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Lease Agreement 1995-0420705RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) STRADLING, YOCCA, CARLSON & RAUTH 660 Newport Center Drive Suite 1600 Newport Beach, California 92660 Attn: Denise E. Hering, Esq. 0 11995-0420705 2 EP -1995 03 =09 PM OFFICIAL..RECOM SON DIEOR COM, RECORDER'S OFFICE GREGORY SHITH'o COWTY RECORDER 8,88 FEES. 0.00 [Space above'for Recorder] This document is recorded for the benefit of the City of Poway, and ,the recording is fee- exempt under Section 27383 of the Government Code. LEASE AGREEMENT by and between CITY OF POWAY, as Lessee and POWAY REDEVELOPMENT AGENCY, as Lessor Dated as of September 1, 1995 Relating to $31,770,000 1995 REFUNDING CERTIFICATES OF PARTICIPATION (CITY OF POWAY 1991 CAPITAL; IMPROVEMENT PROJECT- POWAY ROYAL MOBILEHOME PARK) MM TABLE OF CONTENTS ARTICLE I DEFINITIONS AND EXHIBITS Page SECTION 1.1 Definitions and Rules of Construction 2 SECTION 1.2 Exhibits ... ............................:.. 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES SECTION 2.1 Representations, Covenants and Warranties of the City ..... 4 SECTION 2.2 Representations, Covenants and Warranties of the Agency ... 5 ARTICLE III ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT SECTION 3.1 Deposit of Certificate Proceeds .................... SECTION 3.2 Possession of Site; Acquisition, Construction and SECTION 4.3 Improvement of the Project ...................... SECTION 3.3 Compliance with Law .......................... SECTION 3.4 Payment of Costs ............................ SECTION 3.5 Completion Date; Certification .................... SECTION 3.6 Substitution and Release ........................ SECTION 3.7 Further Assurances and Corrective Instruments .......... ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS' SECTION 4.1 Lease .................................... SECTION 4.2 Term ..... ............................... SECTION 4.3 Extension of Lease Term ........................ SECTION 4.4 Lease Payments ............................ SECTION 4.5 No Withholding ............................ SECTION 4.6 Fair Rental Value ............................ SECTION 4.7 ............... Budget and Appropriation ...................... SECTION 4.8 Assignment of Lease Payments ................... SECTION 4.9 Use and Possession .......................... SECTION 4.10 Abatement of Lease Payments and Additional. Payments .... SECTION 4.11 Additional Payments .......................... SECTION 4.12 Net- Net -Net Lease ........................... PUBL:27201 41138JR2345.52 7 7 7 7 7 8 9 9 9 9 10 10 11 11 11 12 12 12 13 890 ARTICLE V INSURANCE SECTION 5 +.1 Public Liability and Property Damage ............... 13 SECTION 5':2 Worker's Compensation ....................... 14 SECTION 53 Hazard Insurance ........................... 14 SECTION 5.4 Rental Interruption Insurance .................... 14 SECTION 5.5 Title insurance ............................. 15 SECTION 5.6 General Insurance Provisions ... .:................ 15 SECTION 5.7 Cooperation ............................... 16 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1 Application of Net Proceeds ..................... 16 ARTICLE VII COVENANTS WITH RESPECT TO THE SITE SECTION 7.1 Use oPthe Site ............................. 18 SECTION 7.2 Leasehold interest in the Site .................... 18 SECTION 7.3 Option to, Prepay Lease Payments ................. 18 SECTION 7.4 Quiet Enjoyment ............................ 18 SECTION 7.5 Installation of City's Personal Property ......... I .... 19 SECTION 7.6 Access to the Site ........................... 19 SECTION 7.7 Maintenance, Utilities, Taxes and Assessments ......... 19 SECTION 7,.8 Modification of the Site ........................ 20 SECTION 7.9 Liens ..... ............................... 20 SECTION 7.10 Agency's Disclaimer of Warranties ................ 20 SECTION 7.11 City's Right to Enforce Warranties of Manufacturers, Vendors or Contractors ........................ 21 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8.1 Assignment by the Agency ...................... 21 SECTION 8.2 Assignmentand. Subleasing by the City .............. 21 SECTION 8.3 Amendments and Modifications ................... 22 ruBL:27261_41138182345.52 ii 0 ARTICLE IX EVENTS OF DEFAULT AND'.REIvIED1ES SECTION 9.1 Defaults and Remedies ........................ 22 SECTION 9E2 Waiver .... ............................... 26 SECTION 9.3 No Remedy Exclusive ......................... 26 SECTION 9.4 Agreement to Pay Attorneys Fees and Expenses .......... 26 SECTION 9.5 No Additional Waiver Implied by One Waiver .......... 26 SECTION 9.6 Application of the Proceeds Following Default ......... 26 SECTION 9.7 Trustee and Certificate Owners to Exercise Rights ....... 26 ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1 Security Deposit ........ .................... 27 SECTION 10.2 Extraordinary Prepayment From Net Proceeds .......... 27 SECTION'10.3 111.3 Optional. Prepayment .......... .:.............. 27 SECTION 10.4 Sinking Fund Redemption ....................... 28 SECTION 10.5 Credit for Amounts on Deposit .. .................. 28 SECTION 10.6 Effect of Prepayment ......................... 28 ARTICLE XI BOND INSURER TERMS SECTION 11.1 Third Party Beneficiary ........................ 28 SECTION 11.2 City Payment Requirement ...................... 28 SECTION 111.3 Information ............................... 28 ARTICLE XII MISCELLANEOUS SECTION 12.1 Notices ... ............................... 29 SECTION 12.2 Binding Effect ............................. 30 SECTION 12.3 Severability ............................... 30 SECTION 12.4 Execution in,Counterparts ...................... 30 SECTION 12.5 Applicable Law ............................. 30 SECTION 12.6 Captions .. ............................... 30 Exhibit A - Description of the Site ............................. A -1 Exhibit B - Schedule of:Lease Payments ......................... B -I Exhibit C - Lease Supplement ............................... C -1 PUBL:27201_4 11391 82345.52 iii REP LEASE AGREEMENT THIS LEASE,AGREEMENT',, dated as,of September 1, 1995; is entered, into by and between the: POWAY'REDEVELOPMENT AGENCY, a political subdivision of the State of California.(the "State ") duly organized and existing under the laws of the State of California,.as lessor (the `'Agency "), and thelCITY OF.POWAY, a municipal corporation of the State duly organized and existing under and by virtue of the Constitution and laws of the State of California, as lessee (the "City "); WITNESSETH: WHEREAS, pursuant to the ,Government Code of the State of California, the City may enter into leases andragreements relating to real property to be used by the City; WHEREAS, the Agency and.:City desire to enter into this Lease: Agreement (the "Lease ") and authorize the execution and delivery of certificates of participation, described below, evidencing proportionate interests in certain rights of the Agency, under,this Lease, including the right to receive lease payments to be.made by the City hereunder, in order to advance refund the outstanding portion of those certain: outstanding $28,300,000 1991 Certificates of Participation (City of Poway Capital Improvement Project), the proceeds of which were used to finance the acquisition and construction of certain public improvements (the "Prior Certificates "); and WHEREAS, the City has entered into a Site Lease of even date herewith (the "Site Lease ") with the Agency under which, the Agency has agreed to lease from the City the Site, which is described in Exhibit A hereto, and which Site Lease contains other terms and conditions as the governing board of the City deems to be in the best interest of the City; and WHEREAS, in consideration of the lease payments to be paid by the City to the Agency hereunder, the Agency will lease back •the -Site to the City pursuant to Section 4.1 hereof; and WHEREAS, the Agency is. authorized pursuant to the laws of the State of California to provide financial assistance to the City by acquiring, constructing and .financing various public facilities, land and equipment and the leasing of facilities, land.and equipment for the use, benefit and enjoyment of the public; 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: PuBL:27201 411381 E2345.52 893 ARTICLE I DEFINITIONS AND EXffiBITS SECTION 1.1 Definitions and Rules of Construction. Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of this Lease, have the meanings specified in the Trust Agreement: and the additional terms defined in this Section shall, for all purposes of this Lease, have the meanings herein specified. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa. The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this Lease, refer to this Lease as a whole. "Additional Certificates" means any certificates of participation executed and delivered by the Trustee pursuant to Section 317 of the Trust Agreement subsequent to the Delivery Date for the Certificates, which are secured on a parity with the Certificates. "Certificates" means the $31,770,000 1995 Refunding Certificates of Participation (City of Poway 1991 Capital Improvement Project —Poway Royal Mobilehome Park), executed and delivered by the Trustee pursuant to the Trust Agreement. "Completion Certificate" means a certificate of the City filed with the Trustee and signed by the City Representative, as prescribed by Section 3.5 hereof. "Component" means any portion of the Site designated in.Exhibit A hereto as a Component, as such Exhibit A may be amended from time to time in accordance herewith. "Hazardous Substances" means any substance, waste, pollutants, or contaminants now or hereafter included in such (or any similar) term under any federal, state or local code, statute, regulation or ordinance now-in effect or hereafter enacted or amended.. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the State and who is not an employee or officer of the Agency, the Trustee or the City. Insurer" or "Bond Insurer" means Financial Security Assurance Inc. and any successor thereto. "Lease" means this Lease Agreement, by and between the City and the Agency, as amended and supplemented from time to time. "Lease Supplement" means one or more amendments to this Lease executed substantially in the form attached as Exhibit C hereto. "Permitted Encumbrances" means as of any particular time: (1) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to Section 7.7 hereof, permit to remain unpaid; (2) the Assignment Agreement, as it may be amended from time to time; (3) this Lease, as it may be amended from time to time; (4) the Site Lease, as it may be amended from time to time; (5) any right or claim of any mechanic, laborer, vueu27201 4113E 1 B2345.52 2 • • 894 materialman, supplier or .vendor filed or perfected in,the °manner prescribed by law after the Delivery Date for the Certificates which is being contested by the City in.accordance with Section 7.8(b) hereof (6) that certain Memorandum of Affordable. Housing Covenants recorded in the Offices of the Recorder*of San Diego County on orbefore.the date,hereof;'(7) +easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants; conditions or restrictions which exist of record as of the Delivery Date for the Certificates and which the City certifies in writing on the Delivery Date for the Certificates will not; materially impair the use of the Site for its intended purposes; and (8) easements, rights; of way, _mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Delivery Date for the Certificates, or existing on any real property substituted, for the Site, to which the Agency, the Insurer and the City consent in writing and which the City certifies will not materially impair the use of the Site or real property substituted for the Site, as the case may be for its intended purposes. 'Proiect" means any capital, improvements specified by the City from time to time to be constructed with the proceeds of any Additional Certificates. "Site" means the real property, including all improvements thereto, described from time to time in Exhibit A hereto, as such,Exhibit A may be amended and supplemented from time to time in accordance with the provisions of this Lease. "Site Lease" means the Site!Lease, dated as of the date hereof, by and between the City, as lessor, and the Agency, as lessee; as; amended and supplemented from time to time, and any duly authorized and executed amendments thereto. "Term" means the term of this Lease as established by Section 4.2 hereof. "Trust Agreement" means the Trust Agreement, dated as of the date hereof, by and among Bank of America National Trust and Savings Association, as trustee, the City and the Agency, as amended and supplemented from time to time. SECTION 1.2 Exhibits. The following Exhibits are attached to, and by reference made a part of, this Lease: Exhibit A: Description of the Site. Exhibit B: Schedule of Lease Payments. Exhibit C: Lease-Supplement. voaL: 27201_41138162345.52 0 REPRESENTATIONS, 0 895 AND WARRANTIES SECTION 2.1 Representations, Covenants and Warranties of the City. The City represents, covenants and warrants to the Agency as follows: (a) Due OrIzanization and Existence. The City is a municipal corporation, duly organized and validly existing under and by virtue of the Constitution and laws of the State, with the power and authority to own, lease and acquire real and personal property and equipment. (b) Authorization: Enforceability. The Constitution and laws of the State authorize the City to enter into this Lease, the Site Lease, the Escrow Agreement and the Trust Agreement and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid agreements, and the City has duly authorized and executed all of the aforesaid agreements. This Lease, the Site Lease, the Escrow Agreement and the Trust Agreement constitute the legal, valid and binding obligations of the City, enforceable in accordance with their respective terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (c) No Conflicts or Default: No Liens or Encumbrances. Neither the execution and delivery of this Lease, the Site Lease, the Escrow Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City or upon the Site, except for Permitted Encumbrances and the pledges and assignments contained in the Trust Agreement and the Assignment Agreement. (d) Execution and Delivery. The City has duly authorized and executed this Lease, the Site Lease, the Escrow Agreement and the Trust Agreement in accordance with the Constitution and laws of the State. (e) Indemnification of the Agency and the Trustee. To the extent permitted by law, the City covenants to defend, indemnify and hold harmless the Agency, the Insurer, the Trustee and their respective assigns, board members and employees (collectively, the "Indemnified Party ") against any and all losses, claims, damages or liabilities, joint or several, including fees and expenses incurred in connection therewith, to which such Indemnified Party may become subject under any statute or at law or in equity or otherwise in connection with the transactions contemplated by this Lease, and shall reimburse any such Indemnified Parry for any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of the transactions PusL:27201_41138 1 82345.52 4 0 0 896 contemplated"by this Lease, the Escrow Agreement, the Trust Agreement or the Site Lease. In particular, without limitation, to the extent permitted by law, the City shall and hereby agrees to' indemnify and save the''Indemnified Party harmless from-and against all claims, losses and damages, including legal fees and. expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the Site or the Project by the City including, without limitation, as a result of the use, storage, presence, disposal or release of any Hazardous Substances on or about the Site, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Lease, (iii) any act of negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Site or the Project, (iv) any act of negligence of any assignee or sublessee of the City with respect to the Site or the Project, or (v) the completion of the Project or the authorization of payment of the Costs by the City. No indemnification is made under this Section or elsewhere in this Lease for claims, losses or damages, including legal fees and expenses arising out of the willful, misconduct, negligence, or breach of duty under this.Lease by the Agency, its officers, board members, agents, employees, successors or assigns. (f) General Tax and Arbitrage Covenant. The City hereby covenants that, notwithstanding any other provision of this Lease, it will make no use of the proceeds of the Certificates or any Additional Certificates or of any other: amounts, regardless of the source, or of any property or take any action, or refrain from taking any action that may cause the obligations of the City under this Lease to be "arbitrage bonds" within the meaning of Section 148 of the Code, or under applicable Treasury Regulations promulgated thereunder or to cause the Interest Component of the Lease Payments to become subject to State of California personal income taxation. In addition, the City covenants that it will not make any use of.the proceeds of the obligations provided herein or in the Trust Agreement or of any other funds of the City, or take or omit to take,any other action that would cause the obligations of the City under this Lease to be "private activity bonds" within the meaning of Section 141 of the Code, or "federally guaranteed within the meaning of Section 149(b) of the Code. To that end, so long as necessary to maintain the exclusion from gross income for federal income tax purposes of the Interest Component of the Lease Payments, the City will comply with all requirements of such Sections and all regulations thereunder and under Section 103 of the Code, to the extent that such requirements are, at the time, applicable and in effect. SECTION 2.2 Representations, Covenants and Warranties of the Agency. The Agency represents, covenants and warrants to the City as follows: (a) Due Organization and Existence`. Enforceability. The Agency is a political subdivision of the State, duly organized, validly existing and in good standing under and by virtue of the laws of the State, has the power to enter into this Lease, the Site Lease, the Assignment Agreement and the Trust Agreement; is possessed of full power to own and hold real and personal property, and to.lease and sell the same; and has duly authorized the execution and delivery of this Lease, the Site Lease,. the Assignment Agreement and the Trust Agreement. This Lease, the Site Lease, the Assignment Agreement and the Trust Agreement constitute the legal, valid and binding obligations of the Agency, enforceable in accordance with their respective terms, except to the extent PUBL:27201_411381 62345.5' 5 • • 897 limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (b) No Encumbrances. The Agency will not sell, assign, pledge or encumber the Site Lease, this Lease, the Lease Payments, the Additional Payments or any other amounts derived from the Site or from its other rights under this Lease or the Site Lease, except for Permitted Encumbrances and except as expressly provided under the terms of this Lease, the Site Lease, the Assignment Agreement and the Trust Agreement. (c) No Conflicts or Defaults; No Liens or. Encumbrances. Neither the execution and delivery of this Lease, the Site Lease, the Assignment Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of the formation documents of the Agency or any restriction or any agreement or instrument to which the Agency is now a °parry or by which the Agency is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Agency or upon the Site, except for Permitted Encumbrances and except by the pledges and assignments contained in the Trust Agreement and the Assignment Agreement. (d) Execution and Delivery. The Agency has duly authorized and executed this Lease, the Site Lease, the Assignment Agreement and the Trust Agreement in accordance with the Constitution and laws of the State. (e) General Tax and Arbitrage Covenant. So long, as no Event of Default has occurred, the Agency covenants that, notwithstanding any other provision of this Lease, it will make no use of the proceeds of the Certificates or any Additional Certificates.or of any other amounts or property, regardless of the.source, or take any action or refrain from taking any action that may cause the obligations of the City under this Lease to be "arbitrage bonds" subject to ,federal income taxation by reason of Section 148 of the Code or to cause the Interest Component of the Lease Payments to become subject to State of California personal income taxation. In addition, so long as no Event of Default has occurred, the Agency covenants that it will not make any use of the proceeds of the obligations provided,herein or in the TrusrAgreement or of any other funds of the City or take or omit to take any other action that would cause such obligations to be "private activity bonds" within the meaning of Section 141 of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the.Code. To that end, so long as no Event of Default has occurred, so long as necessary to maintain the exclusion from gross income for federal income tax purposes of the Interest Component of the Lease Payments, the Agency will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code, to the extent that such requirements are, at the time, applicable and in effect. (f) Maintenance of Existence. The Agency hereby covenants and agrees that during the term hereof it will maintain its existence as a redevelopment agency, will not PUHL:2720 1 _4 1 138 1 e2345.52 6 0 dissolve or otherwise dispose of all of,substaniially all of its assets, if any, will not become a general or limited partner,in:any, partnership or a.joint venturer in any joint venture and will not combine or consolidate with or. merge °into any other entity or permit one or "more other entities to'consolidate with or merge into it, unless such action (A) will not cause a merger of the City's leasehold estate in the Site and the successor thereto is a public agency which expressly agrees to assume all rights and responsibilities. of the Agency under the Site 'Lease, the Assignment Agreement, the Trust Agreement and this Lease and (B) is consented to in writing by the Insurer. ARTICLE III ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT SECTION 3.1 Deposit of Certificate Proceeds. On theDelivery Date for the Certificates and on the Delivery Date'for. any Additional Certificates, the Agency agrees to pay or cause to be paid to the Trustee as the rental due under the Site Lease the amount specified in Section 4 thereof, which moneys shall be deposited with the Trustee`•as provided in Section 401 of the Trust Agreement, or in the case of Additional Certificates as provided in any Supplemental Trust Agreement which relates to such Additional Certificates. SECTION 3.2 Possession. of Site; Acquisition, Construction and Improvement of the - Project. The City agrees to occupy and take possession of, the Site on September 20, 1995. The City further agrees to acquire, construct, deliver and install the Project, or to cause it to.be acquired, constructed, delivered and installed, with the proceeds of any Additional Certificates paid to the City by the Agency pursuant to Section 3.1 above and the Agency shall have no responsibility with respect thereto. SECTION 3.3 Compliance with Law. The City shall comply with all applicable provisions for bids and contracts ptescribed by law with respect to the Project, including, without limitation, Sections 201.10 et seq. 'of the Public Contracts Code and Article, 42 (commencing with Section 20670) of Part 3 of Division '2 of the Public Contracts Code. SECTION 3.4 Payment of Costs. Payment of the Costs shall be made from the moneys deposited with the Trustee'in the Project Fund as provided in Section 3.1 hereof and Section 402 of the Trust Agreement, which shall be disbursed-froru the Project Fund in accordance and -upon compliance with Section 402 of the Trust Agreement and the provisions of any Supplemental Trust -Agreement pursuant to which any Additional Certificates are executed and delivered. SECTION 3.5: Completion Date; Certification. Upon the completion of acquisition, construction, delivery and installation of the portion of the Project to be financed with the Certificates or with each issue of Additional Certificates, the.City shall deliver to the Trustee a Completion. Certificate'with respect thereto. A separate Completion Certificate will be filed with respect to the portion of the Project to be financed from each issue of Additional Certificates. On the date of filing a Completion Certificate, all excess moneys remaining in the Acquisition and Construction Account of the Project Fund for the issue of Additional Certificates for which PUB1.:27201 411381 B2345.52 7 0 0 899 such Completion Certificate is delivered shall be applied in accordance with the provisions of Section 402(e) of the Trust Agreement. SECTION 3.6 Substitution and Release. The City shall have the right from time to time to add other real property and improvements (subject only to Permitted Encumbrances) or to substitute other real property or improvements (subject only to Permitted Encumbrances) for all or a portion of the Site or to release a portion of the real property or improvements constituting the Site, if it has provided the Trustee with a written Lease Supplement and has obtained and provided to the Trustee each of the following: (a) Written consent of the Insurer and of each municipal bond insurance company that has insured an issue of Additional Certificates, if any; (b) Written confirmation from each Rating Agency that has rated the Certificates or an issue of Additional Certificates that its then existing rating with respect to the Certificates or any Additional Certificates will not reduced or withdrawn as a result of such addition, substitution or release; (c) A certificate from an independent and qualified MAI real estate appraiser selected by the City setting forth his or her findings that the Site as constituted following such addition, substitution or release (i) has an annual fair rental value during the remainder of the Term which is equal to or greater than the maximum annual Lease Payments and Additional Payments (assuming that the annual Additional Payments due in the future will equal the maximum annual Additional Payments prior to such addition, substitution or release) required to be paid hereunder during any year of the remainder of the Term, and (ii) has a useful life at least equal to the remaining Term hereof; (d) Certificates of insurance applicable to the Site (at and after the addition, substitution or release) which comply with the requirements of Article V hereof; and (e) An opinion of Bond Counsel to the effect that such addition, substitution or release will not adversely affect the exclusion from gross income for federal income tax purposes and the exemption from State personal income taxation of the Interest Component of the Lease Payments and that this Lease and the Site Lease, as amended, remain legal, valid and binding obligations of the City. In connection with a substitution or release, all interests of the Agency, and its assignee, in the portion of the Site released shall terminate and the Agency and its assignee shall execute and record with the County Recorder of the County of San Diego all documents deemed necessary by the City to evidence such termination of interest. Upon receipt of the items described in subparagraphs (a), (b). (c), (d) and (e) above, the Trustee also shall execute a Lease Supplement and, if necessary, a Supplemental Trust Agreement, and shall not impose on the City any further conditions or prerequisites to the requested addition, substitution or release. The City shall cause the Lease Supplement to be recorded in the real property records of the County. All costs and expenses incurred in connection with such addition, substitution or release shall be borne by the City. No addition. substitution or release under this Section 3.6 shall be, rueL:27201_51138[ B2345.52 8 0 0 900 by itself, the basis for any reduction in:or abatement of the Lease Payments due from the City hereunder. SECTION 3.7 Further Assurances and Corrective Instruments s. The Agency 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 Site hereby leased or intended so to be orfor carrying out the expressed intention of this Lease. ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE,- LEASE PAYMENTS SECTION 4.1 Lease. The Agency hereby subleases the Site to the City upon the terms and conditions set forth herein., The subleasing by the Agency to the City of the Site described °in Exhibit A hereto shall not effect or result in a merger of the' •City's leasehold estate pursuant to this Lease and its fee estate as lessor under the Site Lease, and the Agency shall continue to have and hold a leasehold estate im said Site pursuant to theiSite Lease throughout the term of the Site Lease. As to the Site, this Lease shall be deemed and constitute a sublease. SECTION 4.2 Term. The Term of this Lease shall commence on the Delivery Date for the Certificates and shall end on August 1, 2028, unless extended pursuant to Section 4.3 hereof. or unless terminated prior thereto upon the earliest of any of the following events: (a) Payment, of All Lease Payments. The payment by the City of all Lease Payments required' under Section 4.4 hereof and all Additional Payments required under Section 4.11 hereof and'the occurrence of the first date upon which the Certificates are no longer Outstanding under the Trust Agreement: or (b) Prepa,yment: The optional prepayment of all Lease Payments in accordance with Section 103 hereof and the payment of all Additional Payments •due through such prepayment date and the occurrence, of the first date upon which the Certificates are no longer deemed Outstanding under the Trust Agreement. SECTION 4.3 Extension of Lease Term. The Term of this Lease may be extended up to August 1. 2038. If on the final maturity date of the Certificates or any Additional Certificates all Interest Components and Principal Components 'represented ' thereby shall not be fully paid, or if the Lease Payments. or Additional Payments due, hereunder shall have been abated at any time as permitted by the terms hereof. then the Term shall be extended until all Certificates. Additional Certificates and all other amounts payable hereunder or under the Trust Agreement shall be fully paid, except that the Term shall in no event be extended beyond August 1, 2038. PUeu27:01_511381n2345.52 9 0 SECTION 4.4 Lease Payments. 0 901 (a) Time and Amount. Subject to the provisions of Section 4.10 (regarding abatement in event of loss of use of any portion of the Site) and Article 10 hereof (regarding prepayment of Lease Payments), the City hereby unconditionally and irrevocably agrees to pay to the Agency, its successors and assigns, as annual rental for the right to the use and possession of the Site, the Lease Payments (denominated into Interest Components and Principal Components) and the Additional Payments. The Lease Payments are intended to be sufficient in both time and amount to pay when due'the Principal Components and Interest Components represented' by the Certificates and any Additional Certificates, and are due and payable in arrears and in immediately available funds on the fifteenth Business Day prior to each August 1 and February 1, commencing February 1, 1996 (the "Lease. Payment Date ") as set forth in "Exhibit B hereto. In the event that any Additional Certificates are executed and delivered, pursuant to the Trust Agreement, the City and the Trustee shall execute an amendment to Exhibit B to state the Lease Payments due hereunder as a result of the execution and delivery of such Additional Certificates. (b) Credits. Any amount held in the Lease Payment Fund or the Interest Account of the Certificate Fund on the date any Lease Payment is made by the City (other than amounts required for payment of past due Principal Components or Interest Components with respect to any Certificates or Additional Certificates that have matured or been called for redemption and have not been presented for payment or amounts which have been paid with respect to a prior Lease Payment Date but not yet distributed to Owners) and available for payment of Lease Payments shall be credited towards the Lease Payment then due and payable. No payment need be made by the City on any Lease Payment Date.if the amounts then held in the Lease Payment Fund and the Interest Account of the Certificate Fund (other than those amounts excluded under the prior sentence and amounts transferred from the Reserve Account. which causes the balance therein to be less than the Reserve Requirement) and available for payment of Lease Payments are at least equal to the Lease Payment then required to be paid. (c) Rate on Overdue Payments. In the event.the City should fail to make any Lease Payments required by this Section 4.4; or any portion of any such Lease Payment, the Lease Payment or portion thereof 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, to the extent permitted by law, from the date such amount was originally payable at the rate.equal to the original interest rate payable with respect to each Certificate or Additional Certificate, as applicable, represented by such delinquent Lease Payment. SECTION 4.5 No Withholding. Notwithstanding any dispute between the Agency and the City, other than a dispute arising under Section 4.10 hereof as a result of-which the City has concluded that it may not legally pay the Lease Payments in dispute, the City shall make all Lease Payments and Additional Payments when due and shall not withhold any Lease Payments or Additional Payments pending the final resolution of such dispute. PUBL:27201 41 138162345.52 10 • • 902 SECTION 4.6" Fair Rental Value. The Lease Payments and the Additional Payments (as defined in.SectionA.11 hereon shall be paid by the City in consideration of the right to the use and,possession of the Site during each such period for which said rental•is to be paid. The parties hereto,have agreed and determined that such total rental to be paid hereunder does not exceed the fair rental value of the Site during the Term of this Lease and that, while the Site is being leased as a whole to the City, only nominal value is attributable to the portion of the Site comprising the buildings and improvements located on the land described in Exhibit A hereto (the "Excluded Improvements "). The parties hereto have further agreed and determined that the Lease Payments and the Additional Payments do not exceed the fair rental value of the Site without reference or consideration given to any portion of the Excluded Improvements. In making such determination, consideration has been given to the fair rental value.of the Site (including but not limited to costs of,maintenance, taxes and insurance but excluding the fair rental value, if any, of the Excluded Improvements), the uses and purposes which may be served by the Site and the essential public benefits therefrom which will accrue to the City and the general public. SECTION 4.7 Budget and Appropriation. The City covenants to take such action as may be necessary to include all Lease Payments and Additional Payments due hereunder as a separate line item in each of its proposed annual budgets and its final adopted annual budgets beginning with Fiscal Year 1995 -96 through the Term of this Lease and to make the necessary annual appropriations for such Lease Payments and Additional Payments. The City shall furnish to the Trustee within 15 days following adoption of the final budget in each Fiscal Year a certificate stating that the Lease Payments and Additional Payments were included in the final budget as adopted. To the extent that the amount of such payment becomes known after the adoption of the annual budget, such amounts shall be included and maintained in such budget as amended. The City covenants to take such action as is necessary to include such amounts in a supplemental budget of the City. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be ministerial duties imposed by law and it shall be the ministerial 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 Citv. The obligation of the City to pay Lease Payments and Additional Payments hereunder shall constitute a current expense of the City payable from all legally available funds and shall not in any way be, construed to be a debt of the City, or the State, or any political subdivision thereof. in contravention of any applicable constitutional or statutory limitation or requirements concerning the creation of indebtedness by the City, the State, or any political subdivision thereof, nor shall anything contained herein constitute a pledge of general revenues, funds or moneys of the City or 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. SECTION 4.8 Assignment of Lease Payments. Certain of the.Agency's rights under this Lease. including the right to receive and enforce payment of the Lease Payments to be made by the City hereunder, have been assigned to the Trustee, subject to certain exceptions, pursuant to the Assignment Agreement, to which assignment the City hereby consents. The Agency PUBL:27201 4I 1381132345.52 11 0 0 903 hereby directs the City, and the City hereby agrees, to,pay to the Trustee at the Trustee's corporate trust office, of -to the Trustee at such other place as the Trustee shall direct in writing, all Lease, Payments or Prepayments thereof payable,.by'the City hereunder. The;Agency will not assign or pledge the Lease,P,ayments or other amounts derived from the Site or from its other rights under this Lease except as expressly provided under the;terms of, this Lease or the Assignment Agreement. The Agency shall not assign its duties and obligations hereunder except as expressly provided under the Assignment Agreement and the Trust Agreement. SECTION 4.9 Use and Possession. The total Lease Payments, and Additional Payments due in any Fiscal Year shall be for the right to the use.and: possession of the Site for such Fiscal Year. During the Term of this Lease, the City shall be entitled to the right to the exclusive use and possession of the Site, subject only to the Permitted Encumbrances. SECTION 4.10 Abatement of Lease Payments and Additional Payments. Except to the extent that proceeds ofthe type described in the following paragraph are available, the amount of Lease Payments and additional Payments shall be abated' during any period in which there is substantial interference with the use or possession of all or a portion of the Site by the City by condemnation, damage, destruction or title defect. The amount of such abatement shall be such that the resulting Lease Payments, exclusive of the amounts, described in the following paragraph, do not exceed the fair rental value (as determined by an.independent real estate appraiser selected by the City, who is not an employee of the City); for the use and,possession of' the portion of the Site for which no substantial interference has occurred. Such abatement shall continue for the period of the substantial interference with the-:use or possession of the Site. In the event of any such interference with;use or possession, this Lease!shall , continue in full force and effect and the City waives any right to terminate this Lease by virtue of any such interference. Notwithstanding a substantial interference with the use or possession of all or a portion of the Site. the Citv shall remain obligated to make Lease Payments, (i) in an amount not to exceed the fair rental value during each Fiscal Year for the portion,of the,Site not damaged, destroyed, interfered with or taken, as determined by an independent real estate; appraiser selected by the City (who is not an employee of the City); (ii) to the extent that moneys derived from any person or company as a result of any delay in the reconstruction, replacement or repair of the Site, or any portion thereof, are available to pay the amount which would otherwise be:abated; or (iii) to the extent that moneys are available in the Certificate Fund.(exceptthe Reserve Account) or the Lease Payment Fund or from rental interruption insurance. to pay the amount which would' otherwise be abated, in which evenuthe Lease Payments shall be payable from such amounts as an obligation of the City payable from a special fund. SECTION 4.11 Additional Payments. Subject to Section 4.10 hereof (regarding abatement in event of loss or use of any portion of the Site) and Article 10 hereof (regarding prepayment of Lease Payments), the City shall also pay such amounts (herein called the "Additional Pavments") as shall be required to be paid by the Agency for the payment of all amounts, costs and expenses incurred by the Agency in' connection with the execution, performance or enforcement of this Lease or any assignment hereof; .the. Trust Agreement, its interest in the Site and the lease of the Site to the City, including but not limited to payment of all fees, costs and expenses and all administrative costs of the Agency related to;the Certificates, any Reserve Credit Facility, the Site, including, without limiting the generality of the foregoing, Puat;:27201 41 1381 B2345.52 12 904 salaries and wages,of employees, all expenses, compensation,_ and indemnification of the Trustee payable:by the Agency under the Trust Agreement „all amounts due to the:Insurer under the Trust Agreement, fees of auditors, accountants, attorneys'or architects, and all other necessary administrative costs of the Agency or charges required to be paid-by itin order to maintain its existence or to comply with the terms of the Certificates or of the Trust Agreement; but,not including in Additional Payments amounts required to pay the principal and interest in respect of the Certificates. Such Additional Payments shall:be billed to the City by the Agency or the Trustee from time to time, together with a'statemenrcertifying that the amount billed has been paid by the Agency or by the Trustee on behalf of the Agency, for one or more of the items above . described, or that such amount is then payable by the City within fifteen (15) days after receipt of the bill by the City. The City reserves the right to audit billings for Additional Payments although exercise of such right shall in no affect the duty of the City to make full and timely payment for all Additional Payments. SECTION 4.12 Net- Net -Net., Lease. This Lease shall beldeemed 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 Agency, free and clear of any expenses, charges, counterclaims or set -offs whatsoever, except as expressly provided herein. ARTICLE V INSURANCE SECTION 5.1 Public Liability and Property Damage. (a) Coverage. The City shall maintain or cause to be maintained, throughout the Term hereof, a standard comprehensive general public liability and property damage insurance policy or policies in protection of the City and the Agency and their respective officers, agents and-employees as additional insureds under the policy or policies. 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 use or operation of the 'Site. (b) Limits. Said policy or policies shall provide coverage in the minimum liability limits of $1:000,000 for personal injury 'or' death of each person in each accident or event and $3,000.000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $500,000 for damage to property resulting from each accident or event (subject to a deductible clause of not to exceed $250,000). Such public liability and property damage insurance may, however, be in the form of a single limit policy covering all such risks in an amount equal to the aggregate minimum liability limits serforth herein. (c) Joint or Self- Insurance. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the City. Such PuBL:27201_41138162345.52 13 0 945 liability insurance may be maintained by the City in the form of self- insurance which complies with Section 5.6(e) hereof. (d) Payment of Proceeds. The:proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds shall have been paid. SECTION 52 Worker's Compensation. The City shall, also maintain worker's compensation insurance issued.bya responsible carrier authorized under the laws of the State to insure its employees.,against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force in the State; or any act her enacted as" an amendment or supplement thereto, or in.lieu'thereof such insurance, or a part thereof, may be maintained by the City in the form of self - insurance which complies with Section 5.6(e) hereof. SECTION 5.3 Hazard Insurance. (a) Coverage. The City shall maintain or cause to be maintained, throughout the Term hereof, a policy or,policies of insurance, issued by insurance providers rated no less than "A" by Standard & PooCs Ratings Group or Moody's Investors Service, against loss or damage to the Site resulting from fire, lightning, vandalism, malicious mischief and such perils ordinarily defined as "extended coverage ",. excluding flood and earthquake; provided, however, that a flood and earthquake rider shall be purchased if the City, in its reasonable, discretion, determines that such coverage, is available from reputable insurers at commercially reasonable rates. Said policy or policies shall be maintained in an amount not less than the full replacement value of the Site, subject to a "deductible: clause" not to exceed one hundred thousand dollars ($100,000) for any one loss or, in the case of a flood and earthquake rider, ten percent (10 %) of the coverage obtained and shall name the Trustee as loss payee and the Agency as an additional insured under the policy or policies. The term "full replacement'value" as used in this Section 5.3 shall mean ,the: actual replacement cost of the; improvements located on the Site (including the cost of restoring the surface of the Site, but excluding the cost of restoring trees, plants and shrubs). (b) Joint or Self- Insurance. Such insurance may be maintained as part of or in conjunction with any other insurance carried by the City. The City shall. not maintain such hazard insurance in the form of self - insurance. (c) Payment of Net Proceeds. The Net Proceeds of such insurance shall be paid to the Trustee and applied as provided in Section 6.1(a) hereof. SECTION 5.4 Rental interruption Insurance. (a) Coverage and Amount. The City shall maintain or cause, to be maintained for the benefit of the Agency rental interruption insurance in an amount not less than an .amount equal to twice the maximum annual Lease Payment during the Term hereof, to insure against loss of rental income from the Site caused by perils covered' by the insurance required to be maintained as provided in Section 5:3 hereof. Such insurance eusL:27201 _4 Bs1e2345.52 14 0 906 shall be obtained not later than the Delivery Date for the Certificates and shall be increased as required in connection with each issue "of Additional Certificates. (b) Joint Insurance. Such insurance may be maintained as part of or in conjunction with any other rental interruption insurance carried by the City. The City may maintain rental interruption insurance through the Southern California Joint Powers Insurance Authority Pool. If the City discontinues provision of rental interruption insurance through the Southern California Joint Powers Insurance Authority Pool, the insurance provider of the substituted rental interruption insurance must be rated no less than "A" by Standard & Poor's or Moody's and such insurance provider shall be subject to the consent of the Bond Insurer. (c) )moment of Proceeds. The proceeds of such rental interruption insurance shall be paid to the Trustee as loss payee and deposited (1) first, in the Reserve Account to make up any deficiencies:therein, and (2) second, in the Lease Payment Fund, to be held therein and credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. SECTION 5.5 Title Insurance. The City shall obtain on,the Delivery Date for the Certificates that policy of title insurance approved by the Bond Insurer and delivered on the Delivery Date. In connection with any substitution of real property pursuant to Section 3.6 hereof. the City shall obtain title insurance on the Site, in the form of an ALTA leasehold title Policy and an ALTA Owner's /Leasehold Policy with Western Regional Exceptions. The title policy or policies in effect at any time with respect to the Site shall be in an amount at least equal to the aggregate Principal Component of unpaid Lease Payments, issued by a company of recognized standing duly authorized to issue the same. The title policy or policies shall insure the City's fee simple estate and the.Agency's and City's leasehold estate in the Site or the substituted Site, subject only to Permitted Encumbrances. The proceeds of such insurance shall be paid to the Trustee as loss payee and applied as provided in Section 6.1(a) hereof. The City shall not maintain title insurance in the form of self - insurance. SECTION i.6 General Insurance Provisions. (a) Form of Policies. All policies of insurance required to be procured and maintained pursuant to this Lease, other than the worker's compensation insurance and the title insurance specified in Sections 5.2 and 5.5 hereof, respectively, and any statements of self- insurance shall provide that the City and the Trustee shall receive 30 days' notice of each expiration, or any intended cancellation thereof or reduction of the coverage provided thereby. Insurance required to be procured and maintained pursuant to Section 5.3 hereof (regarding hazard insurance); Section 5.4 hereof (regarding rental interruption insurance) and Section 5.5 hereof (regarding title insurance) shall provide that all proceeds thereunder shall be payable to the Trustee as the insured or loss payee. (b) Pavment of Premiums. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. (c) Protection of the Trustee. The Trustee shall not be responsible for the sufficiency or adequacy of any insurance herein required and, upon the receipt of FSA PUffi.:27201 _4 1138 1 e2345s2 15 9 0 907 consent, shall be fully protected in accepting payment on account of such insurance or any adjustment; compromise or settlement of any loss agreed to by the City. (d) Evidence of Insurance. The City shall deliver certificates to the Trustee within the 30 days prior to July 1 of each year during the Term of this Lease to the effect that the insurance policies required by this Lease are in full force and effect. (e) Self - Insurance. Any self - insurance maintained by the City pursuant to Section 5.1(c) or 5.2 hereof shall afford reasonable protection to the Agency, the City ' and the Trustee. Before the City elects to provide self - insurance hereunder, and on each July I thereafter, there shall be filed with the Trustee a certificate: of an actuary, independent insurance consultant selected by the City, or other qualified person selected by the City, who may be the City's Risk Manager, stating that: in the opinion of the signer, the method or plan of,protection is sound and affords', adequate protection to the Agency, the City and the Trustee against loss and damage from the hazards and risks covered thereby, and there'shall also be filed with the Trustee a certificate of the City stating thatsuch substitute method or plan has been implemented. The Trustee shall be fully protected in relying mthe certificate provided in accordance with this Section 5.6(e) and shall not be responsible for the review of such certificate or verification that such recommendation, has been implemented. The City shall provide adequate reserves to cover the.amountof any deductible provisions of the insurance required to be maintained pursuant to Sections%5.1,,5.2, 5.3 and 5.4 hereof. SECTION 5.7 Cooperation. The Agency shall cooperate fully with the City at the expense of the City in filing:any proof of loss with respect to any insurance policy maintained pursuant to this Article and in the prosecution or defense of any, prospective or pending condemnation proceeding with respect to the Site or any portion thereof. FVII V[711wldI DAMAGE, DESTRUCTION AND EMINENT' DOMAIN; USE OF NET PROCEEDS SECTION 6.1 Application of Net Proceeds. (a) Deposit in Insurance and Condemnation, Pursuant to Section 405 of the Trust Agreement, the Trustee shall deposit the Net Proceeds of any insurance required by Section 5.3 hereof and the proceeds, if any, of the title insurance required by Section 5.5`hereof in the Insurance and. Condemnation Fund promptly upon receipt thereof. The City and /or the Agency shall transfer to the Trustee any other Net Proceeds received by the City and /or Agency in the event of any taking by eminent-domain or condemnation with respect to the Site, fordeposit in the Insurance and Condemnation Fund. (b) Disbursement for Replacement or Repair of the Site. Upon receipt of the prior written consenvof the Insurer, the certification described in paragraph (1) below and the requisition described in paragraph (2) below, the Trustee shall disburse moneys in the PUBL'2T.01_5 1 138 1 82345.52 16 0 0 908 Insurance and Condemnation Fund to the person, firm or corporation named in the requisition as provided in Section 405 of the Trust Agreement. (1) Certification. An Authorized Representative of the City must provide to the Agency, the Insurer and the Trustee a certificate stating that: (i) Sufficiency of Net Proceeds. The Net Proceeds available for such purpose, together with any other funds supplied by the City for such purpose, are sufficient to repair or replace the Site to a use which will have an annual fair rental value not less than'the maximum annual Lease Payments and Additional Payments (assuming that the annual Additional Payments due in the future will equal the maximum annual Additional Payments prior to such date) due hereunder, and (ii) Timely Completion. In the event that damage, destruction, title defect or taking' results in an abatement of Lease Payments or Additional Payments; such replacement or repair can be fully completed within a period not in excess of the period in which rental interruption insurance proceeds as described in Section 5.4 hereof, together with other legally available. funds, will be available to pay in full all Lease Payments and Additional Payments coming due during such period. (2) Requisition. -An Authorized Representative of the City must state with respect to each payment to be made (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid, and (iv) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance and Condemnation Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation. Any balance of the Net Proceeds remaining after such replacement or repair has been completed shall be disbursed as provided in Section 405 of the Trust Agreement. (c) Disbursement for Prepayment. If an Authorized Representative of the City notifies the Trustee in writing of the City's determination that the certification provided in Section 6.1(b)(1) hereof cannot be made or the Insurer or the City ,determine that, replacement or repair of any portion of the Site is not economically feasible or in the best interest of the City, then the City, with the prior written consent, or at the direction of the Insurer, shall deposit with the Trustee from legally available funds an amount which, when combined with the Net Proceeds, will prepay sufficient Lease Payments (and result in a corresponding redemption of Certificates and Additional Certificates) such that the fair rental value of the remaining portion of the Site is no less than an amount equal to the Principal Components and Interest Components due with respect to the Certificates and Additional Certificates to remain Outstanding under the Trust Agreement after such Net Proceeds and such deposit by the City are applied to redeem Certificates and Additional Certificates under the Trust Agreement. The Trustee shall promptly transfer the Net Proceeds in respect of such portion to the Redemption Account of the Certificate Fund as provided in Section 405 of the Trust Agreement and apply them to the PUBL27201411381132345.52 17 0 0 909 redemption ofthe.Certific_ates and Additional Certificates as provided in Section 310(a) of the Trust Agreement and prepayment of Lease Payments; as provided in'.Section 10.2 hereof. ARTICLE VII COVENANTS WITH RESPECT TO THE SITE SECTION 7.1 Use of the Site. The City represents and warrants that it.has an immediate essential -need for all of the Site, which need is not expected to be temporary or to diminish in the foreseeable future. SECTION 7.2 Leasehold Interest in the Site. (a) Agency Holds Leasehold Interest During Term. During the term of the Site Lease, the Agency shall hold_a leasehold interest in the Site pursuant to the Site Lease. The City shall take any and all actions reasonably required, including but not limited to executing and filing any and all documents, reasonably required to maintain and evidence the Agency's.leasehold interest in the Site at all times during the term of the Site Lease. The execution of this Lease shall not cause a merger, of the interests created by the Site Lease and this Lease. (b) Leasehold Interest Transferred to City at'End of Term. On the day of the expiration of the term.of the Site Lease as provided in Section 3 thereof, the Agency's leasehold interest in the';Site pursuant to the Site Lease and: -all right, title and interest of the Agency in the Site shall be transferred to and vest in the•City, .free and clear of any interest of the Agency or its assigns, without the necessity of any additional document of transfer. SECTION 7.3 Option to Prepay Lease Payments. The;City ' may exercise,an .option to prepay all or a portion of the Lease Payments in accordance with Article. 10 hereof and by prepaying Lease Payments in the amounts necessary to cause the termination of the Term as provided in Section 4.2(b) hereof, terminate the Agency's leasehold interest in the Site under the Site Lease and all right, title and interest of the Agency in the Site. If the City elects to prepay a portion of the Lease Payments, and if the.Lease Payments have been allocated to Components of the Site in Exhibit B hereto, then it may specify to which Component of the Site such prepayment is applicable. SECTION 7.4 Quiet Enjoyment. Subject only to the Permitted Encumbrances, during the Term of this Lease the Agency ,shall provide the City with quiet use and enjoyment of the Site. and the City shall during such Term peaceably and quietly have and hold and enjoy the Site; without suit, trouble or hindrance from the Agency, or any person or. entity claiming under or through the Agency except as expressly set forth in this Lease orlthe Trust Agreement. The Agency will, at the request of the City, join in any legal action in which the City asserts its right to such possession' and enjoyment to the extent the Agency may lawfully do so. Notwithstanding the foregoing ;. the Agency shall have the right of access to the Site as provided in. Section 7.6 hereof. PUBL:27201 41 1381 82345.52 18 910 SECTION 7.5 Installation of City's Personal Property. 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 items of equipment or other personal property in or upon any portion of the Site, so long as such installation shall not materially adversely affect the,fair rental value of the Site. All such items shall remain the sole personal property of the City, regardless of the manner in which the same may be affixed to such portion of the Site, in which neither the Agency nor the Trustee shall have any interest, and may be modified or removed by the City at anytime; rop vided that the City shall repair and restore any and all damage to such portion of the Site resulting from the installation, modification or removal of any such items of equipment. Nothing in this Lease shall prevent the City from purchasing items to be installed pursuant to this Section, provided that no lien or security interest attaching to'.'such items shall attach to any part of the Site. SECTION 7,6 Access to the Site. The City agrees that the Agency, and the Agency's successors and assigns, shall have (1) the right at.all reasonable times to enter upon the Site or any portion thereof to examine and inspect the Site, and (2) such rights of access'to the Site as may be reasonably necessary to cause the proper maintenance of the Site in the event of failure by the City to perform its obligations hereunder. SECTION 7.7 Maintenance, Utilities, Taxes and Assessments. (a) Maintenance: Repair and Replacement. Throughout the Term of this Lease, as part of the consideration for the rental of the Site, all repair and maintenance of the Site shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of the 'cost of the repair and replacement of the Site resulting from ordinary wear and tear or want of care on the part of the City or any sublessee thereof. The City shall provide or cause to be provided all security service, custodial service, power, gas, telephone, light, heating and water, and all other public utility services for the Site. In exchange for the Lease Payments herein provided, the Agency agrees to provide only the Site. (b) Tax and Assessments: Utility Chances. The City shall also pay or cause to be paid all taxes and assessments, including but not limited to utility charges of any type or nature charged to the Agency or the City or levied, assessed or charged against any portion of the Site or the respective interests or estates therein; provided that, with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due. (c) Contests. The City may, at its expense and in its name, in good faith contest anv 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; provided that prior to such nonpayment it shall furnish the Agency, the Insurer and the Trustee with the opinion of an Independent Counsel to the effect that, by nonpayment of any such items, the interest of the Agency in such portion of the Site will not be materially endangered and that the Site will not be subject to loss or forfeiture. Otherwise, the City shall promptly pay such taxes, assessments or charges or make provisions for the payment thereof in PUBL:27201_411381 B2345.52 19 • • 911 form satisfactory to the Agency and the Insurer. The Agency will cooperate fully in such contest, upon the request and at the expense of the City. SECTION 7.8 Modification of the Site. (a) Additions, Modifications and Improvements. The City shall, at its own expense, have the right to °make additions, modifications and improvements to any portion of the Site if such additions, modifications or improvements,,are necessary or beneficial for the use of such portion ofthe Site, so long as such additions, modifications or improvements do not adversely affect the fair rental value of the Site. Such additions, modifications or improvements shall not in any way damage any portion of the Site or cause it to be used for purposes other than those authorized under the provisions of state and federal law or in any way which would impair the exclusion from.gross income for federal income tax purposes of,.the Interest Components!-of the Lease Payments or diminish the fair rental value of the Site; and the Site, upon completion of any additions, modifications or improvements rnade pursuant to this Section', shall be of a value which is not less than the value of' the 'Site immediately prior to the making of such additions, modifications or improvements. (b) No Liens. Except for Permitted Encumbrances, the City will not permit any mechanic's or other lien to be established or remaiwagainst the Site for labor or materials furnished in connection with any additions, modifications or improvements 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 Agency,. the Insurer of the City's intention to do so, the.City may in good faith contest any lien filed or established against the Site, 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 Agency and its assigns with full security against any loss or forfeiture which might arise from the nonpayment of any such lien, in form satisfactory to the Trustee as assignee of the Agency and the Insurer. The Agency will cooperate fully in any such contest, upon the request and at the expense of the City. SECTION 7.9 Liens. Except as expressly permitted by this Lease (including without limitation Section 7.8. Section 8'.1 or Section 8.2 hereof), the City shall not, directly or indirectly, create. incur, assume or suffer to exist any mortgage, pledge, liens, charges, encumbrances or claims, as applicable, on or with respect to the Site, other than Permitted Encumbrances and other than the respective rights of the Agency and the City as herein provided. 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, if the same shall arise at any time; Qrovided,that the City may in good faith contest such lien or claim if it desires to do so, so long as such contest will not,materially, adversely affect the "rights of the City and the Agency to the Site or the payment. of Lease Payments or Additional. Payments hereunder. The City shall reimburse the Agency and its assigns for_any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. SECTION 7.10 Agency's Disclaimer of Warranties. THE AGENCY MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE PueL:27201 41138162345.52 20 • • 912 VALUE, DESIGN, CONDITION, MERCHANTABILITY OR. FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE SITE OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE AGENCY IS NOT A MANUFACTURER OF THE SITE OR OF ANY PORTION THEREOF, AND IS NOT A DEALER THEREIN, AND THAT THE CITY IS LEASING THE SITE AS IS. In no event shall the Agency be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease, the Site Lease, the Assignment Agreement or the Trust Agreement for the existence, furnishing, functioning or City's use and possession of the Site. SECTION 7.11 City's Right to Enforce Warranties of Manufacturers, Vendors or Contractors. The Agency hereby irrevocably appoints the City.its agent and attorney -in -fact during the Term, so long as,the City shall not be in default hereunder, to assert from time to time whatever claims and rights, including without limitation, warranty claims, claims for indemnification and claims for breach of any representations, respecting the Site or the Project which the Agency may have against any vendor or contractor, or any agents thereof. The City's sole remedy for the breach of any such warranty, indemnification or representation shall be against the vendor or contractor with respect thereto, and not against the.Agency, nor shall such matter have any effect whatsoever on the rights and obligations of the Agency with respect to this Lease, including the right to receive full and timely Lease Payments and to cause the City to make all other payments due hereunder. The City shall be entitled to retain any and all amounts recovered as a result of the assertion of any such claims and rights. The Agency shall, upon the City's request and at the City's expense,, do all things and take all such actions as the City may request in connection with the assertion of any such claims and rights. The City expressly acknowledges that neither the Agency nor the Trustee makes, or has made. any representation or warranty whatsoever as to the existence or availability of such warranties of the manufacturer, vendor or contractor with respect to any portion of the Project. ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8.1 Assignment by the Agency. Except as expressly provided herein, in the Assignment Agreement and in the Trust Agreement, the Agency will not assign this Lease, or any right, title or interest of the Agency in and to this Lease, to any person, firm or corporation. SECTION 8.2 Assignment and Subleasing by the City. (a) Assignment. This Lease may not be assigned by the City unless (A) the City obtains the prior written consent of the Insurer, and (B) the City receives an opinion of Bond Counsel stating that such assignment does not adversely affect the exclusion from gross income for federal income tax purposes or the exemption from State personal income taxation of the Interest Components of the Lease Payments. In the event that this Lease is assigned by the City, the obligation to make Lease Payments and Additional Payments and perform the other covenants of the City hereunder shall remain the primary obligation of the City. Pasu2r_ot slis81a23as.s2 21 913 (b) Sublet The City may sublease any portion otZfte Site, with the prior written consent of the Trustee as assignee of the Agency and the Insurer, subject to all of the following conditions: (i) this Lease and the obligation of.the City to make Lease Payments and Additional Payments and perform the other covenants of the City hereunder shall remain primary obligations of the City; (ii) the City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Agency and the Trustee a true and complete copy of such sublease, provided, however, the Trustee shall have no duty to review the form or adequacy of such sublease for any purpose; and (iii) no sublease shall cause the Interest Components of the Lease Payments due with respect to the Site to become subject to federal income taxes or State personal income taxes; and (iv) any sublease shall be terminable by the Agency upon the occurrence of an Event of Default or abatement event hereunder. No consent of the Trustee may be given under this subsection (b) unless the City shall have provided the Trustee with opinions of-Independent Counsel with respect to the matters set forth in clause (i) above and the opinion of Bond Counsel with respect to the matters set forth in clause (iii) above. The provisions of this Section 8.2 shall not apply to the rental of mobilehome park spaces for residential use in the ordinary course of the City's business. The City is expressly authorized to lease mobilehome park spaces in accordance with the intended purposes of the park, without the prior consent of the Agency, the Trustee or the Insurer. SECTION 8.3 Amendments and Modifications. This Lease may be amended or any of its terms modified in accordance with Article VII of the Trust Agreement, with the prior written consent of the Trustee, the Insurer, the City and the Agency. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9.1 Defaults and Remedies. (a) If the City shall fail to pay any rental or other amount payable hereunder when the same becomes due and payable, time being expressly declared to be of the essence of this Lease, or the City shall fail to keep, observe or perform any other term. covenant or condition contained herein or in the Trust Agreement to be kept or performed by the City for a period of thirty (30) days after notice of the same has been given to the City by the Agency, Bond Insurer or the Trustee or for such additional time as is reasonably required, in the discretion of the Trustee with the prior written consent of the Bond Insurer, to correct the same. or upon the happening of any of the events specified in subsection (b) of this Section (any such case above being an 'Event of Default "), the City shall be deemed to be in default hereunder and it shall be lawful for the Agency to exercise any and all remedies available pursuant to law or granted pursuant to this Lease, subject to the limits on acceleration set forth herein. Upon anv such default, the Agency, in addition to all other rights PUBL:27201_511381B2345.52 22 0 914 and remedies it may have at law, may do any of the following, but only subject to the prior written consent of the Bond Insurer, and shall do any of the following, at the direction of the Bond Insurer: (1) To terminate this Lease in the manner hereinafter provided on account of default by the City, notwithstanding any re -entry or re- letting of the Site as hereinafter provided for in subparagraph (2) hereof, and to re -enter the Site and remove all persons in possession thereof and.all personal property whatsoever situated upon the Site and place such personal property in storage in any warehouse or other suitable place located within the City. In the event of such termination, the City agrees to surrender immediately possession of-the Site, without let or hindrance, and to pay the Agency all damages recoverable at law that the Agency may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out.of, in connection with, or incident to any such re -entry upon the Site;and removal and storage of such Property by the Agency or its duly authorized agents in accordance with the provisions herein contained. Neither notice to pay rent or to deliver up possession of the Site given pursuant to law nor any entry or re -entry by the Agency nor any proceeding in unlawful detainer, or otherwise, brought by the Agency for the purpose of effecting such re -entry or obtaining possession of the Site nor the appointment of a receiver upon initiative of the Agency to protect the Agency's interest under this Lease 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 acts of the parties hereto, or otherwise, unless and until the Agency shall have given written notice to the City of the election on the part of the Agency to terminate this Lease. The City covenants and agrees that no surrender of the Site 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 Agency by such written notice. (2) Without terminating this Lease, (i) to collect each installment of rent and other amounts as they become due and enforce any other terms or provision hereof to be kept or performed by the City, regardless of whether or not the City has abandoned the Site. or (ii) to exercise any and all rights of.re -entry upon the Site. In the event the Agency does not elect to terminate this Lease in the manner provided for in subparagraph (1) hereof, the City shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the City and, if the Site is not re -let, to pay the, full amount of the rent and other amounts to the end of the term of this Lease or, in the event that the Site is re -let, to pay any deficiency in rent and other amounts that results therefrom; and further agrees to pay said rent.and other amounts and/or rent and other amounts, including without limitation, any rent deficiency, punctually, at the same.time and in the same manner as hereinabove provided for the payment of rent and other amounts hereunder (without acceleration), notwithstanding the fact that the Agency may have received in previous years or may receive thereafter in subsequent years rental or other amounts in excess of:the rental or other amounts herein specified, and notwithstanding any entry or re -entry by the Agency or suit in unlawful detainer, or otherwise, brought by the Agency for the purpose of effecting such entry or re -entry or obtaining possession of the Site. Should the Agency elect to enter or re -enter as herein provided, the City hereby irrevocably appoints the Agency as the agent and attorney -in -fact of the City to re -let the Site, or any part thereof, from time to time, either vueu27201_411381B234552 23 M 915 in the Agehcy's name: or otherwise, upon such terms and conditions „and for such use and period-as the Agency,may:deem advisable, and to( remove all persons iwpossession thereof and all personal property whatsoever situated upon the Site.and,to place such personal property °in storage in any warehouse or other suitable place located'in the City, for the account: of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Agency from any costs, loss or damage whatsoever arising out of, in connection with, or incident ..to any such re -entry upon and re- letting of the Site and removal and storage of such property by the Agency 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 Agency to re -let the Site and to do all other acts to maintain or preserve the Site as the Agency deems necessary or desirable in the evenrof such re -entry without effecting -a surrender of this Lease, and further agrees that no acts of the Agency in effecting such re- letting shall constitute a surrender or termination of this Lease irrespective of the use or the term for which such re- lettings made or the terms and conditions of such re- letting; or otherwise, but that, on the contrary. in the event of such default by the City the right`to terminate this Lease shall vest in the Agency to be effected in the sole and exclusive manner provided for in sub - paragraph (1) hereof. The City further waives the right to any rental or other amounts obtained by the.Agency in excess of the rental and other amounts herein specified and hereby conveysand releases such excess to the Agency as compensation to the Agency for its services in re- letting the Site or any part thereof. The City further agrees to pay the Agency the,cost of any alterations or additions to the Site necessary to place the Site in condition for re- letting immediately upon notice to the City of the completion and installation of such additions or alterations. The City hereby waives any and all claims for damages caused or which may be caused by the Agency in re- entering and taking possession of the Site,as herein-provided and all claims for damages that may result from the destruction of the Site and all claims for damages to or loss of any property belonging to the City, or any other person, that may be "in or upon the Site. (b) If (1) the City's interest in this Lease or any partthereof be assigned or transferred, either voluntarily or by operation of law or otherwise, without the priorwritten consent of the Bond Insurer. as hereinafter provided for, or (2) the City or any assignee shall file any petition or institute any proceeding under any act or acts, State or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the City's debts or obligations, or offers to the City's creditors to effect a composition or eztension.of time to pay the City's debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for,a readjustment of the City's debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character be filed or be instituted or taken ^against the City, or if areceiver of the business or of the property or assets of the City shall be appointed by any court, except a receiver appointed at the instance or request of the Agency, or if the City shall.make a general or any assignment for the benefit of the City's creditors, or if (3) the City shall abandon or vacate the Site, then the City shall be deemed to be in default hereunder. PueL:27201 _41'1381142345.52 24 0) 917 SECTION 9.2 Waiver. Failure of the Agency to take advantage of any default on the part of the City shall not be, or be construed as, a waiver' thereof;, -nor shall.any custom or practice which may grow up between the parties in the course.of`administering! this instrument be construed to waive or to lessen the right of the Agency to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights given the Agency on account of such default. A waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent default. The acceptance of rent hereunder shall not be, or be construed to be, a waiver of any term, covenant or condition of this Lease. SECTION 9.3 No Remedy Exclusive. No remedy conferred herein upon or reserved to the Agency 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. In order to entitle the Agency to,exercise any remedy reserved to it in this Article it shall not be necessary to give any notice, other than such notice as maybe required in this Article or by law, SECTION 9.4 :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 of performance or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reasonable fees and disbursements of such entity's attorneys and such other expenses so incurred by the nondefaulting party. SECTION 9.5 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 9.6 Application of the Proceeds Following Default. All amounts received by the Agency under this Article 9 (other than fees and, expenses under Section 9.4 above) shall be deposited by the Trustee in the Lease Payment Fund for application in accordance with Section 504 of the Trust Agreement. SECTION 9.7 Trustee and Certificate Owners to Exercise. Rights. Such rights and remedies as are given to the Agencv under this Article 9 have beewassigned by the Agency to the Trustee under the Assignment Agreement and the Trust. Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee, the:Bond Insurer, the Certificate Owners and owners of any Additional Certificates as provided in Article V of the 'Trust Agreement. PU13L:27201 41 138182345.52 26 918 ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1 Security Deposit. Notwithstanding any other provision of this Lease, the City may, on any date, secure the payment of any unpaid.Lease Payment attributable to the Site as set forth in Exhibit B hereto by an irrevocable deposit by it with the Trustee of cash and /or Permitted Investments of the type described in paragraph 1(b) of the definition thereof, which are adequate in the opinion of an independent certified public accountant to provide for payment of such unpaid Lease Payment as it becomes due and payable hereunder (a "Security Deposit ") and provided that such Security Deposit.meets all the terms and provisions established for defeasance of the Certificates set forth in Sections 901 and 10010) of the Trust Agreement. In the event that the City has secured the payment of all unpaid Lease Payments attributable to the Site in accordance with the terms and provisions of the immediately preceding paragraph, and provided that the City'has made arrangements acceptable to the Trustee and the Insurer to pay any Additional Payments due hereunder, all obligations of the City under this Lease, and all security provided by this Lease for said obligations,, shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, Lease Payments from such deposit. Said 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. The Agency shall execute and deliver such further instruments and take such further action as may reasonably be requested by the City for carrying out the leasehold interest transfer for which a security deposit is made hereunder. SECTION 10.2 Extraordinary Prepayment From Net Proceeds. The City shall be obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds transferred to the Redemption Account pursuant to Section 405 of the Trust Agreement. The Citv and the Agency hereby agree that such proceeds shall be credited towards the Citv's obligations hereunder such that approximately equal annual Lease Payments will prevail with respect to the Site following such prepayment and, if the Lease Payments have been allocated to discrete Components of the Site in Exhibit B hereto, the Lease Payments with respect to the Component or Components from which such Net Proceeds were delivered will be reduced accordingly. SECTION 10.3 Optional, Prepayment. Subject to the terms and conditions of this Section and to the prior written consent of the Bond Insurer, the Agency hereby grants:an option to the City to prepav in whole or in part the.Principal Components of Lease.Payments relating to the Site, to the extent, on the dates and at the prepayment prices provided in Section 310(c) of the Trust Agreement as such Section 310(c) may be amended from time to time with respect to Additional Certificates. The City shall execute said option by giving written notice to the Trustee thereof at least 45 days (or such shorter period as approved by the Trustee) prior to the date of redemption of Certificates and Additional Certificates from such prepayment and depositing with said notice cash in the minimum amount of (1) accrued interest on the Principal Component of Lease Payments to be prepaid to the date of redemption of Certificates and Additional Certificates with the proceeds of such prepayment, plus (2) the Principal Component of any Lease Payments to be prepaid, plus (3) the applicable prepayment premium described in such Section 310(c) of Puai.27201 41 138162345.52 27 Sa 919 the Trust Agreement as such Section 310(c) maybe amended. froin time to time with respect to Additional Certificates. SECTION 10;4 Sinking Fund Redemption. The,City and`the Agency acknowledge that the Term Certificates are subject to mandatory redemption from.the Principal Components of Lease Payments on the dates, at the times and in the amounts provided in Section 310(b) of the Trust Agreement. SECTION 10.5 Credit for Amounts on Deposit. In the event of prepayment of all the Lease Payments in full under this Article 10 and the payment in full of all due and payable Additional Payments, such. that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all amounts then,on deposit in the Lease Payment Fund and the Certificate Fund shall be credited toward the amounts then required to be so prepaid. SECTION 10.6 Effect of Prepayment. (a) In Whole. In the event that the City prepays all remaining Lease Payments pursuant to Section 10.3 or Section 10.2 hereof and the Certificates are no longer Outstanding under the Trust Agreement and the City has paid in full all Additional Payments due hereunder, the City's obligations under this Lease shall thereupon cease and terminate, including butnot limited to the City's obligation to continue to pay Lease Payments hereunder. (b) In Part. In the event the City prepays less than;all of the remaining Principal Component of the Lease Payments pursuant to Section 10.2 or 10.3 hereof, the amount of such prepayment shall be applied to reduce the Principal Component of the Lease. Payments corresponding to the resulting prepayment of the Principal Component with respect to the Certificates and the Additional Certificates. ARTICLE XI BOND INSURER TERMS SECTION 11.1 Third Party Beneficiary. The Bond Insurer is hereby deemed to be a third party beneficiary of this Lease Agreement. SECTION 11.2 City Payment Requirement. Subject to the provisions of Section 4.10 hereof, the City hereby covenants and agrees to pay all amounts required to be paid by the Agency under the Trust Agreement. SECTION 11.3 Information. The Bond Insurer shall be provided with the following information: (i) Annual audited financial statements of the City within 120 days after the end of the fiscal year and the annual budget within 30 days after the approval thereof; PUBL:27201_411381 82345.52 28 0 920 (ii) upon delivery of the annual audited financial statements of the City,..a certificate of the chief financial officer of the City stating that, to the best of such individual's knowledge following reasonable inquiry, no Event of Default has occurred, or if an Event of Default has; occurred, specifying the nature thereof and stating in reasonable detail the steps, if any, being taken by the City to cure such Event of Default; (iii) Official statement, if any, prepared-in connection with the issuance of additional indebtedness of the City within 30 days of the incurrence thereof; (iv.) Notice of any failure of the City to make ,any payment required under this Lease Agreement within two Business Days after knowledge thereof; (v) A full original transcript of all proceedings relating to the execution of any amendment or supplement to this Lease Agreement; (vi) Copies of all reports, certificates and notices required to be delivered by the City pursuant to this Lease Agreement; and (vii) Such additional information as'the Bond Insurer from time to time may reasonably request. ARTICLE XII MISCELLANEOUS SECTION 12.1 Notices. All :notices, certificates or other communications hereunder to the Agency, the Bond Insurer and City shall be in writing and shall be sufficiently given and shall be deemed given when delivered or mailed by certified mail, postage prepaid, to the parties listed below: If to the City: City of Poway 13325 Civic Center Drive Poway, California 92064 Attention: City Manager (619) 679 -4204 Telecopier: (619) 748 -1455 If to the Agency: Poway Redevelopment, Agency 13325 Civic, Center Drive Poway, California 92064 Attention: Executive Director (619) 679 -4204 Telecopier: (619) 748 -1455 Puac:27201_411381132345.51. 29 0i 0 921 If to the Trustee: Bank of America National Trust and Savings Association 333. South Beaudry, 25th Floor #8510 Los, Angeles, California 90017 Attention: Corporate Trust Department (213) 345 -3990 Telecopier: (213) 345 -1364 If to the Bond Insurer: Financial Security Assurance Inc. 350 Park Avenue New York, New York 10022 Attention: Managing Director - Surveillance Re: Policy Number Notice shall also be given to the Rating Agency at the address(es) then in effect for the Rating Agency pursuant to:Section 908 of the Indenture. Notices to the Trustee shall be given initially either telephonically or by written telecommunication and shall then be confirmed in writing delivered by registered or certified mail', return receipt requested. The Agency, the City and the Trustee, by notice given hereunder, may designate different addresses'to which subsequent notices, certificates or other communications will be sent. SECTION 12.2 Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Agency and the City and their respective successors and assigns. SECTION 12.3 Severability. In the event any provision of this Lease shall be held invalid or unenforceable by a court of.competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. SECTION 12.4 Execution in Counterparts. This Lease may be executed in any number of counterparts. each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 12.5 Applicable =Law. This Agreement shall be.governed by and construed in accordance with the laws of the State. SECTION 12.6 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 sections of this Lease. vusu27201_41 138 1 B2345.52 30 922 IN WITNESS WHEREOF, the Agency has caused this Lease.to be executed in its name by its duly authorized officers, and the City has caused this Lease to be executed in its name by its duly authorized officers, as of the date first above written. POWAY REDEVELOPMENT AGENCY, as Lessor By: Its: Chairperson ATTEST: Secretary CITY OF POWAY, as Lessee By: Its: Mayor ATTEST: ),_ i City Clerk PUBL.'27201_31138IB2345.52 31 r 0 923 CERTIFICATE OF ACCEPTANCE This is to,certify that the interest in real property , conveyed under the foregoing to the City of Poway, a body corporate :and politic, is hereby accepted by the undersigned officer or agent on behalf of the City Council of the City of Poway, pursuant to authority conferred by resolution of the said City Council adopted on June 20, 1995, and the grantee consents to recordation thereof by its duly authorized officer. Dated: September 21, 1995 CITY OF POWAY sy: Its: Mayor vueL:27201_3i 1381112345.52 0 924 EXHIBIT A LEGAL DESCRIPTION OF THE SITE Poway Royal Mobilehome Park with:a' total of 399 spaces, recreational and community buildings, parking and storage lots, and landscaping located on the property described below: THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: PARCEL 1: ALL OF THE SOUTH HALF OF THE SOUTHWEST QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH. RANGE? ,2 WEST, SAN BERNARDINO -MERIDIAN, IN THE COUNTY OF SAN DIEGO. STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF (INCLUDING THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 13 KNOWN AS PARCEL "A" OF THE MAP OF REVERSION TO ACREAGE OF A PORTION OF RUSS ESTATES UNIT NO. 2, ACCORDING TO MAP THEREOF NO. 5027, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, AUGUST 30, 1962. EXCEPTING THEREFROM THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 13, LYING NORTHERLY AND NORTHWESTERLY OF THE FOLLOWING DESCRIBED LINE: COMMENCING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 13; THENCE ALONG THE EASTERLY LINE OF SAID SOUTHWEST QUARTER, NORTH 01 °54'40" EAST. 366.45 FEET TO THE CENTER LINE OF THE POWAY CREEK CHANNEL AS LOCATED IN MARCH 1971: THENCE ALONG SAID CENTER LINE AS FOLLOWS: SOUTH 89 052'00" WEST. 115.28 FEET TO THE BEGINNING OF A TANGENT 115.28 FOOT RADIUS CURVE. CONCAVE SOUTHEASTERLY; SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF =44 638'02" A DISTANCE OF 155.80 FEET AND TANGENT TO SAID CURVE SOUTH 45 013'58" WEST, 213.31 FEET TO THE WESTERLY LINE OF THE EASTERLY 400.00 FEET OF SAID SOUTHEAST QUARTER OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER AND BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID CENTER LINE AS FOLLOWS: SOUTH 45 013'58" WEST. 466.38 FEET TO THE BEGINNING OF A TANGENT 250.00 FOOT RADIUS CURVE, CONCAVE NORTHWESTERLY, SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 44 038'02 "A DISTANCE OF 194.75 FEET AND TANGENT TO SAID CURVE SOUTH 89 052'00" WEST 443.00 FEET PUBL:272_01_4I 138182345.52 EXHIBIT A -1 ! 925 TO THE WESTERLY LINE OF THE SOUTHEAST QUARTER OF "THE SOUTHWEST QUARTER OF SECTION 13. ALSO EXCEPTING THEREFROM THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN,DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF LYING SOUTHEASTERLY OF THE CENTER LINE OF ROAD SURVEY NO. 1587 -3 AS DESCRIBED IN DEED TO COUNTY OF SAN DIEGO, RECORDED AUGUST 24, 1971 AS FILE NO. 189667 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION CONVEYED TO THE COUNTY OF SAN DIEGO BY DEED RECORDED APRIL 13, 1976 AS FILE NO. 76- 108156 OF OFFICIAL RECORDS, DESCRIBED AS FOLLOWS: BEGINNING AT A 314 INCH IRON PIPE MARKING THE NORTHEAST CORNER OF SAID. SOUTHWEST n TARTER OF THE SOUTHWEST QUARTER OF SECTION 13, ACCORDING TO RECORD OF SURVEY MAP NO. 4195; THENCE ALONG THE NORTHERLY LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER, NORTH 89 009'25 "WEST, 1.338.34 FEET TO THE NORTHWEST CORNER OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER; THENCE SOUTH 00 °49'00" WEST, 868.18 FEET ALONG THE WESTERLY LINE OF SAID SECTION 13; THENCE LEAVING SAID WESTERLY LINE, NORTH 77 040'53 "EAST, 17.97 FEET TO THE BEGINNING OF A TANGENT 227.00 FOOT RADIUS CURVE, CONCAVE NORTHWESTERLY: THENCE NORTHEASTERLY ALONG THE °ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 41010'53", A DISTANCE OF 163.16 FEET; THENCE TANGENT TO SAID CURVE. NORTH 36 030'00" EAST, 20.31 FEET TO THE BEGINNING OF A TANGENT 73.00 FOOT RADIUS CURVE, CONCAVE SOUTHEASTERLY; THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 30 004'00 ". A DISTANCE OF 38.31 FEET: THENCE TANGENT TO SAID CURVE, NORTH 66 034'00" EAST.871:70 FEET TO THE BEGINNING OF A TANGENT 373.00 FOOT RADIUS CURVE. CONCAVE SOUTHEASTERLY; THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE. THROUGH A CENTRAL ANGLE OF 23 018'00" A DISTANCE OF 151.68 FEET: THENCE TANGENT TO SAID CURVE, NORTH 89 152'00" EAST, 201.86 FEET TO A POINT ON THE EASTERLY LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 13; THENCE NORTH 01021'50" EAST. ALONG SAID EASTERLY LINE, 340.14 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. PARCEL 2: AN EASEMENT AND RIGHT OF WAY FOR PUBLIC ROAD PURPOSES OVER AND ACROSS THE WESTERLY 40.00 FEET OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER AND THE WESTERLY 40.00 FEET OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO. STATE OF CALIFORNIA, ACCORDING TO OFFICIAL PLAT THEREOF. PUB1..27201_4 1381 B234552 EXHIBIT A -2 • EXHIBIT B 926 SCHEDULE OF LEASE PAYMENTS LEASE PAYMENT DATE (fifteen Business Days before each of the following PRINCIPAL INTEREST dates) COMPONENT COMPONENT PERIOD TOTAL FISCAL TOTAL 02/01/1996 S 45.000.00 776,360.94 821,360.94 08/01/1996 50,000.00 930,811.88 980,811.88 1,802,172.82 02/02/1997 929.899.38 929,899.38 08/01/1997 929,899.38 929;89938 1,859,798.76 02/01/1998 929,899.38 929;89938 08/01/1998 929,899.38 929,899.38 1,859,798.76 02/01/1999 10.000.00 929,899.38 939,899.38 08/01/1999 15.000.00 929,689.38 944,689.38 1,884,588.76 02/01/2000 50.000.00 929,374.38 979;374.38 08/01/2000 50.000.00 928,286.88 978;286:88 1,957,661.26 02/01/2001 90,000.00 927,199.38 1,017,199.38 - 08/01/2001 95.000.00 925,174.38 1,020,174:38 2,037,373.76 02/01/2002 135,000.00 923,036.88 1,058;036:88 08/01/2002 140,000.00 919;898.13 1,059,898.13 2,117,935.01 02/0112003 145.000.00 916.643.13 1,061,643.13 08/01/2003 150.000.00 913,163.13 1,063,163.13: 2,124,806.26 02/01/2004 195.000.00 909,565.13 1,104,563':13 08/01/2004 195.000.00 904,736.88 1,099,736.88 2,204,300.01 02/01/2005 245.000.00 899,910.63 1,144;910.63 08/01/2005 250.000.00 893,663.13 1,143,663.13 2,288,573.76 02/61/2006 325.000.00 887,288.13 1,212,288..13 08/01/2006 320.000.00 878,756.88 1,198,756.88 2,411,045.01 02/01/2007 335.000.00 870,356.88 1,205,356.88 08/01/2007 340.000.00 861,311.88 1,201,311.88 2,406,668.76 02/01/2008 355.000.00 852,131.88 1,207,131.88 08/01/2008 360,000.00 842,280.63 1,202,280.63 2,409,412.51 02/01/2009 375.000.00 532,290.63 1,207;290.63 08/01/2009 380.000.00 821,275.00 1,201,275.00 2,408,563.63 02/01/2010 400.000.00 810,112.50 1,210,112.50 08/01/2010 400..000.00 798,362.50 1,198,362.50 2,408,475.00 02/01/2011 425.000.00 786,612.50 1,211;612,50 08/01/2011 425.000.00 774,128.13 1,199,128.13 2,410,740.63 02/01/2012 445.000.00 761.643.75 1,206,643.75 08/01/2012 455.000.00 748.571.88 1,203,571.88 2,410,215.63 02/01/2013 475.000.00 735,206.25 1,210,206.25 08/01/2013 475.000.00 72 1.253.13 1,196,253.13 2,406,459.38 02/01/2014 500,000.00 707,300.00 1,207,300.00 - ruBL:27201_41138162345,5- - EXHIBIT B -1 08/01/2014 510,0000 692,612.50 1,202,612.0 2,409,912. 02101/2015 530:000'.00, 677,631.25 1,207;631.25 08/01/2015 540.000.00 662,062.50 1,202,062.50 2,409,693.75 02/01/2016 565,000:,00 646,200.00 1,211,000.00 08/01/2016 570.000':'00 629,250.00 1,1991250.00 2,410,450.00 02/01/2017 605,000.00 612,150.00 1,217;150.00 08/01/2017 600.000.00 594,000.00 1,194;000.00 2,411,150.00 02/01/2018 635.000.00 576.000.00 1,211,000.00 08/01/2018 640,000:00 556.950.00 1,196;930.00 2,407,950.00 02/01/2019 680.000.00 537,750.00 1,217,550.00 08/01/2019 675,000.00 517,350.00 1,192,330.00 2,410,100,00 02/01/2020 715.000.00 497,100.00 1,212,100.00 08/01/2020 720.000.00 475,650.00 1,1951650.00 2,407,750,00 02/01/2021 765.000.00 454,050.00 1,219;050.00 08/01/2021 760.000.00 43'1,100.00 1,191,100.00 2,410.150.00 02/01/2022 805.000.00 408,300.00 1,213,300.00 08/01/2022 810;000.00 384,150.00 1,194,150.00 2,407,450.00 02/01/2023 855.000.00 359,850.00 1,214,850.00 08/01/2023 360,000.00 334,200.00 1,194,200.00 2,409,050.00 02/01/2024 910,000.00 308,400.00 1,218;400.00 08/0112024 910.000.00 281,100.00 1,191,100.00 2,409,500.00 02/01/2025 965,000.00 253,800.00 1,218,800.00 08/01/2025 965,000.00 224,850.00 1,189,850.00 2,408,650.00 02/01/2026 1,025.000.00 195,900.00 1,220;900.00 08/01/2026 1.025,000.00 165,150.00 1,190,150.00 2,411,050.00 02/01/2027 1.090.000.00 134,400.00 1,224,400.00 08/01/2027 1.085.000.00 101,700.00 1,186,700.00 2,411,100.00 02/01/2028 1.150,000.00 69,150.00 1,219,150.00 08/01/2028 1.155,000.00 34,650.00 1,189,650.00 2,408,800.00 PUBL 27201_41138 1 83345.52 EXHIBIT B -2 0 EXHIBIT C LEASE SUPPLEMENT 0 928 There is hereby subjected to the terms of that certain Lease Agreement dated as of September 1, 1995 (the "Lease "), by and between the Poway Redevelopment Agency (the "Agency ") and the City of Poway, California (the "City") the following real property [and improvements. if applicable] (the "Substituted Property") which shall hereafter comprise the Site, as defined therein: Description of Substituted Property: Certification I, the Authorized Representative of the City, hereby certify that: (1) the useful life of the Substituted Property at least equals the remaining Term of the Lease; and (2) the fair rental value of the Substituted Property is such that no reduction of Lease Payments will occur upon the delivery of the Substituted Property. and the portion of the Lease Payments and Additional Payments attributable to the Substituted Property does not exceed the fair rental value for the Substituted Property; and (3) the Substituted Property will be used by the City for authorized public purposes, can be leased under the provisions of the Lease and the Permitted Encumbrances thereon will not materially impair the City's use of the Site; (4) the City will cause Exhibit A to the Lease and Exhibit A to the Site Lease and the Assignment Agreement (each as defined in the Lease) to be amended to reflect the Substituted Property and will have such amendments recorded for the Substituted Property and the previous Site in the City of Poway recorder's office: (5) all of the documents required to be delivered under Section 3.6 of the Lease in connection with the provision of the Substituted Property have been delivered. The undersigned hereby certifies that it has received copies of the documents required pursuant to Section 3.6 of the Lease: and (6) the Site now consists of the Substituted Property set forth in Exhibit I hereto and Exhibit B to the Lease is hereby deemed to be deleted in its entirety and replaced by Exhibit 1 hereto, and the schedule of Lease Payments is set forth in Exhibit 2 hereto and Exhibit B to the Lease is hereby deemed to be amended to incorporate the schedule of Lease Payments set forth in Exhibit 2 hereto. PUBL:27201 411381B2345.52 EXHIBIT C -1 0 0 929 I, the Authorized Representative of the City, hereby certify that the Substituted Property will be leased to the Agency free and clear of all liens or claims of others, except for the lien of the Trust Agreement referred to in the Lease and the rights of the City under the Lease, and that the Agency will not encumber title to the Substituted Property while the Certificates and Additional Certificates remain outstanding. CITY OF POWAY, as Lessee By: Its: The Undersigned Acknowledges Receipt of this Supplement: as assignee of the Lessor By: Its: vusc:27201_41138 le2345.52 EXHIBIT C -2 0 EXHIBIT 1 0 930 DESCRIPTION OF SUBSTITUTED PROPERTY PUBL:27201_41 138 1 62315.52 EXHIBIT 2 0 931 AMENDED SCHEDULE OF LEASE PAYMENTS Principal Interest Maturity Date Component Rate PUBL:27201 41138162345.52 17 State of California ) ss. County of San Diego ) 932 On September 18 , 1995, before me, Vivian MacZis, Notary Public (name, title of officer, e.g., Jane Doe, Notary Public ") personally appeared Marjorie K. Wahlsten and Don Higginson (nanurw of signer(s)) 6 personally known to me —OR— proved to me on the basis of satisfactory evidence to be the pets whose nam (s i are ubscribed t within instrument and acknowledged to me tl he /sh /the executed the same in his/he thei authorized capaci ies and that by his/he their ignatur (s) n the instrument.the perso (s) r the entity upon behalf of which person s) acted, my hand and official seal vlvinr4 A4AC ?b Ole comm. •1oma1 Notary P,bie — CaNfoeJa SAN DIEGO COUNTY My Cornet. E)q*eo SEP 21:1998 (Signature of Notary) Capacity claimed by signer: (TT+is section is oPrroNAL.) Individual Corporate Officer(s): - Partner(s): ❑ General ❑ Attorney -in -fact Trustee(s) Guard ian/Conser_ vator - Other: Limited Signer is representing: name of person (s) or. enaty +es Attention Notary: Although the information requested below is OPTIONAL, it could prevent fraudulent attachment of this certificate to an unauthorized document. THIS CERTIFICATE Title or Type of'Documen - MUST BE ATTACHED TO THE DOCUMENT Number 6Y Pages 1? / Date of D ument J -Yi DESCRIBED AT RIGHT: Signer(s) Other than Named Above — O vueL:27 -01 311381 B2345.52