The URL can be used to link to this page

Lease Agreement 1992-0256131RECORDED F.' "'!F REQUEST O� CkJCAGO TITLE CO. 758 1992 °0256131 30— APR -1992 08 -22 AM STRADLING, YOCCA, CARLSON & RAUTH 660 Newport Center Drive Suite 1600 Newport Beach, California 92660 Attn: Denise Harbaugh Hering, Esq . �3oy7� -/S OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE ANNETTE EVANS, COUNTY RECORDER 0.00 OC [Space above for recorder.] This document is recorded for the benefit of the City of Poway, and the recording is fee - exempt under Section 6103 of the Government Code. LEASE AGREEMENT BETWEEN CITY OF POWAY As Lessee AND POWAY REDEVELOPMENT AGENCY As Lessor RELATING TO THE CITY OF POWAY 1992 REFUNDING PROJECT - POINSETTIA MOBILEHOME PARK DATED AS OF APRIL 15, 1992 759 TABLE OF CONTENTS* PAGE ARTICLE I Definitions and Exhibits Section 1.1 Definitions ........................... 2 Section 1.2 Exhibits .............................. 5 ARTICLE II Lease of Project Section 2.1 Lease of Project ..................... 6 Section 2.1A 3.2 Amendment and Restatement of 1988 Credits to Lease Payments and Payments Certificates Lease Agreement ......... 6 Section 2.2 required under Creation of Project Trust Fund......... 6 Section 2.3 3.3 Creation of 1988 Certificates Lease Payment Components .............. 12 Escrow Fund ........................... 7 Section 2.4 Lease Payments City's Liability ...................... 8 Section 2.5 3.5 Possession and Enjoyment .............. 8 Section 2.6 13 Agency Access to the Project ......... 8 Section 2.7 Consideration Disclaimer of Warranties .............. 8 Section 2.8 3.7 Manufacturers' Warranties ............. 9 Section 2.9 Additions, and Improvements ............ 9 Section 2.10 Expense of the Arbitrage Covenant ..................... 9 ARTICLE III Lease Payments Section 3.1 Payment of Lease Payments; and ARTICLE IV Termination Section 4.1 Termination of Lease Agreement......... 14 *This Table of Contents is for convenience only and should not be considered part of the Lease Agreement. (i) Additional Lease Payments .............. 10 Section 3.2 Credits to Lease Payments and Payments required under Section 3.1 ............ 11 Section 3.3 Lease Payment Components .............. 12 Section 3.4 Lease Payments to be Unconditional .... 12 Section 3.5 Application of Sublease Rents; Budget.. 13 Section 3.6 Consideration ......................... 13 Section 3.7 Lease Payments to Constitute a Current Expense of the City; No Pledge ........ 14 ARTICLE IV Termination Section 4.1 Termination of Lease Agreement......... 14 *This Table of Contents is for convenience only and should not be considered part of the Lease Agreement. (i) 760 ARTICLE V Covenants of City Section 5.1 Maintenance of Project by the City .... 15 Section 5.2 Taxes, Other Governmental Charges 22 Section 6.3 and Utility Charges ................... 15 Section 5.3 Provisions Regarding Insurance ........ 15 Section 5.4 Damage, Destruction or Condemnation ... 18 Section 5.5 Insufficiency of Net Proceeds ......... 20 Section 5.6 Advances .............................. 20 Section 5.7 Financial Reports ..................... 20 Section 5.8 Release and Indemnification of the Agency. ............................... 20 Section 5.9 Fees and Indemnification of Trustee ... 21 Section 5.10 Lease Payments ........................ 21 Section 5.11 Budget and Appropriation .............. 21 ARTICLE VI Title Section 6.1 Title to Project ...................... 22 Section 6.2 Liens .. ............................... 22 Section 6.3 Use.of the Project .................... 22 Section 6.4 Warranties of the Agency .............. 23 ARTICLE VII Assignment, Sublease, Prepayments and Option to Purchase Section 7.1 Assignment by Agency .................. 23 Section 7.2 City's Prepayment and Purchase Option. ............................... 24 Section 7.3 Assignment and Sublease by City........ 24 ARTICLE VIII Events of Default and Remedies Section 8.1 Events of Default Defined ............. 24 Section 8.2 Remedies on Default ................... 25 Section 8.3 Suits at Law or Equity and Mandamus.... 27 Section 8.4 Non Waiver ............................ 28 Section 8.5 Remedies Not Exclusive ................. 28 Section 8.6 Status Quo ............................. 28 Section 8.7 Rights of Certificateowners............ 28 (ii) 0 761 0 ARTICLE IX MISCELLANEOUS Section 9.1 Notices ............................... 28 Section 9.2 Binding Effect ........................ 29 Section 9.3 Severability .......................... 29 Section 9.4 Amendments ............................ 29 Section 9.5 Execution in Counterparts ............. 29 Section 9.6 Applicable Law ........................ 30 Section 9.7 Captions .............................. 30 Section 9.8 Interest .............................. 30 Section 9.9 Bond Insurer Third Party Beneficiary .. 30 Exhibit A Legal Description of Project Exhibit B Legal Description of Property Exhibit C Lease Payment Schedule (iii) 0 762 41 LEASE AGREEMENT THIS LEASE AGREEMENT, dated as of April 15, 1992, by and between the City of Poway, a municipal corporation of the State of California (hereinafter referred to as the "City ") and the Poway Redevelopment Agency, a public body, corporate and politic (hereinafter referred to as the "Agency "). WITNESSETH WHEREAS, the City has the power to enter into leases for real and personal property; and WHEREAS, the City desires to make arrangements for the lease of certain real property, improvements and equipment more particularly described under the term Project in Section 1.1 hereof on the terms and conditions set forth herein; and WHEREAS, the Agency will cause to be provided funds for the refunding of the 1988 Certificates pursuant to this Lease Agreement and the Trust Agreement (as defined herein) by establishing a trust and directing the trustee for such trust to execute and deliver certificates of participation payable from the lease payments to be received from the City pursuant to this Lease Agreement; and WHEREAS, each certificate of participation represents a fractional and undivided interest in the principal portion of the Lease Payments due and payable hereunder and in the interest portion of Lease Payments payable hereunder to and including the earlier of the maturity or prepayment of the certificates of participation; and WHEREAS, the City intends for this Lease Agreement to remain in full force and effect as to the Project until the last Lease Payment (as defined herein) is made, unless sooner terminated in accordance with the terms provided herein; NOW, THEREFORE, the parties hereto mutually agree as follows: 763 0 ARTICLE I DEFINITIONS AND EXHIBITS SECTION 1.1 Definitions. The terms set forth in this section shall have the meanings ascribed to them herein for all purposes of this Lease Agreement unless the context clearly indicates some other meaning. Words in the singular shall include the plural and words in the plural shall include the singular where the context so requires. "Additional Lease Payment" shall mean any amount payable by the City under the terms of this Lease Agreement, other than a Lease Payment. "Authorized Representative of the Agency" shall mean the Executive Director of the Agency and any person or persons designated by the.Board of Directors of the Agency and authorized to act on behalf of the Agency as certified by a written certificate signed on behalf of the Agency by the Executive Director o£ the Agency and containing the specimen signature of each such person. "Authorized Representative of the City" shall mean the City Manager or Assistant City Manager and any person or persons designated by the City Council and authorized to act on behalf of the City as certified by a written certificate signed on behalf of the City by the Mayor and containing the specimen signature of each such person. "Bond Insurer" shall mean Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto. "Business Day" shall mean any day other than (i) a Saturday or Sunday or legal holiday or a day on which banking institutions in the city in which the principal office of the Trustee is located are authorized to close, or (ii) a day on which the New York Stock Exchange is closed. "Certificate" or "Certificates" shall mean any certificate or certificates of participation executed and delivered by the Trustee pursuant to the Trust Agreement. "Certificate of Authorized Representative of the Agency" shall mean a certificate executed by an Authorized Representative of the Agency. "Certificate of Authorized Representative of the City" shall mean a certificate executed by an authorized representative of the City. 04/29/92 8876u/2345/43 -2- 0 764 0 "Certificateowner" or "Owner of Certificates" or "Owner" shall mean the registered owner of any Certificate or Certificates. "Cost" shall mean and be deemed to include, with respect to the Project, together with any other.proper item of cost not specifically mentioned herein, whether incurred prior to or after the date of this Lease Agreement, (a) costs of payment of, or reimbursement for, acquisition, design, construction, rehabilitation, installation and financing of the Project, including, but not limited to, the payment of real property rental, administrative costs and capital expenditures relating to acquisition, construction and installation, inspection costs, filing and recording costs, printing costs, reproduction and binding costs, fees and charges of the Trustee pursuant to the Trust Agreement, financing documents, legal fees and charges, financial, accounting and other professional consultant fees, costs of rating agencies or credit ratings, fees for the printing, execution, transportation and safekeeping of the Certificates, and; (b) all other costs which City shall be required to pay under the terms of any contract or contracts for the acquisition, construction and installation of the Project, including, but not limited to the cost of insurance; (c) any sums required to reimburse City for advances made for any of the above items, or for any other costs incurred and for work done, which is properly chargeable to the Project; and (d) such other expenses not specified herein as may be necessary or incidental to the acquisition, construction and installation of the Project, the financing thereof and the placing of the same in use and operation. Cost as defined herein shall be deemed . to include the cost and expenses incurred by any agent of the City for any of the above mentioned items. "Fiscal Year" shall mean the the City which commences on July June 30 of the succeeding year. twelve month fiscal period of 1 in every year and ends on "Improvement Account" shall mean the Improvement Account established by the Trustee pursuant to Section 401 of the Trust Agreement. "Independent Insurance Consultant" shall mean an independent, qualified and reputable insurance consultant. "Interest Payment Date" shall mean June 1 and December 1 of each year, commencing June 1, 1992. "Lease Agreement" shall mean this Lease Agreement, dated as of April 15, 1992, between the Agency and the City, and any and all modifications, alterations, amendments and supplements hereto made in accordance with the provisions hereof. 04/29/92 8876u/2345/43 -3- 0 765 • "Lease,Payment" shall mean the amount to be paid on the Lease Payment Date by the City for the use and occupancy of the Project as set forth in Section 3.1 hereof. "Lease Payment Account" shall mean the Lease Payment Account established in Section 401 of the Trust Agreement. "Lease Payment Date" shall mean the 15th day of the month (or if the 15th day of the month is not a Business Day, on the next succeeding Business Day) prior to each Interest Payment Date. "Lease Term" shall mean the period during which this Lease Agreement is in effect as specified in Section 2.1 hereof. "Net Proceeds" shall mean any insurance (except municipal bond insurance) or condemnation proceeds paid with respect to the Project and remaining after payment therefrom of all reasonable expenses, incurred in the collection thereof; and, with respect to insurance, if and at such time as City elects to provide self- insurance under Section 5.3 of this Lease Agreement, any moneys payable from any self - insurance fund of the City. "1988 Certificates" shall mean the Agency's $10,650,000 Certificates of Participation (City of Poway 1988 Capital Improvement Project - Poinsettia Mobilehome Park) dated as of May 1, 1988. "Outstanding ", when used with reference to Certificates, shall mean, as of any date, Certificates theretofore or thereupon being executed and delivered under the Trust Agreement except: (i) Certificates cancelled or delivered for cancellation by the Trustee on or prior to such date; (ii) Certificates (or portions of Certificates) defeased as provided in Section 801 of the Trust Agreement; and (iii) Certificates in lieu of or in substitution for which other Certificates shall have been executed and delivered pursuant to Article III of the Trust Agreement. "Permitted Encumbrances" shall mean, with respect to the Project.and as of any particular time: (i) this Lease Agreement, (ii).Trustee's interest in the Project and (iii) such other matters of record approved by the Agency, Bond Insurer and City as of the date hereof. 04/29/92 8876u/2345/43 -4- 766 0 "Project" shall mean the Property and the improvements thereon comprising the Poinsettia Mobile'home Park as more particularly described in Exhibit "A" hereof. "Property" shall mean the parcels of land described in Exhibit "B" hereof to be leased. "Purchase Option Price" shall mean the amount of the principal component of the remaining Lease Payments due under this Lease Agreement with respect to the Project as set forth on Exhibit C hereto, as'the same may be amended, plus interest on such principal to the prepayment date and premium, if any. "Prepayment Account" shall mean the Prepayment Account established by Section 401 of the Trust Agreement. "Reserve Account" shall mean the Reserve Account established in Section 401 of the Trust Agreement. "Reserve Requirement" shall have the meaning as defined in the Trust Agreement. "State" shall mean the State of California. "Trust Agreement" shall mean the Trust Agreement Relating to the Poinsettia Mobilehome Park among the City, the Trustee and the Agency dated as of April 15, 1992 and any and all amendments and supplements thereto made in accordance with the provisions thereof. "Trustee" shall mean Bank of America National Trust and Savings Association and its successor or successors which may at any time be substituted in its place pursuant to the provisions of the Trust Agreement. SECTION 1.2 Exhibits. The following Exhibits are attached to and by this reference made a part.of this Lease Agreement: Exhibit A: A description of the Project. Exhibit B: A legal description of the Property. Exhibit C: A schedule setting forth the principal and interest components of Lease Payments and the dates on which such principal components are to be paid. Exhibit D: The Purchase Option Price schedule for the Project. 04/29/92 8876u/2345/43 -5- • • 767 ARTICLE II LEASE OF PROJECT' SECTION 2.1 Lease of Project. The Agency hereby leases to the City, and the City hereby takes and leases from the Agency, the Project on the terms and conditions set forth in this Lease Agreement. The term of this Lease Agreement shall commence on the date of the delivery of the Certificates and the receipt of Certificate proceeds as provided in the Trust Agreement. The Lease Term shall end when the principal and interest components of the Certificates have been paid or payment has been provided for pursuant to Section 801 of the Trust Agreement. This Lease Agreement shall end on (i) June 5, 2018; or (ii) such earlier or later date when all of the Certificates have been paid or payment has been provided for pursuant to Section 801 of the Trust Agreement and, at such time, any surplus funds remaining in the hands of the Trustee shall be paid to the City after payment of-amounts due the Trustee pursuant to Sections 605 and 612 of the-Trust Agreement; or (iii) upon the termination of this Lease Agreement in accordance with the provisions hereof. SECTION 2.1A Amendment and Restatement of 1988 Certificates Lease Agreement. This Lease Agreement amends and restates that certain Lease Agreement heretofore executed with respect to the 1988 Certificates (the "1988 Lease ") in all respects pursuant to this Section 2.1A to provide that the sole outstanding provision of the 1988 Lease is the survival of the City's obligation to pay the Lease Payments (as defined in the 1988 Lease) in full on June 1, 1998, which obligation shall be payable solely from the 1988 Certificates Escrow Fund established pursuant'to the Trust Agreement. SECTION 2.2 Creation of Project Trust Fund. The Agency shall create, or cause to be created in the Trust Agreement, a Project Trust Fund. Trustee shall make payments from the Improvement Account to pay the costs of repairing or rebuilding the Project, if necessary, upon the receipt of a requisition signed by an Authorized Representative of the City stating with respect to each payment to be made: (1) the requisition number; (2) the name and address of the person, firm, corporation or agency to whom payment is due or has been made; (3) the amount to be 04/29/92 8876u/2345/43 -6- 0 768 paid; (4) that such.payment obligation has been properly incurred; is an item of the cost of repairing or rebuilding the Project and has not been the basis of any previous withdrawal and there is no lien on the Project (other than Permitted Encumbrances); (5) a policy of title insurance acceptable to the Bond Insurer has been obtained naming the City, the Agency and the Trustee as insureds; and (6) that the payment of the cost will not cause the balance remaining in the Improvement Account to be less than the amount necessary to pay the remaining estimated cost.of repairing or rebuilding the Project unless the City has deposited funds with the Trustee to cover the payment of such excess amount or the City has caused the amount of total Outstanding Certificates to be reduced such that the fair rental value of the Property shall provide adequate consideration for the future payment of all Lease Payments, as such become due, on the Outstanding Certificates. Interest or other income earned on any moneys or investments in the Improvement Account shall be kept in the Improvement Account until the repair and rebuilding of the Project have been completed and thereafter, subject to the requirements of Section 409 of the Trust Agreement, any such money shall be transferred to the Lease Payment Account and applied on the next occurring Lease Payment Dates as a credit against the Lease Payments then due on such dates and deemed to be the payment of the interest portion thereof. Interest or other income earned on moneys or investments in the Lease Payment Account shall be retained in such Account, subject to the requirements of Section 409 of the Trust Agreement, and applied for the purposes thereof in accordance with the Trust Agreement. Interest or other income earned on moneys or investments in the Reserve Account shall be paid into the Lease Payment Account, to the extent that such payment would not cause the amount in the Reserve Account to be less than the Reserve Requirement as defined in the Trust Agreement and applied as a credit against the Lease Payment due on the next occurring Lease Payment Date and deemed to be the payment of the principal and interest portion thereof. SECTION 2.3 Creation of 1988 Certificates Escrow Fund. There is hereby created with the Trustee as the Escrow Bank a trust fund called the "1988 Certificates of Participation - Poinsettia.:Mobi- lehome Park Escrow Fund ". Moneys deposited in the 1988 Certificates Escrow Fund pursuant to Section 401 of the Trust Agreement shall be held by the Escrow Bank, and used to pay the'principal of and premium and interest on the 1988 Certificates due on June 1, 1992 and on each December 1 and 04/29/92 8876u/2345/43 -7- 769 .7 June l thereafter until June 1, 1998, on which date the Escrow Bank shall redeem and defease all outstanding 1988 Certificates, all in accordance with and pursuant to the Escrow Agreement. SECTION 2.4 City's Liability. To the extent that any construction is requ ired with respect to the Project during the Lease Term, the City shall maintain, or require each contractor, manufacturer or supplier, with respect to such construction to maintain, in force during the entire construction period', property damage insurance in an amount not less than the full value of all work done and materials and equipment provided or delivered by each such contractor, manufacturer or supplier, comprehensive liability insurance, worker's compensation insurance and other insurance required by law or customarily maintained with respect to like equipment and submit.a performance and payment bond for 100% of such contractor's proposed.construction contract. In the event the City receives any damages or other moneys from any contractor, manufacturer or supplier or its insurer or surety pursuant to this Section 2.5, such moneys shall be applied by the City to the completion of such construction. SECTION 2.5 Possession and Enjoyment. The City shall during the Lease Term peaceably and quietly have and hold and enjoy the use of the Project, without suit, trouble or hindrance from the Agency, except as expressly set forth in this Lease Agreement. The Agency will, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Agency lawfully may do so. SECTION 2.6 Agency Access to the Project. The City agrees that the Agency shall have the right during the City's normal working hours on the City's normal working days to examine and inspect the Project for the purpose of assuring that the Project is being properly maintained, preserved, and kept in good repair;, working order and condition. The City further agrees that the Agency shall have such ,rights of access to the Project as may be reasonably necessary to cause the proper maintenance of the Project in the event of failure by the City to perform its obligations hereunder. If the Agency obtains any confidential information as a result of its access to the Project, the Agency hereby agrees not to disclose such information to any person, firm or corporation. SECTION 2..7 Disclaimer of Warranties. THE AGENCY MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, 'DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR PARTICULAR, PURPOSE OR FITNESS FOR USE OF THE PROJECT OR WARRANTY WITH RESPECT THERETO. In no event shall the Agency be 04/29/92 8876u/2345/43 -8- 0 770 liable for any incidental, indirect, special or consequential damage in connection with or arising out of: this Lease Agreement or the.existence, furnishing, functioning or the City's use of any item or products or services provided for in this Lease Agreement. SECTION 2.8 Manufacturers' Warranties. The Agency appoints the City its agent and attorney -:in -fact during the Lease Term, so long as the City shall not be in default hereunder, to assert from time to time whatever claims and rights, including warranties relating to the Project, which the Agency may have against the manufacturer or supplier of any equipment or improvements with respect to the Project. As between the Agency and the City, the City's sole remedy for the breach of such warranty, indemnification or representation shall be against the manufacturer or supplier of any equipment or improvements with respect to the Project, and not against the Agency; nor shall such matter have any effect whatsoever on the rights of the Agency with respect to this Lease Agreement, including the ,right to '.receive full and.timely payments hereunder. 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 or supplier of any equipment or improvements with respect to the Project. SECTION 2.9 Additions and Improvements. The City shall have the right during the Lease Term to make any additions or improvements to the Project, to attach fixtures, structures or signs, and to affix.any personal property to the improvements on the Project, provided the use of the Project for the purposes contemplated in this Lease Agreement or the value of the Property is not impaired. The parties hereto acknowledge and agree that the City or its designee shall have the right in its discretion and without the approval of the Agency to acquire, construct, install and provide for <the financing of additional improvements and facilities with .respect to the Project. Title to all personal property placed in any of the improvements on the Project shall remain in the Agency. The title to any personal property, improvements or fixtures.placed on,'the Project by any sublessee or licensee of the City shall be controlled by the contracts entered into by the City. SECTION 2.10 Arbitrage. Covenant. The City and the Agency hereby covenant with the Certificateowners that, notwithstanding any other provision of this Lease Agreement, they will make no use of the proceeds of the Certificates which would cause the obligations of the City under this Lease Agreement to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Internal Revenue Code of 1986, as amended. 04/29/92 8876u/2345/43 -9- 0 0 771 ARTICLE III LEASE PAYMENTS SECTION 3.1 Payment of Lease Payments and Additional Lease Payments. (A) On each Lease Payment Date, the City shall pay to the Trustee, in lawful money of the United States of America, provided the Property is available for occupancy, the Lease Payment as set forth in Exhibit C attached hereto and made a part hereof for such Lease Payment Date, less any credits as contemplated by Section 3.2 hereof. If Lease Payments are abated during the term of this Lease Agreement as a result of the acquisition of a portion of the Project by eminent domain and the term is extended as provided in Section 2.1 hereof, the City agrees to pay the fair rental value of the Project then subject to this Lease Agreement, as determined by an M.A.I. appraiser designated by the Agency, whose certificate of appraisal shall be filed with the City, the Agency and the Trustee, until the principal and interest components of the Lease Payments represented by Outstanding Certificates have been paid. (B) The principal portion and interest portion of each Lease Payment attributable to the Project shall be the amounts set forth in Exhibit C. (C) I_f there is a prepayment of Certificates pursuant to Section 303.6 of the Trust Agreement, the Lease Payment schedule set forth in Exhibit C shall be adjusted by the City to provide for the full and timely payment of the Outstanding Certificates. (D) In_ addition to the Lease Payments hereinabove set forth, the City shall pay an amount or amounts (hereinafter called "Additional Lease Payments ") equivalent to the sum of the following: (i) All taxes and assessments of any nature whatsoever, including, but not limited to, excise taxes, ad valorem taxes, ad valorem and specific lien special assessment and gross receipts taxes, if any, levied upon the Project, upon the Agency's interest therein, upon the Agency's operation thereof or the Agency's rental income derived therefrom. (ii) All expenses (not otherwise paid or provided for out of the proceeds of the sale of Certificates) incidental to the sale and delivery of the Certificates and all administrative costs of the Agency, including without limiting the generality of the foregoing, salaries, wages, expenses, 04/29/92 8876u/2345/43 -10- •fz • reasonable compensation and indemnification of the Trustee under the Trust Agreement, fees and charges of auditors, accountants, architects, attorneys and engineers, and all other necessary administrative charges of the Agency or charges required to be paid by it in order to comply with the terms of the Certificates or of the Trust Agreement and to indemnify and defend the Agency and its members. (iii) Insurance premiums, if any, on all insurance required or permitted under the provisions of Section 5.3 hereof. (iv) A_11 costs and expenses which the Agency may incur in of or because of any default by the City under the Lease Agreement, including reasonable attorneys' fees and costs of suit, in equity or action at law to enforce the terms and conditions of the Lease Agreement. (v) Any amount required to ,increase the amount in the Reserve Account to an amount equal to the Reserve Requirement as defined in the Trust Agreement. The Additional Lease Payments payable hereunder (except for Additional Lease Payments to replenish the Reserve Account, which shall be paid.as. provided in Section 404.6 of the Trust Agreement.) • shall be paid by the City within thirty -five (35) days after notice in writing from the Agency or Trustee, as applicable, to the City stating the amount of Additional Lease Payments then due and..'payable and the purpose thereof. The Additional Lease Payments shall be paid directly to the Agency or the Trustee, as applicable, and if to the Agency, shall be applied by the Agency for the purposes for which such payment is made. SECTION 3.2. ired under :,to Lease Payments and Payments 3.1. (A) Subject to the requirements of Section 409 of the Trust Agreement, upon the earlier of December 1, 1994 or on the date of the filing of the Certificate of an Authorized Representative of the City with the Trustee, there shall be deposited into the Lease Payment Account (i) the interest income earned by reason of investment of moneys on deposit in the Improvement Account, if any, which amount is not needed to pay the Cost of the Project and as evidenced by a certificate of an Authorized Representative of the City filed with the Trustee, and (id) moneys in the Reserve Account in excess of the Reserve Requirement. During the Lease Term such interest income shall be applied on the next occurring Lease Payment Date as a credit-against the Lease Payment then due on such date and be deemed to be payment of the interest portion thereof. 04/29/92 8876u/2345/43 -11- 0 773 0 (B) Subject to the requirements of Section 409 of the Trust Agreement, upon the earlier of December 1, 1994 or on the date of the filing of the Certificate of an Authorized Representative of the City with the Trustee, the amount, if any, on deposit in the Improvement Account not required to pay Cost of the Project as evidenced by a certificate of an Authorized Representative of the City fi -led with the Trustee and not required to make the transfer pursuant to Section 3.2(A) hereof, shall be transferred by the Trustee to the Prepayment Account and applied to the prepayment of Certificates pursuant to the provisions of the Trust Agreement, or, at the option of City, said amount shall be transferred by the Trustee to the Lease Payment Account and applied as a credit against the principal component and interest component of the Lease Payments on the next occurring "Lease Payment Dates on which a principal component is due. The City shall notify the Trustee in writing of its exercise of such option (i) prior to December 1, 1994 or (ii) prior to or concurrent with its delivery of the Certificate of Authorized Representative, as applicable. (C) The City shall receive a credit for the principal component and interest component of any ;Lease Payment paid from moneys transferred -rom the Improvement Account as provided in Section 3.2(A) and (B). (D) The amount on deposit in the Reserve Account . shall be transferred by the Trustee to the Lease Payment Account as a credit against the final Lease Payment attributable to the Project. SECTION 3.3 Lease Payment Components. A portion of each Lease Payment is paid as., and represents the payment of, interest and a portion of certain Lease Payments are paid as, and represent the payment of, principal. Such portions are set forth in Exhibit C hereto. SECTION 3.4 Lease Payments to be Unconditional. The obligations of the City to make Lease Payments and to pay all other amounts provided for in this Lease Agreement and to perform its obligations under this Lease Agreement, shall be absolute and unconditional; and such Lease Payments and other amounts shall be payable without any rights of set -o££, recoupment or counterclaim the City might have against any contractor, manufacturer or supplier of any item of the Project, the Agency, the Trustee or any other person. This Lease Agreement shall be deemed and construed to be a "net -net -net lease ". 04/29/92 8876u/2345/43 -12- 0 74 0 SECTION 3,.5 Application of Sublease.Rents,; Budget. Any and all rents col- lected by the City i,n connection with the sublease of all or'a portion of the Project, less any amounts required for operating expenses shall be deposited in a separate account of the City and, so long as Lease Payments or Additional Lease Payments remain unpaid, shall be applied solely to the payment of Lease Payments and Additional Lease Payments pursuant to Section 3.1 hereof. The City shall take such action as may be necessary to include and maintain the applicable Lease.Payments and Additional Lease Payments due hereunder in each Fiscal Year as a separate line item in its budget for such Fiscal Year or pursuant to separate resolution and further shall make the necessary appropriations for all such Lease Payments and Additional Lease Payments. The City shall furnish to the Trustee under the Trust Agreement an annual Certificate on or before October 1, that the requirements of this Section 3.5 have been complied with not later than August 15th of each year. 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 such official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City. SECTION 3.6 Consideration. The Lease Payments and Additional Lease'Payments hereunder for each Fiscal Year of the Lease Term shall constitute the total rental for said Fiscal Year and shall be paid by the City for and in consideration of the right of use and occupancy, and the continued quiet use and enjoyment of the Property for and during said Fiscal Year. The parties hereto have agreed and determined that such total rental does not exceed the fair rental value of the Property and that, while the Project is being leased as a whole to the City, only nominal value is attributable to the improvements on the Property, and the Lease Payments and Additional Lease Payments reflect the fair rental value for the Property only without reference or consideration given to any portion of the Project other than the Property. In making such determination, consideration has been given to the costs of acquisition and financing of the Property, the uses and purposes which will be served by the Property (which uses and purposes may include without limitation use as a mobilehome park or use as open spaces or any other use which the City is "authorized to provide under California law) and the benefits therefrom which will accrue to the parties to this Lease Agreement and the general public by reason of such uses of the Property. 04/29/92 8876u/2345/43 -13- 0 X15 0 SECTION 3.7 Lease Payments to Constitute a Current Expense of the City; No Pledge. The Agency and the City understand, agree and intend that the obligation of the City to pay Lease Payments and Additional Lease Payments hereunder shall constitute a current expense of the City payable from the general revenues of the City and shall not in any way be construed to be a debt of the City, or the State of California, or any political subdivision thereof, in contravention of any applicable constitutional or statutory limitation or requirements concerning the creation of indebtedness by the City, Agency, the State of California, or any political subdivision thereof, nor shall anything contained herein constitute a pledge of general revenues, funds or moneys of the City beyond the Fiscal Year for which the City Council of the City has appropriated funds to pay Lease Payments and Additional Lease Payments hereunder 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. ARTICLE IV TERMINATION SECTION 4.1 Termination of Lease Agreement. This Lease Agreement will terminate upon the earliest to occur of the following events: (a) a default by the City as contemplated by Section 8.1 of this Lease Agreement and the termination of this Lease Agreement as provided in Section 8.2 hereof; (b) the payment by the City of the Purchase Option Price for the Project as provided in Section 7.2 of this Lease Agreement and the first date upon which the Certificates will no longer be Outstanding; (c) the payment by the City of all Lease Payments scheduled to be paid hereunder by the City during the entire Lease Term and the first date upon which the Certificates will no longer be Outstanding; or In the event there is any default hereunder, the City shall have the right to exercise the option to purchase the Project as provided in Section 7.2 hereof as long as the City is in.possession of the Project. 04/29/.92 8876u/234S/43 -14- 776 ARTICLE V COVENANTS OF CITY' SECTION 5.1 Maintenance of Project by the City. The City agrees that at all times during the Lease Term, the City will, at the City's own cost and expense, maintain, preserve and keep the Project in good repair, working order and condition, and that the City will from time to time make or cause to be made all necessary and proper repairs, replacements and renewals thereto. The City shall at its own expense, 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 Project. The Agency shall have no responsibility in any of these matters, or for the making of improvements or additions to the Project. SECTION 5.2 Taxes, Other Governmental Charges and Utility Charges. The City will pay, or cause to be paid, during the Lease.Term, as the same respectively come due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project, as well as all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Project; provided that, with respect to any 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 have accrued during the time the Lease Term is in effect. SECTION 5.3 Provisions Regarding Insurance. The City shall maintain or cause to be maintained the following policies of insurance: (1) insurance against loss or damage to the Project resulting from fire, lightning, vandalism; malicious mischief and such perils ordinarily defined as "extended coverage" and such other perils as�the Agency and the City may.agree should be insured against if such insurance is commercially available from reputable insurers. Such insurance shall be maintained in an amount not less than the greater of the then applicable Purchase Option Price for the Project or the full replacement value of the Project subject to a "deductible clause" in the amount of Ten Thousand Dollars ($10,000.00) and shall contain an inflation guard endorsement. The term "full replacement value" as used in this Section shall mean the actual replacement cost of a "new" Project (including the cost of restoring the surface of the Property but excluding the cost of restoring trees, plants and shrubs); 04/29/92 8876u/2345/43 -15- 0 0 777 ('2) use and occupancy or business interruption or rental income insurance against the perils of fire, lightning, vandalism, malicious mischief and such other perils ordinarily defined as "extended coverage" in an: amount equal to not less than the largest Lease Payments to be paid in any 12 month period by the City 'under this Lease Agreement; (3) public liability insurance against claims for bodily injury or death, or damage to property occurring upon, in or about the Project, such insurance to afford protection to a limit of not less than $5,000,000 combined single limit bodily injury and property damage with such deductible provisions as the City provides on like coverage but not to exceed 2% of this face amount; (4) worker's compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof, such worker's compensation insurance to cover all persons employed in connection with the Project and to cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death during or in connection with the Project or the business of the City. All insurance herein provided for shall be effected under policies issued by insurers of recognized responsibility, licensed or admitted to do business in the State of California and meeting the rating requirements set forth below. All policies or certificates shall name the City, the Agency and the Trustee as named insureds. All policies or certificates issued by the respective insurers for insurance shall provide that such policies or certificates shall not be cancelled or materially changed without at least 30 days' prior written notice to the Trustee. Annually, on or before December 1, a certificate stating that the requirements of this Section 5.3 have been complied with shall be deposited with the Trustee by the City. All premiums and charges due and payable for all of the aforesaid insurance, which are not paid as a part of the construction contracts relating to the Project or from the proceeds of the sale of the Certificates, shall be paid by the City. 04/29/92 8876u/2345/43 -16- 0 778 Notwithstanding the generality of the foregoing, the City shall not be required to maintain or cause to be maintained more insurance than is specifically referred to and with respect to the insurance required hereby, the City shall maintain insurance with insurers rated at least "A" by Standard & Poor's Corporation unless otherwise approved by the Bond Insurer (a "Qualified Insurer "). If an insurer's rating falls below "A ", such insurer shall be replaced with a Qualified Insurer unless otherwise approved by the Bond Insurer. Failure to comply with the above requirements shall constitute an Event of Default under this Lease Agreement. In the event the Agency or the City considers - insurance to be commercially unavailable, it shall so notify the Bond Insurer in writing. If the Bond Insurer identifies available insurance for such coverage, the City shall be obligated to obtain such insurance. In the event the Bond Insurer and the City determine that a particular insurance coverage:is, commercially unavailable, such insurance shall be maintained.in whole in the form of self - insurance by the City meeting the requirements set forth herein. If the City fails to. maintain insurance required under Section 5.3 of the Lease Agreement, the Agency shall be obligated to do so; provided that the City shall be obligated to reimburse the Agency its expense in so doing. In lieu of obtaining any of the insurance coverage required pursuant to this Section, such coverage may be maintained by City in the form of a self - insurance program of City meeting the following requirements: (i) The self- insurance program has been approved by a nationally recognizedsndependent actuary, insurance company, or broker that has actuarial personnel experienced in the area of insurance for which the City is self- insuring (the "Insurance Consultant "); (ii) the self- insurance program includes an actuarially sound claims reserve fund out of which each self - insured claim shall be paid; the adequacy of such fund shall be evaluated on an annual basis by an Insurance Consultant; and any deficiencies in any self- insured claims reserve fund will be remedied in accordance with the recommendation of the Insurance Consultant; (iii) the self - insured claims reserve fund shall be held in a separate trust fund by an independent trustee; and (iv) in the event the self- insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by an Insurance Consultant, shall be maintained. So long as any insurance required hereunder shall be provided through City's self- insurance program, City shall retain an Independent Insurance Consultant which shall, within ninety (90) days following the close of each of City's fiscal years and following each payment from the self- insurance fund in excess of $1,000,000', review the self - insurance program and issue a 04/29/92 8876u/2345/43 -17- • 7i9 written report thereon indicating what action, if any; including, without limitation, the deposit of additional funds into the program, is necessary so that the protection afforded by the self- insurance program is at least comparable to the protection that would be afforded by the insurance described in this Section, as applicable. City shall comply with the recommendations of such Independent Insurance Consultant within ninety (90) days of the issuance of such report. City shall provide to the Trustee (i) promptly upon receipt thereof by City each such report issued by City's Independent Insurance Consultant concerning City's self- insurance program and (ii) promptly upon the preparation thereof, a report on the action, if any, taken be City in response to such report. The Trustee shall not have the duty of evaluating the sufficiency of the self - insurance program. SECTION 5.4 Damage, Destruction or Condemnation. If prior to the termination of the Lease Term, the Project in whole or part is destroyed or damaged by fire or other casualty, or title to, or the temporary use of, the Project in whole or part shall be taken under the exercise of the power of eminent domain, the City shall within 60 days after such damage, destruction or condemnation elect one of the following two options by written notice of such election to the Agency and the Trustee: (a) Option A Repair, Restoration or Replacement. The City and the Agency will cause the Net Proceeds of any insurance claim.or condemnation award to be applied to the prompt repair, restoration, or replacement (in which case such replacement of the Project shall become subject to the provisions of this Lease Agreement as fully as if it were the originally leased Project) of the Project; provided such repaired or replaced Project shall have a fair rental value at least equal to the fair rental value of the Project prior to the damage, destruction or condemnation event. Any Net Proceeds received by the Agency or the City shall be deposited in the Improvement Account and be applied by the Agency to complete'the payment of the cost of such "repair, restoration or replacement of the Project, in the same manner and upon the same conditions as set forth in the Trust Agreement for the payment of the Cost of the Project from the Improvement Account including provision to the Trustee of the Certificate of an Authorized Representative of the City pursuant to Section 2.3 hereof. Any balance of the Net Proceeds remaining after the repair, restoration or replacement shall be deposited in the Prepayment Account and applied to the prepayment of Certificates. 04/29/92 8876u/2345/43 -18- 9 0 730 (b) Option B - Prepayment of Certificates. The City and the Agency will cause the Net Proceeds of any insurance claim or condemnation award to be applied to the prepayment of all or a portion of the Outstanding Certificates. The City and the Agency agree that, in the event of condemnation of the Project, neither shall agree to an amount of compensation if such amount is riot sufficient to redeem all Outstanding Certificates at a price of par plus accrued interest to the prepayment date and to appeal any judgment entered in connection with a'condemnation proceeding if such judgment amount is insufficient to redeem all of the Outstanding Certificates at such prepayment price. All Net Proceeds received by the Agency or the City shall be deposited in the Prepayment Account and applied by the Trustee as provided in the Trust Agreement. I£ no election is given to the Agency and the Trustee within said 60 days, the City shall be deemed to have elected Option B. During such time as the Project is unusable, rent for the Project shall be abated in whole or in part. The amount of such abatement shall be such that the resulting Lease Payments represent fair consideration for the use and possession of the portion of the Project not damaged, destroyed or taken by eminent domain; provided, that in the event such damage, destruction or eminent domain proceedings result in prepayment of Certificates as provided in Section 303.6(a)(ii) of the Trust Agreement (other than a prepayment resulting from certification by the Authorized Representative of the City to the effect the Project has been taken in whole pursuant to eminent domain proceedings or has been taken in part pursuant to such proceedings to such extent that the remaining portion of the Project is no longer useful for the purposes originally intended), the resulting Lease Payments available in each year from the remaining portion of the Project will be sufficient to pay all of the principal and interest components in each year on the Certificates remaining outstanding after the prepayment of Certificates. Such abatement shall continue for the period commencing with such damage, or destruction, or in the case of a taking by eminent domain, commencing with the date possession is taken by the condemnor, and ending with the substantial completion of the replacement or work of repair or reconstruction. Except as provided in this Lease Agreement, in the event of any such damage, destruction or taking, the Lease Agreement shall continue in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage and destruction or taking. There shall be no abatement of Lease Payments to the extent that moneys derived from any person as a result of any defect or delay in the construction of the Project, are available to pay the amount 04/29/92 8876u/2345/43 -19- 781 which would otherwise'be abated, nor to the extent that moneys on deposit in the Improvement Account; Reserve Account and the Lease Payment Account (including proceeds of business interruption insurance.) are available to pay the amount which would,ctherwise be abated. The Agency and City hereby confirm and agree that no abatement of Lease Payments based upon damage or destruction to any portion of the Project other than the Property shall occur. SECTION 5.5 In §ufficiencv of Net Proceeds. If the City elects to repair, restore or replace the Project under the terms of Section 5.4(a) hereof and the Net Proceeds therefor are insufficient to pay in full the cost of such repair, restoration or replacement, the City may complete the work and pay any, cost in excess of the amount of the Net Proceeds. The City agrees that, if by reason of any such insufficiency of the Net Proceeds the City makes any payments pursuant to the provisions of this Section,. the City shall not be entitled to any reimbursement therefor from the Agency nor shall the City be entitled to any diminution of the amounts payable under this Lease Agreement. SECTION 5.6 Advances. In the event the City shall fail to maintain the full 'insurance coverage required by the Lease Agreement or shall fail to keep the Project in good repair and operating condition, the Agency may (but, except as provided in Section 5.3 hereof, shall be under no obli- gation to) purchase the required policies of insurance and pay the premiums on the same, or make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by the Agency•shall become immediately due and payable, which the City agrees to pay, subject to the City making an appropriation therefor, as an additional Lease Payment of the Project, together with interest at the highest annual rate applicable to the Outstanding Certificates. SECTION 5.7 Financial Reports. The City covenants to provide annually to the Agency (i) current financial statements, budgets and proof of appropriations for the ensuing Fiscal Year and (ii) such other financial information relating to the ability of the City to continue to meet its obligations under this Lease Agreement as may be reasonably requested by the Agency and to provide annually, on or before December 1, its current financial statements to the Trustee. SECTION 5.8 Release and Indemnification of the Agency. To the extent permitted by law the City shall protect, hold harmless and indemnify the Agency, its directors and officers from and against any and all liability, obligations, claims and 04/29/92 8876u/2345/43 -20- 0 • 782 damages whatsoever, regardless of cause thereof, and expenses in connection therewith, including, without limitation, counsel fees and expenses, penalties and interest ari.sing.out of or as the result of the entering into of this Lease Agreement', the ownership of the Project, the ordering, acquisition, use, operation, condition, purchase, delivery, rejection, storage or return of any item of equipment, or any accident in connection with any of the foregoing resulting in damage to property or injury to or death of any person. However, the City shall not hold harmless or indemnify the Agency, its directors and officers for any losses which are caused by the bad faith or willful misconduct of the Agency, its directors and officers. SECTION 5.9 Fees and Indemnification of Trustee. The City shall pay to the Trustee from time to time reasonable compensation for all services rendered under this Lease Agreement and the Trust Agreement, and also all reasonable expenses, charges., counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Lease Agreement and the Trust Agreement. The City further agrees to indemnify and save the Trustee harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. SECTION 5.10 Lease Payments. The City covenants and warrants that the Lease Payments do not exceed the fair rental value of the Property as determined by Section 3.6 of this Lease Agreement. SECTION 5.11 Budget and Appropriation. The City hereby covenants to take such action as may be necessary to include all Lease Payments and Additional Lease Payments due hereunder in its annual budgets and to make the necessary appropriations for all such Lease Payments and Additional Lease Payments, subject to Section 5.4 hereof. A Certificate of the City that such payments are included in its annual budget shall be sent to the Trustee not later than October 1 of each year. The covenants on the part of the City 'herein contained shall be deemed to be andshall 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 such official duty of such officials to enable the City to carry out and perform the covenants and agreements on the part of the City contained in this Lease. 04/29/92 8876u/2345/43 -21- 0 783 • The obligation of the City to pay Lease Payments and Additional Lease Payments hereunder shall constitute a current expense of the City.and shall not in any way be construed to be a debt of the City, the Agency, or the State, or any political subdivision thereof, in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, the Agency, the State, or any political subdivision thereof, nor shall anything contained herein constitute a pledge of the general revenues, funds or moneys of the City beyond the Fiscal Year for which the City has appropriated funds to pay Lease Payments and Additional Lease Payments hereunder 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. ARTICLE VI TITLE SECTION 6.1 Title to Project. Upon payment or provision for payment as provided in Section 801 of the Trust Agreement of all Lease Payments as required by this Lease Agreement or the City has exercised its option to purchase the Project as described in Section 7.2 of this Lease Agreement and the payment or provision for the payment of all of the Certificates and the expiration or termination of the Lease Term hereof, title to the Project and any improvements thereon or additions thereto shall be transferred directly to the City in accordance with the provisions of the Trust Agreement. SECTION 6.2 Liens. During the Lease Term the City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Lease Payments or the Project, other than the Permitted Encumbrances provided. The City shall reimburse the Agency for any expense incurred by the Agency in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. SECTION 6.3 Use of the Project. The City will not install, use, operate or maintain the Project improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease Agreement. The City shall provide all permits and licenses, if any, necessary for the acquisition, construction, installation and operation of the Project. In addition, the City agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of the Project) with all laws of the jurisdictions in which its operations involving the Project may extend and with all regulations, orders and decrees of any 04/29/92 8876u/2345/43 -22- 784 legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Project; provided, however, that the City may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not adversely affect the estate of the Agency or the City in and to the Project or either of their interests or rights under this Lease Agreement. SECTION 6.4 Warranties of the Agency. The Agency covenants and warrants to the City and the Bond Insurer: (1) That except for Permitted Encumbrances, the Property is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the Project or the use of the Property as security for the financing as contemplated by the Lease Agreement. (2) That all taxes, assessments, or impositions of any kind with respect to the Property, except current taxes, have been paid in full; and (3) That the Agency's past and current uses of the Property, and to the best of the Agency's knowledge, information and belief, all past and current uses of the Property, complied and comply with all federal, state and local environmental laws, rules, regulations and ordinances. Neither the Agency nor anyone on behalf of the Agency has received notice of any violations of any environmental law, rule, regulation or ordinance.. No actions or lawsuits have been commenced or threatened by a governmental agency or any other person or entity claiming non - compliance with any environmental law, rule, regulation or ordinance. The Agency has never applied for environmental liability insurance or, if it has so applied, it has never been denied such coverage. The Agency has no knowledge or notice of any asbestos, or any emission, discharge, seepage, release, or any hazardous pollutant in or upon the Property. ARTICLE VII ASSIGNMENT, SUBLEASE, PREPAYMENTS AND OPTION TO PURCHASE SECTION 7.1 Assignment by Agency. This Lease Agreement may be transferred and assigned by the Agency in accordance with the provisions of the Trust Agreement and provisions of the Trust Agreement for the benefit of the holders of the Certificates. The parties hereto acknowledge and agree that the Agency'.s rights and remedies under this Lease Agreement will be assigned to the Trustee on behalf of the Owners of the Certificates pursuant to the Trust Agreement. 04/29/92 8876u/2345/43 -23- 785 SECTION 7.2 City's Prepayment and Purchase Option. The City may at its option, as of any Interest Payment Date on or after December 1, 2001 purchase the Project or any portion thereof by paying the Purchase Option Price of the Project to the Trustee, and any delinquent Lease Payments. Such payment of the Purchase Option Price shall be made to the Trustee not later than 45 days prior to the Interest Payment Date upon which the Project is to be purchased. SECTION 7.3 Assignment and Sublease by City. Neither this Lease Agreement nor any interest of the City herein shall, at any time after the date hereof, be mortgaged, pledged, assigned or transferred by the City by voluntary act or by operation of law, or otherwise, except as specifically provided herein. The City shall at all times remain primarily liable for the performance of the covenants and conditions on its part to be performed notwithstanding any assigning, transferring or subletting which may be made. The City shall have the right to sublease or permit the use of all or any part of the Project, but nothing herein contained shall be construed to relieve the City from any obligations contained herein. In no event shall the City sublease or permit the use of all or any part of the Project so as to cause the interest component of Lease Payments to be subject to federal income tax or California personal income tax. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES SECTION 8.1 Events of Default Defined. The following shall be "events of default" under this Lease Agreement and the terms "event of default" and "default" shall mean, whenever they are used in this Lease Agreement, any one or more of the following events, namely: (a) Failure by City to pay any Lease Payment on or before the applicable Lease Payment Date; (b) Failure by City to observe or perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in clause (a) of this Section, for a period of thirty (30) days after written notice specifying such failure and requesting that it bey remedied has been given to City by Agency or its assignee or the Bond Insurer; provided, however, that Agency or its assignee may, upon written request of City prior to the expiration of such thirty (30) day period, consent to an extension of such time not exceeding sixty (60) days in order to cure such failure if corrective action has been instituted by City and is being diligently pursued and will, in the judgment of Agency or its assignee, be diligently pursued until the default is corrected; 04/29/92 8876u/2345/43 -24- • 787 • In the event that Agency or its assignee does not elect to terminate this Lease Agreement, City agrees to and shall remain liable for the payment of Lease Payments and the performance of all conditions herein contained and shall reimburse Agency or its assignee for any deficiency arising out of the re- letting of the Project, or, in the event that Agency or its assignee does not re -let the Project, then for the full amount of the Lease Payments to the end of the term of this Lease Agreement, but said Lease Payments and /or deficiency shall be payable only at the same time and in the same manner as provided in Section 3.1 notwithstanding such entry or re -entry by Agency or its assignee or any suit in unlawful detainer, or otherwise, brought by Agency or its assignee for the purpose of effecting such entry or re -entry or obtaining possession of the Project or the exercise of any other remedy by the Agency or its assignee. City hereby irrevocable appoints Agency or its assignee as the agent and attorney -in -fact of City to enter upon and re -let the Project in the event of default by City. City hereby exempts and agrees to save harmless Agency and its assignee from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and letting of the Project. City hereby waives any and all claims for damages caused, or which may be caused, by Agency or its assignee in entering and taking possession of the Project, for all claims for damages that may result from the destruction of or injury to the Project, and all claims for damages to or loss of any property belonging to City that may be in or upon the Project. City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of Agency or its assignee to re -rent the Project:in the event of such re -entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of Agency or its assignee in effecting such re- renting or re- leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such re- leasing or re- renting is made, or of the terms and conditions of such re- leasing or re- renting, or otherwise, but that, on the contrary; in the event of such default by City, the right to terminate this,Lease Agreement shall vest in Agency. City further waives the right to any rental obtained by Agency or its assignee in excess of the Lease Payments herein specified and hereby conveys and releases such excess to Agency or its assignee as compensation to Agency or its assignee for its services in re- leasing the Project. Each and all of the remedies given to Agency and its assignee hereunder or by any law now or hereafter enacted are cumulative and the exercise of one right or remedy shall not impair the righf 'to Agency or its assignee to exercise any or all other remedies. 04/29/92 8876u/2345/43 -26- 4 '788 r The Bond Insurer may elect, in its sole discretion, to pay principal and accrued interest to the payment date in respect of the Certificates , i -f an Event of Default occurs regardless of whether a claim has been made under the Bond Insurance Policy and the Trustee shal'1 be required to accept such amounts on behalf of Certificateowners. Payment of such amount shall discharge the Bond Insurer's obligations under the Bond Insurance Policy. SECTION 8.3 Suits at Law or in Equity and Mandamus. In addition to the remedies set forth in Section 8.2 hereof, in case one or more of the events of default shall happen, then and in every such case, Agency and its assignee shall be entitled to proceed,to protect and enforce the rights vested in the Agency by this Lease Agreement by such appropriate judicial proceeding as Agency or its assignee shall deem most effectual to protect and enforce any such right, either by suit in equity or by action at law, whether for the specific performance of any covenant or agreement contained in-this Lease Agreement, or in aid of the exercise of any power granted in this Lease Agreement, or to enforce any other legal or equitable right vested in Agency or its assignee by this Lease. Agreement or by law. The provisions of this Lease Agreement and the duties of City and of the officers., agents and employees thereof shall be enforceable by Agency or its assignee by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing, Agency and its assignee shall have the right: (i) Accounting. By action or suit in equity to require City and its officers, agents and employees to account as the trustee of an express trust. (ii) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of Agency or its assignee. (iii) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce its or their rights against City and its officers, agents, and employees, and to compel it or them to perform and carry out its and their duties and obligations under the law and its and their covenants and agreements with City as provided herein. The Agency's right to exercise the remedies provided for herein shall be subject to the prior written consent of the Bond Insurer and the Bond Insurer, acting alone, shall have the right to direct all remedies upon default so long as it is not then in default with its payment obligations under the Bond Insurance Policy. 04/29/92 8876u/2345/43 -27- 739 SECTION. 8.4 Non - Waiver. Nothing in this Article VIII or in any other provision of this Lease Agreement shall affect or impair the obligation of City to pay Lease Payments. No delay or omission of Agency or its assignee to exercise any right or power arising upon the happening of any event of default shall impair any such right or power or shall be construed to be a waiver of any such event of default or any acquiescence therein, and every power and remedy given by this Article VIII to Agency and its assignee may be exercised from time to time and as often as shall be deemed expedient by Agency or its assignee. There shall be no waiver of defaults hereunder. SECTION 8.5 Remedies Not Exclusive. No remedy herein or by law conferred upon or reserved to Agency or its assignee or the Bond Insurer is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy, and every remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise may be exercised without exhausting and without regard to any other remedy conferred by any law. SECTION 8.6 Status Quo. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and then discontinued or abandoned, or shall be determined adversely to Agency and its assignee, then, and in every such case, Agency and its assignee and the Bond Insurer shall be restored to its former position and rights and remedies as if no such suit, action or proceedings had been brought or taken. SECTION 8.7 Right of Certificateowners "Assignee," as used in this Article VIII, shall include Certificateowners to the extent such Certificateowners are given rights to exercise remedies hereunder pursuant to the Trust'Agreement and each Certificateowner shall be entitled to exercise any and all such remedies as provided in the Trust Agreement. ARTICLE IX MISCELLANEOUS SECTION 9.1 Notices. All notices, certificates, requests or other communications (other than payments by City) hereunder 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 at their respective places of business as follows: 04/29/92 8876u/2345/43 -28- 730 If to the City: City of Poway 13325 Civic Center Drive Poway, California 92064 Attn: City Manager If to the Agency: Poway Redevelopment Agency 13325 Civic Center Drive Poway, California 92064 Attn: Executive Director If to the Bond Insurer: Financial Security Assurance Inc. 350 Park Avenue New York, New York 10022 -6022 Attn: Managing Director - Surveillance SECTION 9.2 Binding Effect. This Lease Agreement shall inure to the benefit of and shall be binding upon the Agency and the City and their respective successors and assigns. SECTION 9.3 Severability. If any one or more of the terms, provisions, covenants or conditions of this Lease Agreement shall to any extent be declared invalid, enforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Lease Agreement shall be affected thereby, and each provision of this Lease Agreement shall be valid and enforceable to the fullest extent permitted by law. SECTION 9.4 Amendments. The terms of this Lease Agreement shall not be waived, altered, modified, supplemented or amended in any manner whatsoever except by written instrument signed by the Agency and the City with the prior written consent of the Bond Insurer. A full original transcript of all proceedings relating to the execution of any amendatory or supplemental agreement shall be provided to the City, the Agency and the Bond Insurer. SECTION 9.5 Execution in Counterparts. This Lease Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 04/29/92 8876u/2345/43 -29- 791 SECTION 9.6 Applicable Law. This Lease Agreement shall be governed_by and construed in accordance with the laws of the State of California. SECTION 9.7 Captions. The captions or headings in this Lease Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Lease Agreement. SECTION 9.8 Interest. The interest portion of Lease Payments shall be determined on the basis of a 360 -day year consisting of twelve 30 -day months. SECTION 9.9 Bond Insurer Third Party Beneficiary. The Bond Insurer shall be deemed to be a third party beneficiary of this Lease Agreement. 04/29/92 8876u/2345/43 -30- 792 IN WITNESS WHEREOF, the Agency has executed this Lease Agreement in its corporate name by one of its duly authorized officers, and the City has caused this Lease Agreement to be executed on its behalf by one of its duly authorized officials. All of the above occurred as of the date first above written. POWAY REDEVELOPMENT AGENCY I// I �_ &EW(4 I Dd. (Y •- TTES pu Se etar CITY OF POWAY AT EST: Depilt y ity le k 04/27/92 8876u/2345/43 -29- STATE OF CALIFORNIA SS. COUNTY OF SAN DIEGO 793 On this 28th day of April, 1992, before me, a Notary Public, State of California, duly commissioned and sworn, personally appeared Kathy McIntyre , known to me to be the Deputy Mayor of the City of Poway, California, that executed the within instrument on behalf of said City therein named, and acknowledged to me that such City executed the within instrument pursuant to a resolution of said City. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed by official seal on the day and year in this certificate first above written. A E L LMARI ON ® ~ NSAN DIEGO COUNIYa MyCommisslon EOres Apro 26,1994 (SEAL STATE OF CALIFORNIA SS. COUNTY OF SAN DIEGO Notary Public State of California On this 28th day of April, 1992, before me, a Notary Public, State of California, duly commissioned and sworn, personally appeared Nancy Neufeld , known to me to be the Deputy City Clerk of the City of Poway, California, that executed the within instrument on behalf of said City therein named, and acknowledged to me that such City executed the within instrument pursuant to a resolution of said City. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed by official seal on the day and year in this certificate first above written. OFRcwLSEAL MARIE LOFTON Notary 0 COIWni a SAN DIEGO COUNN W Cor misslon Expires (SEAL) Aprl26,1944 04/27/92 8876u/2345/43 Notary Public State of California 0 794 6 STATE OF CALIFORNIA ss. COUNTY OF SAN DIEGO On this 28th day of April, 1992, before me, a Notary Public, State of California, duly commissioned and sworn, personally appeared Kathy McIntyre and Nancy Neufeld , known to me to be the Deputy Chairperson and Deputy Secretary, respectively, of the Poway Redevelopment Agency, that executed the within instrument on behalf of said Agency therein named, and acknowledged to me that such Agency executed the within instrument pursuant to resolution of the Board of Directors of said Agency. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year in this certificate first above written. OFRCLALSEAL MARIE LOFfO N Notary PUbllc- CalUOmla ® SAN DIEGO COUNTY Notary Public MyCommisslonExpires State of California April 25.1994 04/27/92 8876u/2345/43 • 7950, EXHIBIT A PROJECT DESCRIPTION Poinsettia Mobilehome Park with a total of 264 spaces, recreational and community buildings, parking and storage lots, and landscaping. :930476 16 EXHIBIT "B" DESCRIPTION 1 PARCEL 1: 790 All of Blocks 11, 12, 18, 19, 20 and 21 and a portion of Block 22 of PIERMONT, in the County of San Diego, State of California, According to Map thereof No. 331, filed in the Office of -the County Recorder of San Diego County, May 27, 1887, together with the alleys in said Blocks 12, 18 and 21, the Westerly half of the alley adjoining said Blocks 11, 19 and 20 on the East and the Easterly half of the alley adjoining Lot 6'in Block 22 on the West; all of Malvern Street and portions of Brighton Avenue, Temple Street, Edgemoor Street and Windsor Street, as shown on said Map No. 331, and all of Nottingham Court (closed) and St. Albans Court (closed) in said Blocks 18 and 19, all of Melrose Court (closed) in said Block 20 and 21 and all of Richmond Court (closed) in said Blocks 21 and 22, and a portion of the Southeast Quarter of the Southeast - Quarter of Section 12, Township 14 South, Range 2 West, San Bernardino Meridian, being described as a whole as follows: BEGINNING at the intersection of the center line of the alley adjoining said Block 11 on the East with the Southerly line of Adrian Street as shown on said Map No. 331; thence Westerly along the Southerly line of said Adrain Street a distance of 660.00 feet to an intersection with the center line of said Brighton Avenue; thence Southerly along said center line and the Southerly prolongation thereof, a distance of 962.00 feet to an intersection with the Easterly prolongation of the Northerly line of said Block 22; thence Westerly along said Easterly prolongation to and along the Northerly line of said Block 22, a distance of 136.00 feet; thence Southerly, parallel with the center line of said Brighton Avenue, a distance of 98.00 feet to the Northerly line of land described in Deed recorded March 23, 1966 as File No. 22366; thence Westerly along said Northerly line 4.00 feet to the Northwest corner thereof; thence Southerly,.parallel with the center line of said Brighton Avenue, a distance of 404.00 feet to an intersection with the Northerly line of Lot 6 in Block 22 of Piermont, according to Map thereof No. 331; thence Westerly along said Northerly line and the Westerly prolongation of said line, a distance of 80.00 feet to an intersection with the center line of the alley in said Block 22; thence Southerly along said center line a distance of 50.00 feet to an intersection with the Easterly prolongation of the Southerly line of Lot 5 in said Block 22; thence Westerly along said Easterly prolongation to and along the Southerly line of said Lot 5, in Block 22, 180.00 feet to an intersection with the Easterly line of Midland Avenue; thence Southerly along the Southerly prolongation of the Easterly line of said Midland Avenue, a distance of 139.76 feet to an intersection with the Northerly line of the South 20 acres of the Southeast Quarter of the Southeast Quarter of said Section 12; thence Easterly along the Northerly line a distance of 1060.30 feet to an intersection with the Southerly prolongation of the alley email 930476 16 • EXHIBIT "B" DESCRIPTION 7 z - adjoining said Blocks 11, 19 and 20 on the East; thence Northerly along said prolongation and said center line a distance of 1695.78 feet to the Point of Beginning. PARCEL 2: That portion of the Westerly half of Brighton Avenue, now vacated and closed to public use, as shown on Piermont, according to Map thereof No. 331, filed in the Office of the County Recorder of San Diego County, May 27, 1887, being in the County of San Diego, State of California, described as follows: BEGINNING at the Southeast corner of Block 13 of said Piermont; thence Easterly along the Easterly prolongation of the Southerly line of said Block 13, a distance of 10.00 feet to the beginning of a tangent 60.00 foot radius curve, concave Southwesterly, which said curve is also tangent to the Westerly line of the Easterly 10.00 feet of said Brighton Avenue; thence Southeasterly along the arc of said curve to the center line of said Brighton Avenue; thence Northerly along said center line to the Easterly prolongation of the Northerly line of Lot 8 in said Block 13; thence Westerly along said prolongation a distance of 40.00 feet to the Northeast corner of said Lot 8; thence Southerly.along the Easterly line of said Block 13, a distance of 170.00 feet to the Point of Beginning. EXCEPTING from Parcel 1 above, any portion lying within that portion described as follows: The Westerly 104.30 feet of the Northerly 97.00 feet of the Southerly 195.50 feet of the Northerly 386.00 feet of said Block 18. ALSO EXCEPTING from Parcel 1 above that portion described as follows: The Westerly 104.30 feet of the Southerly 98.50 feet of the Northerly 386.00 feet of said Block 18. EM 7980 EXHIBIT C PRINCIPAL AND INTEREST COMPONENT SCHEDULE FOR LEASE PAYMENTS FOR THE PROJECT Principal Interest Lease Payment Component of Component of Total Date Lease Payment Lease Payment Payment 06/01/92 350,000.00 98,505.97 448,505.97 12/01/92 70,000.00 379,333.13 449,333.13 06/01/93 70,000.00 378,108.13 448,108.13 12/01/93 75,000.00 376,708.13 451,708.13 06/01/94 75,000.00 375,208..13 450,208.13 12/01/94 75,000.00 373,520.63 448,520.63 06/01/95 80,000.00 371,833.13 451,833.13 12/01/95 80,000.00 36.9,913.13 449,913.13 06/01/96 80,000.00 367,993.13 447,993.13 12/01/96 85,000.00 365,993.13 458,993.13 06/01/97 85,000.00 3.63,868.13 448,868.13 12/01/97 135,000.00 361,615.63 496,615.63 06/01/98 145,000.00 338,038.13 503,038.13 12/01/98 145,000.00 354,050.63 499,050.63 06/01/99 150,000.00 350,063.13 500,063.13 12/01/99 160,000.00 345,788.13 505,788.13 06/01/00 155,000.00 341,228.13 496,228.13 12/01/00 165,000.00 336,733.13 501,733.13 06/01/01 165,000.00 331,948.13 496,948.13 12/01/01 170,000.00 326,998.13 496,998.13 06/01/02 180,000.00 321,898.13 501,898.13 12/01/02 180,000.00 316,408.13 496,408.13 06/01/03 190,000.00 310,918.13 500,918.13 12/01/03 200,000.00 305,028.13 505,028.13 06/01/04 195,000.00 298,828.13 493,828.13 12/01/04 210,000.00 292,.612.50 502,612.50 06/01/05 210,000.00 285,918.75 495,918.75 12/01/05 .225,000.00 279,225.00 504,225.00 06/01/06 225,000.00 272,053.13 497,053.13 12/01/06 235,000.00 264,881.25 499,881.25 06/01/07 240,000.00 257,390.63 497,390.63 12/01/07 250,000.00 249,740.63 499,640.63 06/01/08 260,000.00 241,771.88 501,771.88 12/01/08 270,000.00 233,484.38 503,484.38 06/01/09 275,000.00 224,878.13 499,878.13 12/01/09 285,000.00 216,112.50 501,112.50 06/01/10 290,000.00 207,028.13 497,028.13 12101110 305,000.00 197,784.38 502,784.38 06/01/11 315,000.00 188,062.50 503,062.50 12/01/11 320,000.00 178,021.88 498,021.88 06/01/12 335,000.00 167,821.88 502,821.88 12/01/12 340,000.00 157,143.75 497,143.75 799 EXHIBIT C (Continued) PRINCIPAL AND INTEREST COMPONENT SCHEDULE FOR LEASE PAYMENTS FOR THE PROJECT Principal Lease Payment Component of Date Lease Payment 06/01/13 360,000.00 12/01/13 365,000.00 06/01/14 375,000.00 12/01/14 390,000.00 06/01/15 405,000.00 12/01/15 415,000.00 06/01/16 430,000.00 12/01/16 440,000.00 06/01/17 455,000.00 12/01/17 470,000.00 06/01/18 485,000.00 12,640,000.00 Interest Component of Lease Payment 146,306.25 134,831.25 123,196.88 111,243.75 98,812.50 85,903.13 72,675.00 58,968.75 44,943.75 30,440.63 15,459.38 13,317,240.97 Total Payment 506,306.25 499,831.25 498,196.88 501,243.75 503,812.50 500,903.13 502,675.00 498,968.75 499,943.75 500,440.63 500,459.38 25,957,240.97