tax status of the City, its property, income, securities (or interest thereon) or the
validity or enforceability of the 1997 Certificates;
(g) Official Statement Untrue or Incomplete. Any event occurring, or
information becoming known which, in the reasonable judgment of the Underwriter,
makes untrue in any material adverse respect any statement or information contained
in the Official Statement, or has the effect that the Official Statement contains any
untrue statement of a material fact or om/ts to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading;
(h) Certain Amendments to the Official Statement. An event described
in Section 6(h) hereof occurs prior to the Closing which, in the reasonable judgment
of the Underwriter, requires or has required a supplement or amendment to the
Official Statement; or
(i) Action by Rating Agencies. Any downgrading, suspension or
withdrawal, or any official statement as to a possible downgrading, suspension or
withdrawal, of any rating by Moody's Investors Service or Standard & Poor's Ratin, gs
Group or Fitch Investors Service of any obligations of the City (excluding obligations
for which the City acts merely as a conduit issuer), including the 1997 Certificates.
Section 9. Expenses. (a) The Underwriter shall be under no obligation to
pay, and the City or the Authority shall pay, any expenses incident to the performance of
the City's or the Authority's obligations hereunder, including, but not limited to, (i) the cost
of preparation, printing and delivery of the Prelim/nary Official Statement and of
preparation, printing and delivery of the Official Statement; (ii) the cost of preparation of
the 1997 Certificates; (iii) the fees and disbursements of Special Counsel; (iv) the fees and
disbursements of the Trustee; (v) the fees and disbursements of Coopers & Lybrand LLP
for their services as the Independent Auditors of the City; (vi) the fees and disbursements
of any other engineers, accountants, and other experts, consultants or advisers retained by
the City; (vii) the fees for the 1997 Certificate ratings; and (viii) the Insurance fees referred
to in paragraph (e) of Section 7.
(b) The Underwriter shall pay (i) the cost of preparation and printing of
this Purchase Agreement and the Blue Sky and Legal Investment Surveys; (ii) all advertising
expenses in connection with the public offering of the 1997 Certificates; (iii) the California
Debt Advisory Commission fee; and (iv) all other expenses incurred by them or any of them
in connection with the public offering of the 1997 Certificates, including the fees and
disbursements of counsel retained by them.
Section 10. Notices. Any notice or other communication to be given to a
party under this Purchase Agreement may be given by delivering the same in writing by mail
to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time, namely:
sF~-2~o~o, 22
(a) If to the City:
City of South San Francisco
315 Maple Avenue
South San Francisco, CA 94080
(b) If to the Authority:
(c) If to the Trustee:
(d)
If to the Underwriter:
PaineWebber Incorporated
100 California Street, Suite 1200
San Francisco, CA 94111
Attention: Public Finance Department
Section 11. Parties in Interest. This Purchase Agreement is made solely for
the benefit of the City, the Authority and the Underwriter .(including successors or assigns
of the Underwriter) and no other person shall acquire or have any right hereunder or by
virtue hereof. All of the City's and the Authority's representations, warranties and
agreements contained in this Purchase Agreement shall remain operative and in full force
and effect, regardless of (i)any investigations made by or on behalf of any of t.he
Underwriter; (ii) delivery of any payment for the 1997 Certificates pursuant to this Purchase
Agreement; and (iii) any termination of this Purchase Agreement.
Section 12. Governing Law. This Purchase Agreement shall be governed
by the laws of the State of California.
Section 13. Entire Agreement. This Purchase Agreement when accepted
by you in writing as heretofore specified shall constitute the entire agreement .between us
and is made solely for the benefit of the City and the Underwriter (inclttding the successors
or assigns thereof). No other person shall acquire or have any right hereunder or by virtue
hereof.
Section 14. Determination of Underwriting Period. The term "end of the
underwriting period" means such time as the Underwriter no longer retain, directly or as a
member or an underwriting syndicate, an unsold balance of the 1997 Certificates for sale
to the public. Unless the Underwriter gives notice to the contrary, the "end of the
underwriting period" shall be deemed the date of the Closing. Any notice delivered
pursuant to this Section shall be written notice, delivered to the City and the Authority at
or prior to the Closing, and shall specify a date, other than the date of the Closing (or other
date specified by notice delivered pursuant to this section), to be deemed the "end of the
underwriting period."
Section 15. Counterparts. This Purchase Agreement may be executed in.any
number of counter parts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
sm-2~o~o3 23
Section 16. Headings. The headings of the sections of this Purchase
Agreement are inserted for convenience only and shall not be deemed to be a part hereof.
[Remainder of page intentionally left blank]
sw-~oso3 24
Section 17. Effectiveness. This Purchase Agreement shall become effective
upon the acceptance hereof by the authorized officer, the City or his or her designee and
shall be valid and enforceable at the time of such acceptance and acknowledgment.
Very truly yours,
PAINEWEBBER INCORPORATED,
as Underwriter
By
Title:
Accepted this ~ day
of 1997
CITY OF SOUTH SAN FRANCISCO, CALIFORNIA
By
City Manager
APPROVED AS TO FORM:
CITY ATTORNEY
By
sF~-2~o~o3 S-1
SCHEDULE I
1997 Certificates of Participation
Maturity Principal Interest
Date Amount Rate
Price
or
Yield
I-1
12/10/96
NEW ISSUE - BOOK-ENTRY ONLY RATING:
(See 'RATING' herein)
In the opinion of Jones Hall Hill & White, A Professional ~ Corporation, San Francisco, California, Special Counsel. subject, however to certa.1
qualifications described herein, under existing law, the portion of lease payrnents designated as and comprising interest and received by the o~ers of
the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations, although for the purpose of computing minimum tax imposed on certain corporations, such interest
is taken into the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings.
In the further opinion of Special Counsel, such interest is exempt from California personal income taxes. See 'TAX EXEMPTION~ herein.
CITY OF SOUTH SAN FRANCISCO
1997 Certificates of Participation
(Convention Center and Public Facilities Project)
Evidencing the Fractional Undivided Interests of the Owners
thereof in Lease Payments to be made by the
City of South San Francisco, California
to the
City of South San Francisco Capital Improvements Financing Authority
Dated: __ 1, 1997 Due:
·
The Certificates are being executed and delivered (i) to finance the acquisition of certain land and improvements used and operated as a
convention center (the "Property') and to construct and acquire certain other public improven)ents, (ii) to fund a reserve fund for the Certificates
and (iii) to pay the costs of issuance of the Certificates. See "ES~MATED SOURCES AND USES OF FUNDS" and ~I'HE PROJEC-~ herein.
The Certificates evidence fractional undivided interests in lease payments payable by the City of South San Francisco, California (the 'City") under
a Lease Agreement, dated as of January 1, 1997 (the "Lease Agreement"), by and between the City and the City of South San Francisco Capital
Improvements Financing Authority (the "Authority"), relating to the Property. The Certificates are subject to prepayment as described herein.
The Certificates will b~ delivered in fully registered form only and, when executed and delivered, will be registered in the name of Cede &
Co.. as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository, of the Certificates.
Ownership interests in the Certificates mayinitiallybe purchased in book-entry form only, in denominations of $5,000 and integral multiples thereof.
Beneficial Owners of Certificates will not receive physical certificates representing the Certificates purchased, but will receive a credit balance on
the books of DTC. The Certificates will not be transferable or exchangeable, except for transfer to another nominee of DTC as described herein.
Principal, premium, if any, and interest due with respect to the Certificates will be paid by the Trustee to DTC, or its nominee, which will in turn
remit such principal, premium, if any, and interest to its Participants for subsequent disbursement to the Beneficial Owners of thc Certificates as
described herein. Sec "BOOK-ENTRY ONLY SYSWEM" herein.
The City covenants in the Lease Agreement to make all lease payments provided for therein, to include all such payments in its annual budget
and to make the necessary annual appropriations for such rental payments. The City's obligation to make rental payments is subject to abatement
in the event of damage to, destruction or condemnation of, or title defects relating to, the Property described herein.
See thc section of this Official Statement captioned 'RISK FACTORS" for a discussion of certain risk~ associated with thc purchase of the
Certificates which, in addition to other matters set forth herein, should be considered in evaluating the investment quality of thc Certificates.
THE OBLIGATION OF THE CITY OF SOUTH SAN FRANCISCO TO MAKE LEASE PAYMENTS UNDER THE LEASE
AGREEMENT DOES NOT CONS~ITrLrrE AN OBLIGATION OF THE CrFY FOR WHICH THE crrY IS OBLIGATED TO LEVY OR
PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
NEITHER THE LEASE AGREEMENT, THE CERTIFICATES NOR THE OBLIGATION OF THE CITY TO MAKE SUCH LEASE
PAYMENWS OR PAYMENTS OF ADDITIONAL RENTAL CONSTrrLrrES AN INDEBTEDNESS OF THE CITY, THE AUTHORITY, THE
STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF W1THIN THE MEANING OF ANY CONglTrUTIONAL OR
STATUTORY DEBT LIMITATION OR RESTRICTION.
Maturity schedule, interest rates, yields and CUSIP numbers are set forth on the inside front cover.
This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire
Official Statement to obtain information essential to the making of an informed investment decision.
The Certificates will be offered when, as and if executed and delivered to and received by the Underwriter, subject to thc approval of
legality by Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Special Counsel. Certain legal matters will be
passed upon for the Underwriter by their counsel, O'Melveny & Myers LLP, San Francisco, California, and for the City of South San Francisco
and the City of South San Francisco Capital Improvements Financing Authority by the CityAttorney. It is anticipated that the Certificates in book-
entry form will be available for delivery through thc facilities of DTC in New York, New York on or about ,1997.
Preliminary; subject to change.
SFI-250673.V3
PAINEWEBBER INCORPORATED
The date of this Official Statement is , 1997
12/10/9t~
SFI-250673.V3
Maturity
~u~ust 1)
Principal
Amount
MATURITY SCHEDULE'
$ Serial Certificates
Interest Cusip # Maturity
Rate Yield (August 1)
Principal
Amount
Interest
Rate
Yield
Cusip #
Term Certificates maturing August 1, 20__; Price
; CUSIP #
*Preliminary; subject to change.
SF1-250673.V3
No dealer, broker, salesperson or other person has been authorized by the City, the Authority, the
Underwriter or the Trustee to give any information or to make any representations other than those contained in this
Official Statement and, if given or made, such other information or representations must not be relied upon as hax4ng
been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the Certificates by any person in any jurisdiction in which it is
unlawful for such person to make such an offer, solicitation or sale.
The information contained in this Official Statement has been furnished by the City, the Authority and other
sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be
construed as a representation by, either the Trustee or the Underwriter. Summaries and references to statutes and
documents in this Official Statem_ent do not purport to be comprehensive or definitive and are qualified in their
entireties by reference to each such statute or document. Statements contained in this Official Statement which
involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely
as such and are not to be construed as representations of facts. The information and expressions of opinions herein
are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in the affairs of the City or the
Authority since the date hereof. This Official Statement does not constitute a contract between any purchaser of the
Certificates and the City, the Authority, the Trustee or the Underwriter.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET' PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
SF1-250673.V3
CITY OF SOUTH SAN FRANCISCO
John R, Penna
Members of the City Council
Joseph A. Fernekes
Mayor
Eugene R. Mullin
Robert S. Yee
City Officials
Michael A. Wilson
City Manager
Barbara A. Battaya
City Clerk
Steven T. Mattas
City Attorney
Beverly Bonalanza Ford
City Treasurer
Mike Brooks
Director of Finance
SPECIAL COUNSEL
Jones Hall Hill & White,
A Professional Law Corporation
San Francisco, California
Sandra O'Toole
Conference Center
Executive Director
TRUSTEE
First Trust of California, National Association
San Francisco, California
SFI-250673.¥3
TABLE OF CON'IEN'~
INTRODUCTION ................................................................ 1
THE CERTIFICATES ............................................................. 4
General .................................................................. 4
Prepayment ............................................................... 4
BOOK-ENTRY ONLY SYSTEM ...................................................... 6
ESTIMATED SOURCES AND USES OF FUNDS ......................................... 9
THE PROPERTY ................................................................. 9
THE PROJECT .................................................................. 10
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES ....................... 10
Lease Payments ............................................................ 10
Insurance ....................................................... ~ ......... 12
Action on Default ........................................................... 12
Reserve Fund .............................................................. 12
THE AUTHORITY ................................................................ 13
RISK FACTORS ................................................................. 13
Lease Payments NotCity Debt ................................................. 13
Project Delay .............................................................. 14
Substitution of Property ...................................................... 14
Additional Obligations ....................................................... 14
Abatement of Lease ..........................................................
Limited Recourse, No Acceleration on Default ...................................... 16
Loss of Tax' Exemption ....................................................... 16
Revenue Sources to Pay Certificates ............................................. 16
Book-Entry System .......................................................... 17
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES
AND APPROPRIATIONS ........................................................... 18
Article XIIIA of the California Constitution ....................................... 18
Article XIIIB of the California Constitution ....................................... 18
Proposition 62 ............................................................. 19
Proposition 218 ............................................................. 20
Further Initiatives .......................................................... 21
CONTINUING DISCLOSURE ....................................................... 21
TAX EXEMPTION ............................................................... 22
CERTAIN LEGAL MATTERS ....................................................... 22
LITIGATION .................................................................... 22
UNDERWRITING ................................................................ 23
RATING ....................................................................... 23
FURTHER INFORMATION ......................................................... 24
EXECUTION AND DELIVERY ...................................................... 24
APPENDIX A
THE CITY OF SOUTH SAN FRANCISCO ....................................... A-1
APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE CITY OF SOUTH SAN FRANCISCO ...... B-1
APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ................................ C-1
APPENDIX D
FORM OF OPINION OF SPECIAL COUNSEL ................................... D-!
APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE ........................... E-1
SFI-250673.V3 i
OFFICIAL STATEMENT
$ '
CITY OF SOUTH SAN FRANCISCO
1997 CERTIFICATES OF PARTICIPATION
(Convention Center and Public Facilities Project)
Evidencing the Fractional Undivided Interests of the Owners
thereof in Lease Payments to be made by the
CITY OF SOUTH SAN FRANCISCO, CALIFORNIA
to the
CITY OF SoIYrH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING
AUTHORITY
INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the
inside cover and appendices hereto, is to provide information in connection with the offering
of City of South San Francisco 1997 Certificates of Participation (Convention Center and
Public Facilities Project) (the "Certificates") in the aggregate principal amount of
$ ' The Certificates evidence fractional undivided interests in lease payments
(the "Lease Payments") payable by the City of South San Francisco, California (the "City")
under a Lease Agreement, dated as of January 1, 1997 (the "Lease Agreement"), by and
between the City and the City of South San Francisco Capital Improvements Financing
Authority, a California joint powers authority (the "Authority").
This introduction is not a summary of the Official Statement. It is only a brief
description of and guide to, and is qualified by, the more complete and detailed information
contained in the entire Official Statement and the documents summarized or described
herein. A full review should be made of the entire Official Statement. The offering of the
Certificates to potential investors is made only by means of the entire Official Statement.
The Certificates are being executed and delivered to finance the acquisition
of certain land and improvements used as a convention center (the "Convention Center" or
"Property") and acquisition, construction and installation of certain other public facilities and
capital improvements (collectively, the "Project"). See "THE PROJECT." The City will
sublease Property to the Authority pursuant to a Site Lease, dated as of January 1, 1997, by
and between the City and the Authority (the "Site Lease"). See "THE PROPERTY.i' The
Authority will then sub-sublease the Property to the City pursuant to the Lease Agreement.
*Preliminary; subject to change.
SFI-250673.V3 I
The City currently leases the Property from a third party pursuant to an Industrial Real
Estate Lease (the "Facility Lease"). Improvements to the Property were also refinanced by
revenue bonds issued by the Authority. See "THE PROPERTY." On December 18, 1996,
the City commenced condemnation proceedings to acquire the Property.. See "THE
PROJECT." Until the City acquires fee title to the Property, the Site Lease shall constitute
a sublease of the City's leasehold interest pursuant to the Facility Lease.
The Authority will assign its rights to receive payments under the Lease
Agreement to be made by the City and its remedies upon any default under the Lease
Agreement to First Trust of California, National Association, California, as trustee (the
"Trustee"), pursuant to an Assignment Agreement, dated as of January 1, 1997 (the
"Assignment Agreement"). The Certificates, which evidence fractional undivided interests
of the registered owners thereof (the "Owners") in the lease payments to be made by the
City pursuant to the Lease Agreement, will be executed and delivered pursuant to a Trust
Agreement, dated as of January 1, 1997, by and among the City, the Authority and the
Trustee (the "Trust Agreement"). The City is authorized to undertake the actions of the
City described herein by Resolution No. , adopted by. the City Council of the City on
December 18, 1996, and the Authority is authorized to undertake the actions of the
Authority described herein by Resolution No. , adopted by the Board of Directors
of the Authority on December !8, 1996.
The City will be required to pay all of the Lease Payments required under the
Lease Agreement to the Trustee, subject to abatement of all or a portion of such rental
payments. The Lease Payments are designed to be sufficient in both time and amount to
pay, when due, the principal and interest represented by the Certificates. Under the Lease
Agreement, the City will also be required to pay any taxes, assessments, insurance premiums
and maintenance and repair costs in connection with the Property. The City also covenants
in the Lease Agreement to take such action as may be necessary to include the rental
payments in its annual budgets and to make the necessary annual appropriations therefor
subject to abatement due to damage to, destruction or condemnation of, or title defects
relating to, the Property. However, the City is not obligated to levy or pledge any form of
taxation for the payment of rental for the Property, nor has the City done so. See
"APPENDIX C- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Lease
Agreement." For certain financial information with respect to the City, see "APPENDIX A -
THE CITY OF SOUTH SAN FRANCISCO" and "APPENDIX B-AUDITED
FINANCIAL STATEMENTS OF THE CITY OF SOUTH SAN FRANCISCO."
The Lease Payments may be abated in accordance with the Lease Agreement
during any period in which, by reason of material damage, destruction, condemnation or title
defect, there is substantial interference with the City's use and possession of the Property
or any portion thereof. The City will certify that Lease Payments payable under the Lease
Agreement will not exceed the fair rental value of the Property. In the event of abatement,
Lease Payments shall be abated to the extent that the annual fair rental value of the portion
of the Property in respect of which there is no substantial interference is less than the
annual Lease Payments. See "SECURITY AND SOURCES OF PAYMENT FOR THE
CERTIFICATES - Lease Payments."
SFI-250673.V3 2
Under the Lease Agreement, the City is required to maintain use and
occupancy insurance in the amount of Lease Payments for a period of twenty-four (24)
months and covering the same perils as are covered by the property and casualty, insurance
to be maintained by the City. Moneys in the Reserve Fund are also pledged to make such
payments. In addition, the Property will be insured against damage, destruction and title
defect. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES -
Insurance." Net insurance proceeds and condemnation awards will be applied to repair or
replace the Property or to prepay all or a portion of the Certificates. See "THE
CERTIFICATES" and "APPENDIX C SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS - The Lease Agreement."
Under certain circumstances, the City may (a) substitute certain real property
or improvements in lieu of any portion of the Property, (b) add certain real property or
improvements to the Property, or (c)remove real property or improvements from the
definition of Property, subject to certain conditions set forth in the Lease Agreement. See
"APPENDIX C - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -The Lease
Agreement."
The summaries or references to the Trust Agreement, the Site Lease, the
Lease Agreement, the Assignment Agreement and other documents, agreements and
statutes referred to herein, and the description of the Certificates included in this Official
Statement, do not purport to be comprehensive or definitive, and such summaries,
references and descriptions are qualified in their entireties by reference to each such
document or statute. All capitalized te. rms used in this Official Statement (unless otherwise
defined herein) which are defined in the Trust Agreement or the Lease Agreement shall
have the meanings set forth therein, some of which are summarized in "APPENDIX C -
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - Definitions of Certain Terms."
THE OBLIGATION OF THE CITY OF SOUTH SAN FRANCISCO TO
MAKE LEASE PAYMENTS UNDER THE LEASE AGREEMENT DOES NOT
CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS'
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH
THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER
THE LEASE AGREEMENT, THE CERTIFICATES NOR THE OBLIGATION OF THE
CITY TO MAKE SUCH LEASE PAYMENTS CONSTITUTES AN INDEBTEDNESS OF
THE CITY, THE AUTHORITY, THE STATE OF CALIFORNIA OR ANY POLITICAL
SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMITATION OR RESTRICTION.
SFI-250673.V3 3
THE CERTIFICATES
General
The Trustee is authorized to execute and deliver Certificates in an aggregate
amount of $ ' representing undivided fractional interests in the Lease Payments
to be made by the City under the Lease Agreement.
The Certificates will be delivered in fully registered form only and, when
executed and delivered, will be registered in the name of Cede & Co., as nominee of The
Depository Trust Company, New York, New York CDTC"). DTC will act as securities
depository of the Certificates. Ownership interests in the Certificates may be purchased in
book-entry form only, in the denominations hereinafter set forth. See "BOOK-ENTRY
ONLY SYSTEM."
The Certificates will be dated 1, 1997 and interest represented
thereby will accrue from such date. Ownership interests in the Certificates will be in $5,000
denominations or any integral multiple thereof. Interest represented by the Certificates will
be computed using a year of 360 days comprised of twelve 30-day months and is payable on
February 1 and August 1 of each year, commencing August 1, 1997 (each, an "Interest
Payment Date"). The Certificates will mature on the dates and in the principal amounts,
and the interest represented thereby shall be computed atthe rates, all as set forth on the
inside cover of this Official Statement.
Each Certificate shall represent interest from the Interest Payment Date to
which interest has been paid or duly provided for next preceding its date of execution, unless
such date of execution shall be (i) prior to the close of business on July 15, 1997, in which
case such Certificate shall represent interest from 1, 1997, or (ii) subsequent to
a Record Date but on or before the next succeeding Interest Payment Date, in which case
such Certificate shall represent interest from such Interest Payment Date. The "Record
Date" is the close of business on the fifteenth day of the month immediately preceding any
Interest Payment Date, whether or not such day is a Business Day.
Prepayment
Optional Prepayment. The Certificates maturing on or before August 1, .. ,
are not subject to optional prepayment prior to the respective stated maturities. The
Certificates maturing on or after August 1, , are subject to optional prepayment in
whole or in part, on any Business Day on or after August 1, ~, from prepayments of the
Lease Payments made at the option of the City pursuant to the Lease, at a prepayment price
(expressed as a percentage of the principal amount to be prepaid), as set forth in the
following table together with accrued interest represented thereby to the date fixed for
prepayment.
' Preliminary; subject to change. .~ ·
SF1-250673.V3 4
Prepa.vment Dates Prepayment Price
Sinking Fund Payment. The Term Certificates maturing on August 1, ~ are
also subject to mandatory sinking fund payment by lot on August 1 in each year beginning
August 1, , from the principal components of the Lease Payments required to be paid
with respect to each of such dates, at a prepayment price equal to 100% of the principal
amount to be prepaid, together with accrued interest represented thereby to the prepayment
date, without premium, as follows:
Payment Date
(August 1)
Principal Amounts of
Term Certificates
To Be Paid
Notwithstanding the foregoing provisions, in the event that some but not :all
of the Term Certificates have been prepaid pursuant to any of the preceding provisions, the
aggregate principal amount of such Term Certificates to be paid in each year thereafter shall
be reduced by the aggregate principal amount of such Term Certificates so prepaid, to be
allocated among sinking fund installments on a pro rata basis as directed by the City in
integral multiples of $5,000 such that the resulting amount of principal representing by such
Term Certificates subject to payment on any date is equal to the aggregate principal
components of the Lease Payments coming due and payable on such date.
Prepayment From Net Proceeds of Insurance or Eminent Domain. The
Certificates are also subject to mandatory prepayment on any date, in whole or in part, from
the Net Proceeds of insurance or eminent domain proceedings credited towards the
prepayment of the Lease Payments pursuant to the Lease, at a prepayment price equal to
100% of the principal amount to be .prepaid, together with accrued interest represented
thereby to the date fixed for prepayment, without premium.
Extraordinary Mandatory Prepayment. In the event the City fails to acquire
title to the Property in connection with the condemnation proceedings, the Certificates are
subject to extraordinary mandatory prepayment, in whole or in part, on any Business .Day
from amounts, if any, returned to the City from the court and any additional available funds
of the City.as follows: (i) prior to , at the principal amount thereof to be
prepaid together with interest thereon to the date of prepayment without premium; and (ii)
on or after at a prepayment price (expressed as a percentage of the principal
amount to be prepaid) as set forth below together with interest thereon to the date of
prepayment.
SF1-250673.V3 5
[to come]
When prepayment is authorized or required, the Trustee will mail, by first class
mail, postage prepaid, to affected Owners, at the addresses appearing on the registration
books maintained by the Trustee as of the close of business on the day before such notice
of prepayment is given, a notice of prepayment not less than 30 days nor more than 60 days
before the date fixed for prepayment. AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS
USED FOR THE CERTIFICATES, THE TRUSTEE WILL SEND SUCH NOTICE ONLY
TO DTC. SEE "BOOK-ENTRY ONLY SYSTEM."
BOOK-ENTRY ONLY SYSTEM
When the Certificates are issued, ownership interests will be available to
purchasers only through a book-entry system (the "Book-Entry System") maintained by DTC
or such other depositoryinstitution designated by the City pursuant to the Trust Agreement.
If the Certificates are taken out of the Book-Entry System and delivered to owners in
physical form, as described below under "Discontinuance of DTC Services," the following
discussion will not apply.
DTC and Its Participants. The Depository Trust Company, New York, New
York CDTC") will act as securities depository for the Certificates. DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization" within
the meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of the Security
Exchange Act of 1934, as amended. DTC holds securities of its participants (the
"Participants") and also facilitates the clearance and settlement of securities transactions,
such as transfers and pledges, among Participants in deposited securities through electronic
computerized book-entry changes in accounts of the Participants, thereby eliminating the
need for physical movement of securities. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other organizations (the
"Direct Participants"). DTC is owned by a number of Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to others,
such as banks, securities brokers and dealers and trust companies that clear through or
maintain a custodial relationship with Direct Participants, either directly or indirectly (the
"Indirect Participants"). The rules applicable to DTC and the Participants are on file with
the Securities and Exchange Commission (the "SEC").
Purchase of Ownership Interests. Purchases of the Certificates under the
book-entry system must be made by or through Direct Participants. The Participants will
receive a credit balance in the records of DTC. The ownership interest of each actual
purchaser of each Certificate (a "Beneficial Owner") is in turn to be recorded on the records
of the applicable Participant. Beneficial Owners will not receive written confirmation from
DTC of their purchase, but each Beneficial Owner is expected to receive from the
applicable Direct of Indirect Participant a written confirmation of their purchase providing
SF1-250673.V3 6
details of the Certificates acquired as well as periodic statements of such Beneficial Owner's
holdings. Transfers of ownership interests in the Certificates will be accomplished by entries
made on the books of the Participants who act on behalf of the Beneficial Owners.
BENEFICIAL OWNERS WILL NOT RECEIVE PHYSICAL CERTIFICATES
REPRESENTING THEIR OWNERSHIP INTEREST IN BONDS, EXCEPT IN THE
EVENT PARTICIPATION IN THE BOOK-ENTRY SYSTEM IS DISCONTINUED AS
DESCRIBED BELOW.
To facilitate subsequent transfers, all Certificates deposited by Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit
of the Certificates with DTC and their registrations in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Certificates; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Certificates are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other commuhications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from time to time.
Any failure of DTC to advise any Participant, or of any Participant to notify any Beneficial
Owner, of any such notices and its content or effect will not affect the validity or sufficiency
of the proceedings relating to the prepayment of the Certificates called for prepayment or
of any other action premised in such notice. Prepayment notices shall be sent to Cede &
Co. If less than all of the Certificates are being prepaid, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant to be prepaid.
Payments of Principal, Interest and Purchase Price. So long as DTC's Book-
Entry System is used for the Certificates, payments of principal, premium, if any, and
interest on the Certificates will be made by the Trustee to DTC. DTC's practice is to credit
the accounts of the Direct Participants on the payable date in accordance with their
respective holdings shown on the records of DTC unless DTC has reason to believe that it
will not receive payment on the payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is now the case
with municipal securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of DTC, the City or
the Trustee, subject to any statutory and regulatory requirements as may be in effect from
time to time. The City cannot and does not give any assurances that DTC, Direct
Participants, Indirect Participants or others will distribute payments of principal and interest
on the Certificates paid to DTC or its nominee, as the registered owners, or any redemption
or other notices, to the Beneficial Owners or that they will do so on a timely basis or will
serve and act in a manner described in this Official Statement. Payment of principal and
interest to DTC is the responsibility of the Trustee, as set forth in the Trust Agreement,
provided the Trustee receives funds from the City, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners is the responsibility of Diregt and Indirect Participants.
SF1-250673.V3 7
Discontinuance of DTC Services. DTC may discontinue providing its services
with respect to the Certificates at any time by giving 30 days' written notice to the Trustee
and the City, or the City may terminate its participation in the system of book-entry
transfers through DTC (or a successor) at any time. In the event that the City determines
not to continue the Book-Entry System or DTC determines to discontinue providing its
services with respect to the Certificates and the City does not select another qualified
securities depository, Certificates will be printed and delivered as described in the Trust
Agreement. In such event, transfers and exchanges of the Certificates will be governed by
the provisions of the Trust Agreement.
The foregoing information in this section concerning DTC and DTC's Book-
Entry System has been obtained from sources that the City believes to be reliable, but
neither the City nor the Trustee takes any responsibility for the accuracy thereof.
As long as Cede & Co. or its successor is the registered owner of the
Certificates, as nominee of DTC, references herein to the registered owners of the
Certificates shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners
of the Certificates. Each person for whom a Participant acquires an interest in the
Certificates, as nominee, may desire to make arrangements with such Participant to receive
a credit balance in the records of such Participant, and may desire to make arrangements
with such Participant to have all communications to DTC, which may affect such person,
forwarded in writing by such Participant and to receive notification of all interest payments.
NEITHER THE CITY, THE AUTHORITY, THE TRUSTEE NOR THE
UNDERWRITER WILL HAVE ANY RESPONSIBILITY OR OBLIGATION WITH
RESPECT TO THE PAYMENTS TO THE DIRECT PARTICIPANTS, ANY INDIRECT
PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO THE
CERTIFICATES. NO ASSURANCE CAN BE GIVEN BY THE CITY, THE
AUTHORITY, THE TRUSTEE OR THE UNDERWRITER THAT DTC, DIRECT
PARTICIPANTS, INDIRECT PARTICIPANTS OR OTHER NOMINEES OF THE
BENEFICIAL OWNERS WILL MAKE PROMPT TRANSFER OF PAYMENTS TO THE
BENEFICIAL OWNERS, THAT THEY WILL DISTRIBUTE NOTICES RECEIVED AS
THE REGISTERED OWNER OF THE CERTIFICATES TO THE BENEFICIAL
OWNERS, THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL
ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.
SFI-250673.V3 8
ESTIMATED SOURCES AND USES OF FUNDS
The sources and uses of funds in connection with the execution and delivery
of the Certificates are estimated as follows:
SOURCES:
Par Amount of the Certificates
Accrued Interest
Original Issue Discount
USES:
Total Sources
Acquisition and Construction Fund
DepoSit to Reserve Fund
Accrued Interest
Delivery Costs Fund
Certificate Insurance Premium
Underwriter's Discount
Total Uses $
THE PROPERTY
Pursuant to the Lease Agreement, the City will sub-sublease the Property from
the Authority. The Property consists of the South San Francisco Conference Center located
approximately two miles north of the San Francisco International Airport. The South San
Francisco Conference Center operates as a public assembly facility with a 40,000 square foot
meeting and banquet facility capable of accommodating 1,200 guests. The South San
Francisco Conference Center is situated between two full service hotels and features a
dramatic atrium and reception area and audio visual facilities. The Conference Center is
accessible in accordance with the Americans With Disabilities Act.
The South San Francisco Conference Center opened in April of 1993. As of
December 1996, the Conference Center' has hosted over conventions, including
[describe conventions], with an aggregate of approximately attendees.
Construction of the Property, initially financed in 1991, was refinanced in 1993
with proceeds of the Authority's 1993 Revenue Bonds (South San Francisco Conference
Center (the "1993 Bonds"). As of November 30, 1996, [$6,365,000] aggregrate principal
amount of the 1993 Bonds is outstanding. The 1993 Bonds are payable from conference
center payments received by the Authority from the City pursuant to an Amended and
restated Conference Center Use Agreement. The City's obligation to make the conference
center payments is not subject to abatement and is a special obligation payable from tax
revenues generated by the levy of a transient occupancy tax approved by two-thirds of the
SF1-250673.V3 9
electors of the City on November 7, 1989. The 1993 Bonds are not payable from the
proceeds of any insurance or condemnation award with respect to the Property.
THE PROJECT
Proceeds of the Certificates will be used by the City to acquire the Property.
and for certain other public improvements. The City has initiated the condemnation
proceedings to acquire the Property and $ of the proceeds of the Certificates will
be deposited with the court in connection with such proceedings. The City anticipates that
the condemnation proceedings will be completed by , at which time the City shall
acquire fee title to the Property. [At- the initial hearing, the current owner of the Property
(the "Owner") appeared to protest the condemnation proceedings. The City believes the
Owner will continue to contest the condemnation of the Property.] No assurances are given,
however, that the City will complete the condemnation proceedings on schedule or that the
City will prevail and acquire fee title to the Property. See "RISK FACTORS - Project
Delay."
The remaining proceeds, excluding costs of issuance, will be used by the City
to [to come].
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES
Lease Payments
(
Each Certificate evidences an undivided fractional interest in the principal
component of the Lease Payments to be made on the principal payment date on which such
principal component evidenced by such Certificate becomes due and payable or on the
earlier prepayment date of such Certificate, and a portion of the interest component of all
Lease Payments (based on the stated interest rate with respect to that Certificate) to be
made up to and including the principal payment date or prepayment date of that Certificate.
The Authority, pursuant to the Assignment Agreement, has assigned certain of its rights
under the Lease Agreement, including its right to receive Lease Payments thereunder, to
the Trustee for the benefit of the Owners. The rights of the Authority under the Lease
Agreement are subject to certain pre-existing agreements relating to the Property. See
"Action on Default" below. The City has agreed to pay Lease Payments semiannually to the
Trustee, as assignee of the Authority. The Lease Payments are designed to be sufficient,
in both time and amount, to pay principal and interest with respect to the Certificates when
due.
The City has also covenanted in the Lease Agreement to take such action as
may be necessary to include and maintain all Lease Payments for the Property in its annual
budgets and to make the necessary annual appropriations therefor.
Except to the extent of amounts on deposit in the Lease Payment Fund or the
Reserve Fund, amounts received from any use and occupancy insurance or amounts, if any,
SF1-250673.V3 10
otherwise legally available to the Trustee for payments in respect of the Certificates, Lease
Payments may be abated in accordance with the Lease Agreement during any period in
which, by reason of material damage, destruction, condemnation or title defect, there is
substantial interference with the City's use and possession of the Property, or any portion
thereof. See "RISK FACTORS - Abatement of Lease."
For the use of the Property, the Lease Agreement requires the City. to make
Lease Payments commencing July 25, 1997. Lease Payments are due and payable
semiannually during each year on January 25 and July 25. Such payments are intended to
be sufficient to pay, when due, amounts designated as principal and interest with respect to
the Certificates. Pursuant to the Trust Agreement the Trustee will transfer amounts on
deposit in the Lease Payment Fund to the extent necessary to pay principal and interest with
respect to the Certificates. The Trustee's obligation to make such payments to Certificate
Owners is limited to amounts received by it as Lease Payments under the Lease Agreement,
from amounts transferred from the Reserve Fund, from insurance proceeds or from any
other legally available moneys paid to the Trustee pursuant to the Trust Agreement.
Portions of the Lease Payments are designated as principal and interest components in
accordance with the following schedule:
LEASE PAYMENT SCHEDULE
Lease Interest Principal Total
Pa}nnent Date Component Component Lease Payment
Additional payments are also due from the City under the Lease Agreement
and include amounts sufficient to pay certain taxes and assessments charged with respect to
the Property and certain administrative costs. Lease Payments and such additional payments
are subject to abatement in the event of damage to, title defect in, destruction or
condemnation of the Property or any portion thereof, such that the resulting rent represents
fair consideration for the use and possession of the remaining portions of the Property. See
"RISK FACTORS - Abatement of Lease." The City has agreed and determined that the
total Lease Payments represent the fair rental value of the Property. In the event Lease
Payments are abated as described above, rental payments shall be abated to the extent that
the annual fair rental value of the portion of the Property in respect of which there is no
substantial interference is less than the annual Lease Payments, in which case Lease
Payments shall be abated only by an amount equal to the difference. The City is also
responsible for repair and maintenance of the Property during the term of the Lease
Agreement.
THE OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS
UNDER THE LEASE AGREEMENT DOES NOT CONSTITUTE AN OBLIGATION
OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY
sF~-2~o673.v3 11
FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED
ANY FORM OF TAXATION. NEITHER THE CERTIFICATES NOR THE
OBLIGATION OF THE CITY TO MAKE SUCH LEASE PAYMENTS CONSTITUTES
AN INDEBTEDNESS OF THE CITY, THE AUTHORITY, THE STATE OF
CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING
OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION.
Insurance
General. The Property is insured to the extent set forth in "APPENDIX C -
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -The Lease Agreement." The
Lease Agreement provides that the City will maintain (i)public liability and property
damage insurance throughout the term of the Lease Agreement and (ii) insurance against
loss or damage to the Property or such structure or item of furniture or equipment caused
by fire or lightning, with an extended coverage endorsement and vandalism and malicious
mischief insurance. The insurance required under clause (ii) above shall be in an amount
equal to the replacement cost of improvements located or'to be located on the Property,
except that such insurance may be subject to deductible clauses not to exceed 10% of the
value of the insured improvements for any one loss.
In addition, the City is required to obtain .a CLTA title insurance policy
insuring the City's sub-subleasehold interest in the Property. Such title insurance policy shall
be in an amount at least equal to the principal amount represented by the Certificates.
Action on Default
Should the City default under the Lease Agreement, the Lease Agreement and
the Trust Agreement provide that the Trustee, as assignee of the Authority, may exercise
any and all remedies available to the Authority under the Lease Agreement and may
enforce all of its rights and remedies under the Lease Agreement against the City, including
the right to terminate the Lease Agreement or, without terminating the Lease Agreement,
relet the Property and do all other acts to maintain or preserve the Property, including the
removal of persons or property therefrom, or taking possession thereof, subject to the terms
of the Lease Agreement. See "APPENDIX C - SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS - The Lease Agreement."
Reserve Fund
A Reserve Fund is established by the Trust Agreement and held by the
Trustee. The Reserve Fund will initially be funded in an amount equal to $ ,
the initial Reserve Fund Requirement. If the City reduces the amount of Certificates
outstanding through optional or mandatory prepayment, then amounts in the Reserve Fund
shall decrease fractionally. Amounts in the Reserve Fund are to be used to make interest
and principal payments to the extent that amounts in the Lease Payment Fund are
insufficient to make the interest payment or principal payments when due on the
Certificates; provided that amounts in the Reserve Fund may be invested as permitted under
SFI-250673.V3 12
the Trust Agreement. Delinquent Lease Payments made by the City. and not needed to pay
past due interest and principal shall be deposited in the Reserve Fund to the extent that
advances to the Lease Payment Fund have been made from the Reserve Fund.
The City shall have the right at any time after it has given written notice to
Moody's and to S&P to release funds from the Reserve Fund, in whole or in part, by
tendering to the Trustee: (1) a Qualified Reserve Fund Credit Instrument, and (2) an
opinion of Bond Counsel stating that such release will not, of itself, cause the portion of the
Lease Payments designated as and comprising interest to become includable in gross income
for purposes of federal income taxation. Upon Tender of such items to the Trustee, the
Trustee shall transfer such funds from the Reserve Fund to the City. Prior to the expiration
of any Qualified Reserve Fund Credit Instrument, the City shall be obligated either (a) to
replace such Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund
Credit Instrument, or (b) to deposit or cause to be deposited with the Trustee an amount
of funds equal to the Reserve Requirement.
THE AUTHORITY
The City of South San Francisco Capital Improvements Financing Authority
is a California joint exercise of powers agency. The Authority was organized for the purpose
of providing financial assistance to the City and the Redevelopment Agency of South San
Francisco by acquiring property and appurtenances for and on behalf of the City. The
Authority was formed at the request of the City. THE AUTHORITY IS NOT
OBLIGATED IN ANY MANNER WHATSOEVER TO MAKE LEASE PAYMENTS.
RISK FACTORS
The following risk factors, along with all other information in this Official
Statement, should be considered by potential investors in evaluating the Certificates. The
following discussion of risks is not meant to be an exhaustive list of risks associated with the
purchase of the Certificates and does not necessarily reflect the importance of the various
risks. There can be no assurance that other risk factors will not become material in the
future.
Lease Payments Not City Debt
The obligation of the City to pay Lease Payments does not constitute an
obligation for which the City is obligated to levy or pledge any form of taxation or for which
the City has levied or pledged any form of taxation. The obligation of the City to pay Lease
Payments does not constitute a debt or indebtedness of the City, the State or any of its
political subdivisions, within the meaning of any constitutional or statutory debt limitation
or restriction.
Although the Lease Agreement does not create a pledge, lien or encumbrance
upon the funds of the City, the City is obligated under the Lease Agreement to pay Lease
SF1-250673.V3 13
Payments from any source of legally available funds (subject to certain exceptions) and the
City has covenanted in the Lease Agreement to take such action as may be necessary to
include all Lease Payments in its annual budget and annually to appropriate an amount
necessary to make such Lease Payments. The City is currently liable on other obligations
payable from general revenues. See "APPENDIX A - THE CITY OF SOUTH SAN
FRANCISCO."
Project Delay
The City does not currently own fee title to the Property but is see 'king to
acquire title pursuant to condemnation proceedings initiated on
Although the City expects that the condemnation proceedings will be completed by
, no assurances can be given that the proceedings will be completed in a timely
manner or that the City will succeed in acquiring fee title to the Property.
If the City does not acquire title to the Property by , the
Certificates are subject to extraordinary mandatory prepayment from money returned to the
City by the court in connection with the condemnation proceedings and any additional
available funds of the City as described under the caption 'WHE CERTIFICATES -
Prepayment - Extraordinary Mandatory Prepayment." In the event the Certificates are
subject to extraordinary mandatoi'y prepayment, no assurances can be given that the unused
proceeds of the Certificates available to effect the prepayment will be sufficient to prepay
all outstanding Certificates. Under such circumstances, the City has the option but not the
obligation to provide additional funds to effect a total prepayment.
Substitution of Property
The Lease Agreement provides that, upon satisfaction of certain conditions,
the City may substitute other property for the Property. See Appendix C - "SUMMARY OF
THE PRINCIPAL LEGAL DOCUMENTS - The Lease Agreement." Such a replacement
could have an adverse impact on the security for the Certificates, particularly if an
abatement of Lease Payments were to occur subsequent to such substitution. Furthermore,
the Lease Agreement does not require that the substituted property be of any particular
type.
Additional Obligations
The City has the right and authority to enter into other obligations which may
constitute additional charges against its general revenues without obtaining the consent of
the owners of the Certificates. To the extent that additional obligations are incurred by the
City, funds available to make Lease Payments may be decreased.
Abatement of Lease
The obligation of the City to pay Lease Payments is in consideration for right
to the use and occupancy of the Property. The obligation of the City to pay Lease Payments
will be abated in whole or in part if the Ci~ does not have the right to occupy the Property
SFI-250673.V3 14
because of material damage, destruction, theft or condemnation of the Property. or any
portion thereof or defect in title to the Property. Lease Payments will be abated during any
period in which by reason of material damage, destruction, theft or condemnation of the
Property or any portion thereof or defect in title to the Property, there is substantial
interference with the use and possession of the Property or any portion thereof by the City,
except to the extent of (i) amounts held by the Trustee in the Lease Payment Fund and
Reserve Fund, (ii)amounts received in respect of use and occupancy insurance, and
(iii) amounts, if any, otherwise legally available to the Trustee for payments in respect of
any Certificates. The amount of the total abatement will be such that the resulting total
rental does not exceed the total fair rental value of the portion of the Property not
damaged, destroyed, condemned or affected by title defect. Such abatement or adjustment,
if any, shall continue for the period commencing with such damage or destruction or taking
or discovery of such title defect and ending with the restoration of the Property or portion
thereof to tenantable condition or correction of the title defect. In the event of any such
damage, destruction, taking or title defect, the Lease Agreement shall continue to remain
in full force and effect.
Funds in the Reserve Fund may be used by the Trustee to make payments in
the event Lease Payments received by the Trustee are insufficient to pay principal and
interest with respect to the Certificates as such amounts become due. If damage or
destruction to the Property results in abatement or adjustment of Lease Payments and the
resulting Lease Payments, together with moneys in the Lease Payment Fund and Reserve
Fund, are insufficient to make all payments of principal and interest with respect to the
Certificates during the period that the l~roperty is being replaced, repaired or reconstructed,
then the scheduled payments of principal and interest with respect to the Certificates will
not be made and the only remedy available to the Trustee or Owners of the Certificates will
be the proceeds from use and occupancy insurance. The City is required to obtain use and
occupancy insurance which will provide coverage in an amount sufficient to pay the
maximum Lease Payments attributable to the Leases Property for a two year period. See
"APPENDIX C -- SUMMARY OF PRINCIPAL LEGAL DOCUMENT -- Lease
Agreement."
BECAUSE ABATEMENT AFFECTS LEASE PAYMENTS DUE IN ANY GIVEN YEAR,
OWNERS OF THE CERTIFICATES FACE A POTENTIAL RISK OF LOSS OF PRINCIPAL
AND INTEREST IF LEASE PAYMENTS ARE ABATED TO THE EXTENT THAT
AMOUNTS IN THE LEASE PAYMENT FUND OR OTHER LEGALLY AVAILABLE
FUNDS ARE INSUFFICIENT TO PAY SUCH PRINCIPAL AND INTEREST. SUCH
REDUCED OR ABATED LEASE PAYMENTS, TOGETHER WITH OTHER MONEYS
AVAILABLE TO THE TRUSTEE, MAY NOT BE SUFFICIENT, AFTER EXHAUSTION OF
THE MONEYS ON DEPOSIT IN THE FUNDS LISTED ABOVE, TO PAY PRINCIPAL OF
AND INTEREST WITH RESPECT TO THE CERTIFICATES IN THE AMOUNTS AND AT
THE RATES SET FORTH THEREON. THE FAILURE TO MAKE SUCH PAYMENTS OF
PRINCIPAL OR INTEREST WOULD NOT UNDER SUCH CIRCUMSTANCES
CONSTITUTE A DEFAULT UNDER THE TRUST AGREEMENT, THE LEASE
AGREEMENT OR THE CERTIFICATES.
SF1-2506"/3.¥3
Limited Recourse, No Acceleration on Default
Should an Event of Default occur and be continuing under the Lease
Agreement, the Trustee, as assignee of the Authority, may exercise any and all remedies
available to the Authority pursuant to law, including any or all of the rights set forth below
in "APPENDIX C -- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -- Lease
Agreement -- Events of Default and Remedies." Acceleration of future Lease Pa.vments
in the event of an Event of Default is not a remedy available under the Lease Agreement.
The City will only be liable for Lease Payments on an annual basis, and the Trustee would
be required to seek a separate judgment each year for that year's Lease Payments. Any
such suit for money damages would be subject to limitations on legal remedies against cities
in California, including a limitation on enforcement-of judgments against funds of a fiscal
year other than the fiscal year in which the Lease Payments were due and against funds
needed to serve the public welfare and interest. See "APPENDIX C -- SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS - The Trust Agreement - Remedies Upon Event of
Default" and "The Lease Agreement - Events of Default/Remedies."
The enforcement of any remedy provided in the Lease Agreement and the
Trust Agreement could prove both expensive and time consuming. In addition to the
limitation on remedies contained in the Lease Agreement and the Trust Agreement, the
rights and remedies provided in the Lease Agreement and the Trust Agreement may be
limited by and are subject to provisions of federal bankruptcy laws, as now or hereafter
enacted, and to other laws or equitable principles that may affect the enforcement of
creditors' rights. Acceleration of the Lease Payments is not a remedy available under the
Lease Agreement.
Loss of Tax Exemption
As discussed herein under "TAX EXEMPTION," interest with respect to the
Certificates could become includable in gross income for purposes of federal income
taxation retroactive to the date such Certificates were issued as a result of acts or omissions
of the City in violation of its covenants in the Trust Agreement. Should such an event of
taxability occur, the Certificates are not subject to a special prepayment and will remain
outstanding until maturity or until prepaid under one of the prepayment provisions
contained in the Trust Agreement.
Revenue Sources to Pay Certificates
The City derives certain of its revenues from or through the State. See
"APPENDIX A - THE CITY OF SOUTH SAN FRANCISCO." Any occurrence which
would substantially impact the revenues to the State could impact the amount of funds
provided to the City by the State. See "APPENDIX A - THE CITY OF SOUTH SAN
FRANCISCO."
SFI-250673.V3 16
Book-Entry System
Beneficial owners of the Certificates may experience some delay in their
receipt of distributions of principal and interest on the Certificates since such distributions
will be forwarded by the Trustee to DTC and DTC will credit such distributions to the
accounts of the Participants which will thereafter credit them to the accounts of the
beneficial owners either directly or indirectly through Indirect Participants. See
'"BOOK-ENTRY ONLY SYSTEM."
Issuance of the Certificates in book-entry form may reduce the liquidity, of the
Certificates in the secondary trading market since the investors may be unwilling to purchase
Certificates for which they cannot obtain physical certificates. In addition, since transactions
in the Certificates can be effected only through DTC, Participants, Indirect Pariicipants and
certain banks, the ability of a beneficial owner to pledge Certificates to persons or entities
that do not participate in the DTC system, or otherwise to take actions in respect of such
Certificates, may be limited due to lack of a physical certificate. Beneficial owners will not
be recognized by the Trustee as registered owners for purposes of the Trust Agreement, and
beneficial owners will be permitted to exercise the rights of registered owners only indirectly
through DTC and the Participants. See "BOOK-ENTRY ONLY SYSTEM."
SF1-250673.V3 17
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES
AND APPROPRIATIONS
Article XIIIA of the California Constitution
Article XIII A of the State Constitution, known as Proposition 13, was approved by the
voters in June 1978. Section l(a) of Article XIII A limits the maximum ad valorem tax on
real property to 1% of "full cash value," and provides that such tax shall be collected by the
counties and apportioned according to State statutes. Section l(b) of Article XIII A
provides that the 1% limitation does not apply to ad valorem taxes levied to pay interest or
redemption charges on (i) indebtedness approved by the voters prior to July 1, 1978, and
(ii) any bonded indebtedness for the acquisition or improvement of real property approved
on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the
proposition.
Section 2 of Article XIII defines "full cash value" to mean the county assessor's valuation
of real property as shown on the 1976-76 Fiscal Year tax bill, or, thereafter, the appraised
value of real property when purchased, newly constructed, or a change in ownership has
occurred. The full cash value may be adjusted annually to reflect inflation at a rate not to
exceed 2% per year, or to reflect a reduction in the consumer price index or comparable
data for the taxing jurisdiction, or may be reduced in the event of declining property value
caused by substantial damage, destruction or other factors..Legislation enacted by the State
Legislature to implement Article XIII A provides that, notwithstanding any other law, local
agencies may not levy any ad valorem property tax except to pay debt service on
indebtedness approved by the voters as described above. Such legislation further provides
that each county will levy the maximum tax permitted by Article XIII A which is $1.00 per
$100 of assessed market value.
Since its adoption, Article XIII A has been amended a number of times. These
amendments have created a number of exceptions to the requirement that property be
reassessed when purchased, newly constructed or a change in ownership has occurred.
These exceptions include certain transfers of real property between family members, certain
purchases of replacement dwellings for persons over age 55 and by property owners whose
original property has been destroyed in a declared disaster, and certain improvements to
accommodate disabled persons and for seismic upgrades to property. These amendments
have resulted in marginal reductions in the property tax revenues of the City.
Both the California State Supreme Court and the United States Supreme Court have upheld
the validity of Article XIII A.
Article XIIIB of the California Constitution
In addition to the limits Article XIII A imposes on property taxes that may be collected by
local governments, certain other revenues of the State and most local governments are
subject to an annual "appropriations limit" imposed by Article XIII B of the State
Constitution which effectively limits the amount of such revenues those entities are
permitted to spend. Article XIII B, approved by the voters in June 1979, was modified
SFi-250673.V3 18
substantially by Proposition 111 in 1990. The appropriations limit of each government entiw
applies to "proceeds of taxes," which consist of tax revenues, state subventions and certain
other funds, including proceeds from regulatory licenses, user charges or other fees to the
extent that such proceeds exceed "the cost reasonably borne by such entity in providing the
regulation, product or service." "Proceeds of taxes" excludes tax refunds and some benefit
payments such as unemployment insurance. No limit is imposed on the appropriation of
funds which are not "proceeds of taxes," such as reasonable user charges or fees. and certain
other non-tax funds. Article XIII B also does not limit appropriation of local revenues to
pay debt service on 'bonds existing or authorized by January 1, 1979, or subsequently
authorized by the voters, appropriations required to comply with mandates of courts or the
federal government, appropriations for qualified capital outlay projects, and appropriation
by the State of revenues derived from any increase in gasoline taxes and motor vehicle
weight fees above January 1, 1990 levels. The appropriations limit may also be exceeded
in cases of emergency; however, the appropriations limit for the three years following such
emergency appropriation must be reduced to the extent by which it was exceeded, unless the
emergency arises from civil disturbance or natural disaster declared by the Governor; and
the expenditure is approved by two-thirds of the legislative~ body of the local government.
The State and each local government entity has its own appropriations limit. Each year, the
limit is adjusted to allow for changes, if any, in the cost of living, the population of the
jurisdiction, and any transfer to or from another government entity of financial responsibility
for providing services.
Proposition 111 requires that each agency's actual appropriations be tested against its limit
every two years. If the aggregate "proceeds of taxes" for the preceding two year period
exceeds the aggregate limit, the excess must be returned to the agency's taxpayers through
tax rate or fee reductions over the following two years.
Proposition 62
On November 4, 1986, California voters adopted Proposition 62, a statutory initiative, rather
than a constitutional amendment. Proposition 62 added a new article to the California
Government Code (Sections 53720-53730) which among other matters requires (i) that any
tax for general governmental purposes imposed by a local government entity be approved
by a majority of the voters voting in an election on the issue, (ii) that any special tax
(defined as taxes levied for other than general governmental purposes) imposed by a local
governmental entity be approved by two-thirds of the voters voting in an election on the
issue, and (iii) that the revenues from a special tax be used for the purposes or for the
services for which the special tax was imposed.
On September 28, 1995, the California Supreme Court filed its decision in Santa Clara
County Local Transportation Authority v. Guardino (1995) 11 Cal. 4th 220 (the "Santa Clara
decision") which upheld a Court of Appeals decision invalidating a % cent countywide sales
tax for transportation purposes levied by a local transportation authority. The California
Supreme Court based its decision on the failure of the authority to obtain a two-thirds vote
for the levy of a "special tax" as required by Proposition 62. The Santa Clara decision did
not address the question of whether or not it should be applied retroactively.
SF1-250673.V3 19
Proposition 218
On November 5, 1996, the voters of the State passed Proposition 218, a State ballot
initiative known as the "Right to Vote on Taxes Act." The initiative amends the
California Constitution to add Articles XIII C and XIII D which impose requirements on
the imposition by most local governments, including charter cities, of "general taxes,"
"special taxes," "assessments," "fees," and "charges." Proposition 218 became effective on
November 6, 1996, although application of some of its provisions is deferred until July 1,
1997. At this time, the City can not predict the impact of Proposition 218 on the
finances of the City. No assurance may be given that Proposition 218 would not have a
material adverse impact on the City's revenues.
Article XIII C provides that all local governments, including cities such as the City, must
receive voter approval prior to imposing any general or special tax. General taxes
require approval of a majority of the voters and are those taxes imposed for general
purposes. Special taxes are those taxes imposed for a specific purpose, including those
taxes which are deposited into the general fund. Special taxes require the approval of
two-thirds of the voters under Proposition 218. In addition, Proposition 218 provides
that all general taxes imposed after January 1, 1995 shall only continue to be imposed if
the local agency receives voter approval by November 6, 1998.
Article XIII C also extends the people's initiative power to reduce or repeal previously-
authorized local taxes, assessments, and fees and charges. This extension of the initiative
power is not limited by the terms of Proposition 218 to taxes, assessments or fees
imposed after November 6, 1996 and absent other authority could result in retroactive
reduction in any existing taxes, assessments or fees and charges.
Article XIII D sets forth procedures for the imposition, extension or increase of any "fee"
or "charge" including written notice to the record owner of each parcel of real property
upon which a fee or charge is proposed to be imposed or increased. A "fee" or "charge"
includes any levy, other than an ad valorem tax, special tax or assessment, imposed by an
agency upon a parcel of real property or upon a person as an incident of property
ownership. Article XIII D would prohibit, among other things, the imposition of any
proposed fee or charge, and, possibly, the increase of any existing fee or charge, in the
event written protests against the proposed fee or charge are presented at a required
public hearing on the fee or charge by a majority of owners of the parcels upon which
the fee or charge is to be imposed. Except for fees and charges for water, sewer and
refuse collection services, the approval of a majority of the property owners subject to
the fee or charge, or at the option of the agency, by a two-thirds vote of the electorate
residing in the affected area, is required within 45 days following the public hearing on
any such proposed new or increased fee or charge.
Article XIII D also provides that "assessments," including standby charges, must follow
the procedures established under Article XIII D. Such procedures include (1) various
notice requirements, including the requirement to mail a ballot to owners of the affected
property; (2) the substitution of a property owner ballot procedure for the traditional
written protest procedure, and providing that "majority protest" exists when ballots
SFI-250673.V3 20
(weighted according to proportional financial obligation) submitted in opposition exceeds
ballots in favor of the assessments; and (3) the requirement that the levying entity
separate the general benefits from the special benefits conferred on a parcel of land.
Standby charges are specifically classified by Article XIII D as assessments.
[Description of City specific issues]
The provisions of Proposition 218 have not been interpreted by any court and the
California Legislature has not enacted any legislation implementing either Article XIII C
or Article XIII D. The City is unable to predict how Article XIII C and Article XIII D
will be interpreted by the courts and what, if any, implementing legislation will be
enacted. No assurance may be given that Article XIII C and Article XIII D will not
limit the ability of the City to impose taxes, and levy and collect assessments, fees and
charges and that the City's ability to pay the Lease Payments will not be adversely
affected.
Further Initiatives
Article XIIIA, Article XHIB and Propositions 62, 111 and 218 were each adopted as
measures that qualified for the ballot pursuant to California's initiative process. From time
to time other initiative measures could be adopted, further affecting City revenues or the
City's ability to increase revenues or to increase appropriations.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of the Owners of the Certificates
to provide certain financial information and operating date relating to the City within a
specified time period following the end of the City's fiscal year (the "Annual Report"),
commencing with the report for the 1996-1997 fiscal year, and to provide notices of the
occurrence of certain enumerated events, if material. The City shall, or shall cause to be
filed with each Nationally Recognized Municipal Securities Information Repository and
each State Repository an Annual Report. The notices of material events will be filed by
the Trustee on behalf of the City with the Municipal Securities Rulemaking Board and
each State Repository. The covenants have been made in order to assist the
Underwriter in complying with SEC Rule 15c2-12(b)(5). See "APPENDIX E - FORM
OF CONTINUING DISCLOSURE CERTIFICATE."
SF1-250673.V3 21
TAX EXEMPTION
In the opinion of Jones Hall Hill & White, A Professional Law
Corporation, San Francisco, California, Special Counsel, subject, however to the
qualifications set forth below, under existing law, the portion of lease payments
designated as and comprising interest and received by the owners of the Certificates is
excluded from gross income for federal income tax purposes and is not an item of tax
preference for purposes of the federal alternative minimum tax imposed on individuals
and corporations, provided, however, that, for the purpose of computing the alternative
minimum tax imposed on corporations (as defined for federal income tax purposes), such
interest is taken into account in determining certain income and earnings.
The opinions set forth in the preceding paragraph are subject to the
condition that the City comply with all requirements of the Internal Revenue Code of
1986 (the "Code") that must be satisfied subsequent to the delivery of the Lease
Agreement in order that such interest be, or continue to be, excluded from gross income
for federal income tax purposes. The City has covenanted to comply with each such
requirement. Failure to comply with certain of such requirements may cause the
inclusion of such interest in gross income for federal income tax purposes to be
retroactive to the date of delivery of the Lease Agreement.
In the further opinion of Special Counsel, interest payable with respect to
the Certificates is exempt from California personal income taxes.
Owners of the Certificates should also be aware that the ownership or
disposition of, or the accrual or receipt of interest with respect to, the Certificates may
have federal or state tax consequences other than as described above. Special Counsel
expresses no opinion regarding any federal or state tax consequences arising with respect
to the Lease Agreement and the Certificates other than as expressly described above.
CERTAIN LEGAL MATI'ERS
The validity of the Certificates and certain other legal matters are subject
to the approving opinion of Special Counsel. A complete copy of the proposed form of
Special Counsel opinion is contained in Appendix D hereto. Special Counsel undertakes
no responsibility for the accuracy, completeness or fairness of this Official Statement.
Certain legal matters will be passed upon for the Underwriter by its counsel, O'Melveny
& Myers LLP, and for the City and the Authority by the City Attorney.
LITIGATION
No litigation is pending or threatened concerning the validity of the
Certificates, and a certificate of the City to that effect will be furnished at the time of
the original delivery of the Certificates. The City is not aware of any litigation pending
or threatened questioning the political existe~nce of the City, contesting the City's ability
SFI-250673.V3 22
to collect revenues or impose taxes or charges which are deposited in its general fund or
contesting the City's ability to cause the execution, delivery and pa.vment of the
Certificates, except as described below.
The City has instituted condemnation proceedings with respect to the
Property and the owner of the Property is contesting such proceedings. See "THE
PROJECT' and "RISK FACTORS - Project Delay." In addition, there are a number of
lawsuits and claims pending against the City, including personal injury and propert3,
damage suits, for which the City is either self-insured or insured in varying degrees by
commercial insurance. The aggregate amount of the uninsured liabilities of the City and
the timing of any anticipated payments of judgments which may result from suits and
claims will not, in the opinion of the City Attorney and the City's Finance Director,
materially affect the City's finances so as to impair its ability to pay the Lease Payments.
UNDERWRITING
The Certificates are being purchased through negotiation by PaineWebber
Incorporated (the "Underwriter"). The Underwriter has agreed to purchase the
Certificates at an aggregate purchase price equal to $ (which represents
the aggregate principal amount of Certificates originally sold and delivered, less original
issue discount of $ , less an Underwriter's discount of $ , plus
accrued interest from 1, 1997 to the date of delivery thereof in the amount of
$ ). The Purchase Agreement by and between the City and the Underwriter
provides that the Underwriter will purchase all of the Certificates if any are purchased,
the obligation to make such purchase being subject to certain terms and conditions set
forth in such Purchase Agreement, the approval of certain legal matters by counsel and
certain other conditions.
The Underwriter may offer and sell the Certificates to certain dealers and
others at prices lower than the public offering prices set forth on the inside cover hereof.
The offering prices may be changed from time to time by the Underwriter.
RATING
Moody's Investors Service and Standard & Poor's Ratings Group have
assigned a rating of" "and" ," respectively to the Certificates. Such ratings reflects
the view of such rating agencies and any explanation of the significance of the rating
should be obtained directly from such rating agencies. There is no assurance that the
ratings will not subsequently be revised or withdrawn entirely if, in the judgment of such
rating agencies, circumstances so warrant. The City and the Underwriter undertake no
responsibility to bring to the attention of the owners of the Certificates any downward
revision or withdrawal of such rating and any such downward revision or withdrawal
could have an adverse effect on the market price of the Certificates. Maintenance of the
rating will require periodic review of current financial data and other updating
information by assigning agencies.
SFI-e~0'673.V3 23
FURTHER INFORMATION
Copies of this Official Statement, the Trust Agreement, the Site Lease, the
Lease Agreement and certain other documents referred to herein may be obtained from
the City's Director of Finance or the Underwriter.
EXECUTION AND DELIVERY
The execution and delivery of this Official Statement by the City has been
duly authorized.
CITY OF SOUTH SAN FRANCISCO
By
City Manager
SFI-250673.V3 24
APPENDIX A
THE CITY OF SOWI'H SAN FRANCISCO
APPENDIX A
General
The City of South San Francisco covers approximately 9.5square miles and is located
in northern San Mateo County, 10 miles south of San Francisco and 2 miles north of San
Francisco International Airport. Primary highway access to and through the City is provided
by U.S. 101 and Interstate 280, both of which run on a north-south direction and connect
"South City" to San Francisco to the north and San Jose and Silicon Valley to the south.
The City is a general law city incorporated in 1908. The City provides the
administrative, planning, public works and community facilities and services normally
provided by city governments. The City operates its own fire and police departments. The
City owns and operates wastewater collection, treatment and disposal facilities which serve
most of the City area. The City'smain water supplier is California Water Service Company,
an investor-owned utility. The Westborough County Water District supplies water service
and provides wastewater collection facilities to a portion of the western part of the City.
Natural gas and electric facilities are provided by Pacific Gas and Electric Company. Pacific
Bell provides local telephone service.
City Government
The City is governed by a five-member City Council, the members of which are
elected by the voters to serve staggered four-year terms. The Council members elect a
Mayor and Vice-Mayor from their membership for a term of one year. [One seat on the
City Council and the position of Vice-Mayor are currently vacant.] The names and
occupations of the members of the City Council and the dates their terms expire are as
follows:
Names
Joseph A. Fernekes, Mayor
John R. Penna
Eugene R. Mullin
Robert S. Yee
Term
Occupation Expires
[to come] [to come]
The Council appoints a City Manager who is responsible for day-to-day
administration of the City under the policy direction of the Council. All department heads
are appointed and serve under the administrative direction of the City Manager. The City
Attorney is also appointed by the City Council. The offices of City Clerk and City Treasurer
are elected. The names and titles of the principal city staff are as follows:
SFI-250759.V4 A-1
Michael A. Wilson, City Manager
Barbara A. Battaya, City Clerk
Beverly Bonalanza Ford, City Treasurer
Steven T. Mattas, City Attorney
Population
The historic populations of the City and San Mateo County are shown in Table 1.
TABLE 1
CITY OF SOUTH SAN FRANCISCO
SAN MATEO COUNTY
Populations
1992 1993 1994 1995 1996
South San Francisco 55,900 56,400 57,200 56,500 57,000
San Mateo County 669,967 677,800 686,500 685,400 · 691,500
Source: California Department of Finance egumates.
Education
Total enrollment within the South San Francisco Unified School District for the past
five years is set forth below in Table 2.
TABLE 2
[SOUTH SAN FRANCISCO UNIFIED SCHOOL DISTRICT!
TOTAL ENROLLMENT
For Fiscal Years 1985-86 through 1995-96
[to come]
SFI-250759.V4
Employment
In 1995 it was estimated that the City had an employment base of 43,500jobs. The
Association of Bay Area Governments projects a 20 percent employment growth by 2015.
The City's employment profile in 1995 and projected for 2015 are shown below in Table 3.
TABLE 3
SOUTH SAN FRANCISCO
EMPLOYMENT BY SECTOR
1995 & 2015
Sector [ 1995'[ 2015 %+
Agriculture and Mining 180 150 -17
Manufacturing and Wholesale 13,080 14,540 11
Retail 4,9.50 6,320 28
Service Jobs 9,820 13,650 39
Other 13,490 15,73.~.0 17
43,515 52,405 20
Source: Projections 96. ABAG
South San Francisco has over 2,400 acres zoned for commercial/industrial
development. Much of the development is taking place in the commercial and industrial
area east of the Bayshore Freeway. In 1994 the City adopted a plan for the "East of 101
Area" which recognizes its importance as the City's "economic engine." Approximately one
half of the City's jobs are located in the East of 101 Area. The character of this area has
changed considerably from an area of declining heavy industries in the 1950's and 1960's to
one moving toward [office, research and development and distribution]. The time span from
1960 through the 1980'ssaw the development..of the Cabot, Cabot & Forbes Industrial Park;
Holmart's Gateway Project consisting of high rise offices, hotels and flex commercial space;
and the Oyster Point Office Project which adjoins the marina and a redevelopment area
with hotels and restaurants.
The City plays an increasingly important role in the biotechnology industry with the
East of 101 Area becoming home to a number of biotechnical and pharmaceutical
enterprises. The City's largest employer is Genentech Inc. which is headquartered on a
large campus fronting on San Francisco Bay. The company manufactures recombinate DNA
engineered pharmaceuticals on the same site they began their research in 1976. Genentech
has grown considerably in 20 years with current world-wide employment of about 3,000 and
~Projections 96: Forecasts for the San Francisco Bay Area to the year 2015.
Association of Bay Area Governments. December 1995.
SFI-250759.V4 A-3
1.6 million square feet of occupied space with approximately 2,000 employees located in the
City. Genentech projects a fifteen year growth to 4,500 employees and [ ] million square
feet of floor area world-wide. [SSF Expansion Plans?] Genentech has also built in the City
the largest private research laboratory facility on the West Coast. Other bioscience firms
in South San Francisco include Toshiba America MR] (medical equipment), Arris
Pharmaceutical Corp., COR Therapeutics, Imatron (vascular scanning) Aesculap Inc.
(surgical instruments and implants), Shaman Athena Neurosciences Inc. (pharmaceuticals)
and Tularik (pharmaceuticals). These and associated companies account for an additional
1,000 to 1,500 employees in the biotechnology sector.
The civilian labor force figures for San Mateo County are set forth in the following
table. These figures are county-wide statistics and do not necessarily accurately reflect
employment trends in the City of South San Francisco.
TABLE 4
SAN MATEO COUNTY
CIVILIAN LABOR FORCE '
EMPLOYMENT AND UNEMPLOYMENT
Annual Averages
(amounts in thousands)
October
1992 1993 1994 1995 1996
Civilian Labor Force 354.7 371.1 370.5 365.7 366.9
Employment 335.9 352.5 353.1 350.1 355.4
Unemployment 18.8 18.6 17.4 15.6 11.5
Unemployment Rate 5.3 % 5.0 % 4.7 % 4.3 % 3.1%
Source: California Employment Development Department.
SFI-250759.V4 A-4
Major Employers
The City is a highly diversified community with five modem industrial/business parks,
a stable population base and wide range of commercial and community amenities. In earlier
years the City was characterized primarily as an industrial city. Industrial activity is still
strong, but the focus has changed in recent years to the emerging biotechnology industry and
to airport and air transport related industries and services. Chemicals, paper products and
paint manufacturing are among the more traditional industries still active in the City. Table
5 sets forth the City's major employers.
TABLE 5
CITY OF SOUTH SAN FRANCISCO
Major Employers
Comoanv
Emolovment
Business
South San Francisco's Major Employers*
Genentech
Kaiser Hospital
See's Candies
United Parcel Service
Orowheat
Toshiba America
Gallo Sales
Fuller O'Brien
Cellular One Co.
Price Club
Dobbs International
Ogden Food Service Corp.
Georgia Pacific
Olympian Oil Co.
Zellerbach Paper Co.
Heat & Control
Aesculap
Ramada Inn
Folgers Coffee
Grosvenor Airport Inn
2,000
1,000
700
7OO
5OO
4OO
3OO
300
300
289
280
267
242
230
212
180
165
150
150
136
Biotechnology
Medical Cemer
Candy Manufacturer
Shipping
Bakery Products
MRI
Equipment/Health
Wine Distribution
Paint Manufacturer
Corporate Offices-
Cellular Telephones
Retail Sales
Airline Catering
Airline Catering
Corrugated
Containers
Petroleum Products
Paper Products
Petroleum Products
Medical Equipment
Manufacturing
Hotel
Coffee Roasting
Hotel
Public Sector and Airport
S.S.F.Unified School District
City of South San Francisco
County of San Mateo
S.F. International Airport (directly adjacent to
the City)
United Airlines (directly adjacent to the City}
881
380
374
31,000
[ I
*Number of employees in South San Francisco facilities.
Grades K- 12
Government
Government
Airport
Airline
Source: City of South San Francisco.
SF 1-250759.V4 A-5
Personal Income
Effective buying income ("EBI") as reported in the annual publication "Survey of Buying Power"
published by Sales and Marketing Management, is defined as money income less personal taxes and nontax
payments. Money income includes wages and salaries, other labor-related income, proprietor's income, rental
and royalty income, dividends, personal interest income, alimony and child support and transfer payments.
Deductions are then made for federal, state and local taxes, taxes on owner-occupied non-business real estate
and personal contributions for social insurance.
The following tables summarize the total EBI and the median household and per capita EBI for the
County of San Mateo, the State and the nation for the years 1990 through 1995.
Effective Buying Income
For Years 1990 through 1995(~)
(in thousands)
Year San Mateo County California
1990 $12,870,892 $477,784,771
1991 13,970,477 490,749,649
1992 14,293,562 509,152,677
1993 14,676,284 528,958,745
1994 15,458,280 552,074,838
1995(:) 14,285,215 477,640,503
United States
$3,499,365,237
3,728,967,043
3,916,947,023
4,169,724,052
4,436,178,724
3,964,285,118
Median Household Effective Buying Income
For Years 1990 through 1995o)
Year San Mateo Count), California United States
1990 $41,372 $33,342 $29,612
1991 46,531 36,943 32,073
1992 46,977 37,686 33,178
1993 48,241 39,330 35,056
1994 50,629 40,969 37,070
1995(~) 46,145 34,533 32,238
Per Capita Effective Buying Income
For Years 1990 through 1995°)
Year San Mateo County California United States
1990 $19,608 $15,741 $14,507
1991 20,889 15,843 14,702
1992 21,054 16,124 15,255
1993 21,542 16,672 16,064
1994 22,480 17,275 16,918
1995(:~ 20,572 14,759 14,965
(') Latest available information.
Source: Sales and Marketing Management Magazine "Survey of Buying Power."
(:) The definition of EBI changed beginning with the 1995 data; accordingly, the 1995 data is not coinparable with the previous years
SF~-250759.V4 A-6
The median household and per capita EBI for the County of San Marco have consistently been over
20% higher than those of the State and over 33% higher than those of the nation. The following tabulation
shows the distribution of effective buying income by income groups for the County, State and nation. As shown
in the table, the County has more households in the higher income groupings and fewer in the lower income
classes than either the State or the nation.
COUNTY OF SAN MATEO
Household Effective Buying Income
Income Groupings For 1995v)
Income Class San Marco Cotmtv California United States
Under $20,000 16.3% 27.5% 30.2%
$20,000- $34,999 19.2 23.1 23.8
$35,000- $49,999 19.4 : 18.9 18.4
$50,000- Over 45.1 30.5 18.4
Total 100.0 % 100.0 % 100.0 %
m Latest available information.
Source: Sales and Marketing: Management Magazine "Survey of Buying Power."
Commercial Activity
Retail sales in the City increased by 5.2% in 1995 over 1994 and by 7.3% in San
Marco County for the same period. A summary of historic retail sales within both the City
and San Mateo County is set forth below in Table 6.
TABLE 6
CITY OF SOUTH SAN FRANCISCO
SAN MATEO COUNTY
Taxable Transactions
(figures in thousands)
South San Francisco
San Mateo County
1991 1992 1993 1994 1995
925,096 936,853 907,439 879,709 925,354
7,863,738 8,118,279 8,143,240 8,172,772 8,772,560
Source: State Board of Equalization.
Construction Activity
[Elaborate on any new regulations and on recent building trends]
Building Activity for the past five years within the City and San Mateo
shown in the following table:
County is
SFI-250759.V4 A-7
TABLE 7
CITY OF SOUTH SAN FRANCISCO
SAN MATEO COUNTY
Total Building Permit Valuations
(fi~ur~s iii ,kous. nds)
1991 1992 1993
South San Francisco $ 68,447 $ 49,205
San Mateo County 486,791 403,446
1994 1995
Source: Construction Industry Research Board [Materials Ordered]
Community Facilities
South San Francisco has two libraries with over 160,000 volumes, six community
recreation centers, a community swimming pool, and 18. parks and playgrounds. Other
entertainment and cultural facilities include [elaborate].
Transportation
The City is at the center of the Bay Area's extensive surface and air tranSportation
network. Primary highway access to and through South San Francisco is provided by U.S.
101 and Interstate 280, both of which run in a north-south direction and connect "South
City" to San Francisco to the north and to San Jose to the south. The City estimates that
more than 200,000 automobiles pass through the City each day.
The City is directly adjacent to San Francisco International Airport (the "Airport")
and is less than one hour's driving time from two other commercial airports. According to
the Airports Council International, the Airport is the fifth busiest airport in the nation in
terms of passenger volume and the fifth busiest in cargo volume. The Airports Commission
reports that air traffic at the Airport in 1994-95 included 35.4million passengers, an increase
of over 1,559,947 passengers or 4.6% over the previous period. In 1993-94, a total of
approximately 33.1 million passengers Passed through the Airport. Forty-six major passenger
and commuter airlines fly from the Airport, and thirty-one of them serve international
destinations. In 1993-94, the Airport handled 508,970 metric tons of cargo, an increase of
over 22,000 metric tons or 4.6% over the previous period. In 1994-95, the Airport handled
566,495 metric tons of cargo, an increase of over 57,000 metric tons or 11.3% over the
previous period. Although the Airport is owned and operated by the City and County of
San Francisco, it plays a very significant part in the economy of the City. Over 34,000
people are employed at the Airport by the airlines, cargo carriers, restaurants, aviation
suppliers and other Airport-related businesses. The Airport has the approval to build a new
$1 billion 26-gate international terminal, together with a ground transportation center, light
rail system and elevated circulation road. Construction of terminal has already started, with
completion expected in 1998-99. The City also enjoys close proximity to the Port of
Redwood City [others].
SFI-250759.V4 A-8
[Elaborate on other public transportation links]
Employee Relations
The City currently employs 455 full-time equivalent employees. [Elaborate on labor
representation and recent employee/City labor relations]. City employees are currently
represented by the following unions: [list unions].
CITY FINANCIAL INFORMATION
Budget Preparation and Approval Process
The City operates under the general laws of the State of California and annually
adopts a budget effective July 1 for the ensuing fiscal year for the General fund; Special
Revenue funds; Debt Service funds; Capital Project funds; Capital Projects funds except for
the Surplus Property Authority Fund; Enterprise funds; and the Internal Service funds.
The budget is adopted by the City Council and controlled at the department level for
the General fund and the fund level for all other funds. On the effective date of the budget,
the amounts stated therein as proposed expenditures become appropriations to the various
City deparmaents. The City Council may amend the budget by resolution during the fiscal
year. The department heads may authorize transfers within one object category within the
same department and the City Manager may authorize transfers between object categories
within one department. All appropriations lapse at year-end.
[Elaborate on how City determine proposed expenditures in budget]
Retirement System
All full-time permanent employees are eligible to participate in the Public
Employees' Retirement Fund ("Fund") of the State of California's Public Employees'
Retirement System. The Fund is an agent multiple-employer defined benefit retirement
plan that acts as a common investment and administrative agent for various local and State
governmental agencies within the State of California.
A summary of the City's share of the fund for the last nine years is set forth below
in Table 8.
SFI-250759.V4 A-9
TABLE 8
CITY OF SOUTH SAN FRANCISCO
EMPLOYEE RETIREMENT PLAN CONTRIBUTION
Unfunded
Pension
Unfunded/(As Benefit
sets In Excess Obligation as
Fiscal Year Net Assets Pension of) Pension Annual a percentage
Ending Available for Benefit Percentage Benefii Covered of Covered
June 30 Benefits Obligation Funded Obligation Payroll Payroll
1987 $41,194 $ 50,530 81.5% $9336 $ 13,569 68.8%(1)
! 988 46,376 54,177 85.6 7,801 13,685 57.0
1989 52,870 58,802 89.9 5,932 14,215 41.7
1990 59,386 66,70 ! 89.0 7315 15,448 47.4
1991 64390 70365 91.5 5,975 16,298 36.7
1992 70,240 76,610 91.7 6,370 17,394 36.6
1993 76,712 79,65 ! 96.3 2,939 17,918 i 6.4
1994 93,150 86,001 108.3 (7,149) 18,469 (38.7 )
1995 100,258 93,642 107.1 (6,616) 20,109 (32.9)
o) Showing unfunded (assets in excess o0 pension benefit obligation as a percentage of ahnual covered payroll approximately adjusts for the
effects of inflation for analysis purposes.
Source: City of South San Francisco
Deferred Compensation Plan
In 1979, the City established a deferred compensation plan created in accordance
with California Government Code Section 53212 and Internal Revenue Code Section 457.
The plan, available to all City employees, permits them to defer a portion of their salary
until furore years. As of June 30, 1996, the total accumulated contributions and fund
earnings totalled $9,199,631.
All amounts of compensation deferred under the plan, all property and rights
purchased with those amounts, and all income attributable to those amounts, property or
rights (until paid or made available to the employee or other beneficiary) solely the property
and rights of the City (without being restricted to the provisions of benefits under the plan),
subject only to the claims of the City's general creditors. Participants' rights under the plan
are equal to those of general creditors of the City in an amount equal to the fair market of
the deferred account for each participant.
In the opinion of City management, based on the advice of the City's legal counsel,
the City has no liability for losses under the plan but does have the duty of due care that
would be required of an ordinary prudent investor. City management believes that it is
unlikely that it will use the assets to satisfy the claims of general creditors in the future.
SFI-250759.V4 A-10
Investment Practices
The City pursues an investment program in which idle City funds are pooled for
investment purposes. Statutes authorize the City to invest in obligations of the U.S.
Treasury, its agencies and instrumentalities, commercial paper rated A-1 by Standard and
Poor's Corporation or P-1 by Moody's Commercial Paper Record, negotiable certificates of
deposit, mutual funds, bankers' acceptances, repurchase agreements, reverse repurchase
agreements and the State Treasurer's Local Agency Investment Fund.
[Elaborate on administration and management of investments and investment policies
and restrictions].
The assets in the City's portfolio as of June 30, 1996 are set forth below in Table 9.
TABLE 9
CITY OF SOUTH SAN FRANCISCO
INVESTMENT PORTFOLIO'
Assets as of June 30, 1996
Municipal Securities
U.S. government securities
Corporate securities
Overnight repurchase agreement
San mateo County Investment Pool
California Local Agency Investment Fund
Deferred compensation mutual funds
Guaranteed investment contracts
Total investments
Carrying
Amount
$ 235,878
23,862,794
247,900
150,000
16,951,318
10,033,546
7,634,689
1.873.629
$60.989.754
As of , the City has approximately $
Mateo Pooled Investment Fund described below.
invested in the County of San
County Treasurer's Investment Pool
The following information relating to the County pool was derived from the Official
Statement dated June 26, 1996 relating to the County of San Mateo's 1996-97 Tax Revenue
Anticipation Notes. The City makes no representations as to the accuracy or completeness
of such information.
The San Mateo County Treasurer manages, in accordance with California
Government Code Section 53600 et seq., funds deposited in the County Treasury by San
Mateo County (the "County"), all County school districts, various special districts, and some
cities within the County. There are currently approximately 600 participants in the County
SFI-250759.V4 A- 11
pool. The moneys on deposit are predominantly derived from local government revenues
consisting of property taxes, State and federal funding and other fees and charges.
The composition and value of investments under management in the County pool will
vary from time to time depending on cash flow needs of the County and public agencies
invested in the County pool, maturity or sale of investments, purchase of new securities, and
due to fluctuations in interest rates generally. Less than 25 % of the assets of the investment
pool come from public agencies which can make discretionary withdrawals for the purposes
of making alternative investments. There have not been any unanticipated or unusual
withdrawals from the County pool in the last six months. The Treasurer of the County
believes the liquidity in the portfolio is adequate to meet expected cash flow requirements
and would preclude the County from the need to sell investments at below carrying value.
However, the County has in the past and may in the future elect to sell securities below
carrying value, borrow short-term debt to fund cash flow needs and take other actions as the
Treasurer may deem warranted by prudent fiscal management.
On February 14, 1995, the Board of Supervisors of the County (the "Board") adopted
a new investment policy which was subsequently revised on June 11, 1996 (the "County
Investment Policy"). To meet the requirements of both liquidity and long-term investment
needs, the County Investment Policy created the County pool. The County pool attempts
to match maturities with capital expenditures and other planned outlays. It is designed as
an income fund to maximize the return on investible funds over various market cycles,
consistent with limiting risk and prudent investment principles. Yield is considered only
after safety and credit quality have been met. The purpose of the fund is to provide
investors with a reasonably predictable level of income.
The maximum allowable maturity of instruments in the County pool at the time of
investment will be 15 years and the maximum dollar weighted average maturity of the fund
will be five years. Subject to California law, funds deposited in the County pool under the
County Investment Policy may only be reclaimed at the rate of 20% of the principal balance
per month, exclusive of apportionment, payrolls and day to day operations, unless specifically
authorized by the Treasurer. Gains and losses in the County pool are proportionately
allocated to each depositor quarterly, each being given credit for accrued interest earnings
and capital gains based on their average daily pool balance. The minimum balance for an
outside agency to maintain an account in the County pool is $100,000.
The Treasurer of the County will honor all requests to withdraw funds for normal
cash flow purposes. Any requests to withdraw funds for purposes other than cash flow are
subject to the consent of the Treasurer. Such requests will be subject to the County
Treasurer's consideration of the stability and predictability of the County pool or the adverse
affect on the interests of the other depositors in the County pool.
The County Treasurer may not leverage the County pool through any borrowing
collateralized or otherwise secured by cash or securities held unless authorized .by the
SFI-250759.V4 A-12
County Investment Policy in accordance with California law. The Investment Officer is
prohibited from doing personal business with brokers that do business with the County.
The fund also permits investments in repurchase agreements in an amount not
exceeding 100% of the fund value. Collateralization on repurchase agreements is set at
102%. Reverse repurchase agreements are limited to 20% of the fund and must have a
maximum maturity of 92 days or maturity date equal to, or shorter than, the stated final
maturity of the security underlying the reverse repurchase agreement itself. Currently there
are no reverse repurchase agreements in the County pool. The County has not been
required to make any collateral calls with respect to reverse repurchase agreements
previously maintained in the fund.
The Pool engages in certain securities lending transactions from time to time through
the Bank of New York, as custodian (the "Custodian") under a Custody Agreement by and
between the County and the Custodian (the "Custody Agreement"). These transactions
involve the transfer by the governmental entity, through .an agent, of securities to certain
broker-dealers and f'mancial institutions or other entities in exchange for collateral. This
collateral may be cash or securities. Generally, these transactions provide for the return of
the collateral to the securities borrower upon receipt of the same securities at a later date.
Under the County's existing securities lending agreement, a maximum of 20% of the County
pool may be lent. Under the Custody Agreement, the pool and the Custodian share in the
aggregate net return of these securities lending transactions.
Under the current Custody Agreement, the Custodian transfers pool securities to
qualified securities borrowers. The Custodian is required to perform a credit analysis of
each approved counterpart in accordance with the Custodian's established credit policies and
procedures. The counterparty under these repurchase transactions is required to pledge
collateral to secure the return of the securities borrowed, and the value of the securities
borrowed is marked to market every business day. The value of the collateral on deposit
must equal 102% of the market value of the securities borrowed. For this purpose, if cash
is delivered as collateral (even though invested on behalf of the pool), then the same is
deemed to always carry the value of the cash; if the securities are delivered as collateral,
then its market value will be measured daily against the market value of the securities
borrowed. If on any business day the value of the collateral deposited is less than 100% of
the market value of the securities borrowed, the counterparty must deliver additional
collateral so that the collateral on deposit will have a value equal to 102% of the market
value of the securities borrowed. Correspondingly, if the value of the collateral on any
business day is more than 102% of the market value of the securities borrowed, the
borrower may request the return of the excess collateral. If cash is deposited as collateral,
it is to be invested for the risk and account of the pool in securities that comply with the
Investment Policy.
Currently, voluntary participants account for 20% of the County pool's asset value;
however, a three-year contract with the Bay Area Air Quality Management District
CBAAQMD"), which accounts for 4.65% of the total portfolio, mitigates the risk of
SFI-250759.V4 A-13
immediate withdrawal by the BAAQMD. The other voluntary investor, San Mateo County
Transportation Authority, has monthly limitations on withdrawals of 20% of its asset value.
The Board has established an eight member County Treasury Oversight Committee.
There are four designated members: the County Controller or his designee; the County
Superintendent of Schools or his designee; a person appointed by the Board of Supervisors;
and a person selected by a majority of the presiding officers of the governing bodies of the
school districts and of the community college district in the County. In addition there are
four members nominated by the Treasurer and confirmed by the Board of Supervisors who
have expertise, or an academic background, in public finance and investment.
The Oversight Committee will meet at least quarterly to determine general strategies,
to monitor results and to evaluate the economic outlook, portfolio diversification, maturity
structure and potential risks to the funds. It will also consider cash projections and needs
of the various participating entities, control of disbursements and cost-effective banking
relationships.
The Treasurer prepares a monthly report for the County pool participants, the Board
of Supervisors and members of the Oversight Committee stating the type of investment,
name of the issuer, maturity date, par and dollar amount of the investment. The report also
lists average maturity and market value. In addition, the Treasurer prepares' a quarterly
cash flow report which sets forth projections for revenue inflows and interest earnings as
compared to the projections for thd operating and capital outflows of depositors. The
projection will be for at least the succeeding twelve months. An annual audit of the
portfolios, procedures, reports and operations related to the County pool will be conducted
in compliance with California law.
The County Investment Policy is reviewed and approved annually by the Board. All
amendments to the policy must be approved by the Board.
Assessed Valuation and Property Tax Collections
The Bonds are secured by revenues described in this Official Statement. The City
and Authority have no ability to keep taxes for the security of the Bonds other than the
transient occupancy tax. approved by the voters. Assessed valuation and property tax
collections are provided as information on the City only. The City of South San Francisco
uses the services of San Mateo County for assessment and collection of property taxes. City
property taxes are assessed and collected at the same time and on the same rolls as are
county, school and special district property taxes. Assessed valuations are based upon 100%
of value as defined by Article XIIIA of the State Constitution. State law provides
exemptions from ad valorem property taxation for certain classes of property such as
property owned by churches, colleges, non-profit hospitals and charitable institutions.
SFI-250759.V4
A-14
State law also exempts $7,000 of the full cash value of an owner-occupied dwelling,
but this exemption does not result in any loss of revenue to local agencies, since the State
reimburses local agencies for the value of the exemptions.
Table 10 represents a four-year history of assessed valuations within the City's
boundaries, including State-reimbursed exemptions.
TABLE 10
CITY OF SOUTH SAN FRANCISCO
Assessed Valuations
Fiscal Year Total
1993/94 $4,838,139,182
1994/95 4,945,516,392
1995/96 5,029,458,937
1996/97 5,092,933,837'
Source: Califomia Municipal Statistics, Inc.
Taxes are levied for each fiscal year on taxable real and personal property. For
assessment and collection purposes, property is classified either as "secured" or "unsecured"
and .is listed accordingly on separate pans of the assessment roll. The "secured roll" is that
part of the assessment roll containing State-assessed public utilities property and property
the taxes on which are secured by a lien on real property sufficient, in the opinion of the
county assessor, to secure payment of the taxes. Other property is assessed on the
"unsecured roll."
Property taxes on the secured roll are due in two installments, on November 1 and
February 1 of the fiscal year. If unpaid, such taxes become delinquent on December 10 and
April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition,
property on the secured roll with respect to which taxes are delinquent become tax
defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes
and the delinquent penalty, plus a redemption penalty of 1.5 % per month to the time of
redemption. If taxes are unpaid for a period of five years or more, the property is deeded
to the State and is then subject to sale by the county tax collector. Secured tax charges and
delinquencies are set forth below for the past several fiscal years.
In 1993, the County Board of Supervisors adopted the Alternative Method of
Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan") as
provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State.
Generally, the Teeter Plan provides for a tax distribution procedure in which secured roll
taxes are distributed to taxing agencies within the County on the basis of the tax levy, rather
than on the basis of actual tax collections. The County then receives all future delinquent
SFI-250759.V4 A-15
tax payments, penalties and interest, and a complex tax redemption distribution system for
all taxing agencies is avoided. Pursuant to the Teeter Plan, the County establishes a tax
losses reserve fund and a tax resources account and each entity levying property taxes in the
County may draw on the amount of uncollected taxes and assessments credited to its fund
in the same manner as if the amount credited had been collected.
The County is responsible for determining the amount of the tax levy on each parcel
which is entered onto the secured real property tax roll. Upon completion of the secured
real property tax roll, the County's Controller determines the total amount of taxes and
assessments actually extended on the roll for each fund for which a tax levy has been
included, and apportions 100% of the tax and assessment levies to that fund's credit. Such
moneys may thereafter be drawn against by the taxing agency, including the City, in the
same manner as if the amount credited had been collected. The County determines which
moneys in the County Treasury (including those credited to the tax losses reserve fund) shall
be available to be drawn on to the extent of the amount of uncollected taxes credited to
each fund for which a levy has been included. When amounts are received on the secured
tax roll for the current year, or for redemption of tax-defaulted property, Teeter Plan
moneys are distributed to the apportioned tax resources accounts.
TABLE 11
CITY OF SOUTH SAN FRANCISCO
Secured Tax Charges and Delinquencies
Secured Amount Delinquent % Delinquent
Fiscal Year Tax Charl~e o) June 30 June 30
1991/92 42,901,056.42 2,028,486.01
1992/93 44,148,900.38 2,472,465.57
1993/94 46,284,612.18 1,664,617.05
1994/95 47,851,476.00 1,637,996.14
1995/96 48,756,809.72 1,159,145.87
4.73%
5.60
3.60
3.42
2.38
o) All taxes collected by the County within the City. Includes special charges.
Source: California Municipal Statistics, Inc.
sv~-250759.vn A-16
The City's largest property taxpayers are set forth in Table 12.
TABLE 12
CITY OF SOUTH SAN FRANCISCO
Largest Property Taxpayers
Fiscal Year 1995/96
OwfleF
[Genentech, Inc.
HD Delaware Properties Inc.
BNP: Leasing Corp.
Kashiwa Fudosan American
Felcore/CCS Holdings LP
Shelton 'Properties
NC Land Associates
Sam'io, Inc.
Sunchase G.A. California In
Mead Corporation Lessee
Source: City of South San Francisco
Taxable Prooertv Value
$582,135,111
67,654,222
62,129,664
37,855,884
27,492,000
25,867,930
23,047,199
22,238,949
22,022,440
20,657,771]
Debt
In 1991, the City issued $11,200,000 variable rate demand certificates of participation
("COPs") to finance various improvements to the Water Quality Control Plant. The interest
rate is calculated weekly, 3.1% at June 30, 1996, and may be converted to a fixed rate by
the City at any time. The COPs are subject to a mandatory redemption schedule which will
leave all COPs retired by July 1, 2012. Prior to conversion to a fixed rate, the COPs are
payable on demand by the holders thereof. In June of 1993, the City secured a loan from
the State of California, the proceeds of which were used to repay $8,675,000of the COPs.
$1,275,000of the original $11,200,000remains outstanding at year-end. The City has a letter
of credit with a stated amount of $2,229,167 which is held to purchase any bonds presented
for payment. No drawn amounts are outstanding on the letter of credit at year end. Any
bonds redeemed on demand will be resold. The City has agreed that it will prescribe, revise
and collect such charges for services and facilities of the Enterprise which, after allowances
for contingencies and error in the estimates, will produce gross revenues sufficient in each
fiscal year to provide net revenues equal to the amounts listed in the legal documents for
the financing.
On August 1, 1993, the City of South San Francisco Capital Improvements Financing
Authority CCIFA") issued $6,505,000of 1993 revenue bonds. CIFA was created through a
joint exercise of powers agreement between the City and the City of South San Francisco
Redevelopment Agency for the purpose of obtaining financing for capital improvements.
The 1993 revenue bonds are obligations, of CIFA although the Conference Center is
SFI-250759.V4 A-17
required to make the bond principal and interest paymems in return for the use and
ownership of the improvements to the leased building which comprise the Conference
Center's facilities. The Conference Center has pledged the $2.50tax imposed on the City's
hotel occupants on a per day per room basis as the sole source of repayment of these
obligations. The 1993 revenue bonds are, in substance, obligations of the Conference
Center and have therefore been recorded as such in these financial statements.
As of June 30, 1996, $5,245,000 of principal remained outstanding on the 1993
revenue bonds.
The citY has entered into-long-term capital lease agreements with various financing
agencies. Under these capital leases, all leased assets shall be distributed to the City at the
end of the lease terms and shall thereafter remain the sole property of the City. Therefore,
these capital leases have been recorded at the present value of the future minimum .lease
payments at the date of inception of the lease.
Table 13 sets forth the City's overlapping bonded' indebtedness.
SFI-250759.V4 A-18
TABLE 13
CITY OF SOUTH SAN FRANCISCO
Overlapping Bonded Indebtedness
1996-97Assessed Valuation: $4,719,841,448[after deducting $373,092,371redevelopment incremental
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable(1)
Jefferson Union High School Disu'ict 0.067%
City of South San Francisco Lease Tax Obligations 100.
City of South San Francisco 1915 Act Bonds 100.
Westborough County Water District 100.
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
Debt 12/21/96
2.680
625.000
16.774.000
30,000
$17.431.680
valuation)
DIRECT AND OVERLAPPING
San Mateo County General Fund Obligations
San Marco County Board of Education Certificates
of Participation
San Mateo Conununity College District Certificates
of Participation
South San Francisco Unified School District
Cer~ficate of Participation
City of South San Francisco
TOTAL DIRECT AND OVERLAPPING
GENERAL FUND OBLIGATION DEBT: -' 8.642%
8.642
8.642
86.235
100.
GENERAL FUND OBLIGATION DEBT
$19,806,826
502.964
244,137
1,121,055
-(2)
$21,674.982
COMBINED TOTAL DEBT .'
$39,106.662(3)
(1) Based on 1995-96ratios.
(2) Excludes certificate of participation to be sold
(3) Excludes tax and revenue anticipation notes, revenue, mortgage and tax allocation
bonds and non-bonded capital lease obligations.
Ratios to 1996-1997Assessed Valuation:
Direct Debt ($625,000) ................................................................................. 0.01%
Combined Direct Debt ($625,000) ....................................................................... 0.01%
Total Direct and Overlapping Tax and Assessment Debt ...................................................... 0.37%
Combined Total Debt ................................................................................ 0.83%
STATE SCHOOL BUILDING AND REPAYABLE AS OF 6/30/96:$0
YV: ($425)
Source: California Municipal Statistics. Inc.
Sources of Revenue
[Elaborate on other major sources of city tax revenue
The City's major Sources of revenue from taxes (other
below in Table 14.
TABLE 14
CITY OF SOUTH SAN FRANCISCO
TAX REVENUES
other than property taxes]
than property) are set forth
SFI-250759.V4 A-19
Accounting Policies, Reports and Audits
The City's basis of accounting is a modified accrual basis (except for proprietary
funds which are on a full accrual basis) with revenues being recorded when available and
measurable and expenditures recorded when services or goods are received and with all
unpaid liabilities being accrued at year end.
The City Director of Finance maintains the accounting system and records of
accounts for all City funds. An independent certified public accountant conducts an annual
audit of the City's financial statements, books of accounts, financial records, and
transactions.
Funds and Account Groups accounted for by the City are categorized as follows:
Governmental Funds
General Fund
Special Revenue Funds
Debt Service Funds
Capital Projects Funds
Proprietary Fund Types
Enterprise Funds
Internal Service Funds
Fiduciary Funds
Trust and Agency Funds
Account Groups
General Fixed Assets
General Long-term Obligations
General Fund
The following tables describe the financial condition of the City's General Fund by
showing a five year history of the City's Statement of Revenues, Expenditures and Changes
in Fund Balance and a five-year history of the City's Balance Sheet.
SFI-250759.V4 A-20
TABLE 15
CITY OF SOUTH SAN FRANCISCO
Combined Statement of Revenues, Expenditures and Changes in Fund Balance
June 30, 1992 - 1996
(General Fund Only)
REVENUES:
Property Taxes
Other taxes (Principally Sales)
Intergovernmental
Interest and rentals
Licenses and permits
Charges for services
Fmcs and forfeitures
Landscape and maintenance fees
Sale of land
Administrative Charges
Other
Total Revenues
1992 1993, 1,,,994 1995
$ 7,120,389 6.751.440 6,874,979 6.341.791
10,717,395 13,322,736 13,691,398 13.449,142
2,510,178 3,107,298 3,003,234 2.811,615
1,392,532 1,166,438 1,0'27,369 1.002.959
1,340,231 1,381,259 1,531,294 1,721,872
1,961,697 1,608,174 1,972,242 2,076.873
467,533 406,077 391,374 395,637
- 1.072.974 1.097.432 981.006
42,599 38,259 36,692 20,645
$28,533,167 28,854,655 29,626,014 28,801,540
EXPENDITURES:
Elec~d officials
City attorney
City manager
Finance department
Nondepamuental
Economic & community
development
Fire depamnant
Police deparmaent
Public works deparnnent
Technical and maintenance services
Parks, recreation & community
services
Library
Landscape maintenance
Other
Total Expenditures
1996
6.433.531
14.995.766
2.779.821
1.221.687
1.967.822
2.464.551
492.698
1.021.182
90,862
2.118.966
Lease Payments
$ 296.281 249.886 -271.507 295.241 302.637
305.295 322.288 347.861 296.899 237.662
849.696 804.797 462.990 398.652 442.002
931.696 912.218 957.497 939.196 930.632
837.037 517.493 773.742 1.550.207 483.311
1.556.187 1.726.556 1 ;568.079 1.394.868 786.045
7.027.532 7.286.703 7.752.187 7.502.527 8.078.423
7.985.662 8.073.178 8.591.855 8.306.180 8.817.393
73.278.958 3.038.990 2.671.745 3.057.510 2.770.241
4.535.577 4.608.371 4.921.502 4.831.521 4.831.183
1.600.972 1.644.716 1.724.560 1.782.168 1.838.341
3,338 5,166 5,182 4~870 4,694
$29.208.304 29.190.362 30.411.845 30.758.289 29.939.254
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES
(USES):
Operating transfers in
Operating transfers out
Proceeds of capital leases
Total other financing sources (uses)
EXCESS OF REVENUES AND
OTHER SOURCES OVER
EXPENDITURES AND OTHER
USES
PRIOR FUND BALANCE
RESIDUAL EQUITY TRANSFERS
76.661
$ (751.798) i406,353) 420,623 (1,9SI ,071)
1,511,822
$ 961.082 897.967 1.843.513 989.622 874.691
O.042.515) (88.564) (588.564) (300,081) (1.346.465)
111,393 20,119 .,,~5,016 - --
$ 29.960 829.522 1.279.965 689.541 (428.763)
$ (721,838) 423,169. 420.623 (1,291,530)
$10,156,570 9,386,568 9,809,737 10,230,360
(48,164) .... (122,419)
ENDING FUND BALANCE
o) Includes land sale. u) in general, composed of gas tax revenues
Source: City's Audited Financial Statements.
1.083.059
10.043.740
$ 9.386.568 ~ $10.230.360 $10.043.740 $11.126.799
SFI-250759.V4 A-21
ASSETS
CASH AND INVESTMENTS
RECEIVABLES:
Due from and advance to other
government agencies
Due from other funds
Advances to other funds
Properly taxes (net)
Accounts
Accrued interest
Loans
INVENTORY
Prepaid
TOTAL ASSET5
LIABILITIES, FUND EQUITY AND
OTHER CREDITS
LIABILITIES:
Accounts payable
Compensated Absences
Due to other funds
Other
Deferred Revenue
Total Liabilities
FUND EQUITY AND OTHER
CREDITS:
Fund Balance:
Reserved.'
Adv. to c/c
Encumbrances
Advances to other funds
Inventor/ and Prepaid
Loans Receivable
Unreserved:
Designated:
Economic Contingencies
Potential catastrophic events
Health and retirement
Working capital
Cap Proj and Maim
Undesignated
Total fund equity and other credits
TOTAL LIABILITIES, FUND
EQUITY AND OTHER CREDITS
TABLE 16
CITY OF SOUTH SAN FRANCISCO
Balance Sheet (General Fund Only)
June 30, 1992 - 1996
1992 1993 1994
$ 6,391,129 $6,239,149 $5,734,463
464,489 843,624 454,180
476,652 389,857 655,749
2,348,251 2,762,350 3,007,450
145,097 124,101 8,868
653,839 654,746 468,361
653,839 158,230 134,683
18,804 12,072 4,202
52,042 38,015 51,361
10,488 100 1,268
~10,744,822 $11,222,968 ~11,670,489
1995
$5,660.689
1,522,645
188,740
3,216,972
548,92?
229,740
48,299
4,848
$11.558~72
1996
$5.990.044
1.974.264
512.451
3.328.437
603.267
152.003
48.559
6.648
$12.757.736
$1.077.727 $1.046.196 $ 1.404.272 $1.447.324 $1.485.242
247.540 337.033 .....
25.285 - - - 34.600
25.285 30.002 27.822 58.866 63.446
7,702 -- '8,035 8,242 47,529 ·
1.358.254 1.413.231 1.440.129 1.514.432 1.630.937
- - - 109.626 116.166
684.752 651.906 542.194 254.498 483.749
2.348.251 2.762.350 3.111.848 3.216.972 3.328.437
62.530 38.115 52.629 53.147 55.207
18.804 12.072 4.202 --
500.000 - 400,000 400.000 400.000
1.500.000 1.500.000 1,500.000 1.500.000 1.500.000
500,000 500,000 500,000 500,000 500,000
.... 1,107,340 133.005 480,717
3,772,231 4,345,294 3,012,147 3,876,492 4,262,523
9,386,568 . 9,809,737 10,230,360 10,043,740 11,126,799
$10,744,822 $11,222,968 $11,670,489 $11,558,172 $12,757,736
SF 1-250759.V4 A-22
APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE
CITY OF SOUTH SAN FRANCISCO
SFI-250673.V3 B-1
APPENDIX C
S~MARY OF PRINCIPAL LEGAL DOCUMENTS
APPENDIX D
FORM OF OPINION OF SPECIAL COUNSEL
[To Come]
APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
[To Come]
sF~-:~o6-~3.v3 E-1