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Lease Agreement 1991-019016r.% RECORDED AT THE REQUEST Or- CHICAGO TITLE CO. 298 0'; rS 6_x,6 r ftyr __ i. i RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL,TO: ) ,STRADLING;.YOCCA, CARLSON & RAUTH ) 660 Newport Center Drive ) Suite 1600 ) Newport Beach, California 92660 ) Attn: Thomas P. Clark, Jr., Esq. ) go'01-'1 - l3 r:z j j .ANNFTTC j --j) [Space, above for recorder.] ado FEE 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 POWAY ROYAL MOBILEHOME PARK DATED AS OF JANUARY 1, 1991 299 TABLE OF CONTENTS* PAGE ARTICLE I Definitions and Exhibits. Section 1.1 Defi- nitions 2 Section 1.2 Exhibits .............................. 5 ARTICLE II Lease of Project Section 2.1 Lease of'Project ........:.....:...... 5 Section 2,.2 Acquisition, Construction, and Improvement of Project......:,........... 6 Section 2.3 Creation of Project Trust Fund......... 6 Section 2,4 City's Liability ...................... 7 Section 2..5 Possession and Enjoyment .............. 7 Section 2.6 Agency.Access to the Project .......... 7 Section 2.7 Disclaimer of Warranties ............... 8 Section 2.8 Manufacturers' Warranties ................. 8 Section 2.9 Additions and Improvements ............ 8 Section 2.10 Arbitrage Covenant ..................... 9 ARTICLE III Lease Payments Section 3.1 Payment of Lease Payments; and ARTICLE IV Termination Section 4_1 Terminat=ion of Lease Agreement......... 13 *This Table of Contents is for convenience only and should not be considered part of the Lease Agreement. M Additional Lease Payments., ............ 9 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.. 12 Section 3.6 Consideration ...............,........... 12 Section 3.7 Lease Payments to Constitute.a Current Expense of the City; No Pledge ........ 13 ARTICLE IV Termination Section 4_1 Terminat=ion of Lease Agreement......... 13 *This Table of Contents is for convenience only and should not be considered part of the Lease Agreement. M ARTICLE V Covenants of City Section 5.1 Maintenance of Project by the City .... 14 Section 5.2 Taxes, Other Governmental Charges 21 Section 6..3 and Utility Charges ..................... 14 Sett +on 5.3 Provisions Regarding Insurance ........ 14 Section 5.4 Damage, Destruction or Condemnation ... 17 Section 5.5 Insufficiency of Net Proceeds ......... 19 Section 5.6. Advances .............................. 19 Section 5.7 Financial Reports ..................... 19 Section 5.8 Release,,and Indemnification of the Agency:. ........................ Section 5.9 Fees ,and ,Indemnification of Trustee ... 20 Section 5.10 Lease.Payments ......................... 20 ARTICLE VI Title Section 6.1 Title to Project ...................... 20 Section 6.2 Liens ................................. 21 Section 6..3 Use of the Project ..................... 21 Section 6.:4 Warranties of the Agency .............. 21 ARTICLE VII Assignment, Sublease, Prepayments and Option to Purchase Section 7.1 Assignment by Agency 22 Section 7.,2 City's Prepayment and Purchase Option.... ............................... 22 Section 7.3 Assignment and Sublease by City........ '22 ARTICLE VIII Events of Default and Remedies Section 8_1 Events of Default Defined .............. 23 Section 8.2 Remedies on Default .................... 24 Section 8.3 Suits at Law or Equity and Mandamus.... 25 Section 8.4 Non Waiver ............................ 26 Section 8.5 Remedies Not Ex_clusive ................. 26 Section 8.6 Status Quo ............................... 27 Section 8.7 Rights of Certificateowners ............. 27 (.ii) 301 ARTICLE IX MISCELLANEOUS Section 9..1 Notices .. ..................,............ 27 Section 9.2 Binding Effect ........................ 28 Section 9.3 Severability .......................... 28 Section 9.4 Amendments ... ..............:..... ..... 28 Section 9.5 Execution in Counterparts .............. 28 Section 9.6 Applicable Law ........................ 28 Section 9.7 Captions .............................. 28 Section 9.8 Interest .: ..................... ....... 28 Section 9.9 Bond Insurer Third Party Beneficiary .. 28 Exhibit A Legal Description of Project Exhibit B Legal Description of Property Exhibit C Lease Payment Schedule (iii) 3'0 2 LEASE AGREEMENT THIS LEASE AGREEMENT, dated as of January 1, 1991, 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 acquisition.and improvement of the Project 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 redemption 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: 303 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. "Acquisition Account" shall mean the-Acquisition Account established by the Trustee pursuant to Section 401 of the 'Trust Agreement. "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 of 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." shal -1 mean any day other than (i) a Saturday or Sunday or legal'ho -liday or a day on which banking iiistitutions:,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. 01 -11 -91 2295u/23,45/25 -2- • 304 • "Certificate of Authorized Representative of,the City" shall mean a certificate executed by an authorized representative,of the City: "Certifi'cateowner;" 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 'imited to, the payme.nt'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 twelve month ;fiscal period of the City which commences on July 1 in every year and ends on June,30 of the succeeding year. "`Independe,nt Insurance Consultant" shall mean an independent, qualified and reputable insurance consultant. "Interest Payment Date" shall mean January 1 and July 1 of each year, commencing July 1, 1991. "Lease Agreement" shall mean this Lease Agreement, dated as of January 1, 1991, between the Agency and the City, and -any and all modifications, alterations, amendments and supplements hereto made in accordance.with the provisions hereof. 01 -11 -91 2295u/2345/25 -3- 305 0, "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 each 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 Ito '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. "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 I'II 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 of acquisition of the Project. "Project" shall mean the Property and the improvements thereon comprising the Poway Royal Mobilehome Park as more particularly - described in Exhibit "'A" hereof. "Property" shall mean the parcels of land described in Exhibit "B" hereof to be leased. 01 -11 -91 2295u/2345/25 -4- 306 0 "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;P.roject as set forth on Exhibit C hereto, as the same may be !amended, plus interest on such principal to the redemption date and premium, if any. "Redemption Account" shall mean the Redemption 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 i -n the Trust Agreement. "State" shall mean the State of California. "Trust Agreement" shall mean the Trust Agreement Relating to the Poway Royal'Mobilehome Park among the City, the Trustee . and the Agency date"d.as of January 1, 199.1 and any and all amendments and supplements thereto made in accordance with the provisions thereof. "Trustee" shall mean Security Pacific National Bank and its successor.pr 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 thi's 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. 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. 01 -11 -91 2295u/2345/25 -5- 0 307 0 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) January 5, 2024; 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 2.2 Acquisition, Construction and Improvement of Project. The Agency agrees to use its best efforts to acquire the Project, which acquisition shall occur concurrently with the sale and delivery of the Certificates. SECTION 2.3 Creation of Project Trust Fund. The Agency shall create, or cause to be created in the Trust Agreement., a Project Trust Fund into which it shall deposit or cause to be initially deposited '$27,,:563,833.18 from the proceeds of the sale of the Certificates. Trustee shall make payments from the Acquisition.Account to pay the Cost of the Project 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'paid; (4) that such payment obligation has been properly incurred; is an item of the Cost of 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:Acqu sition Account to be less than the amount necessary to pay the remaining estimated Cost of the Project unless the City has deposited funds with the Trustee to cover the payment of such excess amount. Interest or other income earned on any moneys or investments in the Acquisition Account shall be kept in the Acquisition Account until the acquisition, construction and installation of the Project has been completed and thereafter, 01 -11 -91 2295u/2345/25 -6- 9' 30,8 subject to the requirements of Section 409 of the Trust Agreement, -any such money shall be transferred.to the Lease Payment 'Account , and'appiied 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 2.4 City's Liability. To, the extent that any construction is required 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 contracor., manufacturer or supplier or its insurer or surety pursuant.to this Section.2.4, 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 01 -11 -91 2295u/2345/25 -7- 309 examine and inspect the Project for the purpose of assuring i that the Projects being properly maintained;;,preserved, and kept An, good 'repair', working order and',conditi'on. The City further agrees that. the,Agency shall have such rights of access to the Project as`may, bob reasonably necessary to cause the proper maintenance;of' the Project in the event ofr failure by the City to perform,its,obligations hereunder. rf the Agency obtains any. d nformation as a result of its access to the Proj i ect; the Agency hereby agrees not to disclose such information to any person; firm or corporation. SECTION 24.7 Disclaimer of Warranties. THE AGENCY MAKES NO WARRANTY OR RE P,RESENTATION,, 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 evert shall the Agency be liable for any incidental, indirect, special or consequential damage,in connection with or arising out of thi's 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 Pr'oj'ect, 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 ti'ty expressly acknowledges that neither the Agency nor the Tru tee,- +makes, or has made„ any representation or warranty whatsoever as to the existence or availability of such.warrarities 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 01 -11 -91 2295u/2345/25 -8- 0 310 0 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. ARTICLE III LEASE PAYMENTS SECTION 3.1 Payment of Lease Payments and Additional Lease Payments. (A) The City shall pay advance Lease Payments in the total amount of $833- ,000.00, consisting of interest only on the principal component of the Certificates as set forth on Exhibit C hereto. Such advance Lease Payments shall be paid from the proceeds of the sale of the Certificates. (B) On each Lease Payment Date, the City shall pay to the Trustee, in lawful money of the United States of America, provided the Project 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. (C) The principal portion.and interest portion of each Lease Payment attributable to the Project shall be the amounts set forth in Exhibit C. 01 -11 -91 2295u/2345/25 -9- • 311 • (D), If there is a redemption of Certificates pursuant to Section 303.;6 of the Trust Agreement, the Lease Payment schedule set -forth do Exhibit C shall•be. adjusted by the City to provide. for the full and timely payment of the Outstanding Certificates. (E) 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 sa -1'_e and delivery of the Certificates and all administrative costs of the Agency, including without limiting the generality of the foregoing, salaries, wages,, expenses, 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) All costs and expenses which the Agency may incur in.consequence 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 Indenture. 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 01 -11 -91 2295u/2345/25 -10- 0 312 0 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. Credits to Lease Payments and (A) Subject to the requirements of Section 409 of the Trust Agreement, upon the earlier of January 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 Acquisition Account, 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 (ii) moneysin the Reserve Account in excess of the Reserve Requirement. D uring 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 thereo.f. .(B) Subject to the requirements.of Section 409 of the Trust Agreement, upon the earlier of January 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 Acquisition Account not required to pay Cost of the Project as evidenced by a certi'f'icate of an Authorizied'Representative of the City filed 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 Redemption Account and applied to the redemption 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 January l;, 1994 or (ii) prior to or concurrent with its delivery of the Certificate of Authorized Representative, as applicable. (G) The City shall receive a credit for the principal component and interest component of any Lease Payment paid.from moneys transferred from the Acquisition 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. 01 -11 -91 2295u/2345/25 -11- 313 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. zThe 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-off, 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 ". SECTION 3.5 Application of Sublease:Rents; Budget. Any and all rents collected by the City in connection with the sublease of all or a portion of the Project, Tess any amounts required for oper'ati'ng 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 applic able 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 Additional Lease Lease Term shall Year and shall b the right of "use enjoyment of the Consideration_ The Lease Payments and Payments hereunder for each Fiscal Year of the constitute the total rental for said Fiscal >_ paid by the City for and in consideration of and occupancy, and the continued,quiet use and Project for and during said'Fiscal Year. The 01 -11 -91 2295u/2345/25 -12 0 0 314 parties hereto have:agr_eed.and determined that such total rental does:not exceed the fair rental value:of the P- roperty 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 therefroim which will accrue to the parties to this Lease Agreement and the general public by reason of such uses of the Property. SECTION 3.7 to Expense of the City,;..Nb Pledge. The Agency and the City understand, agree and intend that the obligation of the City to pay ,Lease P,ayments;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,£unds 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; 01 -11 -91 2295u/2345/25 -13- 315 0 (bp 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. 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:re,spect to any governmental charges that may lawfully be paid i-n 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: 01 -11 -91 2295u/2345/25 -14- 0 316 0 (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.appliable 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); (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. 01 -11 -91 2295u/2345/25 -15- 0 317 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 January 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. Nothwithstanding 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 herebyV the City shall not be required to maintain such insurance unless the same is insurance which is commercially available from insurers rated at least "A" by.Standard & Poor's Corporation unless otherwise approved by the Bond I- nsurer (a "Qualified Insurer "). I£ 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. I£ the City fails to maintain insurance required under Section 5.3 of the Lease Agreement, the Agency or the Trustee shall be obligated to-do so; provided that the City shall be obligated to reimburse the Agency or the Trustee its expense in so doing. In lieu of obtaining any of the insurance coverage required pursuant to this Section, such coveragd,may'be maintained by City in the form of a self- insurance program of City meeting the followi-ng,requirements: (i) The self - insurance program has been approved by a nationally recognized independent 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 01 -11 -91 2295u/2345/25 -16- 0 0 318 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) i'h 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 programs 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 pro gram and issue a 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,'b "e 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, 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 cr 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 Acquisition Account and be applied by the Agency to complete the payment o£''the cost of such repair, restoration or 01 -11 -91 2295u/2345/25 -17- 319 F 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 A'cquis_ition Account including provision to the Trustee of the 'Certi£icate 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 Redemption Account and applied to the redemption of Certificates. (b) Option B - Redemption of Certificates. The City and the Agency will cause the Net Proceeds of,any insurance claim or condemnation award to be applied.to the redemption 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 not sufficient to redeem all Outstanding Certificates at a price, of par plus accrued interest to the redemption date and `to appeal any judgment eniered'in connection with a condemnation proceeding if such judgment amount is insufficient to redeem all of the Outstanding Certificates at such redemption price. All Net Proceeds received by the Agency or.the City shall be deposited in the Redemption Account and applied by the Trustee as provided in the Trust Agreement. If 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 a be abated in whole or in prt. The amount of such abatet<ierit shall be 'such that the resulting Lease Payments represent fair consideration for the use and po'ssession.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 redemption of Certificates as provided in Section 303,.;6(a)(2) of the Trust. Agreement (other than a redemption resulting from certification by the Authorized Representative of the. City to the effect the Project ha's 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 Payment will be sufficient to pay all of the principal and interest components on the Certificates remaining outstanding after the redemption 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 01 -11 -91 2295u/2345/25 -18- • 320 completion of the replacement or work of're`a -ir or reconstruction. Except as provided in thits 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 which would otherwise be abated, nor to the extent that moneys on deposit in the Acquisition Account, Reserve Account and the Lease Payment Account ,(including proceeds of business interruption insurance,) are available to pay the amount which would otherwise 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 Insufficiency of Net Proceeds. I£ 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 obligation 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 01 -11 -91 2295u/2345/25 -19- 0 321 0 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 damages whatsoever, regardless of cause thereof, and expenses in connection therewith h, including, without limitation, counsel fees and expenses; penalties and interest arising 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,proper.ty or injury to or death of any person. However, the City shall'no,t 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. 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, 01 -11 -91 2295u/2345/25 -20- 0 322 0 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 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 Propety, 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 Propety, complied and comply with all federal, state and local 01 -11 -91 2295u/2345/25 -21- • 323 • 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 maybe transferred and assigned by the Agency in.accordance with the provisions of the Trust Agreement'and provisions of the Assignment 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 Assignment Agreement. SECTION 7.2 City's Prepayment and Purchase Option. The City may at its option, as of any Interest Payment Date on or after January 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 or such later date as permitted by the Trustee.. 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 01 -11 -91 2295u/2345/25 -22- 324 11 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 be 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; (c) The City abandons or vacates the Project; (d) The City's interest in the Lease., in whole or in part,, is assigned'or transferred without the written consent of the Agency.and the Bond I- nsurer, either voluntarily or by operation of law; (ie) A court having jurisdiction.in the premises,shall enter a decree or order for relief in respect of City in a case under any applicable bankruptcy, insolvency or other similar law now or .hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of City or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) days; or (f) City shall commence a voluntary case under any applicable bankruptcy,'insolvency or other similar law now or hereafter in effect, or shall consent :to'the entry of an order 01 -11 -91 2295u/2345/25 -23- 0 325 0 for relief,in an involuntary case under any such law, or shall consent to the appointment of or taking "possession by a' receiver, liqui'$ator, assignee, trustee„ custodian, sequestrator (or similar official) of City for any substantial part of its property, or shall make any general assignment for the benefit of credi -tors, or shall fail generally to pay its debts as they become due or shall take any corporate action in furtherance of any of the foregoing. SECTION 8.2 Remedies on Default. Upon the happening of any of the events of default specified in Section 8.1 hereof,, Agency or its assignee shall notify the Bond Insurer immediately upon the occurrence of a payment default and within five (5) Business Days of the occurrence of any other event of default and with the %'prior written consent of the Bond Insurer may exercise any and''all remedies available - pursuant to law or granted pursuant to this Lease Agreement. Agency or its assignee is expressly authorized hereby to enter and re- enter the Project for the purpose of taking possession of any portion of the Project if the.City does not deliver possession of the Project to the Agency on demand or to re -let_ the Project and, in addition, at.its option, with or without such entry to terminate this Lease Agreement. In the event of: default and notwithstanding any entry or re -entry by Agency or its assignee City; shall; as herein expressly provided, continue to remain liable for the ,payment of Lease Payments and /or damages for breach of this Lease Agreement and the performance of all conditions herein contained,and, in any event, such Lease Payments and /or damages shall be payable to the Agency or its assignee at the time and in the manner set forth in this Section. 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. 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 P'roj'ect, or, in the.event that'Agency or its assignee does not.re .let the Project, then for the.,£ull 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 01 -11 -91 2295u/2345/25 -24- 0 327 0 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 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. 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 01 -11 -91 2295u/2345/25 -26- 0 328 0 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: 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 01 -11 -91 2295u/2345/25 -27- 329 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 tease 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. 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. 01 -11 -91 2295u/2345/25 -28- 1 11 0 330 0 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. AGENCY: Poway Redevelopment Agency By ' AE E ecutive Director ATTEST: Secre`tar,y \� CITY: City of Poway By: City Manager ATTEST: City Clerk �I 01 -11 -91 2295u/2345/25 -29- 331 STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On this/z4L day of /c//`D , before me, a Notary Public, State of Ca1'foinia, dul commissioned and sworn, personally appeared t¢o known to me to be the City Manag r 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 (SEAL) STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) Not a Public State of California On this /� day o r7gl before me, a Notary Public, State of Cali o nia, duYly cgqmmi s oned and sworn, personally appeare &_&4�tt_ /_GN , known to me to be the City Clerk of�tie 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 (SEAL) 01 -11 -91 2295u/2345/25 -30- �l XJZ F� Notary Public State of California n u STATE OF CALIFORNIA COUNTY OF SAN DIEGO ) ss. 332 On this /.day of 1991, before me, a Notary Public, State of al' orn' ul commissioned and sworn, personall a peared and kn an of the executed the iilthfn instrui named, and acknowledged to within instrument pursuant Directors of said Agency. wn to me to be the F_,((1 'z Poway Redevelopment Agency, that nent on behalf of said Agency therein me that such Agency executed the to a resolution of the Board of 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. M1� � - - 01 -11 -91 2295u/2345/25 -31- Notary Public State of California 0 333 EXHIBIT A PROJECT DESCRIPTION Poway Royal Mobilehome Park with a total of 400 spaces, recreational and community buildings, parking and storage lots, and landscaping. 01 -11 -91 2295u/2345/25 Exhibit A Page 1 of 1 0 Order No: 803471 -13 PARCEL 1: 334 0 EXHIBIT B s ek — Y CeR 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 Santiago. State of California, according to the Official Plat thereof (including that portion of the Southwest Quarter of the Southwest Quarter of said Section ; 13 kno •s Parcel •A' of the Map of Reversion to,Acreage of a portion of RDSS ESTATES UNIT NO. 2, according to Nap 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 larch, 1971; thence along said center line as follows: South 89° 52•.'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° 38' 02• a distance of 155:80 feet and tangent to said curve South 45° 13. 58' West, 213.31 feet to the Westerly line of the Easterly 400.001feet 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 4S- 13. 58' West, 466.SS feet to the beginning of a tangent 250.00 foot radius curve, conceve Northwesterly; Southwesterly along the arc of said curve througb.l central angle of 44° 38. 021, a distance of 194.75 feet and tangent to said curve South 89° 52. 00' West 443.00 feet to the Westerly line Of the Southeast Quarter of the Southwest Quarter of Section 13. ALSO EXCEPTING TREEMOM' 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 a 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 Sea Diego by deed recorded April 13, 1976 as File No. 76- 108156 of Official Records, described as followa: BEGINNING at a 314 ,inch iron pipe marking the Northeast comer of said Southwest Quarter of the Southwest Quarter of Section 13, according to Record of Survey Nap No. 4195; thence along the Northerly line of said Southeaat Quarter of the Southwest Quarter, North 89° 09' 25' West, 1,335.34 feet to the Northwest comer of said Southwest Quarter of the;Southwest Quarter; thence South 000 49. 00- West, 868.18 feet along the Westerly line of said Section. 131 thence leaving said Westerly line, North 77. 40' 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 41s 10' 531, a distance of 163.16 01 -11 -91 2295u/2345/25 Exhibit B Page i of order Not 803472 -13 DESCRIP'PION 335 • feet; thence tangent to said curve, North 36' 30' 00' East, 20:51 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' 04' 00', a distance of 38.31 feet; thence tangent to said curve, North 66' 34. 00' East, 571.70 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' 18' 60''a distance of 151.68 feet; thence tangent to said curve, North 89' 52' 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 OS' 21. 50' East, along said Easterly line, 340.14 feet, more or less, to the Point of Beginning. PARCEL 2, An "semen and right of way for public road purposes over and across the Vesterly 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 Vest, ban Bernardino Meridian, in the County of San Diego. State of California, according to Official Plat thereof. 01 -11 -91 Exhibit B 2295u/2345/25 Page 2 of 336 EXHIBIT C PRINCIPAL AND INTEREST COMPONENT SCHEDULE FOR LEASE PAYMENTS FOR THE PROJECT Lease Payment Date 6/15/1991 12/15/1991 6/15/1992 12/15/1992 6/15/1993 12/15/1993 6/15/1994 12/15/1994 6/15/1995 12/15/1995 6/15/1996 12/15/1996 6/15/1997 12/15/1997 6/15/1998 12/15/1998 6/15/1999 12/15/1999 6/15/2000 12/15/2000 6/15/2001 12/15/2001 6/15/2002 12/15/2002 6/15/2003 12/15/2003 6/15/2004. 12/15/2004 6/15/2005 12/15/2005 6/15/2006 12/15/2006 6/15/2007 12/15/2007 6/15/2008 12/15/2008 6/15/2009 01 -11 -91 2295u/2345/25 Principal Component of Lease Payment 155,000.00 160,000.00 165,000.00 170,000.00 175,000.00 180,000.00 185,000.00 190,000.00 195,000.00 205,000.00 210,000.00 215,000.00 225,000.00 230,000.00 240,000.00 245,000.00 255,000.00 265,000.00 275,000.00 285,000.00 295,000.00 305,000.00 315,000.00 325,000.00 340,000.00 350,000.00 365,000.00 375,000.00 390,000.00 405,000.00 Interest Component of Lease Payment Exhibit C Page 1 of 995,317.50 995,317.50 995,317.50 995,317.50 995,317.50 995,317.50 995,317.50 995,317.50. 990,667.50 985,867.50 980,835.00 975,650.00 970,225.00 964,645.00 958,817.50 952,832.50 946,592.50 940,032.50 933,207.50 926,220.00 918,795.00 911,205.00 902,565.00 893,745.00 884,565.00 875,025.00 865,125.00 854,865.00 844,245.00 833,265.00 821,925.00 810,225.00 797,985.00 785,385.00 772,245.00 758,745.00 744,705.00 Total Payment 995,317 995,317 995,317 995,317 995,317 995,317 995,317 1,150,317 1,150,667 1,150,867 1,150,835 1,150,650 1,150,225 1,149,645 1,148,817 1,147,832 1,151,592 1,150,032 1,148,207 1,151,220 1,148,795 1,151,205 1,147,565 1,148,745 1,149,565 1,150,025 1,150,125 1,149,865 1,149,245 1,148 „265 1,146,925 1,150,225 1,147,985 1,150,385 1,147,245 1,,,148,745 1,149,705 50 50 50 50 50 50 50 50 50 50 00 00 00 00 50 50 50 50 50 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 Lease Payment Date 0 Principal Component of Lease Payment 337 Interest Component of Lease Payment Total Payment 12/15/2009 $ 420,000.00 $ 730,125.00 $ 1,150,125.00 6/15/2010 435,000.00 715,005.00 1,.150,005.00 12/15/2010 450,000.00 699,345.00 1,149,345.00 6/15/2011 465,000.00 683,145.00 1,148,145.00 12/15/2011 485,000.00 666,405.00 1,151,405.00 6/15/2012 500,000.00 649,430.00 1,149,430.00 12/15/2012 515,000.00 631,930.00 1,148,930.00 6/15/2013 535,000.00 613,905.00 1,148,905.00 12/15/2013 555,000.00 595,180.00 1,150,180.00 6/15/2014 575,000.00 575,755.00 1,150,755.00 12/15/2014 595,000.00 555,,630.00 1,150,630.00 6/15/2015 615,000.00 534,805.00 1,149,805.00 12/15/2015 635,000.00 513,280.00 1,148,280.00 6/15/2016 660,000.00 491,055.00 1,151,055.00 12/15/2016 680,000.00 467,955.00 1,147,955.00 6/15/2017 705,000.00 444,155.00 1,149,155.00 12/15/2017 730,000.00 419,480.00 1,149,480.00 6/15/2018 755,000.00 393,930.00 1,148,930.00 12/15/2018 780,000.00 367,505.00 1,147,505.00 6/15/2019 810,000.00 340,205.00 1,150,205.00 12/15/2019 840,000.00 311,855.00 1,151,855.00 6/15/2020 865.,000.00 282,455.00 1,147,455.00 12/15/2020 895,000.00 252,180.00 1,147,180.00 6/15/2021 930,000.00 219,960.00 1,149,960.00 12/15/2021 965,000.00 186,480.00 1,151,480.00 6/15/2022 1,000,000.00 151,740.00 1,151,740.00 12/15/2022 1,.035,000.00 115,740.00 1,150,740.00 6/15/2023 1,070,000.00 78,480.00 1,148,480.00 12/15/2023 1,110,000.00 39,960.00 1,149,960.00 $28,300,000.00 $46,489,822.50 $74,789,822.50 -------- - - - - -- -------- - - - - -- -------- - - - - -- -------------- -------- - - - - -- -------- - - - - -- 01 -11 -91 Exhibit C 1 2295u/2345/25 Page 2 of 2