14-1104_SAN JUAN BASIN AUTHORITY_Lease Agreement Amended and RestatedOHS DRAFT
1.1.//1.4
AMENDED AND RESTATED LEASE AGREEMENT
By and Between
CITY OF SAN JUAN CAPISTRANO,
as Lessee
and
SAN JUAN BASIN AUTHORITY,
as Lessor
Dated as of November 1, 2014
Relating to
SAN JUAN BASIN AUTHORITY
LEASE REVENUE BONDS
(GROUND WATER RECOVERY PROJECT)
ISSUE OF 2014
Amending and restating Lease Agreement, dated as of December 1, 2002,
by and between the City of San Juan Capistrano
as successor to Capistrano Valley Water District, as Lessee,
and San Juan Basin Authority, as Lessor
0HSUSA:754110187.6
TABLE OF CONTENTS
Pa c
AR'T'ICLE I
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions and Rules of Construction .................................. ... I
..............................
Section1.2 Exhibits...................................................................................................................7
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1 Representations, Covenants and Warranties of the City........................................8
Section 2.2 Representations, Covenants and. Warranties of the Authority..............................10
ARTICLE III
APPLICATION OF BONDS PROCEEDS
Section 3.1
Deposit of Bond Proceeds ................................ .................12
Section 3.2
Redemption of 2002 Bonds......................................................... .........................12
ARTICLE IV
AGREEMENT OF LEASE; TERM OF LEASE; LEASE PAYMENTS
Section4.1
Lease.....................................................................................................................12
Section4.2
Term......................................................................................................................12
Section 4.3
Extension of Lease Term......................................................................................12
Section 4.4
Lease Payments....................................................................................................12
Section 4.5
No Withholding...... ................................................................ -- ........ .................
13
Section 4.6
Obligation Absolute..............................................................................................13
Section 4.7
Budget and Appropriation....................................................................................13
Section4.8
Revenue Fund.... .................... ........ -- ................................. .......................
........ 14
Section 4.9
Rates and Charges................................................................................................14
Section 4.10
No Priority for Additional Obligations.................................................................14
Section 4.11
Limits on Additional Debt....................................................................................14
Section 4.12
Assignment of Lease Payments............................................................................16
Section 4.13
Use and Possession...............................................................................................16
Section 4.14
Additional Payments.............................................................................................16
Section4.15
Net -Net -Net Lease................................................................................................16
Section 4.16
Further Assurances and Corrective Instruments...................................................16
Section 4.17
Financial Statements and Budgets........................................................................17
Section4.18
Notices..................................................................................................................17
ARTICLE V
INSURANCE AND CONDEMNATION
Section5.1 Insu.rance...............................................................................................................17
OF[SUSA:7541101876 -1-
Cable of Contents
(continued)
Page
Section5.2 Cooperation..........................................................................................................17
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
Section. 6.1 Application of Net Insurance Proceeds................................................................18
Section 6.2 Eminent Domain Proceeds...................................................................................19
ARTICLE VII
COVENANTS WITH RESPECT TO THE PROJECT
Section 7.1
Use of the Project.................................................................................................19
Section 7.2
Leasehold Interest in the Project..........................................................................19
Section 7.3
Option to Prepay Lease Payments........................................................................19
Section 7.4
Quiet Enjoyment...................................................................................................19
Section 7.5
Installation of City's Personal Property................................................................20
Section 7.6
Access to the Project.............................................................................................20
Section 7.7
Maintenance, Utilities, Taxes and Assessments...................................................20
Section 7.8
Modification of the Project...................................................................................21
Section7.9
Liens.....................................................................................................................21
Section 7.10
Authority's Disclaimer of Warranties..................................................................22
Section 7.11.
City's Right to Enforce Warranties of Manufacturers, Vendors or
Contractors............................................................................................................22
Section 7.12
Reconstruction; Application of Net Insurance Proceeds......................................22
Section 7.13
Against Encumbrances.........................................................................................22
Section 7.14
Against Sale or Other Disposition of Project.......................................................22
Section7.15
Payment of Claims................................................................................................23
Section 7.16
Compliance with Lease........................................................................................23
Section 7.17
Compliance with Governmental Regulations.......................................................23
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1 Assignment by the Authority ................................................................................23
Section 8.2 Assignment and Subleasing by the City,....... ........ .................................. ........... 23
Section 8.3 Amendments and Modifications... .................... -- .............................................. 24
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Events of Default Defined ....................................................................................24
Section 9.2 Remedies on Default; No Acceleration................................................................25
Section 9.3 No Remedy Exclusive..........................................................................................26
Section 9.4 Agreement to Pay Attorneys Lees and Expenses.................................................26
Section 9.5 No Additional Waiver Implied by One Waiver....................................................26
011SUSA:75411418T6 _11_
Table of Contents
(continued)
Section 9.6 "Trustee to Exercise Rights..............................................................
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
RMe
..........26
Section 10.1 Security Deposit.............................................................................. ....26
.................
Section 10.2 Mandatory Prepayment From Net Insurance Proceeds........................................27
Section 10.3 Optional Prepayment............................................................................................27
Section 10.4 Effect of Prepayment............................................................................................27
ARTICLE XI
MISCELLANEOUS
Section 11.1
Liability of City Limited.......................................................................................28
Section 11.2
Waiver of Personal Liability .................................................................................28
Section11.3
Notices..................................................................................................................28
Section11.4
Binding Effect.......................................................................................................29
Section11.5
Severability...........................................................................................................29
Section 11.6
Execution in Counterparts....................................................................................29
Section11.7
Applicable Law.....................................................................................................29
Section1.1.8
Captions................................................................................................................29
Section11,9
No Merger.............................................................................................................29
Section 11.10
Amendment of Original Lease.............................................................................29
0I,ISUSA:754110187.6 -iii-
LEASE AGREEMENT
THIS AMENDED AND RESTATED LEAST' AGREEMENT (this "Lease" or "Lease
Agreement"), dated as of November L. 2014, by and between the SAN JUAN BASIN
AUTHORITY, a joint powers authority duly organized and existing under the laws of the State
of California, as lessor (the "Authority") and the CITY OF SAN JUAN CAPISTR ANO, a
municipality duly organized and existing under and by virtue of the laws of the State of
California, as lessee (the "City"), amending the Lease Agreement, dated as of December 1, 2002
(the "Original Lease"), between the Authority and the City as successor to the Capistrano Valley
Water District (the "Water District");
WITNESSETH:
WHEREAS, pursuant to the laws of the State of California, the City may enter into leases
and agreements relating to real property to be used by the City; and
WHEREAS, the City has leased the Property (defined herein) to the Authority pursuant
to that certain Property Lease by and between the Authority and the City dated December 1,
2002; and
WHEREAS, the Authority and the Water District entered into the Original Lease
pursuant to which the Water District leased the Property from the Authority; and
WHEREAS, the Authority issued its San Tuan Basin Authority Lease Revenue Bonds
(Ground Water .Recovery Project Bonds) Issue of 2002 (the "2002 Bonds") secured by, among
other things, lease payments made by the Water District under the Original Lease; and
WHEREAS, the City is the successor to the Water District; and
WHEREAS, the Authority has authorized the issuance of its San Juan Basin: Authority
Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014 (the "Bonds") for the
purpose of refunding the 2002 Bonds; and
WHEREAS, in connection with the issuance of the Bonds, the City and the Authority
have agreed to amend the Original Lease by entering into this Lease Agreement;
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:
[VIMMwal
DEFINITIONS AND EXHIBITS
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
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,"
O SUSk754'1 [0187.5
":herein," "hereunder" and any similar terms, as used in this Lease, refer to this Lease as a whole.
Capitalized terms not otherwise defined herein shall have the meaning given to each such term in
the Trust Agreement.
"Additional Payments" shall have the meaning ascribed thereto in Section 4.14 hereof.
"Applicable Environmental Laws" means
"Applicable Law" means (a) all applicable common law and principles of equity and (b)
all applicable provisions of all (i) constitutions, statutes, rules, regulations and orders of all
Governmental Authorities, (ii) Applicable Environmental Laws, (iii) applicable seismic building
code requirements at the time of construction, and (iv) orders, decisions, judgments, writs,
injunctions and decrees of all courts (whether at law or in equity) and arbitrators.
"Authority" means the San Tuan Basin Authority, a joint exercise of powers authority
organized and existing pursuant to Chapter 5, Division 7, Title 1 of the Government Code of the
State.
"Authorized Representative of the City" means the City Manager of the City, the Public
Works and Utilities Director of the City, the Chief Financial Officer/Treasurer of the City or any
person or persons designated by the City Manager and authorized to act on behalf of the City by
a written certificate signed on behalf of the City by the City Manager and containing the
specimen signature of each such person.
"Bond" or "Bonds" means any of the San .Tuan Basin Authority Lease Revenue Bonds
(Ground Water Recovery Project) Issue of 2014 issued pursuant to the Trust Agreement.
"2002 Bonds" means the San Tuan Basin Authority Lease Revenue Bonds (Ground Water
Recovery Project) Issue of 2002.
"Bond Counsel" means a firm of nationally -recognized attorneys experienced in the
issuance of tax-exempt obligations the interest on which is excludable from gross income under
Section 103 of the Code.
"City" means the City of San Juan Capistrano, California.
"City Council" means the City Council of the City.
"Closing Date" means the date on which the Bonds are delivered to the initial purchaser
thereof.
"Code" means the Internal Revenue Code of 1986, as amended and the United States
Treasury Regulations proposed or in effect with respect thereto.
"Costs of Issuance" means all expenses and costs of the Authority or the City incident to
the performance of its obligations in connection with the authorization, execution, sale and
delivery of the Bonds, including, but not limited to, printing costs, initial Trustee fees and
01-[SOSA:754110187.6 2
expenses and fees and expenses of its counsel, fees and expenses of consultants and fees and
expenses of bond counsel to the Authority or the City.
"Costs of Issuance Account" means the account by that name established pursuant to
Section 4.1 of the Trust Agreement.
"Debt Service Payment Account" means the Debt Service Payment Account established
in Section 4.1 of the Trust Agreement.
"End of Term" shall have the meaning ascribed thereto in Section. 4.2.
"Escrow Agent" means The Bank of New York Mellon Trust Company, N.A., acting in it
capacity as trustee and escrow agent under and pursuant to the Escrow Agreement, and its
successor and assigns as provided in the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement, dated as of November 1,
2014, by and among the City, the Authority and the Escrow Agent, providing for the refunding
of the 2002 Bonds.
"Events of Default" means events of default as set forth in Section 9.1.
"Financing Authority" means the San Juan Capistrano Public Financing Authority.
"Fiscal Year" means the twelve month fiscal period of the City which commences on
July 1 in every year and ends on June 30 of the succeeding year.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any governmental or quasi -governmental entity,
including any court, department, commission, board, bureau, agency, administration, central
bank, service, City or other instrumentality of any governmental entity or other entity exercising
executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or
functions of or pertaining to government, or any arbitrator, mediator or other person with.
authority to bind a party at law.
"Independent Counsel" means an attorney duly admitted to the practice of law before the
highest court of the state in which such attorney maintains an office and who is not an employee
or officer of the Authority, the Trustee or the City.
"Interest Payment Date" means June I and December 1. of each year commencing June 1,
2015.
"Joint Exercise of Powers Agreement" means that certain Joint Exercise of Powers
Agreement entered into by and among the Capistrano Beach County Water District, the Santa
Margarita Water District, and Orange County Waterworks District No.4 dated as of
November 22, 1971, as amended effective October 16, 1979 by Amendment No. 1, September 1,
1987 by Addendum No. 1, August 1, 1989 by Addendum No. 2 and September 1, 2002 by
Addendum No. 3, and as it may be subsequently amended in accordance with its terms.
01-rsosA:754110187.6 3
":Lease" or "Lease Agreement" means this Lease Agreement, between the City and the
Authority, as amended and supplemented from time to time in accordance with its terms.
"Lease Payment" means the amount to be paid by the City for the lease of the Project
corresponding to the Lease Payment Date set forth in Section 4.4 and Exhibit B of this Lease
Agreement.
"Lease Payment Date" means the 15th day of the month preceding each Interest Payment
Date (or if the 15th day of the month is not a Business Day, on the next succeeding Business
Day).
":Lease Termination" means any termination of this Lease pursuant to Section 4.17
hereof.
"Maintenance and Operation Costs" means costs spent or incurred for operation and
maintenance of the Water System calculated in accordance with generally accepted accounting
principles, including (among other things) the reasonable expenses of management and repair
and other expenses necessary to maintain and preserve the Water System in good repair and
working order, and also means all costs of water purchased or otherwise acquired for delivery by
the Water System (including the Lease Payments, any Parity Obligations and any interim or
renewed arrangement for water purchase or acquisition); but excluding in all cases depreciation,
replacement and obsolescence charges or reserves therefor and amortization of intangibles or
other bookkeeping entries of a similar nature and any amounts transferred to the Lease Revenue
Bonds Rate Stabilization Reserve.
"-Maintenance and Operation Cap" means annual costs not to exceed $2,754,000 for
Lease Payments, as such costs may be increased due to currently unforeseeable cost increases
which are out of the control of the City and of the owner, operator and lenders with respect to the
Ground Water Recovery Plant.
"Material Adverse Effect" means an event or occurrence which adversely affects in a
material manner (a) the assets, liabilities, condition (financial or otherwise), business, facilities or
operations of the City or the Water System. (b) the ability of the City to carry out its business in
the manner conducted as of the date of this Lease or to meet or perform its obligations under this
Lease on a timely basis, (c) the validity or enforceability of this Lease, or (d) the exclusion of the
interest component of the Lease Payments from gross income for federal income tax purposes or
the exemption of such interest for state income tax purposes, and shall include, amongst other
events or occurrences, any material, adverse change to the rating by Moody's Investors Service,
Inc., Standard & Poor's, a Standard & Poor's Financial Services LLC business, or Fitch Ratings,
Inc. of any debt securities issued by the City.
"Material Litigation" means any action, suit, proceeding, inquiry or investigation against
the City in any court or before any arbitrator of any kind or before or by any Governmental
Authority, (i) if determined adversely to the City, may have a Material Adverse Effect, (ii) seek
to restrain or enjoin any of the transactions contemplated by this Lease, or (iii) may adversely
affect (A) the exclusion of the interest component of the Lease Payments from gross income for
federal income tax purposes or the exemption of such interest for state income tax purposes, (B)
0HSL1sA:754110187.6 4
the ability of the City to perform its obligations under this Lease, or (C) the operation of the
Water System.
"Metropolitan Water Agreement" means that certain 1998 San Juan Basin DeSalter
Agreement between the Metropolitan City of Southern California ("MWD"), the Municipal City
of Orange County ("MWDOC"), and the San Tuan Basin Authority dated December 4, 1998, as
amended effective October 15, 2002 by that certain First Amendment thereto by and between
MWD, MWDOC, the Authority and the City.
"Net Insurance Proceeds" means any insurance or condemnation proceeds paid with
respect to the Project remaining after payment therefrom of all expenses incurred in the
collection thereof.
"Net Revenue Bond Indentures" means that certain Indenture, dated as of September 1,
2014, by and between the City and The Bank of New York Mellon Trust Company, N.A., as
Trustee and any other indenture or trust agreement providing for the issuance of Net Revenue
Bonds.
"Net Revenue Bonds" means the City of San Juan Capistrano Water Revenue Refunding
Bonds, Series 2014A, and any other bonds issued by the City payable from Net Revenues
therewith and with the payment of Net Revenue Installment Payments.
"Net Revenue Installment Agreements" means that certain Installment Purchase
Agreement, dated as of April 1, 2009, by and between the City and the Financing Authority, and
any other agreement providing for the payment by the City of Net Revenue Installment Payments
from Net Revenues on a parity therewith and with the payment of principal and interest on Net
Revenue Bonds.
"Net Revenue Installment Payments" means the installment payments payable by the
City from the net revenues of the Water System pursuant to a Net Revenue installment
Agreement.
"Net Revenue Obligation Documents" means, collectively, Net Revenue Installment
Agreements and Net Revenue Bond Indentures.
"Net Revenue Obligations" means the obligations of the City to pay Net Reserve Bonds
and Net Reserve Installment Payments.
"Net Revenues" means the amounts of Revenues of the Water System remaining after
payment therefrom of the Maintenance and Operation Costs.
"Operating Lease" means that certain Operating Lease by and between the City and the
Authority as amended and supplemented from time to time in accordance with its terms.
"Original Lease" means that certain Lease Agreement, dated as of December 1, 2002, by
and between. the Authority and the City as successor to the Water District, which is being
amended and restated by this Lease Agreement.
OFI'SUSA:754110187.6 5
"Parity Obligations" means any obligations secured on a parity with the Lease Payments
which are incurred in accordance with the provisions of Section 4.11 hereof.
"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(c) hereof, permit to remain unpaid; (2) the Trust Agreement as it may be amended
from time to time; (3) this Lease Agreement and the Property Lease as they may be amended
from time to time; (4) any right or claim of any mechanic, laborer, materialman., supplier or
vendor filed or perfected in the manner prescribed by law to the extent permitted under Section
7.8(b) hereof; (5) casements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions which exist of record as of the Closing Date;
(6) easements, rights of way, mineral rights, drilling rights and other rights, reservations,
covenants, conditions or restrictions established following the Closing Date, to which the
Authority 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; and (7) liens
created in connection with the issuance of Parity Obligations.
"Project" means that Property and the improvements thereon.
"Property" means the real property described from time to time in Exhibit A hereto.
"Property Lease" means the Property Lease between the City, as lessor, and the
Authority, as lessee, as amended and supplemented from time to time in accordance with its
terms.
"Purchase Option Price" means the amount to be paid pursuant to this Lease Agreement,
as the same may be amended, less the amount of any funds held by the Trustee which are
available for redemption of the Bonds plus interest on such principal to the redemption date and
premium, if any.
"Revenue Fund" means the enterprise fund of the City currently identified as the "Water
Enterprise Fund" of the City, any successor fund or funds, and such other funds as the City
Council shall establish as a part of the Revenue Fund which shall constitute the Revenue Fund
maintained pursuant to this Lease Agreement and the "Revenue Fund" maintained pursuant to
the Net Revenue Obligation Documents.
"Revenues" means all income, rents, rates, fees, charges and other moneys derived from
the ownership or operation of the Water System, including, without limiting the generality of the
foregoing,
(1) all income, rents, rates, fees, charges, business interruption insurance proceeds or
other moneys derived by the City from the sale, furnishing and supplying of the water or other
services, facilities, and commodities sold, furnished or supplied through the facilities of or in the
conduct or operation of the business of the Water System;
(2) the earnings on and income derived from the investment of amounts described in
clause (1) above and from City reserves;
OF ISUSA:754110197.0 6
(3) the proceeds derived by the City directly or indirectly from the sale, lease or other
disposition of a part of the Water System; and
(4) payments under Metropolitan Water Agreement;
but excluding
(a) customers' deposits or any other deposits or advances subject to refund
until such deposits or advances have become the property of the City;
(b) any proceeds of taxes or assessments restricted by law to be used by the
City to pay bonds or other obligations heretofore or hereafter issued.
"S&P" or "Standard & Poor's" means Standard & Poor's Ratings Group, a municipal
bond rating service with offices in New York, New York.
"State" means the State of California.
"Term" means the duration of this Lease Agreement pursuant to the provisions of
Section 4.2 hereof.
"Transaction Documents" means, collectively, this Lease Agreement, the Trust
Agreement and the Property Lease.
"Trust Agreement" means the 'Frust Agreement relating to the San Tuan Basin Authority
Lease Revenue Bonds (Ground Water Recovery Project) Issue of 2014, dated as of the date
hereof entered into by and among the City, the Authority and the Trustee and any and all
Supplemental Trust Agreements.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., and its successor
or successors which may at any time be substituted in its place pursuant to the provisions of the
Trust Agreement.
"Water System" means the entire water system of the City, including, without limitation,
all real property and buildings, and including all improvements, works or facilities assessed,
controlled or operated by the City to provide water, as such improvements, works or facilities
now exist, together with all improvements and extensions to said water system later acquired,
constructed or organized.
Section 1.2 Exhibits. The following Exhibits are attached to, and by reference made a
part of, this Lease Agreement:
Exhibit A: Description of the Property.
Exhibit B: Schedule of Lease Payments.
OHS1 NA: 75&1If) 187.6 7
AR'T'ICLE II
REPRESENTATIONS, COVENANTS AND WARRAN'T'IES
Section 2.1 Representations Covenants and Warranties of the City. The City
represents, covenants and warrants to the Authority as follows:
(a) Due Organization and Existence. The City is a municipality duly
organized and existing under and by virtue of the laws of the State, with the power and authority
to own, lease and acquire real and personal property and equipment and to incur the obligations
hereunder.
(b) Authorization, Enforceability. The laws of the State authorize the City to
enter into this Lease Agreement and to enter into the transactions contemplated by and to carry
out its obligations under this Lease Agreement, and the City has duly authorized and executed
this Lease Agreement. This Lease Agreement constitutes the legal, valid and binding obligation
of the City, enforceable in accordance with its 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 Agreement, nor the fulfillment of or compliance with the
terms and conditions hereof, nor the consummation of the transactions contemplated hereby,
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.
(d) Execution and Delivery. The City has duly authorized and executed this
Lease Agreement in accordance with the laws of the State.
(e) No Consent Required. There is no consent, approval; authorization or
other order of, or filing with, or certification by, any regulatory authority having jurisdiction. over
the City required for the consummation by the City of the transactions contemplated by this
Lease Agreement.
(f) No Litigation. There is no action. suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, governmental agency, public off ce or
body, pending or threatened against the City affecting the existence of the City or the titles of its
officers to their respective offices or seeking to prohibit, restrain or enjoin the City's covenant to
make Lease Payments or in any way contesting or affecting the validity or enforceability of this
Lease Agreement or contesting the powers of the City or its authority to enter into, adopt or
perform its obligations under this Lease Agreement.
(g) Indemnification of Authority. To the extent permitted by law, the City
covenants to defend, indemnify and hold harmless the Authority and its assigns (including
specifically the Trustee), directors and employees (collectively, the "Indemnified Party") against
ortsusAi 754110187,6 8
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 Agreement or the Trust Agreement, and shall reimburse any such Indemnified
Party for any legal expenses reasonably incurred by it in connection with defending any actions,
insofar as such losses, claims, damages, liabilities or actions arise out of the transactions
contemplated by this Lease Agreement, the Trust Agreement or the Property Lease. In
particular, without limitation, to the extent permitted by law, the City shall and hereby agrees to
indemnify and save the Indemnified Party harmless from and against all claims, losses and
damages, including legal fees and expenses, to the extent arising out of (i) the use, maintenance,
condition or management of, or from any work or thing done on, the Project by the City, (ii) any
breach or default on the part of the City in the performance of any of its obligations under this
Lease Agreement or the Trust Agreement, (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 Project or (v) the
acceptance of, and performance of the duties of the Trustee under the Trust Agreement. No
indemnification is made under this Section or elsewhere in this Lease Agreement for claims,
Losses or damages, including legal fees and expenses arising out of the willful misconduct,
negligent acts or omissions, or breach of duty under this Lease Agreement, the Property Lease or
the Trust Agreement by the Authority, its officers, directors, agents, employees, successors or
assigns (including specifically the Trustee).
(h) General 'Fax and Arb_itra e Covenant. The City hereby covenants that,
notwithstanding any other provision of this Lease Agreement, it shall not take any action. or fail
to take any action, if any such action or failure to take action would adversely affect the
exclusion from gross income of interest with respect to the Bonds under Section 103 of the
Internal Revenue Code of 1986, as amended (the "Code"). The City shall not, directly or
indirectly, use or permit the use of proceeds of the Bonds or the Project or any portion thereof,
by any person other than a governmental unit (as such term is used in Section 141 of the Code),
in such manner or to such extent as would result in the loss of exclusion from gross income for
federal income tax purposes of interest on the Bonds.
The City shall not take any action, or fail to take any action, if any such action or failure
to take action would cause the Bonds to be "private activity bonds" within the meaning of
Section 141 of the Code, and in furtherance thereof, shall not make any use of the proceeds of
the Bonds or the Project, or any portion thereof, or any other funds of the City, that would cause
the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. To that
end, so long as any Bonds are outstanding, the City, with respect to such proceeds and the
Project and such other funds, will comply with applicable requirements of the Code and all
regulations of the United States Department of the Treasury issued thereunder and under Section
103 of the Code, to the extent such requirements are, at the time, applicable and in effect.
The City shall not, directly or indirectly, use or permit the use of any proceeds of any
Fonds or other funds of the City, or take or omit to take any action, that would cause the Bonds
to be "arbitrage bonds" within the meaning of Section 148 of the Code. To that end, the City
shall comply with all requirements of Section 148 of the Code and all regulations of the United
OHSiJSA:754110187.6 9
States Department of the Treasury issued thereunder to the extent such requirements are, at the
time, in effect and applicable to the Bonds.
The City shall not make any use of the proceeds of the Bonds or any other funds of the
City, or take or omit to take any other action, that would cause the Bonds to be "federally
guaranteed" within the meaning of Section 149(b) of the Code.
(i) The Lease Payments as due and payable pursuant to Exhibit A hereto, do
not in any year exceed the Maintenance and Operations Cap and, except as Lease Payments
exceed the Maintenance and Operations Cap in any year due to acceleration thereof, shall
constitute Maintenance and Operations Costs.
0) The City reasonably believes that sufficient funds can be obtained to make
all Lease Payments and all other amounts required to be paid pursuant to this Lease Agreement.
(k) The City has never non -appropriated or defaulted under any of its payment
or performance obligations or covenants, either under any financing lease of the same general
nature as this Lease Agreement, or under any of its bonds, notes, or other debt obligations.
(1) The City is the owner in fee of title to the Property. No lien or
encumbrance on the Property materially impairs the City's use of the Property for the purposes
for which it is, or may reasonably be expected to be, held.
(m) The Property is not located in a 100 -year flood .zone and has never been
subject to material damage from flooding.
(n) The Project complies with all applicable restrictive covenants, zoning
ordinances, building laws and other Applicable Laws (including without limitation, the
Americans with Disabilities Act., as amended).
Section 2.2 Representations, Covenants and Warranties of the Authorit The
Authority represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence Enforceabilit The Authority is a joint
powers authority, duly organized, existing and in good standing under and by virtue of the laws
of the State, has the power to enter into this Lease Agreement, the Property Lease 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 Agreement,
the Property Lease and the Trust Agreement. This Lease Agreement, the Property Lease and the
Trust Agreement constitute the legal, valid and binding obligations of the Authority, 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 Authority will not pledge the Lease Payments or
Additional Payments or other amounts derived from. the Project or from its other rights under this
Lease Agreement or the Property Lease, except for Permitted Encumbrances and except as
provided under the terms of this Lease Agreement and the Trust Agreement.
OI ISUsA-754 L 10187.6 10
(c) No Conflicts or Defaults-,_ No Liens or Encumbrances. Neither the
execution and delivery of this Lease Agreement, the Property 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 Joint Exercise of Powers Agreement of the
Authority or any restriction or any agreement or instrument to which the Authority is now a party
or by which the Authority 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 Authority or upon the Project, except for Permitted Encumbrances.
(d) No Consent Required. There is no consent, approval, authorization or
other order of, or filing with, or certification by, any regulatory authority having jurisdiction over
the Authority required for the consummation by the Authority of the transactions contemplated
by this Lease Agreement, the Trust Agreement or the Property Lease.
(e) No Litigation. There is no action. suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, governmental agency, public office or
body, pending or threatened against the Authority affecting the existence of the Authority or the
titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the
Authority's receipt of, or assignment to the Trustee of, Lease Payments or in any way contesting
or affecting the validity or enforceability of this Lease Agreement, the Trust Agreement or the
Property Lease or contesting the powers of the Authority or its authority to enter into, adopt or
perform its obligations under this Lease Agreement, the Trust Agreement or the Property Lease
or any amendment or supplement thereto, wherein an unfavorable decision, ruling or finding
would materially adversely affect the Lease Agreement, the Trust Agreement or the Property
Lease, or in which a final adverse decision could materially adversely affect the operations of the
Authority.
(t) Execution and Delivery. The Authority has daily authorized and executed
this Lease Agreement, the Property Lease and the Trust Agreement in accordance with the
Constitution and laws of the State.
(g) General Tax and Arbitrage Covenant. The Authority covenants that,
notwithstanding any other provision of this Lease Agreement, it will make no use of the proceeds
of the Bonds 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
Agreement to be "arbitrage bonds" subject to federal income taxation by reason of Section 148
of the Code.
In addition, the Authority 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 the
Authority 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 necessary
to maintain the exclusion from gross income for federal income tax purposes of the interest
portion of the Lease Payments, the Authority will comply with all requirements of such Sections
and all regulations of the United States Department of the Treasury issued thereunder and under
OHS LTSA:754110187.6 11
Section 103 of the Code, to the extent that such. requirements are, at the time, applicable and in
effect.
(h) Maintenanceol'' Cor orate Existence. To the extent permitted by law, the
Authority agrees that during the Terra it will maintain its existence as a public entity, will not
dissolve or otherwise dispose of all car substantially all of its assets.
ARTICLE III;
APPLICATION OF BONDS PROCEEDS
Section 3.1 Deposit of Bond Proceeds. On the Closing Date, the Authority agrees to
deposit to the Refunding Account created under the Trust Agreement (the "Refunding Account")
the proceeds of the Authority's sale of the Bonds in the amount specified in Section 4.1 of the
Trust Agreement.
Section 3.2 Redemption of 2002 Bonds. On the Closing Date, the Authority agrees to
cause the Trustee to transfer amounts in the Refunding Account to the Escrow Agent for
application to the redemption of the 2002 Bonds as provided in the Escrow Agreernent.
ARTICLE IV
AGREEMENT OF LEASE; TERM OF LEASE; LEASE PAYMENTS
Section 4.1 Lease, The Authority hereby leases the Property to the City upon the
terms and conditions set forth herein.
Section 4.2 Term. The Term of this Lease Agreement shall commence on the Closing
Date and shall end on December 1, 2035, unless extended pursuant to Section 4.3 hereof (as so
extended the "End of Term"), or unless terminated prior thereto upon. the earlier of the following
events.
(a) Payment of All I.,ease Pa meats. The payment by the City of all Lease
Payments required under Section 4.4 hereof and any Additional Payments required under
Section 4.14 hereof; or
(b) Pre�erl. 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.
Section 4.3 Extension of Lease Terra. if on December 1, 2035 the Bonds shall not be
fully paid, then the Term shall be extended until all Bonds shall be fully paid, except that the
Term shall in no event be extended beyond December 1, 2045,
Section 4.4 Lease Payments.
(a) Time and Amount. Subject to the provisions of Article X hereof
(regarding prepayment of Lease Payments), the City agrees to pay to the Authority, its
011SGSA:754110187.6 12
successors and assigns, as annual rental for the use and possession of the Project, the Lease
Payments to be due and payable in arrears on the days specified in Exhibit B hereto or if such a
day is not a Business Day then on the next preceding Business Day (each such day a "Lease
Payment Date").
(b) Priority Payment. The City hereby unconditionally pledges the Revenues
to the payment of the I:_ease Payments on a senior basis to its pledge of Net Revenues to the
payment of Net Revenue Obligations up to the Maintenance and Operation Cap and
unconditionally pledges Net Revenues to the payment of Lease Payments on a parity to its
pledge of Not Revenues to the payment of Net Revenue Obligations. The City covenants to
make no changes in the Net Revenue Obligation Documents or otherwise that impairs the
priority of such pledge and such priority shall survive any partial payment or defeasance of the
Net Revenue Obligations.
(c) Credits, Any amount held in the Debt Service Payment Account on any
Lease Payment Date (other than amounts required for payment of past due principal or interest
with respect to any Bonds 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 Bond Owners) shall be credited toward the Lease Payment then
due and payable. No Lease Payment need be made on any Lease Payment Date if the amounts
then held in the Debt Service Payment Account (other than those amounts excluded under the
prior sentence) are at least equal to the cumulative total of Lease Payments then required to be
paid.
(d) Rate on Overdue Pa meets. In the event the City should fail to make any
Lease Payment required by this Section 4.4, or any portion of any such Lease Payment, the
Lease Payment or portion 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 highest stated interest rate on any of the Bonds as stated in the Trust Agreement.
Section 4.5 No Withholdin. Notwithstanding any dispute between the Authority and
the City, the City shall make all Lease Payments when due and shall not withhold any Lease
Payment pending the final resolution of such dispute.
Section 4.6 Obligation Absolute. The obligation of the City to make the Lease
Payments is absolute and unconditional and until such time as the Lease Payments shall have
been paid in full (or provision for the payment thereof shall have been made pursuant to Article
X), the City will not discontinue or suspend any Lease Payments or Additional Payments
required to be made by it under this Lease Agreement when due, whether or not the Water
System or any part thereof is operating or operable or its use is suspended, interfered with,
reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to
reduction whether by offset or otherwise and shall not be conditional upon the performance or
nonperformance by any party of any agreement for any cause whatsoever.
Section. 4.7 Bud et and Appropriation. The City covenants to take such action as may
be necessary to include all Lease Payments and Additional Payments due hereunder in its
OIIsusA;754110187:6 13
proposed annual budget and its final adopted annual budget and to make the necessary
appropriations for any amount of Lease Payments and Additional Payments to be paid therefor.
Section 4.8 Revenue Fund. The City agrees to maintain the Revenue Fund. All
Revenues shall be deposited when and as received by the City in the Revenue Fund. The City
shall transfer moneys from the Revenue Fund to pay Maintenance and Operation Costs,
including without limitation the Lease Payments in accordance with Section 4.4 of this Lease
Agreement and lease payments securing Parity Obligations, if any. Any Revenues in excess of
the amounts budgeted, as required, for the payment of the Lease Payments and Maintenance and
Operation Costs shall constitute surplus revenues in the Revenue Fund. After all covenants
contained herein have been duly performed each year, and provided that there are no amounts
then owing to Authority or the Trustee by the City, such surplus revenues may be used for:
(1) payment of Net Revenue Obligations, (2) extensions and betterments of the Water System; or
(3) any lawful purpose of the City.
Section 4.9 Rates and Charges. The City shall, to the maximum extent permitted by
law, fix, prescribe and collect rates and charges for water service which will be at least sufficient
to yield during each Fiscal Year Revenues equal to one hundred percent (100%) of Maintenance
and Operation Costs paid in the immediately preceding Fiscal Year, provided that such costs
shall include the Lease Payments payable in such Fiscal Year, plus Additional Payments payable
in such Fiscal Year. The City may make adjustments from time to time in such rates and charges
and may make such classification thereof as it deems necessary, but shall not reduce the rates
and charges then in effect unless the Revenues from such reduced rates and charges will at all
times be sufficient to meet the requirements of this rate. covenant.
Section 4.10 No Priority for Additional Obligations. The City covenants that no
additional bonds, notes or obligations shall be issued or incurred by the City which will have any
priority in payment out of the Revenues over the Lease Payments.
Section 4.11 Limits on Additional Debt. The City covenants that, except for
obligations issued to prepay all or a portion of the Lease Payments, it will issue obligations
payable from Revenues on a parity basis with the Lease Payments only if the City delivers to the
Trustee prior to the issuance of any Parity Obligations a certificate certifying that all of the
following additional conditions are met:
(a) The City is not in default under the terms.of this Lease Agreement; and
(b) the Revenues as shown by the boobs of the District for any twelve
(12) consecutive calendar months selected by the City within the twenty-four (24) calendar
months ending prior to the incurring of such additional obligations shall have amounted to at
least one hundred percent (100%) of Maintenance and Operation Costs, including without
limitation Lease Payments, for such twelve (12) calendar month period; for purposes of
preparing the certificate or certificates described above, the City may rely upon financial
statements prepared by the City, which have not been subject to audit by an Independent
Certified Public Accountant if audited financial statements for the Fiscal Year or period are not
available;
0HSUSA:754t10187,6 14
(c) the estimated Revenues for the twelve (12) calendar months following the
date of incurring such Parity Obligations will be at least equal to one hundred percent (100%) of
all Maintenance and Operation Costs, including without limitation Lease Payments projected to
be paid in the next succeeding Fiscal. Year and payments in the next succeeding :Fiscal Year on
Parity Obligations to be outstanding immediately after the incurring of such Parity Obligations,
and the Additional Payments paid in the prior fiscal Year as of the date of incurring of such
Parity Obligations;
(d) for so long as any Net Revenue Bonds or Net Revenue Installment
Payment obligations are outstanding, the Lease Payments plus lease payments securing all Parity
Obligations, including without limitation the Parity Obligations proposed to be issued, do not in
the aggregate exceed the Maintenance and Operation Cap.
For purposes of the computations to be made as described in (b) above, the determination
of the Revenues:
(i) may take into account any increases in rates and charges which
relate to the Water System and shall take into account any reduction in such rates and
charges, which will be effective prior to or at the time of incurring such proposed
additional. obligations;
(ii) may take into account an allowance for any estimated increase in
such Revenues from any revenue producing additions to or improvements or extensions
of the Water System to be made with the proceeds of such additional obligations or with
the proceeds of obligations previously issued, as shown by a certificate of the City; and
(iii) for the period contemplated by (c) above, Maintenance and
Operation Costs of the Water System shall be deemed to be the same as for the period for
which a calculation is done pursuant to (b) above, but adjusted, if deemed necessary by
the City, for any increased Maintenance and Operation Costs of the Water System which
are, in the judgment of the City, essential to maintaining and operating the Water System.
Nothing herein shall preclude the City from issuing obligations which are subordinate to
the payment of the Lease Payments.
In the event the additional indebtedness bears interest at a variable rate, for purposes of
the rate covenant (Section 4.9 above) and determining compliance with the tests for issuance of
additional indebtedness under this Section 4.11, debt service payable on variable rate additional
indebtedness shall be computed assuming such additional indebtedness bears interest at the rate
quoted in The Bond Buyer 25 Revenue Bond Index for the last week of the month preceding the
date when the City incurs such additional indebtedness, as published in The Bond Buyer, plus
one-half of one percent (0.50%), or if such index is no longer published, another similar index to
be selected by the Authority, or if the Authority fails to select a replacement index, an interest
rate equal. to eighty percent (80%) of the yield for outstanding United States Treasury bonds
having a maturity equivalent to that of the additional indebtedness proposed to be incurred, or if
there are no such Treasury bonds having equivalent maturities, eighty percent (80%) of the
01iSUSA:7541101.87.6 15
lowest prevailing prime rate of any of the five largest commercial banks in the United States
ranked by assets,
Section 4.12 Assignment of Lease Payments. Certain of the Authority's rights under
this Lease Agreement, including the right to receive and enforce payment of the Lease Payments
to be made by the City hereunder, have been absolutely assigned by the Authority to the Trustee,
subject to certain exceptions, pursuant to the Trust Agreement, to which assignments the City
hereby consents. The Authority 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 or prepayments thereof payable by the City hereunder.
The Authority will not assign or pledge the Lease Payments or other amounts derived from the
Project or from its other rights under this Lease Agreement except as provided under the terms of
this Lease Agreement and the Trust Agreement, or its duties and obligations except as provided
under the Trust Agreement,
Section. 4.13 Use and Possession. The total Lease Payments and Additional Payments
due in any Fiscal Year shall be for the use and possession of the Project for such Fiscal Year.
During the Term of this Lease Agreement, the City shall be entitled to the exclusive use of the
Project subject only to the Permitted Encumbrances.
Section 4.14 Additional Payments. In addition to the Lease Payments, the City shall
also pay such amounts ("Additional Payments") as shall be required for the payment of all
administrative costs of the Authority relating to the Project, including without limitation all
expenses including usual and ordinary legal fees and expenses, assessments, compensation and
indemnification of the Authority and the Trustee, any amounts required to be rebated to the
federal government in order to comply with the provisions of Section 148 of the Code, any
amounts required to be paid to the Trustee to replenish the Reserve Account to the Reserve
Requirement pursuant to Section 4,4(f) of the Trust Agreement, fees under any Alternative
Reserve Account Security instruments, taxes of any sort whatsoever payable by the Authority as
a result of its lease of the Project or undertaking of the transactions contemplated herein or in the
Trust Agreement, fees of auditors, accountants, attorneys or engineers, insurance premiums
required by Article V hereof, items required by Section 7.7 hereof and all other necessary
administrative costs of the Authority or charges required to be paid by it in order to comply with
the terms of the Bonds or of the Trust Agreement or to pay or indemnify the Trustee and its
officers and directors. All such Additional Payments to be paid hereunder shall be paid when
due directly by the City to the respective parties to whom such Additional Payments are owing.
Section 4.15 Net -Net -Net Lease. This Lease Agreement 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 Authority, free and clear of any expenses, charges or set. -offs
whatsoever, except as expressly provided herein.
Section 4.16 Further Assurances and Corrective Instruments. The Authority 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 Property
01-ISUSA:754110187.6 16
hereby leased or intended so to be or for carrying out the expressed intention of this Lease
Agreement.
Section 4.17 Financial Statements and Budgets. Within nine (9) months following the
end of each Fiscal Year of the City during the Term of this Lease, the City shall furnish or cause
to be furnished to the Owner of the Bonds, a copy of its audited financial statements for such
Fiscal Year. The City shall furnish or cause to be furnished to the Owner of the Bonds a copy of
its annual budgets and any then -available interim budget updates or modifications for each Fiscal
Year of the City during the Term of this Lease within thirty (90) days of the end of each Fiscal
Year. The City hereby agrees to provide the Owner of the Bonds with such other information as
may be reasonably requested by the Owner of the Bonds. Any audited financial statements
furnished to the Owner of the Bonds shall be prepared in accordance with generally accepted
accounting principles, consistently applied, and shall fairly present the City's financial condition
as of the date of the statements.
Section 4.18 Notices. During the Term of this Lease, the City shall provide to the
Owner of the Bonds: (i) immediate notice by telephone, promptly confirmed in writing, of any
event, action or failure to take any action which constitutes an event of default under this Lease,
together with a detailed statement by a representative of the City of the steps being taken by the
City to cure the effect of such Event of Default, (ii) prompt written notice of any Material
Litigation or event causing a Material Adverse Effect, or any investigation, inquiry or similar
proceeding by any Governmental Authority, and (iii) with reasonable promptness, such other
information respecting the City, and the operations, affairs and financial condition of the City as
the Owner of the Bonds may from time to time reasonably request.
ARTICLE V
INSURANCE AND CONDEMNATION
Section 5.1 Insurance. The City will procure and maintain insurance on the Project
with responsible insurers at reasonable cost in such amount and against such risks as are usually
covered in connection with facilities similar to the Project, but not less than the lesser of the full
replacement cost or the principal amount of Bonds then outstanding, so long as such insurance is
available from reputable insurance companies.
In the event of any damage to or destruction of the Project caused by the perils covered
by such insurance, the Net Insurance Proceeds thereof shall be applied in accordance with
Article VI hereof.
The City shall provide adequate reserves to cover the amount of any deductible
provisions of the insurance required to be maintained pursuant to this Section 5.1.
Section 5.2 Cooperation. The Authority shall cooperate fully with the City at the
expense of the City in filing anyproof 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.
OH'SUSA:754!10 87.6 17
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
Section 6.1 Application of Net Insurance Proceeds.
(a) Deposit in Insurance and Condemnation Account. The City and/or the
Authority shall transfer to the Trustee any Net Insurance Proceeds received by the City and/or
Authority in respect of any insurance required by Section 5.1 hereof or in the event of any taking
by eminent domain or condemnation with respect to the Project, for deposit in the Insurance and
Condemnation Account by the Trustee in accordance with the Trust Agreement.
(b) Disbursement for Replacement or Repair of thePro'ect. Upon receipt of
the certification described in paragraph (i) below and the requisition described in paragraph (ii)
below, the parties hereto agree that the Trustee shall disburse moneys in the Insurance and
Condemnation Account to the person, firm or corporation named in the requisition.
(i) Certification. The Authorized Representative of the City must
provide to the Authority and the Trustee a certificate stating that the Net Insurance
Proceeds available for such purpose, together with other funds, if any, supplied by the
City for such purpose in its sole and absolute discretion, are sufficient to restore the
Project to a value greater than or equal to the value thereof prior to the insured event, and
(i i) Requisition. An Authorized Representative of the City must state
with respect to each payment to be made (1) the requisition number, (2) the name and
address of the person, firm or corporation to whom payment is due, (3) the amount to be
paid and (4) that each obligation mentioned therein has been properly incurred, is a
proper charge against the Insurance and Condemnation Account, has not been the basis of
any previous withdrawal therefrom, and specifying in reasonable detail the nature of the
obligation.
Any balance of the Net Insurance Proceeds remaining after such replacement or repair
has been completed as evidenced by a certificate of the City shall be disbursed as provided in
subsection (c) below.
In the event and to the extent the requirements of subsections (b)(i) and (b)(ii) above are
satisfied, the City shall begin such reconstruction, repair or replacement promptly after such
damage or destruction shall occur, and shall continue and properly complete such reconstruction,
repair or replacement as expeditiously as possible, and shall pay out of such Net Insurance
Proceeds and funds provided by it (if any) in its sole discretion all costs and expenses in
connection with such reconstruction, repair or replacement so that the same shall be completed
and the Project shall be free and clear of all claims and liens except as provided in Section 7.8.
(c) Disbursement for Prepayment. If the Authorized Representative of the
City notifies the Trustee in writing of the City's determination that the certification provided in
Section 6.1(b)(i) hereof cannot be made or replacement or repair of any portion of the Project is
not economically feasible or in the best interest of the City, Net Insurance Proceeds will be
applied to the prepayment of Lease Payments, provided that if available Net Insurance Proceeds
01 fS0SA:754 t 10187_c 18
exceed the amount necessary to prepay enough Lease Payments and any other amounts due or to
become due under the Lease Agreement or the Trust Agreement, such that the value of the
remaining portion of the Project is equal to or greater than the value of such portion of the
Project prior to the insured event, excess proceeds shall be available to be expended by the City
for any lawful purpose.
Section 6.2 Eminent Domain Proceeds. If all or any part of the Project shall be taken
by eminent domain proceedings rendering the Project substantially unavailable for use by the
City, the Net Insurance Proceeds thereof shall be applied by the City to the prepayment of Lease
Payments as provided in Article X and to such other fund or account as may be appropriate and
used for the retirement of Bonds.
COVENANTS WITH RESPECT TO THE PROJECT
Section 7.1 Use of the Project. The City represents and warrants that it has an
immediate need for all of the Project, which need is not expected to be temporary or to diminish
in the foreseeable future.
Section 7.2 Leasehold Interest in the Project.
(a) Authority Holds Leasehold Interest During Term. During the Term, the
Authority shall hold a leasehold interest in the Project pursuant to the Property Lease. The
Authority shall take any and all actions reasonably required, including but not limited to
executing and filing any and all documents, reasonably required to maintain and evidence the
Authority's leasehold interest in the Project at all times during the Term.
(b) Leasehold Interest Transferred to Authorft at End of Term. Upon the
expiration of the Term as provided in Section. 4.2, the City's leasehold interest in the Project
pursuant to this Lease shall terminate, provided that, concurrent with such termination, the
leasehold interest of the City pursuant to the terms of the Operating Lease shall become effective
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 X hereof and, by
prepaying Lease Payments in the amounts necessary to cause the termination of the Term as
provided in Section 4.2(b) (the "Purchase Option Price"), terminate the Authority's leasehold
interest in the Property under the Property Lease.
Section 7.4 Quiet Enjoyment. Subject only to Permitted Encumbrances, during the
Term the Authority 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 Authority, or any person or entity claiming under or through
the Authority except as expressly set forth in this Lease Agreement. The Authority 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 Authority may lawfully do so. Notwithstanding the foregoing,
the Authority shall have the right of access to the Project as provided in Section 7.6.
oHSUSA�7541 I0187.6 19
Section 7.5 Installation of City's Personal Propeqy. 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. 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 Authority 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 Agreement shall prevent the City from purchasing items to be installed pursuant to
this Section 7.5, 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 Authority and the
Authority's successors or 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 perforin its obligations hereunder.
Section 7.7 Maintenance Utilities Taxes and Assessments.
(a) _Maintenance: Repair and Replacement. Throughout the Term of this
Lease Agreement, 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 Authority agrees to provide
only the Project.
(b) Tax and Assessments; Utility Char. 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 Authority 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
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 Agreement 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 Authority and the Trustee with the opinion of an Independent Counsel to the
effect that, by nonpayment of any such items, the interest of the Authority in such portion of the
Project will not be materially endangered and that the Project will not be subject to loss or
forfeiture or lien. Otherwise, the City shall promptly pay such taxes, assessments or charges or
01-iscIsA:754110187.6 20
make provisions for the payment thereof in form satisfactory to the Authority. The Authority
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 or 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. Such additions, modifications and improvements shall not in any
way damage any portion of the Project or cause them 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 interest on the Bonds; and the
Project, upon completion of any additions, modifications and improvements made pursuant to
this Section 7.8, 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. The City will not create, will use its best efforts to prevent the
creation of, and will remove any mortgage or lien upon the Water System or any property
essential to the proper operation of the Water System or to the maintenance of the Revenues,
provided that, notwithstanding the foregoing, the City may encumber the Water System with
mechanic's or materialman's liens, in connection with provision of administration buildings and
operational facilities; and provided further, that the foregoing covenant shall not affect the
Authority's right to issue Parity Obligations in accordance with the Trust Agreement and this
Lease Agreement. Except for Permitted EDcumbrances, 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 7.8; provided that if any such lien is established and the City shall first notify or cause to
be notified the Authority 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 Authority with full security against any loss or forfeiture which.
might arise from the nonpayment of any such lien, in form satisfactory to the Trustee of the
Authority. The Authority will cooperate fully in any such.contest, upon the request and at the
expense of the City.
Section 7.9 Liens. Except as permitted by this Lease Agreement (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 Authority and the City as herein provided. Except as
expressly provided in this Article, the City shall promptly, at its own expense, take such action as
may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge,
encumbrance or claim, for which it is responsible, if the same shall arise at any time; provided
that the City may 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 to the Project or the payment of Lease
Payments hereunder. The City shall reimburse the Authority for any expense incurred by it in
order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
O11SUSA:7541If) 187.6 21
Section 7.10 Authority's Disclaimer of Warranties. TIIE AUTHORITY AND
TRUSTEE MAKES NO WARRANTY OR RF....PRESENTATION, 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, In no
event shall the Authority or Trustee be liable for incidental, indirect, special or consequential
damages, in connection with or arising out of this Lease Agreement, the Property Lease, or the
Trust Agreement for the existence, furnishing, functioning or City's use and possession of the
Project.
Section 7.11 City's Rig ht to Enforce Warranties of Manufacturers Vendors or
Contractors. The Authority 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, with respect to the Project or the
improvements to the Project which the Authority may have against any manufacturer, 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 manufacturer, vendor or contractor with
respect thereto, and not against the Authority, nor shall such matter have any effect whatsoever
on the rights and obligations of the Authority with respect to this Lease Agreement, 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 arnounts recovered as a result of
the assertion of any such claims and rights. The Authority 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 Authority 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 of the improvements on
the Project.
Section 7.1.2 Reconstruction; Application of Net Insurance Proceeds. If any useful
portion of the Project shall be destroyed or is damaged by lire or other casualty, or title to, or the
temporary use of, such portion shall be taken under the exercise of the power of eminent domain,
the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be
prosecuted the repair, reconstruction, restoration or replacement thereof, unless it is determined
under the provisions of Section 6.1(c) hereof that such repair, reconstruction, restoration or
replacement is not to be undertaken.
Section 7.13 Against Encumbrances. The City will not make any pledge of or place
any lien on the Revenues except as provided herein.. The City may expend at any time, or from
time to time, general fund revenues or may issue evidences of indebtedness or incur other
obligations for any lawful purpose which are payable from and secured by a pledge of and lien
on general fund revenues.
Section 7.14 Against Sale or Other Disposition of Project. The City will not enter into
any agreement or lease which impairs the operation of the Project or any part thereof necessary
of fsusa:7sa 110187 6 22
to secure adequate water services for the community. Any real or personal property which has
become nonoperative or which is not needed for the efficient and proper operation of the
improvements on the Project, or any material or equipment which has become worn out, may be
sold if such sale Will not impair the ability of the City to pay Lease Payments and if the proceeds
of such sale are deposited in the Lease Payment fund.
Section 7.15 Payment of Claims. The City will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien on the Revenues or
the funds or accounts created hereunder or on any funds in the hands of the City pledged to pay
the Bonds prior or superior to the lien of the Trust Agreement or which might impair the security
of the Bonds. Notwithstanding the foregoing, the City may pledge, encumber or otherwise
secure its obligations with the Net Revenues; provided, that in all instances any such pledge, lien
or security is wholly subordinate and junior to the obligations of the City contained in the Trust
Agreement and this Lease Agreement.
Section 7.16 Compliance with Lease. The City will neither take nor omit to take any
action under any contract if the effect of such act or failure to act would in any manner impair or
adversely affect the ability of the City to pay Lease Payments; and the City will comply with,
keep, observe and perform all agreements, conditions, covenants and terms, express or implied,
required to be performed by it contained in all other contracts affecting or involving the Project,
to the extent that the City is a party thereto.
Section 7.17 Corn .liance with Governmental ReMI The City will duly observe
and comply with all valid regulations and requirements of any governmental authority relative to
the operation of the improvements on the Project, or any part thereof, but the City shall not be
required to comply with any regulations or requirements so hong as the validity or application
thereof shall be contested in good faith.
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1 Assi nment by the Authority. Except as provided herein and in the Trust
Agreement, the Authority will not assign this Lease Agreement, or any right, title or interest of
the Authority in and to this Lease Agreement, to any other person, firm or corporation so as to
impair or violate the representations, covenants and warranties contained in Section 2.2 hereof.
Section 8.2 Assignment and Subleasing b the Cit .
(a) Assignment. This Lease Agreement may not be assigned by the City
unless the City receives (i) the written consent of the Owners of 100% of the outstanding Bonds
and (ii) an opinion of Bond Counsel, stating that such assignment does not adversely affect the
exclusion from gross income for federal income tax purposes or from State of California
personal income taxes of interest on the Bonds. In the event that this Lease Agreement is
assigned by the City, the obligation to make Lease Payments and perform the other covenants of
the City hereunder shall remain the obligation of the City.
OI s[J_5A:7>4110187.6 2j
(b) Sublease. The City may sublease any portion of the Project, with the prior
written consent of the Authority, which consent shall not be unreasonably withheld, subject to all
of the following conditions:
(i) This Lease Agreement and the obligation of the City to make
Lease Payments and perform the other covenants of the City hereunder shall remain
obligations of the City;
(ii) The City shall, within 30 days after the delivery thereof, furnish or
cause to be furnished to the Authority and the Trustee a true and complete copy of such
sublease;
(iii) No sublease by the City shall cause the Project to be used for a
purpose other than a governmental or proprietary function authorized under the
provisions of the laws of the State; and
(iv) No sublease shall cause the interest on the Bonds to become
subject to federal income taxes or State of California personal income taxes.
Section 8.3 Amendments and Modifications. The terms of this Lease Agreement shall
not be waived, altered, modified, supplemented or amended in any manner whatsoever except by
written instrument signed by the Authority and the City, with the written consent of the Trustee
subject to the same conditions as set forth in Sections 7.2, 7.3 and 7.4 of the Trust Agreement.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Events of Default Defined. The following shall be "Events of Default"
under this Lease Agreement and the terms "Events of Default" and "default" mean, whenever
they are used in this Lease Agreement, any one or more of the following events:
(a) Payment Default. Failure by the City to pay any Lease Payment or
Additional Payment required to be paid hereunder on the date such payment is due hereunder.
(b) Covenant Default. Failure by the City to observe and perform any
warranty, covenant, condition or agreement on its part to be observed or performed herein or
otherwise with respect hereto or in the Property Lease, other than as referred to in clause (a) of
this Section, for a period of 30 days after written notice specifying such failure and requesting
that it be remedied has been given to the City by the Authority or the Trustee; provided,
however, if the failure stated in the notice cannot be corrected within the applicable period, then
no Event of Default shall have occurred for a period of 60 days after such applicable period so
long as corrective action is instituted by the City within the applicable period and diligently
pursued until the default is corrected. Notwithstanding the foregoing, an Event of Default shall
have occurred concurrent with any failure by the City to observe and perforin any warranty,
covenant, condition or agreement on its part to be observed or performed in Section 4.9, 4.10,
4.12, 5.1, 7.9, 7.13 or 7.14 hereof.
0iISUSA:75410187.6 24
(c) Bankruptcy or Insolvency. The filing by the City of a case in bankruptcy,
or the subjection of any right or interest of the City under this Lease Agreement to any execution,
garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City
for the benefit of creditors, or the entry by the City into an agreement of composition with
creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City
in any proceedings instituted under the provisions of the federal bankruptcy code, as amended, or
under any similar act which may hereafter be enacted.
(d) Breach of Representation. A material breach of any representation of the
City or the Authority hereunder after written notice specifying such failure and requesting that it
be remedied has been given to the City by the Authority or the Trustee.
(e) Abandonment of Pro ert . The City shall abandon any part of the
Property or the Property.
(f) Assignment of Lease. The assignment or transfer of the City's interest in
this Lease or any part thereof without the written consent of the Owners of 100% of the
outstanding Bonds, either voluntarily or by operation of law or otherwise.
(g) Invalidity of Lease. Any court of competent jurisdiction shall find or rule
that this Lease is not a valid or binding agreement of the City.
Section 9.2 Remedies on Default,• No Acceleration. Whenever any Event of Default
referred to in Section 9. .1 hereof shall have happened and be continuing, it shall be lawful :for the
Authority to exercise any and all remedies available pursuant to law or equity or granted
pursuant to this Lease Agreement, including
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the City or any director, officer or employee thereof, and to compel the
City or any such director, officer or employee to perform and carry out its or his duties under the
agreements and covenants required to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate
the rights of the Authority; or
(c) by suit in equity upon the happening of an Event of Default to require the
City and its City Council members, officers and employees to account as the trustee of an
express trust.
Notwithstanding the above, the Authority shall have no right to declare the unpaid Lease
Payments to be due and payable immediately.
Notwithstanding anything to the contrary contained in this Lease Agreement or any
Transaction Document, none of the Authority, the Trustee or the Bondholders shall have the
right hereunder to re-enter or re -let the Project under any circumstances unless otherwise
permitted under the Transaction Documents.
or[sUSA: 5 1 a 01 s7.e 25
Notwithstanding anything contained herein, the Authority shall have no security interest
in or mortgage on the Project, the Water System or other assets of the City and no default
hereunder shall result in the loss of the Project, the Water System, or other assets of the City.
Section 9.3 No Remedy Exclusive. Subject to the express limitation on remedies
described in the last paragraph of Section 9.2 above, no remedy conferred herein upon or
reserved to the Authority 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 Agreement or now or
hereafter existing at law or in equity. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the Authority 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.
Section. 9.4 Agreement to Pay Attorneys pees and Expenses, In the event either party
to this Lease Agreement should default under any of the provisions hereof and the nondefaulting
party should commence legal action or arbitration 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 attorneys fees, court costs and legal expenses incurred by the
nondefaulting party in such action or arbitration after payment of all fees and expenses of the
Trustee.
Section 9.5 No Additional Waiver Implied._by One Waiver. In the event any
agreement contained in this Lease Agreement 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 Trustee to Exercise Rights. Such rights and remedies as are given to the
Authority under this Lease Agreement have been assigned by the Authority to the Trustee, to
which assignment the City hereby consents. Such rights and remedies shall be exercised by the
Trustee subject to the terms of the Trust Agreement and this Lease Agreement.
ARTICLE X
PREPAYMENT OF LEASE PAYMENTS
Section 10.1 Seci rite _Deposi.t. Notwithstanding any other provision of this Lease
Agreement, the City may, on any date, secure the payment of all unpaid Lease Payments as set
forth in Exhibit B hereto by an irrevocable deposit by it with the Trustee of sufficient moneys
and non -callable Investment Securities, issued by the United States of America and described in
clause (A) of the definition thereof, the principal of and interest on which when due will provide
money sufficient to pay all principal, prepayment premium, if any, and interest of such Lease
Payments to and including their respective Lease Payment Dates or prepayment date or dates as
the case may be. In such event, and provided that the City has made arrangements acceptable to
the Trustee to pay any Additional Payments, all obligations of the City under this Lease
014S USA -754110187.6 26
Agreement, and all security provided by this Lease Agreement 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. On the date of said deposit the leasehold interest in the Project
shall vest in the City automatically and without further action by the City or the Authority
(except as provided herein); provided that the leasehold interest with respect to the Project shall
be subject to the subsequent payment of all Lease Payments made from said deposit in full in
accordance with the provisions hereof. 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
Agreement. The Authority shall execute and deliver such further instruments and take such
further action as may reasonably be requested by the City for carrying out the leaschold interest
transfer of the Project.
Section 10.2 Mandatory Pre a ment From Net Insurance 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 Insurance Proceeds theretofore transferred to the Insurance and Condemnation Account
and not otherwise applied to the Project in accordance with Article VI. The City and the
Authority hereby agree that such proceeds shall be credited towards the City's obligations
hereunder with respect to the portion of the Project from which. such proceeds were derived
(except in the case of such prepayment of the Lease Payments in whole) such that approximately
equal annual Lease Payments will prevail with respect to the Project following such prepayment.
Section 10.3 Optional Prepaymen . Subject to the terms and conditions of this Section,
the Authority hereby grants an option to the City to prepay in whole or in part a principal portion
of Lease Payments, in whole or in part in increments of X1.00 on any date on or after
November 15, 2024 hereafter at a prepayment price equal to the principal portion to be
redeemed.
The City shall execute said option by giving written notice to the Trustee thereof at least
60 days prior to the date of redemption of Bonds from such prepayment and depositing with said
notice cash in the minimum amount of (1) accrued interest on the principal portion of Lease
Payments to be prepaid to the date of redemption of Bonds with the proceeds of such
prepayment, plus (2) the principal portion of any Lease Payments to be prepaid, plus (3) the
applicable prepayment premium described herein.
Section 10.4 Effect of Pre a ment.
(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 has paid all Additional Payments
due hereunder, the City's obligations under this Lease Agreement shall thereupon cease and
terminate, including but not limited to the City's obligation to continue to pay Lease Payments
hereunder.
(b) In Part. In the event the City prepays less than all of the remaining
principal portion 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 portion of the remaining Lease
Payments corresponding to the resulting prepayment of the principal portion with respect to the
Bonds.
0HS13SA:754110187.6 27
ARTICLE XI
MISCELLANEOUS
Section 11.1 Liability of City Limited. Notwithstanding anything contained herein, the
City shall not be required to advance any money derived from any source of income other than
the Revenues and the other funds provided herein for the payment of the Lease Payments or for
the observance or performance of any agreements, conditions, covenants or terms contained
herein;rop„ vided, that the City may advance funds for any such payment as long as such funds
are derived from a source legally available for such purpose.
The obligation of the City to make Lease Payments is a limited obligation of the City
payable solely from the Revenues.
Section 11.2 Waiver of Personal Liability. No City Council member, officer, agent or
employee of the City or the City shall be individually or personally liable for the payment of
Lease Payments hereunder or be subject to any personal liability or accountability by reason of
the issuance thereof; but nothing herein contained shall relieve any such member, officer, agent
or employee from the performance of any official duty provided by law or by the Trust
Agreement.
Section 11.3 Notices. All notices, certificates or other communications hereunder to
the Authority and City shall be sufficiently given and shall be deemed to have been received five
(5) business days after deposit in the United. States mail in certified form, postage prepaid, to the
City or the Authority, as the case may be, at the following addresses:
If to the City:
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attention: City Manager and Chief Financial Officer/City Treasurer
If to the Authority:
San Juan Basin Authority
2611 Antonio Parkway
Rancho Santa Margarita, CA 92688
Attention:
If to the Trustee:
The Bank of New York Mellon Trust Company, N.A.
400 S. Hope Street, Ste 400
Los Angeles, CA 90071
Attention.: Corporate Trust Department
0xsUsA:754110187.6 28
All notices, certificates and other communications to the Trustee shall be sufficiently given and
shall be deemed to have been received five (5) days after deposit in the United States mail in
registered or certified form, postage prepaid. Notices to the Trustee may be given initially either
telephonically or by written telecommunication and shall then be confirmed in writing delivered
by certified mail, return receipt requested. The Authority, 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 11.4 Binding_ Effect. This Lease Agreement shall inure to the benefit of and
shall be binding upon the Authority and the City and their respective successors and assigns
(including without limitation the Trustee).
Section. 11.5 Severability. In the event any provision of this Lease Agreement 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 11.6 Execution in Counterparts. This Lease Agreement 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 11.7 Applicable Law. This Lease Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 11.5 Captions. The captions or headings in this Lease Agreement are for
convenience only and in no way detine, limit or describe the scope or intent of any provisions or
sections of this Lease Agreement.
Section 11.9 NoMerer. The leasing by the Authority to the City of the Property shall
not effect or result in a merger of the City's leasehold estate pursuant to this Lease Agreement
and pursuant to the Operating Lease and its fee estate as lessor under the Property Lease, and the
Authority shall continue to have and hold a leasehold estate in said. Property pursuant to the
Property Lease throughout the term thereof and the term of this Lease Agreement. As to said
Property, this Lease shall be deemed and constitute a sublease.
Section 11.10 Amendment of Original Lease. This Lease Agreement amends the
Original Lease as of November 1, 2014.
OHS USA: 7,4110[87 6 29
IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be
executed in its name by its duly authorized officers, and the City has caused this Lease
Agreement to be executed in its name by its duly authorized officers, as of the date first above
written.
SAN JUAN BASIN AUTHORITY, as Lessor
By:
ATTEST:
Secretary of the Board of Directors
Chairman of the Board of Directors
CITY OF SAN JUAN CAPISTRANO, as Lessee
By:
Mayor
ATTEST:
City Clerk
01fSUSA:754110197 6 S -I
EXHIBIT A
DESCRIPTION OF THE PROPERTY
€1HSUSA7754110187.e A-1
SCHEDULE OF LEASE PAYMENTS
Lease Payment Date. Principal. Payment Interest PUment Total Lease PUment
OI1SUSA:754 110187,6 A-1
IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be
executed in its name by its duly authorized officers, and the City has caused this Lease
Agreement to be executed in its dame by its duly authorized officers, as of the date first above
written.
ATTEST:
. . .... .. .. ... ��pr JK -
Secretary of the Boa d of Directors
I
SAN JUAN BASIN AUTHO TTY, as Lessor
Chair an of the Board of Directors
CITY OF SAN JUAN CAPISTRANO, as Lessee
By: A4a4azl
Mayor
QHSUSA:754110187 S-1
IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be
executed in its name by its duly authorized officers, and the City has caused this Lease
Agreement to be executed in its name by its duly authorized officers, as of the date first above
written.
ATTEST:
9
Secretary of the Board of Directors
SAN JUAN BASIN AUTHORITY, s Lessor
By
Chairman of the Board of Directors
CITY OF SAN JU N CAPISTRANO, as Lessee
By:
Mayor
OFfSUSA:7541101.87 S-1
N WITNESS WHEREOF, the Authority has caused this Lease Agreement to be
executed in its name by its duly authorized officers, and the City has caused this Lease
Agreement to be executed in its name by its duly authorized officers, as of the date first above
written.
ATTEST:
a-L4a-�--
Secretary of the Board of Directors
I
SAN .YUAN BASIN AUTHORITY, as Lessor
B
Chairman of the Board of Directors
CITY OF SAN JUAN CAPISTRANO, as Lessee
By:
Mayor
O SUSA:75411Q187 S-1
IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be
executed in its name by its duly authorized officers, and the City has caused this Lease
Agreement to be executed in its name by its duly authorized officers, as of the date first above
written.
ATTEST:
Qpql=
Secretary of the Board of Directors
SAN JUAN BASIN AUTHORY, as Lessor
By:
Chairman of the Board of Directors
CITY OF SAN JUAN CAPISTRANO, as Lessee
By: ."
Mayor
OHSUSA:7541 l0I &7 S-1