SR-203-002 (2)
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CA:RMM:lmd076b
City council Meeting 10-22-85
Santa Monica, California
SUPPLEMENTAL STAFF REPORT
TO:
Mayor and City Council
FROM:
City Staff
SUBJECT:
Airport Certificates of Participation
This supplemental Staff Report and attachments reflect the
following
revisions
and clarifications to the
documents
pertaining to the"Airport Certificates of Participation ("COPS").
(1) Earthquake Insurance on the Facilities.
The American Municipal Bond Assurance Corporation ("AMBAC")
is willing to provide debt service insurance on the COPs only if
the City includes a provision in Section 505 of the Lease
Agreement ("Fire and Special Extended Coverage Endorsement")
which requires the Ci ty to obtain earthquake insurance on the
facilities from a reputable insurance company, if such insurance
is available. Debt service insurance assures continued payments
of principal and interest to the holders of the COPs in the event
of nonpayment of Lease Payments by City.
The advantages of insuring the COPs are twofold.
First,
debt service insurance provides a higher rating to the COPS,
thereby increasing their marketability. Currently, the COPs have
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"J a provisional rating of "AIf from Standard & poors Corporation.
However, by obtaining debt service insurance from AMBAC, the
COPs' rating would be elevated to AMBAC's own "AAA" rating.
Second, the COPs would have a lower interest rate if they
are insured. This would result in direct dollar savings to the
City.
It
is estimated by city's
financial consultant,
paineWebber, that the total gross savings in interest costs over
the life of the issuance would be approximately $380,000.00. Of
course, there would be a one-time premium paid to AMBAC for this
debt service insurance. Total present value savings is estimated
at $96,000.00.
(2) Modification of Resolution Approvinq Preliminary
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Official Statement and certificate Purchase Aqreement.
The attached revised resolution should be substituted in
place of the original resolution. The former section concerning
the City Council's knowledge, information, and belief as to the
truthfulness of the Preliminary Official statement has been
deleted.
PREPARED BY: Robert M. Myers, City Attorney
Linda A. Moxon, Deputy city Attorney
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RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF SANTA MONICA. CALIFORNIA
APPROVING PRELIMINARY OFFICIAL STATEMENT AND
CERTIFICATE PURCHASE AGREEMENT, AND
AUTHORIZING AND DIRECTING CERTAIN ACTIONS
WITH RESPECT THERETO
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The Clty Cauncll of the Clty of Santa Monlca,
Callfornla DOES HEREBY RESOLVE, DETERMINE AND ORDER as
follows:
Sectlon 1. ~he Certlflcate Purchase Agreement, by
and among PalneWebber Incorporated (the "Underwrlter"), Bank
of Amerlca Natlonal Trust and Savlngs Assoc1at1on as Trustee
and the C1ty, relatlng to the purchase and sale of Certlfl-
cates of Partlcipat10n to f1nance certa1n lmprovements at the
Santa Mon1ca MUDlc1pal A1rport (the "Purchase Agreement"),
substantlally in the form presented at thlS meetlng, 15
hereby approved. The City Manager and the Clty Clerk are
authorized and dlrected to complete and execute the Purchase
Agreement on behalf of the Clty, sUbJect to the folloW1ng:
(a) The aggregate prlnclpal amount of Certlficates
set forth in Paragraph 1 of the Purchase Agreement shall be
the amount set forth ln Sect10n 601 of the Trust Agreement
relatlog to Alrport Facll1t1es, dated as of October I, 1985,
by and among the Clty, the above named Trustee and Security
PaclflC Natlonal Bank, and shall be not less than $3,980,000.
(b) The purchase prlce of the Certiflcates set
forth 10 Paragraph 1 of the Purchase Agreement shall be not
less than 96-1/2% of the aggregate par value of the Certlflcates.
The Purchase Agreement may be modlf~ed, pr~or to
lts executlon and dellvery, by the Clty Manager wlth the
adv1ce of the Clty Attorney, provlded that such modlflcat1on
1S conslstent wlth the essentlal terms thereof and W1th the
limltations set forth above. The C~ty Manager's approval of
such modiflcatlons shall be concluslvely estab11shed by h1S
execut10n of the Purchase Agreement.
Section 2. The Mayor, City Manager, City Clerk and
other off~clals of the Clty are hereby authorlzed and d1rected
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to execute such other agreements, documents and certificates
as may be requ1red by the Purchase Agreement or otherW1se
necessary to effect 1tS purposes.
Section 3. The Pre11m~nary Official Statement,
dated as of October 22, 1985, relat1ng to the Certif1cates of
Partic1pat1on, substantially in the form presented at th~s
meeting, 1S hereby approved for use by the Underwr1ter 1n the
offering and sale to the pub11c of the Cert1f1cates.f\
Section 4. The C1ty Manager 1S author1zed to
approve correct1ons and add1t1ons to the Prelim1nary Offic1al
Statement by supplement or amendment thereto, or otherw~se as
appropr1ate, provlded that any such correctlons or add~tions
shall be necessary to cause the 1nforrnatlon contalned therein
to conform wlth facts material to the Certlf1cates or to the
proceedlnqs of the City, or that such correctlons or additions
relate to form rather than substance.
Sectlon 5. The C1ty Manager is authorized and
directed to cause the Prelimlnary Offlclal Statement to be
modlf1ed lnto the form of a Flnal Offlclal Statement and to
execute said Final Off1clal Statement, dated as of the date
of the Clty's execution of the Purchase Agreement.
ADOPTED AND APPROVED thlS
day of October, 1985.
Approved as to form:
Robert M. Myers, Esq.
City Attorney
Mayor
[SEAL]
Attest:
City Clerk
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LEASE AGREE'1E~"T
RELATI~G TO AIRPORT FACI~ITIES
by and bet\.:een
SECCRITY PACIFIC ~ATIO\A~ BA\K. as Lessor
and
CITY or SASTA '10~ICA. 85 Lessee
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Dated as of October 1. 1985
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TABLE OF COSTE~S
ARTICLE I
RECITALS
Status and Powers of Lessor " "
Status and Powers of City...... '" "
Purpose of Agreement ........ .......
Issuance of Cert~fIcates .. +... + +.. . . . . . . . .
Related Agreements ., .. .. ....
Construction of th~s Agreement .... .. .. ... " .
ARTICLE I I
DEFINITIONS A~D GEKERAL PROVISIO~S
DefinItIons In General
Rules of Construction .
ARTICLE II I
RIGHT OF E~~Y; CO~STR~CT:O~ OF FACILITIES
DeposIt of ~oneys . .. +. .. '" _ ...... _ . +....
Ground Lease of SIte . + . .. .. +.. . . . " .,..
RIght of Entry . .. ..... ..... +.. . :,... ,
Construction of FaCllltles ... ...... .+. . _. . '.+
Payment of DelIvery Costs. + .. ...... ..
Unexpended Moneys... . .... ...
ARTICLE IV
LEASE OF FACILITIES AND SUBLEASE OF SITE, LEASE PAY~E,TS
Term of Agreement . +, . . . . . .. .. . .. . '" ., .. ..,
Sublease of Slte and Lease of FaCIlItIes + .+..+ ....
Lease Payments . +. . +. ....... .. ........
Prepayment of Lease Payments .. '" " .
Interest Component . , .....' . . .. , .
Payment ~n Lawful ~Dney; ~D Set-Off
Covenant to Budget and Appropriate
SecurIty DepOSIt ...... +. '" .._.....
Ground Lease ....... - + . . . . . . . . .. .......... ...... '" +
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ARTICLE V
COVE!\A~TS
Improvements .......
MaIntenance and UtIlltIes ..... ...... .
Publlc LIab1l1ty Insurance ....
Workers' Compensat~on Insurance
FIre and SpeCIal Extended Coverage Endorsement
Rental Interrupt10n Insurance . .' ... . ... ..
Form of Insurance Pollcles, De hvery .. . . . . . .
ApplIcation of Net Proceeds of Insurance .....
TItle Insurance ...... '" . .. ... .. .... ... ..
Appl1catIon of ~et Proceeds of T1tle Insurance
or Condemnation . ..... ...... . . . .. ..............
Payment of Lease Payments . .. . .. ...... .....
ComplIance w1th thIS Agreement ........ .. ....
Payment of Taxes . ........ ... ... ... . . .. ...
Observance of Laws and Regulatlons ... .. ........
MaInta~n and Preserve the Facl:ltles .. .. . ... .
Other L1ens. . . . . . . . . .. .. . . .. ... ... .. .. ....
AgaInst Encumbrances or SaLes ....
ProsecutIon and Defense of SUIts
RecordatIon and FI11ng .. ... .. . .
WaIver of Laws . . .. " ... .....
ComplIance WIth Condltlons Precedent. .. ....
Power to Enter Into Agreement . ..... " ....... " ....
Further Assurances .... ... .. + . t + . ,..
FInanCIal Reports ....... .. .. . . . . . .. .
Lessor ~ot LIable ........ ...... .,..
Net Lease .. .... .... .
Trustee Fees .........
ARTIC.E VI
DISCLAI~ER OF WARRANTIES; ASSIC~~E~lJ SuBLEASISG;
ACCESS, &~E~D~E~7
DIsclaImer of ~arrantles . ...... ......... .. '" . ...
Ass 19nment by Lessor ....... ........ ...........
Ass1gnment and Subleas1ng by C1ty . .. . ... ..... ....
Transfer of Tax BenefIts ...... ..... .,. ....
Access ~o Slte and the Faclllt1es
Amendment ....... .,. ..... ....
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ARTI CLE VII
EVE~TS OF DEFACLT AND RE~EDIES
Events of Default
Remedles on Default .. ...
SUlts at Law or ln EqUlty and ~andamus
Non-Waiver ......... .....
Remedles Sot Excluslve
Status Quo Ante
ARTICLE VIII
AD~lI ~ I STRATI VE PROV I 5 I O:.lS
Preservatlon and Inspectlon of
Partles of Interest ., ...
No Recourse Under Agreement ..
:-Jot lces . " ..... . .. ....
Blndlng Effect ......
Severablhty . .. .. ... .. ..
Headlngs .
Appllcable Law..... . . .
Lessor and Cl:Y Representatlves
Further Assurances
Form of Certlflcate of Offlcers
Buslness Days '" ...... ..
Docu'Ilents
Exhlbit. A
Exhlb.lt B.
Descrlptlon of Slte
Lease Payments
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11679 00000002/089266-L
LEASE AGREP1E~1
RELATING TO AIRPORT FACILITIES
THIS LEASE AGREE~NT RELATISG TO AIRPORT FACILITIES 1S made and
entered into as of October I, 1985, by and bet~een SECURITY PACIFIC
J\ATIO~AL BA~K, a natlonal bank1.ng aSSOCl.atlon (herel.n called "Lessortl),
and the CITY OF SA~TA ~O\ICA. a munlclpal corporatlon organized and oper-
atlng under the laws of the State of Cal1.forn1.a and the Clty Charter
(hereln called flC1tyfO).
wINESSETH'
In conslderatlon of the mutual covenants herelnafter contalned and
for other valuable conslderatlon, the partles hereto hereby agree as
follows:
ART! CLE I
RECITALS
101 Status and Powers of Lessor Lessor 15 a natlonal bankIng
assoclatlon duly organlzed and valldly existlng under the lahs of the
Unlted States and has full power, authorlty and legal r1ght to enter into
and perform lts obllgatlons pursuant to thlS Lease Agre~ent.
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102. Status and Po~ers of Clty. City 1S a charter Clty and ~unlCl-
pal corporatlon organlzed and operatlng pursuant to the laws of the State
of Callfornla and the City Charter and is authorized by Californla Gov.
ernment Code Sectlon 37350 to acqUire and lease property for the co~mon
benefit and in furtherance of lts publlc purposes.
103 Purpose of Agreement. Pursuant to the "Ground Lease" (as here-
inafter deflned) by aad between Clty, as lessor, and Lessor, as lessee,
C~ty has dem~sed and leased to Lessor, and Lessor has taken and h1red
from Clty, the "Slte" (as herelnafter deflned). In order to provlde for
~ts governmental and proprletary needs and 10 furtherance of its publlC
purposes, Clty deSires to sublease the S~te and lease the "Facilitles"
(as herelnafter defined). Lessor is able and wllllng, for adequate con-
slderat1on, to sublease the Slte and lease the Facl11tles to Clty.
104. Issuance of Certlflcates Certlflcates of partlclpatlon (the
"Certlf1cates"), representlng the dlrect and proportionate lnterests of
the reglstered owners thereof in payments to be made by C~ty as rental
for the Slte and the FaCllltles pursuant to thlS Agreement, wl1l be
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Issued and delIvered pursuant to a Trust Agreement RelatIng to AIrport
FaCIlItIes, dated concurrently herevilth (the "Trust Agreement"), by and
among CIty, Lessor and the trustee under the Trust Agreement (the
"Trustee").
105. Related Agreements. The partIes hereto acknowledge the follow-
ing agreements and hereby approve of, and consent to, the terms thereof-
(a) the AssIgnment Agreement pursuant to whIch Lessor aSSIgns
all of Its rIghts and Interest 1n thIS Agreement to the Trustee; and
(b) the Trust Agreement pursuant to whIch the Trustee, Lessor
and CIty agree to Implement thIS Agreement by prOVIdIng for the delIvery
of the CertifIcates, for the admInIstratIon of funds and for the exerCIse
of rIghts and remedIes.
106 Construct1on of ThIS Agreement. ExceptIng the oblIgatIon to
acqUIre, construct and Install the FaCIlItIes as prOVIded In SectIon 304
hereof, for all purposes of thIS Agreement, reference to the ffassIgnee"
of Lessor means the Trustee act~ng on behalf of the Owners of the Cer-
t~flcates delIvered pursuant to the Trust Agreement So long as the
ASSIgnment Agreement shall be In effect, references here~n to Lessor or
ItS ass~gnee shall he deemed to also refer to the Trustee as ass~gnee of
Lessor.
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ARTICLE II
DEFI~ITIONS ASD GE~ERAL PROVISlO~S
201. Defln1t1ons 1n General The terms deflned 1n this Sectlon 201
shall. for all purposes of th~s Agreement. have the mean~ngs ascr~bed to
them here~n. as follo~s:
AcqU1s1t1on and Construct1on Acccc:.,t. The term "Acqu1s1t1on
and Construct1on Account" means th'e account by that name estab11shed
under, and held by the Trustee pursuant to. Sectlon 402 of the Trust
Agreement.
Acquisltion and Constructlon Costs. The term "Acqulsltlon and
ConstructIon Costs.t means all costs of payment of, or reImbursement for,
acquis1tlon. constructlon and lnstallatlon of the Fac1lltles. ~ncludlng
but not llmlted to. archltect. englneer1ng, project manager and construc-
t10n supervlslon costs. constructlon contractor payments. and costs of
feas1blllty, envlronmental and other reports, bUllders' rlsk Insurance
premIums. inltlal hazard and llablllty lnsurance premlums, tltle lnsur-
ance costs. Inspectlon costs, permlt fees and fillng and recordlng costs.
and. 1n addltlon, Dellvery Costs to the extent that the amounts on
deposlt ln the De11very Costs Account are lnsufflClen~ to pay all De11v-
ery Costs ln full.
Asslgnment Agreement. The term "Asslgnment Agreement" means
the Asslgnment Agreement Relatlng to A~rport Facllltles. dated as of
October 1, 1985. by and between Lessor and the Trustee. as now or here-
after amended.
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Authorlzed Offlcer. The term "Authorlzed Offlcer". when used
wlth respect to Lessor. means any Vlce Pres1dent of Lessor or any other
offlcer of Lessor who is des~gnated by the Lessor as an Authorlzed Offl-
cer for purposes of the Lease Agreement. The term "Authorlzed Offlcer."
when used wlth respect to Clty. means the ~ayor, Cl~Y ~anager, Clty
Flnance D1rector or Alrport Dlrector or thelr deputles or asslstants or
any other offlcer or employee of Clty who 15 deslgnated by the Clty Coun-
cll or the Clty ~anager as an Authorlzed Offlcer for purposes of th1s
Agreement.
Certlficates. The term "Certlf1cates" means the certlflcates
of partlclpatlon prepared and dellvered by the Trustee pursuant to the
Trust Agreement.
Clty. The term "rlty" means the Clty of Santa Mon1ca,
Callfornla.
DelIvery Costs. The term "Dellvery Costs" means all costs of
payment of or relmbursement for executlon. sale and dellvery of the Lease
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Agreement and the CertIfIcates, IncludIng. but not lImIted to. costs paId
or incurred by CIty. Lessor or the Trustee for fIlIng costs, printIng
costs, reproductIon and binding costs, fees and charges of the Trustee,
fInancing dIscounts, legal fees and charges and reImbursements, fInancIal
and other professIonal consultant fees and charges and reImbursements,
audItors fees and charges and reImbursements. costs of ratIng agencles
for credIt ratIngs, fees for executIon. regIstratIon. transportatIon and
safekeepIng of CertifIcates, municlpal bond insurance premiums. If any,
and other charges and fees in connectIon wlth the foregOIng
DelIvery Costs Account. The term "Delivery Costs Account"
means the account by that name establIshed under and held by the Trustee
pursuant to SectIon 403 of the Trust Agreement.
Event of Default. The term "Event of Default" means an event
of default under the Lease Agreement as set forth In SectIon 701 of the
Lease Agreement.
Faclhtles, The term "FaCIlItIes" means the facllltles located
and to be located on and in the Slte conSisting generally of a hangar and
an aIrport admIn~stratIon bUlldlng
Federal Securltles. The CE!.rm "Federal SecurItIes" means Cntted
States Treasury notes. bonds, bllls or certlflcaces of ~ndebtedness or
obl~gatlons for whlch the full falth and credlt of the [nlted States are
pledged for the payment of prInCIpal and Interest, lncludlng Cnlted
States Treasury (book entry/ cert~f~cates. notes and bonds, state and
local government serles.
Ground Lease. The term "Ground Lease"
dated as of October I, 1985 by and bet~een CIty,
as lessee, pertalning to the SIte.
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means~~he Ground Lease
as lessor, and Lessor,
Lease Agreement. The terms "Lease Agreement" or "Agreement"
mean th~s Lease Agreement Relatlng to Alrport Fac~lltles, dated as of
October 1, 1985, by and bet~een Lessor, as lessor, and Clty, as lessee,
as now or hereafter amended.
Lease Pa~"ment Account The term "Lease Payment Account" means
the account by that name establlshed under. and held by the Trustee pur-
suant to, SectIon 404 of the Trust Agreement
Lease Payments. The term "Lease Payments" means lease payments
payable by C1ty for the use of the 51te and the Fac111t1es pursuant to
the Lease Agreeffi~nt.
Lessor. The term "Lessor" means SecurIty Pac1flC Natlonal
Bank, a natIonal bank1ng associatIon.
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t..;et Proceeds The term "'.;et Proceeds," when used wlth respect
to any lnsurance or condemnatlon award, means the gross proceeds from the
Insurance or condemnatIon award wlth respect to whlch that term is used
remaInlng after payment of all expenses lncurred In the collectIon of
such gross proceeds.
OutstandIng. The term "OutstandIng" \o'hen used wIth reference
to the CertIfIcates and as of any partIcular date means all CertIflcates
theretofore delIvered except. (a) any CertIfIcate cancelled by the Trus-
tee at or before saId date and (b) any CertIfIcate In lIeu of or In sub-
stltutIon for whIch another CertlfIcate shall have been delIvered
pursuant to the Trust Agreement
Ow'ner The term "Owner" or "CertIfl.cate Owneru or "Owner of
CertIfIcates" or any SImIlar term, when used WIth respect to the Cer-
tIfIcates, means any person ~ho shall be the regIstered owner of any Out-
standIng CertIfIcate or, In the eVent of amendment of the Trust AgreeMent
to permlt Certlflcates payable to bearer, any person who shall be the
bearer of any Outstand~ng Cert~fIcate not reg~stered
Payment Date. The term "Payment Date" means AprIl 1 and
October 1 of each year commenclng ~Ith Aprll 1, 1986
Perr[l1tted Encumbrances. The term "Permltted Encumbrances"
means 1f and to the extent perw2tted by law and by any POlICY gUldelInes
promulgated by CI-Y
(1) Ad valorem taxes and assessments for the cur~ent
flscal year of C~ty. ,_
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(ii) Easements, rIghts-of-way, mineral r~ghts and other
rIghts, covenants, condItIons of restrIctIons whIch In the Judgment of
City do not Impalr or Impede or othe~lse adversely affect constructIon
or operat~on of the FaCIlltIBs or access to the FaCIlItIes by Lessor or
Its aSSIgnee.
(II~) The Lease Agreement.
(IV) The ASSIgnment Agreement
PrInCIpal OffIce. The term "Prlnclpal OffIce" means the
prIncipal corporate trust offIce of the Trustee In Los Angeles,
Callforn~a.
Redemption Fun4 The term "Redempt~on Fund" means the fund by
that name establIshed under and held by the Trustee pursuant to Sec.
tlon 615 of the Trust Agreement.
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Reserve Account. The term "Reserve Account" means the account
by that name establlshed under, and held by the Trustee pursuant to,
SectIon 405 of the Trust Agreement.
Reserve Requirement. The term r'Reserve Requiremene' means an
amount equal to the largest of the annual Lease Payments as shown 10
ExhlbIt B to this Lease Agreement.
SIte. The term "SIte" means the land more partlcularly
descrIbed 1n Exhlblt ~ attached to th1S Lease Agreement.
Spec1al RedemptlCn Account. The term "SpecIal RedemptIon
Account" means the accou~t by that name establlshed under, and held by
the Trustor pursuant to. SectIon 406 of the Trust Agreement.
SubstantIal COl1pletlon. The term "substantIal completlon" or
"substant~ally complete, II \then used WIth respect to the Facll~t~es, shall
mean completion of the acquiSItIon, constructlon, Instal1atlon and equIp-
plng of the FaCIlItIes 10 accordance ~Ith the plans and speclflcatlons
therefor, except for such minor ltems as shall not prevent the full
occupancy and utIlIzatIon of the Facllltles by Clty.
Trust Agreement. The term "Trust Agree'llent" means the Trust
Agreement RelatIng to Alrport Facllltles, dated as of Oc~ober 1, 1985, by
and among the Trustee, Lessor and Clty, as now or hereafter amended.
Trustee. The term lITrustee" means Bank of Arnerlca 'latIonal
Trust and Savlngs ASSOCIatIon, a national trust and savlngs aSSOCla~lon,
or ltS successors In lnterest acting as Trustee under the Trust
Agreement ',:
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Usable The term "usable," when used with respect to ~he
Facllltles. means tenantable and available for use for the normal opera-
tlon of such Facllltles
202 Rules of Construction. Words of the rnascul1ne gender shall be
deemed and construed to lnclude correlatIve words of the femlnlne and
neuter genders Unless the context otherw~se lndlcates, words lmportlng
the slngular number shall lnclude the plural number and Vlce versa, and
words import~ng persons shall Include corporatlons and aSSOCIatIon,
Includlng publlc bodIes, as well as natural persons
The terms "hereby," "hereof," "hereto, II IIhere in," "hereunder tt and
any SImIlar terms, as used In thls Agreement, refer to thlS Agreement
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ARTICLE III
RIGHT OF E~lRY, CO~STRCCTION OF FACILITIES
301. Deposlt of ~oneys. In order to ~nduce CIty to sublease the
SIte and lease the FaCIlItIes from Lessor and to assure Clty that the
moneys needed to pay the AcquisItIon and ConstructIon Costs and DelIvery
Costs wIll be available for thIs purpose ~lthout delay, Lessor or Its
assIgnee, ImmedIately followIng delIvery of thIs Agreement by CIty to the
Trustee, shall cause to be deposIted wIth the Trustee. from the proceeds
of the CertIfIcates. the sum of $ Of thIs amount an amount
equal to Interest ~lth respect to the CertIfIcates for a perIod of two
and one-half years is required to be deposIted In the Lease Payment
Account, an amount equal to the Reserve ReqUIrement 15 requIred to be
deposIted In the Reserve Account, an amount equal to estImated DelIvery
Costs IS requIred to be deposIted In the DelIvery Costs Account, and the
balance thereof ~s requIred to be deposIted In the AcquisItIon and
ConstructIon Account.
302. Ground Lease of SIte. PrIor to the executIon of thIS
Agreement. CIty, as lessor, and Lessor. as lessee. shall execute a Ground
Lease of the S~te by ~h~ch CIty shall. ~n conslderat~on of One Dollar
($1) per annum and other addltlonal rent paId by the Lessor, ground lease
the SIte to Lessor. Such Ground Lease shall expressly permlt the
sublease of the SIte to the City pursuant to th~s Agreement A
memorandum of such Ground Lease shall be recorded on the date of
recordatIon of a memorandum of this Lease Agreement.
303 RIght of Entry. In order to enable Lessor to carry out the
terms of thIS Agreement and to facllltate the exerClse ~Jrsuant to Sec-
t~on 702 hereof of remedIes upon an Event of Default by CIty herell~der.
CIty hereby grants a r1ght of entry to Lessor, lts agents and Its aSSIgn-
ees to the Slte and the FaCllltles, exerc~sable (except as otherWlse
provlded In SectIon 702 hereof) on reasonable notlce to CIty and durlng
normal bus1ness hours C1ty represents that It IS empowered to grant
such rIght of entry to Lessor.
304. ConstructIon of Facillt~es. Lessor shall construct and lns~all
or cause the constructIon and lnstallatlon of the FaCIlItIes 1n
accordance with plans and speclflcatlons approved by CIty DIsbursements
for acqulsltlon, constructlon and lnstallatlon shall be from the ACqUIS1-
tlon and Construct~on Account establlshed and held by the Trustee
pursuant to the Trust Agreement and 1n accordance WIth the procedures set
forth In SectIon 402 of the Trust Agreement for sald dlsbursements.
Clty may, at any tIme. approve modiflcatlons or change orders to
plans and specifIcatIons for the FaCIlItIes prOVIded that amounts In the
Acqu1sItlon and Construct~on Account (1ncluding, ~ithout I1mltat1on, any
amounts deposited thereIn by the C1ty, at ItS option. for payment of
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add~t~onal constructlon costs) are sufflClent to pay constructIon costs
resultIng from such modIfIcatIons or change orders.
Lessor agrees that It shall cause the acqulsltlon, construction and
InstallatIon of the Facilltles to be substantIally completed by Apr1l 2.
1988. Lessor further agrees to assure that contractors carry such per-
formance bonds. and agree to such lIqu1dated damages for constructlon
delays as may be reqUIred by Clty and comply wIth workerst compensatIon
laws appllcable to CIty and affIrmatIve actIon standards of Clty. Pro-
ceeds of llquldated damages, If any, receIved by Lessor shall be
deposIted 1n the Lease Payment Accoupt to be held for Lease Payments,
provIded, however. that If lIquIdated damages are to be Imposed through
wIthholdIng payment from contractors, then Lessor shall dIrect the
Trustee to wIthdraw from the Acqulsltlon and ConstructIon Account an
amount equal to sald lIqUIdated damages and to depos1t such amount 1n the
Lease Payment Account for the benefIt of CIty.
CIty agrees that Lessor may cause the aforesaId st1pulated comple-
tion date to be extended for a perlod equal to any extens10ns of tIme to
WhlCh contractors are entltled under contracts therefor and any delays in
constructIon resultIng from other causes and events not w1th1n the
reasonable control of Clty or Lessor. CIty shall take possesslon of the
Facllltles upon substantIal completlon of constructlon thereof.
If, however, Lessor, for any reason ~hatsoever> cannot dellver pos-
seSSIon of the FaCllltles as substant1ally complete to Clty In a cond1-
tIon acceptable to Clty by the aforesaId stlpulated completIon date, thIS
Agreement shall not be vOld or VOIdable, nor shall Lessor be lIable to
the CIty for any loss or damage resultlng therefrom; but in such eve~t
the remaInlng Lease Payments pertalnIng to the FacllltL€s shall be
abated. 1n the proportlon that the Acqulslt~on and Constructlon Costs of
the portIon of the Fac1lItles not so substantially completed bears to the
entIre AcqUlsitlon and Constructlon Costs, WIth respect to the perIod
between the aforesald stIpulated completlon date and the tlme when Lessor
1S able to del1ver posseSSIon of the portIon of the Facllltles not so
substant1ally completed; prOVIded. however, that there shall be no
abatement to the extent of amounts on depOSIt ln the Lease Payment
Account or the Reserve Account, It beIng acknowledged that saId Accounts
constltute speCIal funds for the payment of amounts pursuant to this
Agreement.
305. Payment of DelIvery Costs Payment of Dellvery Costs shall be
made from moneys depOSIted WIth the Trustee in the DelIvery Costs Account
and shall be dIsbursed In accordance with and upon compl1ance wlth Sec-
t10n 403 of the Trust Agreement.
306. Unexpended Moneys. Lessor agrees that unexpended moneys
rema1ning 1n the De11very Costs Account shall, upon the earlIer of
(1) payment In full of DelIvery Costs or (11) AprIl 2, 1986, be
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transferred to the Acqu~slt~on and Constructlon Account and that excess
moneys, If any, remalnlng ln the Acquisltlon and Constructlon Account
shall, upon the earller of (1) recelpt by the Trustee of the certlflcate
of substantlal completlon referenced ln Sectlon 402(e) of the Trust
Agreement or (11) Aprll 2. 1988. be transferred by the Trustee to the
Lease Payment Account and be applled as a credlt agalnst the prlnclpal
component of the next subsequent Lease Payments, as more partlcularly
descrlbed ln Sectlon 402(e) of the Trust Agreement.
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ARTICLE IV
LEASE OF FACILITIES AN~ SUBLEASE OF SITE; LEASE PAYMENTS
401 Term of Agreement. The term of th~s Lease Agreement shall commence
as of the date hereof and shall end on the earlier of (i) October 1, 2007
or (ii) the date upon wh~ch Lease Payments are paid 1n full, unless ex-
~nded or term1nated earlier in accordance with the proviSIons hereof.
If on October 1, 2007, the Cert~fIcates have not been pa1d or prOVIs~on
for the payment thereof has not been made, then the term of thIS Lease
Agreement shall be extended untIl ten (10) days after all the Certifi-
cates have been paid or provision therefor has been made, except that in
no event shall the term hereof be extended byond October 1, 2017.
402. Sublease of Site and Lease of FaCIlities. In conSIderation of
the payment by City to Lessor or Its ass1gnee of the Lease Payments and
for other valuable consideration, Lessor hereby subleases the Slte and
leases the FaCIlIties to CIty.
403. Lease Payments. For the right to possession and use of the
Site and the FaC1l1tles, CIty shall pay to Lessor the Lease Payments set
forth 1n Exh1b1t ~ attached hereto and by th1s reference incorporated
herein.
Each Lease Payment shall be for the right to possess the Site and
the Facilities for the annual perIod commenCIng the second day of October
of each calendar year and endIng on the f1rst day of October of the fol-
lowing calendar year, except that the Lease Payments attrIbutable to the
period through and Includ1ng AprIl 1, 1988 shall constitute advance Lease
Payments in consideration of Lessor's agreement to sublease the Site and
lease the FaCIlities to City, shall be deemed to be made on October 1,
1985, and shall be paid from moneys in the Lease Payment Account, it
being hereby acknowledged that said moneys constitute special funds held
by the Trustee pursuant to this Lease Agreement and the Trust Agreement.
For each annual rental period commencing w1th the per10d beginnIng on the
date hereof, City shall make Lease Payments dur1ng said annual per10d as
more particularly set forth in ExhIbIt B, as ExhIbit B may from time to
t1me be mod~fied by the Trustee, as assignee of Lessor, following prepay-
ment of Lease Payments.
Lease Payments for each annual payment period during the terms of
this Agreement shall const1tute the total amount due for sa1d payment
per10d, and shall be paid by City for and in consideration of the r1ght
of possession of, and the continued qU1et use and enjoyment of, the Slte
and the Facilit1es during each such annual payment perIod.
An amount equal to the Lease Payment attributable to each annual
payment per10d shall be due on the fIrst day of September in each year as
specif1ed in Exhibit B; prov~ded however, that, with respect to Lease
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Payments const1tutlng advance ren~al as referenced above. there shall be
appl1ed as a credlt an amount equal to the amount then on depos1t In the
Lease Payment Account therefor; and provided. further. that commenclng
w1th the f1rst Payment Date follo~lng the date upon WhlCh the Acqu1s1tlon
and Construct1on Account lS closed pursuant to Sectlon 402(e) of the
Trust Agreement and for each Payment Date thereafter, there shall be
applied as a credlt (provlded there are no dellnquent Lease Payments)
agalnst the Lease Payments payable on such date an amount equal to the
sum of (i) the amount of lnterest or lncome. lf any, theretofore earned
on the Lease Payment Account and Redempt10n Fund Slnce the date of the
prevlous report made by the Trustee In accordance w1th the prOVlslons of
Sectlon 408 of the Trust Agreement. plus (11) the amount of interest or
income, If any. earned on the Reserve Account Slnce the date of the pre-
V10US report made by the Trustee ln accordance wlth the prOVlslons of
Sectlon 408 of the Trust Agreement. plus (lli) the amount. lf any. then
on deposit in the Lease Payment Account, whlch total credit shall have
been reported on the preced1ng August 31 by the Trustee to C~ty pursuant
to Section 408 of the Trust Agreement In the event that the total
amount of credit exceeds the Lease Payment due on the Payment Date fo1-
lowlng sa~d report, the amount of sald excess shall be appl~ed as a
credlt agalnst subsequent Lease Payments. In addit1on, the amount 1n the
Reserve Account shall be applled as a credit ag31nst the last Lease Pay-
ments due prlor to the explrat~on of the term of thlS Agreement. Should
any Lease Payment be made later than the Pa}~ent Date to whlch such Lease
Payment pertains, such Lease Payment shall bear Interest at the same rate
as the rate represented by th{ ~ntere5t component of S31d Lease Payment
from such Payment Date to the date of actual payment.
Lessor d~rects that CIty shall make the Lease Payments dIrectly to
the Trustee as aSSIgnee of Lessor for deposlt 1n the Le~e Payment
Account
404. Prepayment of Lease Payments.
(a) The prlnclpal component of Lease Payments shall be prepald on
any Payment Date (but not ln a total amount of less than $5,000 at any
one tlme) In lnverse order of Payment Date. wlthout prem1um or penalty at
the prlncIpal amount thereof, together wlth Interest accrued to sald
Payment Date. from the Net Proceeds of Insurance or condemnatlon not used
for repa1r, reconstruct1on or replacement and deposlted ~n the Lease
Payment Account pursuant to SectIons 508(a), 50B(b), 510(a) and 510(b).
1t belng acknowledged that such Net Proceeds so deposited constltute a
special fund for the payment of Lease Payments
(b) The prlncipal component of Lease Payments shall be prepald In
full on October I, 1986. under the Clrcumstances descrlbed In Sect~on
614(b) of the Trust Agreement, ~1thout prem1um or penalty at the
prInc1pal amount thereof, together w1th accrued lnterest to October 1.
1986. from amounts on depos1t In the Speclal Redemptlon Account, 1t belng
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acknowledged that such amounts constltute a speclal fund for the payment
of Lease Payments
(c) Subject to the terms and condltlons of th~s Sectlon, Lessor
hereby grants an optIon to Clty to prepay the Lease Payments in full by
payIng the stIpulated value (as set forth 2n ExhIbIt B) of the Lessor's
Interest ln the Ground Lease and the Facll1tles. 1n whole or In part.
Sald optlon may be exerclsed wlth respect to Lease Payments due on and
after October I, 1996. on any Payment Date commenclng on October I, 1995.
SaId option shall be exercIsed by CIty by glving wrItten notlce to Lessor
or lts assignee of the exerClse of such optlon on or before the flrst day
of February or August prlor to the selected Payment Date Such optlon
shall be exerclsed, in the event of prepayment ln full, by elther
(1) fIllng WIth sald notIce a certlfled copy of a resolutlon of the CIty
approVIng the lS5uance of refundIng bonds or notes. the proceeds of whIch
pursuant to such resolutlon are requlred to be applled to redemptIon of
Certlflcates and are sufflCIent to redeem the CertlfIcates at the premI-
ums payable as provlded 1n the Trust Agreement on the date f~xed for
redemptlon thereof, or (11) depos1tIng on the date sald notlce is glven
cash ~n the amount sufflClent to pay the stlPulated value of the Ground
Lease and the Fac1lltles on sa1d Payment Date as set forth ~n Exhlblt B
together WIth any Lease Payments then due but unpald, or, 1n the event of
prepayment ln part, by deposltlng wlth sald not1ce an amount dlvislble by
$5,000 equal to the amount descrLbed to be prepaLd, together with any
Lease Payments then due but unpald, and the lnterest component of Lease
Payments accrued t~ the selected PaYMent Date. In any event, sald cash
deposlt shall be accompanled by an amount equal to the followlng amoun'
(expressed as a percentage of the amount prepald) constltutlng a prepay-
ment penalty.
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Date of Prepayment Penalty
August 1. 1995 and February 1 , 1996 2-1/2~
August 1. 1996 and February 1. 1997 2%
August 1. 1997 and February I. 1998 1-1/2%
August 1. 1998 and February 1. 1999 I%.
August I, 1999 and February 1. 2000 1/2%
August 1. 2000 and thereafter -0-
In the event of prepayment 1n part. the partlal prepayment shall be
applled by Lessor or lts asslgnee against the prlnclpal component of
Lease Payments In inverse order of thelr Payment Dates. and the Trustee.
as assignee of Lessor. shall provlde to Clty a revlsed schedule of Lease
Payments reflectlng sa1d partlal prepayment
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405. Interest Component. Allor a portlon of each Lease Payment is
pald as, and represents payment of. 1nterest The 1nterest component of
each Lease Payment IS set forth 1n Exh1blt B.
406. Payment 1n Lawful ~oney, No Set-Off. Each Lease Payment shall
be pa1d by Clty 1n lawful money of the Cnlted States of Amer1ca, whlch at
the tlme of pa}~ent 15 legal tender for the payment of publ1c and prIvate
debts, to or upon the order of Lessor or Its asslgnee at the Prlnclpal
Offlce of the Trustee or at such other place as Lessor or lts asslgnee
shall deslgnate. ~otw1thstandlng any dlspute between CIty and Lessor,
Clty shall make or cause to be made each and all Lease Payments when due
and shall not wlthhold or permlt to be wlthheld any Lease Payments
pendlng the flnal resolutIon of such dlspute nor shall Clty assert nor
permlt to be asserted any r1ght of setoff or counterclaIm agalnst the
obllgatlon to make Lease Payments as set forth hereln.
407 Covenant to Budget and Approprlate. Clty covenants to take
such actlon as may be necessary to lnclude all Lease Payments (other than
the amount of any Lease Payment which lS subject to a credlt from funds
deposIted wlth the Trustee, as reported by the Trustee to the Clty pursu-
ant ~o Sectlon 408 of the Trust Agreement) and other payments requlred to
be made hereunder pursuant to thlS Agreement In ItS annual budget and
annually to approprlate an amount necessary to make such Lease Payments.
Durlng the term of thls Agreement, CIty ~ll1 furnlsh to the Tru3tee, as
ass~gnee of AuthorIty, a certIfIcate statIng that the fInal budget for
such fI~~al year contaIns an appropriat1on of amounts sufflc'ent to make
the Lease Payments payable durlng such flscal year. wIthln t~enty (20)
days after each flnal budget of Clty 15 prlnted. The covenants on the
part of CIty hereIn contalned shall be deemed to be and,.shall be con~
strued to be mlnlsterlal dutles Imposed by law and It shall be the duty
of each and every publlC offlclal of Clty to take such actlon and do such
things as are requIred by law In the performance of the offlclal duty of
such offlclals to enable Clty to carry out and perform the covenants and
agreements In thIS Agreement agreed to be carr led out and performed by
Clty.
408. SecurIty DepOSIt ~otwlthstandlng any other provIslon of thIS
Agreement. Clty may on any date secure the payment of all or a portlon of
Lease Payments by a deposIt wlth the Trustee, as escrow holder under an
escrow deposIt and trust agreement as referenced 1n Sectlon 802(d) of the
Trust Agreement, of eIther (1) an amount, If any. whIch, together WIth
amounts on deposlt in the Lease Payment Account and the Reserve Account,
15 suffIcIent to pay all unpaId Lease Payments. lncludlng the prInc1pal
and Interest components thereof. In accordance ~lth the Lease Payments
schedule set forth in ExhIb1t B, or (11) Federal SecurItles, together
WIth cash, If required. in such amount as will, in the opInion of counsel
whose opln1on IS acceptable by underwrlters In the marketlng of tax-
exempt oblIgatIons or of an independent certlfled publ~c accountant,
together wlth Interest to accrue thereon and, If requlred) all or a
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por~Ion of moneys or Federal SecurItIes then on deposIt In the Lease
Payment Account and Reserve Account, be fully suffIcIent to pay all
unpaId Lease Payments on theIr Payment Date.
409 Ground Lease. It IS expressly understood, acknowledged and
agreed by CIty that In addItIon to the terms, condItIons and covenants
stated herein, all of the other terms, conditIons and covenants of thIS
Lease Agreement shall be those stated In the Ground Lease and any amend-
ments and mOdIfIcatIons thereto as of the date of thIS Lease Agree~ent~
provIded, however. that In the event of any InconSistencies between any
of ~he prOViSions of thIS Lease Agreement and the Ground Lease, the terms
of thIS Lease Agreement shall govern. Lessor shall have an oblIgatIon to
maIntaIn the Ground Lease in full force and effect during the term of
thIS Lease Agreement. whenever the prOVISIons of the Ground Lease whIch
have been Incorporated as prOVISIons of thIS Lease Agreemen~ reqUire the
wrItten consent of the Lessor, saId prOVISIons shall be construed to
requ~re the wr1tten consent of both the lessor under the Ground Lease and
the Lessor.
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ARTICLE V
COVEr-;ANTS
501. Improvements. City shall have the right dur1ng the term of
this Agreement to makeJ or perm1t to be made, improvements to the Site
and the Facl1ities if such are necessary or beneficial to the Site and
the Facihties.
502. Maintenance and Ut11~ties. All maintenance and repair of the
Fac1litles shall be the responsib~lity of City. and Clty shall pay for.
or otherWlse arrange for the pa~~ent for. any necessary utillty serVlces
supplied to the Fac~11t1es. all costs of operation of the Facl11ties and
all costs of repair and replacement of the FaCl1ities resultlng from
ordinary wear and tear or want of care on the part of C1ty. In exchange
for the Lease Payments herelD providedJ Lessor agrees to provide only the
Site and the Facilities.
503. Public Liabl1ity Insurance. City shall maintain or cause to
be maintained. throughout the term of this Agreement. a comprehens1ve
general public liability losurance policy or pollc1es agalnst dlrect or
contingent loss or liabillty for damages for personal lnJury. death or
property damage occasloned by reason of the constructlon or operat10n of
the S1te or the Faci11ties. Sald policy or pollcies for comprehensive
general public liabllity insurance shall provide a total coverage of not
less than $10.000JOOO comblned slngle 11mit of bodily injury, personal
injury and property damage including umbrella excess liability. and may
be subject to a deductible amount or self-lnsured retentlon in an amount
not to exceed $500.000. or such lesser amount as may be author~zed by
City's 11sbility insurance program. provided that any self-insured
retention shall be actuarially sound.
504. Workers' Compensation Insurance. C1ty shall maintain or cause
to be maintained, followlng substantlal completlon of the Facilities and
thereafter throughout the term of this Agreement. Workers. Compensation
Insurance or self-insurance to cover all persons employed in connection
wlth the Facilities who are not otherwise covered as required by the
Labor Code of the State of Californ1a. or any act hereaf~er enacted as an
amendment or supplement thereto or in lieu thereof.
505. Fire and Special Extended Coverage Endorsement~ Earthquake
Insurance. City shall malntaln or cause to be maintalned, throughout the
term of this Agreement, fire. lightn~ng and special extended coverage
insurance, which includes vandallsm and mallclouS mlschief on all improve-
ments constituting any part of the Facilities in an amount equal to the
greater of one hundred percent (100%) of the replacement cost of such
improvements or the outstanding prlncipal component of Lease Payments.
TIaCh such policy of insurance shall contain a standard replacement cost
endorsement providing for no deduction for depreciation and a stipulated
amount endorsement. City shall also malntain or cause. to be. maintainedi
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~hrou~hout the term of this Agreementl earthquake insurance in an amount
not less than the full insurable value of the Facil~tiesl if available on
the open market from a reputable insurance company. All insurance requ~red
to be maintained pursuant to this Sect~on may be subject to a deductible
amount or self-~nsured retention ~n an amount not to exceed $500,000, or
such lesser amount as may be author~zed by C~ty's liab~lity 1nsurance pro-
gram, provided that any self-insured retention shall be actuarially sound 1\
506. Rental Interruption Insurance. City shall maintain or cause to
be ma1ntained throughout the term of this Agreement rental ~nterrupt10n
insurance In an amount not less than the maximum total Lease Payments
payable by C~ty on any two consecut1ve Payment Dates, to Insure agalnst
loss of Lease Payments to Lessor or ~ts ass1gnee caused by per1ls covered
by the 1nsurance requ1red by Section 505 hereof.
507. Form of Insurance Pollc1es~ Delivery.
(a) Any polIcies of insurance delIvered In satisfactIon of the
requirements of SectIons 503 through 506 shall prov1de that all Net Pro-
ceeds thereunder shall be payable to C1ty and to the Trustee, as assignee
of Lessor, as theIr Interests may appear. Said pollcles shall permit the
Trustee in the absence of any actIon by City in accordance with thIS
Agreement, to adjust, collect and rece1ve all moneys which may become due
and payable under any such po11cies, to compromise any and all claims
thereunder and to apply the Net Proceeds of such insurance as provided in
this Agreement. All pol1cies of Insurance required by this Agreement
shall provide that City and the Trustee shall be gIven thirty (30) days'
notice of any 1ntended cancellatlon thereof or reduction of the coverage
prOVIded thereby.
(b) City shall deliver, or cause to be dellvered, to the Trustee as
ass1gnee of Lessor in the month of September In each year a schedule, in
such detail as Lessor or its asslgnee may request, setting forth the
insurance policies then in force pursuant to th1s Agreement. the names of
the insurers wh1ch have issued the policies, the amounts thereof and the
property and risks covered thereby. If so requested 1n writlng by the
Trustee as assignee of Lessor. Clty shall also del~ver, or cause to be
delivered to the Trustee, dupl1cate originals or certified copies of each
insurance POllCY described in such schedule, prov1ded that delivery of
the insurance policles under the provisions of this Section shall not
confer responsibilIty upon Lessor or the Trustee as lts ass1gnee as to
the suffIciency of coverage or amounts of said policles. Before a plan
of self-Insurance may be provlded by C1ty, and prior to any change in
such plan, there shall be filed WIth the Trustee a certificate of an
actuary. an independent insurance consultant or other qualifled person
acceptable to the Trustee stating that, in the opinion of the signer, the
plan of self-insurance or change In such plan, when effectlve. would
afford adequate protection to C~ty, Lessor and Its directors, officers
and employees and the Trustee agalnst loss and damage from the hazards
and risks required to be covered hereby.
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508. Appl~catlon of Net Proceeds of Insurance Any Net Proceeds of
any lnsurance requ1red by ~h1S Agreement relatIng to an accident to or
destruct10n of any part of the Fac1l1t1es ~hlCh 1S collected by C1~y 1n
consequence of any such accIdent or destructIon shall he deposited by
CIty in a spec1al fund to be held 1n trust by the Trustee as ass1gnee of
Lessor and shall be appl~ed and d1sbursed as set forth below:
(a) If CIty determines that such Net Proceeds are to be utl-
llzed far the repalr, reconstruct1on or replacement of the damaged or
destroyed port1on of the FacIl1tles, eVldenced by a cert1ficate executed
by an Authorized Offlcer of Clty and flied wlth the Trustee, then CIty
shall cause such portIon of the Fac1l1tles to be repa1red, reconstructed
or replaced to at least the same good order, repair and condltlon as It
existed prlor to the damage or destruction, lnsofar as the same may be
accomplIshed by the use of said Net Proceeds, and shall dlrect the
Trustee to wlthdraw sald Net Proceeds from sald speclal fund held by the
Trustee from t~me to tIme and to pay such ~et Proceeds to C1ty for the
purpose of such repair, reconstructlon or replacement Clty shall d1rect
the Trustee to deposit any balance of sa1d Set Proceeds rema1nlng 1n sald
spec1al fund and not requlred for such repalr, reconstructlon or replace-
ment lnto the Lease Payment Account as a prepayment of Lease Payments, ln
accordance wlth Sectlon 404(a) hereof. Subject to the provlslons of sub-
sect10ns (b) and (c) of this Sectlon, C1ty shall be obl1gated to contlnue
to make Lease Paymen~s reqUired by thlS Agreement notWithstandIng aCC1-
dent to or destructlon of all or a port1on of the FaCll1tles; provided,
however. that 1n +he event that accldent or damage to any port1on of the
Facilit1es 1S such as to cause such portlon not to be usable. then such
Lease Payments shall be abated, In the proportion to whlch the unusable
portlon of the Fac1llt1es bears to the entire FaC1lltle~. untll repa1r of
such damaged portlon 15 completed to such an extent as 'to enable use
thereof. except that there shall be no abatement so long as moneys then
on depOSIt 1n the Lease Payment Account or 1n the Reserve Account, or ~et
Proceeds of 1nsurance, are sufficlent for the maklng of Lease Payments
when and as due It be1ng hereby declared that such moneys and ~et Pro-
ceeds const1tute spec1al funds for the payment of Lease Pa;~ents.
(b) In lleu of repair, reconstruction or replacement of the
damaged or destroyed portlon of the Fac111tles. Clty may, by a certlfl+
cate executed by an Authorlzed Off1cer of C1ty and flIed w1th the Trus.
tee, d1rect the Trustee to apply the Net Proceeds of lnsurance to the
exerClse In whole to the extent of sa1d ~et Proceeds. on the next suc-
ceed1ng Payment Date to the prepayment of Lease Payments 1n accordance
w1th SectIon 404(a) hereof. For the purposes of th~s subsect1on, Sec-
tIon 404(a) of th1S Lease Agreement shall be deemed to requ1re prepayment
w1thout premium on the Payment Date follo~lng the date whlch 1S s~xty
(60) days subsequent to recelpt by the Trustee of the Net ?roceeds of
lnsurance and of sa1d cert1flcate of an Authorlzed Off1cer of City.
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(c) Any ~et Proceeds of rental InterruptIon insurance requIred
by thls Agreement shall be used fIrst to reImburse CIty for Lease
Payments theretofore paId dur~ng any perIod In ~hich abatement of Lease
Payments would otherWIse have occurred notwIthstandIng aCCIdent to or
destructIon of all or a portIon of the FaCIlItIes Any balances
remaInIng shall be paId by CIty to the Trustee, as assIgnee of Lessor,
for deposIt In the Lease Payment Account and applIed as 8 credIt agaInst
the next subsequent Lease Payments
509. TItle Insurance City shall prOVIde. or cause to be prOVIded,
at Its own expense a CalIfornIa Land TItle ASSOCIatIon tItle Insurance
polICY wIth endorsement so as to be payable to the Trustee (as AssIgnee
of Lessor pursuant to the AssIgnment Agreement). Such polICY shall
Insure CIty'S subleasehold tItle to the Slte and leasehold tItle to the
Facllltles. subject only to PermItted Encumbrances. Said tItle 1nsurance
polICY shall be In a prIncipal amount equal to the aggregate unpa~d prln-
clpal component of Lease Payments set forth in Exh~b~t B.
510 Appllcat~on of ~et Proceeds of TItle Insurance or Conde~nat~on
All Net Proceeds receIved under the tItle ~nsurance polley prov~ded for
by this Agreement or 1n any condemnation proceed~ng undertaken by any
governmental agency relatlng to all or a portlon of the Site or the
FaCl1lt~es shall be paId to the Trustee pursuant to the Trust Agreement
and shall be applIed and dlsbursed as set forth below:
(a) If City determines that such t~tle defect or condemnat~on
has not materlally affected the operat~on of the Facl1itles or the ab~l-
1ty of CIty or lts assIgnee to meet any of the oblIgatIons hereunder or
If such ~et Proceeds are lnsufflClent to enable CIty t~.prepay Lease Pay-
ments 1n full pursuant to Sectlon 404(a) hereof. as se~.forth In a cer-
t~flcate eXerc~sed by an Author~zed Off~cer of CIty and flIed wlth the
Trustee. Clty shall d~rect the Trustee by sald certlf1cate of an Autho-
rIzed OffIcer, to hold such Net Proceeds 1n the Lease Payment Account and
apply such Set Proceeds as a prepayment 1n part of Lease Payments pur-
suant to Sectlon 404(a) hereof. For the purposes of thlS 5ubsectlon.
Sectlon 404(a) of thlS Lease Agreement shall be deemed to permit prepayment
wlthout premlum or penalty on the Payment Date follow1ng the date WhlCh
IS thIrty (30) days subsequent to rece1pt by the Trustee of Net Proceeds
of tltle 1nsurance or condemnation and of saId certlflcate of an Autho-
rlzed Officer of City. Subject to the prov1sions of subsectIon (b) of
th1S Section. C1ty shall be oblIgated to contInue to make Lease Payments
required by thlS Lease Agreement notwlthstand1ng condemnatlon of or 8 t1tle
defect relatlng to a portIon of the SIte or the Fac111tles; prov1ded.
however. that 1n the eVent that such condemnat1on or defect ~s to such
extent as to cause such portion not to he usable, then such Lease Pay-
ments shall be abated, 1n the proportIon to which the unusable portIon of
the FaC11itles bears to the entIre FaCl11tles, except that abatement
shall not result so long as moneys then on depOSIt In the Lease Payment
Account or Reserve Account or Net Proceeds of title insurance or condem-
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nation are sufficlent for the maklng of Lease Payments. It being hereby
declared that such moneys and Net Proceeds constitute special funds for
the payment of Lease Payments.
(b) If City determines that such title defect or condem-
nation has materially affected the operation of the Facilities or the
ability of City to meet any of the obligations hereunder as set forth in
a certificate executed by an Authorized Offlcer of City, and filed with
the Trustee. or if such ~et Proceeds are sufficient to enable City to
prepay in full as set forth in Section 404(8) hereof as set forth in a
certiflcate exerclsed by an Authorized Officer of City and filed with the
Trustee, City shall direct the Trustee. by said certificate of an
Authorized Officer, to treat such Net Proceeds as the prepayment. on the
Payment Date followlng the date whlch is thirty (30) days subsequent to
receipt by the Trustee of ~et Proceeds of title insurance or
condemnatlon, and of sald certificate of an Authorized Officer of City,
of Lease Payments in full.
ec) In the event of condemnation of the Site and the
Facillties, Clty ~11l use all efforts to assure that any award made as a
result of said condemnatIon IS suffiCient to pay the stIpulated value (as
set forth In ExhIbit B hereof) of the Lessor's Interest In the Ground
Lease and the Facillties.
511. Payment of Lease Payments. CIty shall duly and punctually pay
or cause to be paid the Lease Payments, at the dates and places and In
the manner provlded in this Lease Agreement according to the true intent
and meanIng hereof and shall not dlrectly or Indirectly extend or assent
to the extenSion of the Payment Dates of any Lease Paym,nts.
,.
512. Compliance With thIS Agreement. Each of City and Lessor will
faithfully observe and perform their respective covenants. condltions and
reqUIrements of this Lease Agreement CIty will not suffer or permIt any
default to occur hereunder. nor do or permIt to be done in. upon or about
the Site or the Facilities or any part thereof. anything that might 1n
any way weaken, dImInish or impair the operation of the Facillties. Clty
Will not do or permlt anythlng to be done, or omIt or refrain from dOlng
anything, in any case where any such act done or permltted to be done, or
any such omission of or refraIning from actIon. would or mlght be a
ground for cancellation or termInation of this Lease Agreement.
513 Payment of Taxes. City WIll payor cause to be paid all taxes,
assessments and other governmental charges, if any, that may be levled,
assessed or charged upon the Slte or the FacilitIes or any part thereof.
promptly as and when the same shall become due and payable; prOVided.
however. that City shall not be requ~red to pay any such tax, assessment,
or charge. if the validIty thereof shall concurrently be contested In
good faith by appropr1ate proceedings, and if City shall set aSldet or
cause to be set aside. reserves deemed by it to be adequate w1th respect
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thereto and prov~ded further, that CIty, upon the commencement of any
proceed~ngs to foreclose the l~en of any such tax, assessment, or charge,
w~ll forthwith pay, or cause to be paId, any such tax, assessment or
charge, unless contested ln good falth as aforesald. Clty wIll not
suffer the Slte or the FeCI1Itles or any part thereof to be sold for any
taxes, assessments or other charges whatsoever, or to be forfelted
therefor. Nothlng herein contalned shall be deemed to lmpose any
llab~llty to pay taxes, assessments or charges ~here none is lmposed by
l~
514. Observance of Laws and RegulatIons. Clty wl11 well and truly
keep, observe and perform all valId and lawful obllgatlons or regulatIons
now or hereafter lmposed on 1t by contract. or prescrlbed by any law of
the Cnlted States. ar of the State of Callfornla. or by any offlcer,
board or commIssion haVIng Jurlsdlctlon or control, as a condItIon of the
contInued enjoyment of any and every rlght, prlvI1ege or franchise now
owned or hereafter acqulred by C1ty, 1ncludlng lts right to eX1st and
carryon bus1ness as a pub11c body, corporate and pOlltlc, to the end
that such r1ghts, pr1vileges and franch1ses shall be maintained and pre-
served, and shall not become abandoned, forfe1ted or ln any manner
1mpa1red.
515 Malntaln and Preserve the Fac~11t1es C1ty wlll operate, ma1n-
ta1n and preserve, or cause to be operated, malntalned and presecved, the
FaC111tIes tn good repaIr and worklng order and wlll operate, or cause to
be operated, the Facl11ties 1n an eff1clent and economlcal ma~ner.
516. Other LIens Clty shall keep the FaclIltles and all parts
thereof free from judgments, from mechanlcs' and materlplmen's liens
, , .
(except those mechanlCS and materIalmen s Ilens arlsl~ from construc-
tlon of all or a portlon of the FaCI1lt1es) and, except as to Perml~ted
Encumbrances, free from all llens, cla~ms. demands and encumbrances of
whatsoever nature or character. to the end that the Slte and the Fac111-
tles may at all t1mes be malntalned and preserved, and Clty shall keep
the Slte and Facllltles free from any cla1m or llabll1ty whlch, 1n the
reasonable Judgment of Lessor or lts asslgnee. mlght lmpair ar Impede the
operatlon of the Facllitles; provlded, however, that C1ty shall not be
requlred to pay any such llens, clalrns or demands If the valldlty thereof
shall concurrently be contested 1n good f81th by approprlate proceedlngs,
and lf Clty shall set aSlde or cause to be set as~de reserves deemed by
tt to be adequate w1th respect thereto and provlded further, that Clty
upon the commencement of any proceedlngs to foreclose the llen of any
such charge or c1a~m, w111 forthw1th payor cause to be pa1d any such
charge or cla~m unless contested in good falth as aforesa~d. Lessor, or
lts ass~gnee, at ~ts optIon (after f~rst gIving C1ty ten (10) days' wrlt-
ten notlce to comply thereWIth and fallure of Clty or lts asslgns to so
comply wlthln sald ten-day perlod) may defend agalnst any and all actlons
or proceed~ngs in which the valld1ty of thlS Agreement lS or mIght be
questioned. or may payor compromIse any cla~m or demand asserted in any
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such act10ns or proceed~ngs; provIded, however, that, In defendlng
agalnst such actIons or proceed1ngs or In paYIng or compromIsIng such
claIms or demands, neIther Lessor nor its aSSIgns shall 1n any event be
deemed to have waIved or released C1ty from llablllty for or on account
of any of lts covenants and warrantIes contaIned hereIn, or from its
lIabilIty hereunder to defend the valIdIty of thIS Agreement and the
pledge herein made to perform such covenants and warrantIes.
517 AgaInst Encumbrances or Sales. Except as permItted in this
Agreement and except as to PermItted Encumbrances, Clty WIll not create
or suffer to be created any mortgage, pledge, lIen, charge or encumbrance
upon the SIte or FacIlItIes or any part thereof, or upon any real or
personal property essentIal to the operatIon of the FaCIlItIes CIty
WIll not sell or otherWIse dlspose of the SIte or the FacIllt1es or any
property essentIal to the proper operatIon of the Facllltles, except as
otherwise provIded In thIS Agreement
518 ProsecutIon and Defense of SUlts C~ty shall promptly) upon
request of Lessor or Its aSSIgnee) from tIme to t~me take or cause to be
taken such action as may be necessary or proper to remedy or cure any
defect in or cloud upon the tItle to the SIte or the FaCIlItIes whether
now eXIstIng or hereafter developIng and shall prosecute all such SUIts,
actIons and other proceedIngs as may be approprlate for such purpose and
shall IndemnIfy or cause to be IndemnIfied Lessor and lts aSSIgns for all
loss, cost, damage and expense, 1nclud1ng attorneys' fees, ~hich they or
any of them may Incur by reason of any such defect, cloud) SUIt, actIon
or proceedlngs.
CIty shall defend, or cause to be defended, every ~Ult, actIon or
proceedlng at any time brought against Lessor or its aS~lgnee upon any
claIm arISIng out of the receIpt, appllcatlon or dIsbursement of any
amounts held by the Trustee or involVIng the rIghts of Lessor or Its
aSSIgnee under thls Agreement; prov1ded, that Lessor and ltS aSSIgnee at
theIr electIon may appear 1n and defend any such sU1t, actIon or pro4
ceeding City shall IndemnIfy or cause to he lndemnified Lessor and Its
aSSIgnee agaInst any and all llab~llty claImed or asserted by any person,
ar1sIng out of such rece1pt) applIcatIon or disbursement.
519. Recordatlon and FIl1ng CIty shall record and flle, or cause
to be recorded and flIed, a memorandum of th1s Agreement and all such
supplemental Instruments and other documents as may be reqUIred by law
(together w~th whatever else may be necessary or be reasonably requ~red
by Lessor or its aSSIgnee), In such manner. at such tImes and 1n such
places as may be requlred by law ln order fully to preserve and protect
the rights of I,essor and its aSSIgnee under thIS Agreement.
520 WaIver of Laws. C1ty shall not at any tIme Inslst upon or
plead in any manner ~hatsoever, Or claIm or suffer or take the benefit or
advantage of any stay or extension law now or at any t~me hereafter in
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force which may adversely affect the covenants and agreements conta~ned
1n th~5 Agreement and the beneflt and advantage of any such law or laws
is hereby expressly walved by C1ty to the extent that Clty may legally
make such walver.
521. Compl~ance wlth Conditlons Precedent Upon the date of dellvery
of th1S Agreenent, all cond1tions, acts and thlngs required by law or by
this Lease Agreement to have happened or to have been performed precedent
to or ln the execut10n of thlS Lease Agreement shall eXist, have happened
and have been performed, and thiS Lease Agreement shall be w1th~n every
11mlt prescr1bed by law
522. Power to Enter lnto Agreement. City is duly authorized
pursuant to the law to enter 1nto thls Agreement. The provlslons of thlS
Lease Agreement are and will be the val1d and legally enforceable speclal
obl~8atlons of Clty ~n accordance wlth thelr terms and the terms of thlS
Lease Agreement.
523. Further Assurances. ~henever and so often as requested so to
do by any party or 1tS ass1gnee the other party w1l1 upon wr1tten request
by such party or 1tS asslgnee and follow1ng reasonable notlce execute and
dellver or cause to be executed and del1vered all such other and further
1nstruments, documents or assurances, and do or cause to be done all such
other and further thlngs, as may be necessary or reasonably requ1red 1n
order further and more fully to vest 1n such party or 1tS asslgnee, all
rlghts, lnterest, powers, beneflts, prl' _leges and advantages conferred
or lntended to be conferred upon such party by th1s Agreement.
524 F1nancial Reports. w1chln one hundred e1ght~:(180) days after
the close of each f1scal year of Clty, C1ty wlll furn1sh, or cause to be
furnlshed, to the Trustee as aSSIgnee of Lessor detailed certlf1ed
reports of aud1t, based on an exam1natlon suff1clently complete, prepared
by an lndependent cert1f1ed publlc accountant cover1ng the operatlons of
the Clty for sald f1scal year shOWing the general funds, revenues and
expenses for such perIod Such audIt report shall Include statements of
the status of each fund establ1shed by Clty pertaln1ng to thiS Agreement
or the Facllltles, showlng the amount and source of deposlts thereln, the
amount and purpose of the WIthdrawals therefrom and the balance thereIn
at the beg1nn1ng and end of the f1scal year. Such audIt reports may be
comb1ned WIth the audits made for Cltyts general business and operat1ons.
525. Lessor ~ot LIable. Ne1ther Lessor nor 1ts members, offlcers,
agents, employees, or asslgnee shall be liable to C1ty or to any other
party whomsoever for any death, InjUry or damage that may result to any
person or property by or from any cause whatsoever in, on or about the
Slte or the Facllltles. City shall lndemnlfy or cause to be Indemn~fled
and hold Lessor, 1tS members, offlcers, agents, employees and 1tS
ass1gnee harmless from, and defend or cause each of them to be defended
agaInst any and all clalms, llens and Judgments for death of or injury to
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any person or damage to property ~hatsoever occurrIng in, on or about the
SIte or the Facilltles, except for clalms, lIens or Judgments of any
nature whatsoever arIsIng from the gross neglIgence or ~lllfu1 mIsconduct
of Lessor or its assIgnee and their respectIve members, offIcers, agents
and employees.
526 Net Lease. It IS the purpose and Intent of Lessor and CIty
that Lease Payments shall be absolutely net to Lessor so that thIS Lease
Agreement shall YIeld to Lessor the Lease Payments, free of any charges,
assessments, or Impositions of any kind charged, assessed, or Imposed on
or against the SIte or the FacIlItIes, and ~Ithout abatement, counter-
claIm, deductIon, defense, deferment or set-off by City, except as hereIn
specifically othe~lse provIded, and Lessor shall not be expected or
required to pay any such charge, assessment or ImpOSItIon, or be under
any oblIgatIon or lIabIlIty hereunder except as hereIn expressly set
forth. and that all costs, expenses and obligations of any kind relatIng
to the maIntenance and operatIon of the SIte and the FaCIlItIes ~hlCh may
arIse or become due durIng the term of thls Lease Agreement shall be paId
by CIty. To that end, CIty shall IndemnIfy and hold Lessor. its members,
offIcers, agents and employees, and its aSSIgnee harmless from and
against any and all costs, expenses and oblIgatIons (IncludIng, ~lthout
lImItatIon. reasonable a~torneys' fees) that may be ~mposed on or asserted
agaInst Lessor relatIng to the maintenance and operatIon of ~he S~te and the
FacilitIes pursuant to thlS Lease Agreement and the Ground Lease, except
for costs, expenses and oblIgatIons ar1sIng from the gross neglIgence or
w1llful mIsconduct of Lessor ~r Its aSSIgnee and the1r respectIve
members, offIcers. agents and employees.
527 Trustee Fees. City shall payor cause to he Raid to the Trus-
tee reasonable fees and compensatlon due under the Tru~e Agreement upon
perIodIC bIllIng therefor by Trustee.
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ARTICLE VI
DISCLAI~ER OF wARRA~TIES, ASSIG\~E~l;
SUBLEASING, ACCESS, A~E\D~ENT
601. DISCLAI~ER OF ~ARRA'lIES NEITHER LESSOR NOR ITS ASSIG~EE ~AKE
~~~ WARRA~lY OR REPRESE~TATION. EITHER ExPRESS OR IMPLIED, AS TO THE
VALUE, DESIGN, CO~DrTrON, MERCHA~lABILITY OR FI~ESS FOR A~Y PARTIClLAR
PURPOSE OR FITKESS FOR THE CSE CO\!E~PLATED BY CITY OF THE FACILITIES OR
A~Y PORTION THEREOF, OR ANY OTHER REPRESE~TATION OR ~ARRA\lY wITH RESPECT
TO THE FACILITIES OR ANY PORTION THEREOF. I~ ~o EVE~T SHALL LESSOR OR
ITS ASSIG\EE BE LIABLE FOR INCIDE~TAL, I~DIRECT. SPECIAL OR CO~SEQL[~TIAL
DAMAGES, IN CO~~ECTIO~ WITH THIS AGREE~E'l OR THE EXISTE\CE, FLR~ISHI~G,
OR FCNCTIOSI~G OF THE FACILITIES OR CITY'S CSE OF THE FACILITIES, EXCEPT
SCCH DA:1AGES AS '1AY ARISE BY REASO~ OF LESSOR'S BREACH OF THIS AGREE~E\l
602. ASSIgnment by Lessor. Lessor's r1ghts under th1s Agreement,
includIng the rIght to receIve and enforce payment of the Lease Payments
to be made by the C~ty under thIS Agreement, may be assigned and reas-
slgned, 1n conformance ~lth the terms and conditlons of thiS Agreement,
in whole or ~n part to one or more aSSIgns by Lessor at any t~me, w1thout
the consent of CIty Lessor agrees to provIde pro~pt ~r1tten notlce of
any such aSSIgnment to CIty.
603. ASSIgnment and Subleaslng by Clty Except as prov1ded herein,
this Agreement may not be asslgned by City wIthout the written consent rf
the Trustee as aSSignee of Lessor. Such wrItten consent shall not be
unreasonably wlthheld.
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t'
Notwithstandlng any other provls1on of thiS Agreement the Slte and
the Facllit1es may be subleased by C1ty. subject to PermItted Encum-
brances, in ~hole or 1n part, Without the consent of Lessor, subject,
however, to each of the follOWIng conditions
(a) Th1s Agreement and the oblIgatIon of CIty to make Lease
Payments hereunder, shall not be adversely affected, and
(b) No such sublease shall cause the interest component of the
Lease Payments to become subject to Federal 1ncome taxes; prOVided that
City may in entering lnto any such sublease rely upon the opinion of
counsel whose opInIon 1S acceptable by underwrlters In the marketlng of
tax-exempt obligatlons With respect to the effect. 1f any, of such
sublease.
604. Transfer of Tax Beneflts. ~othIng herein shall be deemed to
prevent C1ty from enter~ng Into any agreement or making any dlSpos1tlon
for the sole purpose of transferrIng to one or more corporat1ons. part-
nersh1ps or IndIVIduals Federal or state ~ncome tax benefits whIch would
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be aval1able for the FaCl1ltles If o~ned by a prlvate person, subject,
however, to each of the follo~lng condItIons:
(a) Thls Agreement and the obllgatlon of C1ty to make Lease
Payments hereunder shall not be adversely affected;
(b) No such agreement or dlSposltlon shall cause the Interest
component of the Lease Payments to become subject to Federal Income
taxes; and
(c) The transactlon ~lll be so structured as to assure that In
the event of bankruptcy of the transferee, the Lease Payments shall not
become a part of the transferee's estate under SectIon 362a, S47b and
552a of the Federal Bankruptcy Code or any slmllar successor Sect~ons
~h1Ch may hereafter be enacted.
605. Access to Slte and Facil1tles. C1ty agrees that Lessor and Its
assignee shall have the r1ght at all reasonable tlmes and upon reasonable
notIce to examine and lnspect the SIte and the Facllltles and the rIght
of access to the Slte and the Facllltles for such purpose.
606 Amendment Th1S Lease Agreement may be amended 1n wrltlng by
the partles hereto or by theIr aSSIgnees on thelr behalf or ln theIr name
for the purpose of (a) curIng any amblgulty or of curlng, correcting or
supplement~ng any defect~ve provlslon contalned hereln, or (b) in regard
to quest~ons arlslng under thIS Agree~ent which City may deem necessary
or deslrab1e and not lnconslstent With the prOVls~ons of th~~ agreement,
provlded, however, that no such amend~ent shall adversely affect the
exempt~on from Federal lncorne taxat~on of the ~nterest ~omponent of Lease
Payments or the lnterests of the Cer~~f~cate Owners, and'provlded, fur-
ther, that the part1es hereto or their asslgnees may rely 1n entering
into any such amendment pursuant to thIS Sectlon 606 upon the opin~on of
counsel whose opinlon 1S acceptable by under~r1ters 1n the marketing of
tax-exempt obllgatlons statlng that the reqUirements of thls sentence
have been met wlth respect to such amendment.
Thls Lease Agreement may be amended in wrltlng by the partles hereto
or by the1r aSSignees on thelr behalf or In theIr name wlth respect ~o
matters not lncluded in (8) or (b) above upon approval of a maJor1ty in
aggregate prIncipal amount of the Owners of the Certlflcates then Out-
standIng, provlded that no such amendment shall impair the rlght of any
Owner to recelve hiS proportIonate share of any Lease Payment 1n accor-
dance wlth his Certificate. Notwlthstandlng the foregolng, no amendment
to thIS Lease Agreement may confer any addltlonal oblIgations on Lessor
Without the prlor ~rItten consent of Lessor, to be granted 1n its sole
dlscretlon.
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ARTICLE VII
EVE~7S OF DEFALLT A~D RE~EDIES
701. Events of Default. The folloW'l.ng shall be "Events of
Defaule' under thlS Agreement and the term "Event of Default" shall mean,
whenever it ~s used in thiS Agreement anyone or more of the followlng
events:
(a) Failure by Cl.ty to pay any Lease Payment requlred to
be pal.d hereunder at the tlme specifled hereln and the continuation of
sa~d fallure to the Payment Date to WhlCh such Lease Payment pertaIns; or
(b) Fallure by Clty to observe and perform any covenant,
COndl.tlon or agreement on l.ts part to be observed or performed, other
than as referred to in clause (a) of the SectIon 701, for a period of
thirty (30) days after wr~tten notice speclfYlng such fallure and
requestlng that 1t be re~edled has been glven to C1ty by Lessor or lts
ass1gnee, unless Lessor or 1tS assignee shall agree In writlng to an
extenSl.on of such time prlor to its eXp1rat1on. provlded, however, 1f the
fallure stated ln the notlce cannot be corrected wlthln the appl1cable
perIod, Lessor or 1ts ass1gnee wlll not unreasonably wlthhold ~ts consent
to an extens~on of such tlme lf correct~ve actlon lS 1nstituted by C~ty
w1th1n the appllcable perIod and d~llgently pursued untIl the default 1S
corrected; or
(c) A court havlng Jurisdlctlon 1L the premlses shall
enter a decree or order for rel1ef ln respect of C~ty 1n an 1nvoluntary
case under any applIcable bankruptcy, 1nsolvency or oth$r slm1lar law now
or hereafter 1n effect, or appolntlng a recelVer. 11quldator, assignee,
custodlan, trustee, sequestrator (or slmllar off1Cldl) of Clty or for any
substantlal part of ltS property, or orderlng the wlndlng up or llqulda~
tIon of lts affalrs. and such decree or order shall remal.n unstayed and
ln effect for a perlod of Sixty (60) days, or
(d) Clty shall cowmence a voluntary case under any appll-
cable bankruptcy. lnsolvency or other slm2lar law now or hereafter In
effect, or shall consent to the entry of an order for rellef ln an lnvol-
untary case under any such law, or shall consent to the appolntment of or
taking possessl.on by a recelver, lIquIdator, ass1gnee, trustee,
custodlan, sequestrator (or slmilar off1Cl.al) of Clty or for any
substantial part of its property, or shall make any general aSSIgnment
for the beneflt of creditors, or shall fall generally to pay lts debts as
they become due or shall take any corporate actlon ln furtherance of any
of the foregolng.
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702. Remedles on Default.
(a) Upon the happen~ng of any of the Events of Default
specified 1n Sectlon 701 hereof. Lessor or lts ass1gnee may exerClse any
and all remedies available pursuant to law or granted pursuant to thlS
Agreement. In the event of an Event of Default, Clty shall. as herein
expressly provided. contlnue to remaln llable for the payment of Lease
Payments and damages for breach of this Agreement and the performance of
all concl1tlons herein conta1ned and, 1n any event, such Lease Payments
and damages shall be payable to the Lessor or ltS ass1gnee at the tlme
and In the manner set forth 1n paragraphs (1) and (2) of thlS subsect1on.
(1) In the event that Lessor or its ass1gnee does
not elect to termlnate this Agreement pursuant to paragraph (2) below.
Clty agrees to and shall remaln llable for the payment of Lease Payments
and the performance of all condltlons hereln contalned and shall relm-
burse Lessor or ltS asslgnee for any def~clency arls1ng out of the re1et-
tlng of the Slte and the Fac1lltles, or, 1n the even~ that Lessor or lts
ass~gnee is unable to relet the Slte and the Facl11tles. then for the
full amount of the Lease Payments to the end of the term of this Agree-
ment, but sa~d Lease Payments or deflc~ency shall be payable only at the
same tlme and 1n the same manner as prov~ded 1n Sectlon 403, notwtth-
standlng any SUlt 1n unla~ful detalner, or otherWlse, brought by Lessor
or its asslgnee for the purpose of obtain1ng possesslon of the Slte and
the Facilitles or the exerClse of any other remedy by the Lessor or lts
asslgnee. C1ty hereby lrrevocably appo1nts Lessor or 1tS asslgnee as the
agent and attorneY-1n-fact of C1ty to ~nter upon and relet the Slte and
the Facll1tles ln the event of default by Clty Clty hereby exempts and
agrees to save harmless Lessor and its asslgnee from an~ costs. loss or
damage whatsoever (lncludlng, w1thout llm1tatlon, reason~ble attorneys'
fees) ar1s1ng or occasloned by any such entry upon and lett1ng of the S1te
and the Facll1ties, except for any such costs, loss or damage ar1s1ng from
the gross negl1gence or w1llful m1sconduct of Lessor or ltS asslgnee. Clty
hereby wa1ves any and all cla1ms for damages caused, or wh1ch may be
caused, by Lessor or its asslgnee 1n tak1ng possesslon of the Slte and
the Facl11tles, for all clalms for damages that may result from ~he
destructlon of or 1njury to the Slte and the Facll1ties. and all claims
for damages to or loss of any property belong1ng to C1ty that may be ln
or upon the Slte and the Facll1t~es, except for damages or loss arlslng
from the gross negllgence or w~llful mlsconduct of Lessor or 1tS
ass~gnee. Clty agrees that the terms of th1S Agreement constltute full
and suff1c1ent notlce of the right of Lessor or lts asslgnee to relet the
Slte and the Facll1tles wlthout effectlng a surrender of thlS Agreement,
and further agrees that no acts of Lessor or lts ass1gnee 1n effect1ng
such relettlng shall constltute a surrender or termination of thls Agree-
ment 1rrespectlve of the term for whlch such relettlng 1S made~ or of the
terms and conditions of such re1ettlng, or otherwise, but that, on the
contrary. In the event of such default by Clty, the rIght to term1nate
th1S Agreement shall vest 1n Lessor or its ass1gnee to be effected 1n the
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sole and exclusive manner here~nafter prov~ded for ~n paragraph (2)
below.
(2) Upon an Event of Default, Lessor or ~ts assIgnee
may, at Its optIon, term~nate thIS Agreement followIng ten (10) days'
wrItten notIce thereof to CIty. In the event of termInatIon of thIS
Agreement by Lessor or Its assIgnee on account of an Event of Default
(and notwIthstandIng any resublettIng of the SIte and the Facil~tles),
CIty nevertheless agrees to pay to Lessor or to Its assIgnee all costs,
loss or damages howsoever (IncludIng, WIthout 11mltat~on, reasonable
attorneys' fees) ar~slng or occurrIng payable at the same tIme and In the
same manner as in the case of payment of Lease Payments hereander. Lessor
or Its ass~gnee may resublet the SIte and the Fac~lltIes. Moneys rece~Ved
from such resublettlng and any surplus receIved by Lessor or Its aSSIgnee
from such resublettlng shall be the absolute property of Lessor or Its
aSSIgnee and C~ty shall have no rIght thereto ~eIther notIce to pay
rent or to del~ver up possess~on of the S~te and the FacIlitIes g~ven
pursuant to law nor any proceedIng In unlawful detaIner taken by Lessor
or its aSSIgnee shall of Itself operate to termInate thIS Agreement, and
no termInatIon of th~s Agreement on account of default by CIty shall be
or become effectIve by operatIon of law, or otherw1se, unless and uncIl
Lessor or Its ass1gnee shall have gIven wrItten notlce to CIty of the
electlon on ~he part of Lessor or ltS assignee ~o termInate thlS
Agreement.
(b) Each and all of the remedIes glven to Lessor and ltS
ass~gnee hereunder or by any -aw now or hereafter enacted are cumulatIve
and the exerClse of one rlght or remedy shall noc Impalr the rlght to
Lessor or ltS aSSIgnee to exerCIse any or all other remedles.
~:
703 SUIts at Law or In EqUIty and ~andamus. in addltlon to
the remedIes set forth In SectIon 702 hereof, In case one or more of the
Events of Default shall happen, then and 1n every such case, Lessor and
lts aSSIgnee shall be entItled to proceed to protect and enforce the
rlghts vested in Lessor and Its asslgnee by thIS Agreement by such appro-
prlate ]UdlClal proceedlng as Lessor or lts aSSIgnee shall deem most
effectual to protect and enforce any such rIght, eIther by SUIt In equlty
or by actlon at law, whether for the specIflc performance of any covenant
or agreement contaIned ln thIS Agreement, or to enforce any other legal
or eqUItable rlght vested In Lessor and Its aSSIgnee by thIS Agreement or
by law. The provlslons of thIS Agreement and the dutIes of C~ty and of
the members, offIcers and employees thereof shall be enforceable by
Lessor or lts aSSIgnee by mandamus or other approprlate SUIt, actlon or
proceedIng ln any court of competent JurIsdIctIon.
(a) WIthout lImItIng the generallty of the foregOIng,
Lessor and Its aSSIgnee shall have the rIght.
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(1) Accountlng By actlon or SUlt In equity to
requlre the Clty and Its offlcers. agent and e~ployees and Its asslgns to
account as the trustee of an express trust.
(11) InJunctIon.
enJoln any acts or thIngs ~hICh may
r1ghts of Lessor or ltS asslgnee.
By actlon or SUIt 1n equity to
be unlawful or In vlolat1on of the
(111) ~andamus. By mandamus or other suit. actlon or
proceedIng at law or In eqUIty to enforce Its or theIr rIghts agaInst
Clty and ItS and any of Its offIcers, agents, and employees and Its
aSSIgns. and to compel It or them to perform and carry out lts and theIr
dutles and oblIgatIons under the law and Its and their covenants and
agreemen~s wIth Lessor as prOVIded hereln.
704 \on-Walver \othIng in thlS ArtIcle VII or In any other
prOVISIon of thIS Agreement shall affect or Impalr the obllgatlon of CIty
to pay the Lease Payments, as hereln prOVIded. No delay or omlSSlon of
Lessor or i~s aSSIgnee to exerClse any rIght or power arlslng upon the
happenIng of any event of default shall ImpaIr any such rIght or pOwer or
shall be construed to be a walver of any such event of default or any
acqUIescence thereIn, and every power and remedy gIven by thlS ArtIcle
VII to Lessor and ItS aSSIgnee may be exercIsed from tlme to tIme and as
often as shall be deemed expedIent by Lessor Qr l~S aSSIgnee
705. RemedIes not ExclUSIve. ~o remedy herein or by law con-
ferred upon or resrrved to Lessor and Its dss1gnee 15 Intended to be
exclUSIve of any other remedy, bu~ each such remedy IS cumulatIve and ln
addItIon to every other remedy, and every remedy gIven hereunder or now
or hereafter existIng. at law or In eqUIty or by statute~cr otherWIse may
be exerc~sed ~lthout exhaustIng and ~~thout regard to any other renedy
conferred or by any law
706. Status Quo An~e. In case any SUIt, actIon or proceed lag
to enforce any rIght or exerClse any remedy shall be brought or taken and
then dIscontlnued or abandoned. then, and In every such case. Lessor and
ItS aSSIgnee and CIty shall be restored to ItS and thelr former pOSltlon
and rIghts and remedIes as If no such SUlt. actIon or proceedlngs had
been brought or taken.
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ARTICLE VIII
ADMI~ISTRATIVE PROVISIO~S
801. Preservatlon and InspectIon of Documents. All documents
receIved by Lessor or Its asslgnee or CIty under the provlslons of thls
Agreement shall be re~aIned In theIr respectIve posseSSIons and shall be
subject at all reasonable tImes to the InspectIon of the other party
hereto and Its assigns. agents and representatIves, any of ~hom may make
caples thereof.
802 PartIes In Interest Nothlng In thIS Agreement, expressed
or lmplled. 1S Intended to or shall be construed to confer upon or to
glve to any person or party other than Lessor and Its asslgnee and CIty
any rIghts. remedles or clalms under or by reason of thIS Agreement or
any covenants, condlt~on or stlpulatlon hereof; and all covenants.
stIpulations. promIses and agreements In thls Agree~ent conta1ned by or
on behalf of Lessor or Clty shall be for the sole and exclUSIve beneflt
of Lessor and ltS aSSIgnee and CIty.
803 ~o Recourse Cnder Agree~ent. All covenants, stlpulatlons,
promIses. agreements and obllgatlons of the partles hereto contaIned in
thIS Agreement shall be deemed to be the covenants, stlpulat~ons.
promlses, agreements and obllgatlons of the partIes hereto, respectively,
and not of any member. offlcer. employee or agent of the partles hereto
in an IndlvIdual capaCIty. and no recourse shall be had for the payment
of the Lease Payments or for arJ clalm based thereon or under thiS
Agreeme~_ agaknst any member, offlcer. employee or agent of the partIes
hereto.
~.
804. ~otlces All notlces, cert~flcates or oth~r
communlcatlons hereunder shall be sufficlently gIven and shall be deemed
g1ven when dellvered or deposl~ed In the United States mall wlth postage
fully prepaid:
If to Lessor:
Security Paciflc NatIonal Bank
300 South Grand Avenue
21st Floor 8-211
Los Angeles, CA 90071
Attn. Richard H. Clark
If to City:
Clty of Santa ~onlca
1685 Maln Street
Santa MonIca. CA 90401-3295
Attn Clty Manager
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wIth a copy to'
CIty of Santa MonIca
1685 MaIn Street
Santa ~onlca, CA 90401-3295
Attn CIty Attorney
Santa ~onlca AIrport
3200 AIrport Avenue
Santa MonIca, CA 90405
Attn' AIrport DIrector
The partIes hereto, by notIce gIven hereunder, may, respectIvely,
deSIgnate dIfferent addresses to ~hich subsequent notIces, certIfIcates
or other co~munIcatIons ~ill be sent. A copy of all notIces to one party
to thIS Agreement shall be transmItted to the other party to thIS
Agreement, and to the Trustee.
80S BIndIng Effect. ThIS Agreement shall inure to the benefIt
of and be bIndIng upon Lessor and CIty and theIr respectIve successors
and aSSIgns.
806 SeverabIlIty. If anyone or more of the covenants, stIPU-
latIons, promIses, agreements or oblIgat~ons prov~ded In thIS AgreeMent
on the part of Lessor or CIty to be performed should be determIned by a
court of competent jurIsdIctIon to be contrary to law, then such cove-
nant, stipulatIon, promise, agreement or oblIgatIon shall be deemed and
construed to be severable from the remaInIng covenants. stIpulatIons,
promIses, agreements and oblIgatIons hereIn contaIned and shall In no ~ay
affect the valIdIty of the other prOVISIons of thIS Agreement.
807. HeadIngs. Any headIngs precedIng the tex~of the several
ArtIcles and SectIons hereof, and any table of contents or margInal notes
appended to caples hereof. shall be solely for convenIence or reference
and sqall not constItute a part of thIS Agreement, nor shall they affect
Its meanIng. constructIon or effect.
808 ApplIcable Law. ThIS Agreement shall be governed by and
construed In accordance WIth the la~s of the State of CalIfornIa.
809. Lessor and CIty RepresentatIves. Whenever under the
provIslons of thIS Agreement the approval of Lessor or C1ty IS reqUIred
or Lessor or C1ty are reqUIred to take some actIon at the request of the
other, such approval of such request may be gIven for Lessor by an
AuthorIzed OffIcer of Lessor and for CIty by an AuthorIzed OffIcer of
CIty, and any party hereto shall be authorIzed to rely upon any such
approval or request.
810. Further Assurances Lessor and Clty agree that they wlll.
from time to t1me. execute, acknowledge and delIver, or cause to be
executed. acknowledged and delIvered, such supplements hereto and such
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further Instruments as may reasonably be requIred for correctIng any
Inadequate or incorrect descrIptIon of the SIte and the FacIlItIes hereby
leased or Intended so to be or for carrying out the expressed IntentIon
of thIS Agreement.
811. Form of CertIfIcate of OffIcers. Every certificate ~ith
respect to complIance wIth a condItIon or covenant prOVIded for In thIS
Agreement and whIch IS precedent to the takIng of any actIon under thIs
Agreement shall Include.
(a) A statement that the person makIng or gIvIng such
certIfIcate has read such covenant or condItIon and the defInItIons
hereIn relatIng thereto;
(b) A brIef statement as to the nature and scope of the
examInatIon or InvestIgatIon upon whIch the state~en~s or opInIons con-
taIned In such certIfIcate are based,
(c) A statement that, In the opInIon of the sIgner,
sIgner has made or caused to be made such examInatIon or Investiga~lon as
15 necessary to enable the sIgner to express an Informed opInIon as to
~hether or not such covenant or condItIon has been complIed WIth, and
(d) A statement as to whether, In the opInIon of the
sIgner, such condItIon or covenant has been complIed WIth.
:~ certIfIcate may be based, u:sofar as It relates to legal
matters, upon a certIfIcate or opInIon of or representatlons by counsel,
unless the persons prOVIdIng the certIfIcate know that the cert1flcate or
representat10ns ~lth respect to the mat~ers upon Wh1Ch ttta certIfIcate
may be based are erroneous, or In the exerClse of reasonable care s~ould
have known that the same were erroneous.
812 Buslness Days Any act or thIng requlred to be done or
eX1st on any date set forth hereIn whIch does not constItute a bUSiness
day ln any year shall be deemed to be done or to eXist on such date If
such act or thlng 1S done or exists on the next date whIch cons~ltutes a
business day of banks In the City of Los Angeles, CalIfornIa
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IN WIT\ESS ~HEREOF, the parties hereto have caused thIS Agree-
ment to be executed 1n their respect1ve names by the1r duly authorIzed
offIcers as of the date fIrst above ~rItten.
SECURITY PACIFIC ~ATIOSAL BANK,
as Lessor
By
VIce Presldent
By
VIce PresIdent
APPROVED AS TO FOR~:
CITY OF SA'ITA ~fONICA,
as Lessee
By
CIty Manager
Robert: M. Myers
City Attorney
[SEAL]
.,-
"
Attest"
CIty Clerk
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EXHIBIT B
Lease Pa}'ments
StIpulated Value
Lea.se Payment Interest Pr~ncipal Lease of Ground Lease
Date Component Component Pavment* And rac~hties
..
September 1, 1986
September 1, 1987
September 1, 1988
September 1. 1989
September 1, 1990
September 1, 1991
September I, 1992
September I, 1993
September 1. 1994 ,
~'
September 1. 1995
Sepi;ember 1, 1996 [to come)
Sept" ember 1. 1997
September 1, 1998
September 1. 1999
September 1. 2000
September I, 2001 "
September 1, 2002
September 1. 2003
September I, 2004
September 1. 2005
September 1. 2006
S ept. ember I, 2007
* Not to exceed $525.000
35
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