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Home My WebLink AboutSANTA ANA FINANCING AUTHORITYA-200J -zgcl Quint & Thimmig LLP $8,470,000 LEASE AGREEMENT Dated March 30, 2007 by and between the SANTA ANA FINANCING AUTHORITY, as Lessor and the CITY OF SANTA ANA, as Lessee 02/12/07 03/15/07 03/22/07 190U07 TABLE OF CONTENTS ARTICLE I DEFINITIONS AND EXHIBITS Section1.1. Definitions.................................................................................................................2 Section1.2. Exhibits ..................................... .................................................... ......... .................... 2 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1. Representations, Covenants and Warranties of the City...............................................3 Section 2.2. Representations, Covenants and Warranties of Authority............................................4 ARTICLE III APPLICATION OF MONEYS; DISBURSEMENT Section 3.1. Application of Moneys....... ....... .................................... .......................................... 5 Section3.2. Disbursement.............................................................................................................5 Section 3.3. Prepayment of Existing Lease Agreement...................................................................6 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Section4.1. Lease......................................................................................................................... 7 Section 4.2. Term of Agreement....................................................................................................7 Section4.3. Possession..................................................................................................................7 Section 4.4. Lease Payments..........................................................................................................7 Section4.5. Quiet Enjoyment........................................................................................................8 Section 4.7. Additional Payments..................................................................................................8 ARTICLE V MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS; AND OTHER MATTERS Section 5.1. Maintenance, Utilities, Taxes and Assessments............................................................9 Section 5.2. Modification of Property............................................................................................9 Section 5.3. Public Liability and Property Damage Insurance...................................................... 10 Section 5.4. Fire and Extended Coverage Insurance.................................................................... 10 Section 5.5. Rental Interruption Insurance.................................................................................. 10 Section 5.6. Performance and Payment Bonds............................................................................. 11 Section 5.7. Title Insurance......................................................................................................... 11 Section 5.8. Insurance Net Proceeds; Form of Policies................................................................ 11 Section5.9. Advances.. ............................................................................................................... 11 Section 5.10. Installation of City's Equipment............................................................................... 11 Section5.11. Liens........................................................................................................................ 12 Section 5.12. Private Activity Bond Limitation.............................................................................. 12 Section 5.13. Federal Guarantee Prohibition................................................................................. 12 Section 5.14. Rebate Requirement................................................................................................. 12 Section5.15. No Arbitrage........................................................................................................... 12 Section 5.16. Maintenance of Tax-Exemption................................................................................ 12 Section 5.17. Environmental Covenants........................................................................................ 12 -i- ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1. Eminent Domain...................................................................................................... 14 Section 6.2. Application of Net Proceeds.................................................................................... 14 Section 6.3. Abatement of Lease Payments in the Event of Damage or Destruction ...................... 14 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS, INDEMNIFICATION Section 7.1. Disclaimer of Warranties.......................................................................................... 16 Section 7.2. Access to the Property............................................................................................. 16 Section 7.3. Release and InderruZification Covenants................................................................... 16 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1. Assignment by the Authority................................................................................... 17 Section 8.2. Assignment and Subleasing by the City....................................................................17 Section 8.3. Amendment of Lease Agreement ................................ . 17 ............................................ ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.1. Events of Default Defined......................................................................................... 18 Section 9.2. Remedies on Default.. ... - .................................................................. ............ 18 Section 9.3. Waiver of Statutory Remedies.................................................................................. 20 Section 9.4. No Remedy Exclusive.............................................................................................. 20 Section 9.5. Agreement to Pay Attorneys' Fees and Expenses...................................................... 20 Section 9.6. No Additional Waiver Implied by One Waiver........................................................ 20 Section 9.7. Application of Proceeds........................................................................................... 20 Section 9.8. Assignee to Exercise Rights...................................................................................... 20 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Prepayment Option.................................................................................................. 21 Section 10.2. Mandatory Prepayment From Net Proceeds of Insurance, Title Insurance or EminentDomain...................................................................................................... 21 ARTICLE XI MISCELLANEOUS Section11.1. Notices............................................................................ Section 11.2. Binding Effect.................................................................. Section 11.3. Severability...................................................................... Section 11.4. Net -net -net Lease............................................................. Section 11.5. Further Assurances and Corrective Instruments ................ Section 11.6. Execution in Counterparts ................................................ Section 11.7. Applicable Law............................................................... Section 11.8. Authority and City Representatives .................................. Section11.9. Captions.......................................................................... EXHIBIT A: DEFINITIONS EXHIBIT B: DESCRIPTION OF THE SITE EXHIBIT C: DESCRIPTION OF THE IMPROVEMENTS EXHIBIT D: LEASE PAYMENT SCHEDULE EXHIBIT E: FORM OF DISBURSEMENT CERTIFICATE ........................................ 22 ........................................ 22 ........................................ 22 ........................................ 22 ........................................ 23 ........................................ 23 ........................................ 23 .............. I......................... 23 ........................................ 23 LEASE AGREEMENT THIS LEASE AGREEMENT (the "Lease Agreement"), dated March 30, 2007, is by and between the SANTA ANA FINANCING AUTHORITY, a point exercise of powers authority organized and existing under the laws of the State of California, as lessor (the "Authority"), and the CITY OF SANTA ANA, a municipal corporation and chartered city duly organized and existing under the laws of the State of California, as lessee (the "City"); WITNE SSE TH: WIIEREAS, pursuant to that certain Site Lease, dated October 27, 2005, as amended by the First Amendment to Site Lease, dated as of March 30, 2007 (the "Site Lease"), the City has leased that certain parcel of real property situated in the City of Santa Ana, Orange County, State of California, more particularly described in Exhibit B attached hereto and made a part hereof, together with certain improvements thereon (the "Site"), to the Authority, all for the purpose of enabling the City to refinance and finance the construction of a parking structure on the Site which is located adjacent to the proposed State Appellate Court Building in Santa Ana, California (the "Improvements"), - WHEREAS, the Authority proposes to lease the Site and the Improvements (collectively, the "Property") back to the City pursuant to this Lease Agreement and to assign its right to receive lease payments under this Lease Agreement (the "Lease Payments"), its right to enforce payment of the Lease Payments and otherwise to enforce its interest and rights under this Lease Agreement in the event of a default hereunder by the City, to All Points Public Funding, LLC, as assignee (the "Assignee"), pursuant to that certain Assignment Agreement, dated March 30, 2007, by and between the Authority and the Assignee; and WHEREAS, the proceeds of the assignment of this Lease Agreement, together with other available moneys, will be applied by the City to refinance and finance the costs of the Improvements; ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1. Definitions. The terms defined in Exhibit A attached hereto and by this reference incorporated herein, as used and capitalized herein, shall, for all purposes of this Lease Agreement, have the meanings ascribed to them in said Exhibit A unless the context clearly requires some other meaning. Section 1.2. Exhibits. The following exhibits are attached to, and by this reference made a part of, this Lease Agreement: Exhibit A: Definitions Exhibit B: Description of the Site Exhibit C: Description of the Improvements Exhibit D: The schedule of Lease Payments to be paid by the City hereunder with respect to the Property, showing the Interest Payment Date and amount of each such Lease Payment Exhibit E: Form of Disbursement Certificate -2- ARTICLE 11 REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1. Representations. Covenants and Warranties of the City. The City represents, covenants and warrants to the Authority and the Assignee as follows: (a) Due Organization and Existence. The City is a municipal corporation and chartered city, duly organized and existing under the laws of the State. (b) Authorization. The laws of the State authorize the City to enter into the Site Lease and this Lease Agreement and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid agreements; the City has duly authorized and executed all of the aforesaid agreements and such agreements constitute the legal, valid and binding agreements of the City, enforceable against the City in accordance with their respective terms. All procedures and requirements, including any legal bidding requirements, have been met by the City prior to the execution of this Lease Agreement in order to insure the enforceability of this Lease Agreement, and all Lease Payments and other payment obligations will be paid out of funds legally available for such purpose. The governing body of the City has complied with all applicable open public meeting and notice laws and requirements with respect to the meeting at which the City's execution of this Lease Agreement was authorized. (c) No Violations. Neither the execution and delivery of the Site Lease or this Lease Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction, agreement or instrument to which the City is now a party or by which the City is bound, constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrances whatsoever upon any of the property or assets of the City, or upon the Property, except 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) Essential Nature of Property. The Property is essential to the City's operations. (f) Use of the Property. The City will use the Property for the purpose of performing one or more governmental or proprietary functions of the City consistent with the permissible scope of the City's authority. (g) Value of the Property. The value of the Property is approximately $12,000,000. (h) Financial Information Accurate. All information provided by the City to the Assignee with respect to the financial performance of the City for the unaudited fiscal year ended June 30, 2006, is accurate in all material respects as of its date and does not omit any information necessary to make the information provided not misleading. The City has experienced no material change in its financial condition since June 30, 2006. -3- (i) Appropriated Moneys. The City has appropriated sufficient monies in its current fiscal year to meet the May 1, 2007 Lease Payment Section 2.2. Representations. Covenants and Warranties of Authority. The Authority represents, covenants and warrants to the Assignee and the City as follows: (a) Due Organization and Existence. The Authority is a joint exercise of powers authority, duly organized and existing under and by virtue of the laws of the State; has power to enter into the Site Lease, this Lease Agreement and the Assignment Agreement; is possessed of full power to own and hold, improve and equip real and personal property and to lease and sell the same; has duly authorized the execution and delivery of all of the aforesaid agreements and such agreements constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms. (b) No Encumbrances. The Authority will not pledge the Lease Payments or other amounts derived from the Property and from its other rights under this Lease Agreement and will not mortgage or encumber the Property, except as provided under the terms of this Lease Agreement. (c) No Violations. Neither the execution and delivery of the Site Lease, this Lease Agreement or the Assignment Agreement, the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Authority is now a party or by which the Authority is bound, 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 Property, except Permitted Encumbrances. (d) No Assignments. Except for its assignment to the Assignee or as otherwise provided herein, the Authority will not assign this Lease Agreement, its right to receive Lease Payments from the City or its duties and obligations hereunder to any other person, firm or corporation so as to impair or violate the representations, covenants and warranties contained in this Section 2.2. (e) Execution and Delivery. The Authority has duly authorized and executed this Lease Agreement in accordance with the laws of the State. ARTICLE III APPLICATION OF MONEYS; DISBURSEMENT Section 3.1. Application of Moneys. On the Closing Date, the Authority shall cause the Assignee to apply the amount of $8,470,000.00 as follows: (a) $5,970,000.00 shall be applied by the Assignee to the prepayment in whole of the principal component of the lease payments under the Existing Lease Agreement; and (b) $2,500,000.00 (the "Completion Amount") shall be deposited in the Depository Account and disbursed in accordance with the provisions of Section 3.2 hereof. Section 3.2. Disbursement. (a) The City agrees to establish, on or prior to the Closing Date, an account (the "Depositary Account") with the Depositary Agent, which account shall be used solely for the investment of the Completion Amount and for the payment of costs of completing the Improvements and Costs of Issuance and for no other purposes. On the Closing Date, the Completion Amount shall be deposited in the Depositary Account. Written evidence of such deposit shall be provided by the City to the Assignee. To secure the performance of the City's obligations under this Lease Agreement, the City hereby grants to the Assignee a first priority security interest in the cash and investments from time to time held in the Depositary Account and all proceeds thereof, which security interest shall automatically vest without the necessity of a writing or formal agreement, and agrees with respect thereto that the Assignee shall have all the rights and remedies of a secured party under the applicable Uniform Commercial Code. (b) Amounts on deposit in the Depositary Account shall be withdrawn by the Depositary Agent upon the receipt, from time to time of a Disbursement Certificate of the City, signed by an authorized officer of the City and the construction or project manager of the Improvements and affirmed for payment by the Assignee, substantially in the form attached hereto as Exhibit E, stating: (i) the name of the payee or payees to whom each such payment is due, which may be the City in the case of reimbursement for costs theretofore paid by the City; (ii) if such disbursement is for reimbursement to the City, evidence of prior payment; (iii) the respective amounts to be paid; (iv) the purpose for which each obligation to be paid was incurred; (v) that obligations in the stated amounts have been incurred by the City and are presently due and payable and that each item thereof is a proper charge against the Depositary Account, and has not been previously paid therefrom; (vi) that there has not been filed with or served upon the City notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the persons named in such requisition, which has not been released or will not be released simultaneously with the payment -5- of such obligation, other than materialmen's or mechanics' liens accruing by mere operation of law; (vii) that the component of the Improvements for which such payment relates is satisfactory to the City, (viii) that invoices, statements, vouchers or bills for the amounts requested are attached thereto; and (ix) that the balance remaining in the Depositary Account after payment of such amounts, together with any investment income reasonably anticipated to be deposited in the Depositary Account and any other funds available therefor, will be sufficient to pay all of the costs of the Improvements and the Costs of Issuance. In the event that the amounts held in the Depositary Account are insufficient to pay all of the costs of completing the Improvements and the Costs of Issuance, the City shall pay such remaining costs from sources other than proceeds of any borrowing or other financing. Section 3.3. Prepayment of Existing Lease Agreement. On the Closing Date, the City shall pay to Assignee an amount sufficient, together with the amount described in Section 3.1(a) hereof, to pay the aggregate unpaid principal component of the lease payments under the Existing Lease Agreement, plus accrued interest to the Closing Date, without premium. The City agrees to execute and deliver, and cause to be recorded in the appropriate real property records, such instruments as may be reasonably required to evidence the termination of the Existing Lease Agreement. M ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Section 4.1. Lease. The Authority hereby leases the Property to the City, and the City hereby leases the Property from the Authority, upon the terms and conditions set forth in this Lease Agreement. Section 4.2. Term of Agreement.. The Term of the Lease Agreement shall commence on the date hereof, and shall end on May 1, 2026, unless such term is extended as hereinafter provided. If, on May 1, 2026, the Lease Payments payable hereunder shall have been abated at any time and for any reason, or if an Event of Default shall have occurred under this Lease Agreement and, as a result, any obligation under this Lease Agreement remains unpaid, then the Term of the Lease Agreement shall be extended until there has been deposited with the Assignee an amount sufficient to pay all obligations due under the Lease Agreement, but in no event shall the Term of the Lease Agreement extend beyond May 1, 2046. Section 4.3. Possession. The City hereby agrees to accept and take possession of the Property on or prior to the date hereof. The first Lease Payment shall be due on May 1, 2007. Section 4.4. Lease Payments. (a) Obligation to Pay. Subject to the provisions of Articles VI and X hereof, the City agrees to pay to the Authority, its successors and assigns, as rental for the beneficial use and occupancy of the Property during each Rental Period, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Exhibit D hereto, to be due and payable on the respective Interest Payment Dates specified in Exhibit D hereto. Notwithstanding any dispute between the City, the Authority or any other party, the City will make all Lease Payments when due, without withholding any portion of such rent, pending final resolution of such dispute by mutual agreement between the parties thereto or by a court of competent jurisdiction. (b) Effect of Prepayment. In the event that the City prepays all remaining Lease Payments in full pursuant to Article X hereof, the City's obligations under this Lease Agreement shall thereupon cease and terminate including, but not limited to, the City's obligation to pay Lease Payments under this Section 4.4. (c) Rate on Overdue Payments. In the event the City should fail to make any of the payments required in this Section 4.4, the payment 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 of such default to the date of payment at the rate of twelve percent (12%) per annum. (d) Fair Rental Value. The Lease Payments for the Property for each Rental Period shall constitute the total rental for the Property for each such Rental Period and shall be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy, and the continued quiet use and enjoyment, of the Property during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments for the Property do not exceed the fair rental value of the Property. In making such determination, consideration has been given to the obligations of the parties under this Lease Agreement, the uses and purposes which may be served by the Property, the total amounts which have -7- been expended on the Property, the value of the Property and the benefits therefrom which will accrue to the City and the general public. (e) Source of Payments; Budget and Appropriation. Lease Payments shall be payable from any source of available funds of the City, subject to the provisions of Articles VI and X hereof. The City covenants to take such action as may be necessary to include all Lease Payments due hereunder in each of its budgets during the Term of the Lease Agreement and to make the necessary annual appropriations for all such Lease Payments. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City. (f) Assignment. The City understands and agrees that all Lease Payments have been assigned by the Authority to the Assignee pursuant to the Assignment Agreement, and the City hereby acknowledges such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the Assignee at the following address, all payments payable by the City pursuant to this Section 4.4 and all amounts payable by the City pursuant to Article X hereof, in the respective amounts for each Assignee as set forth in Exhibit D hereof: All Points Public Funding, LLC 275 Broadhollow Road Melville, NY 11747 Attention: Jonathan Lewis Wire Information: Receiving Bank: North Fork Bank ABA No.: 021407912 Beneficiary: All Points Capital Corp. Beneficiary Acct. No.: 4224020638 Add'1 Info/FC: City of Santa Ana or such other account as shall be provided to the City by the Assignee upon request In addition, all references herein to the Authority, when the context implies the Assignee, shall be assumed to also refer to the Assignee, even if not specifically so indicated. Section 4.5. Quiet Enjoyment. During the Term of the Lease Agreement, the Authority shall provide the City with quiet use and enjoyment of the Property and the City shall, during such Term, peaceably and quietly have and hold and enjoy the Property without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease Agreement. The Authority will, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority shall have the right to inspect the Property as provided in Section 7.2 hereof. Section 4.6. Additional Payments. In addition to the Lease Payments, the City shall pay when due all costs and expenses incurred by the City and the Authority to comply with the provisions of this Lease Agreement, or otherwise arising from the leasing of the Property, compensation and indemnification due to the Authority and the Assignee, and all costs and expenses of auditors, engineers, attorneys and accountants. -S- ARTICLE V MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS; AND OTHER MATTERS Section 5.1. Maintenance, Utilities. Taxes and Assessments. Throughout the Term of the Lease Agreement, as part of the consideration for the rental of the Property, all improvement, repair and maintenance of the Property shall be the responsibility of the City and the City shall pay, or otherwise arrange for the payment of, all utility services supplied to the Property which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Property, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the City under the terms of this Lease Agreement. The City shall also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Property 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 the Lease Agreement as and when the same become due. The City may, at the City's 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 unless the Authority shall notify the City that, in the opinion of Independent Counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority. Section 5.2. Modification of Property. The City shall, at its own expense, have the right to remodel the Property or to make additions, modifications and improvements to the Property. All additions, modifications and improvements to the Property, but not any additional buildings or improvements, shall thereafter comprise part of the Property and be subject to the provisions of this Lease Agreement. Such additions, modifications and improvements shall not in any way damage the Property, substantially alter its nature, cause the interest component of Lease Payments to be subject to federal income taxes or cause the Property to be used for purposes other than those authorized under the provisions of State and federal law; and the Property, upon completion of any additions, modifications and improvements made thereto pursuant to this Section 5.2 (but excluding any additional buildings or improvements that do not comprise part of the Property), shall be of a value which is not substantially less than the value of the Property immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other lien to be established or remain against the Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City pursuant to this Section 5.2; provided that if any such lien is established and the City shall first notify the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Property, and in such event may permit the items so contested to &0 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 item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City. Section 5.3. Public Liability and Property Damage Insurance. The City shall maintain or cause to be maintained, throughout the Term of the Lease Agreement, insurance policies, including a standard comprehensive general insurance policy or policies in protection of the Authority, the City and the Assignee and their respective members, officers, agents and employees. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the City, and may be maintained through a joint exercise of powers authority created for such purpose or in the form of self-insurance by the City. Said policy or policies shall provide for indemnification of said parties against direct or consequential loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $150,000 for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Deductibles, if any, shall be in such amounts as may reasonably be obtained by a city in California of comparable size to the City, insuring risks comparable to those that are the subject of said insurance coverage, but shall in no circumstance be in excess of amounts that would be reasonable in the exercise of prudence and good judgment by the City. The proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the proceeds of such insurance shall have been paid. Section 5.4. Fire and Extended Coverage Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease Agreement, insurance against loss or damage to any structures constituting part of the Property by fire and lightning, with extended coverage and vandalism and malicious mischief insurance, with the Authority and the Assignee named as loss payees. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to one hundred percent (100%) of the replacement cost of such structures. Such insurance may be subject to deductible clauses of not to exceed $100,000 for any one loss. Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the City and may be maintained in whole or in part in the form of insurance maintained through a joint exercise of powers authority created for such purpose or in the form of self-insurance by the City. The Net Proceeds of such insurance shall be applied as provided in Sections 5.6 and 6.2(a) hereof. Section 5.5. Rental Interruption Insurance. The City shall procure and maintain, or cause to be maintained, throughout the Term of the Lease Agreement, rental interruption insurance to cover loss, total or partial, of the use of any part of the Property during the Term of the Lease Agreement as a result of any of the hazards covered in the insurance required by Section 5.4 hereof, with the Authority and the Assignee named as additional insureds, in an amount at least equal to the maximum amount of Lease Payments payable in any two year period. Such insurance may be carried in conjunction with, and may be subject to the same provisions as, the insurance required under Section 5.4. The City hereby assigns to the Authority all right of the City, if any, to collect and receive Net Proceeds -10- under any of said policies, which right has been assigned by the Authority to the Assignee pursuant to the Assignment Agreement. The Net Proceeds of such insurance shall be paid to the Assignee and shall be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. Section 5.6. Performance and Payment Bonds. The City shall obtain performance and payment bonds relating to the Improvements in such form as shall be acceptable to the Assignee. Section 5.7. Title Insurance. (a) The City shall provide, on the Closing Date, an ALTA title insurance policy (or an amendment to the ALTA policy issued on October 27, 2005), covering, and in the amount of not less than the principal amount of the Lease Agreement, insuring the leasehold estate created by the Site Lease. The Assignee shall be a named insured of such title insurance policy. (b) The Net Proceeds of such title insurance shall be applied as provided in Section 6.2(c) hereof. Section 5.8. Insurance Net Proceeds: Form of Policies. In the event that the City is not self -insured as hereinafter provided, the City, at its expense, shall throughout the term of this Lease Agreement keep the Property insured against theft, fire, collision (in the case of vehicles) and such other risks as may be customary for each item of Property in the amounts and for the coverage set forth in this Lease Agreement, with carriers acceptable to the Authority, under a policy or policies containing a loss payable endorsement in favor of the Authority and the Assignee, and affording to the Authority such additional protection as the Authority shall reasonably require. The City shall further, at its expense, maintain in effect throughout the term of this Lease Agreement a policy or policies of comprehensive public liability and property damage insurance in the amounts and for the coverage set forth in this Lease Agreement, with carriers satisfactory to the Authority. Such insurance may be maintained as part of or in conjunction with any other insurance carried by the City and may be maintained in whole or in part through a joint exercise of powers authority created for such purpose. The policies required hereby shall provide that they may not be canceled or materially altered without at least 30 days prior written notice to the Authority and the Assignee. The City shall deliver to the Authority and the Assignee copies or other evidence satisfactory to the Authority or the Assignee, as applicable, of each insurance policy and each renewal thereof. Failure by the Authority or the Assignee to request evidence of such insurance policies or renewals, or otherwise to verify the existence of such insurance, shall not constitute a waiver of the requirements hereof. The Authority, the Assignee and the City shall jointly make claim for, receive payment of and execute and endorse all documents, checks or drafts received in payment for loss or damage under said insurance policies. Section 5.9. Advances. If the City shall fail to perform any of its obligations under this Article V, the Authority or the Assignee may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as soon as possible, with interest at the rate of twelve percent (12%) per annum from the date of the advance to the date of repayment. Section 5.10. Installation of City's Equipment. 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 Property. All -11- such items shall remain the sole property of the City in which neither the Authority nor the Assignee 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 the Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement shall prevent the City from purchasing or leasing items to be installed pursuant to this Section 5.10 under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Property. Section 5.11. Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Property, other than the respective rights of the Authority and the City as provided herein and Permitted Encumbrances. Except as expressly provided in this Article V, 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. 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. Section 5.12. Private Activity Bond Limitation. The City shall assure that proceeds of the Lease Agreement are not so used as to cause the Lease Agreement to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. Section 5.13. Federal Guarantee P_ rohibiti. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Lease Agreement to be "federally guaranteed" within the meaning of section 149(b) of the Code. Section 5.14. Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Lease Agreement. Section 5.15. No Arbitrage. The City shall not take, or permit or suffer to be taken, any action with respect to the proceeds of the Lease Agreement which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the effective date of the Lease Agreement, would have caused the Lease Agreement to be "arbitrage bonds" within the meaning of section 148 of the Code. Section 5.16. Maintenance of Tax -Exemption. The City shall take all actions necessary to assure the exclusion of interest with respect to the Lease Agreement from the gross income of the recipients thereof to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the effective date of the Lease Agreement. Section 5.17. Environmental Covenants. (a) The City shall not cause or permit the Property or any part thereof to be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials, except in compliance with all applicable Federal, state and local taws or regulations, nor shall the City cause or permit, as a result of any intentional or unintentional act or omission on the part of the City or any tenant or subtenant, a release of Hazardous Materials onto the Property. The City shall comply with and ensure compliance by all tenants and subtenants with all applicable Federal, state and local laws, ordinances, -12- rules and regulations, whenever and by whomever triggered, and shall obtain and comply with, and ensure that all tenants and subtenants obtain and comply with, any and all approvals, registrations or permits required thereunder. (b) The City shall (i) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal, and other actions necessary to clean up and remove all Hazardous Materials, on, from, or affecting the Property (A) in accordance with all applicable Federal, state and local laws, ordinances, rules, regulations, and policies, (B) to the satisfaction of the Assignee, and (C) in accordance with the orders and directives of all Federal, state and local governmental authorities, and (ii) defend, indemnify, and hold harmless the Assignee from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to, (A) the presence, disposal, release, or threatened release of any Hazardous Materials which are on, from, or affecting the soil, water, vegetation, buildings, personal property, persons, animals, or otherwise; (B) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials, and/or (C) any violation of laws, orders, regulations, requirements or demands of government authorities, or any policies or requirements of the mortgage Assignee, which are based upon or in any way related to such Hazardous Materials including, without limitation, attorney and consultant fees, investigation and laboratory fees, court costs, and litigation expenses. (c) In the event that the Assignee elects to control, operate, sell or otherwise claim property rights in the Property, the City shall deliver the Property free of any and all Hazardous Materials so that the conditions of the Property shall conform with all applicable Federal, state and local laws, ordinances, rules or regulations affecting the Property. Prior to any such delivery of the Property, the City shall pay the Assignee, from its own funds, any amounts then required to be paid under subsection (ii) above. (d) The provisions of this Section 5.17 shall survive any termination of this Lease Agreement. (e) For purposes of this Section 5.17, "Hazardous Materials" includes, without limit, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. §§ 1801 et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. §§ 9601 et seq.), and in the regulations adopted and publications promulgated pursuant thereto, or any other Federal, state or local environmental law, ordinance, rule, or regulation. 59, ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1. Eminent Domain. If all of the Property shall be taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease Agreement shall cease as of the day possession shall be so taken. If less than all of the Property shall be taken permanently, or if all of the Property or any part thereof shall be taken temporarily under the power of eminent domain, (1) this Lease Agreement shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (2) there shall be a partial abatement of Lease Payments as a result of the application of the Net Proceeds of any eminent domain award to the prepayment of the Lease Payments hereunder, in an amount to be agreed upon by the City and the Authority, and so certified by such parties to the Assignee, such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Property. Section 6.2. Application of Net Proceeds. (a) From Insurance Award. The Net Proceeds of any insurance award resulting from any damage to or destruction of any portion of the Property by fire or other casualty shall, if not elected by the City for the repair or replacement of such damaged or destroyed portion of the Property be paid by the City to the Assignee, as assignee of the Authority under the Assignment Agreement, and applied to the prepayment of Lease Payments as described in Section 10.2 hereof. (b) From ,Eminent Domain Award. The Net Proceeds of any eminent domain award resulting from any event described in Section 6.1 hereof shall be paid by the City to the Assignee, as assignee of the Authority under the Assignment Agreement, and applied to the prepayment of Lease Payments as described in Section 10.2 hereof. (c) From Title Insurance. The Net Proceeds of any title insurance award shall be paid by the City to the Assignee, as assignee of the Authority under the Assignment Agreement, and applied to the prepayment of Lease Payments as described in Section 10.2 hereof. Section 6.3. Abatement of Lease Payments in the Event of Damage or Destruction. Lease Payments shall be abated during any period in which, by reason of damage or destruction, there is substantial interference with the use and occupancy by the City of the Property or any portion thereof (other than any additional buildings or improvements that do not comprise part of the Property as described in Section 5.2 hereof) to the extent to be agreed upon by the City and the Authority. The parties agree that the amounts of the Lease Payments under such circumstances shall not be less than the amounts of the unpaid Lease Payments as are then set forth in Exhibit D, unless such unpaid amounts are determined to be greater than the fair rental value of the portions of the Property not damaged or destroyed (giving due consideration to the factors identified in the last sentence of Section 4.4(d)), based upon the opinion of an MAI appraiser with expertise in valuing such properties or other appropriate method of valuation, in which event the Lease Payments shall be abated such that they represent said fair rental value. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease Agreement shall continue in full force and effect and the City waives any right to terminate this Lease Agreement by virtue of any such damage and -14- destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that the proceeds of rental interruption insurance are available to pay Lease Payments which would otherwise be abated under this Section 6.3, it being hereby declared that such proceeds and amounts constitute special funds for the payment of the Lease Payments. -15- ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEMNIFICATION Section 7.1. Disclaimer of Warranties. NEITHER THE AUTHORITY NOR ITS ASSIGNS MAKES ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE PROPERTY OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROPERTY. IN NO EVENT SHALL THE AUTHORITY OR ITS ASSIGNS BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE SITE AND FACILITY LEASE OR THIS LEASE AGREEMENT FOR THE EXISTENCE, FURNISHING, FUNCTIONING OR THE CITY'S USE OF THE PROPERTY, Section 7.2. Access to the Property. The City agrees that the Authority and any Authority Representative, and the Authority's successors or assigns (including the Assignee), shall have the right at all reasonable times to enter upon and to examine and inspect the Property. The City further agrees that the Authority, any Authority Representative, and the Authority's successors or assigns (including the Assignee) shail have such rights of access to the Property as may be reasonably necessary to cause the proper maintenance of the Property in the event of failure by the City to perform its obligations hereunder. Section 7.3. Release and Indemnification Covenants. The City shall and hereby agrees to indemnify and save the Authority, the Assignee and their respective officers, agents, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of or from (i) the use, maintenance, condition or management of any work or thing done on the Property 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, (iii) any act or omission of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Property, (iv) any act or omission of any sublessee of the City with respect to the Property, or (v) the payment of costs of the Property. No indemnification is made under this Section 7.3 or elsewhere in this Lease Agreement for willful misconduct, negligence or breach of duty under this Lease Agreement by the party seeking indemnity or any of its officers, agents or employees. -16- ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1. Assignment by the Authority. 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 under this Lease Agreement, have been assigned to the Assignee, pursuant to the Assignment Agreement and the City hereby acknowledge such assignment. The Assignee and any successor assignee may assign its rights under this Lease Agreement, including the right to receive and enforce payment of the Lease Payments to be made by the City under this Lease Agreement, to a successor assignee, without the written consent of the City. No such further assignment shall be effective against the City until the City has received written notice, signed by the assignor, of the name and address of the assignee. The City agrees to keep a written record of each assignment in from necessary to comply with section 149(a) of the Code. Section 8.2. Assignment and Subleasing by the City. This Lease Agreement may not be assigned by the City. The City may not sublease the Property or any portion thereof. Section 8.3. Amendment of Lease Agreement. This Lease Agreement may be amended in such manner as shall be agreed to by the parties hereto, subject to the approval of the Assignee. -17- 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" shall mean, whenever they are used in this Lease Agreement, any one or more of the following events: (a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed under this Lease Agreement, other than as referred to in clause (a) of this Section 9.1, for a period of thirty (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 Assignee; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority and the Assignee shall not unreasonably withhold their consent to an extension of such time, for a period not to exceed ninety (90) days, if corrective action is instituted by the City within the applicable period and diligently pursued until the Default is corrected. (c) Any statement, representation or warranty made by the City in or pursuant to this Lease Agreement or its execution, delivery or performance shall prove to have been false, incorrect or misleading in any material respect on the date when made. (d) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift 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 Act, as amended, or under any similar acts which may hereafter be enacted. Section 9.2. Remedies on Default. 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 or the Assignee to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement; provided, however, that notwithstanding anything herein to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority or the Assignee may exercise any and all rights of entry and re-entry upon the Property, and also, at its option, with or without such entry, may terminate this Lease Agreement; provided, that no such termination shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. In the event of such Default and notwithstanding any re-entry by the Authority or the Assignee, the City shall, as herein expressly provided, continue to remain liable for the payment of the Lease Payments and/or damages for breach of this Lease Agreement and the performance of all conditions herein contained and, in any event such rent and/or damages shall be payable to the Assignee at the time and in the manner as herein provided, to wit: (a) In the event the Authority or the Assignee does not elect to terminate this Lease Agreement in the manner hereinafter provided for in subparagraph (b) hereof, the City H-3 agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and shall reimburse the Assignee for any deficiency arising out of the re -leasing of the Property, or, in the event the Authority or the Assignee are unable to re -lease the Property, then for the full amount of all Lease Payments to the end of the Term of the Lease Agreement, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority or the Assignee or any suit in unlawful detainer, or otherwise, brought by the Authority or the Assignee for the purpose of effecting such re-entry or obtaining possession of the Property or the exercise of any other remedy by the Authority or the Assignee, The City hereby irrevocably appoints the Authority and the Assignee as the agent and attorney - in -fact of the City to enter upon and re -lease the Property in the Event of Default by the City in the performance of any covenants herein contained to be performed by the City and to remove all personal property whatsoever situated upon the Property, to place such property in storage or other suitable place in Orange County, California, for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority and the Assignee from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re -leasing of the Property and the removal and storage of such property by the Authority or the Assignee or their duly authorized agents in accordance with the provisions herein contained. The City hereby waives any and all claims for damages caused or which may be caused by the Authority or the Assignee in re- entering and taking possession of the Property as herein provided and all claims for damages that may result from the destruction of or injury to the Property and all claims for damages to or loss of any property belonging to the City that may be in or upon the Property. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the.right of the Authority and the Assignee to re -lease the Property in the event of such re-entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority or the Assignee in effecting such re -leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such re -leasing is made or the terms and conditions of such re -leasing, or otherwise, but that, on the contrary, in the event of such Default by the City the right to terminate this Lease Agreement shall vest in the Authority and the Assignee to be effected in the sole and exclusive manner hereinafter provided for in paragraph (b) hereof. The City further waives the right to any rental obtained by the Authority or the Assignee in excess of the Lease Payments and payments due pursuant to Section 4.7 hereof and hereby conveys and releases such excess to the Authority or the Assignee, as applicable, as compensation to the Authority or the Assignee for their services in re -leasing the Property. (b) In an Event of Default hereunder, the Authority or the Assignee at their option may terminate this Lease Agreement and re -lease all or any portion of the Property. In the event of the termination of this Lease Agreement by the Authority or the Assignee at their option and in the manner hereinafter provided on account of Default by the City (and notwithstanding any re-entry upon the Property by the Authority or the Assignee in any manner whatsoever or the re -leasing of the Property), the City nevertheless agrees to pay to the Authority or the Assignee, as applicable, all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments. Any surplus received by the Authority or the Assignee from such re -leasing shall be credited towards the Lease Payments next coming due and payable. Neither notice to pay rent or to deliver up possession of the premises given pursuant to law nor any proceeding in unlawful detainer taken by the Authority or the Assignee shall of itself operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of Default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority or the Assignee shall have given written notice to the City of its election to terminate this Lease Agreement. The City covenants and -19- agrees that no surrender of the Property and/or of the remainder of the Term of the Lease Agreement or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Assignee by such written notice. Section 9.3. Waiver of Statutory Remedies. Pursuant to California Civil Code section 1952.6(b), the City hereby waives, to the fullest extent permitted by law, all of the remedies for a breach of this Lease Agreement provided in sections 1951 to 1952.2, inclusive, of the California Civil Code, and contracts instead for the remedies set forth in this Article IX. Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or the Assignee 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 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 or the Assignee to exercise any remedy reserved to it in this Article IX it shall not be necessary to give any notice, other than such notice as may be required in this Article IX or by law. Section 9.5. Agreement to Pay Attorneys' Fees and Expenses. In the event that any party to this Lease Agreement should default under any of the provisions hereof and the non -defaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the non -defaulting party the reasonable fees of such attorneys and such other expenses so incurred by the non -defaulting party. Section 9.6. 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 9.7. Application of Proceeds. All net proceeds received from the re -lease or other disposition of the Property under this Article IX, and all other amounts derived by the Authority or the Assignee as a result of an Event of Default hereunder, shall be transferred to the Assignee promptly upon receipt thereof and after payment of all fees and expenses of the Assignee, including attorneys fees, shall be applied to the Lease Payments in order of payment date. Section 9.8. Assignee to Exercise Rights. Such rights and remedies as are given to the Authority under this Article IX have been assigned by the Authority to the Assignee, under the Assignment Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised solely by the Assignee as provided in the Assignment Agreement and herein. -20- ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Prepayment Option. The Authority hereby grants an option to the City to prepay the principal component of the Lease Payments in whole or in part, on any Interest Payment Date, on or after November 1, 2010, by paying a prepayment amount equal to the principal amount of Lease Payments to be prepaid (not less than $1,000,000 in the case of a partial prepayment), together with the premium set forth below (expressed as a percentage of the total principal amount prepaid), and accrued interest to the date fixed for prepayment. Redemption Redemption Date Premium November 1, 2010, May 1, 2011, November 2.0% 1, 2011, and May 1, 2012 November 1, 2012, May 1, 2013, November 1.5 1, 2013, and May 1, 2014 November 1, 2014, May 1, 2015, November 1.0 1, 2015, and May 1, 2016 November 1, 2016, and each May 1 and 0.0 November 1 thereafter Said option shall be exercised by the City by giving written notice to the Authority and the Assignee of the exercise of such option at least sixty (60) days prior to said date. Such option shall be exercised by depositing with said notice cash in an amount sufficient to pay the aggregate unpaid principal component of the Lease Payments on said Interest Payment Date as set forth in Exhibit D hereto, together with any Lease Payments then due but unpaid and any accrued interest to such prepayment date. Section 10.2. Mandatory Prepayment From Net _Proceeds of Insurance. Title Insurance or Eminent Domain. The City shall be obligated to prepay the Lease Payments, in whole on any date or in part on any Interest Payment Date, from and to the extent of any Net Proceeds of an insurance, title insurance or condemnation award with respect to the Property. The City, the Authority and the Assignee hereby agree that such Net Proceeds shall be applied first to the payment of any delinquent Lease Payments, and thereafter shall be credited towards the City's obligations under this Section 10.2. Lease Payments due after any such partial prepayment shall be in the amounts set forth in a revised Lease Payment schedule which shall be provided by, or caused to be provided by, the Assignee to the City and which shall represent an adjustment to the schedule set forth in Exhibit D attached hereto taking into account said partial prepayment. -21- ARTICLE XI MISCELLANEOUS Section 11.1.. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received upon actual receipt after deposit in the United States mail in first-class form with postage fully prepaid: If to the Authority: Santa Ana Financing Authority 20 Civic Center Plaza Santa Ana, CA 92702 Attention: Executive Director Phone: (714) 647-5422 Fax: (714) 647-5414 If to the City: City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92702 Attention: Executive Director of Finance Phone: (714) 647-54" Fax: (714) 647-5414 If to the Assignee: All Points Public Funding, LLC 275 Broadhollow Road Melville, NY 11747 Attention: Mr. Jonathan A. Lewis, Senior Vice President/Manager Phone: (631) 531-2824 Fax: (631) 574-3102 with a copy to SunTrust Leasing Corporation 29883 Santa Margarita Parkway, Suite 100 Rancho Santa Margarita, CA 92688 Attention: Public Sector Finance Group Phone: (949) 713-9063 Fax:(949) 713-9065 The Authority, the City and the Assignee, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent. Any party giving notice to the other pursuant to this Lease Agreement shall also give such notice to the Assignee. Section 11.2. 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. Section 11.3. Severability. In the event any provision of this Lease Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 11.4. 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 or the Assignee, free and clear of any expenses, charges or set -offs whatsoever. -22- Section 11.5. 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 hereby leased or intended so to be or for carrying out the expressed intentions of this Lease Agreement. Section 11.6. Execution in Counterparts. This Lease Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.7. Ap 2licable Law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.8. Authority and City Representatives. Whenever under the provisions of this Lease Agreement the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given for the Authority by a Authority Representative and for the City by a City Representative, and each party hereto shall be authorized to rely upon any such approval or request. Section 11.9. Captions. The captions or headings in this Lease Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease Agreement. -23- IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be executed in its corporate 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: Patricia E. Healy Secretary SANTA ANA FINANCING AUTHORITY, as Lessor By LA, 60."- David N. Ream Executive Director CITY OF SANTA ANA, as Lessee By 4Z- Davia N. Ream Attest: City Manager Patricia E. Healy Clerk of the Council -24- EXHIBIT A DEFINITIONS "Assignee" means All Points Public Funding, LLC, as assignee, or any successor thereto. "Assignment Agreement" means the Assignment Agreement, dated March 30, 2007, by and between the Authority and the Assignee, together with any duly authorized and executed amendments thereto. "Authority" means the Santa Ana Financing Authority, a joint exercise of powers authority organized and existing under the laws of the State. "Authority Representative" means the Chairman, the Vice Chairman, the Executive Director, the Treasurer or any other person authorized by resolution of the Board of Directors of the Authority to act on behalf of the Authority under or with respect to the Site Lease, the Lease Agreement and the Assignment Agreement. "Bond Counsel" means (a) Quint & Thimmig LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City of nationally -recognized experience in the issuance of obligations of public entities. "Business Day" means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the state in which the Assignee is located are closed or are required to close or a day on which the New York Stock Exchange is closed. "City" means the City of Santa Ana, a municipal corporation and chartered city duly organized and existing under and by virtue of the constitution and laws of the State. "City Representative" means the Mayor, the Mayor Pro Tem, the City Manager, the Finance Director, or the designee of any such official, or any other person authorized to act on behalf of the City under or with respect to the Site Lease, the Lease Agreement and/or the Depositary Agreement and identified as such to the Assignee in writing. "Code" means the Internal Revenue Code of 1986. "Costs of Issuance" means all expenses incurred in connection with the authorization, execution and delivery of the Lease Agreement, including but not limited to all compensation, fees and expenses (including but not limited to fees and expenses for legal counsel) of the Authority or the City, fees and expenses of the Depositary Agent (including but not limited to fees and expenses for legal counsel), compensation to any financial consultants, legal fees and expenses, filing and recording costs, costs of preparation and reproduction of documents, out-of-pocket expenses of the Authority or the City, Authority and City staff costs and costs of printing, "Depositary Agent" means The Bank of New York Trust Company, N.A., Los Angeles, California. "Event of Default" means an event of default under the Lease Agreement, as defined in Section 9.1 thereof. Exhibit A Page 1 "Existing Lease Agreement" means the Lease Agreement, dated October 27, 2005, between the Assignee, as lessor and as assignee of the Authority, and the City, as lessee, the proceeds of which have been used to pay a portion of the costs of the Improvements. "Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending on June 30 of the next succeeding year, or any other twelve-month period selected by the City as its fiscal year. "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 of the City, the Authority or the Assignee. "Improvements" means those improvements to be to be financed with the proceeds of the Lease Agreement and constructed on the Site more particularly described in Exhibit C to the Lease Agreement. "Interest Payment Date" means the 20th day of each April and October, commencing April 20, 2007. "Lease Agreement" means the Lease Agreement, dated March 30, 2007, by and between the Authority, as lessor, and the City, as lessee, together with any duly authorized and executed amendments thereto. "Lease Payments" means all payments required to be paid by the City pursuant to Section 4.4 of the Lease Agreement, including any prepayment thereof pursuant to Article X of the Lease Agreement, which payments consist of an interest component and a principal component. "Net Proceeds," when used with respect to insurance or condemnation proceeds, means any insurance proceeds or condemnation award paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. "Permitted Encumbrances" means, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V of the Lease Agreement, permit to remain unpaid; (b) the Assignment Agreement, (c) the Lease Agreement; (d) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (e) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which the City certifies in writing will not materially impair the use of the Property; and (f) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Lease Agreement (or a memorandum thereof) and to which the Assignee and the City consent in writing. "Property" means, collectively, the Site and the Improvements. "Rental Period" means each twelve-month period during the Term of the Lease Agreement commencing on May 2 in any year and ending May 1 in the next succeeding year. "Site" means that certain real property more particularly described in Exhibit A to the Site Lease and in Exhibit B to the Lease Agreement. Exhibit A Page 2 "Site Lease" means the Site Lease, dated October 27, 2005, as amended by the First Amendment to Site Lease, dated as of March 30, 2007, by and between the City, as lessor, and the Authority, as lessee, together with any duly authorized and executed amendments thereto. "State" means the State of California. "Term of the Lease Agreement" means the time during which the Lease Agreement is in effect, as provided in Section 4.2 0£ the Lease Agreement. Exhibit A Page 3 EXHIBIT B DESCRIPTION OF THE SITE All that certain real property situated in the City of Santa Ana, County of Orange, State of California, described as follows: ALL OF BLOCKS A, B, C, AND D IN THE ROSS ADDITION, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP THEREOF RECORDED IN BOOK 3, PAGES 534 AND 535, MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA. TOGETHER WITH THOSE PORTIONS OF FOURTH, FIFTH, SIXTH, VAN NESS STRFFTS AND THE EAST 1/2 OF PARTON STREET, LYING ADJACENT TO SAID BLOCKS, AS ABANDONED PER RESOLUTION NO. 69-27 , DATED FEBRUARY 17, 1969, BY THE SANTA ANA CITY COUNCIL AND RECORDED FEBRUARY 19, 1969, IN BOOK 8878, PAGE 863 OF OFFICIAL RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM THOSE PORTIONS THEREOF DECLARED TO BE PUBLIC STREETS PER RESOLUTION NO. 68-186, DATED DECEMBER 16, 1968, BY THE SANTA ANA CITY COUNCIL AND RECORDED DECEMBER 18, 1969, IN BOOK 8819, PAGE 934 OF OFFICIAL RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY. ALSO EXCEPTING THEREFROM LOTS 6 AND 7 AND THOSE PORTIONS OF LOTS 3, 4, 5 AND 8 OF BLOCK C OF SAID ROSS ADDITION AND THAT PORTION OF PARTON STREET AND FIFTH STREET AS ABANDONED PER SAID RESOLUTION NO. 69-27, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF PARTON STREET 50.00 FEET WIDE, WITH THE CENTERLINE OF HICKEY STREET, 50.00 FEET WIDE, (NOW NAMED CIVIC CENTER DRIVE), AS SAID PARTON STREET AND HICKEY STREET ARE SHOWN ON A MAP OF HARTLEYS ADDITION TO THE TOWN OF SANTA ANA, RECORDED IN BOOK 23, PAGE 80 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA.- THENCE EAST ALONG SAID CENTERLINE OF HICKEY STREET A DISTANCE OF 277.69 FEET; THENCE SOUTH 000 04' 04" EAST A DISTANCE OF 708.14 FEET; THENCE SOUTH 89' 55' 56" WEST A DISTANCE OF 329.37 FEET TO A POINT, SAID POINT BEING 519.16 FEET EASTERLY FROM THE CENTERLINE OF FLOWER STREET AS SHOWN ON SAID MAP OF THE ROSS ADDITION TO SANTA ANA; THENCE SOUTH 00' 04' 04" EAST A DISTANCE OF 116.50 FEET; THENCE NORTH 89' 55' 56" EAST A DISTANCE OF 123.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 00°04' 04" EAST A DISTANCE OF 166.67 FEET; THENCE NORTH 89' 55' 56" EAST A DISTANCE OF 120.00 FEET; THENCE NORTH 00' 04' 04" WEST A DISTANCE OF 166.67 FEET; THENCE SOUTH 89' 55' 56" WEST A DISTANCE OF 120.00 FEET TO THE TRUE POINT OF BEGINNING. APN: 008-067-27 and 008-067-33 and 008-067-43 and. 008-067-37 and 008-067-38 and 008-067-39 and 008- 067-40. Exhibit B Page 1 EXHIBIT C DESCRIPTION OF THE IMPROVEMENTS The Improvements consist of a three hundred (300) vehicle 3 level parking facility one hundred and twenty-four feet (124') wide by two hundred and seventy feet (270') long comprising one on grade level and two elevated levels. The structure shall be long -span, cast -in -place concrete with post -tensioned slabs and beams, cast -in -place columns, slab on grade with concrete foundations. The structure is a two bay 3 level parking facility designed for two-way traffic flow and 90-degree parking. The parking structure is designed as an above -grade "open" parking structure of Group S Division 4 Occupancy, of Type I fire resistive construction per the 2001 California Building Code. The primary use of the structure is to offset the parking lost by the sale of the adjacent property to the State Appellate Court. The ground floor will be designated for the self -parking of seventy (70) automobiles of Appellate Court Staff. 230 spaces will be provided on the two remaining elevated levels for general Civic Center parking. The northeast corner of the facility will be devoted to stairs, one elevator and the elevator machine room for the vertical circulation of pedestrians. A second stair will be located at the southwest comer of the parking facility. The vertical vehicle circulation is achieved by means of short ramps that rise one half floor level before turning and rising another half level to the next level. The short ramps are required because of the limited site available for the parking facility. The north end of the facility is depressed below grade one half level to allow vehicles entering the facility at the southwest corner at grade level to ramp up half a level a point one full level above the parking below at the north end. Vehicles entering on grade at the southeast corner will ramp down one half level to a point one full level below the parking above at the north end. Exhibit C EXHIBIT D LEASE PAYMENT SCHEDULE Lease Total Payment Principal Interest Lease Date Component Component* Payment 05/01/07 $ 45,798.93 $ 34,877.41 $ 80,676.34 11/01/07 138,491.86 201,418.94 339,910.80 05/01/08 141,803.13 198,107.66 339,910.79 11 /01 / 08 145,193.59 194,717.21 339,910.80 05/01/09 148,665.10 191,245.70 339,910.80 11/01/09 152,219.62 187,691.18 339,910.80 05/01/10 155,859.12 184,051.68 339,910.80 11/01/10 159,585.66 180,325.15 339,910.81 05/01/11 163,401.26 176,509.53 339,910.79 11/01/11 167,308.12 172,602.68 339,910.80 05 /01 / 12 171,308.39 168,602.41 339,910.80 11 /01/12 175,404.29 164,506.51 339,910.80 05/01/13 179,598.14 160,312.67 339,910.81 11/01/13 183,892.25 156,018.55 339,910.80 05/01/14 188,289.02 151,621.77 339,910.79 11/01/14 192,790.94 147,119.86 339,910.80 05/01/15 197,400.48 142,510.32 339,910.80 11/01/15 202,120.24 137,790.56 339,910.80 05/01/16 206,952.85 132,957.95 339,910.80 11/01/16 211,901.00 128,009.80 339,910,80 05/01/17 216,967.46 122,943.34 339,910.80 11/01/17 222,155.05 117,755.74 339,910.79 05/01/18 227,466.69 112,444.11 339,910.80 11/01/18 232,905.31 107,005.49 339,910.80 05/01/19 238,473.98 101,436.82 339,910.80 11/01/19 244,175.78 95,735.01 339,910.79 05/01/20 250,013.92 89,896.88 339,910,80 11/01/20 255,991.64 83,919.16 339,910.80 05/01/21 262,112.29 77,798.51 339,910.80 11/01/21 268,379.28 71,531.52 339,910.80 05/01/22 274,796.11 65,114.69 339,910.80 11/01/22 281,366.36 58,544.43 339,910.79 05/01/23 288,093.71 51,817.09 339,910.80 11/01/23 294,981.90 44,928.90 339,910.80 05/01/24 302,034.80 37,876.01 339,910.81 11/01/24 309,256.31 30,654.49 339,910.80 05/01/25 316,650.49 23,260.31 339,910.80 11/01/25 324,221.47 15,689.33 339,910.80 5/01/26 331,973,46 7,927.34 339,910.80 TOTALS $8,470,000.00 $4,527,286.71 $12,997,286.71 *Interest component is computed at 4.78191203% per annum. Exhibit D Page 1 EXHIBIT E FORM OF DISBURSEMENT CERTIFICATE $8,470,000 LEASE AGREEMENT Dated March 30, 2007, by and between the Santa Ana Financing Authority, as Lessor, and the City of Santa Ana, as Lessee, Assigned to All Points Public Funding, LLC, as Assignee DISBURSEMENT CERTIFICATE NO. The undersigned hereby states and certifies: (i) that the undersigned is the duly appointed, qualified and acting of City of Santa Ana, a municipal corporation and charter city, organized and existing under the laws of the State of California (the "City"), and as such, is familiar with the facts herein certified and is authorized to certify the same on behalf of the City; (h) that, pursuant to Section 3.2 of that certain Lease Agreement, dated March 30, 2007 ("Lease Agreement"), by and between the Santa Ana Financing Authority, as lessor (the "Authority"), and the City, as assigned to All Points Public Funding, LLC, as assignee (the "Assignee"), The Bank of New York Trust Company, N.A. (the "Depositary Agent") is hereby requested to disburse this date from the Depositary Account (as defined in Lease Agreement) to the payees designated on Exhibit A attached hereto and by this reference incorporated herein, at the addresses set forth below such payee name, the sum set forth opposite such payee, for payment or reimbursement for costs of the Improvements or of Costs of Issuance (as defined in Lease Agreement) as specified; (iii) that, if such disbursement is for reimbursement to the City, evidence of prior payment is attached hereto; (iv) that obligations in the stated amounts have been incurred by the City and are presently due and payable and that each item thereof is a proper charge against the Depositary Account, and has not been previously paid therefrom; (v) that there has not been filed with or served upon the City notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the persons named in such requisition, which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen's or mechanics' liens accruing by mere operation of law; (vi) that the component of the Improvements for which such payment relates is satisfactory to the City; (vii) that invoices, statements, vouchers or bills for the amounts requested are attached hereto; and (ix) that the balance remaining in the Depositary Account after payment of such amounts, together with any investment income reasonably anticipated to be deposited in the Depositary Account and any other funds available therefor, will be sufficient to pay all of the costs of the Improvements and Costs of Issuance; and Exhibit E Page 1 (viii) that capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Lease Agreement. Dated: APPROVED FOR PAYMENT: ALL POINTS PUBLIC FUNDING, LLC By — Name Title Exhibit E Page 2 CITY OF SANTA ANA By -- Name Title EXHIBIT A DISBURSEMENT CERTIFICATE NO. Payee Name and Address Purpose of Obligation Amount Exhibit E Page 3