Lease Agreement 1997-0017583RECORDED REOUEST OF BI TITLE
COWYERCIAL. /I271U3'DRIAL DERAR'TMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
STRADLING, YOCCA, CARLSON & RAUTH
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Denise E. Hering, Esq.
jkP N L/
7C # 1997=0017583
14 —JAM -1997 01 =00 PM
OFFICIAL RECORDS
270 SAN DIEGO COUNTY RECORDER$S OFFICE
GREGORY SMITH, COUNTY
UNTRECORDE
FEES: 0.00
NA
[Space above for Recorder's use.]
This document is recorded for the benefit of the
City of Poway, and the recording is fee - exempt
under Section 27383 of the Government Code.
LEASE AGREEMENT
by and between
CITY OF POWAY,
as Lessee
and
POWAY REDEVELOPMENT AGENCY,
as Lessor
Dated as of December 1, 1996
Relating to
$4,375,000
1996 CERTIFICATES OF PARTICIPATION
(SHERIFF SUBSTATION PROJECT)
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND EXHIBITS
271
Page
SECTION 1.1 Definitions and Rules of Construction 2
SECTION 1.2 Exhibits ....... ............................... 3
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
SECTION 2.1 Representations, Covenants and Warranties of the City ......... 4
SECTION 2.2 Representations, Covenants and Warranties of the Agency ....... 5
ARTICLE III
ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT
SECTION 3.1
Deposit of Certificate Proceeds ......................
SECTION 3.2
.
Possession of Site; Acquisition, Construction and Improvement
of the Project; Essentiality ..........................
SECTION 3.3
Compliance with Law ............................
SECTION 3.4
.
Payment of Costs ...............................
SECTION 3.5
.
Completion Date; Certification .......................
SECTION 3.6
.
Substitution and Release ...........................
SECTION 3.7
.
Further Assurances and Corrective Instruments ...... _
ARTICLE IV
AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS
SECTION 4.1
SECTION 4.2
SECTION 4.3
SECTION 4.4
SECTION 4.5
SECTION 4.6
SECTION 4.7
SECTION 4.8
SECTION 4.9
SECTION 4.10
SECTION 4.11
SECTION 4.12
Lease....... ...............................
Term ............
..........................
Extension of Lease Term .......................... .
Lease Payments . ............................... .
No Withholding ............................... .
Fair Rental Value .............................. .
Budget and Appropriation ......................... .
Assignment of Lease Payments ......................
Use and Possession ............................. .
Abatement of Lease Payments and Additional Payments .......
Additional Payments ............................ .
Net - Net -Net Lease ............................. .
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272
ARTICLE V
INSURANCE
SECTION 5.1 Public Liability and Property Damage .................. 13
SECTION 5.2 Worker's Compensation ........................... 14
SECTION 5.3 Hazard Insurance ............................... 14
SECTION 5.4 Rental Interruption Insurance ........................ 14
SECTION 5.5 Title Insurance . ............................... 15
SECTION 5.6 General Insurance Provisions ........................ 15
SECTION 5.7 Cooperation ... ............................... 16
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
SECTION 6.1 Application of Net Proceeds ........................ 17
ARTICLE VII
COVENANTS WITH RESPECT TO THE PROJECT
SECTION 7.1
SECTION 7.2
SECTION 7.3
SECTION 7.4
SECTION 7.5
SECTION 7.6
SECTION 7.7
SECTION 7.8
SECTION 7.9
SECTION 7.10
SECTION 7.11
Use of the Project ..............................
18
Leasehold Interest in the Project ......................
18
Option to Prepay Lease Payments .....................
18
Quiet Enjoyment ...............................
19
Installation of City's Personal Property .................
19
Access to the Project .............................
19
Maintenance, Utilities, Taxes and Assessments .............
19
Modification of the Project .........................
20
Liens .............................
20
Agency's Disclaimer of Warranties ....................
21
City's Right to Enforce Warranties of Manufacturers, Vendors or
Contractors .... ...............................
21
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
SECTION 8.1 Assignment by the Agency ......................... 21
SECTION 8.2 Assignment and Subleasing by the City ................. 22
SECTION 8.3 Amendments and Modifications 23
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.1
Defaults and Remedies ............................
23
SECTION 9.2
Waiver ...... ...............................
26
SECTION 9.3
No Remedy Exclusive ............................
26
SECTION 9.4
Agreement to Pay Attorneys Fees and Expenses ............
27
SECTION 9.5
No Additional Waiver Implied by One Waiver .............
27
SECTION 9.6
Application of the Proceeds Following Default .............
27
SECTION 9.7
Trustee and Certificate Owners to Exercise Rights ...........
27
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
SECTION 10.1 Security Deposit ............................... 27
SECTION 10.2 Extraordinary Prepayment From Net Proceeds ............. 28
SECTION 10.3 Optional Prepayment ............................. 28
SECTION 10.4 Sinking Fund Redemption .......................... 28
SECTION 10.5 Credit for Amounts on Deposit ...................... 28
SECTION 10.6 Effect of Prepayment ............................. 28
ARTICLE XI
BOND INSURER TERMS
SECTION 11.1 Third Party Beneficiary ........................... 29
SECTION 11.2 City Payment Requirement ......................... 29
SECTION 11.3 Information ... ............................... 29
ARTICLE XII
MISCELLANEOUS
SECTION 12.1
Notices
SECTION 12.2
...... ...............................
Binding Effect
30
SECTION 12.3
.. ...............................
Severability ,
30
SECTION 12.4
... ...............................
Execution in Counterparts
31
SECTION 12.5
..........................
Applicable Law
31
SECTION 12.6
. ...............................
Captions
31
..... ...............................
31
Signatures............... ............................... S -1
Exhibit A - Description of the Site ............................. A -1
Exhibit B - Schedule of Lease Payments ......................... B -1
Exhibit C - Lease Supplement ............................... C -1
LEASE AGREEMENT
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THIS LEASE AGREEMENT, dated as of December 1, 1996, is entered into by and
between the POWAY REDEVELOPMENT AGENCY, a political subdivision of the State of
California (the "State ") duly organized and existing under the laws of the State of California, as
lessor (the "Agency "), and the CITY OF POWAY, a municipal corporation of the State duly
organized and existing under and by virtue of the Constitution and laws of the State of California,
as lessee (the "City");
WITNESSETK-
WHEREAS, pursuant to the Government Code of the State of California, the City may
enter into leases and agreements relating to real property to be used by the City;
WHEREAS, the Agency and City desire to enter into this Lease Agreement (the "Lease ")
and authorize the execution and delivery of certificates of participation, described below,
evidencing proportionate interests in certain rights of the Agency under this Lease, including the
right to receive lease payments to be made by the City hereunder, in order to finance the
acquisition and construction of certain public improvements to be located on the site described in
Exhibit A hereto, which site and improvements are referred to herein collectively as the
"Project "; and
WHEREAS, the City has entered into a lease agreement of even date herewith (the
"County Lease ") with the County of San Diego (the "County") under which the County has
agreed to lease from the City the Project, which is described in Exhibit A hereto, and which
County Lease contains other terms and conditions as the governing board of the City deems to be
in the best interest of the City; and
WHEREAS, in consideration of the lease payments to be paid by the City to the Agency
hereunder, the Agency will lease the Project to the City pursuant to Section 4.1 hereof; and
WHEREAS, the Agency is authorized pursuant to the laws of the State of California to
provide financial assistance to the City by acquiring, constructing and financing various public
facilities, land and equipment and the leasing of facilities, land and equipment for the use, benefit
and enjoyment of the public;
NOW, THEREFORE, in consideration of the above premises and of the mutual covenants
hereinafter contained and for other good and valuable consideration, the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS AND EXHIBITS
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SECTION 1.1 Definitions and Rules of Construction. Unless the context otherwise
requires, the capitalized terms used herein shall, for all purposes of this Lease, have the
meanings specified in the Trust Agreement; and the additional terms defined in this Section shall,
for all purposes of this Lease, have the meanings herein specified. Unless the context otherwise
indicates, words importing the singular number shall include the plural number and vice versa.
The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in
this Lease, refer to this Lease as a whole.
"Additional Certificates" means any certificates of participation executed and delivered by
the Trustee pursuant to Section 317 of the Trust Agreement subsequent to the Delivery Date for
the Certificates, which are secured on a parity with the Certificates.
"Agency Contribution Agreement" means that certain Agency Contribution Agreement by
and between the Agency and the Trustee dated as of December 1, 1996 as amended and
supplemented from time to time.
"Assignment Agreement" means that certain Assignment Agreement by and between the
Agency and the Trustee dated as of December 1, 1996 as amended and supplemented from time
to time.
"Certificates" means the $4,375,000 1996 Certificates of Participation (Sheriff Substation
Project), executed and delivered by the Trustee pursuant to the Trust Agreement.
"Completion Certificate" means a certificate of the City filed with the Trustee and signed
by the City Representative, as prescribed by Section 3.5 hereof.
"Component" means any portion of the Project designated in Exhibit A hereto as a
Component, as such Exhibit A may be amended from time to time in accordance herewith.
"Coun " means the County of San Diego, State of California.
"County Lease" means the County Sublease Agreement, dated as of December 10, 1996,
by and among the Agency, the City, as lessor, and the County, as lessee, as amended and
supplemented from time to time, and any duly authorized and executed amendments thereto.
"Hazardous Substances" means any substance, waste, pollutants, or contaminants now or
hereafter included in such (or any similar) term under any federal, state or local code, statute,
regulation or ordinance now in effect or hereafter enacted or amended.
"Independent Counsel" means an attorney duly admitted to the practice of law before the
highest court of the State and who is not an employee or officer of the Agency, the Trustee or
the City.
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"Insurer" or "Bond Insurer" means MBIA Insurance Corporation, a stock insurance
company incorporated under the laws of the State of New York, and any successor thereto.
"Lease" means this Lease Agreement, by and between the City and the Agency, as
amended and supplemented from time to time.
"Lease Supplement" means one or more amendments to this Lease executed substantially
in the form attached as Exhibit C hereto.
"Permitted Encumbrances" means as of any particular time: (1) liens for general ad
valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to
Section 7.7 hereof, permit to remain unpaid; (2) the Assignment Agreement, as it may be
amended from time to time; (3) this Lease, as it may be amended from time to time; (4) the
County Lease, as it may be amended from time to time; (5) any right or claim of any mechanic,
laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law after
the Delivery Date for the Certificates which is being contested by the City in accordance with
Section 7.8(b) hereof; (6) easements, rights of way, mineral rights, drilling rights and other
rights, reservations, covenants, conditions or restrictions which exist of record as of the Delivery
Date for the Certificates and which the City certifies in writing on the Delivery Date for the
Certificates will not materially impair the use of the Site for its intended purposes; and
(7) easements, rights of way, mineral rights, drilling rights and other rights, reservations,
covenants, conditions or restrictions established following the Delivery Date for the Certificates,
or existing on any real property substituted for the Project, to which the Agency, the Insurer and
the City consent in writing and which the City certifies will not materially impair the use of the
Project, or real property substituted for the Project, as the case may be for its intended purposes.
"Project" means collectively, the Site and all buildings and capital improvements located
thereon.
"Site" means the real property described from time to time in Exhibit A hereto, as such
Exhibit A may be amended and supplemented from time to time in accordance with the
provisions of this Lease
"Term" means the term of this Lease as established by Section 4.2 hereof.
"Trust Agreement" means the Trust Agreement, dated as of the date hereof, by and
among First Trust of California, National Association, as trustee, the City and the Agency, as
amended and supplemented from time to time.
SECTION 1.2 Exhibits. The following Exhibits are attached to, and by reference
made a part of, this Lease:
Exhibit A: Description of the Site.
Exhibit B: Schedule of Lease Payments.
Exhibit C: Lease Supplement.
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
SECTION 2.1 Representations, Covenants and Warranties of the City. The City
represents, covenants and warrants to the Agency as follows:
(a) Due Organization and Existence. The City is a political subdivision of the
State, duly organized and validly existing under and by virtue of the Constitution and laws of the
State, with the power and authority to own, lease and acquire real and personal property and
equipment.
(b) Authorization: Enforceability. The Constitution and laws of the State
authorize the City to enter into this Lease, the County Lease and the Trust Agreement and to
enter into the transactions contemplated by and to carry out its obligations under all of the
aforesaid agreements, and the City has duly authorized and executed all of the aforesaid
agreements. This Lease, the County Lease and the Trust Agreement constitute the legal, valid
and binding obligations of the City, enforceable in accordance with their respective terms, except
to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws or equitable principles affecting the rights of creditors generally.
(c) No Conflicts or Default: No Liens or Encumbrances. Neither the
execution and delivery of this Lease, the County Lease or the Trust Agreement, nor the
fulfillment of or compliance with the terms and conditions hereof or thereof, nor the
consummation of the transactions contemplated hereby or thereby, conflicts with or results in a
breach of the terms, conditions or provisions of any restriction or any agreement or instrument to
which the City is now a party or by which the City is bound, or constitutes a default under any
of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of the City or upon the Project, except for
Permitted Encumbrances and the pledges and assignments contained in the Trust Agreement and
the Assignment Agreement.
(d) Execution and Delivery. The City has duly authorized and executed this
Lease, the County Lease and the Trust Agreement in accordance with the Constitution and laws
of the State.
(e) Indemnification of the Agency and the Trustee. To the extent permitted by
law, the City covenants to defend, indemnify and hold harmless the Agency, the Insurer, the
Trustee and their respective assigns, board members and employees (collectively, the
"Indemnified Party ") against any and all losses, claims, damages or liabilities, joint or several,
including fees and expenses incurred in connection therewith, to which such Indemnified Party
may become subject under any statute or at law or in equity or otherwise in connection with the
transactions contemplated by this Lease, and shall reimburse any such Indemnified Party for any
legal or other expenses incurred by it in connection with investigating any claims against it and
defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of
the transactions contemplated by this Lease, the Trust Agreement or the County Lease. In
particular, without limitation, to the extent permitted by law, the City shall and hereby agrees to
indemnify and save the Indemnified Party harmless from and against all claims, losses and
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damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or
management of, or from any work or thing done on, the Site or the Project by the City including,
without limitation, as a result of the use, storage, presence, disposal or release of any Hazardous
Substances on or about the Site, (ii) any breach or default on the part of the City in the
performance of any of its obligations under this Lease, (iii) any act of negligence of the City or
of any of its agents, contractors, servants, employees or licensees with respect to the Project, (iv)
any act of negligence of any assignee or sublessee of the City with respect to the Site or the
Project, or (v) the completion of the Project or the authorization of payment of the Costs by the
City. No indemnification is made under this Section or elsewhere in this Lease for claims, losses
or damages, including legal fees and expenses arising out of the willful misconduct, negligence,
or breach of duty under this Lease by the Agency, its officers, board members, agents,
employees, successors or assigns.
(f) General Tax and Arbitrage Covenan t. The City hereby covenants that,
notwithstanding any other provision of this Lease, it will make no use of the proceeds of the
Certificates or any Additional Certificates or of any other amounts, regardless of the source, or
of any property or take any action, or refrain from taking any action that may cause the
obligations of the City under this Lease to be "arbitrage bonds" within the meaning of
Section 148 of the Code, or under applicable Treasury Regulations promulgated thereunder or to
cause the Interest Component of the Lease Payments to become subject to State of California
personal income taxation.
In addition, the City covenants that it will not make any use of the proceeds of the
obligations provided herein or in the Trust Agreement or of any other funds of the City, or take
or omit to take any other action that would cause the obligations of the City under this Lease to
be "private activity bonds" within the meaning of Section 141 of the Code, or "federally
guaranteed" within the meaning of Section 149(b) of the Code. To that end, so long as necessary
to maintain the exclusion from gross income for federal income tax purposes of the Interest
Component of the Lease Payments, the City will comply with all requirements of such Sections
and all regulations thereunder and under Section 103 of the Code, to the extent that such
requirements are, at the time, applicable and in effect.
SECTION 2.2 Representations, Covenants and Warranties of the Agency. The
Agency represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence: Enforceability. The Agency is a
redevelopment agency duly organized, validly existing and in good standing under and by virtue
of the laws of the State, has the power to enter into this Lease, the Assignment Agreement and
the Trust Agreement; is possessed of full power to own and hold real and personal property, and
to lease and sell the same; and has duly authorized the execution and delivery of this Lease, the
Assignment Agreement and the Trust Agreement. This Lease, the Assignment Agreement and
the Trust Agreement constitute the legal, valid and binding obligations of the Agency,
enforceable in accordance with their respective terms, except to the extent limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles
affecting the rights of creditors generally.
(b) No Encumbrances. The Agency will not sell, assign, pledge or encumber
the County Lease, this Lease, the Lease Payments, the Additional Payments or any other amounts
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derived from the Site or the Project or from its other rights under this Lease or the County
Lease, except for Permitted Encumbrances and except as expressly provided under the terms of
this Lease, the County Lease, the Assignment Agreement and the Trust Agreement.
(c) No Conflicts or Defaults: No Liens or Encumbrances. Neither the
execution and delivery of this Lease, the Assignment Agreement, the County Lease or the Trust
Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof,
nor the consummation of the transactions contemplated hereby or thereby, conflicts with or
results in a breach of the terms, conditions or provisions of the formation documents of the
Agency or any restriction or any agreement or instrument to which the Agency is now a party or
by which the Agency is bound, or constitutes a default under any of the foregoing, or results in
the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the
property or assets of the Agency or upon the Site or the Project, except for Permitted
Encumbrances and except by the pledges and assignments contained in the Trust Agreement and
the Assignment Agreement.
(d) Execution and Delivery. The Agency has duly authorized and executed
this Lease, the Assignment Agreement, the County Lease and the Trust Agreement in accordance
with the Constitution and laws of the State.
(e) General Tax and Arbitrage Covenant. So long as no Event of Default has
occurred, the Agency covenants that, notwithstanding any other provision of this Lease, it will
make no use of the proceeds of the Certificates or any Additional Certificates or of any other
amounts or property, regardless of the source, or take any action or refrain from taking any
action that may cause the obligations of the City under this Lease to be "arbitrage bonds" subject
to federal income taxation by reason of Section 148 of the Code or to cause the Interest
Component of the Lease Payments to become subject to State of California personal income
taxation.
In addition, so long as no Event of Default has occurred, the Agency covenants
that it will not make any use of the proceeds of the obligations provided herein or in the Trust
Agreement or of any other funds of the City or take or omit to take any other action that would
cause such obligations to be "private activity bonds" within the meaning of Section 141 of the
Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code. To that end,
so long as no Event of Default has occurred, so long as necessary to maintain the exclusion from
gross income for federal income tax purposes of the Interest Component of the Lease Payments,
the Agency will comply with all requirements of such Sections and all regulations of the United
States Department of the Treasury issued thereunder and under Section 103 of the Code, to the
extent that such requirements are, at the time, applicable and in effect.
(f) Maintenance of Existence. The Agency hereby covenants and agrees that
during the term hereof it will maintain its existence as a redevelopment agency, will not dissolve
or otherwise dispose of all or substantially all of its assets, if any, will not become a general or
limited partner in any partnership or a joint venturer in any joint venture and will not combine or
consolidate with or merge into any other entity or permit one or more other entities to consolidate
with or merge into it, unless such action (A) will not cause a merger of the City's leasehold
estate in the Project and the successor thereto is a public agency which expressly agrees to
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assume all rights and responsibilities of the Agency under the Assignment Agreement, the Trust
Agreement and this Lease and (B) is consented to in writing by the Insurer.
ARTICLE III
ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF THE PROJECT
SECTION 3.1 Deposit of Certificate Proceeds. On the Delivery Date for the
Certificates and on the Delivery Date for any Additional Certificates, the Agency agrees to pay
or cause to be paid to the Trustee the amount specified in Section 401 thereof, which moneys
shall be deposited with the Trustee as provided in Section 401 of the Trust Agreement, or in the
case of Additional Certificates as provided in any Supplemental Trust Agreement which relates to
such Additional Certificates.
SECTION 3.2 Possession of Site; Acquisition, Construction and Improvement of
the Project; Essentiality. The City agrees to occupy and take possession of the Site on
January 15, 1997. The City further agrees to acquire, construct, deliver and install the Project,
or to cause it to be acquired, constructed, delivered and installed, with the proceeds of the
Certificates paid to the City by the Agency pursuant to Section 3.1 above and, except as set forth
in the Agency Contribution Agreement, the Agency shall have no responsibility with respect
thereto. The Agency hereby represents that the Project, upon completion, will be essential to the
provision of law enforcement services within the boundaries of the City and the Agency's project
area.
SECTION 3.3 Compliance with Law. The City shall comply with all applicable
provisions for bids and contracts prescribed by law with respect to the Project, including, without
limitation, Sections 20110 et sec.. of the Public Contracts Code and Article 42 (commencing with
Section 20670) of Part 3 of Division 2 of the Public Contracts Code.
SECTION 3.4 Payment of Costs. Payment of the Costs shall be made from the
moneys deposited with the Trustee in the Project Fund as provided in Section 3.1 hereof and
Section 402 of the Trust Agreement, which shall be disbursed from the Project Fund in
accordance and upon compliance with Section 402 of the Trust Agreement.
SECTION 3.5 Completion Date; Certification. Upon the completion of acquisition,
construction, delivery and installation of the Project, the City shall deliver to the Trustee a
Completion Certificate with respect thereto. On the date of filing the Completion Certificate, all
excess moneys remaining in the Acquisition and Construction Account of the Project Fund shall
be applied in accordance with the provisions of Section 402(e) of the Trust Agreement.
SECTION 3.6 Substitution and Release. The City shall have the right from time to
time to add other real property and improvements (subject only to Permitted Encumbrances) or to
substitute other real property or improvements (subject only to Permitted Encumbrances) for all
or a portion of the Project or to release a portion of the real property or improvements
constituting the Project, if it has provided the Trustee with a written Lease Supplement and has
obtained and provided to the Trustee each of the following:
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(a) Written consent of the Insurer;
(b) Written confirmation from each Rating Agency that has rated the
Certificates that its then existing rating with respect to the Certificates will not be reduced
or withdrawn as a result of such addition, substitution or release;
(c) A certificate from an independent and qualified MAI real estate appraiser
selected by the City setting forth his or her findings that the Project as constituted
following such addition, substitution or release (i) has an annual fair rental value during
the remainder of the Term which is equal to or greater than the maximum annual Lease
Payments and Additional Payments (assuming that the annual Additional Payments due in
the future will equal the maximum annual Additional Payments prior to such addition,
substitution or release) required to be paid hereunder during any year of the remainder of
the Term, and (ii) has a useful life at least equal to the remaining Term hereof; provided,
however, that notwithstanding this subsection (c) the City may select an alternative
replacement Property in accordance with this Lease in the event of damage or destruction
of the Property;
(d) Certification by the Agency that the essentiality of the substituted property
is comparable to that of the Project;
(e) Certificates of insurance applicable to the Project (at and after the addition,
substitution or release) which comply with the requirements of Article V hereof; and
(f) No prior liens on the substituted property which are unacceptable to the
Insurer;
(g) An opinion of Bond Counsel to the effect that such addition, substitution
or release will not adversely affect the exclusion from gross income for federal income
tax purposes and the exemption from State personal income taxation of the Interest
Component of the Lease Payments and that this Lease, as amended, remain legal, valid
and binding obligations of the City; and
(h) Title insurance for the substituted property provided prior to the release of
the Project or evidence that the existing title insurance policy is not adversely affected by
such substitution.
In connection with a substitution or release, all interests of the Agency, and its assignee,
in the portion of the Project released shall terminate and the Agency and its assignee shall
execute and record with the County Recorder of the County of San Diego all documents deemed
necessary by the City to evidence such termination of interest. Upon receipt of the items
described in subparagraphs (a), (b), (c), (d) and (e) above, the Trustee also shall execute a Lease
Supplement and, if necessary, a Supplemental Trust Agreement, and shall not impose on the City
any further conditions or prerequisites to the requested addition, substitution or release. The City
shall cause the Lease Supplement to be recorded in the real property records of the City.
All costs and expenses incurred in connection with such addition, substitution or release
shall be borne by the City. No addition, substitution or release under this Section 3.6 shall be,
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by itself, the basis for any reduction in or abatement of the Lease Payments due from the City
hereunder.
SECTION 3.7 Further Assurances and Corrective Instruments. The Agency and
the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further instruments as
may reasonably be required for correcting any inadequate or incorrect description of the Project
hereby ]eased or intended so to be or for carrying out the expressed intention of this Lease.
ARTICLE IV
AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS
SECTION 4.1 Lease. The Agency hereby leases the Project to the City upon the
terms and conditions set forth herein.
The Agency shall continue to have and hold a fee estate in said Project throughout the
term of the Lease.
SECTION 4.2 Term. The Term of this Lease shall commence on the Delivery Date
for the Certificates and shall end on August 1, 2026, unless extended pursuant to Section 4.3
hereof, or unless terminated prior thereto upon the earliest of any of the following events:
(a) Payment of All Lease Payments. The payment by the City of all Lease
Payments required under Section 4.4 hereof and all Additional Payments required under
Section 4.11 hereof and the occurrence of the first date upon which the Certificates are no longer
Outstanding under the Trust Agreement; or
(b) Prepayment. The optional prepayment of all Lease Payments in
accordance with Section 10.3 hereof and the payment of all Additional Payments due through
such prepayment date and the occurrence of the first date upon which the Certificates are no
longer Outstanding under the Trust Agreement.
SECTION 4.3 Extension of Lease Term. The Term of this Lease may be extended
up to August 1, 2036. If on the final maturity date of the Certificates or any Additional
Certificates all Interest Components and Principal Components represented thereby shall not be
fully paid, or if the Lease Payments or Additional Payments due hereunder shall have been
abated at any time as permitted by the terms hereof, then the Term shall be extended until all
Certificates, Additional Certificates and all other amounts payable hereunder or under the Trust
Agreement shall be fully paid, except that the Term shall in no event be extended beyond
August 1, 2036.
SECTION 4.4 Lease Payments.
(a) Time and Amount. Subject to the provisions of Section 4.10 (regarding
abatement in event of loss of use of any portion of the Site) and Article 10 hereof (regarding
prepayment of Lease Payments), the City hereby unconditionally and irrevocably agrees to pay to
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the Agency, its successors and assigns, as annual rental for the right to the use and possession of
the Site, the Lease Payments (denominated into Interest Components and Principal Components)
and the Additional Payments. The City hereby further unconditionally and irrevocably agrees to
pay to the Agency, its successors and assigns, all amounts, if any, received by the City from the
County pursuant to the County Lease and the Agency hereby agrees that the obligation of the
City to pay Lease Payments hereunder shall be deemed paid and satisfied to the extent that any
such County payment under the County Lease is received by the Trustee. The Lease Payments
are intended to be sufficient in both time and amount to pay when due the Principal Components
and Interest Components represented by the Certificates and any Additional Certificates, and are
due and payable in arrears and in immediately available funds on the fifteenth Business Day prior
to each August 1 and February 1, commencing the first Interest Payment Date following receipt
by the Trustee of the Completion Certificate pursuant to Section 3.5 hereof (the "Lease Payment
Date ") as set forth in Exhibit B hereto. In the event that any Additional Certificates are executed
and delivered pursuant to the Trust Agreement, the City and the Trustee shall execute an
amendment to Exhibit B to state the Lease Payments due hereunder as a result of the execution
and delivery of such Additional Certificates.
(b) Credits. Any amount held in the Lease Payment Fund or the Interest
Account of the Certificate Fund on the date any Lease Payment is made by the City (other than
amounts required for payment of past due Principal Components or Interest Components with
respect to any Certificates or Additional Certificates that have matured or been called for
redemption and have not been presented for payment or amounts which have been paid with
respect to a prior Lease Payment Date but not yet distributed to Owners) and available for
payment of Lease Payments shall be credited towards the Lease Payment then due and payable.
No payment need be made by the City on any Lease Payment Date if the amounts then held in
the Lease Payment Fund and the Interest Account of the Certificate Fund (other than those
amounts excluded under the prior sentence and amounts transferred from the Reserve Account
which causes the balance therein to be less than the Reserve Requirement) and available for
payment of Lease Payments are at least equal to the Lease Payment then required to be paid.
(c) Rate on Overdue Payments. In the event the City should fail to make any
Lease Payments required by this Section 4.4, or any portion of any such Lease Payment, the
Lease Payment or portion thereof in default shall continue as an obligation of the City until the
amount in default shall have been fully paid, and the City agrees to pay the same with interest
thereon, to the extent permitted by law, from the date such amount was originally payable at the
rate equal to the original interest rate payable with respect to each Certificate or Additional
Certificate, as applicable, represented by such delinquent Lease Payment.
SECTION 4.5 No Withholding. Notwithstanding any dispute between the Agency
and the City, other than a dispute arising under Section 4.10 hereof as a result of which the City
has concluded that it may not legally pay the Lease Payments in dispute, the City shall make all
Lease Payments and Additional Payments when due and shall not withhold any Lease Payments
or Additional Payments pending the final resolution of such dispute.
SECTION 4.6 Fair Rental Value. The Lease Payments and the Additional Payments
(as defined in Section 4.11 hereof) shall be paid by the City in consideration of the right to the
use and possession of the Project during each such period for which said rental is to be paid.
The parties hereto have agreed and determined that such total rental to be paid hereunder does
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not exceed the fair rental value of the Project during the Term of this Lease. In making such
determination, consideration has been given to the fair rental value of the Project (including but
not limited to costs of maintenance, taxes and insurance), the uses and purposes which may be
served by the Project and the essential public benefits therefrom which will accrue to the City
and the general public.
SECTION 4.7 Budget and Appropriation. The City covenants to take such action
as may be necessary to include all Lease Payments and Additional Payments due hereunder as a
separate line item in each of its proposed annual budgets and its final adopted annual budgets
beginning with Fiscal Year 1998 -99 through the Term of this Lease and to make the necessary
annual appropriations for such Lease Payments and Additional Payments. The City shall furnish
to the Trustee within 15 days following adoption of the final budget in each Fiscal Year which
shall be on or before August 30 a certificate stating that the Lease Payments and Additional
Payments were included in the final budget as adopted.
To the extent that the amount of such payment becomes known after the adoption of the
annual budget, such amounts shall be included and maintained in such budget as amended. The
City covenants to take such action as is necessary to include such amounts in a supplemental
budget of the City. The covenants on the part of the City herein contained shall be deemed to be
and shall be construed to be ministerial duties imposed by law and it shall be the ministerial duty
of each and every public official of the City to take such action and do such things as are
required by law in the performance of the official duty of such officials to enable the City to
carry out and perform the covenants and agreements in this Lease agreed to be carried out and
performed by the City.
The obligation of the City to pay Lease Payments and Additional Payments hereunder
shall constitute a current expense of the City payable from all legally available funds and shall
not in any way be construed to be a debt of the City, or the State, or any political subdivision
thereof, in contravention of any applicable constitutional or statutory limitation or requirements
concerning the creation of indebtedness by the City, the State, or any political subdivision
thereof, nor shall anything contained herein constitute a pledge of general revenues, funds or
moneys of the City or an obligation of the City for which the City is obligated to levy or pledge
any form of taxation or for which the City has levied or pledged any form of taxation.
SECTION 4.8 Assignment of Lease Payments. Certain of the Agency's rights under
this Lease, including the right to receive and enforce payment of the Lease Payments to be made
by the City hereunder, have been assigned to the Trustee, subject to certain exceptions, pursuant
to the Assignment Agreement, to which assignment the City hereby consents. The Agency
hereby directs the City, and the City hereby agrees, to pay to the Trustee at the Trustee's
corporate trust office, or to the Trustee at such other place as the Trustee shall direct in writing,
all Lease Payments and Prepayments thereof payable by the City hereunder. The Agency will
not assign or pledge the Lease Payments or other amounts derived from the Project or from its
other rights under this Lease except as expressly provided under the terms of this Lease or the
Assignment Agreement. The Agency shall not assign its duties and obligations hereunder except
as expressly provided under the Assignment Agreement and the Trust Agreement.
SECTION 4.9 Use and Possession. The total Lease Payments and Additional
Payments due in any Fiscal Year shall be for the right to the use and possession of the Project
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for such Fiscal Year. During the Term of this Lease, the City shall be entitled to the right to the
exclusive use and possession of the Project, subject only to the Permitted Encumbrances,
including without limitation the County Lease.
SECTION 4.10 Abatement of Lease Payments and Additional Payments. Except
to the extent that proceeds of the type described in the following paragraph are available, the
amount of Lease Payments and Additional Payments shall be abated during any period in which
there is substantial interference with the use or possession of all or a portion of the Project by the
City by condemnation, damage, destruction or title defect. The amount of such abatement shall
be such that the resulting Lease Payments, exclusive of the amounts described in the following
paragraph, do not exceed the fair rental value (as determined by an independent real estate
appraiser selected by the City, who is not an employee of the City) for the use and possession of
the portion of the Project for which no substantial interference has occurred. Such abatement
shall continue for the period of the substantial interference with the use or possession of the
Project. In the event of any such interference with use or possession, this Lease shall continue in
full force and effect and the City waives any right to terminate this Lease by virtue of any such
interference.
Notwithstanding a substantial interference with the use or possession of all or a portion of
the Project, the City shall remain obligated to make Lease Payments (i) in an amount not
to exceed the fair rental value during each Fiscal Year for the portion of the Project not
damaged, destroyed, interfered with or taken, as determined by an independent real estate
appraiser selected by the City (who is not an employee of the City); (ii) to the extent that moneys
derived from any person or company as a result of any delay in the reconstruction, replacement
or repair of the Project, or any portion thereof, are available to pay the amount which would
otherwise be abated; or (iii) to the extent that moneys are available in the Certificate Fund
(including the Reserve Account) or the Lease Payment Fund to pay the amount which would
otherwise be abated, in which event the Lease Payments shall be payable from such amounts as
an obligation of the City payable from a special fund.
SECTION 4.11 Additional Payments. Subject to Section 4.10 hereof (regarding
abatement in event of loss or use of any portion of the Site) and Article 10 hereof (regarding
prepayment of Lease Payments), the City shall also pay such amounts (herein called the
"Additional Payments ") as shall be required to be paid by the Agency for the payment of all
amounts, costs and expenses incurred by the Agency in connection with the execution,
performance or enforcement of this Lease or any assignment hereof, the Trust Agreement, its
interest in.the Project and the lease of the Project to the City, including but not limited to
payment of all taxes and assessments levied on the Site, all insurance premiums with respect to
the insurance the City is obligated to maintain under the Lease, amounts to be rebated to the
federal government, and fees, costs and expenses and all administrative costs of the Agency
related to the Certificates, any Reserve Credit Facility, the Project, including, without limiting
the generality of the foregoing, salaries and wages of employees, all expenses, compensation and
indemnification of the Trustee payable by the Agency under the Trust Agreement, fees of
auditors, accountants, attorneys or architects, and all other necessary administrative costs of the
Agency or charges required to be paid by it in order to maintain its existence or to comply with
the terms of the Certificates or of the Trust Agreement; but not including in Additional Payments
amounts required to pay the principal and interest in respect of the Certificates.
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Such Additional Payments shall be billed to the City by the Agency or the Trustee from
time to time, together with a statement certifying that the amount billed has been paid by the
Agency or by the Trustee on behalf of the Agency, for one or more of the items above
described, or that such amount is then payable by the City within fifteen (15) days after receipt of
the bill by the City. The City reserves the right to audit billings for Additional Payments
although exercise of such right shall in no way affect the duty of the City to make full and timely
payment for all Additional Payments.
SECTION 4.12 Net- Net -Net Lease. This Lease shall be deemed and construed to be a
"net- net -net lease" and the City hereby agrees that the Lease Payments shall be an absolute net
return to the Agency, free and clear of any expenses, charges, counterclaims or set -offs
whatsoever, except as expressly provided herein.
ARTICLE V
INSURANCE
Notwithstanding any provisions of Article V to the contrary, for so long as the County is
paying to the Trustee amounts under the County Lease which equal the City's then accrued Lease
Payment obligations hereunder, all of the insurance requirements contained in this Article V shall
be deemed fully satisfied by compliance with the insurance requirements under the County Lease.
SECTION 5.1 Public Liability and Property Damage.
(a) Coverage. Except as provided in the first sentence of this Article V, the
City shall maintain or cause to be maintained, throughout the Term hereof, a standard
comprehensive general public liability and property damage insurance policy or policies in
protection of the City and the Agency and their respective officers, agents and employees as
additional insureds under the policy or policies. Said policy or policies shall provide for
indemnification of said parties against direct or contingent loss or liability for damages for bodily
and personal injury, death or property damage occasioned by reason of the use or operation of
the Project.
(b) Limits. Said policy or policies shall provide coverage in the minimum
liability limits of $1,000,000 for personal injury or death of each person in each accident or event
and $3,000,000 for personal injury or deaths of two or more persons in each accident or event,
and in a minimum amount of $500,000 for damage to property resulting from each accident or
event (subject to a deductible clause of not to exceed $250,000). Such public liability and
property damage insurance may, however, be in the form of a single limit policy covering all
such risks in an amount equal to the aggregate minimum liability limits set forth herein.
(c) Joint or Self- Insurance. Such liability insurance may be maintained as part
of or in conjunction with any other liability insurance coverage carried by the City. Such
liability insurance may be maintained by the City in the form of self - insurance which complies
with Section 5.6(e) hereof.
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(d) Payment of Proceeds. The proceeds of such liability insurance shall be
applied toward extinguishment or satisfaction of the liability with respect to which the insurance
proceeds shall have been paid.
SECTION 5.2 Worker's Compensation. The City shall also maintain worker's
compensation insurance issued by a responsible carrier authorized under the laws of the State to
insure its employees against liability for compensation under the Worker's Compensation
Insurance and Safety Act now in force in the State; or any act hereafter enacted as an amendment
or supplement thereto, or in lieu thereof such insurance, or a part thereof, may be maintained by
the City in the form of self - insurance which complies with Section 5.6(e) hereof.
SECTION 5.3 Hazard Insurance.
(a) Coverage. Except as provided in the first sentence of this Article V, the
City shall maintain or cause to be maintained, throughout the Term hereof, a policy or policies of
insurance, issued by insurance providers rated no less than "A" by Standard & Poor's Ratings
Group or Moody's Investors Service, against loss or damage to the Site resulting from fire,
lightning, vandalism, malicious mischief and such perils ordinarily defined as "extended
coverage ", excluding flood and earthquake; provided, however, that a flood and earthquake rider
shall be purchased if the City, in its reasonable discretion, determines that such coverage is
available from reputable insurers at commercially reasonable rates. Said policy or policies shall
be maintained in an amount not less than the full replacement value of the Project, subject to a
"deductible clause" not to exceed one hundred thousand dollars ($100,000) for any one loss or,
in the case of a flood and earthquake rider, ten percent (10%) of the coverage obtained and shall
name the Trustee as loss payee and the Agency as an additional insured under the policy or
policies. The term "full replacement value" as used in this Section 5.3 shall mean the actual
replacement cost of the improvements located on the Site (including the cost of restoring the
surface of the Site, but excluding the cost of restoring trees, plants and shrubs).
(b) Joint or Self- Insurance. Such insurance may be maintained as part of or in
conjunction with any other insurance carried by the City. The City shall not maintain such
hazard insurance in the form of self - insurance.
(c) Payment of Net Proceeds The Net Proceeds of such insurance shall be
paid to the Trustee and applied as provided in Section 6.l(a) hereof.
SECTION 5.4 Rental Interruption Insurance.
(a) Coverage and Amount. Except as provided in the first sentence of this
Article V, the City shall maintain or cause to be maintained for the benefit of the Agency rental
interruption insurance in an amount not less than an amount equal to twice the maximum annual
Lease Payment during the Term hereof, to insure against loss of rental income from the Project
caused by perils covered by the insurance required to be maintained as provided in Section 5.3
hereof. Such insurance shall be obtained not later than the Delivery Date for the Certificates and
shall be increased as required in connection with each issue of Additional Certificates.
(b) Joint Insurance. Such insurance may be maintained as part of or in
conjunction with any other rental interruption insurance carried by the City. The City may
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maintain rental interruption insurance through the Southern California Joint Powers Insurance
Authority Pool. If the City discontinues provision of rental interruption insurance through the
current self - insurance pool, the insurance provider of the substituted rental interruption insurance
must be rated no less than "A" by Standard & Poor's and Moody's and such insurance provider
shall be subject to the consent of the Bond Insurer.
(c) Payment of Proceeds. The proceeds of such rental interruption insurance
shall be paid to the Trustee as loss payee and deposited (1) first in the Reserve Account to make
up any deficiencies therein, and (2) second, in the Lease Payment Fund, to be held therein and
credited towards the payment of the Lease Payments in the order in which such Lease Payments
come due and payable.
SECTION 5.5 Title Insurance. Except as provided in the first sentence of this
Article V, the City shall obtain on the Delivery Date for the Certificates that policy of title
insurance approved by the Bond Insurer and delivered on the Delivery Date. In connection with
any substitution of real property pursuant to Section 3.6 hereof, the City shall obtain title
insurance on the Project, in the form of a CLTA Owner's Policy with Western Regional
Exceptions. The title policy or policies in effect at any time with respect to the Site shall be in
an amount at least equal to the aggregate Principal Component of unpaid Lease Payments, issued
by a company of recognized standing duly authorized to issue the same. The title policy or
policies shall insure the City's fee simple estate and the Agency's and City's leasehold estate in
the substituted Project, subject only to Permitted Encumbrances. The proceeds of such insurance
shall be paid to the Trustee as loss payee and applied as provided in Section 6.1(a) hereof. The
City shall not maintain title insurance in the form of self- insurance.
SECTION 5.6 General Insurance Provisions.
(a) Form of Policies. All policies of insurance required to be procured and
maintained pursuant to this Lease, other than the worker's compensation insurance and the title
insurance specified in Sections 5.2 and 5.5 hereof, respectively, and any statements of
self - insurance shall provide that the City and the Trustee shall receive 30 days' notice of each
expiration, or any intended cancellation thereof or reduction of the coverage provided thereby.
Insurance required to be procured and maintained pursuant to Section 5.3 hereof (regarding
hazard insurance); Section 5.4 hereof (regarding rental interruption insurance) and Section 5.5
hereof (regarding title insurance) shall provide that all proceeds thereunder shall be payable to the
Trustee as the loss payee. All required insurance policies must be provided by a commercial
insurance rated A by Best or in the two highest rating categories of S &P and Moody's. All
policies shall name the Lessee, the Lessor, and the Trustee as insureds and the Trustee as loss
payee.
(b) Payment of Premiums. The City shall pay or cause to be paid when due
the premiums for all insurance policies required by this Lease.
(c) Protection of the Trustee. The Trustee shall not be responsible for the
sufficiency or adequacy of any insurance herein required and, upon the receipt of the prior
written consent of the Insurer, shall be fully protected in accepting payment on account of such
insurance or any adjustment, compromise or settlement of any loss agreed to by the City.
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(d) Evidence of Insurance. The City shall deliver certificates to the Trustee
within the 30 days prior to July 1 of each year during the Term of this Lease to the effect that
the insurance policies required by this Lease are in full force and effect.
(e) Self - Insurance. Any self - insurance maintained by the City pursuant to
Section 5.1(c) or 5.2 hereof shall afford reasonable protection to the Agency, the City and the
Trustee. Before the City elects to provide self - insurance hereunder, and on each July 1
thereafter, there shall be filed with the Trustee a certificate of an actuary, independent insurance
consultant selected by the City, or other qualified person selected by the City, who may be the
City's Risk Manager, stating that, in the opinion of the signer, the method or plan of protection
is sound and affords adequate protection to the Agency, the City and the Trustee against loss and
damage from the hazards and risks covered thereby, and there shall also be filed with the Trustee
a certificate of the City stating that such substitute method or plan has been implemented. Self -
insurance for property and casualty and liability risks may be approved in writing by the Insurer
on an exception basis provided that the following minimum conditions are met:
a. The self insurance program must be approved by an independent insurance
consultant;
b. The self insurance program must be maintained on an actuarially sound
basis and the Insurer will annually receive a certified actuarial statement
attesting to the sufficiency of the program's assets;
C. The self insurance fund must be held in a separate trust fund by an
independent trustee-
d. In the event the self insurance program is discontinued, the actuarial
soundness of the claim reserve fund must be maintained.
The Trustee shall be fully protected in relying on the certificate provided in accordance with this
Section 5.6(e) and shall not be responsible for the review or verification of such certificate.
The City shall provide adequate reserves to cover the amount of any deductible provisions
of the insurance required to be maintained pursuant to Sections 5.1, 5.2, 53 and 5.4 hereof.
SECTION 5.7 Cooperation. The Agency shall cooperate fully with the City at the
expense of the City in filing any proof of loss with respect to any insurance policy maintained
pursuant to this Article and in the prosecution or defense of any prospective or pending
condemnation proceeding with respect to the Project or any portion thereof.
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ARTICLE VI
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DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
SECTION 6.1 Application of Net Proceeds.
(a) Deposit in Insurance and Condemnation Fund. Pursuant to Section 405 of
the Trust Agreement, the Trustee shall deposit the Net Proceeds of any hazard insurance required
by the County Lease and by Section 5.3 hereof and the proceeds of the title insurance required
by Section 5.5 hereof in the Insurance and Condemnation Fund promptly upon receipt thereof.
The City and /or the Agency shall transfer to the Trustee any other Net Proceeds received by the
City and /or Agency in the event of any taking by eminent domain or condemnation with respect
to the Project, for deposit in the Insurance and Condemnation Fund.
(b) Disbursement for Replacement or Repair of the Site. Upon receipt of the
prior written consent of the Insurer, the certification described in paragraph (1) below and the
requisition described in paragraph (2) below, the Trustee shall disburse moneys in the Insurance
and Condemnation Fund to the person, firm or corporation named in the requisition as provided
in Section 405 of the Trust Agreement.
(1) Certification. An Authorized Representative of the City must
provide to the Agency, the Insurer and the Trustee a certificate stating that:
0) Sufficiency of Net Proceeds. The Net Proceeds available
for such purpose, together with any other funds supplied by the City for
such purpose, are sufficient to repair or replace the Project to a use which
will have an annual fair rental value not less than maximum the annual
Lease Payments and Additional Payments (assuming that the annual
Additional Payments due in the future will equal the maximum annual
Additional Payments prior to such date) due hereunder, and
(ii) Timely Completion. In the event that damage, destruction,
title defect or taking results in an abatement of Lease Payments or
Additional Payments, such replacement or repair can be fully completed
within a period not in excess of the period in which rental interruption
insurance proceeds as described in Section 5.4 hereof, together with other
legally available funds, will be available to pay in full all Lease Payments
and Additional Payments coming due during such period.
(2) Requisition. An Authorized Representative of the City must state
with respect to each payment to be made (i) the requisition number, (ii) the name
and address of the person, firm or corporation to whom payment is due, (iii) the
amount to be paid, and (iv) that each obligation mentioned therein has been
properly incurred, is a proper charge against the Insurance and Condemnation
Fund, has not been the basis of any previous withdrawal, and specifying in
reasonable detail the nature of the obligation.
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Any balance of the Net Proceeds remaining after such replacement or repa.291
been completed shall be disbursed as provided in Section 405 of the Trust Agreement.
(c) Disbursement for Prepayment. If an Authorized Representative of the City
notifies the Trustee in writing of the City's determination that the certification provided in
Section 6.1(b)(1) hereof cannot be made or the Insurer or the City determine that replacement or
repair of any portion of the Project is not economically feasible or in the best interest of the City,
then the City, with the prior written consent, or at the direction of the Insurer, shall deposit with
the Trustee from legally available funds an amount which, when combined with the Net
Proceeds, will prepay sufficient Lease Payments (and result in a corresponding redemption of
Certificates and Additional Certificates) such that the fair rental value of the remaining portion of
the Project is no less than an amount equal to the Principal Components and Interest Components
due with respect to the Certificates and Additional Certificates to remain Outstanding under the
Trust Agreement after such Net Proceeds and such deposit by the City are applied to redeem
Certificates and Additional Certificates under the Trust Agreement. The Trustee shall promptly
transfer the Net Proceeds in respect of such portion to the Redemption Account of the Certificate
Fund as provided in Section 405 of the Trust Agreement and apply them to the redemption of the
Certificates and Additional Certificates as provided in Section 310(a) of the Trust Agreement and
prepayment of Lease Payments as provided in Section 10.2 hereof.
ARTICLE VII
COVENANTS WITH RESPECT TO THE PROJECT
SECTION 7.1 Use of the Project. The City represents and warrants that it has an
immediate essential need for all of the Project, which need is not expected to be temporary or to
diminish in the foreseeable future, and the City hereby covenants that, for the term of the Lease,
it will continue to use the Project to serve its law enforcement needs, notwithstanding the
discontinuation of the County Lease.
SECTION 7.2 Leasehold Interest in the Project.
(a) Agency Holds Fee Interest During Term. During the term of the Lease,
the Agency shall hold a fee interest in the Project.
(b) Fee Interest Transferred to City at End of Term. On the day of the
expiration of the term of the Lease as provided in Section 3 thereof, the Agency's fee interest
in the Project pursuant to the Lease and all right, title and interest of the Agency in the Project
shall be transferred to and vest in the City, free and clear of any interest of the Agency or its
assigns, without the necessity of any additional document of transfer.
SECTION 7.3 Option to Prepay Lease Payments. The City may exercise an option
to prepay all or a portion of the Lease Payments in accordance with Article 10 hereof and, by
prepaying Lease Payments in the amounts necessary to cause the termination of the Term as
provided in Section 4.2(b) hereof, terminate the Agency's leasehold interest in the Project under
the Lease and all right, title and interest of the Agency in the Project. If the City elects to
prepay a portion of the Lease Payments, and if the Lease Payments have been allocated to
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Components of the Project in Exhibit B hereto, then it may specify to which Component of the
Site such prepayment is applicable.
SECTION 7.4 Quiet Enjoyment. Subject only to the Permitted Encumbrances,
during the Term of this Lease the Agency shall provide the City with quiet use and enjoyment of
the Project, and the City shall during such Term peaceably and quietly have and hold and enjoy
the Project, without suit, trouble or hindrance from the Agency, or any person or entity claiming
under or through the Agency except as expressly set forth in this Lease or the Trust Agreement.
The Agency will, at the request of the City, join in any legal action in which the City asserts its
right to such possession and enjoyment to the extent the Agency may lawfully do so.
Notwithstanding the foregoing, the Agency shall have the right of access to the Project as
provided in Section 7.6 hereof.
SECTION 7.5 Installation of City's Personal Property. The City may at any time
and from time to time, in its sole discretion and at its own expense, install or permit to be
installed items of equipment or other personal property in or upon any portion of the Project, so
long as such installation shall not materially adversely affect the fair rental value of the Project.
All such items shall remain the sole personal property of the City, regardless of the manner in
which the same may be affixed to such portion of the Project, in which neither the Agency nor
the Trustee shall have any interest, and may be modified or removed by the City at any time;
provided that the City shall repair and restore any and all damage to such portion of the Project
resulting from the installation, modification or removal of any such items of equipment. Nothing
in this Lease shall prevent the City from purchasing items to be installed pursuant to this Section,
provided that no lien or security interest attaching to such items shall attach to any part of the
Project.
SECTION 7.6 Access to the Project. The City agrees that the Agency, and the
Agency's successors and assigns, shall have (1) the right at all reasonable times to enter upon the
Project or any portion thereof to examine and inspect the Project, and (2) 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.
SECTION 7.7 Maintenance, Utilities, Taxes and Assessments.
(a) Maintenance: Repair and Replacement. Throughout the Term of this
Lease, as part of the consideration for the rental of the Project, all repair and maintenance of the
Project shall be the responsibility of the City, and the City shall pay for or otherwise arrange for
the payment of the cost of the repair and replacement of the Project resulting from ordinary wear
and tear or want of care on the part of the City or any sublessee thereof. The City shall provide
or cause to be provided all security service, custodial service, power, gas, telephone, light,
heating and water, and all other public utility services for the Project. In exchange for the Lease
Payments herein provided, the Agency agrees to provide only the Project.
(b) Tax and Assessments: Utility Charges. The City shall also pay or cause to
be paid all taxes and assessments, including but not limited to utility charges of any type or
nature charged to the Agency or the City or levied, assessed or charged against any portion of
the Project or the respective interests or estates therein; provided that, with respect to special
assessments or other governmental charges that may lawfully be paid in installments over a
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period of years, the City shall be obligated to pay only such installments as are required to be
paid during the Term of this Lease as and when the same become due.
(c) Contests. The City may, at its expense and in its name, in good faith
contest any such taxes, assessments, utility and other charges and, in the event of any such
contest, may permit the taxes, assessments or other charges so contested to remain unpaid during
the period of such contest and any appeal therefrom; provided that prior to such nonpayment it
shall furnish the Agency, the Insurer and the Trustee with the opinion of an Independent Counsel
to the effect that, by nonpayment of any such items, the interest of the Agency in such portion of
the Project will not be materially endangered and that the Project will not be subject to loss or
forfeiture. Otherwise, the City shall promptly pay such taxes, assessments or charges or make
provisions for the payment thereof in form satisfactory to the Agency and the Insurer. The
Agency will cooperate fully in such contest, upon the request and at the expense of the City.
SECTION 7.8 Modification of the Project.
(a) Additions. Modifications and Improvements. The City shall, at its own
expense, have the right to make additions, modifications and improvements to any portion of the
Project if such additions, modifications or improvements are necessary or beneficial for the use
of such portion of the Project, so long as such additions, modifications or improvements do not
adversely affect the fair rental value of the Project. Such additions, modifications or
improvements shall not in any way damage any portion of the Project or cause it to be used for
purposes other than those authorized under the provisions of state and federal law or in any way
which would impair the exclusion from gross income for federal income tax purposes of the
Interest Components of the Lease Payments or diminish the fair rental value of the Project; and
the Project, upon completion of any additions, modifications or improvements made pursuant to
this Section, shall be of a value which is not less than the value of the Project immediately prior
to the making of such additions, modifications or improvements.
(b) No Liens. Except for Permitted Encumbrances, the City will not permit
any mechanic's or other lien to be established or remain against the Project for labor or materials
furnished in connection with any additions, modifications or improvements made by the City
pursuant to this Section; provided that if any such lien is established and the City shall first notify
or cause to be notified the Agency and the Insurer of the City's intention to do so, the City may
in good faith contest any lien filed or established against the Project, and in such event may
permit the items so contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom and shall provide the Agency and its assigns with full security
against any loss or forfeiture which might arise from the nonpayment of any such lien, in form
satisfactory to the Agency and the Insurer. The Agency will cooperate fully in any such contest,
upon the request and at the expense of the City.
SECTION 7.9 Liens. Except as expressly permitted by this Lease (including without
limitation Section 7.8, Section 8.1 or Section 8.2 hereof), the City shall not, directly or
indirectly, create, incur, assume or suffer to exist any mortgage, pledge, liens, charges,
encumbrances or claims, as applicable, on or with respect to the Project, other than Permitted
Encumbrances and other than the respective rights of the Agency and the City as herein
provided. Except as expressly provided in this Article, the City shall promptly, at its own
expense, take such action as may be necessary to duly discharge or remove any such mortgage,
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pledge, lien, charge, encumbrance or claim, if the same shall arise at any time; rop vided that the
City may in good faith contest such lien or claim if it desires to do so, so long as such contest
will not materially, adversely affect the rights of the City and the Agency to the Project or the
payment of Lease Payments or Additional Payments hereunder. The City shall reimburse the
Agency and its assigns for any expense incurred by it in order to discharge or remove any such
mortgage, pledge, lien, charge, encumbrance or claim.
SECTION 7.10 Agency's Disclaimer of Warranties. THE AGENCY AND
TRUSTEE MAKE NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE
CONTEMPLATED BY THE CITY OF THE PROJECT OR ANY PORTION THEREOF. THE
CITY ACKNOWLEDGES THAT THE AGENCY OR TRUSTEE IS NOT A
MANUFACTURER OF THE PROJECT OR OF ANY PORTION THEREOF, AND IS NOT A
DEALER THEREIN, AND THAT THE CITY IS LEASING THE PROJECT AS IS. In no
event shall the Agency or Trustee be liable for incidental, indirect, special or consequential
damages, in connection with or arising out of this Lease, the County Lease, the Assignment
Agreement or the Trust Agreement for the existence, furnishing, functioning or City's use and
possession of the Project.
SECTION 7.11 City's Right to Enforce Warranties of Manufacturers, Vendors or
Contractors. The Agency hereby irrevocably appoints the City its agent and attorney -in -fact
during the Term, so long as the City shall not be in default hereunder, to assert from time to
time whatever claims and rights, including without limitation, warranty claims, claims for
indemnification and claims for breach of any representations, respecting the Site or the Project
which the Agency may have against any vendor or contractor, or any agents thereof. The City's
sole remedy for the breach of any such warranty, indemnification or representation shall be
against the vendor or contractor with respect thereto, and not against the Agency, nor shall such
matter have any effect whatsoever on the rights and obligations of the Agency with respect to this
Lease, including the right to receive full and timely Lease Payments and to cause the City to
make all other payments due hereunder. The City shall be entitled to retain any and all amounts
recovered as a result of the assertion of any such claims and rights. The Agency shall, upon the
City's request and at the City's expense, do all things and take all such actions as the City may
request in connection with the assertion of any such claims and rights.
The City expressly acknowledges that neither the Agency nor the Trustee makes, or has
made, any_ representation or warranty whatsoever as to the existence or availability of such
warranties of the manufacturer, vendor or contractor with respect to any portion of the Project.
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
SECTION 8.1 Assignment by the Agency. Except as expressly provided herein, in
the Assignment Agreement and in the Trust Agreement, the Agency will not assign this Lease, or
any right, title or interest of the Agency in and to this Lease, to any person, firm or corporation.
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SECTION 8.2 Assignment and Subleasing by the City.
(a) Assignment. The City, for consideration received, does hereby absolutely
and irrevocably grant, sell, assign and transfer to the Agency, for the benefit of the Owners of
the Certificates, all of its right, title and interest (but none of its duties or obligations) in and to
the County Lease (other than its rights to indemnification and payment or reimbursement of its
reasonable costs or expenses thereunder), including, without limitation, its right to receive rent,
including without limitation Base Semi - annual Rental Payments (as defined in the County Lease),
from the County under the County Lease; its right to receive proceeds of condemnation of, and
insurance on, the Site; and its right to enforce payment of such rent, including without limitation
Base Semi -annual Rental Payments (as defined in the County Lease), when due and otherwise to
protect its interests and enforce its rights under the County Lease in the event of a default by the
County. The rent, including without limitation Base Semi - annual Rental Payments (as defined in
the County Lease), and other amounts derived from the Site shall be applied, and the rights so
assigned shall be exercised, by the Trustee as provided in the Trust Agreement. The assignment
provided for in this Section 8.2 shall grant in favor of the Trustee all of the City's right, title and
interest in and to the County Lease (other than its rights to indemnification and payment or
reimbursement for its costs or expenses thereunder) and all of its interest in the Site. Such
assignment is to the Trustee solely in its capacity as Trustee under the Trust Agreement, subject
to the provisions of the Trust Agreement. The Trustee is not responsible for any duties,
covenants, warranties or obligations of the City or Agency under the County Lease. The City
hereby consents to the further assignment of the foregoing by the Agency to the Trustee.
This Lease may not be assigned by the City unless (A) the City obtains the
prior written consent of the Insurer, and (B) the City receives an opinion of Bond Counsel stating
that such assignment does not adversely affect the exclusion from gross income for federal
income tax purposes or the exemption from State personal income taxation of the Interest
Components of the Lease Payments. In the event that this Lease is assigned by the City, the
obligation to make Lease Payments and Additional Payments and perform the other covenants of
the City hereunder shall remain the primary obligation of the City.
(b) Sublease. The City may sublease the Site in any manner not inconsistent
with the County Lease so long as the County is not in default thereunder, and may sublease any
portion of the Site, with the prior written consent of the Agency and the Insurer, subject to all of
the following conditions:
(i) this Lease and the obligation of the City to make Lease
Payments and Additional Payments and perform the other covenants of the City
hereunder shall remain primary obligations of the City;
(ii) the City shall, within 30 days after the delivery thereof,
furnish or cause to be furnished to the Agency and the Trustee a true and
complete copy of such sublease, provided, however, the Trustee shall have no
duty to review the form or adequacy of such sublease for any purpose;
(iii) no sublease shall cause the Interest Components of the
Lease Payments due with respect to the Site to become subject to federal income
taxes or State personal income taxes; and
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(iv) any sublease shall terminable by the Agency upon the
occurrence of an Event of Default or abatement event hereunder.
No consent of the Agency may be given under this subsection (b) unless the City shall
have provided the Agency with opinions of Independent Counsel with respect to the matters set
forth in clause (i) above and the opinion of Bond Counsel with respect to the matters set forth in
clause (iii) above.
SECTION 8.3 Amendments and Modifications. This Lease may be amended or any
of its terms modified in accordance with Article VII of the Trust Agreement, with the prior
written consent of the Trustee, the Insurer, the City and the Agency.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.1 Defaults and Remedies.
(a) If the City shall fail to pay any rental or other amount payable hereunder
when the same becomes due and payable, time being expressly declared to be of the essence of
this Lease, or the City shall fail to keep, observe or perform any other term, covenant or
condition contained herein or in the Trust Agreement to be kept or performed by the City for a
period of thirty (30) days after notice of the same has been given to the City by the Agency,
Bond Insurer or the Trustee or for such additional time as is reasonably required, in the
discretion of the Trustee with the prior written consent of the Bond Insurer, to correct the same,
or upon the happening of any of the events specified in subsection (b) of this Section (any such
case above being an "Event of Default "), the City shall be deemed to be in default hereunder and
it shall be lawful for the Agency to exercise any and all remedies available pursuant to law or
granted pursuant to this Lease. Upon any such default, the Agency, in addition to all other rights
and remedies it may have at law, may do any of the following, but only provided that if the
County is current on all payments due from it under the County Lease, no such remedy shall
interfere with the County's quiet use and enjoyment of the Project, and only subject to the prior
written consent of the Bond Insurer, and shall do any of the following, at the direction of the
Bond Insurer:
(1) To terminate this Lease in the manner hereinafter provided on
account of default by the City, notwithstanding any re -entry or re- letting of the Project as
hereinafter provided for in subparagraph (2) hereof, and to re -enter the Project and
remove all persons in possession thereof and all personal property whatsoever situated
upon the Project and place such personal property in storage in any warehouse or other
suitable place located within the City. In the event of such termination, the City agrees to
surrender immediately possession of the Project, without let or hindrance, and to pay the
Agency all damages recoverable at law that the Agency may incur by reason of default by
the City, including, without limitation, any costs, loss or damage whatsoever arising out
of, in connection with, or incident to any such re -entry upon the Project and removal and
storage of such property by the Agency or its duly authorized agents in accordance with
the provisions herein contained. Neither notice to pay rent or to deliver up possession of
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the Project given pursuant to law nor any entry or re -entry by the Agency nor any
proceeding in unlawful detainer, or otherwise, brought by the Agency for the purpose of
effecting such re -entry or obtaining possession of the Project nor the appointment of a
receiver upon initiative of the Agency to protect the Agency's interest under this Lease
shall of itself operate to terminate this Lease, and no termination of this Lease on account
of default by the City shall be or become effective by operation of law or acts of the
parties hereto, or otherwise, unless and until the Agency shall have given written notice
to the City of the election on the part of the Agency to terminate this Lease. The City
covenants and agrees that no surrender of the Project or of the remainder of the term
hereof or any termination of this Lease shall be valid in any manner or for any purpose
whatsoever unless stated or accepted by the Agency by such written notice.
(2) Without terminating this Lease, (i) to collect each installment of
rent and other amounts as they become due, including without limitations, payments due
under the County Lease, and enforce any other terms or provision hereof to be kept or
performed by the City, regardless of whether or not the City has abandoned the Project,
or (ii) to exercise any and all rights of re -entry upon the Project. In the event the Agency
does not elect to terminate this Lease in the manner provided for in subparagraph (1)
hereof, the City shall remain liable and agrees to keep or perform all covenants and
conditions herein contained to be kept or performed by the City and, if the Project is not
re -let, to pay the full amount of the rent and other amounts to the end of the term of this
Lease or, in the event that the Project is re -let, to pay any deficiency in rent and other
amounts that results therefrom; and further agrees to pay said rent and other amounts
and /or rent and other amounts, including without limitation, any rent deficiency,
punctually, at the same time and in the same manner as hereinabove provided for the
payment of rent and other amounts hereunder (without acceleration), notwithstanding the
fact that the Agency may have received in previous years or may receive thereafter in
subsequent years rental or other amounts in excess of the rental or other amounts herein
specified, and notwithstanding any entry or re -entry by the Agency or suit in unlawful
detainer, or otherwise, brought by the Agency for the purpose of effecting such entry or
re -entry or obtaining possession of the Project. Should the Agency elect to enter or
re -enter as herein provided, the City hereby irrevocably appoints the Agency as the agent
and attorney -in -fact of the City to re -let the Project, or any part thereof, from time to
time, either in the Agency's name or otherwise, upon such terms and conditions and for
such use and period as the Agency may deem advisable, and to remove all persons in
possession thereof and all personal property whatsoever situated upon the Project and to
place such personal property in storage in any warehouse or other suitable place located
in the City, for the account of and at the expense of the City, and the City hereby
exempts and agrees to save harmless the Agency from any costs, loss or damage
whatsoever arising out of, in connection with, or incident to any such re -entry upon and
re- letting of the Project and removal and storage of such property by the Agency or its
duly authorized agents in accordance with the provisions herein contained. The City
agrees that the terms of this Lease constitute full and sufficient notice of the right of the
Agency to re -let the Project and to do all other acts to maintain or preserve the Project as
the Agency deems necessary or desirable in the event of such re -entry without effecting a
surrender of this Lease, and further agrees that no acts of the Agency in effecting such
re- letting shall constitute a surrender or termination of this Lease irrespective of the use
or the term for which such re- letting is made or the terms and conditions of such
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re- letting, or otherwise, but that, on the contrary, in the event of such default by the City
the right to terminate this Lease shall vest in the Agency to be effected in the sole and
exclusive manner provided for in sub - paragraph (1) hereof. The City further waives the
right to any rental or other amounts obtained by the Agency in excess of the rental and
other amounts herein specified and hereby conveys and releases such excess to the
Agency as compensation to the Agency for its services in re- letting the Project or any part
thereof. The City further agrees to pay the Agency the cost of any alterations or
additions to the Project necessary to place the Project in condition for re- letting
immediately upon notice to the City of the completion and installation of such additions or
alterations.
The City hereby waives any and all claims for damages caused or which may be caused
by the Agency in re- entering and taking possession of the Project as herein provided and all
claims for damages that may result from the destruction of the Project and all claims for damages
to or loss of any property belonging to the City, or any other person, that may be in or upon the
Project.
(b) If (1) the City's interest in this Lease or any part thereof be assigned or
transferred, either voluntarily or by operation of law or otherwise, without the prior written
consent of the Bond Insurer, as hereinafter provided for, or (2) the City or any assignee shall file
any petition or institute any proceeding under any act or acts, State or federal, dealing with or
relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such
act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity,
wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be
discharged from any or all of the City's debts or obligations, or offers to the City's creditors to
effect a composition or extension of time to pay the City's debts or asks, seeks or prays for
reorganization or to effect a plan of reorganization, or for a readjustment of the City's debts, or
for any other similar relief, or if any such petition or any such proceedings of the same or similar
kind or character be filed or be instituted or taken against the City, or if a receiver of the
business or of the property or assets of the City shall be appointed by any court, except a
receiver appointed at the instance or request of the Agency, or if the City shall make a general or
any assignment for the benefit of the City's creditors, or if (3) the City shall abandon or vacate
the Project, then the City shall be deemed to be in default hereunder.
(c) The Agency shall in no event be in default in the performance of any of its
obligations hereunder or imposed by any statute or rule of law unless and until the Agency shall
have failed to perform such obligations within thirty (30) days or such additional time as is
reasonably required to correct any such default after notice by the City to the Agency and to the
Bond Insurer properly specifying wherein the Agency has failed to perform any such obligation.
In the event of default by the Agency, the City shall be entitled to pursue any remedy provided
by law.
(d) In addition to the other remedies set forth in this Section, upon the
occurrence of an event of default as described in this Section, the Agency, subject to the direction
of the Bond Insurer, shall proceed to protect and enforce the rights vested in the Agency by this
Lease or by law. The provisions of this Lease and the duties of the City and of its trustees,
officers or employees shall be enforceable by the Agency by mandamus or other appropriate suit,
action or proceeding in any court of competent jurisdiction. Without limiting the generality of
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the foregoing, the Agency may, with the prior written consent of the Bond Insurer, and shall, at
the direction of the Bond Insurer, bring the following actions:
(1) Accounting. By action or suit in equity to require the City and its
trustees, officers and employees and its assigns to account as the trustee of an express
trust.
(2) Injunction. By action or suit in equity to enjoin any acts or things
which may be unlawful or in violation of the rights of the Agency.
(3) Mandamus. By mandamus or other suit, action or proceeding at
law or in equity to enforce the Agency's rights against the City (and its board, officers
and employees) and to compel the City to perform and carry out its duties and obligations
under the law and its covenants and agreements with the Agency as provided herein.
The exercise of any rights or remedies under this Lease shall not permit acceleration of Lease
Payments.
Each and all of the remedies given to the Agency hereunder or by any law now or
hereafter enacted are cumulative and the single or partial exercise of any right, power or
privilege hereunder shall not impair the right of the Agency to other or further exercise thereof
or the exercise of any or all other rights, powers or privileges. The term "re -let" or "re- letting"
as used in this Section shall include, but not be limited to, re- letting by means of the operation by
the Agency of the Project. If any statute or rule of law validly shall limit the remedies given to
the Agency hereunder, the Agency nevertheless shall be entitled to whatever remedies are
allowable under any statute or rule of law.
In the event the Agency shall prevail in any action brought to enforce any of the terms
and provisions of this Lease, the City agrees to pay a reasonable amount as and for attorney's
fees incurred by the Agency in attempting to enforce any of the remedies available to the Agency
hereunder, whether or not a lawsuit has been filed and whether or not any lawsuit culminates in a
judgment.
SECTION 9.2 Waiver. Failure of the Agency to take advantage of any default on the
part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or
practice which may grow up between the parties in the course of administering this instrument be
construed to waive or to lessen the right of the Agency to insist upon performance by the City of
any term, covenant or condition hereof, or to exercise any rights given the Agency on account of
such default. A waiver of a particular default shall not be deemed to be a waiver of the same or
any subsequent default. The acceptance of rent hereunder shall not be, or be construed to be, a
waiver of any term, covenant or condition of this Lease.
SECTION 9.3 No Remedy Exclusive. No remedy conferred herein upon or reserved
to the Agency is intended to be exclusive and every such remedy shall be cumulative and shall be
in addition to every other remedy given under this Lease or now or hereafter existing at law or in
equity. In order to entitle the Agency to exercise any remedy reserved to it in this Article it shall
not be necessary to give any notice, other than such notice as may be required in this Article or
by law.
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SECTION 9.4 Agreement to Pay Attorneys Fees and Expenses. In the event either
party to this Lease should default under any of the provisions hereof and the nondefaulting party
should employ attorneys or incur other expenses for the collection of moneys or the enforcement
of performance or observance of any obligation or agreement on the part of the defaulting party
contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party
the reasonable fees and disbursements of such entity's attorneys and such other expenses so
incurred by the nondefaulting party.
SECTION 9.5 No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Lease should be breached by either party and thereafter waived by
the other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
SECTION 9.6 Application of the Proceeds Following Default. All amounts
received by the Agency under this Article 9 (other than fees and expenses recovered under
Section 9.4 above) shall be deposited by the Trustee in the Lease Payment Fund for application
in accordance with Section 504 of the Trust Agreement.
SECTION 9.7 Trustee and Certificate Owners to Exercise Rights. Such rights and
remedies as are given to the Agency under this Article 9 have been assigned by the Agency to
the Trustee under the Assignment Agreement and the Trust Agreement, to which assignment the
City hereby consents. Such rights and remedies shall be exercised by the Trustee, the Insurer,
the Certificate Owners and owners of any Additional Certificates as provided in Article V of the
Trust Agreement.
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
SECTION 10.1 Security Deposit. Notwithstanding any other provision of this Lease,
the City may, on any date, secure the payment of any unpaid Lease Payment attributable to the
Project as set forth in Exhibit B hereto by an irrevocable deposit by it with the Trustee of cash
and /or Permitted Investments of the type described in paragraph 1(b) of the definition thereof,
which are adequate in the opinion of an independent certified public accountant to provide for
payment of such unpaid Lease Payment as it becomes due and payable hereunder (a "Security
Deposit ") and provided that such Security Deposit meets all the terms and provisions established
for defeasance of the Certificates set forth in Sections 901 and 1001Q) of the Trust Agreement.
In the event that the City has secured the payment of all unpaid Lease Payments
attributable to the Project in accordance with the terms and provisions of the immediately
preceding paragraph, and provided that the City has made arrangements acceptable to the Trustee
and the Insurer to pay any Additional Payments due hereunder, all obligations of the City under
this Lease, and all security provided by this Lease for said obligations, shall cease and terminate,
excepting only the obligation of the City to make, or cause to be made, Lease Payments from
such deposit. Said deposit shall be deemed to be and shall constitute a special fund for the
payment of Lease Payments in accordance with the provisions of this Lease. The Agency shall
execute and deliver such further instruments and take such further action as may reasonably be
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requested by the City for carrying out the leasehold interest transfer for which a security deposit
is made hereunder.
SECTION 10.2 Extraordinary Prepayment From Net Proceeds. The City shall be
obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of
any Net Proceeds transferred to the Redemption Account pursuant to Section 405 of the Trust
Agreement. The City and the Agency hereby agree that such proceeds shall be credited towards
the City's obligations hereunder such that approximately equal annual Lease Payments will
prevail with respect to the Project following such prepayment and, if the Lease Payments have
been allocated to discrete Components of the Project in Exhibit B hereto, the Lease Payments
with respect to the Component or Components from which such Net Proceeds were delivered will
be reduced accordingly.
SECTION 10.3 Optional Prepayment. Subject to the terms and conditions of this
Section and to the prior written consent of the Bond Insurer, the Agency hereby grants an option
to the City to prepay in whole or in part the Principal Components of Lease Payments relating to
the Project, to the extent, on the dates and at the prepayment prices provided in Section 310(c) of
the Trust Agreement as such Section 310(c) may be amended from time to time with respect to
Additional Certificates. The City shall execute said option by giving written notice to the Trustee
thereof at least 45 days (or such shorter period as approved by the Trustee in its sole discretion)
prior to the date of redemption of Certificates and Additional Certificates from such prepayment
and depositing with said notice cash in the minimum amount of (1) accrued interest on the
Principal Component of Lease Payments to be prepaid to the date of redemption of Certificates
and Additional Certificates with the proceeds of such prepayment, plus (2) the Principal
Component of any Lease Payments to be prepaid, plus (3) the applicable prepayment premium
described in such Section 310(c) of the Trust Agreement as such Section 310(c) may be amended
from time to time with respect to Additional Certificates.
SECTION 10.4 Sinking Fund Redemption. The City and the Agency acknowledge
that the Term Certificates are subject to mandatory redemption from the Principal Components of
Lease Payments on the dates, at the times and in the amounts provided in Section 310(b) of the
Trust Agreement.
SECTION 10.5 Credit for Amounts on Deposit. In the event of prepayment of all
the Lease Payments in full under this Article 10 and the payment in full of all due and payable
Additional Payments, such that the Trust Agreement shall be discharged by its terms as a result
of such prepayment, all amounts then on deposit in the Lease Payment Fund and the Certificate
Fund shall be credited toward the amounts then required to be so prepaid.
SECTION 10.6 Effect of Prepayment.
(a) In Whole. In the event that the City prepays all remaining Lease
Payments pursuant to Section 10.3 or Section 10.2 hereof and the Certificates are no longer
Outstanding under the Trust Agreement and the City has paid in full all Additional Payments due
hereunder, the City's obligations under this Lease shall thereupon cease and terminate, including
but not limited to the City's obligation to continue to pay Lease Payments hereunder.
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(b) In Part. In the event the City prepays less than all of the remaining
Principal Component of the Lease Payments pursuant to Section 10.2 or 10.3 hereof, the amount
of such prepayment shall be applied to reduce the Principal Component of the Lease Payments
corresponding to the resulting prepayment of the Principal Component with respect to the
Certificates and the Additional Certificates.
ARTICLE XI
BOND INSURER TERMS
SECTION 11.1 Third Party Beneficiary. The Bond Insurer is hereby deemed to be a
third party beneficiary of this Lease Agreement.
SECTION 11.2 City Payment Requirement. Subject to the provisions of Section 4.10
hereof, the City hereby covenants and agrees to pay or cause to be paid all amounts required to
be paid by the Agency under the Trust Agreement.
SECTION 11.3 Information. The Bond Insurer shall be provided with the following
information:
(i) The Completion Certificate upon Project completion.
(ii) Annual audited financial statements of the City within 120
days after the end of the fiscal year and the annual budget within 30 days after the
approval thereof;
(iii) upon delivery of the annual audited financial statements of
the City, a certificate of the chief financial officer of the City stating that, to the
best of such individual's knowledge following reasonable inquiry, no Event of
Default has occurred, or if an Event of Default has occurred, specifying the nature
thereof and stating in reasonable detail the steps, if any, being taken by the City to
cure such Event of Default;
(iv) Official statement, if any, prepared in connection with the
issuance of additional indebtedness of the City within 30 days of the incurrence
thereof;
(v) Notice of any failure of the City to make any payment
required under this Lease Agreement within two Business Days after knowledge
thereof;
(vi) A full original transcript of all proceedings relating to the
execution of any amendment or supplement to this Lease Agreement;
(vii) Copies of all reports, certificates and notices required to be
delivered by the City pursuant to this Lease Agreement; and
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(viii) Such additional information as the Bond Insurer from time
to time may reasonably request.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices. All notices, certificates or other communications hereunder to
the Agency, the Insurer and City shall be in writing and shall be sufficiently given and shall be
deemed given when delivered or mailed by certified mail, postage prepaid, to the parties listed
below:
If to the City: City of Poway
13325 Civic Center Drive
Poway, California 92064
Attention: City Manager
(619) 679 -4204
Telecopier: (619) 748 -1455
If to the Agency: Poway Redevelopment Agency
13325 Civic Center Drive
Poway, California 92064
Attention: Executive Director
(619) 679 -4204
Telecopier: (619) 748 -1455
If to the Trustee: First Trust of California, National Association
550 South Hope Street, 5th Floor
Los Angeles, California 90071
Attention: Corporate Trust
If to the Bond Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Investment Portfolio Management Department
Re: Policy Number 22835
Notice shall also be given to the Rating Agency at the address(es) then in effect for the Rating
Agency pursuant to Section 908 of the Indenture. Notices to the Trustee shall be given initially
either telephonically or by written telecommunication and shall then be confirmed in writing
delivered by registered or certified mail, return receipt requested. The Agency, the City and the
Trustee, by notice given hereunder, may designate different addresses to which subsequent
notices, certificates or other communications will be sent.
SECTION 12.2 Binding Effect. This Lease shall inure to the benefit of and shall be
binding upon the Agency and the City and their respective successors and assigns.
ka
%W 304
SECTION 12.3 Severability. In the event any provision of this Lease shall be held
invalid or unenforceable by a court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.
SECTION 12.4 Execution in Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.
SECTION 12.5 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State.
SECTION 12.6 Captions. The captions or headings in this Lease are for convenience
only and in no way define, limit or describe the scope or intent of any provisions or sections of
this Lease.
31
`'" 305
IN WITNESS WHEREOF, the Agency has caused this Lease to be executed in its name
by its duly authorized officers, and the City has caused this Lease to be executed in its name by
its duly authorized officers, as of the date first above written.
POWAY REDEVELOPMENT AGENCY, as
Lessor
By:
Its: Chairperson
ATTEST:
Secretary
i
u
CITY OF POWAY, as Lessee
By :� ti 1'Y
Its: Mayor
ATTEST:
City Cler1,
PueL:42306_41138122468. 10 S -1
..W
306
State of California )
ss.
County of San Diego )
On January _ ,Z0 , 1997, before me,
(name, title of o ce , e.g.,' Jane Doe, ary Public")
personally appeared � e"�- �al„q�,��,
personally known to me —OR—
proved to me on the basis of satisfactory evidence
to be the persoriN&hose name is/km subscribed to the within instrument and acknowledged to
me that heAtm4tiiey executed the same in hisl mT*heir authorized capacity7iss, and that by
hisftmrfthw signatures n the instrument the person4 or the entity upon behalf of which person
acted, executed the instrument.
ess my %fficia 1.
< COMA#IM9231
Z ' �0 .. Notary Nble — ColtmMo
SAN DIEGO couNry
My Comm. EXIDIrM SEP 21.1995
Capacity claimed by signer:
❑
Individual
❑
Corporate Officer(s):
❑
Partner(s):
❑ General ❑
❑
Attorney -in -fact
❑
Trustee(s)
❑
Guardian/Conservator
❑
Other:
Limited
Signer is representing:
name Of persons or entity tes
(This section is OP77ONAL.)
Attention Notary: Although the information requested below is OPTIONAL, it could prevent
fraudulent attachment of this certificate to an unauthorized document.
THIS CERTIFICATE
MUST BE ATTACHED
TO THE DOCUMENT
DESCRIBED AT RIGHT:
POeL:42306_41138122468.10
Title or Type of Document Lease Aereement
Number of Pages Date of Document
Signer(s) Other than Named Above
✓ � 307
State of California )
ss.
County of San Diego )
On January /0 1997, before me,
(mmrie, title of offi` er, e.g., lane D�Notary Public ")
personally appeared 2 &a jA . a'4&�
(n tsl nf.eian &)l
personally known to me --OR-
0 proved to me on the basis of satisfactory evidence
to be the personXwhose name Warp4ubscribed to the within instrument and acknowledged to
me that )Wshelske y executed the same in )%is1hef79te ir authorized capacity7ies,, and that by
his /her/bi<iir slgnaturN on the instrument the person or the entity upon behalf of which person(
acted, executed the instrument.
s my official s
i _ COA *IOb92J1
SAM DIE60 C L..,, 7s
88YComn1. EWhW SEP 21.1998 I (Signature of Not )
Capacity claimed by signer: r1his section is OP77ONAL.)
0 Individual
11 Corporate Officer(s):
• Partner(s):
11 General 11 Limited
• Attorney -in -fact
• Trustee(s)
11 Guardian /Conservator
0 Other:
Signer is representing:
name o persons or entity les
Attention Notary: Although the information requested below is OPTIONAL, it could prevent
fraudulent attachment of this certificate to an unauthorized document.
THIS CERTIFICATE
MUST BE ATTACHED
TO THE DOCUMENT
DESCRIBED AT RIGHT:
Puau42306_41138122468.10
Title or Type of Document Lease Agreement
Number of Pages Date of Document
Signer(s) Other than Named Above
303
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed under the foregoing to the
City of Poway, a body corporate and politic, is hereby accepted by the undersigned officer or
agent on behalf of the City Council of the City of Poway, pursuant to authority conferred by
resolution of the said City Council adopted on December 10, 1996, and the grantee consents to
recordation thereof by its duly authorized officer.
Dated: January 14, 1997 CITY OF POWAY
Bv:
Its: Mayor
PusL:42306_41138122468. 10
EXHIBIT A 309
DESCRIPTION OF THE SITE
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
THAT PORTION OF PARCEL 1 OF PARCEL MAP NO. 9105, IN THE CITY OF POWAY,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO PARCEL MAP
THEREOF FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, ON AUGUST 30, 1979 AS FILE NO. 79- 366067 OF OFFICIAL RECORDS,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEAST CORNER OF SAID PARCEL 1 OF PARCEL MAP
NO. 9105, BEING ALSO A POINT IN THE WESTERLY RIGHT -OF -WAY LINE OF
BOWRON ROAD AS SAID ROAD IS SHOWN BY SAID PARCEL MAP; THENCE ALONG
THE EASTERLY LINE OF SAID PARCEL 1, NORTH 01 022'07" EAST, 198.01 FEET;
THENCE LEAVING SAID EASTERLY LINE, NORTH 89 008'30" WEST, 202.01 FEET;
THENCE NORTH 01022'07- EAST, 27.00 FEET; THENCE NORTH 89 °08'30" WEST,
170.01 FEET; THENCE NORTH 01'22'07" EAST 23.00 FEET; THENCE NORTH 89 108'30"
WEST, 10.00 FEET; THENCE SOUTH 43 144'55" WEST, 68.24 FEET; THENCE NORTH
89 008'30" WEST, 15.00 FEET; THENCE SOUTH 01'22'07" WEST, 198.01 FEET TO THE
SOUTHERLY LINE OF SAID PARCEL 1; THENCE ALONG SAID SOUTHERLY LINE,
SOUTH 89 008'30" EAST, 443.02 FEET TO THE POINT OF BEGINNING.
A -1
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
LEASE
PAYMENT DATE
(fifteen Business
Days before
each of the
following PRINCIPAL INTEREST
310
dates)
COMPONENT
COMPONENT
PERIOD TOTAL
FISCAL TOTAL
08 -01 -1997
$ 0.00
$ 129,046.94
$ 129,046.94
$ 129,046.94
02 -01 -1998
0.00
118,512.50
118,512.50
118,512.50
08 -01 -1998
70,000.00
118,512.50
118,512.50
118,512.50
02 -01 -1999
0.00
116,972.50
116,972.50
116,972.50
08 -01 -1999
70,000.00
116,972.50
186,972.50
186,972.50
02 -01 -2000
0.00
115,432.50
115,432.50
115,432.50
08 -01 -2000
75,000.00
115,432.50
190,432.50
190,432.50
02 -01 -2001
0.00
113,782.50
113.782.50
113.782.50
08 -01 -2001
80,000.00
113,782.50
193,782.50
193,782.50
02 -01 -2002
0.00
111,982.50
111,982.50
111,982.50
08 -01 -2002
80,000.00
111,982.50
191,982.50
191,982.50
02 -01 -2003
0.00
110,142.50
110,142.50
110,142.50
08 -01 -2003
85,000.00
110,142.50
195,142.50
195,142.50
02 -01 -2004
0.00
108,145.00
108,145.00
108,145.00
08 -01- 2004
90,000.00
108,145.00
198,145.00
198,145.00
02 -01 -2005
0.00
105,985.00
105,985.00
105,985.00
0"1 -2005
95,000.00
105,985.00
200,985.00
200,985.00
02 -01 -2006
0.00
103,657.50
103,657.50
103,657.50
08 -01 -2006
100,000.00
103,657.50
203,657.50
203,657.50
02 -01 -2007
0.00
101,157.50
101,157.50
101,157.50
08 -01 -2007
105,000.00
101,157.50
206,157.50
206,157.50
02 -01 -2008
0.00
98,480.00
98,480.00
98,480.00
08 -01 -2008
110,000.00
98,480.00
208,480.00
208,480.00
02 -01 -2009
0.00
95,620.00
95,620.00
95,620.00
08 -01 -2019
115,000.00
95,620.00
210,620.00
210,620.00
02 -01 -2010
0.00
92,400.00
92,400.00
92,400.00
08 -01 -2010.
120,000.00
92,400.00
212,400.00
212,400.00
02 -01 -2011
0.00
89,040.00
89,040.00
89,040.00
08 -01 -2011
130,000.00
89,040.00
219,040.00
219,040.00
02 -01 -2012
0.00
85,400.00
85,400.00
85,400.00
08 -01 -2012
135,000.00
85,400.00
220,400.00
220,400.00
02 -01 -2013
0.00
81,620.00
81,620.00
81,620.00
08 -01 -2013
145,000.00
81,620.00
226,620.00
226,620.00
02 -01 -2014
0.00
77,560.00
77,560.00
77,560.00
0"1 -2014
150,000.00
77,560.00
227,560.00
227,560.00
02 -01 -2015
0.00
73,360.00
73,360.00
73,360.00
08 -01 -2015
160,000.00
73,360.00
233,360.00
233,360.00
02 -01 -2016
0.00
68,880.00
68,880.00
68,880.00
08 -01 -2016
170,000.00
68,880.00
238,880.00
238,880.00
02 -01 -2017
0.00
64,120.00
64,120.00
64,120.00
rm
08 -01 -2017
02 -01 -2018
08 -01 -2018
02 -01 -2019
08 -01 -2019
02 -01 -2020
08 -01 -2020
02 -01 -2021
08 -01 -2021
02 -01 -2022
08 -01 -2022
02 -01 -2023
08 -01 -2023
02 -01 -2024
08 -01 -2024
02 -01 -2025
08 -01 -2025
02 -01 -2026
08 -01 -2026
175,000.11
0.11�1:
185,000.41
0.00
200,000.00
0.00
210,000.00
0.00
220,000.00
0.00
230,000.00
0.00
245,000.00
0.00
260,000.00
0.00
275,000.00
0.00
290,000.
$ 4,375.000.00
64,120.00
59,220.00
59,220.00
54,040.00
54,040.00
48,440.00
48,440.00
42,560.00
42,560.00
36,400.00
36,400.00
29,960.00
29,960.00
23,100.00
23,100.00
15,820.00
15,820.00
8,120.00
8.120.00
$ 4,628.866.94
m
239,120.00
59, 220.00
244,220.00
54,040.00
254,040.00
48,440.00
258,440.00
42,560.00
262,560.00
36,400.00
266,400.00
29,960.00
274,960.00
23,100.00
283,100.00
15,820.00
290,820.00
8,120.00
298.120.00
$ 9,003,866.94
311
239,120.00
59,220.00
244,220.00
54,040.00
254,040.00
48,440.00
258,440.00
42,560.00
262,560.00
36,400.00
266,400.00
29,960.00
274,960.00
23,100.00
283,100.00
15,820.00
290,820.00
8,120.00
298.120.00
$ 9.003.866.94
312
EXHIBIT C
LEASE SUPPLEMENT
There is hereby subjected to the terms of that certain Lease Agreement (the "Lease "),
dated as of December 1, 1996, between the Poway Redevelopment Agency (the "Agency ") and
the City of Poway, California (the "City") the following real property and improvements, if
applicable (the "Substituted Property") which shall hereafter comprise the Project, as defined
therein:
Description of Substituted Property:
Certification
I, the Authorized Representative of the City, hereby certify that:
(1) the useful life of the Substituted Property at least equals the remaining Term of
the Lease; and
(2) the fair rental value of the Substituted Property is such that no reduction of Lease
Payments will occur upon the delivery of the Substituted Property and the portion of the Lease
Payments and Additional Payments attributable to the Substituted Property does not exceed the
fair rental value for the Substituted Property; and
(3) the Substituted Property will be used by the City for authorized public purposes,
can be leased under the provisions of the Lease and the Permitted Encumbrances thereon will not
materially impair the City's use of the Project;
(4) the City will cause Exhibit A to the Lease and Exhibit A to the County Lease and
the Assignment Agreement (each as defined in the Lease) to be amended to reflect the Substituted
Property and will have such amendments recorded for the Substituted Property and the previous
Project in the City of Poway recorder's office;
(5) all of the documents required to be delivered under Section 3.6 of the Lease in
connection with the provision of the Substituted Property have been delivered. The undersigned
hereby certifies that it has received copies of the documents required pursuant to Section 3.6 of
the Lease; and
(6) the Site now consists of the Substituted Property set forth in Exhibit 1 hereto and
Exhibit B to the Lease is hereby deemed to be deleted in its entirety and replaced by Exhibit 1
hereto, and the schedule of Lease Payments is set forth in Exhibit 2 hereto and Exhibit B to
the Lease is hereby deemed to be amended to incorporate the schedule of Lease Payments set
forth in Exhibit 2 hereto.
C -1
w
313
I, the Authorized Representative of the City, hereby certify that the Substituted Property
will be leased to the Agency free and clear of all liens or claims of others, except for the lien of
the Trust Agreement referred to in the Lease and the rights of the City under the Lease, and that
the Agency will not encumber title to the Substituted Property while the Certificates and
Additional Certificates remain outstanding.
The Undersigned Acknowledges
Receipt of this Supplement:
as assignee of the Lessor
Title
C -2
CITY OF POWAY, as Lessee
0
Title
EXHIBIT I
DESCRIPTION OF SUBSTITUTED PROPERTY
C -3
314
w
��r. I-
AMENDED SCHEDULE OF LEASE PAYMENTS
C-4
315