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HomeMy WebLinkAboutCDC/1999-33 This item contains 3 Reso~utions - CDC 1999-33. 1999-230 and J-48 ' 1 2 RESOLUTION NO. CDC 1999-33 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE LEASE OF 201 NORTH E STREET TO THE JOINT POWERS AUTHORITY IN CONNECTION WITH THE SALE AND DELIVERY OF 1999 CERTIFICATES OF PARTICIPATION(POLICE STATION, SOUTH VALLE AND 201 NORTH E STREET PROJECTS) 3 4 5 6 WHEREAS, the Redevelopment Agency of the City of 7 San Bernardino (the "Agency") is a public body corporate and 8 politic duly created and existing pursuant to the laws of the IState 9 of California; and 10 11 WHEREAS, the City of San Bernardino (the "City") is a 12 municipal corporation and charter city duly created and existing 13 pursuant to the laws of the State of California; and 14 15 WHEREAS, the San Bernardino Joint Powers Financing 16 Authority (the "Authority") is a joint powers authority created to 17 assist the City and Agency with the financing and refinancing of 18 certain projects; and 19 20 WHEREAS, on June 21, 1999, the City, Agency and Authority 21 approved certain actions in connection with the sale and delivery 22 of the not to exceed $12,000,000 Certificates of Participation 23 ( 1 9 9 9 Station South Valle Projects) (the Police and 24 "Certificates"); and 25 26 subsequent to said approval, the Agency WHEREAS, 27 determined to lease a building located at 201 North E Street, 28 San Bernardino, California, currently owned by the Agency ("201 1 COC 1999-33 1 North E Street") to the Authority and the Authority has determined 2 to lease 201 North E Street to the City in return for the City 3 making payments thereon to the Authority which payments shall be 4 applied to pay the Certificate holders; and 5 6 WHEREAS, the Agency desires to increase the amount of the 7 Certificates to not to exceed $18,000,000 in order to include 201 8 North E Street in the financing; and 9 10 WHEREAS, the Agency shall lease 201 North E Street to the 11 Authority pursuant to a Site and Facility Lease (the "Site and 12 Facility Lease") and the Authority shall lease said building to the 13 City pursuant to a Lease Agreement (the "Lease Agreement"); and 14 15 WHEREAS, on June 21, 1999, the Agency approved execution 16 of a reimbursement agreement (the "Reimbursement Agreement") 17 evidencing its obligation to repay the City for the use of the 18 proceeds of the Certificates in connection with the South Valle 19 Project and desires to include in said Reimbursement Agreement, its 20 obligation to repay the City for the use of proceeds of the 21 Certificates in connection with 201 North E Street; and 22 23 WHEREAS, the Agency deems it advisable to approve the 24 transactions contemplated hereby in the best interests of the 25 Agency. 26 27 28 2 CDC 1999-33 1 2 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION 3 ACTING ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF 4 SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: 5 6 Section 1. Approval of Final Forms of Site and 7 Facility Lease and Lease Agreement. The Agency hereby approves the 8 forms of Site and Facility Lease and Lease Agreement presently on 9 file with the Agency Secretary together with any changes therein or 10 additions thereto as may be approved by Agency Counselor Special 11 Counsel. The Agency hereby further authorizes and directs that the 12 forms of Site and Facility Lease and Lease Agreement presently on 13 file with the Agency Secretary be converted into the final forms 14 thereof, together with such changes or modifications as deemed 15 necessary or desirable by the Agency Counselor Special Counsel. 16 The Chairperson or such other authorized officer of the Agency is 17 hereby authorized and directed to execute and deliver, and the 18 Agency Secretary is hereby authorized and directed to attest to, 19 the final form of Site and Facility Lease when the same has been 20 prepared and such execution and deli very shall be deemed to be 21 conclusive evidence of the approval thereof. The Agency hereby 22 authorizes the delivery and performance of the Site and Facility 23 Lease. 24 25 Section 2. Approval of Final Form of Reimbursement 26 Agreement. The Agency hereby approves the form of Reimbursement 27 Agreement presently on file with the Agency Secretary together with 28 any changes therein or additions thereto as may be approved by 3 CDC 1999-33 1 Agency Counselor Special Counsel. The Agency hereby further 2 authorizes and directs that the form of Reimbursement Agreement 3 presently on file with the Agency Secretary be converted into the 4 final form thereof, together with such changes or modifications as 5 deemed necessary or desirable by the Agency Counselor Special 6 Counsel. The Chairperson or such other authorized officer of the 7 Agency is hereby authorized and directed to execute and deliver, 8 and the Agency Secretary is hereby authorized and directed to 9 attest to, the final form of Reimbursement Agreement when the same 10 has been prepared and such execution and delivery shall be deemed 11 to be conclusive evidence of the approval thereof. The Agency 12 hereby authorizes the delivery and performance of the Reimbursement 13 Agreement. 14 15 Section 3. Official Action. The Chairperson, 16 Executive Director, Secretary, Counsel and any and all other 17 officers of the Agency are hereby authorized and directed, for and 18 in the name and on behalf of the Agency, to do any and all things 19 and take any and all actions, including execution and delivery of 20 any and all assignments, certificates, requisitions, agreements, 21 notices, consents, instruments of conveyance, warrants and other 22 documents, which they, or any of them, may deem necessary or 23 advisable in order to consummate the transaction contemplated 24 herein. Whenever in this Resolution any officer of the Agency is 25 authorized to execute or countersign any document or take any 26 action, such execution, countersigning or action may be taken on 27 behalf of such officer by any person designated by such officer to 28 act on his or her behalf in the case such officer shall be absent 4 CDC 1999-33 1 or unavailable. The Agency hereby appoints its Chairperson and 2 Executive Director as agents of the Agency for purposes of 3 executing any and all documents and instruments which any officer is authorized to execute hereunder. 4 of the Agency 5 III 6 III 7 III 8 III 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 CDC 1999-33 1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE LEASE OF 201 NORTH E STREET TO THE 2 JOINT POWERS AUTHORITY IN CONNECTION WITH THE SALE AND DELIVERY OF 1999 CERTIFICATES OF PARTICIPATION(POLICE STATION, SOUTH VALLE AND 3 201 NORTH E STREET PROJECTS) 4 5 6 Section 4. Effective The findings and Date. determinations herein shall be final and conclusive. This Resolution shall take effect upon the date of its adoption. 7 8 9 10 11 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community Development Commission of the City of San Bernardino at a joint requ1ar meeting thereof, held on the 7th day of September, 1999, by the following vote, to wit: Commission Members: AYES NAYS ABSTAIN ABSENT 12 ESTRADA 13 LIEN McGINNIS 14 SCHNETZ (VACANT) - 5th Ward 15 ANDERSON MILLER x x x X X X 16 17 18 ~h.~ The foregoing da y 0 f Septeml5er Commission resolution , 1999. approved this is ereby 25 content: 26 27 SBEO\0180\DOC\Oll.WPD 28 6 SABO & GREEN, LLP A LIMITED LIABILITY PARTNERSHIP ATTORNEYS AT LAW SUITE 1015 23801 CALABASAS ROAD CALABASAS, CALIFORNIA 91302 Internet: www.sabogreen.com Direct e-mail address: acrump@sabogreen.com (818) 704-0195 Fax Number (818) 704-4729 ENCLOSURE MEMO Date: February 24, 2000 To: Melanie Miller City Clerk's Office City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 From: Alexis G. Crump Re: $15,480,000 Refunding Certificates of Participation (1999 Police Station and South Valle and 201 North "En Street Projects); (Our File No. SBEO 180) Per your request, enclosed are the Police Station, South Valle and 201 North "En Street documents which were recorded in connection with the bond financing. Please call me if you need anything further. SBEO/0001/MISC/998 \0 "r. "l;t c... ~ Q;;) ~ ~ ~ '\ I ~ ~ REJcordlng Requested By CHICAGd TITLE COMPANY RECORDING REQUESTED BY: REDEVELOPMENT AGENCY OF AND WHEN RECORDED RETURN TO: . SABO & GREEN, a Professional Corporation Suite 1015 23801 Calabasas Road Calabasas, California 91302 :eco~ded in Official Records County of an ernardino. Larry Walker: Recorder Doc No. 19990408312 08:00am 09/29/99 Chicago ritle A # ~'1 5 NON ST LN SVY CIHO TRANS TAX 6Q1. OA CHRG EXAM THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. /lfJH /.t..J'D -. .;(<fj / - s;L (Space Above for Recorder's Use) POLICE STATION SITE AND FACILITY LEASE r- 'r. oo:;t 0- co N = U-J l..L- ~ POLICE STATION SITE AND FACILITY LEASE Dated as of September 1, 1999 by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, as Lessor and the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, as Lessee $15,480,000 Refunding Certificates of Participation (1999 Police Station and South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority SBE001BO\CCC\002 06\21\39 age POLICE STATION SITE AND FACILITY LEASE This POLICE STATION SITE AND FACILITY LEASE (this "Site and Facility Lease"), dated as of September 1, 1999, is by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body corporate and politic duly organized and existing under and by virtue of the laws of the State of California (the "Agency"), as lessor, and the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY duly organized and existing under and by virtue of the laws of the State of California (the "Authority"), as lessee; WIT N E SSE T H: WHEREAS, in 1995, the Agency assisted the City of San Bernardino (the "City") in the construction of a police station within the City by leasing certain property (as further described in Exhibit A hereto) (the "Police Station Site") to the Authority to cause the execution and delivery of certain Certificates of Participation (1995 Police Station Project) (the "Prior Certificates"); and WHEREAS, the Agency desires to assist the City'with the refinancing of the Police Station Site and therefore proposes to enter into this Police Station Site and Facility Lease with the Authority as a material consideration for the Authority's agreement to lease the Police Station Site to the City; WHEREAS, the Authority intends to assist the City in refinancing the Police Station Site by leasing said site to the City pursuant to a Lease Agreement, dated as of the same dated hereof; and NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED, as follows: Section 1. Site and Facilitv Lease. The Agency hereby leases to the Authority and the Authority hereby leases from the Agency, on the terms and conditions hereinafter set forth, the 1 Site, constituting that certain parcel of real property and the facility situated thereon situated in the City of San Bernardino, County of San Bernardino, State of California, more particularly described in Exhibit A attached hereto and made a part hereof. Section 2. Term. The term of this Site and Facility Lease shall commence on the date of recordation of this Site and Facility Lease in the Office of the County Recorder of the County of San Bernardino, State of California, and shall end on September 2, 2024, unless such term is extended or sooner terminated as hereinafter provided. If, on September 2, 2024, the aggregate amount of Lease Payments (as defined in and as payable under the Lease Agreement) shall not have been paid, or provision shall not have been made for their payment, then the term of this Site and Facility Lease shall be extended until such Lease Payments shall be fully paid or provision made for such payment. If, prior to September 2, 2024, all Lease Payments shall be fully paid or provision made for such payment in accordance,with Section 4.2 or 10.1 of the Lease Agreement, the term of this Site and Facility Lease shall end. Section 3. Rental. The Agency acknowledges receipt from the Authority, as and for rental hereunder, the sum of one dollar ($1.00) on or before the date of delivery of this Site and Facility Lease. Section 4. Purpose. The Authority shall use the Police Station Site solely for the purpose of leasing the said site to the City pursuant to the Lease Agreement and for such purposes as may be incidental theretoi provided, however, that in the event of default by the City under the Lease Agreement, the Authority and its assigns may exercise the remedies provided in the Lease Agreement. Section 5. The Agency covenants Police Station Site. Aqencv's Interest in Police Station Site. that it is the owner of fee title to the Section 6. Assiqnments and Subleases. Unless the City shall be in default under the Lease Agreement, the Authority may not assign its rights under this Site and Facility Lease or sublet the Police Station Site, except as provided in the Lease 2 Agreement, without the written consent of the Agency and MBIA Insurance Corporation, Armonk New York, as the Bond Insurer. Section 7. Riqht of Entrv. The Agency reserves the right, for any of its duly authorized representatives, to enter upon the Police Station Site at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof. Section 8. Termination. The Authority agrees, upon the termination of this Site and Facility Lease, to quit and surrender the Police Station Site in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements and structures existing upon the Police Station Site at the time of the termination of this Site and Facility Lease shall remain thereon and title thereto shall vest in the Agency. Section 9. Default. In the event the Authority shall be in default in the performance of any obligation on its part to be performed under the terms of this Site and Facility Lease, which default continues for thirty (30) days following notice and demand for correction thereof to the Authority, the Agency may exercise any and all remedies granted by law; provided, however, that so long as any Certificates (as defined in the Lease Agreement) are outstanding and 'unpaid in accordance with the terms thereof, the Lease Payments assigned by the Authority to the trustee under the Assignment Agreement, dated as of September 1, 1999, by and between the Authority and u.S. Bank Trust National Association, as trustee (the "Trustee"), shall continue to be paid to the Trustee. Section 10. Ouiet Enlovment. The Authority, at all times during the term of this Site and Facility Lease, shall peaceably and quietly have, hold and enjoy the Police Station Site subj ect to the provisions of the Lease Agreement and the Trust Agreement, dated as of September I, 1999, by and among the City, the Authority and the Trustee. Section 11. Waiver of Personal Liabilitv. All liabilities under this Site and Facility Lease on the part of the Authority are solely liabilities of the Authority and the Agency hereby releases each and every member, director, officer, employee 3 and agent of the Authority of and from any personal or individual liability under this Site and Facility Lease. No member, director, officer, employee or agent of the Authority shall at any time or under any circumstances be individually or personally liable under this Site and Facility Lease for anything done or omitted to be done by the Authority hereunder. Section 12. Taxes. The Authority covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Police Station Site (including both land and improvements) . Section 13. Eminent Domain. In the event the whole or any part of the Police Station Site is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then unpaid Certificates including the unpaid principa~ and interest with respect to any then outstanding such Certificates and, subject to the provisions of the Lease Agreement, the balance of the award, if any, shall be paid to the Agency. Section 14. Partial Invaliditv. If anyone or more of the terms, provisions, covenants or conditions of this Site and Facility Lease shall, to any extent, be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding, order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site and Facility Lease shall be affected thereby, and each provision of this Site and Facility Lease shall be valid and enforceable to the fullest extent permitted by law. Section 15. Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered mail, return receipt requested, postage prepaid, and, if to the Agency, addressed to the Agency in care of the Agency Executive Director, Redevelopment Agency of the City of San Bernardino, 201 North "E" Street, Third Floor, SanBernardino, CA 92418, or if to the Authority, addressed to the Authority in 4 care of the Executive Director, San Bernardino Joint Powers Financing Authority, 201 North "E" Street, Third Floor, San Bernardino, CA 92401, or to such other addresses as the respective parties may from time to time designate by notice in writing. Section 16. Section Headinqs. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site and Facility Lease. Section 17. Execution in Counterparts. This Site and Facility Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument. 5 IN WITNESS WHEREOF, the Agency and the Authority have caused this Site and Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARD 0, as Lesso By Att~ ti~ Assistant/Secretary Attest: SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, as Lessee By i person SBEO\0123\DOC\65 5 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 27.1999 before me, Lisa A. Gomez. Notary Public, personally appeared Gary Van Osdel . personally known to me (or pro'Jee to mo on tho basis of satisfaotory ovil:lenoe) to be the person~ whose name~ iSfafe subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity~, and that by his/her/their signature~ on the instrument the person~, or the entity upon behalf of which the personW acted, executed the instrument. ' WITNESS my hand and official seal. __t!\.. lIIl>..~~I!l!..A-~ 1 ~ - USAA.GO"'~ , ~_ Commission it 1198927 z :< .. . t... . Notary Public - Califcmia ~ ~ ~ . Scn lIemcrdino Counly ~. _~~.E:qires_Octl8.2[Xl2 (Seal) STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 28. 1999 before me, Lisa A. Gomez. Notary Public, personally appeared Judith Valles, personally known to me fef provod to ~o on tho baGis of GatisfaGtory o':iEloAoo) to be the person~ whose name~ is.laFe subscribed to the within instrument and acknowledged to me that Re.lshe/thoy executed the same in l=H&/herAAef!: authorized capacityBest. and that by Ris.lherAAef!: signature~ on the instrument the person~. or the entity upon behalf of which the personfs} acted, executed the instrument. WITNESS my hand and official seal. ~ - ~-e,uS~:-~~~ ~1 - fi Commission # 1198927 z ~, Notary Public - Califcmia ~ z _ i . San Bernardino County t "" ~ Ccr11m. Expires Oct 18. 2lXJ2 L _~_, ,.....!'>._. .-...--..... ,~.."_ __-~.. -::".-._ (Seal) EXHIBIT A DESCRIPTION OF THE POLICE STATION SITE EXHIBIT A DIVISION TWO: PARCEL 1 OF PARCEL MAP NO. 14725, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 178, PAGES 32 THROUGH 34 INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. ~ ~ I h ~ () ~ ~ ~ Recording Requested By CHICAGO TiTLE COMPANX J,; ~.- RECORDING REQUESTED BY: CITY OF SAN BERNARDINO AFTER RECORDATION RETURN TO: SABO & GREEN, A Professional Co~ 23801 Calabasas Road, Suite 1015 Calabasas, California 91302 ,~ /-9e; -;2 8"/-52 Recorded in Official Records, County of San Bernardino, Larry Walker, Recorder Doc No. 19990408313 08:00am 09/29/99 Chicago litle A ~ ~~1 NON ST IN SVY THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSU~T TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. POLICE STATION LEASE AGREEMENT ..... r.- ~ 0... co N 0::' I:t: f3 POLICE STATION LEASE AGREEMENT Dated as of September I, 1999 by and between the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, as Lessor and CITY OF SAN BERNARDINO, CALIFORNIA, as Lessee $15,480,000 Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority Section 1.1 Section 2.1 Section 2.2 Section 3.1 Section 3.2 Section 3.3 Section 3.4 Section 4.1 Section 4.2 Section 4.3 Section 4.4 Section 4.5 Section 4.6 Section 4.7 TABLE OF CONTENTS ARTICLE I DEFINITIONS Paqe Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Representations, Covenants and Warranties of the City........................ 12 Representations, Covenants and Warranties of the Authority .................. 12 ARTICLE III DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION OF THE IMPROVEMENTS Deposit of Moneys.............................. 14 Acquisition and Construction of Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Payment of Acquisition and Construction Costs............................ 15 Payment of Delivery Costs. . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Term of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Lease Payments................................. 16 Quiet Enjoyment................................ 19 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Additional Payments............................ 20 ARTICLE V MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS; AND OTHER MATTERS Section 5.1 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Section 5.9 Section 5.10 Section 5.11 Section 5.12 Section 5.13 Section 6.1 Section 6.2 Section 6.3 Section 7.1 Section 7.2 Section 7.3 Section 8.1 Section 8.2 Section 8.3 Section 9.1 Section 9.2 Maintenance, Utilities, Taxes and Assessments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Modification of proj ect . . . . . . . . . . . . . . . . . . . . . . . . 21 Public Liability and Project Damage Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Fire and Extended Coverage Insurance........... 23 Rental Interruption Insurance........... .......23 Title Insurance................................ 24 Insurance Net Proceeds; Form of Policies....... 24 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Installation of City's Equipment............... 24 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Private Activity Bond Limitation. . . . . . . . . . . . . . . 25 Federal Guarantee Prohibition.................. 25 Maintenance of Tax-Exemption........... ........25 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Eminent Domain................................. 26 Application of Net Proceeds........... ........26 Abatement of Lease Payments in the Event of Damage or Destruction. . . . . . . . . . . . . . . . 26 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEMNIFICATION Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . . . . 28 Access to the Project.......................... 28 Release and Indemnification Covenants.......... 28 ARTICLE VII I ASSIGNMENT, SUBLEASING AND AMENDMENT Assignment by the Corporation.................. 29 Assignment and Subleasing by the City.......... 29 Amendment of this Lease Agreement. . . . . . . . . . . . . . 29 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Events of Default Defined. . . . . . . . . . . . . . . . . . . . . . 33 Remedies on Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 9.3 Section 9.4 Section 9.5 Section 9.6 Section 9.7 Section 10.1 Section 10.2 Section 10.3 Section 10.4 Section 11.1 Section 11.2 Section 11.3 Section 11.4 Section 11.5 Section 11.6 Section 11.7 Section 11.8 Section 11.9 EXHIBIT A - EXHIBIT B - EXHIBIT C - No Remedy Exclusive............................ 35 Agreement to Pay Attorneys' Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 No Additional Waiver Implied by One Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Application of Proceeds................ ........36 Trustee and Certificate Owners to Exercise Rights............................... 36 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Prepayment Option.............................. 38 Mandatory Prepayment From Net Proceeds of Insurance; Title Insurance or Eminent Domain................................ 39 Credit for Amounts on Deposit. . . . . . . . . . . . . . . . . . 39 ARTICLE XI MISCELLANEOUS Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Net - Net - Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Further Assurances and Corrective Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Execution in Counterparts...................... 41 Applicable Law................................. 41 Authority and City Representatives. . . . . . . . . . . . . 41 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 DESCRIPTION OF THE SITE DESCRIPTION OF THE FACILITY SCHEDULE OF LEASE PAYMENTS POLICE STATION LEASE AGREEMENT THIS POLICE STATION LEASE AGREEMENT (the "Lease Agreement"), dated as of September 1, 1999, is by and between the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a public body corporate and politic and existing under the laws of the State of California, as lessor (the "Authority"), and CITY OF SAN BERNARDINO, a municipal corporation and charter city duly organized and existing under the laws of the State of California, as lessee (the "City"); WIT N E SSE T H: WHEREAS, pursuant to that certain Police Station Site and Facility Lease, dated as of September 1, 1999 (the "Police Station Site and Facility Lease"), the Redevelopment Agency of the City of San Bernardino has leased that certain parcel of real property, a facility located thereon situated in the City of San Bernardino, County of San Bernardino, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (the "Police Station Site"), all for the purpose of enabling the Authority to assist the City in the refinancing of the Police Station site; WHEREAS, the Authority proposes to lease the Police Station Site 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 U.S. Bank Trust National Association, as trustee (the "Trustee"), pursuant to that certain Assignment Agreement, dated as of September 1, 1999, by and between the Authority and the Trustee; WHEREAS, pursuant to that certain Trust Agreement, dated as of September 1, 1999, by and among the City, the Authority and the Trustee, the Trustee will execute and deliver certificates of participation (the "Certificates") in the Lease Payments; and WHEREAS, the proceeds of the Certificates, together with other available moneys, will be applied by the City to (i) refund 1 those certain 1987 Refunding Certificates of Participation (South Valle Public Improvements Project) and remove the liens attached to the respective property in connection therewith, (ii) to refund those certain Certificates of Participation (1995 Police Station Project) and remove the liens attached to the respective property in connection therewith, (iii) to fund a reserve fund, capital reserve fund and capitalized interest fund and (iv) to pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent and in connection to the execution and delivery of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement. NOW THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE, AS FOLLOWS: 2 ARTICLE I DEFINITIONS Section 1.1. Definitions. Unless otherwise defined in this Section 1.1, capitalized terms contained herein shall have the meanings ascribed to them in the Trust Agreement dated the same date hereof among the San Bernardino Joint Powers Financing Authority (the "Authority"), the City of San Bernardino (the "City") and U.S. Bank Trust National Association, as Trustee {the ("Trustee") (the "Trust Agreement") . "Event of Default" means an event of default as defined in Section 9.1 hereof. "Police Station Site" means the real property and the improvements thereon, including the San Bernardino Police Station, all as more particularly described in Exhibit A attached to this Lease Agreement. 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1. of the City. The City Authority, as follows: Representations. Covenants and Warranties represents, covenants and warrants to the (al Due Oroanization municipal corporation and charter under the laws of the State. and Existence. The City is a city, duly organized and existing (bl Authorization. The laws of the State authorize the City to enter into the Police Station Site and Facility Lease, the Agency Agreement, this Lease Agreement and the Trust 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. (cl No Violations. Neither the execution and delivery of the Police Station Site and Facility Lease, the Agency Agreement, this Lease Agreement or the Trust 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, 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 assets of the City, or upon the police Station Site, except Permitted Encumbrances. (dl Execution and Deliverv. The City has duly authorized and executed this Lease Agreement in accordance with the laws of the State. The City represents that the Police Station Site is essential to its operations. 4 Section 2.2. Representations, Covenants and Warranties of Authoritv. The Authority represents, covenants and warrants to the City, as follows: (a) Due Oroanization and Existence. The Authority is a joint powers authority, duly organized and existing under and by virtue of the laws of the State; has power to enter into the Police Station Site and Facility Lease, the Agency Agreement, this Lease Agreement, the Assignment Agreement and the Trust 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 Police Station Site and from its other rights under this Lease Agreement and will not mortgage or encumber the Police Station Site, except as provided under the terms of this Lease Agreement and the Trust Agreement (c) No Violations. Neither the execution and delivery of the Police Station Site and Facility Lease, the Agency Agreement, this Lease Agreement, the Assignment Agreement or the Trust 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 assets of the Authority, or upon the Police Station Site, except Permitted Encumbrances. (d) No Assionments. Except as 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. 5 (e) Title to Police Station Site and the Facility: Riqht of Entry. The Authority warrants that it has, pursuant to the Police Station Site and Facility Lease, acquired, and is owner of, leasehold title to the Police Station Site and the Facility. (f) Execution and Delivery. The Authority has duly authorized and executed this Lease Agreement in accordance with the laws of the State. ARTICLE III DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION OF THE IMPROVEMENTS Section 3.1. Deposit of Moneys. On the Closing Date, the Authority shall cause to be deposited with the Trustee the proceeds of sale of the Certificates. Pursuant to Section 2.07 of the Trust Agreement, an amount equal to the Reserve Requirement shall be deposited in the Reserve Fund, accrued interest on the Certificates from September 1, 1999, shall be deposited into the Interest Account, amounts estimated to be required to pay Delivery Costs shall be deposited in the Delivery Costs Fund and amounts necessary to fund the Capital Reserve Fund and Project Fund shall be deposited into said funds all as provided in the Trust Agreement. The Authority hereby agrees to direct that amounts in the Funds and Accounts established under the Trust Agreement be applied as provided therein. The liens of the Prior Certificates, as applicable, are hereby removed and deemed satisfied upon the recordation of this Lease Agreement. 6 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Section 4.1. Lease. The Authority hereby Police Station Site to the City, and the City hereby Police Station Site from the Authority, upon the conditions set forth in this Lease Agreement. leases leases terms the the and Section 4.2. Term of Aqreement. The term of the Lease Agreement shall commence on the date hereof, and shall end on September 1, 2024, unless such term is extended as hereinafter provided. If, on September 1, 2024, the Trust Agreement shall not be discharged by its terms or if the Lease Payments payable hereunder shall have been abated at any time and for any reason, then the term of the Lease Agreement shall be extended until there has been deposited with the Trustee 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 September 1, 2034. If, prior to September 1, 2024, the Trust Agreement shall be discharged by its terms, the term of the Lease Agreement shall thereupon end. Section 4.3. Possession. The City currently has possession of the Police Station Site and possession of said site subj ect hereto shall commence on the date of recording of this Lease Agreement. The first Lease Payment shall be due on February 15, 2000. Section 4.4. Lease Payments. (a) Obliqation to Pav. 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 use and occupancy of the police Station Site during each Rental Period, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Exhibit B hereto, to be due and payable on February 15 and August 15 (each a "Lease Payment Date") of each year commencing February 15, 2000. In the event such day is not a Business Day, such payment shall be made on the Business Day next preceding such date. Any amount held in the 7 Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to Article X hereof and other than amounts required for payment of Certificates not yet surrendered) shall be credited toward the Lease Payment then due and payable; and no Lease Payment need be made on any Lease Payment Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be paid. The Lease Payments for the Police Station Site payable in any Rental Period shall be for the use of the Police Station Site' for such Rental Period. (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; subject however, to the provisions of Section 10.1 hereof in the case of prepayment by application of a security deposit. In the event that the City optionally prepays the Lease Payments in part but not in whole pursuant to Section 10.2 hereof or pursuant to Section 10.3 hereof as a result of any insurance or condemnation award with respect to any portion of the Police Station Site, such prepayment shall be credited entirely toward the prepayment of the Lease Payments as follows: (i) the principal components of each remaining such Lease Payments shall be reduced in such order of payment date as shall be designated by the City to the Trustee, and if the City shall fail to so designate, pro rata among such payment dates, in integral multiples of $5,000; and (ii) the interest component of each remaining such Lease Payments shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Certificates thereby redeemed pursuant to Sections 4.01(a) or (b), as the case may be, of the Trust Agreement. (c) Rate on Overdue Pavments. 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 corresponding Certificate default to the date of payment at the rate of twelve percent (12%) per annum. Such interest, if received, shall be deposited in the Lease Payment Fund. 8 (d) Fair Rental Value. The Lease Payments for the Police Station Site for each Rental Period shall constitute the total rental for the Police Station Site 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 Police Station Site during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments for the Police Station Site do not exceed the fair rental value of the Police Station Site. 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 Police Station Site, the total amounts which have been expended on the Police Station Site, the value of the real property and the benefits therefrom which will accrue to the City and the general public. (e) Source of Payments; Budqet 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) Assiqnment. The City understands and agrees that all Lease Payments have been assigned by the Authority to the Trustee in trust, pursuant to the Assignment Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents to such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the Trustee at the Principal Corporate Trust Office, all payments payable by the City pursuant to this Section 4.4 and all amounts payable by the City pursuant to Article X hereof. 9 Section 4.5. Ouiet Eniovment. During the term of the Lease Agreement, the Authority shall provide the City with quiet use and enjoyment of the police Station Site and the City shall, during such term, peaceably and quietly have and hold and enjoy the Police Station Site 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 Police Station Site as provided in Section 7.2 hereof. Section 4.6. Title. During the term of the Lease Agreement, the Authority shall hold fee title to those portions of the Police Station Site which are newly acquired or constructed (excluding real property acquired) and any and all additions which comprise fixtures, repairs, replacements or modifications to the Police Station Site, except for those fixtures, repairs, replacements or modifications which are added to the Police Station Site by the City at its own expense and which may be removed without damaging the Police Station Site and except for any items added to the Police Station Site by the City pursuant to Section 5.9 hereof. If the City prepays the Lease Payments in full pursuant to Article X hereof, or makes the security deposit permitted by Section 10.1 hereof, or pays all Lease Payments during the term of the Lease Agreement as the same become due and payable, all right, title and interest of the Authority in and to the Police Station Site shall be transferred to and vested in the City. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title. Section 4.7. 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 the Trust Agreement, or otherwise arising from the leasing of the Police Station Site, including without limitation all Delivery Costs (to the extent not paid from amounts on deposit in the Delivery Costs Fund), compensation and indemnification due 10 to the Trustee and all costs and expenses of auditors, attorneys and accountants. 11 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 Police Station Site, all improvement, repair and maintenance of the Police Station Site 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 Police Station Site 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 Police Station Site 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 Lea'se Payments herein provided, the Authority agrees to provide only the Police Station Site, 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 payor cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Police Station Site 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 Police Station Site will be materially endangered or the Police Station Site or any part thereof will be subject to loss or forfeiture, in which event the City shall 12 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 and the Trustee. Section 5.2. Modification of Police Station Site. The City shall, at its own expense, have the right to remodel the Police Station Site or to make additions, modifications and improvements to the Police Station Site. All additions, modifications and improvements to the Police Station Site, but not any additional buildings or improvements, shall thereafter comprise part of the Police Station Site and be subject to the provisions of this Lease Agreement. Such additions, modifications and improvements shall not in any way damage the Police Station Site, substantially alter its nature, cause the interest component of Lease Payments to be subject to federal income taxes or cause the Police Station Site to be used for purposes other than those authorized under the provisions of State and federal law; and the Police Station Site, upon completion of any additions, modifications and improvements made thereto pursuant to this Section 5.2, shall be of a value which is not substantially less than the value of the Police Station Site 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 Police Station Site 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 Police Station Site, 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 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 Liabilitv and Property Damaqe 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 City, the Authority and the Trustee, 13 including their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Police Station Site. 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 $100,000 (subject to a deductible clause of not to exceed $5,000) 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. 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 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 as provided in Section 5.8 hereof. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds shall have been paid. Section 5.4. Fire and Extended Coveraqe 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 Police Station Site by fire and lightning, with extended coverage and vandalism and malicious mischief insurance. 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 the greater of (a) one hundred percent (100%) of the replacement cost of the Police Station Site, or (b) the aggregate principal amount of the Outstanding Certificates. Such insurance may be subject to deductible clauses of not to exceed $100,000 for anyone 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 as 14 provided in Section 5.8 hereof. The Net Proceeds of such insurance shall be applied as provided in Section 6.2(a) hereof. The City agrees to procure and maintain, or cause to be procured and maintained, throughout the term of the Lease Agreement, insurance against earthquake loss or damage to the Police Station Site in such amounts as an independent insurance consultant shall annually determine is necessary to protect the City for such rise. Such insurance may be subject to a deductible clause of not to exceed ten percent (10%) for anyone loss. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City. If the City cannot purchase such insurance on the open market from reputable insurers at reasonable cost, the City agrees to self-insure for such coverage as provided in Section 5.8 hereof. The Net Proceeds of such insurance shall be applied as provided in Sections 5.7 and 6.2(a) hereof. Section 5.5. Rental Interruption Insurance. The City shall procure and maintain through the term of the Lease Agreement, rental interruption or use and occupancy insurance, if commercially available, to cover loss, total or partial, of the use of any part of the Police Station Site 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, in an amount at least equal to two times the Reserve Requirement. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited toward the payment of the Lease Payments in the order in which such Lease Payments would otherwise become due and be payable. No self insurance shall be permitted hereunder for rental interruption insurance. Section 5.6. Title Insurance. The City shall provide, at its own expense, on the Closing Date, a CLTA title insurance policy in the amount of not less than the aggregate original principal amount (but not maturity amount) of the Certificates insuring the City's leasehold estate in the Police Station Site, subject only to Permitted Encumbrances. The Net Proceeds of such insurance shall be applied as provided in Section 6.2(c) hereof. Section 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance required by Sections 5.4, 5.5 and 5.6 hereof shall provide that all proceeds thereunder shall be payable 15 to the Bond Insurer or the Trustee as directed by the Bond Insurer. All insurance policies shall be approved by a commercial insurer rated "AD by Best or in the two highest rating categories of S & p and Moody's. All policies shall name the Lessee, Lessor and Trustee as insureds and name the Trustee as loss payee. The City shall payor cause to be paid when due the premiums for all insurance policies required by this Lease Agreement. The Trustee shall not be responsible for the sufficiency of any insurance herein required, including any forms of self-insurance and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. The City shall cause to be delivered annually on or before each September 1 to the Trustee and Bond Insurer a certification that all requirements of this Lease Agreement with respect to insurance have been met. Section 5.8 Self Insurance. With the approval of the Bond Insurer, the City may maintain self insurance for purposes of the insurance required by Section 5.3 and 5.4 hereof; provided that: (a) The City shall have the adequacy of any insurance reserves maintained by the City or by a joint exercise of powers authority, if applicable, reviewed at least annually, on or before each September 1, by an independent insurance consultant; (b) sound basis consultant to not otherwise The City shall maintain reserves on an actuarially in accordance with the recommendations of such the extent moneys are available for such purpose and appropriated; (c) The self insurance fund is held in a separate trust fund by an independent trustee; and (d) discontinued, maintained. In the event that the self insurance program is the actuarial soundness of the claim reserve must be It is understood by the Trustee and the Bond Insurer that on the Closing Date the City is self insured for the insurance described in Sections 5.3 and 5.4 hereof. Section 5.9. Installation of City r s Eauipment. The City may, at any time and from time to time in its sole discretion 16 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 Police Station Site. All such items shall remain the sole property of the City 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 the Police Station Site 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 5.9 under a lease or conditional sale agreement, or subj ect to a vendor I 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 Police Station Site. Section 5.10. 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 Police Station Site, 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 5.11. Private Activitv Bond Limitation. The City shall assure that proceeds of the Certificates are not so used as to cause the Certificates or 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 5.12. Federal Guarantee Prohibition. 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 any of the Certificates or the Lease Agreement to be "federally guaranteed" within the meaning of Section 149(b) of the Code. shall Section 5.13. take all actions Maintenance of Tax-Exemption. The City necessary to assure the exclusion of 17 interest with respect to the Certificates from the gross income of the Owners of the Certificates to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the Closing Date. Section 5.14. Advances. If the City shall fail to perform any of its obligations under this Article V, the Authority 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. 18 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1. Eminent Domain. If all of the Police Station Site 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 Police Station Site shall be taken permanently, or if all of the Police Station Site 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 such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Police Station Site. Section 6.2. Application of Net Proceeds. (a) Insurance Award. The Net Proceeds of any insurance award resulting from any damage to or destruction of any portion of the Police Station Site by fire or other casualty shall be paid by the City to the Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund by the Trustee and applied as set forth in Section 7.01 of the Trust Agreement. (b) 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 Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund and applied as set forth in Section 7.02 of the Trust Agreement. (c) Title Insurance. The Net Proceeds of any title insurance award shall be paid to the Trustee, as assignee of 19 the Authority under the Assignment Agreement, Insurance and Condemnation Fund and applied Section 7.03 of the Trust Agreement. deposited in the as set forth in Section 6.3. Abatement of Lease Payments in the Event of Damaae 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 Police Station Site or any portion thereof (other than any portions of the Police Station Site 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 B, 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 destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Reserve Fund and/or the Insurance and Condemnation Fund and/or the Lease Payment Fund 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. 20 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEMNIFICATION Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR AS TO THE FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE POLICE STATION SITE OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE POLICE STATION SITE. IN NO EVENT SHALL THE AUTHORITY BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE SITE AND FACILITY LEASE, THE AGENCY AGREEMENT, THIS LEASES AGREEMENT OR THE TRUST AGREEMENT FOR THE EXISTENCE, FURNISHING, FUNCTIONING OR THE CITY'S USE OF THE POLICE STATION SITE. Section 7.2. Access to the Police Station Site. The City agrees that the Authority and any Authority Representative, and the Authority's successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the Police Station Site. The City further agrees that the Authority, any Authority Representative, and the Authority's successors or assigns shall have such rights of access to the Police Station Site as may be reasonably necessary to cause the proper maintenance of the Police Station Site 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 and its officers, agents, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the Police Station Site 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 Police Station Site, (iv) any act or omission of any sublessee of the City with respect to the Police Station Site, or (v) the payment of Delivery Costs. No indemnification is made under this Section 7.3 or elsewhere in this Lease Agreement 21 for willful misconduct, negligence or breach of duty under this Lease Agreement by the Authority, its officers, agents, employees, successors or assigns. 22 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1. Assiqnment 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 Trustee pursuant to the Assignment Agreement. Section 8.2. Assiqnment and Subleasinq bv the Citv. This Lease Agreement may not be assigned by the City. The City may sublease the Police Station Site or any portion thereof, but only with the prior written consent of the Authority and the Bond Insurer and subject to all of the following conditions: (i) This Lease Agreement and the obligation of the City to make Lease Payments 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 such sublease shall cause the Police Station Site to be used for a purpose other than as may be authorized under the provisions of the Constitution and laws of the State; and (iv) The City shall furnish the Authority and the Trustee with a written opinion of nationally-recognized Bond Counsel, which shall be an Independent Counsel, stating that such sublease does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. Section 8.3. Amendment of this Lease Aqreement. (a) Substitution of Police Station Site. Upon the prior written consent of the Bond Insurer (which may be given in its sole discretion), the City shall have, and is hereby granted, the option at any time and from time to time during the term of the 23 Lease Agreement to substitute other land (a "Substitute Site") and/or a substitute facility or substitute facilities (a "Substitute Facility") for the Site (the "Former Site"), or a portion thereof, and/or the Facility (the "Former Facility"), or a portion thereof, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such substitution: {i} The City shall file with the Authority, the Trustee and Bond Insurer an amended Exhibit A to the Police Station Site and Facility Lease which adds thereto a description of such Substitute Site and/or Substitute Facility and deletes therefrom the description of the Former Site; (ii) The City shall file with the Authority, the Trustee and Bond Insurer an amended Exhibit A to this Lease Agreement which adds thereto a' description of such Substitute Site and/or Substitute Facility and deletes therefrom the description of the Former Site; (iii) The City shall certify Authority, the Trustee and Bond Substitute Site and/or Substitute purposes of the City, constitutes unencumbered, subject to Permitted constitutes property which the City is under the laws of the State; in writing to the Insurer that such Facility serve the property that is Encumbrances, and permitted to lease {iv} The City delivers to the Trustee, the Authority and the Bond Insurer an MAl fair market appraisal evidencing that the Substitute Site and/or Substitute Facility are of equal or greater market and fair rental value than the Former Site and Former Facility; (v) The Substitute Site and/or Substitute Facility shall not cause the City to violate any of its covenants, representations and warranties made herein and in the Trust Agreement; {vi} The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 24 hereof which adds thereto a description of the Substitute Site and deletes therefrom the description of the Former Site; and (vii) The City shall certify that the Substitute Site and/or the Substitute Facility is of the same or greater essentiality to the City as was the Former Site and/or the Former Facility. (b) Release of Police Station Site. Upon the prior written consent of the Bond Insurer (which may be given in its sole discretion), the City shall have, and is hereby granted, the option at any time and from time to time during the term of the Lease Agreement to release any portion of the Police Station Site, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such release: (i) The City shall file with the Authority, the Trustee and the Bond Insurer an amended Exhibit A to the Police Station Site and Facility Lease which describes the Police Station Site, as revised by such release; (ii) The City shall file with the Authority and the Trustee an amended Exhibit A to this Lease Agreement which describes the Police Station Site, as revised by such release; (iii) The City delivers to the Trustee and the Authority and the Bond Insurer an MAl fair market appraisal evidencing that the Police Station Site, as revised by such release, is of a value at least equal to the value of the Police Station Site as of the Closing Date and of a fair rental value at least equal to the remaining Lease Payments; and (iv) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 hereof which describes the Police Station Site, as revised by such release. (c) Additional Lease Pavments. Upon the written consent of the Bond Insurer, the City shall have, and is hereby 25 granted, the option at any time and from time to time during the term of the Lease Agreement to amend this Lease Agreement to provide for the payment of additional lease payments for the use and occupancy of the Police Station Site, provided that: (i) such additional lea~e payments do not cause the total lease payments made by the City for the use and occupancy of the Police Station Site to exceed the fair rental value of the Police Station Site, based upon the opinion of an MAl appraiser with expertise in valuing such properties or other appropriate method of valuation; (ii) the City shall have obtained, and filed with the Authority and the Trustee, an appraisal of the Police Station Site, prepared by an MAl appraiser with expertise in valuing such properties, showing that the estimated fair market value of the Police Station Site is not less than the aggregate unpaid principal components of the Lease Payments and the aggregate principal components of such additional lease payments; and (iii) such additional lease payments are pledged or assigned for the payment of any bonds, notes, leases or other obligations the proceeds of which shall be applied to finance the construction or acquisition of land, facilities or other improvements which are authorized pursuant to law. (d) Generallv. Neither the City nor the Authority will alter, modify or cancel, or agree or consent to alter, modify or cancel this Lease Agreement, except in connection with a substitution or release permitted by this Section 8.3 and as may be permitted by Article X of the Trust Agreement. 26 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, anyone or more of the following events: or other specified (a) Failure by the City to pay any Lease Payment payment required to be paid hereunder at the time hereunder. (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 or under the Trust 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, the Trustee, or the Owners of not less than five percent (5%) in aggregate principal amount of Certificates then outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the Default is corrected. (c) Failure of the officers of the City to request that Lease Payments be included in the annual budget of the City. (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. 27 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 to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreementj provided, however, that notwithstanding anything herein or in the Trust Agreement 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 currently 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 may exercise any and all rights of entry and reentry upon the Police Station Site, and also, at its option, with or without such entry, may terminate this Lease Agreementj 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 reentry by the Authority, 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 Authority at the time and in the manner as herein provided, specifically: (a) In the event the Authority does not elect to terminate this Lease Agreement in the manner hereinafter provided for in subparagraph (b) hereof, the City 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 Authority for any deficiency arising out of the releasing of the Police Station Site, or, in the event the Authority is unable to re-lease the Police Station Site, 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 reentry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such reentry or obtaining possession of the Police Station Site or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to enter upon and re-lease the Police Station Site in the Event of Default by the City in the performance of any covenants 28 herein contained to be performed by the City and to remove all personal property whatsoever situated upon the Police Station Site, to place such property in storage or other suitable place in the County of San Bernardino, California, for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the Police Station Site and the removal and storage of such property by the Authority or its 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 in reentering and taking possession of the Police Station Site as herein provided and all claims for damages that may result from the destruction of or injury to the Police Station Site and all claims for damages to or loss of any property belonging to the City that may be in or upon the Police Station Site. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-lease the Police Station Site in the event of such reentry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such releasing 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 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 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 as compensation to the Authority for its services in releasing the Police Station Site. (b) In an Event of Default hereunder, the Authority at its option may terminate this Lease Agreement and re- lease all or any portion of the Police Station Site. In the event of the termination of this Lease Agreement by the Authority at its option and in the manner hereinafter provided on account of Default by the City (and notwithstanding any reentry upon the Police Station Site by the Authority in any manner whatsoever or the re- leasing of the Police Station Site), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same 29 manner as is herein provided in the case of payment of Lease Payments. Any surplus received by the Authority from such re- leasing shall be credited toward 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 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 shall have given written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the Police Station Site 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 Authority by such written notice. Section 9.3. No Remedv Exclusive.- No remedy herein conferred 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 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 IX or by law. Section 9.4. Aqreement to Pav Attorneys' Fees and Expenses. In the event either 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. Waiver. Section 9.5. In the event No any Additional agreement Waiver Implied bv contained in this One Lease 30 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. Application of Proceeds. All net proceeds received from the re-lease or other disposition of the Police Station Site under this Article IX, and all other amounts derived by the Authority or the Trustee as a result of an Event of Default hereunder, shall be transferred to the Trustee promptly upon receipt thereof and after payment of all fees and expenses of the Trustee, including attorneys fees, shall be deposited by the Trustee in the Lease Payment Fund to be applied as specified in Section 13.03 of the Trust Agreement. Section 9.7. Trustee and Certificate Owners to Exercise Riqhts. Such rights and remedies as are given to the Authority under this Article IX have been assigned by the Authority to the Trustee under the Trust Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners of the Certificates as provided in the Trust Agreement and herein. 31 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Security Deposit. Notwithstanding any other provision of this Lease Agreement, the City may, on any date, secure the payment of all or a portion of the Lease Payments remaining due by an irrevocable deposit with the Trustee or an escrow holder under an escrow deposit and trust agreement as referenced in Section 14.01(b) of the Trust Agreement, of: (a) in the case of a security deposit relating to all Lease Payments, either (i) cash in an amount which, together with amounts on deposit in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, is sufficient to pay all unpaid Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Exhibit B, or (ii) Defeasance Obligations in such amount as will, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, together with interest to accrue thereon and, if required, all or a portion of moneys or Federal Securities or cash then on deposit and interest earnings thereon in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment Dates i or (b) in the case of a security deposit relating to a portion of the Lease Payments, a certificate executed by the City Representative (or such officer's designee, such designation to be evidenced by a writing delivered to the Trustee) designating the portion of the Lease Payments to which the deposit pertains, and either (i) cash in an amount which is sufficient to pay the portion of the Lease Payments designated in such City Representative's (or such officer's designee's) designation, such designation to be evidenced by a writing delivered to the Trustee) certificate, including the principal and interest components thereof, or (ii) Defeasance Obligations in such amount as will, together with interest to be received thereon, if any, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, be fully sufficient to pay the portion of the Lease Payments designated in the aforesaid City Representative's (or such officer's designee's, such designation to be evidenced by a writing delivered to the Trustee) certificate. 32 In the event of a deposit pursuant to this Section 10.1 as to all Lease Payments and the payment of all fees, expenses and indemnifications owed to the Trustee, all obligations of the City under this Lease Agreement shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, all payments from the deposit made by the City pursuant to this Section 10.1, and title to the Police Station Site shall vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said deposit and interest earnings thereon shall be deemed to be and shall constitute a special fund for the payments provided for by this Section 10.1 and said obligation shall thereafter be deemed to be and shall constitute the installment purchase obligation of the City for the Police Station Site. Upon said deposit, the Authority will execute or cause to be executed any and all documents as may be necessary to confirm title to the Police Station Site in accordance with the provisions hereof. In addition, the Authority hereby appoints the City as its agent to prepare, execute and file or record, in appropriate offices, such documents as may be necessary to place record title to the Police Station Site in the City. Section 10.2. Prepayment Option. The Authority hereby grants an option to the City to prepay the principal component of the Lease Payments attributable to the Certificates in full, or in part, together with a premium represented by a percentage of the portion of such principal component of Lease Payments attributable to the Certificates prepaid equal to the percentages set forth below: Prepayment Date Prepayment Premium August 15, 2009 through August 14, 2010 102% August 15, 2010 through August 14, 2011 101% August 15, 2011 and thereafter 100% Said option may be exercised with respect to payments attributable to the Certificates due on and after September 1, 2009, in whole at any time, or in part on any Lease Payment Date, commencing August 15, 2009. Said option shall be exercised by the City by giving written notice to the Authority and the Trustee of 33 the exercise of such option at least sixty (60) days prior to said payment date. Such option shall be exercised in the event of prepayment in full, by depositing with said notice cash in an amount, which, together with amounts then on deposit in the Reserve Fund, the Insurance and Condemnation Fund and the Lease Payment Fund, will be sufficient to pay the aggregate unpaid component of the Lease Payments attributable to the Certificates on said payment date, together with any Lease Payments attributable to the Certificates then due but unpaid, or, in the event of prepayment in part, by depositing with said notice cash in an amount divisible by $5,000 equal to the amount desired to be prepaid together with any Lease Payments attributable to the Certificates then due but unpaid. In the event of prepayment in part, the partial prepayment shall be applied against Lease Payments in such manner as the City shall determine and if the City shall fail to make such determination, pro rata among their payment dates. Lease Payments attributable to the Certificates 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 City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit B attached hereto taking into account said partial prepayment. Section 10.3. Mandatorv Prepayment From Net Proceeds of Insurance. Title Insurance or Eminent Domain. The City shall be obligated to prepay the Lease Payments allocable to the Police Station Site, in whole on any date or in part on any Lease Payment Date, from and to the extent of any Net Proceeds of an insurance, title insurance or condemnation award with respect to the Police Station Site theretofore deposited in the Lease Payment Fund for such purpose pursuant to Article VI hereof and Article VIr of the Trust Agreement. The City and the Authority hereby agree that such Net Proceeds shall be applied first to the payment of any delinquent Lease Payments, and thereafter shall be credited toward the City's obligations under this Section 10.3. 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 City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit B attached hereto taking into account said partial prepayment event Section 10.4. of prepayment of Credit for Amounts on Deposit. In the the principal components of the Lease 34 Payments in full under this Article X, such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, remaining amounts on deposit in the Lease Payment Fund, if any, or the Reserve Fund shall be credited toward the amounts then required to be so prepaid. 35 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 48 hours after deposit in the United States mail in first class form with postage fully prepaid: If to the City: City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 Attn: City Representative If to the Authority: San Bernardino Joint Powers Financing Authority 201 North "E" Street, Third Floor San Bernardino, CA 92401 Attn: Executive Director If to the Trustee: U.S. Bank Trust, National Association Corporate Trust Dept., Suite 3020 550 South Hope Avenue Los Angeles, CA 90071 If to the Bond Insurer: MBIA Insurance Corporation 113 King Street Armonk, New York 10504 Attn: Insured Portfolio Management Dept. 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 11.2. Bindinq Effect. shall inure to the benefit of and shall Authority and the City and their respective This Lease Agreement be binding upon the successors and assigns. Section 11.3. Severabilitv. In the event any provision of this Agreement shall be held invalid or unenforceable by any 36 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, free and clear of any expenses, charges or set-offs whatsoever. 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 Police Station Site 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. Applicable law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.8. Authoritv and Citv 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 an 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. 37 IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be executed in its corporate name by its duly authorized officers and sealed with its seal; and the City has caused this Lease Agreement to be executed in its name by its duly authorized officers and sealed with its seal, as of the date first above written. CITY OF SAN BERNARDINO By: / ATTEST: By:~h.~ ty Clerk - SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY By' aL~ 0<'- c7rperson ATTEST: By: ~L.I );J. CLvc...k- retary 34 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On Seotember 28. 1999 before me, Lisa A. Gomez. Notary Public, personally appeared Judith Valles. personally known to me (ef proved to me on tho basis of satisfaCltor/ ovidonoo) to be the personW whose nameW iSfafe subscribed to the within instrument and acknowledged to me that Re.tshe/they executed the same in ffi&/herltAeH: authorized capacity~, and that by Ri6,lherltAeH: signature~ on the instrument the personW, or the entity upon behalf of which the personW acted, executed the instrument. WITNESS my hand and official seal. lj.::~~~-J z' Notary Public - CaJifcmla f 1 San Bemad1no County - '~ -f ~~~~~I~~f (Seal) E~mITA DIVISION TWO: . PARCEL 1 OF PARCEL MAP NO. 14725, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 178, PAGES 32 THROUGH 34 INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. ~ \i ~ I 'y} ~ ~ Recording Requested By CHICAGO TITLE COMPANY RECORDING REQUESTED BY: REDEVELOPMENT AGENCY OF THE C- iT,-\ 0 ~ 'CCVY) 1:).Q.1'"Y1O-'1. eLl "Yl D AND WHEN RECORDED RETURN TO: SABO & GREEN, a Professional Corporation Suite 1015 23801 Calabasas Road Calabasas, California 91302 Recorded in Official Record., County of San Bernardino, Larry Walker, Recorder Doc No. 19990408314 08:00am 09/29/99 Chicago fitle ~ ~ 011 THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT C9J)E?, / HP~ /3'-/- "3~/-",zL/ (Space Above 'for Recorder's Use) 201 NORTH E STREET SITE AND FACILITY LEASE l"- 'r." <o::r 0.. co N = c:.: 53 201 NORTH E STREET Dated as of September 1, 1999 by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, as Lessor and the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, as Lessee $15,480,000 Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority SBE00180\DOC\002 06\21\99 age 201 NORTH E STREET SITE AND FACILITY LEASE This 201 NORTH E STREET SITE AND FACILITY LEASE (this "Site and Facility Lease"), dated as of September 1, 1999, is by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body corporate and politic duly organized and existing under and by virtue of the laws of the State of California (the "Agency"), as lessor, and the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY duly organized and existing under and by virtue of the laws of the State of California (the "Authority"), as lessee; WIT N E SSE T H: WHEREAS, the Agency desires to lease certain property commonly known as the 201 North E Street Building located in the City of San Bernardino (the "City") (as further described in Exhibit A hereto) (the "Site") to the Authority; and WHEREAS, the Authority intends to lease said site to the City pursuant to a Lease Agreement, dated as of the same dated hereof to cause the execution and delivery of certain Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects (the "Certificates"). NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED, as follows: Section 1. Site and Facility Lease. The Agency hereby leases to the Authority and the Authority hereby leases from the Agency, on the terms and conditions hereinafter set forth, the Site, constituting that certain parcel of real property and the facility situated thereon situated in the City of San Bernardino, County of San Bernardino, State of California, more particularly described in Exhibit A attached hereto and made a part hereof. Section 2. Term. The term of this Site and Facility Lease shall commence on the date of recordation of this Site and Facility Lease in the Office of the County Recorder of the County 1 of San Bernardino, State of California, and shall end on September 2, 2024, unless such term is extended or sooner terminated as hereinafter provided. If, on September 2, 2024, the aggregate amount of Lease Payments (as defined in and as payable under the Lease Agreement) shall not have been paid, or provision shall not have been made for their payment, then the term of this Site and Facility Lease shall be extended until such Lease Payments shall be fully paid or provision made for such payment. If, prior to September 2, 2024, all Lease Payments shall be fully paid or provision made for such payment in accordance with Section 4.2 or 10.1 of the Lease Agreement, the term of this Site and Facility Lease shall end. Section 3. Rental. The Agency acknowledges receipt from the Authority, as and for rental hereunder, the sum of one dollar ($1.00) on or before the date of delivery of this Site and Facility Lease. Section 4. Purpose. The Authority shall use the 201 North E Street Site solely for the purpose of leasing the said site to the City pursuant to the Lease Agreement and for such purposes as may be incidental thereto; provided, however, that in the event of default by the City under the Lease Agreement, the Authority and its assigns may exercise the remedies provided in the Lease Agreement. Section 5. Aqency's Interest in 201 North E Street Site. The Agency covenants that it is the owner of fee title to the 201 North E Street Site. Section 6. Assiqnments and Subleases. Unless the City shall be in default under the Lease Agreement, the Authority may not assign its rights under this Site and Facility Lease or sublet the 201 North E Street Site, except as provided in the Lease Agreement, without the written consent of the Agency and MBIA Insurance Corporation, Armonk New York, as the Bond Insurer. Section 7. Riqht of Entrv. The Agency reserves the right, for any of its duly authorized representatives, to enter upon the 201 North E Street Site at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof. 2 Section 8. Termination. The Authority agrees, upon the termination of this Site and Facility Lease, to quit and surrender the 201 North E Street Site in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements and structures existing upon the 201 North E Street Site at the time of the termination of this Site and Facility Lease shall remain thereon and title thereto shall vest in the Agency. Section 9. Default. In the event the Authority shall be in default in the performance of any obligation on its part to be performed under the terms of this Site and Facility Lease, which default continues for thirty (30) days following notice and demand for correction thereof to the Authority, the Agency may exercise any and all remedies granted by lawi provided, however, that so long as any Certificates (as defined in the Lease Agreement) are outstanding and unpaid in accordance with the terms thereof, the Lease Payments assigned by the Authority to the trustee under the Assignment Agreement, dated as of September 1, 1999, by and between the Authority and u.S. Bank Trust National Association, as trustee (the "Trustee"), shall continue to be paid to the Trustee. Section 10. Ouiet Eniovment. The Authority, at all times during the term of this Site and Facility Lease, shall peaceably and quietly have, hold and enjoy the 201 North E Street Site subject to the provisions of the Lease Agreement and the Trust Agreement, dated as of September 1, 1999, by and among the City, the Authority and the Trustee. Section 11. Waiver of Personal Liability. All liabilities under this Site and Facility Lease on the part of the Authority are solely liabilities of the Authority and the Agency hereby releases each and every member, director, officer, employee and agent of the Authority of and from any personal or individual liability under this Site and Facility Lease. No member, director, officer, employee or agent of the Authority shall at any time or under any circumstances be individually or personally liable under this Site and Facility Lease for anything done or omitted to be done by the Authority hereunder. Section 12. Taxes. The Authority covenants and agrees to pay any and all assessments of any kind or character and also 3 all taxes, including possessory upon the 201 North E Street improvements) . interest taxes, levied or assessed Site (including both land and Section 13. Eminent Domain. In the event the whole or any part of the 201 North E Street Site is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then unpaid Certificates including the unpaid principal and interest with respect to any then outstanding such Certificates and, subject to the provisions of the Lease Agreement, the balance of the award, if any, shall be paid to the Agency. Section 14. Partial Invaliditv. If anyone or more of the terms, provisions, covenants or conditions of this Site and Facility Lease shall, to any extent, be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding" order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site and Facility Lease shall be affected thereby, and each provision of this Site and Facility Lease shall be valid and enforceable to the fullest extent permitted by law. Section 15. Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered mail, return receipt requested, postage prepaid, and, if to the Agency, addressed to the Agency in care of the Agency Executive Director, Redevelopment Agency of the City of San Bernardino, 201 North "E" Street, Third Floor, SanBernardino, CA 92418, or if to the Authority, addressed to the Authority in care of the Executive Director, San Bernardino Joint Powers Financing Authority, 201 North "E" Street, Third Floor, San Bernardino, CA 92401, or to such other addresses as the respective parties may from time to time designate by notice in writing. Section 16. Section Headinos. All section headings contained herein are for convenience of reference only and are not 4 intended to define or limit the scope of any provision of this Site and Facility Lease. Section 17. Execution in Counterparts. This Site and Facility Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument. 5 IN WITNESS WHEREOF, the Agency and the Authority have caused this Site and Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARD NO, as Lesso / By Attest: ~~ SAN BERNARDINO JOINT POW~RS FINANCIN. AUTHORITY, as Lessee / i / By ,- STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 27, 1999 before me, Lisa A. Gomez, Notary Public, personally appeared Gary Van Osdel . personally known to me (or J3ro':ed to rno on tho Basis of satisfactory evidonoo) to be the person~ whose name~ islafe subscribed to the within instrument and acknowledged to me that he/eho/thoy executed the same in his/hoF.<thoir authorized capacity~, and that by his/hor/thoir signature~ on the instrument the person~, or the entity upon behalf of which the person~ acted, executed the instrument. WITNESS my hand and official seal. 1-----. -----~-~ USA A. GOMEZ -- @ Commission I 119B9Z1 ~ _. Notary Pubfic - earlfanla ~ 1 San Bernardino Coun1y ( ._ ~,,_.~~~.~;;:m~~C::l~~ (Seal) STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On Seotember 28. 1999 before me, Lisa A. Gomez. Notary Public, personally appeared Judith Valles. personally known to me {ef proved to mo on tho eGlsi€ of satisfactory e':iaenoo) to be the personW whose nameW istafe subscribed to the within instrument and acknowledged to me that Re.lshe/they executed the same in J::Hs/herAAeH: authorized capacityfies1, and that by ffis.lherAAeH: signatureW on the instrument the person~, or the entity upon behalf of which the person~ acted, executed the instrument. WITNESS my hand and official seal. ------------1 USA A. GOMEZ- 1 ~ . eommls5lon 1 119B921 ~. Notary Public - California ~ :z San Bemcrdlno Coun1Y i J ~ = ~ ~~~~1':~ (Seal) EXHIBIT A DESCRIPTION OF THE 201 NORTH E STREET SITE EXHIBIT A DIVISION THREE: PARCEL NO. 1A: THAT PORTION OF BLOCK 13, CITY OF SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 7 PAGE 1 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE EAST LINE OF "E" STREET WITH THE NORTH LINE OF "2ND" STREET AS DESCRIBED IN THAT CERTAIN DEED TO THE CITY OF SAN BERNARDINO RECORDED MAY 21, 1970 IN BOOK 7447 PAGE 275 OFFICIAL RECORDS OF SAID COUNTY; THENCE SOUTH 890 56' 00" EAST ALONG SAID NORTH LINE 111.67 FEET; THENCE NORTH 450 04' 11" EAST 9.90 FEET; THENCE NORTH 00 04' 11" EAST 112.21 FEET; THENCE NORTH 150 04' 11" EAST 100.46 FEET; THENCE NORTH 00 04' 11" EAST 111. 75 FEET TO A LINE PARALLEL WITH AND DISTANT 225.92 FEET SOUTHERLY MEASu~D AT RIGHT ANGLES, FROM THAT CERTAIN COURSE RECITED AS "NORTH 890 55' 49" WEST 206.48 FEET" IN THE BOUNDARY DESCRIBED IN DEED TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, CALIFORNIA RECORDED JUNE 4, 1970 IN BOOK 7455 PAGE 214 OFFICIAL RECORDS OF SAID COUNTY; THENCE NORTH 890 55' 49" WEST ALONG SAID PARALLEL LINE 137.19 FEET TO SAID EAST LINE OF "E" STREET; THENCE SOUTH 30 57' 51" WEST ALONG SAID EAST LINE 116.07 FEET; THENCE CONTINUING ALONG SAID EAST LINE SOUTH 00 02' 25" EAST 212.20 FEET TO THE POINT OF BEGINNING. ALSO KNOWN AS PARCEL NO. 27 OF PARCEL MAP NO. 688 IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 25 OF PARCEL MAPS, PAGES 47 TO 58 INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL NO. 1B: TOGETHER WITH AN EASEMENT FOR VEHICULAR INGRESS AND EGRESS OVER THAT PORTION OF SAID BLOCK 13 DESCRIBED AS FOLLOWS: COMMENCING AT SAID INTERSECTION OF THE EAST LINE OF "E" STREET WITH THE NORTH LINE OF "2ND" STREET; THENCE SOUTH 890 56' 00" EAST ALONG SAID NORTH LINE 111.67 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 450 04' 11" EAST ALONG THE EAST LINE OF THE ABOVE DESCRIBED PARCEL 9.90 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 00 04' 11" EAST 112.21 FEET; THENCE CONTINUING ALONG SAID EAST LINE 1'lORTH 150 04' 11" EAST 100.46 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 00 04' 11" EAST 11.75 FEET TO THE NORTH LINE OF SAID PARCEL; THENCE SOUTH 890 55' 49" EAST ALONG THE EASTERLY PROLONGATION OF SAID NORTH LINE 30.50 FEET; THENCE SOUTH 00 04' 11" WEST 138.74 FEET; THENCE SOUTH 150 04' 11" WEST 113.98 FEET; THENCE SOUTH 00 04' 11" WEST 79.16 FEET TO SAID NORTH LINE OF "2ND" STREET; THENCE NORTH 890 57' 00" WEST 34.00 FEET TO THE POINT OF BEGINNING. ~ ~ ~ ~ Recording Requested By . CHICAGO TITLE COMPANY RECORDING REQUESTED BY: CITY OF SAN BERNARDINO AFTER RECORDATION RETURN TO: SABO & GREEN, A Professional Cc 23801 Calabasas Road, Suite 101 Calabasas, California 91302 ~,<./ /3L/- 3~ /-.;2--1 - -, . ~ ,,' .....".....\ "".6 1) Recorded in Official Records, County of San Bernardino, Larry Walker, Recorder Doc No. 19990408315 08:00am Chicago Htle A 09/29/99 ~ o~1 NON Sf LN THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFO~~=A GOVERNMENT CODE. 201 NORTH E STREET LEASE AGREEMENT ,... r.' ....,. Q.. 00 N = L.LJ u.. ~ ~ 201 NORTH E STREET LEASE AGREEMENT Dated as of September 1, 1999 by and between the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, as Lessor and CITY OF SAN BERNARDINO, CALIFORNIA, as Lessee $15,480,000 Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority Section 1.1 Section 2.1 Section 2.2 Section 3.1 Section 3.2 Section 3.3 Section 3.4 Section 4.1 Section 4.2 Section 4.3 Section 4.4 Section 4.5 Section 4.6 Section 4.7 TABLE OF CONTENTS ARTICLE I DEFINITIONS Paqe Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Representations, Covenants and Warranties of the City........................ 12 Representations, Covenants and Warranties of the Authority .................. 12 ARTICLE III DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION OF THE IMPROVEMENTS Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Acquisition and Construction of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Payment of Acquisition and Construction Costs.. . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Payment of Delivery Costs. . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Term of Agreement... . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Lease Payments................................. 16 Quiet Enjoyment................................ 19 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Additional Payments............................ 20 ARTICLE V MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS; AND OTHER MATTERS i Section 5.1 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Section 5.9 Section 5.10 Section 5.11 Section 5.12 Section 5.13 Section 6.1 Section 6.2 Section 6.3 Section 7.1 Section 7.2 Section 7.3 Section 8.1 Section 8.2 Section 8.3 Maintenance, Utilities, Taxes and Assessments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Modification of Project........................ 21 Public Liability and Project Damage .Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Fire and Extended Coverage Insurance........... 23 Rental Interruption Insurance.................. 23 Title Insurance................................ 24 Insurance Net Proceeds; Form of Policies....... 24 Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Installation of City's Equipment...... .........24 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Private Activity Bond Limitation............... 25 Federal Guarantee Prohibition.................. 25 Maintenance of Tax-Exemption................... 25 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Eminent Domain................................. 26 Application of Net Proceeds ................... 25 Abatement of Lease Payments in the Event of Damage or Destruction................ 26 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEt<1NIFICATION Disclaimer of Warranties........... ............28 Access to the Project.......................... 28 Release and Indemnification Covenants...... . . . . 28 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Assignment by the Corporation.................. 29 Assignment and Subleasing by the City.......... 29 Amendment of this Lease Agreement. . . . . . . . . . . . . . 29 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES ii Section 9.1 Section 9.2 Section 9.3 Section 9.4 Section 9.5 Section 9.6 Section 9.7 Section 10.1 Section 10.2 Section 10.3 Section 10.4 Section 11.1 Section 11.2 Section 11.3 Section 11.4 Section 11.5 Section 11.6 Section 11.7 Section 11.8 Section 11.9 EXHIBIT A - EXHIBIT B - EXHIBIT C - Events of Default Defined...................... 33 Remedies on Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 No Remedy Exclusive............................ 35 Agreement to Pay Attorneys' Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 No Additional Waiver Implied by One Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Application of Proceeds........................ 36 Trustee and Certificate Owners to Exercise Rights............................... 36 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Prepayment Option............:................. 38 Mandatory Prepayment From Net Proceeds of Insurance; Title Insurance or Eminent Domain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Credit for Amounts on Deposit.................. 39 ARTICLE XI MISCELLANEOUS Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Net-Net-Net Lease.............................. 40 Further Assurances and Corrective Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Execution in Counterparts.. . . . . . . . . . . . . . . . . . . . . 41 Applicable Law................................. 41 Authority and City Representatives. . . . . . . . . . . . . 41 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 DESCRIPTION OF THE SITE DESCRIPTION OF THE FACILITY SCHEDULE OF LEASE PAYMENTS iii 201 NORTH E STREET LEASE AGREEMENT THIS 201 NORTH E STREET LEASE AGREEMENT (the "Lease Agreement"), dated as of September 1, 1999, is by and between the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a public body corporate and politic and existing under the laws of the State of California, as lessor (the "Authority"), and CITY OF SAN BERNARDINO, a municipal corporation and charter city duly organized and existing under the laws of the State of California, as lessee (the "City"); WIT N E SSE T H: WHEREAS, pursuant to that certain 201 North E Street Site and Facility Lease, dated as of September 1, 1999 (the "201 North E Street Site and Facility Lease"), the Redevelopment Agency of the City of San Bernardino has leased that certain parcel of real property, a facility located thereon situated in the City of San Bernardino, County of San Bernardino, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (the "201 North E Street Site"); WHEREAS, the Authority proposes to lease the 201 North E Street Site 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 U.S. Bank Trust National Association, as trustee (the "Trustee"), pursuant to that certain Assignment Agreement, dated as of September 1, 1999, by and between the Authority and the Trustee; WHEREAS, pursuant to that certain Trust Agreement, dated as of September 1, 1999, by and among the City, the Authority and the Trustee, the Trustee will execute and deliver certificates of participation (the "Certificates") in the Lease Payments; and WHEREAS, the proceeds of the Certificates, together with other available moneys, will be applied by the City (i) to refund those certain Certificates of Participation (1995 police Station Project) , (ii) to refund those certain Certificates of 1 Participation (1987 South Valle Project), (iii) to fund a reserve fund and capitalized interest fund and (iv) to pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent and in connection to the execution and delivery of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement. NOW THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE, AS FOLLOWS: 2 ARTICLE I DEFINITIONS Section 1.1. Definitions. Unless otherwise defined in this Section 1.1, capitalized terms contained herein shall have the meanings ascribed to them in the Trust Agreement dated the same date hereof among the San Bernardino Joint Powers Financing Authority (the "Authority"), the City of San Bernardino (the "City") and U.S. Bank Trust National Association, as Trustee (the ("Trustee") (the "Trust Agreement") . "Event of Default" means an event of default as defined in Section 9.1 hereof. "201 North E Street Site" means the ,real property and the improvements thereon, all as more particularly described in Exhibit A attached to this Lease Agreement. 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1. of the City. The City Authority, as follows: Representations, Coyenants and Warranties represents, covenants and warrants to the (a) Due Oroanization municipal corporation and charter under the laws of the State. and Existence. The City is a city, duly organized and existing (b) Authorization. The laws of the State authorize the City to enter into the 201 North E Street Site and Facility Lease, the Agency Agreement, this Lease Agreement and the Trust Agreement and to enter into the transactions contemplate~ 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. (c) No Violations. Neither the execution and delivery of the 201 North E Street Site and Facility Lease, the Agency Agreement, this Lease Agreement or the Trust 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, 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 assets of the City, or upon the 201 North E Street Site, except Permitted Encumbrances. (d) Execution and Delivery. authorized and executed this Lease Agreement laws of the State. The City represents that Site is essential to its operations. The City has duly in accordance with the the 201 North E Street 4 Section 2.2. Representations, Covenants and warranties of Authoritv. The Authority represents, covenants and warrants to the City, as follows: (a) Due Oroanization and Existence. The Authority is a joint powers authority, duly organized and existing under and by virtue of the laws of the State; has power to enter into the 201 North E Street Site and Facility Lease, the Agency Agreement, this Lease Agreement, the Assignment Agreement and the Trust Agreement; is possessed of full power to own and hold, improve and equip real and personal property and to lease and sell the samei 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 201 North E Street Site and from its other rights under this Lease Agreement and will not mortgage or encumber the 201 North E Street Site, except as provided under the ter~s of this Lease Agreement and the Trust Agreement (c) No Violations. Neither the execution and delivery of the 201 North E Street Site and Facility Lease, the Agency Agreement, this Lease Agreement, the Assignment Agreement or the Trust 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 assets of the Authority, or upon the 201 North E Street Site, except Permitted Encumbrances. (d) No Assionments. Except as 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. 5 (e) Title to 201 North E Street Site and the Facilitv: Riqht of Entrv. The Authority warrants that it has, pursuant to the 201 North E Street Site and Facility Lease, acquired, and is owner of, leasehold title to the 201 North E Street Site and the Facility. (f) Execution and Deliverv. The Authority has duly authorized and executed this Lease Agreement in accordance with the laws of the State. ARTICLE III DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION OF THE IMPROVEMENTS Section 3.1. Deposit of Monevs. On the Closing Date, the Authority shall cause to be deposited with the Trustee the proceeds of sale of the Certificates. Pursuant to Section 2.07 of the Trust Agreement, an amount equal to the Reserve Requirement shall be deposited in the Reserve Fund, accrued interest on the Certificates from September 1, 1999, shall be deposited into the Interest Account, amounts estimated to be required to pay Delivery Costs shall be deposited in the Delivery Costs Fund and amounts necessary to fund the Capital Reserve Fund and Project Fund shall be deposited into said funds all as provided in the Trust Agreement. The Authority hereby agrees to direct that amounts in the Funds and Accounts established under the Trust Agreement be applied as provided therein. 6 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Section 4.1. Lease. The Authority hereby leases the 201 North E Street Site to the City, and the City hereby leases the 201 North E Street Site from the Authority, upon the terms and conditions set forth in this Lease Agreement. Section 4.2. Term of Aoreement. The term of the Lease Agreement shall commence on the date hereof, and shall end on September 1, 2024, unless such term is extended as hereinafter provided. If, on September 1, 2024, the Trust Agreement shall not be discharged by its terms or if the Lease Payments payable hereunder shall have been abated at any time, and for any reason, then the term of the Lease Agreement shall be extended until there has been deposited with the Trustee 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 September 1, 2034. If, prior to September 1, 2024, the Trust Agreement shall be discharged by its terms, the term of the Lease Agreement shall thereupon end. Section 4.3. Possession. The City currently has possession of the 201 North E Street Site and possession of said site subject hereto shall commence on the date of recording of this Lease Agreement. The first Lease Payment shall be due on February 15, 2000. Section 4.4. Lease Payments. (a) Oblioation to Pav. 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 use and occupancy of the 201 North E Street Site during each Rental Period, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in ExhibitB hereto, to be due and payable on February 15 and August 15 (each a "Lease Payment Date") of each year commencing February 15, 2000. In the event such day is not a Business Day, such payment shall be made on the Business Day next preceding such date. Any amount held in the 7 Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to Article X hereof and other than amounts required for payment of Certificates not yet surrendered) shall be credited toward the Lease Payment then due and payable; and no Lease Payment need be made on any Lease Payment Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be paid. The Lease Payments for the 201 North E Street Site payable in any Rental Period shall be for the use of the 201 North E Street Site' for such Rental Period. (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; subject however, to the provisions of Secti~n 10.1 hereof in the case of prepayment by application of a security deposit. In the event that the City optionally prepays the Lease Payments in part but not in whole pursuant to Section 10.2 hereof or pursuant to Section 10.3 hereof as a result of any insurance or condemnation award with respect to any portion of the 201 North E Street Site, such prepayment shall be credited entirely toward the prepayment of the Lease Payments as follows: (i) the principal components of each remaining such Lease Payments shall be reduced in such order of payment date as shall be designated by the City to the Trustee, and if the City shall fail to so designate, pro rata among such payment dates, in integral multiples of $5,000; and (ii) the interest component of each remaining such Lease Payments shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Certificates thereby redeemed pursuant to Sections 4.01(a) or (b), as the case may be, of the Trust Agreement. (c) Rate on Overdue Pavments. 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 corresponding Certificate default to the date of payment at the rate of twelve percent (12%) per annum. Such interest, if received, shall be deposited in the Lease Payment Fund. 8 (d) Fair Rental Value. The Lease Payments for the 201 North E Street Site for each Rental Period shall constitute the total rental for the 201 North E Street Site 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 201 North E Street Site during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments for the 201 North E Street Site do not exceed the fair rental value of the 201 North E Street Site. 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 201 North E Street Site, the total amounts which have been expended on the 201 North E Street Site, the value of the real property and the benefits therefrom which will accrue to the City and the general public. (e) Source of Payments; Budoet 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) Assionment. The City understands and agrees that all Lease Payments have been assigned by the Authority to the Trustee in trust, pursuant to the Assignment Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents to such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the Trustee at the Principal Corporate Trust Office, all payments payable by the City pursuant 9 to this Section 4.4 and all amounts payable by the City pursuant to Article X hereof. Section 4.5. Ouiet Enlovrnent. During the term of the Lease Agreement, the Authority shall provide the City with quiet use and enjoyment of the 201 North E Street Site and the City shall, during such term, peaceably and quietly have and hold and enjoy the 201 North E Street Site 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 201 North E Street Site as provided in Section 7.2 hereof. Section 4.6. Title. During the term of the Lease Agreement, the Authority shall hold fee title to those portions of the 201 North E Street Site which are newly acquired or constructed (excluding real property acquired) and any and all additions which comprise fixtures, repairs, replacements or modifications to the 201 North E Street Site, except for those fixtures, repairs, replacements or modifications which are added to the 201 North E Street Site by the City at its own expense and which may be removed without damaging the 201 North E Street Site and except for any items added to the 201 North E Street Site by the City pursuant to Section 5.9 hereof. If the City prepays the Lease Payments in full pursuant to Article X hereof, or makes the security deposit permitted by Section 10.1 hereof, or pays all Lease Payments during the term of the Lease Agreement as the same become due and payable, all right, title and interest of the Authority in and to the 201 North E Street Site shall be transferred to and vested in the City. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title. Section 4.7. Additional Pavrnents. 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 the Trust Agreement, or otherwise arising from the leasing of the 201 North E Street Site, including without 10 limitation all Delivery Costs (to the extent not paid from amounts on deposit in the Delivery Costs indemnification due to the Trustee and auditors, attorneys and accountants. 11 Fund), compensation and all costs and expenses of 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 201 North E Street Site, all improvement, repair and maintenance of the 201 North E Street Site 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 201 North E Street Site 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 201 North E Street Site resulting from ordinary wear and tear or want of care on th~ 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 201 North E Street Site, 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 payor cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the 201 North E Street Site 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 201 North E Street Site will be materially endangered or the 201 North E Street Site or any part thereof will 12 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 and the Trustee. Section 5.2. Modification of 201 North E Street Site. The City shall, at its own expense, have the right to remodel the 201 North E Street Site or to make additions, modifications and improvements to the 201 North E Street Site. All additions, modifications and improvements to the 201 North E Street Site, but not any additional buildings or improvements, shall thereafter comprise part of the 201 North E Street Site and be subject to the provisions of this Lease Agreement. Such additions, modifications and improvements shall not in any way damage the 201 North E Street Site, substantially alter its nature, cause the interest component of Lease Payments to be subject to federal income taxes or cause the 201 North E Street Site to be used for purposes other than those authorized under the provisions of State and federal law; and the 201 North E Street Site, upon completion of any additions, modifications and improvements made thereto pursuant to this Section 5.2, shall be of a value which is not substantially less than the value of the 201 North E Street Site 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 201 North E Street Site 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 201 North E Street Site, 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 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 Liabilitv and Propertv Damaqe 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 13 policies in protection of the City, the Authority and the Trustee, including their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the 201 North E Street Site. 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 $100,000 (subject to a deductible clause of not to exceed $5,000) 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. 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 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 as provided in Section 5.8 hereof. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds shall have been paid. Section 5.4. Fire and Extended Coveraqe 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 201 North E Street Site by fire and lightning, with extended coverage and vandalism and malicious mischief insurance. 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 the greater of (a) one hundred percent (100%) of the replacement cost of the 201 North E Street Site, or (b) the aggregate principal amount of the Outstanding Certificates. Such insurance may be subject to deductible clauses of not to exceed $100,000 for anyone 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 14 by the City as provided in such insurance shall Section 6.2(a) hereof. Section 5.8 hereof. be applied The Net Proceeds of as provided in The City agrees to procure and maintain, or cause to be procured and maintained, throughout the term of the Lease Agreement, insurance against earthquake loss or damage to the 201 North E Street Site in such amounts as an independent insurance consultant shall annually determine is necessary to protect the City for such rise. Such insurance may be subject to a deductible clause of not to exceed ten percent (10%) for anyone loss. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City. If the City cannot purchase such insurance on the open market from reputable insurers at reasonable cost, the City agrees to self-insure for such coverage as provided in Section 5.8 hereof. The Net Proceeds of such insurance shall be applied as provided in Sections 5.7 and 6.2(a) hereof. Section 5.5. Rental Interruption Insurance. The City shall procure and maintain through the term of the Lease Agreement, rental interruption or use and occupancy insurance, if commercially available, to cover loss, total or partial, of the use of any part of the 201 North E Street Site 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, in an amount at least equal to two times the Reserve Requirement. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited toward the payment of the Lease Payments in the order in which such Lease Payments would otherwise become due and be payable. No self insurance shall be permitted hereunder for rental interruption insurance. Section 5.6. Title Insurance. The City shall provide, at its own expense, on the Closing Date, a CLTA title insurance policy in the amount of not less than the aggregate original principal amount (but not maturity amount) of the Certificates insuring the City's leasehold estate in the 201 North E Street Site, subject only to Permitted Encumbrances. The Net Proceeds of such insurance shall be applied as provided in Section 6.2(c) hereof. 15 Section 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance required by Sections 5.4, 5.5 and 5.6 hereof shall provide that all proceeds thereunder shall be payable to the Bond Insurer or the Trustee as directed by the Bond Insurer. All insurance policies shall be approved by a commercial insurer rated "A" by Best or in the two highest rating categories of S & P and Moody's. All policies shall name the Lessee, Lessor and Trustee as insureds and name the Trustee as loss payee. The City shall payor cause to be paid when due the premiums for all insurance policies required by this Lease Agreement. The Trustee shall not be responsible for the sufficiency of any insurance herein required, including any forms of self-insurance and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. The City shall cause to be delivered annually on or before each September 1 to the Trustee and Bond Insurer a certification that all requirements of this Lease Agreement with respect to insurance have been met. . Section 5.8 Self Insurance. With the approval of the Bond Insurer, the City may maintain self insurance for purposes of the insurance required by Section 5.3 and 5.4 hereof; provided that: (a) The City shall have the adequacy of any insurance reserves maintained by the City or by a joint exercise of powers authority, if applicable, reviewed at least annually, on or before each September 1, by an independent insurance consultant; (b) sound basis consultant to not otherwise The City shall maintain reserves on an actuarially in accordance with the recommendations of such the extent moneys are available for such purpose and appropriated; (c) The self insurance fund is held in a separate trust fund by an independent trustee; and (d) discontinued, maintained. In the event that the self insurance program is the actuarial soundness of the claim reserve must be 16 It is understood by the Trustee and the Bond Insurer that on the Closing Date the City is self insured for the insurance described in Sections 5.3 and 5.4 hereof. Section 5.9. Installation of Citv's Eauipment. 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 201 North E Street Site. All such items shall remain the sole property of the City 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 the 201 North E Street Site 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 Section5.9 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 201 North E Street Site. Section 5.10. 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 201 North E Street Site, 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 5.11. Private Activitv Bond Limitation. The City shall assure that proceeds of the Certificates are not so used as to cause the Certificates or 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 5.12. Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be 17 taken if the result of the same would be to cause any of the Certificates or the Lease Agreement to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Section 5.13. Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the exclusion of interest with respect to the Certificates from the gross income of the Owners of the Certificates to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the Closing Date. Section 5.14. Advances. If the City shall fail to perform any of its obligations under this Article V, the Authority may, but shall not be obligated to, take such action as ~ay 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 tw~lve percent (12%)per annum from the date of the advance to the date of repayment. 18 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1. Eminent Domain. If all of the 201 North E Street Site 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 201 North E Street Site shall be taken permanently, or if all of the 201 North E Street Site 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 such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the 201 North E Street Site. Section 6.2. ADPlication of Net Proceeds. (a) Insurance Award. The Net Proceeds of any insurance award resulting from any damage to or destruction of any portion of the 201 North E Street Site by fire or other casualty shall be paid by the City to the Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund by the Trustee and applied as set forth in Section 7.01 of the Trust Agreement. (b) 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 Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund and applied as set forth in Section 7.02 of the Trust Agreement. (c) Title Insurance. The Net Proceeds of any title insurance award shall be paid to the Trustee, as assignee of 19 the Authority under the Assignment Agreement, Insurance and Condemnation Fund and applied Section 7.03 of the Trust Agreement. deposited in the as set forth in Section 6.3. Abatement of Lease Payments in the Event of Damaoe 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 201 North E Street Site or any portion thereof (other than any portions of the 201 North E Street Site 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 B, 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 Section4.4(d)), based upon the opinion of an MAl 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 destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Reserve Fund and/or the Insurance and Condemnation Fund and/or the Lease Payment Fund 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. 20 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEMNIFICATION Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR AS TO THE FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE 201 North E Street SITE OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE 201 North E Street SITE. IN NO EVENT SHALL THE AUTHORITY BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE SITE AND FACILITY LEASE, THE AGENCY AGREEMENT, THIS LEASES AGREEMENT OR THE TRUST AGREEMENT FOR THE EXISTENCE, FURNISHING, FUNCTIONING OR THE CITY'S USE OF THE 201 North E Street SITE. Section 7.2. Access to the 201 North E Street Site. The City agrees that the Authority and any Authority Representative, and the Authority'S successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the 201 North E Street Site. The City further agrees that the Authority, any Authority Representative, and the Authority's successors or assigns shall have such rights of access to the 201 North E Street Site as may be reasonably necessary to cause the proper maintenance of the 201 North E Street Site 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 and its officers, agents, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the 201 North E Street Site 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 201 North E Street Site, (iv) any act or omission of any sublessee of the City with respect to the 201 North E Street Site, or (v) the payment of Delivery Costs. No indemnification is made under this Section 7.3 or elsewhere in this 21 Lease Agreement for willful misconduct, negligence or breach of duty under this Lease Agreement by the Authority, its officers, agents, employees, successors or assigns. 22 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1. Assiqnment 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 Trustee pursuant to the Assignment Agreement. Section 8.2. Assiqnment and Subleasinq by the City. This Lease Agreement may not be assigned by the City. The City may sublease the 201 North E Street Site or any portion thereof, but only with the prior written consent of the Authority and the Bond Insurer and subject to all of the following conditions: (i) This Lease Agreement and the obligation of the City to make Lease Payments 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 such sublease shall cause the 201 North E Street Site to be used for a purpose other than as may be authorized under the provisions of the Constitution and laws of the State; and (iv) The City shall furnish the Authority and the Trustee with a written opinion of nationally-recognized Bond Counsel, which shall be an Independent Counsel, stating that such sublease does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. Section 8.3. Amendment of this Lease Aqreement. (a) Substitution of 201 North E Street Site. Upon the prior written consent of the Bond Insurer (which may be given in its sole discretion), the City shall have, and is hereby granted, the option at any time and from time to time during the 23 term of the Lease Agreement to substitute other land (a "Substitute Site") and/or a substitute facility or substitute facilities (a "Substitute Facility") for the Site (the "Former Site"), or a portion thereof, and/or the Facility (the "Former Facility"), or a portion thereof, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such substitution: (i) The City shall file with the Authority, the Trustee and Bond Insurer an amended ExhibitA to the 201 North E Street Site and Facility Lease which adds thereto a description of such Substitute Site and/or Substitute Facility and deletes therefrom the description of the Former Site; (ii) The City shall file with the Authority, the Trustee and Bond Insurer an amended Exhibit A to this Lease Agreement which adds thereto a description of such Substitute Site and/or Substitute Facility and deletes therefrom the description of the Former Site; (iii) The City shall certify in writing to the Authority, the Trustee and Bond Insurer that such Substitute Site and/or Substitute Facility serve the purposes of the City, constitutes property that is unencumbered, subject to Permitted Encumbrances, and constitutes property which the City is permitted to lease under the laws of the State; (iv) The City delivers to the Trustee, the Authority and the Bond Insurer an MAl fair market appraisal evidencing that the Substitute Site and/or Substitute Facility are of equal or greater market and fair rental value than the Former Site and Former Facility; (v) The Substitute Site and/or Substitute Facility shall not cause the City to violate any of its covenants, representations and warranties made herein and in the Trust Agreement; (vi) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 24 hereof which adds thereto a description of the Substitute Site and deletes therefrom the description of the Former Site; and (vii) The City shall certify that the Substitute Site and/or the Substitute Facility is of the same or greater essentiality to the City as was the Former Site and/or the Former Facility. (b) Release of 201 North E Street Site. Upon the prior written consent of the Bond Insurer (which may be given in its sole discretion), the City shall have, and is hereby granted, the option at any time and from time to time during the term of the Lease Agreement to release any portion of the 201 North E Street Site, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such release: (i) The City shall file with the Authority, the Trustee and the Bond Insurer an amended ExhibitA to the 201 North E Street Site and Facility Lease which describes the 201 North E Street Site, as revised by such release; (ii) The City shall file with the Authority and the Trustee an amended Exhibit A to this Lease Agreement which describes the 201 North E Street Site, as revised by such release; (iii) The City delivers to the Trustee and the Authority and the Bond Insurer an MAl fair market appraisal evidencing that the 201 North E Street Site, as revised by such release, is of a value at least equal to the value of the 201 North E Street Site as of the Closing Date and of a fair rental value at least equal to the remaining Lease Payments; and (iv) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 hereof which describes the 201 North E Street Site, as revised by such release. 25 (c) Additional Lease Pavments. Upon the written consent of the Bond Insurer, the City shall have, and is hereby granted, the option at any time and from time to time during the term of the Lease Agreement to amend this Lease Agreement to provide for the payment of additional lease payments for the use and occupancy of the 201 North E Street Site, provided that: (i) such additional lease payments do not cause the total lease payments made by the City for the use and occupancy of the 201 North E Street Site to exceed the fair rental value of the 201 North E Street Site, based upon the opinion of an MAI appraiser with expertise in valuing such properties or other appropriate method of valuation; (ii) the City shall have obtained, and filed with the Authority and the Trustee, an appraisal of the 201 North E Street Site, prepared by an MAI appraiser with expertise in valuing such properties, showing that the estimated fair market value of the 201 North E Street Site is not less than the aggregate unpaid principal components of the Lease Payments and the aggregate principal components of such additional lease payments; and (iii) such additional lease payments are pledged or assigned for the payment of any bonds, notes, leases or other obligations the proceeds of which shall be applied to finance the construction or acquisition of land, facilities or other improvements which are authorized pursuant to law. (d) Generallv. Neither the City nor the Authority will alter, modify or cancel, or agree or consent to alter, modify or cancel this Lease Agreement, except in connection with a substitution or release permitted by this Section 8.3 and as may be permitted by Article X of the Trust Agreement. 26 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, anyone 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 hereunder. (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 or under the Trust 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, the Trustee, or the Owners of not less than five percent (5%) in aggregate principal amount of Certificates then outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the Default is corrected. (c) Failure of the officers of the City to request that Lease Payments be included in the annual budget of the City. (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 benef it 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. 27 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 to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement; provided, however, that notwithstanding anything herein or in the Trust Agreement 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 currently 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 may exercise any and all rights of entry and reentry upon the 201 North E Street Site, 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 reentry by the Authority, 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 Authority at the time and in the manner as herein provided, specifically: (a) In the event the Authority does not elect to terminate this Lease Agreement in the manner hereinafter provided for in subparagraph (b) hereof, the City 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 Authority for any deficiency arising out of the releasing of the 201 North E Street Site, or, in the event the Authority is unable to re-lease the 201 North E Street Site, 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 reentry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such reentry or obtaining possession of the 201 North E Street Site or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in- fact of the City to enter upon and re-lease the 201 North E Street Site in the Event of Default by the City in the performance of any 28 covenants herein contained to be performed by the City and to remove all personal property whatsoever situated upon the 201 North E Street Site, to place such property in storage or other suitable place in the County of San Bernardino, California, for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the 201 North E Street Site and the removal and storage of such property by the Authority or its 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 in reentering and taking possession of the 201 North E Street Site as herein provided and all claims for damages that may result from the destruction of or injury to the 201 North E Street Site and all claims for damages to or loss of any property belonging to the City that may be in or upon the 201 North E Street Site. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-lease the 201 North E Street Site in the event of such reentry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such releasing 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 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 in excess of the Lease Payments and payments due pursuant to Section4.7 hereof and hereby conveys and releases such excess to the Authority as compensation to the Authority for its services in releasing the 201 North E Street Site. (b) In an Event of Default hereunder, the Authority at its option may terminate this Lease Agreement and re- lease all or any portion of the 201 North E Street Site. In the event of the termination of this Lease Agreement by the Authority at its option and in the manner hereinafter provided on account of Default by the City (and notwithstanding any reentry upon the 201 North E Street Site by the Authority in any manner whatsoever or the re-leasing of the 201 North E Street Site), the City 29 nevertheless agrees to pay to the Authority 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 from such re- leasing shall be credited toward 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 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 shall have given written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the 201 North E Street Site 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 Authority by such written notice. Section 9.3. No Remedv Exclusive. No remedy herein conferred 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 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 IX or by law. Section 9.4. Aqreement to Pay Attornevs' Fees and Expenses. In the event either 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. 30 Section 9.5. No Additional Waiver Implied bv 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. Application of Proceeds. All net proceeds received from the re-lease or other disposition of the 201 North E Street Site under this Article IX, and all other amounts derived by the Authority or the Trustee as a result of an Event of Default hereunder, shall be transferred to the Trustee promptly upon receipt thereof and after payment of all fees and expenses of the Trustee, including attorneys fees, shall be deposited by the Trustee in the Lease Payment Fund to be applied as specified in Section 13.03 of the Trust Agreement. Section 9.7. Trustee and Certificate Owners to Exercise Riohts. Such rights and remedies as are given to the Authority under this Article IX have been assigned by the Authority to the Trustee under the Trust Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners of the Certificates as provided in the Trust Agreement and herein. 31 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Security Deposit. Notwithstanding any other provision of this Lease Agreement, the City may, on any date, secure the payment of all or a portion of the Lease Payments remaining due by an irrevocable deposit with the Trustee or an escrow holder under an escrow deposit and trust agreement as referenced in Section 14.01(b) of the Trust Agreement, of: (a) in the case of a security deposit relating to all Lease Payments, either (i) cash in an amount which, together with amounts on deposit in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, is sufficient to pay all unpaid Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Exhibit B, or (ii) Defeasance Obligations in such amount as will, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, together with interest to accrue thereon and, if required, all or a portion of moneys or Federal Securities or cash then on deposit and interest earnings thereon in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment Dates; or (b) in the case of a security deposit relating to a portion of the Lease Payments, a certificate executed by the City Representative (or such officer's designee, such designation to be evidenced by a writing delivered to the Trustee) designating the portion of the Lease Payments to which the deposit pertains, and either (i) cash in an amount which is sufficient to pay the portion of the Lease Payments designated in such City Representative's (or such officer's designee's) designation, such designation to be evidenced by a writing delivered to the Trustee) certificate, including the principal and interest components thereof, or (ii) Defeasance Obligations in such amount as will, together with interest to be received thereon, if any, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, be fully sufficient to pay the portion of the Lease Payments designated in the aforesaid City Representative's (or such officer's designee's, such designation to be evidenced by a writing delivered to the Trustee) certificate. 32 In the event of a deposit pursuant to this Section 10.1 as to all Lease Payments and the payment of all fees, expenses and indemnifications owed to the Trustee, all obligations of the City under this Lease Agreement shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, all payments from the deposit made by the City pursuant to this Section 10.1, and title to the 201 North E Street Site shall vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said deposit and interest earnings thereon shall be deemed to be and shall constitute a special fund for the payments provided for by this Section 10.1 and said obligation shall thereafter be deemed to be and shall constitute the installment purchase obligation of the City for the 201 North E Street Site. Upon said deposit, the Authority will execute or cause to be executed any and all documents as may be necessary to confirm title to the 201 North E Street Site in accordance with the provisions hereof. In addition, the Authority hereby appoints the City as its agent to prepare, execute and file or record, in appropriate offices, such documents as may be necessary to place record title to the 201 North E Street Site in the City. Section 10.2. Prepayment Option. The Authority hereby grants an option to the City to prepay the principal component of the Lease Payments attributable to the Certificates in full, or in part, together with a premium represented by a percentage of the portion of such principal component of Lease Payments attributable to the Certificates prepaid equal to the percentages set forth below: Prepayment Date Prepayment Premium August 15, 2009 through August 14, 2010 August 15, 2010 through August 14, 2011 August 15, 2011 and thereafter 102% 101% 100% Said option may be exercised with respect to payments attributable to the Certificates due on and after September 1, 2009, in whole at any time, or in part on any Lease Payment Date, commencing August 15, 2009. Said option shall be exercised by the City by giving written notice to the Authority and the Trustee of 33 the exercise of such option at least sixty (60) days prior to said payment date. Such option shall be exercised in the event of prepayment in full, by depositing with said notice cash in an amount, which, together with amounts then on deposit in the Reserve Fund, the Insurance and Condemnation Fund and the Lease Payment Fund, will be sufficient to pay the aggregate unpaid component of the Lease Payments attributable to the Certificates on said payment date, together with any Lease Payments attributable to the Certificates then due but unpaid, or, in the event of prepayment in part, by depositing with said notice cash in an amount divisible by $5,000 equal to the amount desired to be prepaid together with any Lease Payments attributable to the Certificates then due but unpaid. In the event of prepayment in part, the partial prepayment shall be applied against Lease Payments in such manner as the City shall determine and if the City shall fail to make such determination, pro rata among their payment dates. Lease Payments attributable to the Certificates 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 City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit B attached hereto taking into account said partial prepayment. Section 10.3. Mandatorv Prepayment From Net Proceeds of Insurance. Title Insurance or Eminent Domain. The City shall be obligated to prepay the Lease Payments allocable to the 201 North E Street Site, in whole on any date or in part on any Lease Payment Date, from and to the extent of any Net Proceeds of an insurance, title insurance or condemnation award with respect to the 201 North E Street Site theretofore deposited in the Lease Payment Fund for such purpose pursuant to Article VI hereof and Article VII of the Trust Agreement. The City and the Authority hereby agree that such Net Proceeds shall be applied first to the payment of any delinquent Lease Payments, and thereafter shall be credited toward the City's obligations under this Section 10.3. 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 City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit B attached hereto taking into account said partial prepayment event Section 10.4. of prepayment of Credit for Amounts on Deposit. In the the principal components of the Lease 34 Payments in full under this Article X, such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, remaining amounts on deposit in the Lease Payment Fund, if any, or the Reserve Fund shall be credited toward the amounts then required to be so prepaid. 35 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 48 hours after deposit in the United States mail in first class form with postage fully prepaid: If to the City: City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 Attn: City Representative If to the Authority: San Bernardino Joint Powers Financing Authority 201 North "E" Street, Third Floor San Bernardino, CA 92401 Attn: Executive Director If to the Trustee: U.S. Bank Trust, National Association Corporate Trust Dept., Suite 3020 550 South Hope Avenue Los Angeles, CA 90071 If to the Bond Insurer: MBIA Insurance Corporation 113 King Street Armonk, New York 10504 Attn: Insured Portfolio Management Dept. 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 11.2. Bindinq Effect. shall inure to the benefit of and shall Authority and the City and their respective This Lease Agreement be binding upon the successors and assigns. Section 11.3. Severabilitv. In the event any provision of this Agreement shall be held invalid or unenforceable by any 36 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, free and clear of any expenses, charges or set-offs whatsoever. 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 201 North E Street Site 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. Applicable law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.8. Authoritv and Citv 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 an 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. 37 IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be executed in its corporate name by its duly authorized officers and sealed with its seal; and the City has caused this Lease Agreement to be executed in its name by its duly authorized officers and sealed with its seal, as of the date first above written. CITY OF SAN BERNARDINO By:~~h.~ C'ty Clerk ATTEST: SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY By: (?~ At. C(&.~ ~retary ATTEST: S3EO\lBO\DOC\016.1 34 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 28. 1999 before me, Lisa A. Gomez. Notary Public, personally appeared Judith Valles. personally known to me (ef provea to me on the basis of satisfactory oviaonoo) to be the person~ whose nam~ iSfafe subscribed to the within instrument and acknowledged to me that Re,/shc/thoy executed the same in ffi&/herAReif authorized capacity~, and that by J:H&lherAReif signature~ on the instrument the person~, or the entity upon behalf of which the personfst acted, executed the instrument. WITNESS my hand and official seal. _....ft. *t:..A A't ~~AAGOMa , ~ Commission # 1198927 z :< 'II . Notary Public' California ~ i .. Son Bernardino County . Myccmm.ElqjresOctI8.2Xl2 . '- - (Seal) EXHIBIT A DIVISION THREE: PARCEL NO. lA: THAT PORTION OF BLOCK 13, CITY OF SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 7 PAGE 1 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE EAST LINE OF "E" STREET WITH THE NORTH LINE OF "2ND" STREET AS DESCRIBED IN THAT CERTAIN DEED TO THE CITY OF SAN BERNARDINO RECORDED MAY 21, 1970 IN BOOK 7447 PAGE 275 OFFICIAL RECORDS OF SAID COUNTY; THENCE SOUTH 890 56' 00" EAST ALONG SAID NORTH LINE 11l.67 FEET; THENCE NORTH 450 04' 11" EAST 9.90 FEET; THENCE NORTH 00 04' 11" EAST 112.21 FEET; THENCE NORTH 150 04' 11" EAST 100.46 FEET; THENCE NORTH 00 04' 11" EAST 11l.75 FEET TO A LINE PARALLEL WITH AND DISTANT 225.92 FEET SOUTHERLY MEASURED AT RIGHT ANGLES, FROM THAT CERTAIN COURSE RECITED AS "NORTH 890 55' 49" WEST 206.48 FEET" IN THE BOUNDARY DESCRIBED IN DEED TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, CALIFORNIA RECORDED JUNE 4, 1970 IN BOOK 7455 PAGE 214 OFFICIAL RECORDS OF SAID COUNTY; THENCE NORTH 890 55' 49" WEST ALONG SAID PARALLEL LINE l37.19 FEET TO SAID EAST LINE OF "E" STREET; THENCE SOUTH 30 57' 51" WEST ALONG SAID EAST LINE 116.07 FEET; THENCE CONTINUING ALONG SAID EAST LINE SOUTH 00 02' 25" EAST 212.20 FEET TO THE POINT OF BEGINNING. ALSO KNOWN AS PARCEL NO. 27 OF PARCEL MAP NO. 688 IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 25 OF PARCEL MAPS, PAGES 47 TO 58 INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL NO. lB: TOGETHER WITH AN EASEMENT FOR VEHICULAR INGRESS AND EGRESS OVER THAT PORTION OF SAID BLOCK 13 DESCRIBED AS FOLLOWS: COMMENCING AT SAID INTERSECTION OF THE EAST LINE OF "E" STREET WITH THE NORTH LINE OF "2ND" STREET; THENCE SOUTH 890 56' 00" EAST ALONG SAID NORTH LINE 111.67 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 450 04' 11" EAST ALONG THE EAST LINE OF THE ABOVE DESCRIBED PARCEL 9.90 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 00 04' 11" EAST 112.21 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 150 04' 11" EAST 100.46 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 00 04' 11" EAST 11. 75 FEET TO THE NORTH LINE OF SAID PARCEL; THENCE SOUTH 890 55' 49" EAST ALONG THE EASTERLY PROLONGATION OF SAID NORTH LINE 30.50 FEET; THENCE SOUTH 00 04' 11" WEST 138.74 FEET; THENCE SOUTH 150 04' 11" WEST 113.98 FEET; THENCE SOUTH 00 04' 11" WEST 79.16 FEET TO SAID NORTH LINE OF "2ND" STREET; THENCE NORTH 890 57' 00" WEST 34.00 FEET TO THE POINT OF BEGINNING. CHICAGO TITle CO. RECORDIN~ R~VESTED BY AND WHEN RECORDED RETURN TO: Recorded in Official Records, County of San Bernardino, Larry Walker, Recorder Doc No. 19990408316 08:00am 09/29/99 U. S. BANK TRUST NATIONAL AsSOCIATION C, SABO & GREEN 23801 CALABASAS ROAD, SUITE 1015 CALABASAS, CALIF. 91302 Chicago HUe ~ ~ ~~1 (Space Above for Recorder's Use) DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FINANCING STATEMENT (201 NORTH E STREET) ..... r.- 'Il:t 0.. co N CJ:I tl: t3 DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FINANCING STATEMENT (201 NORTH E STREET) Dated: As of September 1, 1999 MADE BY THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body TO CHICAGO TITLE INSURANCE COMPANY, as Trustee FOR THE BENEFIT OF U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee under that certain Trust Agreement as further described herein $15,480,000 Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority ?,\APPS\WPDATA\SBEO\OlBO\DOC\021. l~P DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FINANCING STATEMENT 201 NORTH E STREET THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FINANCING STATEMENT (this "Deed of Trust") is made as of September I, 1999, by the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body having an address of 201 North E Street Third Floor San Bernardino, California 92401 ("Trustor"), to CHICAGO TITLE INSURANCE COMPANY, having an address of 560 East Hospitality Lane San Bernardino California 92408, as trustee ("Trustee"), for the benefit of U.S.' BANK TRUST NATIONAL ASSOCIATION, as trustee for those certain Notes (as described below) having an address of 550 S. Hope Street, Suite 500, Los Angeles, California 90071 ("Beneficiary"). All capitalized terms not expressly defined in this Deed of Trust shall have the meanings given to them in the Trust Indenture (as hereinafter defined) . WITNESSETH: WHEREAS, pursuant to that certain Police Station Site and Facility Lease, dated as of September I, 1999 (the "Police Station Site and Facility Lease"), Trustor has leased to the Authority that certain parcel of real property and the facility located thereon situated in the City of San Bernardino, County of San Bernardino, State of California (the "Police Station Site") i and WHEREAS, pursuant to that certain South Valle Site and Facility Lease, dated as of September I, 1999 (the "South Valle Site and Facility Lease"), Trustor has leased to the Authority those certain parcels of real property with certain improvements located thereon situated in the City of San Bernardino, County of San Bernardino, State of California (the "South Valle Improvements") i and WHEREAS, pursuant to that certain 201 North E Street site -2- and Facility Lease, dated as of September 1, 1999 (the "201 North E Site and Facility Lease"), Trustor has leased to the Authority that certain parcel of real property and the facility located thereon situated in the City of San Bernardino, County of San Bernardino, State of California ("201 North E Street" and with the Police Station Site, the "Project"); and with the Police Station Site and the South Valle Improvements, the "Project"); and WHEREAS, the South Valle Site and Facility Lease, the Police Station Site and Facility Lease and the 201 North E Site and Facility Lease (collectively the "Site and Facility Leases") are being entered into for the purpose of enabling the Authority to assist the City in the refinancing of the Police Station Site and the South Valle Improvements and to provide additional funds to the Agency; and WHEREAS, the Authority proposes (i), to lease the Police Station Site to the City pursuant to that certain Police Station Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City (the "Police Station Lease Agreement) (ii) to lease the South Valle Improvements to the City pursuant to that certain South Valle Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City and (the "South Valle Lease Agreement") and (iii) to lease the 201 North E Street Site to the City pursuant to that certain 201 North E Street Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City (the "201 North E Street Lease Agreement") and with the Police Station Lease Agreement and the South Valle Lease Agreement, the "Lease Agreements"); and WHEREAS, the Authority shall assign its right to receive lease payments under the Lease Agreements (the "Lease Payments"), its right to enforce payment of the Lease Payments and otherwise to enforce its interest and rights under the Lease Agreements in the event of a default thereunder by the City, to Beneficiary pursuant to that certain, Assignment Agreement, dated as of September 1, 1999, by and between the Authority and the Beneficiary; and WHEREAS, pursuant to the Trust Agreement dated as of September 1, 1999, among the Authority, City and Beneficiary, the Beneficiary will execute and deliver certificates of participation (the "Certificates") evidencing the direct, undivided fractional interest of the owner thereof in lease payments to be made by the -3- City as the rental for certain projects pursuant to Lease Agreements with the Authority; and WHEREAS, the proceeds of the Certificates will be applied to refund the outstanding Refunding Certificates of Participation (South Valle Public Improvements Project) dated April 1, 1987 (the "South Valle Certificates"), and the Police Station Certificates of Participation (1995 Police Station Financing Project) dated April 1, 1995 (the "Police Station Certificates" and collectively with the South Valle Certificates, the "Prior Certificates") and to fund certain projects of the Trustor; and WHEREAS, among other things, the Trustor has agreed to pledge the Premises (as herein described) as further security for the repayment of the portion of the Certificates under the Trust Agreement representing the 201 North E Street Lease Agreement in accordance with this Deed of Trust and hereby pledges such Premises to the Beneficiary for the benefit of the holders of the Certificates. NOW, THEREFORE, in consideration of the obligations pledged under the 201 North E Street Lease Agreement to secure timely repayment of the portion of the Certificates under the Trust Agreement representing the 201 North E Street Lease Agreement, and in accordance with the terms, provisions and limitations of this Deed of Trust, and to secure the performance of the covenants and agreements contained herein and in the 201 North E Street Lease Agreement, whether currently in effect or to be executed after the date hereof, and any other documents evidencing and securing the obligation secured hereby (collectively, the "Related Documents") to be performed by Trustor, Trustor, intending to be legally bound, does hereby irrevocably GIVE, GRANT, BARGAIN AND SELL, ALIENATE, MORTGAGE, CONVEY, CONFIRM, TRANSFER AND ASSIGN TO TRUSTEE, ITS SUCCESSORS AND ASSIGNS, FOR THE BENEFIT OF BENEFICIARY, ITS SUCCESSORS AND ASSIGNS, IN TRUST, WITH POWER OF SALE, all of Trustor's estate, right, title and interest in and to that certain real property situated and, lying, and being in the City of San Bernardino, County of San Bernardino and State of California and more particularly described in Exhibit "A" attached hereto (the "premises"); TOGETHER with all easements, rights of way, strips and gores of land, vaults, streets, alleys, water rights, r.1ineral -4- rights and rights used in connection therewith or as a means of access thereto, or to provide service thereto, privileges, franchises, development, air and other rights and appendages now or in the future belonging to or in any way appertaining to the Premises, including, without limitation, all tenements, hereditaments and appurtenances thereof and thereto pertaining or belonging, and all underground and overhead passageways and licenses in connection therewith; TOGETHER with all of Trustor's right, title and interest in any and all of the Premises, and leases, subleases, management agreements, arrangements, concessions or agreements, written or oral, relating to the use and occupancy of the Premises or any portion thereof, now or hereafter existing or entered into, as any of the foregoing may be amended, extended, renewed or modified from time to time, which grant is made subsequent in time and priority to the rights granted to Beneficiary pursuant to Section 25 hereof; TOGETHER with all rents, issues' and profits of the Premises for so long and during all such times as Trustor may be entitled thereto (which are pledged primarily and on a parity with said real estate and not secondarily), which grant is made subsequent in time and priority to the rights granted to Beneficiary pursuant hereto; TOGETHER with all of Trustor's right, title and interest in and to any and all buildings, structures and improvements now or hereafter erected on the Premises, including, without limitation, the buildings and structures, the fixtures, attachments, appliances, equipment, machinery and other articles attached to said buildings and improvements and all tangible or intangible personal property owned by Trustor now or any time hereafter located on or at the Premises or used in connection therewith, including, but not limited to, all goods, machinery, tools, equipment (including, without limitation, fire sprinklers and alarm systems, air conditioning, heating, boilers, refrigerating, electronic monitoring, water, lighting, power, sanitation, waste removal, entertainment, recreational, window or structural cleaning rigs, maintenance and all other equipment of every kind), lobby and all other indoor or outdoor furniture (including, without limitation, tables, chairs, planters, desks, sofas, shelves, lockers and cabinets), furnishings, appliances, inventory, rugs, carpets and other floor coverings, draperies, drapery rods and brackets, awnings, venetian blinds, partitions, chandeliers and -5- other lighting fixtures, and all other fixtures, apparatus, equipment, furniture, furnishings, and articles, any plans and specifications pertaining to the Premises, including, without limitation, all installations, fixtures and furnishings specif ically designed for any part of the Premises, including, hardware and software, HVAC and other utility installations, all appraisals, engineering, soils, environmental and other reports and studies relating to the Premises, all permits, licenses and contract rights, warranties, guarantees, catalogues, tenant suppliers, advertising materials and telephone exchange numbers as identified in such materials, it being understood that the enumeration of any specific articles of property shall in no way result in or be held to exclude any items of property not specifically mentioned; TOGETHER with all the estate, interest, right, title, other claim or demand, including claims or de~ands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereinafter acquire in or with respect to the Premises, and any and all awards made for the taking by eminent domain, or by any proceedings or purchase in lieu thereof, of the whole or any part of the Premises, including, without limitation, any awards resulting from the change of grade of streets and awards for severance damages; and TOGETHER with all proceeds and avails of the conversion, voluntarily or involuntarily, of any of the foregoing into cash or liquidated claims, including but not limited to proceeds of insurance and of any conveyance of the Premises or any part thereof, TO HAVE AND TO HOLD the Premises, together with all and singular of the rights, privileges, tenements, hereditaments and appurtenances thereto in any way incident or belonging unto the Trustee and to its successors or substitutes in trust and its and their assigns forever, FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary may elect, and without limiting the generality of the foregoing provisions of this Deed of Trust: (a) payment of all amounts due under the 201 North E Street Lease Agreement; -6- (b) payment of all sums advanced by Beneficiary, the Issuer or Trustee to protect the Premises; (c) performance of every obligation, covenant or agreement of Trustor contained herein and in the 201 North E Street Lease Agreement; (d) performance of every obligation, covenant and agreement of Trustor contained in any agreement now or hereafter exacted by Trustor which recites that the obligations thereunder are secured by this Deed of Trust; and (g) compliance with and performance of each and every material provision of any declaration of covenants, conditions and restrictions pertaining to the Premises or any portion thereof. All of the land, rights, estate and property hereinabove described, real, personal and mixed, whether affixed or annexed or not (except where otherwise herein specifieC), and all rights hereby conveyed and mortgaged are intended so to be as a unit and are hereby understood, agreed and declared to form a part and parcel of the real estate and to be appropriated to the use of the real estate, and shall for the purposes of this Deed of Trust be deemed to be real estate and conveyed and mortgaged hereby. Trustor covenants that (i) it has good marketable and insurable title and interest to the Premises subject only to the Permitted Exceptions and is lawfully seized of the Premises i (ii) it has good right, full power and lawful authority to convey and mortgage the same, and that it will warrant and forever defend the Premises and the quiet and peaceful possession of the same against the claims of all persons whomsoever; (iii) all leases, management agreements, licenses and other instruments hereinabove referred to and assigned and mortgaged hereby are valid and subsisting and in full force and effect and Trustor is not in default thereunder, Trustor has no knowledge of any default thereunder by any other party, and no written notice of default remaining uncured as of the date hereof has been given or received by Trustor; (iv) this Deed of Trust and the other Related Documents pertaining to the Premises when duly recorded in the appropriate public records create a valid and enforceable lien upon the -7- Premises subject hereto and thereto securing the sums secured hereby and thereby, and, as of the date hereof, there are no defenses or offsets to this Deed of Trust or to any indebtedness secured hereby; and (v) each and every warranty and representation of Trustor contained in any part of the Related Documents was true, complete and correct in all material respects at the time made and remade, and does not omit any material fact necessary to make such warranty or representation not misleading. This Deed of Trust is given pursuant to the Loan Agreement and the Related Documents. Each and every term and provision of the Loan Agreement and the Related Documents including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties of Trustor, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Deed of Trust, and payment, fulfillment and performance thereo~ is secured hereby, and, in accordance with the Loan Agreement and the Related Documents, any default under the Loan Agreement and the Related Documents which continues beyond the applicable notice and cure period under the said documents shall constitute an "Event of Default" (as hereinafter defined) under this Deed of Trust entitling Beneficiary to all the remedies provided in this Deed of Trust, under the Loan Agreement and the Related Documents, at law and in equity. Without limiting the generality of the foregoing, Trustor does hereby covenant and agree to carry out, perform, fulfill and observe each and every covenant, agreement, obligation and indemnity of Trustor set out in the Loan Agreement and the Related Documents and Trustor specifically agrees for the benefit of Beneficiary, as follows: Maintenance, Repair and Restoration of Improvements, Payment of Liens, Etc. 1. Trustor shall (a) promptly repair, restore or rebuild, or cause to be repaired, restored or rebuilt, any buildings or improvements now or hereafter on the Premises which may become damaged or be destroyed; (b) constantly maintain or cause to be maintained the Premises in good condition and repair, without waste; (c) keep the Premises free from mechanics' liens or claims for lien; (d) pay when due any indebtedness which may be secured by a lien or charge on the Premises and comply with all -8- requirements of all the Related Documents evidencing or securing such indebtedness, and, upon request, exhibit satisfactory evidence of the discharge of such prior lien or such compliance to Beneficiary; (e) comply with all requirements of law, municipal ordinances or restrictions of record and all other applicable laws, rules, regulations, directions, requirements, orders and notices of violation of any governmental or quasi-governmental agency, body or office with respect to the Premises and the operation or use thereof; (f) initiate or acquiesce in no zoning variation or reclassification of the Premises or any part thereof without Beneficiary's written consent; (g) pay each item of indebtedness and perform and fulfill each of the obligations secured by this Deed of Trust when due or required according to the terms hereof, the Loan Agreement and Related Documents; (h) make no material alterations to or demolish any portion of the Premises, except as required by law or municipal ordinance or as contemplated by the Loan Agreement; and (i) suffer or permit no change in the general nature of the occupancy of the Premises without Beneficiary's written consent. Payment of Taxes 2. Trustor shall pay, before any penalty attaches, all real property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, including, without limitation, nongovernmental levies or assessments such as maintenance charges, levies or charges resulting from covenants, conditions and restrictions affecting the Premises, which are assessed or imposed upon the Premises, or become due and payable, and which create, may create or appear to create a lien upon the Premises, or any part thereof, or upon any maintenance thereof, and shall pay special taxes, special assessments, water charges, sewer service charges and other utility charges which may become a charge or lien against the Premises when due and shall, upon written request, furnish to Beneficiary duplicate receipts therefor or other evidence of payment acceptable to Beneficiary. To prevent default hereunder, Trustor shall pay in full under protest, in the manner provided by statute, any tax or assessment which Trustor may decide to contest. Trustor shall not suffer, permit or initiate the joint assessment of any real and personal property which may constitute all or a portion of the Premises or suffer, permit or initiate any other procedure whereby the lien of the real property taxes and the lien of the personal -9- property taxes shall be assessed, levied or charged to the Premises as a single lien. Insurance and Premium Deposits 3. (a) Trustor shall maintain the following policies of insurance under the following terms and conditions: (i) Public Liabilitv and Property Damaqe Insurance. The Trustor shall maintain or cause to be maintained, throughout the term of this Deed of Trust, insurance policies, including a standard comprehensive general insurance policy or policies in protection of the Trustor, the Issuer and the Beneficiary, including their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Premises. 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 $2,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $100,000 (subject to a deductible clause of not to exceed $5,000) 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 $2,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the Trustor. The net proceeds of such liability insurance shall be applied towards extinguishing or satisfying the liability with respect to which the insurance proceeds shall have been paid. (ii) Fire and Extended Coveraqe Insurance. The Trustor shall procure and maintain, or cause to be procured and maintained, throughout the term of this Deed of Trust, insurance against loss or damage to any structures constituting part of the Premises by f ire and lightning, with extended coverage and vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other -10- hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to the greater of (a) one hundred percent (100%) of the replacement cost of the Premises, or (b) the aggregate principal amount of the Outstanding Notes. Such insurance may be subject to deductible clauses of not to exceed $100,000 for anyone loss. Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the Trustor. (iii) Rental Interruption Insurance. The Trustor shall procure and maintain through the term of this Deed of Trust, rental interruption or use and occupancy insurance, if commercially available, to cover loss, total or partial, of the use of any part of the Premises during the term of this Deed of Trust as a result of any of the hazards covered in the insurance required by subsection b hereof, in an amount at least equal to $1,000,000. The Net Proceeds of such insurance shall be pai~ to the Trustee as provided in Article V of the Indenture. (iv) Title Insurance. The Trustor shall provide, at its own expense, on the Closing Date, a CLTA Lender's Title Insurance policy in the amount of not less than the aggregate original principal amount (but not maturity amount) of the Notes. The Net Proceeds of such insurance shall be applied as provided in Article V of the Indenture. (b) All policies of insurance to be furnished hereunder shall be in forms and from companies reasonably satisfactory to Beneficiary with mortgagee clauses attached to all policies in favor of Beneficiary and in form reasonably satisfactory to Beneficiary, and shall name Beneficiary as an additional insured, and shall include provisions requiring that the coverage evidenced thereby shall not be terminated (including termination for non- payment) or materially modified without thirty (30) days' prior written notice to Beneficiary and that no act or thing done by Trustor shall invalidate the policy as against Beneficiary. Trustor shall deliver all policies, including additional and renewal policies, together with evidence of payment of premiums thereon, to Beneficiary, and in the case of all insurance about to expire, shall deliver renewal policies not less than thirty (30) days prior to their respective dates of expiration. (c) Trustor shall not take out separate insurance -11- concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless Beneficiary is included thereon under a standard, non-contributory mortgagee clause acceptable to Beneficiary. Trustor shall immediately notify Beneficiary whenever any such separate insurance is taken out and shall promptly deliver to Beneficiary the original policy or policies of such insurance. (d) In the event of foreclosure of this Deed of Trust or other transfer of title or assignment of the Premises in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Trustor in and to all policies of insurance required by this Section 3 and covering solely the Premises or any portion thereof shall inure to the benefit of and pass to the successor in interest to Trustee or the purchaser or grantee of the Premises. Adlustment of Losses with Insurer and Application of Proceeds of Insurance 4. (a) Trustor shall give prompt written notice to Beneficiary after the happening of a casualty to or in connection with the Premises or any part thereof the cost of which to repair, as reasonably estimated by Trustor, is $50,000 or more, whether or not covered by insurance. In case of loss, Beneficiary shall have the right (but not the obligation) to settle any insurance claim filed for more than $100,000; provided, however, that if there does not exist a default under the Loan Agreement, this Deed of Trust or other Related Documents, Trustor shall have the right to participate in and jointly settle any such insurance claims with Beneficiary. In the event that the claim will be jointly settled, Beneficiary shall have the sole right to settle any such insurance claims which are not settled jointly by Beneficiary and Trustor on or before ninety (90) days of such loss, unless Trustor has been unable, despite diligent efforts on its part, to settle the claim in question within such ninety (90) day period, in which case such ninety (90) day period shall be extended for up to an additional sixty (60) days in order to give Trustor sufficient time to effect such settlement, on the condition that Trustor continue diligent efforts to achieve a settlement during any such extension period. Any claim filed for $100,000 or less shall be adjusted and settled by Trustor alone, provided that Beneficiary shall have -12- the right to settle any such claims that Trustor has not settled on or before ninety (90) days after the date of such loss. Beneficiary is at all times authorized to collect and receive any insurance money. If Beneficiary may, and elects to, apply such proceeds in payment or reduction of the indebtedness secured hereby, whether due or not, and if the same are insufficient to pay such amount in full, then Beneficiary may, at its option, declare the balance due and payable under the Loan Agreement and this Deed of Trust to be due and payable forthwith and avail itself of any of the remedies provided for herein or in the Loan Agreement in the case of a default. If Beneficiary may not, or does not elect to, apply the insurance proceeds to the indebtedness as set forth in the preceding sentence, such insurance proceeds shall be used to reimburse Trustor for the cost of rebuilding or restoration of the Premises. The Premises shall be so restored or rebuilt as to be of at least equal value and quality and substantially the same character as the Premises were prior to such damage or destruction. If Beneficiary elects to reimburse Trustor out of insurance proceeds, such proceeds shall be made available, from time to time, upon Beneficiary being furnished with satisfactory evidence of the estimated cost of completion thereof and with such architect's certificates, waivers of lien, contractors' sworn statements and other evidence of cost and of payments as Beneficiary may require and approve. If the estimated cost of the work exceeds $100,000, Beneficiary shall also be furnished with all plans and specifications for such rebuilding or restoration as the Beneficiary may require and approve. (b) Any insurance proceeds paid to and held by Beneficiary to reimburse Trustor for the cost of rebuilding or restoration of the Premises shall be placed by Beneficiary in an interest bearing account selected by Beneficiary. Any interest earned on such insurance proceeds shall be applied and disbursed in the same manner as such insurance proceeds and shall, for the purposes hereof, be deemed to be part of such insurance proceeds, except that if, after the completion of any such rebuilding or restoration, there remains any interest earned on such proceeds, same shall be disbursed to Trustor, provided that no default exists under this Deed of Trust or any of the other Related Documents. (c) In case of loss after foreclosure proceedings have been instituted, the proceeds of any such insurance policy or policies, if not applied as aforesaid to the rebuilding or -13 - restoring of the buildings or improvements, shall be applied in payment or reduction of the indebtedness secured hereby or in payment or reduction of the amount due in accordance with any decree of foreclosure that may be entered in any such proceedings, and the balance, if any, shall be paid to the owner of the equity of redemption if it shall then be entitled to the same or as the court may direct. In the event of a foreclosure sale, Beneficiary is hereby authorized to assign, without the consent of Trustor, any and all insurance policies to the purchaser at the sale, or to take such other steps as Beneficiary may deem advisable to cause the interest of such purchaser to be protected by any of the said insurance policies. Tax 5. If, by the laws of the United States of America, or of any state or political subdivision having jurisdiction over Trustor, any tax is due or becomes due in iespect of the Loan Agreement or the recording of this Deed of Trust, Trustor covenants and agrees to pay such tax in the manner required by any such law. Trustor further covenants to defend and hold harmless and agrees to indemnify Beneficiary, its successors or assigns, against any liability incurred by reason of the imposition of any tax in respect of the Loan Agreement or the recording of this Deed of Trust. Effect of Chanqes in Laws Reqardinq Taxation 6. In the event of the enactment after the date of this Deed of Trust of any law of the State of California or any political subdivision thereof deducting from the value of land for the purpose of taxation any lien thereon, or imposing upon Beneficiary the obligation to pay the whole or any part of the taxes or assessments or charges or liens herein required to be paid by Trustor, or changing in any way the laws relating to the taxation of deeds of trust or debts secured by the Deeds of Trust or the Beneficiary's interest in the Premises, or any portion thereof, or the manner of collection of taxes, so as to adversely affect this Deed of Trust or the debt secured hereby or the Holders, then, and in any such event, Trustor, upon demand by Beneficiary, shall pay such taxes or assessments, or reimburse Beneficiary therefor. -14- Indemnification; Subroqation; Waiver of Offset 7. (a) If Trustee or Beneficiary is made a party to any litigation concerning the Loan Agreement, this Deed of Trust or any other Related Documents, the Premises or any part thereof or interest therein, or the occupancy of the Premises by Trustor, then Trustor shall indemnify, defend and hold harmless Trustee (to the extent permitted by law) and Beneficiary from and against any and all liability by reason of said litigation, including attorneys' fees and expenses incurred by Trustee and Beneficiary as a result of any such litigation, whether or not any such litigation is prosecuted to judgment, or in any way arising out of such litigation, including, without limitation, any negotiation, whether or not successful, of any proposed settlement of any such litigation. Without limiting the generality of the immediately preceding sentence, each of Trustee and Beneficiary may employ an attorney or attorneys to protect its rights hereunder and Trustor shall pay all attorneys' fees and expenses incurred by Trustee and Beneficiary. (b) Trustor waives any and all right to claim or recover against Trustee, Beneficiary, their respective officers, employees, agents and representatives for loss of or damage to Trustor, the Premises, Trustor's property or the property of others under Trustor's control from any cause insured against or required to be insured against by the provisions of this Deed of Trust. (c) All sums payable by Trustor pursuant to the Loan Agreement, this Deed of Trust or any other Related Document shall be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liability of Trustor hereunder shall in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (1) any damage to or destruction of or any condemnation or similar taking of the Premises or any part thereof; (ii) any restriction or prevention of or interference by any third party with any use of the Premises or any part thereof; (iii) any title defect or encumbrance or any eviction from the Premises or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Trustee or Beneficiary, or any action taken with respect to this Deed of Trust -15- by any trustee or receiver of Beneficiary, or by any court, in any such proceeding; (v) any claim which Trustor has or might have against Trustee or Beneficiary; (vi) any default or failure on the part of Trustee or Beneficiary to perform or comply with any of the terms hereof or of any other agreement with Trustor; (vii) any other occurrence whatsoever, whether similar or dissimilar to the foregoing; whether or not Trustor shall have notice or knowledge or any of the foregoing. Except as expressly provided herein, Trustor waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Trustor. Actions Affectinq the Premises 8. Trustor shall appear in and contest any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and shall pay all costs and expenses, including costs of evidence of title and attorneys' fees and expenses, in any such action or proceeding in which Beneficiary or Trustee may appear. -16- Actions by Trustee or Beneficiary to Preserve Premises 9. If Trustor fails to make any payment or to do any act as in the manner provided in the Loan Agreement or any of the Related Documents, Beneficiary and/or Trustee, each in its own discretion, without obligation so to do, without releasing Trustor from any obligation, and without notice to or demand upon Trustor, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. In connection therewith (but without limiting their general powers, whether conferred herein, in another Related Document or by law), each of Beneficiary and Trustee shall have and are hereby given the right, but not the obligation: (a) to enter upon and take possession of the Premises; (b) to make additions, alterations, repairs and improvements to the Premises which they or either of them may consider necessary or proper to keep the Premises in good condition and repair; (c) to appear and participate in any action or proceeding affecting or which may affect the security hereof or the rights or powers of Beneficiary and Trustee; (d) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt which in the judgment of either may affect or appears to affect the security of this Deed of Trust or be prior or superior hereto; and (e) in exercising such powers, to pay necessary expenses, including employment of counselor other necessary or desirable consultants. Trustor shall, immediately upon demand therefor by Beneficiary and Trustee, or either of them, pay to Beneficiary and Trustee an amount equal to all of their respective costs and expenses incurred in connection with the exercise by either Beneficiary or Trustee, or both, of the foregoing rights, including, without limitation, costs of evidence of title, court costs, appraisals, surveys and receiver's, trustee's and attorneys' fees and expenses. Full Performance Required; Survival of Warranties 10. All representations, warranties and covenants of Trustor contained in the Loan Agreement or made to Beneficiary in connection with the indebtedness secured hereby or contained in the Related Documents or incorporated by reference therein, shall survive the execution and delivery of this Deed of Trust and shall remain continuing obligations, warranties and representations of Trustor so long as any portion of the obligations secured by this Deed of Trust remain outstanding. -17- Cumulative Security 11. No other security now existing, or hereafter taken, to secure the obligations secured hereby shall be impaired or affected by the execution of this Deed of Trust; and all such security shall be taken, considered and held as cumulative. The taking of other security, execution of partial releases of the security, or any extension of the time of payment of the indebtedness secured hereby shall not diminish the force, effect or lien of this Deed of Trust and shall not effect or impair the liability of any maker, surety or endorser for the payment of said indebtedness. If Beneficiary at any time holds any other security for any of the obligations secured hereby, it may enforce the sale thereof or otherwise realize upon the same, at its option, either before, concurrently, or after a sale is made hereunder. Appointment of Successor Trustee 12. Beneficiary may, from time to time, by a written instrument executed and acknowledged by Beneficiary, mailed to Trustor and recorded in the county in which the Premises is located, and by otherwise complying with the provisions of applicable law, substitute a successor or successors to any Trustee named herein or acting hereunder; and said successor shall, without conveyance from the predecessor Trustee, succeed to all title, estate, rights, powers and duties of said predecessor. Liens 13. Trustor shall pay and promptly discharge, at Trustor's cost and expense, all liens, encumbrances and charges upon the Premises. If Trustor shall fail to remove and discharge any such lien, encumbrance or charge, then, in addition to any other right or remedy of Beneficiary, Beneficiary may, but shall not be obligated to, discharge the same, either by paying the amount claimed to be due, or by procuring the discharge of such lien, encumbrance or charge by depositing in a court a bond or the amount claimed, otherwise giving security for such claim, or by procuring such discharge in such manner as is or may be prescribed by law. Trustor shall, immediately upon demand therefor by Beneficiary, pay to Beneficiary an amount equal to all costs and expenses incurred by Beneficiary of the foregoing right to discharge any such lien, encumbrance or charge. -18- Trustee's Powers 14. At any time, or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Loan Agreement secured hereby for endorsement or the effect of this Deed of Trust upon the remainder of said Premises, the Trustee may (a) consent in writing to the making of any map or plat thereof, (b) join in granting any easement thereon or (c) join in any extension agreement or any agreement subordinating the lien or charge hereof. Trustee Notice 15. Trustee is not obligated to notify any party hereto of any pending sale under any other deed of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party, unless brought by Trustee. Compensation and Indemnification of Trustee 16. Trustee shall be entitled to reasonable compensation for all services rendered or expenses incurred in the administration or execution of the trust hereby created and Trustor hereby agrees to pay the same. To the extent permitted by law, Trustee shall be indemnified, held harmless and reimbursed by Trustor for any liability, damage or expense, including attorneys' fees and amounts paid in settlement, which Trustee may incur or sustain in connection with this Deed of Trust or in the doing of any act which Trustee is required or permitted to do by the terms hereof or by law, and shall be reimbursed therefor by Trustor promptly upon demand, unless such liability, damage or expense results from Trustee's acts constituting gross negligence or willful misconduct on the part of Trustee. Beneficiary's Powers 17. Without affecting the liability of any other person liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon any portion of the Premises not then or theretofore released as security for the full amount of all unpaid obligations, Beneficiary may, from time to time and without notice (a) release any person so -19- liable, (b) extend the maturity or alter any of the terms of any such obligations, (c) grant other indulgences, (d) take or release any other or additional security for any obligation herein mentioned, or (e) make compositions or other arrangements with debtors in relation thereto. Effect of Extensions of Time and Amendments 18. If the payment of the indebtedness or the performance of any of the obligations secured by this Deed of Trust, or any part thereof, be extended or varied, or if any part of the security be released, all persons now or at any time hereafter liable therefor, or interested in the Premises, shall be held to assent to such extension, variation or release, and their liability and the lien and all provisions hereof shall continue in full force, the right of recourse, if any, against all such persons being expressly reserved by Beneficiary notwithstanding such extension, variation or release. Any person. or entity taking a junior deed of trust or other lien upon the Premises or any interest therein, shall take said lien subject to the rights of Beneficiary herein to amend, modify and supplement this Deed of Trust, the Loan Agreement, any other Related Documents, or any other document or instrument evidencing or securing the indebtedness hereby secured, and to vary the rate of interest and the method of computing the same, and to impose additional fees and other charges, and to extend the maturity of said indebtedness, and to grant partial releases of the lien of this Deed of Trust, in each and every case without obtaining the consent of the holder of such junior lien and without the lien of this Deed of Trust losing its priority over the rights of any such junior lien. Nothing in this Section 18 contained shall be construed as waiving any provision contained herein which provides, among other things, that it shall constitute an Event of Default if the Premises be sold, conveyed or encumbered unless permitted by the Loan Agreement and Related Documents. Beneficiary's Performance of Default Acts; Subroqation 19. If Trustor fails to perform any of its covenants and agreements herein or in the Loan Agreement or in any other Related Document within the time parameters set forth in the Loan Agreement or such other Related Document, as the case may be, then, Beneficiary may elect, in its sole discretion, to make any payment -20- or perform any act herein or therein required of Trustor, in any form and manner deemed expedient by Beneficiary, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Premises or contest any tax or assessment. All moneys paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including, without limitation, attorney's fees and expenses, and any other moneys advanced by Beneficiary to protect the Premises and the lien hereof, shall be so much additional indebtedness secured hereby, and shall become immediately due and payable without notice. Inaction of Beneficiary shall never be considered as a waiver of any right accruing to it on account of any default on the part of Trustor. Should any amount paid out or advanced hereunder by Trustee, be used directly or indirectly to payoff, discharge or satisfy, in whole or in part, any lien or encumbrance upon. the Premises or any part thereof on a parity with or prior or superior to the lien hereof, then as added security hereunder, the Beneficiary shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, however remote, regardless of whether said liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment. Beneficiary and any person designated by the Beneficiary shall have the right, and is hereby granted the right, to enter upon the Premises for the foregoing purposes. Beneficiary's Reliance on Tax Bills, Etc. 20. Beneficiary, in making any payment authorized by this Deed of Trust or the Loan Agreement: (a) relating to taxes and assessments, may do so according to any bill, statement or estimate procured from the appropriate public office without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale forfeiture, tax lien or title or claim thereofi or (b) for the purchase, discharge, compromise or settlement of any other prior lien, may do so without inquiry as to the validity or amount of any claim for lien which may be asserted. Events of Default -21- 21. Any of the following events shall be deemed an "Event of Default" hereunder: (a) default shall be made in the payment of any amount due under the Loan Agreement or the Note, when due; (b) default shall be made, with respect to nonmonetary covenants, agreements and obligations of Trustor hereunder and shall continue uncured for fifteen (15) days after written notice thereof from Beneficiary; provided, however, that if such failure by its nature cannot be cured within a fifteen (15) day period, then same shall not constitute an Event of Default so long as Trustor commences the cure of such default within such fifteen (15) day period and diligently prosecutes such cure to completion; or (c) any other default shall have occurred under the Loan Agreement or any other Related Document and the default shall not have been cured within any applicable grace period; or (d) any unpermitted transfer of title as described in this Deed of Trust. Foreclosure: Expense of Litiqation; Indemnification 22. (a) Upon the occurrence of an Event of Default, the amounts due under the Loan Agreement and other funds then held or to be received by Beneficiary under the provisions of the Indenture shall be payable without any presentment, demand, protest or notice of any kind to Trustor as and when such amounts become due. Thereafter Beneficiary may in such order as Beneficiary, in its sole discretion and as provided in the Indenture, may elect: (i) either in person or by an agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon and take possession of the Premises, or any part thereof, in its own name or in the name of Trustee, and perform any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Premises, or any part thereof or interest therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Premises, sue for or otherwise collect the rents, issues and -22- profits thereof, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection including, without limitation, attorney's fees and expenses, in payment of any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of the Premises, the collection of such rents, issues and profits or the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession of all or any portion of the Premises or the collection, receipt and application of rents, issues or profits, Trustee or Beneficiary shall be entitled to exercise every right provided for herein or in any of the other Related Documents or by law upon occurrence of any Event of Default, including the right to exercise the power of sale; (ii) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (iii) exercise the power of sale contained herein; (iv) exercise its rights under California Code of Civil Procedure Sections 726.5 or 736; or (v) exercise all other rights provided herein, in any other Related Document, document or agreement now or hereafter securing all of the obligations secured hereby, or at law or in and remedies in any other or any portion equity. (b) Should Beneficiary elect to foreclose by exercise of the power of sale herein contained, Beneficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust and the Loan Agreement and such receipts and evidence of expenditures made and secured hereby as Trustee may require. (i) Upon receipt of such notice from Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor a notice of default and election to sell ("Notice of Default") as is then required by law. Trustee shall, -23- without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and after notice of sale ("Notice of Sale") shall have been given as required by law, sell the Premises at the time and place of sale fixed by it in said Notice of Sale, either as a whole, or in separate lots or parcels or items as Trustee shall deem expedient, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale and Trustor hereby covenants to warrant and defend the title of such purchaser or purchasers. (ii) Trustee shall apply the proceeds of sale in the priority set forth in Section 23 hereof. (iii) Subject to the provisions of California Civil Code Section 2924q, Trustee may postpone sale of all or any portion of the Premises by public announcement made at the time and place set forth in the Notice of Sale, and from time to time thereafter may further postpone such sale by public announcement or subsequently given Notice of Sale, and without further notice may make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale. Should Beneficiary in its discretion determine that more than one such sale or other disposition would be advantageous, Beneficiary may, at its option, cause the same to be conducted simultaneously, or successively on the same day, or at such different days or times and in such order as Beneficiary may deem to be in its best interest. (c) Concurrently herewith, trustor has executed and delivered to Beneficiary the UCC-l with respect to certain collateral described therein. In the event of any inconsistency between the provisions hereof and the provisions of the UCC-l with respect to the collateral described therein, the provisions of the UCC-l shall control. Upon the occurrence of an Event of Default, Beneficiary may proceed in any sequence: (i) to exercise its rights hereunder with respect to all or any portion of the Premises and -24- all or any portion of the collateral; and (ii) to exercise its rights under the UCC-1 with respect to all or any portion of the collateral in accordance with the provisions of California Commercial Code (the "Code") Section 9501(4). The receipt by Beneficiary of any proceeds of the disposition of such collateral, or as a result of the exercise of any of Beneficiary's other rights hereunder, shall not cure any Event of Default or reinstate any obligation under any of the Related Documents for purposes of California Civil Code Section 2924c. (d) Should Beneficiary elect to cause any of the Premises to be disposed of as personal property as permitted by this Deed of Trust, it may dispose of any part thereof in any manner now or hereafter permitted by Division 9 of the Code or in accordance with any other remedy provided by law. Both Trustor and Beneficiary shall be eligible to purchase any part or all of such property at any such disposition. Any such disposition may be either public or private as Beneficiary may so elect, subject to the provisions of the Code. Beneficiary shall give Trustor five (5) days' prior written notice of the time and place of any public sale or other disposition of such property or of the day on or after which any private sale or any other intended disposition is to be made, and if such notice is sent to Trustor as provided in the Reimbursement Agreement, it shall constitute reasonable notice to Trustor. (e) In connection with any foreclosure of the lien hereof or any action to enforce any other remedy of Beneficiary under this Deed of Trust, the Loan Agreement or any other Related Document, Trustor agrees to pay all expenditures and expenses which may be paid or incurred by or on behalf of Beneficiary, including, without limitation, attorneys' fees and expenses, appraisers' fees, outlays for documentary and expert evidence, stenographers' charges, publication costs, and costs (which may be estimated as to items to be expended prior to the date of sale) of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to title and value as Beneficiary may deem reasonably necessary either to prosecute such suit or to evidence to bidders at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Premises, and the right to such fees and expenses shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is -25- prosecuted to judgment. All expenditures and expenses of the nature mentioned in this Section 22, and such expenses and fees as may be incurred in the protection of the Premises and the maintenance of the lien of this Deed of Trust, including the fees and expenses of any attorney employed by Beneficiary in any litigation or proceeding affecting this Deed of Trust, the Loan Agreement, any other Related Document or the Premises (including, without limitation, the occupancy thereof, or any construction work performed thereon), including, without limitation, probate and bankruptcy proceedings, or in preparations for the commencement or defense of any proceeding or threatened suit or proceeding, whether or not an action is actually commenced, shall be immediately due and payable by Trustor and shall be secured by this Deed of Trust. (f) Without limiting the liability of Trustor as set forth above, Trustor shall indemnify Beneficiary and its officers, directors, employees, representatives and agents, and hold them harmless from and against all claims, injury, damage, loss and liability of any and every kind to any persons or property by reason of (i) the operation or maintenance or the Premises; and (ii) any other action or inaction by, or matter which is, directly or indirectly, the responsibility of, Trustor. Application of Proceeds of Foreclosure Sale 23. The proceeds of any foreclosure sale of the Premises shall be distributed and applied in the following order of priority: (1) first, to payment of all costs and expenses incident to the foreclosure proceedings, including, without limitation, the costs, fees and expenses of Trustee, attorneys' fees and expenses, the actual cost of publishing, recording, mailing and posting notice and all such items as are mentioned in the preceding Section 22; (b) second, to the cost of any search and/or other evidence of title procured in connection therewith and the transfer tax on any deed or conveyance; (c) third, to all sums expended under the terms hereof, not then repaid, with accrued interest at the rate provided herein; (d) fourth, to all other sums secured hereby, in such order as provided in Article VIII of the Indenture. Appointment of Receiver 24. Upon, or at any time after, the occurrence of an -26- Event of Default hereunder, Beneficiary, as a matter of right, and without notice to Trustor or anyone claiming under Trustor, and without regard to the then value of the Premises or the adequacy of any security for the obligations then secured hereby, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Premises, and Trustor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any time after an Event of Default has occurred hereunder, a court of competent jurisdiction may appoint a receiver for the Premises. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of Trustor at the time of application for such receiver and without regard to the then value of the Premises, and Beneficiary hereunder or any of the Holders may be appointed as such receiver. Such receiver shall have power, until the later of (a) the expiration of the full statutory period of redemption (whether or not the Premises are redeemed), in the case of a deficiency after a duly conducted foreclosure sale, (b) the disbursement of all proceeds of the Premises collected by such receiver and the payment of all expenses incurred in connection therewith and (c) the termination of such receivership with the consent of Beneficiary or pursuant to an order of a court of competent jurisdiction: (i) to operate the Premises and collect the rents, issues and profits of the Premises; (ii) to extend or modify any then existing leases and agreements regarding the Premises and to make new leases and agreements, which extensions, modifications and new leases and agreements may provide for terms to expire, or for options to extend or renew terms to expire, beyond the maturity date of the indebtedness secured hereunder and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases and agreements, and the options or other such provisions to be contained therein, shall be binding upon Trustor and all persons whose interests in the Premises are subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the indebtedness secured hereby, satisfaction of any foreclosure, decree or issuance of any certificate of sale or deed to any purchaser; and (iii) to exercise all other powers which may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during the whole of said period. The court, from time to time, may authorize the receiver to apply the net income in his hands in -27- payment in whole or In part of: (A) the indebtedness secured hereby, or by any decree foreclosing this Deed of Trust, or any tax, special assessment or other lien which may be or may become superior to the lien hereof or of such decree, provided such application is made prior to the foreclosure sale; and (B) the deficiency in case of a sale and deficiency. Assiqnment of Rents, Issues, Profits and Losses 25. (a) Trustor hereby sells, assigns and transfers absolutely unto Beneficiary all the rents, issues, profits and avails now due and which may hereafter become due under or by virtue of any lease, whether written or verbal, or any letting of, or of any agreement for the use or occupancy of, the Premises or any part thereof, which may have been heretofore or may be hereafter made or agreed to or which may be made or agreed to by Beneficiary under the powers herein granted, it being the intention hereby to establish an absolute and present transfer and assignment of all such rents, issues, profits, leases and agreements, and all the avails thereunder, to Beneficiary and not merely the passing of a security interest. Trustor shall not amend, terminate or otherwise modify any such lease, and shall not enter into any new lease or agreement with respect to occupancy of the Premises, without the prior written consent of Beneficiary, which consent may be withheld in Beneficiary's sole discretion. Trustor hereby irrevocably appoints Beneficiary its true and lawful attorney, in its name and stead, with or without taking possession of the Premises, personally or by receiver as provided herein (it being understood that such power of attorney is coupled with an interest and irrevocable) at the option of Beneficiary at any time and from time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in the name of Trustor, Trustee or Beneficiary, for all of said avails, rents, issues and profits arising from or accruing at any time hereafter, and all now due or that may hereafter become due, under each and every of the leases and agreements, written or verbal, or other tenancy existing, or which may hereafter exist, on the Premises, with the same rights and powers and subject to the same immunities, exoneration of liability and rights of recourse and indemnity as Beneficiary would have upon taking possession of the Premises hereunder. (b) Provided that there exists no Event of Default -28- hereunder under the Loan Agreement or any other Related Document, Trustor shall have the right under a revocable license granted hereby, and Beneficiary hereby grants to Trustor such a revocable license, to collect all of the rents arising from or out of the leases or any renewals or extensions thereof, or from or out of the Premises or any part thereof, as trustee for the benefit of Beneficiary. The license granted hereby shall be revoked automatically (and without the necessity of taking any other action) upon the occurrence of any such Event of Default. Beneficiary acknowledges that it has assigned to First Trust of California, National Association, as Bond trustee under the Indenture, certain rental payments pursuant to the Indenture and in a manner not inconsistent herewith or with the Loan Agreement or any other Related Document. (c) Upon the occurrence of an Event of Default hereunder Beneficiary may, at its option, exercise (or cause the Trustee to exercise) its rights hereunder. If Beneficiary elects to exercise its rights hereunder, Beneficiary or Trustee may, at any time and without notice, either in person, by agent or by a receiver appointed by a court, enter upon and take possession of all or any portion of the Premises, enforce all leases, collect all rents (including, without limitation, those past due and unpaid) and apply the same to the costs and expenses of operation and collection, including, without limitation, attorneys' fees and expenses, and to any indebtedness then secured hereby, all in such order as Beneficiary may determine. In connection with the exercise by Beneficiary of its rights hereunder, Trustor agrees that Beneficiary shall have the right to specifically enforce such rights and to obtain the appointment of a receiver in accordance with the provisions hereof without regard to the value of the Premises or the adequacy of any security for the obligations then secured hereby. The collection of such rents or the entering upon and taking possession of the Premises, or the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default, or be deemed or construed to make Beneficiary a mortgagee-in-possession of the Premises or any portion thereof. (d) Trustee represents and agrees that the amount of any rent paid shall be consistent with the terms and conditions of the Related Documents, and that except as authorized in the Loan -29- Agreement, no payment of the rents to accrue for any portion of said Premises will be waived, released, reduced, discounted or otherwise discharged or compromised by Trustor. As between Trustor and Beneficiary, Trustor waives any rights of set off against any person in possession of any portion of the Premises. If any lease provides for the abatement of rent during repair of the Premises demised thereunder by reason of fire or other casualty, Trustor shall furnish to Beneficiary loss of rents insurance, the policies to be in amount and form as shall be satisfactory to the Beneficiary and written by such insurance companies as shall be reasonably satisfactory to the Beneficiary. Trustor agrees that it will not assign any of the rents or profits of the Premises, except to a purchaser or grantee of the Premises. (e) Nothing herein contained shall be construed as constituting Beneficiary a mortgagee-in-possession in the absence of the taking of actual possession of the Premises by Beneficiary. In the exercise of the powers herein granted Beneficiary, no liability shall be asserted or enforced against Beneficiary, all such liability being expressly waived and released by Trustor to the fullest extent permitted by law. Nothing contained herein, including, without limitation, the assignment provisions set forth above, shall impose upon Beneficiary any duty to produce any rents, issues or profits or cause Beneficiary to (i) be responsible for performing any of the obligations of lessor under any lease, or (ii) be responsible or liable for any waste or for any dangerous or defective conditions of the Premises, for negligence in the management, upkeep, repair or control of the Premises, or for any other act or omission by any other person. 26. INTENTIONALLY OMITTED Beneficiarv's Riqht of Possession in Case of Default 27. (a) To the extent permitted by law, upon the occurrence of an Event of Default under this Deed of Trust, the Loan Agreement or any other Related Documents, whether before or after the indebtedness secured hereby is declared to be due as aforesaid, or whether before or after the institution of legal proceedings to foreclose the lien hereof or before or after sale thereunder, Trustor shall forthwith, upon demand of Beneficiary, surrender to Beneficiary and Beneficiary shall be entitled to take -30- actual possession of the Premises or any part thereof, personally, or by its agent or attorneys. In such event Beneficiary in its discretion may, to the extent permitted by law, with or without force and with or without process of law, enter upon and take and maintain possession of all or part of said Premises, together with all documents, books, records, papers and accounts of Trustor or the then owner of the Premises relating thereto, and may exclude Trustor, its agents or servants, wholly therefrom and may, as attorney in fact or agent of Trustor, or in its own name as Beneficiary and under the powers herein granted, hold, operate, manage and control the Premises and conduct the business, if any, thereof, either personally or by its agents, and with full power to use such measures, legal or equitable, as in its discretion or in the discretion of its successors or assigns may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues and profits of the Premises, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent, and with full power, in each case to the fullest extent permitted by law; (i) to cancel or terminate any lease or sublease for any cause or on any ground which would entitle Trustor to cancel the same; (ii) subject to the provisions of any applicable non-disturbance or similar agreements, to elect to disaffirm any lease or sublease which is then subordinate to the lien hereof; (iii) to extend or modify any then existing leases and to make new leases, which extensions, modifications, and new leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the maturity date of the indebtedness hereunder and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon Trustor and all persons whose interests in the Premises are subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Deed of Trust indebtedness, satisfaction of any foreclosure decree or issuance of any certificate of sale or deed to any purchaser; (iv) to enter into any management, leasing or brokerage agreements covering the Premises; (v) to make all necessary or proper repairs, decorations, renewals, replacements, alterations, additions, betterments and improvements to the Premises as to it may seem judicious; (vi) to insure and reinsure the same and all risks incidental to Beneficiary'S possession, operation and management thereof; and -31- .,' "V '.7", (vii) to receive all of such avails, rents, issues and profits; Trustor hereby granting full power and authority to exercise each and every of the rights, privileges and powers herein granted at any and all times hereafter, without notice to Trustor, (b) Beneficiary shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability under any lease. Trustor shall and does hereby agree to indemnify and hold Beneficiary harmless of and from any and all liability, loss or damage which it mayor might incur by reason of its performance of any action authorized under this Section 27 and of and from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements of Trustor, unless such liability, loss or damage results from Beneficiary's acts constituting gross negligence or willful misconduct on the part of Beneficiary. Should Beneficiary incur. any such liability, loss or damage by its performance or nonperformance of actions authorized by this Section 27, or in the defense of any claims or demands, the amount thereof, including costs, expenses and reasonable attorneys' fees and expenses, together with interest on any such amount shall be secured hereby, and Trustor shall reimburse Beneficiary therefor immediately upon demand. (c) Notwithstanding the foregoing, Beneficiary's reservation in this Section 27 of a right of possession of the Premises in the event of a default hereunder shall not be deemed to impose any requirement of possession in order to perfect the assignment of rents and leases contained herein, it being agreed and intended by Trustor that any and all assignments of rents and leases are perfected upon the execution of this Deed of Trust without necessity of any further action. Application of Income Received bv Beneficiarv 28. Beneficiary, in the exercise of the rights and powers hereinabove conferred upon it by Section 23, Section 24 and Section 25 hereof, shall have full power to use and apply the rents, issues and profits of the Premises to the payment of or on account of the following, in such order as Beneficiary may determine: -32- (a) to the payment of all reasonable fees and expenses of the Beneficiary; (b) to payment of all reasonable fees of the receiver approved by the court; (c) to payment of all prior or current real estate taxes and special assessments with respect to the Premises; (d) to payment of all premiums due for the insurance required by the provisions of this Deed of Trust; (e) to payment of expenses incurred for normal operation and maintenance of the Premises in such order of priority as Beneficiary shall deem proper, including, without limitation, the payment of management (which shall include reasonable compensation to Beneficiary and its agent or agents, if management be delegated to an agent or agents), brokerage (which shall include leasing commissions and other compensation and expenses of seeking and procuring tenants and entering into leases) and attorneys' fees; (f) (i) if received prior to any foreclosure sale of the Premises, then to Beneficiary for payment of the amounts and fees and expenses due to Beneficiary under the Loan Agreement. The rights and powers of Beneficiary under this Deed of Trust and the application of the avails, rents, issues and profits as provided above shall continue until expiration of the redemption period from any foreclosure sale, whether or not any deficiency remains after a foreclosure sale. Beneficiary's Riqht of Inspection 29. Beneficiary, or its agents, representatives or workers shall have the right to inspect the Premises and access thereto shall be permitted for the purpose of inspecting the same and for the purpose of performing any of the acts Beneficiary is authorized to perform hereunder or by law or under any other Related Document, including, without limitation, the rights provided in California Civil Code Section 2929.5. -33- Condemnation 30. (a) If any proceeding or action be commenced for the taking of the Premises, or any part thereof or interest therein, for public or quasi-public use or otherwise, or if the Premises are taken or damaged by reason of any public improvement, or under the power of eminent domain or by condemnation or any transaction in lieu of condemnation, or in any other manner (in any such case a "Condemnation"), or should Trustor receive any notice or other information regarding such proceeding, action or Condemnation, Trustor shall give prompt written notice thereof to Beneficiary. Beneficiary shall be entitled at its option, on behalf of the holders of the Bonds as provided in the Indenture, without regard to the adequacy of this security, to commence, appear in and prosecute in its own name any such action or proceeding and Beneficiary shall be entitled to make any compromise or settlement in connection with such Condemnationi provided, however, that if there does not exist a default under the Loan Agreement, this Deed of Trust or the other Related Documents, Trustor shall have the right to participate in and jointly settle wi th Beneficiary any such action or proceeding, provided that Beneficiary shall have the sole right to settle any such action or proceeding which is not settled jointly by Beneficiary and Trustor on or before ninety (90) days after such action or proceeding has been commenced, unless Trustor has been unable, despite diligent efforts on its part, to settle the claim in question within such ninety (90) day period, in which case such ninety (90) day period shall be extended for up to an additional sixty (60) days in order to give Trustor sufficient time to effect such settlement, on the condition that Trustor continue diligent efforts to achieve a settlement during any such extension period. Trustor I s entire interest in all compensation, awards, damages, rights to action and proceeds awarded to Trustor by reason of any Condemnation (collectively, "Condemnation Proceeds") are hereby assigned, transferred and set over to Beneficiary, and Trustor agrees to execute such further assignments of such proceeds as Beneficiary or Trustor may require. (b) If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust, and if such Condemnation does not result in -34- cancellation or termination of such lease, then, provided Trustor is not then in default under this Deed of Trust, the Condemnation Proceeds shall be used to reimburse Trustor for the cost of rebuilding or restoring of buildings or improvements on the Premises. In all other cases, Beneficiary shall have the right, at its option, to apply the Condemnation Proceeds upon or in reduction of the indebtedness secured hereby, whether due or not, and if the same are insufficient to pay such amount in full, Beneficiary may, at its option, declare the amounts due under the Loan Agreement and this Deed of Trust to be due and payable as and when such amounts come due and avail itself of any of the remedies provided herein or in the Loan Agreement as in the case of a default. If the Condemnation Proceeds are required to be used as aforesaid to reimburse Trustor for the cost of rebuilding or restoring buildings or improvements on the Premises, or if Beneficiary elects that the Condemnation Proceeds be so used, and the buildings and other improvements shall be rebuilt or restored, the Condemnation Proceeds shall be paid out in the same manner as is provided in Section 4 hereof for the payment of insurance proceeds towards the cost of rebuilding or restoration of such buildings and other improvements. Any surplus which may remain out of the Condemnation Proceeds after payment of such cost of rebuilding or restoration shall, at the option of Beneficiary, be applied on account of the indebtedness secured hereby or be paid to any other party entitled thereto. If the Condemnation Proceeds are not sufficient to repay the Bonds in full and are not used as aforesaid to reimburse Trustor for the cost of rebuilding or restoring buildings or improvements on the Premises, Trustor shall immediately pay any remaining balance, together with accrued interest. Application or release of the Condemnation Proceeds as provided herein shall not cure or waive any default or notice of default hereunder or under any other Related Document or invalidate any act done pursuant to such notice. (c) Any Condemnation Proceeds paid to and held by Beneficiary to reimburse Trustor for the cost of restoration of the Premises shall be placed by Beneficiary in an interest bearing account selected by Beneficiary. Any interest earned on such Condemnation Proceeds shall be applied and disbursed in the same manner as such Condemnation Proceeds and shall, for the purposes hereof, be deemed to be part of such Condemnation Proceeds. (d) Trustor hereby specifically, unconditionally -35- and irrevocably waives all rights of a property owner granted under California Code of Civil Procedure Section 1265.225 (a), which provides for allocation of condemnation proceeds between a property owner and a lienholder, and any law or successor statute of similar import. 31. OMITTED Givinq of Notice 32. Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given: (a) if hand delivered, on the day so delivered to the address set forth below; (b) if mailed, on the third Business Day after the day on which it is deposited in the United States mails in the continental United States, registered or certified mail, postage prepaid, returned receipt requested, addressed as set forth below; (c) if by Federal Express or other reputable express courier service, overnight delivery, on the next Business Day after the date delivered to such express courier service, addressed as set forth below; or (d) if by telecopy transmission, on the day and at the time on which delivered to such party at the address and the telecopier number set forth below: If to the Trustor: Redevelopment Agency of the City of San Bernardino 201 North E Street, Third Fl. San Bernardino, California 92401 Attention: Executive Director If to the City: City of San Bernardino 300 North "D" Street San Bernardino, California 92401 Attention: Administrator If to the Beneficiary: U.S. Bank Trust, National Association 550 South Hope Street, Suite 500 Los Angeles, California 90071 Reference: City of San Bernardino --Police Station/South Valle/201 North E -36- If to the Trustee: Chicago Title Insurance Company with a copy to: Sabo & Green, A Professional Corporation Special Counsel 23801 Calabasas Road, Suite 1015 Calabasas, California 91302 or at such other address or to such other addresses as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice. Remedies Not Exclusive 33. No action for the enforcement .of the lien or any provision hereof shall be subject to any defense which would not be good and available to the party interposing same in an action at law upon the Loan Agreement. Trustee and Beneficiary, and each of them, shall be entitled to enforce payment and performance of any indebtedness or obligations secured hereby and to exercise all rights and powers under this Deed of Trust or other agreement or any laws now or hereafter in force, notwithstanding that some or all of the said indebtedness and obligations secured hereby may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement, whether by court action or pursuant to the power of sale or other powers herein contained, shall prejudice or in any manner affect Beneficiary's right to realize upon or enforce any other security now or hereafter held by Trustee, it being agreed that Trustee and Beneficiary, and each of them, shall be entitled to enforce this Deed of Trust and any remedy herein or in the Loan Agreement, or any other Related Document or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or under the Deed of Trust, Loan Agreement, or any other Related Documents or now or hereafter existing at law or in equity or by statute. Every power or remedy given hereby to Trustee and Beneficiary, and each of them or to which they may be otherwise entitled, may be exercised, concurrently or independently, from time to time, and as often as it may be deemed -37- expedient by Trustee and Beneficiary, and each of them, and Trustee or Beneficiary, or either of them, may pursue inconsistent remedies. No waiver of any default of the Trustor hereunder shall be implied from any omission by Trustee, Beneficiary or the Holders to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that such waived default is waived only for the time and to the extent therein stated. No acceptance of any payment of anyone or more delinquent installments shall constitute a waiver of the rights of Trustee, Beneficiary or holders of the Bonds at any time thereafter to demand and collect payment of (a) interest or (b) late charges, if any. Waiver by Trustor 34. (a) Trustor waives any requirements of presentment, demands for payment, notices of nonpayment or late payment, protests, notices of protest, notices of dishonor, and all other formalities or notices of any kind not otherwise required hereby or by the Loan Agreement or any other Related Documents. Trustor waives all rights and all privileges it might otherwise have to require Trustee, Beneficiary, or both, to proceed against or exhaust the assets encumbered hereby or by the Loan Agreement, or any other Related Documents or to proceed against Trustor or any Guarantor or to pursue any other remedy available to Beneficiary in any particular manner or order under the legal or equitable doctrine or principle of marshaling or of suretyship, and further agrees that Trustee, or Beneficiary, or both, may proceed against any or all of the assets encumbered hereby or by the Loan Agreement or by any other Related Documents upon an Event of Default in such order and manner as Beneficiary, in its sole discretion, may determine. (b) Trustor hereby agrees that it shall not and will not apply for or avail itself of any appraisement, valuation, stay, extension or exemption laws or any so-called "Moratorium Laws," now existing or hereafter enacted, in order to prevent or hinder the enforcement or foreclosure of this Deed of Trust, but hereby waives the benefit of such laws. Trustor, for itself and all who may claim through or under it, hereby waives any and all right to have the property and estates comprising the Premises marshaled upon any foreclosure of the lien hereof and agrees that any court -38- having jurisdiction to foreclose such lien may order the Premises sold as an entirety. Trustor waives, to the extent permitted by law, (i) the benefit of all laws now existing or that may hereafter be enacted providing for any appraisement before sale of any portion of the Premises, (ii) all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshaling in the event of foreclosure of the liens hereby created and (iii) all rights and remedies which Trustor may have or be able to assert by reason of the laws of any state pertaining to the rights and remedies of sureties. TO THE EXTENT PERMITTED BY LAW, TRUSTOR HEREBY WAIVES ANY STATUTE OF LIMITATIONS APPLICABLE TO THIS DEED OF TRUST AND ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THE ENFORCEMENT OF THIS DEED OF TRUST. (c) Trustor hereby expressly waives any defense arising by reason of (i) the incapacity, lack 'of authority, death or disability of Trustor or any other or others, (ii) the revocation or repudiation of this Deed of Trust by Trustor or the revocation or repudiation of the Loan Agreement, or other Related Documents by Trustor or any other or others, (iii) the failure of Beneficiary to file or enforce a claim against the estate, (either in administration, bankruptcy or any other proceeding) of Trustor or any other or others, (iv) the unenforceability in whole or in part of the Related Documents or any other instrument, document or agreement referred to herein, (v) Beneficiary's election, in any proceeding instituted under the United States Bankruptcy Code ("Bankruptcy Code"), of the application of Section 1111(b) (2) of the Bankruptcy Code, (vi) any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code, (vii) any defense based upon an election of remedies by Beneficiary, (viii) any rights or defenses created by anti-deficiency statutes of the State of California, (ix) any defense based upon any taking, modification or release of any collateral for any indebtedness of Trustor to Beneficiary or any failure to perfect any security interest in, or the taking of or failure to take any other action with respect to, any collateral securing payment of the indebtedness or performance of the obligations of Trustor and (x) any rights or defenses based upon an offset by Trustor against any obligation now or hereafter owed to Trustor by any other Party; it being the intention hereof that Trustor shall remain liable as principal, to the extent set forth herein, until the full payment -39- of the Indebtedness and full performance of all the obligations of Trustor, notwithstanding any act, omission or thing which might otherwise operate as a generality of the foregoing, or any other provision hereof, Trustor hereby expressly waives any and all benefits which might otherwise be available to it under California Civil Code Sections 2809, 2810, 2819, 2825, 2839, 2945, 2846, 2847, 2848, 2849, 2850, 2899 and 3433 and California Code of Civil Procedure Sections 580a through 580d and 726. Estoooel Affidavits; Statements bv Beneficiary 35. (a) Trustor, within fifteen (15) days after written request from Beneficiary, shall furnish a written statement, duly acknowledged, setting forth the unpaid principal of, and interest on, the indebtedness secured hereby and whether or not any offset or defense exists against such indebtedness, and covering such other matters as Beneficiary may reasonably require. (b) Beneficiary shall furnish, upon request and subj ect to the provisions hereof, any statement regarding the obligations secured hereby or regarding the amounts held in any trust or reserve fund hereunder required by California Civil Code Section 2943. For any statement requested by Trustor regarding the obligations secured hereby, or regarding the amounts held in any trust or reserve fund established hereunder, Beneficiary may charge a reasonable fee, not to exceed the maximum amount permitted by law at the time of the request therefor. Trustor hereby requests that a copy of any Notice of Default and every Notice of Sale be mailed to it as provided by law at the address provided for in this Deed of Trust. Bindinq on Successors and Assiqns 36. This Deed of Trust may not be changed or terminated orally. The covenants contained in this Deed of Trust shall run with the Premises and shall bind Trustor, the successors and assigns of Trustor, all subsequent owners, encumbrancers, tenants and subtenants of the Premises, and all persons claiming under or through Trustor, and shall inure to the benefit of Beneficiary, the personal representative, successors and assigns of the Beneficiary and all subsequent holders of this Deed of Trust. -40- No Third Parties Benefitted 37. This Deed of Trust is made and entered into for the sole protection and benefit of Trustee, Beneficiary and Trustor, their successors and assigns, and no other person or persons shall have any right to action hereon. 38. INTENTIONALLY OMITTED Captions 39. The cover page, the table of contents and the captions and headings of various paragraphs of this Deed of Trust are for convenience only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof. Securitv Aqreement and Financinq Statements 40. (a) Trustor and Beneficiary agree: (i) that this Deed of Trust shall constitute a "Security Agreement" within the meaning of the Code with respect to all sums on deposit with the Trustee (the "Deposits") and with respect to any property (the "Property") included in the definition herein of the word "Premises" which may not be deemed to form a part of the real estate described in Exhibit A or may not constitute a "fixture" (within the meaning of Code Section 9313), and all replacements of such property, substitutions for such property, additions to such property, and the proceeds thereof (said property, replacements, substitutions, additions and the proceeds thereof being sometimes herein collectively referred to as the "Collateral"); (ii) that a security interest in and to the Collateral and the Deposits is hereby granted to the Beneficiary; and (iii) that the Deposits and all of trustor I s right, title and interest therein are hereby assigned to Beneficiary, all to secure payment of the indebtedness and to secure performance by Trustor of the terms, covenants and provisions of the Loan Agreement, this Deed of Trust and the other Related Documents. (b) If an Event of Default occurs hereunder, Beneficiary, pursuant to the appropriate provisions of the Code, shall have an option to proceed with respect to both the real property and the Collateral in accordance with its rights, powers and remedies with respect to the real property, in which event the -41- default provisions of the Code shall not apply. The parties agree that if Beneficiary shall elect to proceed with respect to the Collateral separately from the real property, Beneficiary shall have all remedies available to a secured party under the Code and five (5) days I notice of the sale of the Collateral shall be reasonable notice. The reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by Beneficiary shall include, but shall not be limited to, attorneys' fees and legal expenses incurred by Trustee. Trustor agrees that, without the written consent of Beneficiary, Trustor will not remove or permi t to be removed from the Premises any of the Collateral, however, so long as Trustor is not in default hereunder, it shall be permitted to sell or dispose of the Collateral when obsolete, worn out, inadequate, unserviceable or unnecessary for use in the operation of the Premises, but only upon replacing the same or substituting for the same other Collateral at least equal in value and utility to the initial value and utility of the Collateral disposed of and in such a manner that said replacement or substituted collateral shall be subject to the security interest created hereby and that the security interest of Beneficiary shall be perfected and first in priority, it being expressly understood and agreed that all replacements thereof, substitutions therefor or additions thereto, unless Beneficiary otherwise consents, will be free and clear of liens, encumbrances, title retention devices and security interests of others. (c) Trustor and Beneficiary agree, to the extent permitted by law, that: (i) all of the goods described within the definition of the word 11 Property" herein are or are to become fixtures on the land described in Exhibit Ai (ii) this instrument, upon recording or registration in the real estate records of the proper office, shall constitute a "fixture filing" within the meaning of Code Sections 9313 and 9402i and (iii) Trustor is the record owner of the Site described in Exhibit A. The addresses of Trustor and Beneficiary are set forth in the introductory paragraph hereof. (d) This Deed of Trust shall be self operative with respect to the security interest granted in the Collateral, but Trustor agrees, upon request by Beneficiary from time to time, to execute, acknowledge and deliver to Beneficiary, a separate security agreement, financing statement or other similar security instruments, in form satisfactory to Beneficiary, covering all -42- property of any kind whatsoever owned by Trustor, as the case may be, which in the sole opinion of Beneficiary is essential to the operation of the Premises and which constitutes goods within the meaning of the Code or concerning which there may be any doubt whether the title to same has been conveyed by or security interest perfected by this Deed of Trust under the laws of the State of California, and will further execute, acknowledge and deliver or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as Beneficiary may request in order to perfect, preserve, maintain, continue and extend the security interest under and the priority of this Deed of Trust and such security instrument. Trustor further agrees to pay to Beneficiary on demand all costs and expenses incurred by Beneficiary in connection with the preparation, execution, recording, filing and re-filing of any such document. Trustor shall from time to time, on request of Beneficiary, deliver to Beneficiary an inventory of the Collateral in reasonable detail. To the extent permitted. by the provisions of the Code, now or hereinafter in effect, Trustor hereby authorizes Beneficiary, without the signature of Trustor, to execute and file any of the documents described in this Section 40 if Trustee shall determine that such are necessary and advisable in order to perfect Beneficiary's security interest in the Collateral. 41. INTENTIONALLY OMITTED Beneficiary's Lien for Costs and Expenses 42. At all times, regardless of whether any funds have been disbursed, this Deed of Trust secures {in addition to any funds disbursed from time to time} the payment of any and all costs and expenses due to or incurred by Trustee or Beneficiary in connection with the Loan Agreement to be secured hereby. Acceptance by Trustee 43. duly executed by law. Trustee accepts this trust when this Deed of Trust, and acknowledged, is made a public record as provided -43- Trust Irrevocable; No Offset 44. The trust created hereby is irrevocable by Trustor. No offset or claim that Trustor now or may in the future have against Beneficiary shall relieve Trustor from paying installments or performing any other obligation herein or secured hereby. Further Assurances 45. Trustor, Beneficiary and Trustee agree to do, and to cause to be done, such further acts and things and to execute and deliver, or to cause to be executed and delivered, such additional assignments, agreements, powers and instruments, and any of them may reasonably require or deem advisable to keep valid and effective the charges and lien hereof, to carry into effect the purposes of this Deed of Trust or to better assure and confirm unto any of them their rights, powers and remedies hereunder; and, upon request by Beneficiary, shall supply evidence of fulfillment of each of the covenants herein contained concerning which a request for such evidence has been made. Truth-in-Lendinq 46. secured hereby Act, 15 D.S.C. Trustor represents and agrees that the obligation is an exempt transaction under the Truth-in-Lending S 1601, et ~. Environmental Representations, Warranties and Covenants of Trustor 47. Trustor represents that, after due inquiry and investigation, no portion of the Premises has ever been used by previous owners and/or operators to refine, produce, store, handle, transfer, process or transport Hazardous Materials, including but not limited to gasoline, petroleum and other petroleum by-products, asbestos, explosives, PCBs, radioactive materials or any hazardous or toxic material, substance or waste which is defined by those or similar terms or is regulated as such under any statute, law, ordinance, rule or regulation of any governmental authority having jurisdiction over the Project or any portion thereof or its use, including, without limitation, any material, substance or waste which is: (a) defined as a hazardous substance under Section 311 of the Water Pollution Control Act; (33 D.S.C. s1317) as amended; (b) defined as a hazardous waste under Section 1004 of the Resource -44- Conservation and Recovery Act of 1976, 42 U.S.C. ~ 6901, et seq., as amended; (c) defined as a hazardous waste substance under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1986, as amended by the Superfund Reauthorization Act of 1986, 42 U.S.C. ~ 9601, et seo. or any so- called "superfund" or "superlien" law, including the judicial interpretations thereof; (d) defined as a "pollutant" or "contaminant" under 42 U.S.C.A. ~ 9601 (33); (e) defined as "hazardous waste" pursuant to 40 C.P.R. Part 260; (f) defined as a "hazardous chemical" under 29 C.P.R. Part 1910; (g) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under Sections 25117, 25115 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Act); (h) defined as "used oil" under Section 25249.110 of the California Health and Safety Code, Division 20, Chapter 6.5; (i) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (j) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); ; (i) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances Act); (1) defined as " waste" under Section 13050 of the California Water Code; (m) listed under Section 2549.8 of the California Health and Safety Code, Division 20, Chapter 6.6 (Proposition 65); or (n) subject to any other law or other past, present or future requirement of any governmental authority regulating, relating to, or imposing obligations, liability or standards of conduct concerning, the protection of human health, plant life, animal life, natural resources, property or the reasonable enjoyment of any solid, liquid, gas, odor or any form of energy from whatever source ("Hazardous Materials"). Trustor has not in the past, nor shall Trustor in the future, use the Premises or allow the Premises to be used for the purpose of refining, producing, storing, handling, transferring, processing or transporting said Hazardous Materials. The Trustor hereby covenants and agrees to indemnify, defend and hold harmless the Beneficiary from and against any and all claims, judgments, damages, penalties, fines, costs and -45- liabilities that arise directly or indirectly from or in connection with the presence, suspected presence, release or suspected release of any Hazardous Materials in, or from, the Premises, whether into the air, soil, surface water or groundwater at the Premises, or any other violations, actual or alleged, of any of the statutes, laws, ordinances, rules or regulations of any governmental authority, including without limitation those set forth above, or any breach of the foregoing representations, warranties and covenants. -46- Governinq Law 48. THIS DEED OF TRUST SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA. THE TRUSTOR ACKNOWLEDGES RECEIPT OF A TRUE COpy OF THIS DEED OF TRUST WITHOUT CHARGE. -47- IN WITNESS WHEREOF, Trustor has executed this Deed of Trust on the day and year first above written. TRUSTOR PLEASE NOTE: UPON THE OCCURRENCE OF A DEFAULT, CALIFORNIA PROCEDURE PERMITS TRUSTEE TO SELL THE PREMISES AT A SALE HELD WITHOUT SUPERVISION BY ANY COURT AFTER EXPIRATION OF A PERIOD PRESCRIBED BY LAW. UNLESS YOU PROVIDE AN ADDRESS FOR THE GIVING OF NOTICE, YOU MAY NOT BE ENTITLED TO NOTICE OF THE COMMENCEMENT OF ANY SALE PROCEEDINGS. BY EXECUTION OF THIS DEED OF TRUST, YOU CONSENT TO SUCH PROCEDURE. BENEFICIARY URGES YOU TO GIVE PROMPT NOTICE OF ANY CHANGE IN YOUR ADDRESS SO THAT YOU MAY RECEIVE ANY NOTICE GIVEN PURSUANT TO THIS DEED OF TRUST. r STATEOF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 27. 1999 before me, Lisa A. Gomez, Notary Public, personally appeared Gary Van Osdel . personally known to me (or pro\'oel to mo on tho basis sf satisfactory evidonoe) to be the person~ whose nam~ is.Lafe subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity~, and that by his/her/their signature~ on the instrument the person~, or the entity upon behalf of which the person~ acted, executed the instrument. WITNESS my hand and official seal. Signature I ! / / \.// - - .. - .. -~:~~ - .~ 1 ''1.. eornm1ss\Orl i 1198921 t bile - earlfcrT1ia ~ t~~" ~~t (Seal) EXHIBIT "A" DESCRIPTION OF PREMISES The real property situated in the State of California, County of San Bernardino, and described as follows: [See next page] EXHIBIT A DmsrON THREE: PARCEL NO. 1A: THAT PORTION OF BLOCK 13, CITY OF SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 7 PAGE 1 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE EAST LINE OF "E" STREET WITH THE NORTH LINE OF "2ND" STREET AS DESCRIBED IN THAT CERTAIN DEED TO THE CITY OF SAN BERNARDINO RECORDED MAY 21, 1970 IN BOOK 7447 PAGE 275 OFFICIAL RECORDS OF SAID COUNTY; THENCE SOUTH 890 56' 00" EAST ALONG SAID NORTH LINE 111.67 FEET; THENCE NORTH 450 04' 11" EAST 9.90 FEET; THENCE NORTH 00 04' 11" EAST 112.21 FEET; THENCE NORTH 150 04' 11" EAST 100.46 FEET; THENCE NORTH 0004' 11" EAST 111.75 FEET TO A LINE 'PARALLEL WITH AND DISTANT 225.92 FEET SOUTHERLY MEASURED AT RIGHT ANGLES, FROM THAT CERTAIN COURSE RECITED AS "NORTH 890 55' 49" WEST 206.48 FEET" IN THE BOUNDARY DESCRIBED IN DEED TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, CALIFORNIA RECORDED JUNE 4, 1970 IN BOOK 7455 PAGE 214 OFFICIAL RECORDS OF SAID COUNTY; THENCE NORTH 890 55' 49" WEST ALONG SAID PARALLEL LINE 137.19 FEET TO SAID EAST LINE OF "E" STREET; THENCE SOUTH 30 57' 51" WEST ALONG SAID EAST LINE 116.07 FEET; THENCE CONTINUING ALONG SAID EAST LINE SOUTH 00 02' 25" EAST 212.20 FEET TO THE POINT OF BEGINNING. ALSO KNOWN AS PARCEL NO. 27 OF PARCEL MAP NO. 688 IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 25 OF PARCEL MAPS, PAGES 47 TO 58 INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL NO. 1B: TOGETHER WITH AN EASEMENT FOR VEHICULAR INGRESS AND EGRESS OVER THAT PORTION OF SAID BLOCK 13 DESCRIBED AS FOLLOWS: COMMENCING AT SAID INTERSECTION OF THE EAST LINE OF "E" STREET WITH THE NORTH LINE OF "2ND" STREET; THENCE SOUTH 8 9 0 5 6' 0 0" EAST ALONG SAID NORTH LINE 111. 67 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 450 04' 11" EAST ALONG THE EAST LINE OF THE ABOVE DESCRIBED PARCEL 9.90 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 00 04' 11" EAST 112.21 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 150 04' 11" EAST 100.46 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 00 04' 11" EAST 11.75 FEET TO THE NORTH LINE OF SAID PARCEL; THENCE SOUTH 890 55' 49" EAST ALONG THE EASTERLY PROLONGATION OF SAID NORTH LINE 30.50 FEET; THENCE SOUTH 00 04' 11" WEST 138.74 FEET; THENCE SOUTH 150 04' 11" WEST 113.98 FEET; THENCE SOUTH 00 04' 11" WEST 79.16 FEET TO SAID NORTH LINE OF "2ND" STREET; THENCE NORTH 890 57' 00" WEST 34.00 FEET TO THE POINT OF BEGINNING. ~ .~ ~ I , !J J NJ 'vj ~ ~l R(-!r:G~c'10:! ~squested By r.L;ji'~\':1n flTLE COl\.lPANY R~CO~DINGREQcrES~ED B1: Recorded in Official Records, County of San Bernardino, Larry Walker, Recorder CITY OF SAN BERNARDINO Doc No. 19990408317 08:00am 09/29/99 AND WHEN RECORDED RETURN TO: ~hicago Htle A ~ o~1 SABO & GREEN, a Professional Corporation Suite 1015 23801 Calabasas Road Calabasas, California 91302 THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. (Space Above for Recorder's Use) SOUTH VALLE SITE AND FACILITY LEASE ..... r.- 'OI;t 0.. co N = ~ 8 . ' SOUTH VALLE SITE AND FACILITY LEASE Dated as of September 1, 1999 by and between the CITY OF SAN BERNARDINO, as Lessor and the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, as Lessee $15,480,000 Refunding Certificates of Participation (1999 Police Station and South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority SBEOj0180jDOC/017.1 SOUTH VALLE SITE AND FACILITY LEASE This SOUTH VALLE SITE AND FACILITY LEASE (this "Site and Facility Lease"), dated as of September 1, 1999, is by and l:etween the CITY OF SAN BE~~ARDINO, a municipal corporation duly organized and existing under and by virtue of the laws of the State of California (the "City"), as lessor, and the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY duly organized and existing under and by virtue of the laws of the State of California (the "Authority"), as lessee; WIT N E SSE T H: WHEREAS, the City leased certain property (as further described in Exhibit A hereto) (the "South Valle Improvements") to the Authority to assist in financing the construction thereof by causing the execution and delivery of certain 1987 Refunding Certificates of Participation (South Valle Public Improvements Project) (the "Prior Certificates"); and WHEREAS, the parties desire to assist in the refinanci~g of the South Valle Improvements and therefore propose to enter into this Site and Facility Lease as a material consideration for the Authority's agreement to lease the South Valle Improvements to the City pursuant to a Lease Agreement, dated as of the same dated hereof (the "South Valle Lease Agreement") . NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED, as follows: Section 1. Site and Facilitv Lease. The City hereby leases to the Authority and the Authority hereby leases from the City, on the terms and conditions hereinafter set forth, the South Valle Improvements situated in the City, County of San Bernardino, State of California, more particularly described in Exhibit A attached hereto and made a part hereof. Section 2. Term. The term of this Site and Facility Lease shall commence on the date of recordation of this Site and Facility Lease in the Office of the County Recorder of the County 1 of San Bernardino, State of California, and shall end on September 2, 2024, unless such term is extended or sooner terminated as hereinafter provided. If, on September 2, 2024, the aggregate amount of Lease Payments (as defined in and as payable under the Lease Agreement) shall not have been paid, or provision shall not have been made for their payment, then the term of this Site and Facility Lease shall be extended until such Lease Payments shall be fully paid or provision made for such payment. If, prior to September 2, 2024, all Lease Payments shall be fully paid or provision made for such payment in accordance with Section 4.2 or 10.1 of the Lease Agreement, the term of this Site and Facility Lease shall end. Section 3. Rental. The City acknowledges receipt from the Authority, as and for rental hereunder, the sum of one dollar ($1.00) on or before the date of delivery of this Site and Facility Lease. Section 4. Purpose. The Authority shall use the South Valle Improvements solely for the purpose of leasing the said site to the City pursuant to the Lease Agreement and for such purposes as may be incidental theretoi provided, however, that in the event of default by the City under the Lease Agreement, the Authority and its assigns may exercise the remedies provided in the Lease Agreement. Section 5. Citv' s Interest Improvements Site. The City covenants that easement in the South Valle Improvements. in South Valle it is the owner of an Section 6. Assiqnments and Subleases. Unless the City shall be in default under the Lease Agreement, the Authority may not assign its rights under this Site and Facility Lease or sublet the South Valle Improvements, except as provided in the Lease Agreement, without the written consent of the City and MBIA Insurance Corporation, Armonk New York, as the Bond Insurer. Section 7. Riqht of Entrv. The City reserves the right, for any of its duly authorized representatives, to enter upon the South Valle Improvements at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof. 2 Section 8. Termination. The Authority agrees, upon the termination of this Site and Facility Lease, to quit and surrender the South Valle Improvements in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements and structures existing upon the South Valle Improvements at the time of the termination of this Site and Facility Lease shall remain thereon and title thereto shall vest in the City. Section 9. Default. In the event the Authority shall be in default in the performance of any obligation on its part to be performed under the terms of this Site and Facility Lease, which default continues for thirty (30) days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law; provided, however, that so long as any Certificates (as defined in the Lease Agreement) are outstanding and unpaid in accordance with the terms thereof, the Lease Payments assigned by the Authority to the trustee under the Assignment Agreement, dated as of September 1, 1999, by and between the Authority and U.S. Bank Trust National Association, as trustee (the "Trustee"), shall continue to be paid to the Trustee. Section 10. Ouiet Enlovment. The Authority, at all times during the term of this Site and Facility Lease, shall peaceably and quietly have, hold and enjoy the South Valle Improvements subject to the provisions of the Lease Agreement and the Trust Agreement, dated as of September 1, 1999, by and among the City, the Authority and the Trustee. Section 11. Waiver of Personal Liabilitv. All liabilities under this Site and Facility Lease on the part of the Authority are solely liabilities of the Authority and the City hereby releases each and every member, director, officer, employee and agent of the Authority of and from any personal or individual liability under this Site and Facility Lease. No member, director, officer, employee or agent of the Authority shall at any time or under any circumstances be individually or personally liable under this Site and Facility Lease for anything done or omitted to be done by the Authority hereunder. Section 12. Taxes. The Authority covenants and agrees to pay any and all assessments of any kind or character and also 3 all taxes, including possessory interest taxes, levied upon the South Valle Improvements (including both improvements) . or assessed land and Section 13. Eminent Domain. In the event the whole or any part of the South Valle Improvements is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then unpaid Certificates including the unpaid principal and interest with respect to any then outstanding such Certificates and, subject to the provisions of the Lease Agreement, the balance of the award, if any, shall be paid to the City. Section 14. Partial Invaliditv. If anyone or more of the terms, provisions, covenants or conditions of this Site and Facility Lease shall, to any extent, be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding., order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site and Facility Lease shall be affected thereby, and each provision of this Site and Facility Lease shall be valid and enforceable to the fullest extent permitted by law. Section 15. Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered mail, return receipt requested, postage prepaid, and, if to the City, addressed to the City in care of the City Administrator, City of San Bernardino, 300 North "D" Street, San Bernardino, CA 92418, or if to the Authority, addressed to the Authority in care of the Executive Director, San Bernardino Joint Powers Financing Authority, 201 North "E" Street, Third Floor, San Bernardino, CA 92401, or to such other addresses as the respective parties may from time to time designate by notice in writing. Section 16. Section Headinos. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site and Facility Lease. 4 Section 17. Execution in Counterparts. This Site and Facility Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument. 5 IN WITNESS WHEREOF, the City and the Authority have caused this Site and Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. CITY OF SAN BERNARDINO, as Lessor Attest: ~h.~ . City Clerk By POWERS as Lessee Attest: Attest: ~;zf~ Assistant Secretary ~~.l retary /:1.~ SacO\0180\DOC\017 5 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 27. 1999 before me, Lisa A. Gomez. Notary Public, personally appeared Gary Van Osdel . personally known to me (or Ilrovod to me on tho baGi& of &atisKH,tory o'.'idenClo) to be the personfe;1 whose namefe;1 islafe. subscribed to the within instrument and acknowledged to me that he/cho/thoy executed the same in his/hor/their authorized capacityfiest, and that by his/hor/thoir signaturefe;1 on the instrument the personfe;1, or the entity upon behalf of which the personfe;1 acted, executed the instrument. WITNESS my hand and official seal. Signature! _Q ~A.GOMEz ~, CommISSion # IJ 98927 z Notary PUblic _ Ca/item' Z SanS 10 ~ My emCTdino County - ~ .~ _~m.Expi:esOct18.2C02 -=- ~ (Seal) STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 28. 1999 before me, Lisa A. Gomez. Notary Public, personally appeared Judith Valles. personally known to me fef pro':od to FRO on tho basis of satisfaotory ovidenoo) to be the personW whose nameW islaFe subscribed to the within instrument and acknowledged to me that Re.lsheARey executed the same in Rffi/herAAeH: authorized capacityfje6t, and that by fHs.lherAAeH: signatureW on the instrument the personW, or the entity upon behalf of which the personfst acted, executed the instrument. WITNESS my hand and official seal. 1;----------- fj USA A GOMEZ _ Commission f# 1198927 ~ ~' Notary PUbl"lC - CafdanJa f San Bemadlno County - j _ _ _ ~:a::~~l~~t (Seal) EXHIBIT A DESCRIPTION OF THE SOUTH VALLE IMPROVEMENTS 9 EXIllBIT A DIVISION ONE: PARCEL NO.1: HUNTS LANE EXISTING CITY OF SAN BERNARDINO RIGHT OF WAY BETWEEN REDLANDS BOULEVARD AND 200 FEET SOUTH OF THE SOUTHERN PACIFIC RAILROAD, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 65, RAHCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF HUNTS LANE AND THE SOUTH LINE OF REDLANDS BOULEVARD (82. 50 FEET WIDE) ; THENCE SOUTH 1450.00 FEET, ALONG THE SAID CENTER LINE OF HUNTS LANE; THENCE EAST 44.00 FEET TO THE EAST LINE OF SAID HUNTS LANE; THENCE NORTH ALONG SAID EAST LINE OF HUNTS LANE, FOLLOWING ALL ITS VARIOUS COURSES AND DISTANCES, TO THE SOUTH LINE OF SAID REDLANDS BOULEVARD; THENCE WEST ALONG SAID SOUTH LINE OF REDLANDS BOULEVARD TO THE POINT OF BEGINNING. PARCEL NO.2: REDLANDS BOULEVARD EXISTING CITY RIGHT OF WAY BETWEEN HUNTS LANE AND WATERMAN AVENUE SOUTH BOUND OFF RAMP OF INTERSTATE 10 FREEWAY, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 64; AND A PORTION OF LOT 1, BLOCK 54, OF THE RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT A CENTER LINE INTERSECTION OF REDLANDS BOULEVARD AND HUNTS LANE, SAID POINT MARKED BY A CALIFORNIA DIVISION OF HIGHWAYS BRASS CAP MONUMENT AS SHOWN PER PARCEL MAP NO. 3818, IN BOOK 35 OF PARCEL MAPS, PAGE 35; THENCE NORTH ALONG SAID HUNTS LANE CENTER LINE TO THE NORTH LINE OF SAID REDLANDS BOULEVARD; THENCE EAST ALONG SAID NORTH LINE OF REDLANDS BOULEVARD FOLLOWING ITS VARIOUS COURSES AND DrSTANCES TO THE INTERSECTION OF THE SOUTHEASTERLY PROLONGATION OF THE EASTERLY LINE OF THE WATERMAN AVENUE SOUTH BOUND OFF RAMP AS SHOWN PER STATE OF CALIFORNIA RIGHT OF WAY MAP NO. 910512 AND BEARING SOUTH 240 18' 00" EAST PER SAID STATE MAP; THENCE SOUTH 82.50 FEET TO THE SOUTH LINE OF SAID REDLANDS BOULEVARD; THENCE WEST ALONG SAID SOUTH LINE OF REDLANDS BOULEVARD FOLLOWING ITS VARIOUS COURSES AND DISTANCES TO SAID CENTER LINE OF HUNTS LANE; THENCE NORTH ALONG SAID CENTER LINE OF HUNTS LANE TO THE POINT OF BEGINNING. PARCEL NO.3: CAROLINE STREET EXISTING 60 FOOT RIGHT OF WAY BETWEEN WATERMAN AVENUE AND ITS WEST TERMINUS, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 65, OF THE RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHEASTERLY CORNER OF PARCEL 6, OF PARCEL MAP NO. 2803, IN THE CITY OF SAN BERNARDINO, RECORDED IN BOOK 34 OF PARCEL MAPS, PAGES 83 AND 84, RECORDS OF SAN BERNARDINO COUNTY, SAID POINT BEING ON THE SOUTH LINE OF CAROLINE STREET; THENCE NORTH 60.00 FEET ALONG THE EAST LINE OF SAID PARCEL 6 TO THE NORTH LINE OF SAID CAROLINE STREET; THENCE EAST ALONG SAID NORTH LINE OF CAROLINE STREET TO THE WEST LINE OF WATERMAN AVENUE (82.5 FEET WIDE); THENCE SOUTH ALONG THE WEST LINE OF WATERMAN AVENUE TO THE SOUTH LINE OF SAID CAROLINE STREET; THENCE WEST ALONG SAID SOUTH LINE OF CAROLINE STREET TO THE POINT OF BEGINNING. PARCEL NO.4: HUNTS LANE EXISTING CITY OF SAN BERNARDINO RIGHT OF WAY BETWEEN REDLANDS BOULEVAlill AND "E" STREET, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOTS 1 AND 2, BLOCK 54 AND A PORTION OF LOTS 3 AND 4, BLOCK 65, BOTH OF THE RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF HUNTS LANE AND THE SOUTH LINE PROLONGATION OF "E" STREET BEARING NORTH 890 42' 56" EAST AS SHOWN ON PARCEL MAP NO. 4491, RECORDED IN BOOK 43 OF PARCEL MAPS, PAGE 42, RECORDS OF SAN BERNARDINO COUNTY; THENCE EAST ALONG SAID SOUTH LINE PROLONGATION OF "E" STREET TO THE EAST LINE OF HUNTS LANE; THENCE SOUTH ALONG SAID EAST LINE OF HUNTS LANE TO THE SOUTH LINE OF REDLANDS BOULEVARD ; THENCE WEST TQ A POINT THAT INTERSECTS THE SOUTH LINE OF STEEL ROAD AND THE WEST LINE OF HUNTS LANE; THENCE NORTH ALONG SAID WEST LINE OF HUNTS LANE AND ITS PROLONGATION TO THE SAID SOUTH LINE PROLONGATION OF "E" STREET; THENCE EAST ALONG SAID SOUTH LINE PROLONGATION OF "E" STREET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION LYING WITHIN THE CORPORATE CITY LIMITS OF THE CITY OF COLTON, CALIFORNIA AS SAID CITY LIMITS EXISTED ON JUNE 15, 19~4. ALSO EXCEPTING THEREFROM THAT PORTION OF HUNTS LANE AS CONVEYED TO THE STATE OF CALIFORNIA, BY DEEDS RECORDED IN BOOK 3833, PAGE 474, OFFICIAL RECORDS; IN BOOK 3918, PAGE 82, OFFICIAL RECORDS; IN BOOK 5324, PAGE 520, OFFICIAL RECORDS; AND NOT RELINQUISHED TO THE CITY OF SAN BERNARDINO BY THE STATE OF CALIFORNIA, AS DESCRIBED IN THAT CERTAIN RELINQUISHMENT OF HIGHWAY RIGHT OF WAY DEED RECORDED IN BOOK 8154, PAGE 659, OFFICIAL RECORDS. ~ \~ " I ~/) Y) ~ \ Vl cY) ~ ~ Recording Requested By CH:C,L..GO TlTLE COil,lPANY RECORDING REQUESTED BY: CITY OF SAN BERNARDINO AFTER RECORDATION RETURN TO: SABO & GREEN, A Professional Corp 23801 Calabasas Road, Suite 1015 Calabasas, California 91302 SBEO/0180/DOC/018,l Recorded in Official Records, County of San Bernardino, Larry Walker, Recorder Doc No. 19990408318 08:00am ~hica~o Htle A 09/29/99 ~ ~~1 THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE'AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. SOUTH VALLE LEASE AGREEMENT ,..... ':":' "l;t 0- 00 N Cl:l tt: ~ SOUTH VALLE LEASE AGREEMENT Dated as of September I, 1999 by and between the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, as Lessor and CITY OF SAN BERNARDINO, CALIFORNIA, as Lessee $15,480,000 Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority Section 1.1 Section 2.1 Section 2.2 Section 3.1 Section 3.2 Section 3.3 Section 3.4 Section 4.1 Section 4.2 Section 4.3 Section 4.4 Section 4.5 Section 4.6 Section 4.7 TABLE OF CONTENTS ARTICLE I DEFINITIONS Paoe Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Representations, Covenants and Warranties of the City........................ 12 Representations, Covenants and Warranties of the Authority .................. 12 ARTICLE III DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION OF THE IMPROVEMENTS Deposi t of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Acquisition and Construction of Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Payment of Acquisition and Construction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Payment of Delivery Costs.. . . . . . . . . . . . . . . . . . . . . 15 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Term of Agreement.............................. 16 Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Lease Payments................................. 16 Quiet Enj oyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Additional Payments............................ 20 ARTICLE V MAINTENANCE; TAXES; INSURANCE; USE LIMITATIONS; AND OTHER MATTERS i Section 5.1 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Section 5.9 Section 5.10 Section 5.11 Section 5.12 Section 5.13 Section 6.1 Section 6.2 Section 6.3 Section 7.1 Section 7.2 Section 7.3 Section 8.1 Section 8.2 Section 8.3 Maintenance, Utilities, Taxes and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Modification of Project ....... .... .............21 Public Liability and Project Damage Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Fire and Extended Coverage Insurance........... 23 Rental Interruption Insurance.................. 23 Title Insurance................................ 24 Insurance Net Proceeds; Form of Policies....... 24 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Installation of City I s Equipment............... 24 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Private Activity Bond Limitation............... 25 Federal Guarantee Prohibition.................. 25 Maintenance of Tax-Exemption................... 25 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Eminent Domain................................. 25 Application of Net Proceeds ................... 26 Abatement of Lease Payments in the Event of Damage or Destruction......... . . . . . . . 26 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS; INDEMNIFICATION Disclaimer of Warranties............. . . . . . . . . . . 28 Access to the Project. . . . . . . . . . . . . . . . . . . . . . . . . . 28 Release and Indemnification Covenants.. . . . . . . . . 28 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Assignment by the Corporation.................. 29 Assignment and Subleasing by the City.......... 29 Amendment of this Lease Agreement . . . . . . . . . . . . . . 29 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES ii Section 9.1 Section 9.2 Section 9.3 Section 9.4 Section 9.5 Section 9.6 Section 9.7 Section 10.1 Section 10.2 Section 10.3 Section 10.4 Section 11.1 Section 11.2 Section 11.3 Section 11.4 Section 11.5 Section 11.6 Section 11.7 Section 11.8 Section 11.9 EXHIBIT A - EXHIBIT B - EXHIBIT C - Events of Default Defined...................... 33 Remedies on Default.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33 No Remedy Exclusive............................ 35 Agreement to Pay Attorneys' Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 No Additional Waiver Implied by One Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Application of Proceeds........................ 36 Trustee and Certificate Owners to Exercise Rights............................... 36 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Prepayment Option.............,................. 38 Mandatory Prepayment From Net Proceeds of Insurancej Title Insurance or Eminent Domain.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Credit for Amounts on Deposit. . . . . . . . . . . . . . . . . . 39 ARTICLE XI MISCELLANEOUS Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Binding Effect.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Net-Net-Net Lease.............................. 40 Further Assurances and Corrective Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Execution in Counterparts....... . . . . . . . . . . . . . . . 41 Applicable Law................................. 41 Authority and City Representatives. . . . . . . . . . . . . 41 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 DESCRIPTION OF THE SITE DESCRIPTION OF THE FACILITY SCHEDULE OF LEASE PAYMENTS iii SOUTH VALLE LEASE AGREEMENT THIS SOUTH VALLE LEASE AGREEMENT (the "Lease Agreement") , dated as of September 1, 1999, is by and between the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a public body corporate and politic and existing under the laws of the State of California, as lessor (the "Authority"), and CITY OF SAN BERNARDINO, a municipal corporation and charter city duly organized and existing under the laws of the State of California, as lessee (the "City"); WIT N E SSE T H: WHEREAS, pursuant to that certain South Valle Site and Facility Lease, dated as of September 1, 1999 (the "South Valle Site and Facility Lease"), the City of San Bernardino (the .City") has leased those certain capital improvements situated in the City of San Bernardino, County of San Bernardino, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (the "South Valle Improvements"); and WHEREAS, the Authority proposes to lease the South Valle Improvements 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 U.S. Bank Trust National Association, as trustee (the "Trustee"), pursuant to that certain Assignment Agreement, dated as of September 1, 1999, by and between the Authority and the Trustee; WHEREAS, pursuant to that certain Trust Agreement, dated as of September 1, 1999, by and among the City, the Authority and the Trustee, the Trustee will execute and deliver certificates of participation (the "Certificates") in the Lease Payments; and WHEREAS, the proceeds of the Certificates, together with other available moneys, will be applied by the City to (i) refund those certain 1987 Refunding Certificates of Participation (South Valle Public Improvements Project) and remove the liens attached to the respective property in connection therewith, (ii) to refund those certain Certificates of Participation (1995 Police Station 1 Project) and remove the liens attached to the respective property in connection therewith, (iii) to fund a reserve fund, capital reserve fund and capitalized interest fund and (iv) to pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent and in connection to the execution and delivery of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement. NOW THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE, AS FOLLOWS: 2 ARTICLE I DEFINITIONS Section 1.1. Definitions. Unless otherwise defined in this Section 1.1, capitalized terms contained herein shall have the meanings ascribed to them in the Trust Agreement dated the same date hereof among the San Bernardino Joint Powers Financing Authority (the "Authority"), the City of San Bernardino (the "City") and U.S. Bank Trust National Association, as Trustee (the ("Trustee") (the "Trust Agreement") . "Event of Default" means an event of default as defined in Section 9.1 hereof. "South Valle Improvements" means the,real property all as more particularly described in Exhibit A attached to this Lease Agreement. 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1. of the Citv. The City Authority, as follows: Representations. Covenants and Warranties represents, covenants and warrants to the (a) Due Orqanization municipal corporation and charter under the laws of the State. and Existence. The City is a city, duly organized and existing (b) Authorization. The laws of the State authorize the City to enter into the South Valle Site and Facility Lease, the Agency Agreement, this Lease Agreement and the Trust 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. (c) No Violations. Neither the execution and delivery of the South Valle Site and Facility Lease, the Agency Agreement, this Lease Agreement or the Trust 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, 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 assets of the City, or upon the South Valle Improvements, except Permitted Encumbrances. (d) Execution and Deliverv. The City has duly authorized and executed this Lease Agreement in accordance with the laws of the State. The City represents that the South Valle Improvements are essential to its operations. 4 Section 2.2. Representations, Covenants and Warranties of Authoritv. The Authority represents, covenants and warrants to the City, as follows: (a) Due Orqanization and Existence. The Authority is a joint powers authority, duly organized and existing under and by virtue of the laws of the State; has power to enter into the South Valle Site and Facility Lease, the Agency Agreement, this Lease Agreement, the Assignment Agreement and the Trust 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 South Valle Improvements and from its other rights under this Lease Agreement and will not mortgage or encumber the South Valle Improvements, except as provided under the terms of this Lease Agreement and the Trust Agreement. (c) No Violations. Neither the execution and delivery of the South Valle Site and Facility Lease, the Agency Agreement, this Lease Agreement, the Assignment Agreement or the Trust 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 assets of the Authority, or upon the South Valle Improvements, except Permitted Encumbrances. (d) No Assiqnments. Except as 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. 5 (e) Title to South Valle Imorovements Site and the Facilitv; Riqht of Entrv. The Authority warrants that it has, pursuant to the South Valle Site and Facility Lease, acquired, and is owner of, leasehold title to the South Valle Improvements. (f) Execution and Delivery. The Authority has duly authorized and executed this Lease Agreement in accordance with the laws of the State. ARTICLE III DEPOSIT OF MONEYS; ACQUISITION AND CONSTRUCTION OF THE IMPROVEMENTS Section 3.1. Deoosit of Moneys. On the Closing Date, the Authority shall cause to be deposited with the Trustee the proceeds of sale of the Certificates. Pursuant to Section 2.07 of the Trust Agreement, an amount equal to the Reserve Requirement shall be deposited in the Reserve Fund, accrued interest on the Certificates from September 1, 1999, shall be deposited into the Interest Account, amounts estimated to be required to pay Delivery Costs shall be deposited in the Delivery Costs Fund and amounts necessary to fund the Capital Reserve Fund and Project Fund shall be deposited into said funds all as provided in the Trust Agreement. The Authority hereby agrees to direct that amounts in the Funds and Accounts established under the Trust Agreement be applied as provided therein. The liens of the Prior Certificates, as applicable, are hereby removed and deemed satisfied upon the recordation of this Lease Agreement. 6 ARTICLE IV AGREEMENT TO LEASE; TERM OF THIS LEASE AGREEMENT; LEASE PAYMENTS Section 4.1. Lease. The Authority hereby leases the South Valle Improvements to the City, and the City hereby leases the South Valle Improvements from the Authority, upon the terms and conditions set forth in this Lease Agreement. Section 4.2. Term of Aoreement. The term of the Lease Agreement shall commence on the date hereof, and shall end on September 1, 2024, unless such term is extended as hereinafter provided. If, on September 1, 2024, the Trust Agreement shall not be discharged by its terms or if the Lease Payments payable hereunder shall have been abated at any time ,and for any reason, then the term of the Lease Agreement shall be extended until there has been deposited with the Trustee 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 September 1, 2034. If, prior to September 1, 2024, the Trust Agreement shall be discharged by its terms, the term of the Lease Agreement shall thereupon end. Section 4.3. Possession. The City currently has possession of the South Valle Improvements and possession of said site subject hereto shall commence on the date of recording of this Lease Agreement. The first Lease Payment shall be due on February 15, 2000. Section 4.4. Lease Pavments. (a) Oblioation 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 use and occupancy of the South Valle Improvements during each Rental Period, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Exhibit B hereto, to be due and payable on February 15 and August 15 (each a "Lease Payment Date") of each year commencing February 15, 2000. In the event such day is not a Business Day, such payment shall be made on the Business Day next preceding such date. 7 Any amount held in the Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to Article X hereof and other than amounts required for payment of Certificates not yet surrendered) shall be credited toward the Lease Payment then due and payable; and no Lease Payment need be made on any Lease Payment Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be paid. The Lease Payments for the South Valle Improvements payable in any Rental Period shall be for the use of the South Valle Improvements for such Rental Period. (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 und~r this Section 4.4; subject however, to the provisions of Section 10.1 hereof in the case of prepayment by application of a security deposit. In the event that the City optionally prepays the Lease Payments in part but not in whole pursuant to Section 10.2 hereof or pursuant to Section 10.3 hereof as a result of any insurance or condemnation award with respect to any portion of the South Valle Improvements, such prepayment shall be credited entirely toward the prepayment of the Lease Payments as follows: (i) the principal components of each remaining such Lease Payments shall be reduced in such order of payment date as shall be designated by the City to the Trustee, and if the City shall fail to so designate, pro rata among such payment dates, in integral multiples of $5,000; and (ii) the interest component of each remaining such Lease Payments shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Certificates thereby redeemed pursuant to Sections 4.01(a) or (b), as the case may be, of the Trust Agreement. (c) Rate on Overdue Pavments. 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 corresponding Certificate default to the date of payment at the rate of twelve percent 8 (12%) per annum. Such interest, if received, shall be deposited in the Lease Payment Fund. (d) Fair Rental Value. The Lease Payments for the South Valle Improvements for each Rental Period shall constitute the total rental for the South Valle Improvements 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 the continued quiet use and enjoyment, of the South Valle Improvements during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments for the South Valle Improvements do not exceed the fair rental value of the South Valle Improvements. 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 South Valle Improvements, the total amounts which have been expended on the South Valle Improvements, the value of the real property and the benefits therefrom which will accrue to the City and the general public. (e) Source of Pavments; Budqet 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) Assiqnment. The City understands and agrees that all Lease Payments have been assigned by the Authority to the Trustee in trust, pursuant to the Assignment Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents to such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the Trustee at the Principal Corporate Trust Office, all payments payable by the City pursuant 9 to this Section 4.4 and all amounts payable by the City pursuant to Article X hereof. Section 4.5. Ouiet Enloyment. During the term of the Lease Agreement, the Authority shall provide the City with quiet use and enjoyment of the South Valle Improvements and the City shall, during such term, peaceably and quietly have and hold and enjoy the South Valle Improvements 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 South Valle Improvements as provided in Section 7.2 hereof. Section 4.6. Title. During the term of the Lease Agreement, the Authority shall hold fee title to those portions of the South Valle Improvements which are newly acquired or constructed (excluding real property acquired) and any and all additions which comprise fixtures, repairs, replacements or modifications to the South Valle Improvements, except for those fixtures, repairs, replacements or modifications which are added to the South Valle Improvements by the City at its own expense and which may be removed without damaging the South Valle Improvements and except for any items added to the South Valle Improvements by the City pursuant to Section 5.9 hereof. If the City prepays the Lease Payments in full pursuant to Article X hereof, or makes the security deposit permitted by Section 10.1 hereof, or pays all Lease Payments during the term of the Lease Agreement as the same become due and payable, all right, title and interest of the Authority in and to the South Valle Improvements shall be transferred to and vested in the City. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title. Section 4.7. Lease Payments, the City incurred by the City provisions of the Trust leasing of the South Additional Payments. In addition to the shall pay when due all costs and expenses and the Authority to comply with the Agreement, or otherwise arising from the Valle Improvements, including without 10 limitation all Delivery Costs (to the extent not paid from amounts on deposit in the Delivery Costs Fund), compensation and indemnification due to the Trustee and all costs and expenses of auditors, attorneys and accountants. 11 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 South Valle Improvements, all improvement, repair and maintenance of the South Valle Improvements 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 South Valle Improvements 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 South Valle Improvements 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 South Valle Improvements, 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 payor cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the South Valle Improvements 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 South Valle Improvements will be materially 12 endan?ered or the South Valle Improvements 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 and the Trustee. Section 5.2. Modification of South Valle Improvements. The City shall, at its own expense, have the right to remodel the South Valle Improvements or to make additions, modifications and improvements to the South Valle Improvements. All additions, modifications and improvements to the South Valle Improvements, but not any additional buildings or improvements, shall thereafter comprise part of the South Valle Improvements and be subject to the provisions of this Lease Agreement. Such additions, modifications and improvements shall not in any way damage the South Valle Improvements, substantially alter its nature, cause the interest component of Lease Payments to be subject to federal income taxes or cause the South Valle Improvements to be used for purposes other than those authorized under the provisions of State and federal law; and the South Valle Improvements, upon completion of any additions, modifications and improvements made thereto pursuant to this Section 5.2, shall be of a value which is not substantially less than the value of the South Valle Improvements 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 South Valle Improvements 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 South Valle Improvements, 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 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 Liabilitv and Prooertv Damaoe Insurance. The City shall maintain or cause to be maintained, throughout the term of the Lease Agreement, insurance policies, 13 including a standard comprehensive general insurance policy or policies in protection of the City, the Authority and the Trustee, including their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the South Valle Improvements. 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 $100,000 (subject to a deductible clause of not to exceed $5,000) 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. 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 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 as provided in Section 5.8 hereof. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds shall have been paid. Section 5.4. Fire and Extended Coveraqe 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 South Valle Improvements by fire and lightning, with extended coverage and vandalism and malicious mischief insurance. 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 the greater of (a) one hundred percent (100%) of the replacement cost of the South Valle Improvements, or (b) the aggregate principal amount of the Outstanding Certificates. Such insurance may be subject to deductible clauses of not to exceed $100,000 for anyone 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 14 authority created for such by the City as provided in such insurance shall Section 6.2(a) hereof. purpose Section be or in the form of self-insurance 5.8 hereof. The Net Proceeds of applied as provided in The City agrees to procure and maintain, or cause to be procured and maintained, throughout the term of the Lease Agreement, insurance against earthquake loss or damage to the South Valle Improvements in such amounts as an independent insurance consultant shall annually determine is necessary to protect the City for such rise. Such insurance may be subject to a deductible clause of not to exceed ten percent (10%) for anyone loss. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City. If the City cannot purchase such insurance on the open market from reputable insurers at reasonable cost, the City agrees to self-insure for such coverage as provided in Section 5.8 hereof. The Net Proceeds of such insurance shall be applied as provided in Sections 5.7 and 6.2(a) hereof. Section 5.5. Rental Interruption Insurance. The City shall procure and maintain through the term of the Lease Agreement, rental interruption or use and occupancy insurance, if commercially available, to cover loss, total or partial, of the use of any part of the South Valle Improvements 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, in an amount at least equal to two times the Reserve Requirement. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited toward the payment of the Lease Payments in the order in which such Lease Payments would otherwise become due and be payable. No self insurance shall be permitted hereunder for rental interruption insurance. Section 5.6. Title Insurance. The City shall provide, at its own expense, on the Closing Date, a CLTA title insurance policy in the amount of not less than the aggregate original principal amount (but not maturity amount) of the Certificates insuring the City's leasehold estate in the South Valle Improvements, subj ect only to Permitted Encumbrances. The Net Proceeds of such insurance shall be applied as provided in Section 6.2(c) hereof. 15 Section 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance required by Sections 5.4, 5.5 and 5.6 hereof shall provide that all proceeds thereunder shall be payable to the Bond Insurer or the Trustee as directed by the Bond Insurer. All insurance policies shall be approved by a commercial insurer rated "A" by Best or in the two highest rating categories of S & P and Moody's. All policies shall name the Lessee, Lessor and Trustee as insureds and name the Trustee as loss payee. The City shall payor cause to be paid when due the premiums for all insurance policies required by this Lease Agreement. The Trustee shall not be responsible for the sufficiency of any insurance herein required, including any forms of self-insurance and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. The City shall cause to be delivered annually on or before each September 1 to the Trustee and Bond Insurer a certification that all requirements of this Lease Agreement with respect to insurance have been met. Section 5.8 Self Insurance. Bond Insurer, the City may maintain self the insurance required by Section 5.3 that: With the approval of the insurance for purposes of and 5.4 hereof; provided (a) The City shall have the adequacy of any insurance reserves maintained by the City or by a joint exercise of powers authority, if applicable, reviewed at least annually, on or before each September 1, by an independent insurance consultant; (b) sound basis consultant to not otherwise The City shall maintain reserves on an actuarially in accordance with the recommendations of such the extent moneys are available for such purpose and appropriated; (c) The self insurance fund is held in a separate trust fund by an independent trustee; and (d) discontinued, maintained. In the event that the self insurance program is the actuarial soundness of the claim reserve must be 16 It is understood by the Trustee and the Bond Insurer that on the Closing Date the City is self insured for the insurance described in Sections 5.3 and 5.4 hereof. Section 5.9. Installation of Citv 's Eauipment. 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 South Valle Improvements. All such items shall remain the sole property of the City 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 the South Valle Improvements 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 5.9 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 South Valle Improvements. Section 5.10. 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 South Valle Improvements, 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 .11. Private Acti vi tv Bond Limitation. The City shall assure that proceeds of the Certificates are not so used as to cause the Certificates or 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 5.12. Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be 17 taken if the result of the same would be to cause any of the Certificates or the Lease Agreement to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Section 5.13. Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the exclusion of interest with respect to the Certificates from the gross income of the Owners of the Certificates to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the Closing Date. Section 5.14. Advances. If the City shall fail to perform any of its obligations under this Article V, the Authority 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. 18 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1. Eminent Domain. If all of the South Valle Improvements 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 South Valle Improvements shall be taken permanently, or if all of the South Valle Improvements 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 such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the South Valle Improvements. Section 6.2. Application of Net Proceeds. (a) Insurance Award. The Net Proceeds of any insurance award resulting from any damage to or destruction of any portion of the South Valle Improvements by fire or other casualty shall be paid by the City to the Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund by the Trustee and applied as set forth in Section 7.01 of the Trust Agreement. (b) 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 Trustee, as assignee of the Authority under the Assignment Agreement, deposited in the Insurance and Condemnation Fund and applied as set forth in Section 7.02 of the Trust Agreement. (c) Title Insurance. The Net Proceeds of any title insurance award shall be paid to the Trustee, as assignee of 19 the Authority under the Assignment Agreement, Insurance and Condemnation Fund and applied Section 7.03 of the Trust Agreement. deposi ted in the as set forth in Section 6.3. Abatement of Lease Payments in the Event of Damaoe 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 South Valle Improvements or any portion thereof (other than any portions of the South Valle Improvements 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 B, 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 MAl 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 destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Reserve Fund and/or the Insurance and Condemnation Fund and/or the Lease Payment Fund 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. 20 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESSj INDEMNIFICATION Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR AS TO THE FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE SOUTH VALLE IMPROVEMENTS OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE SOUTH VALLE IMPROVEMENTS. IN NO EVENT SHALL THE AUTHORITY BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE SITE AND FACILITY LEASE, THE AGENCY AGREEMENT, THIS LEASES AGREEMENT OR THE TRUST AGREEMENT FOR THE EXISTENCE, FURNISHING, FUNCTIONING OR THE CITY'S USE OF THE SOUTH VALLE IMPROVEMENTS. Section 7.2. Access to the South'Valle Improvements. The City agrees that the Authority and any Authority Representative, and the Authority'S successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the South Valle Improvements. The City further agrees that the Authority, any Authority Representative, and the Authority'S successors or assigns shall have such rights of access to the South Valle Improvements as may be reasonably necessary to cause the proper maintenance of the South Valle Improvements 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 and its officers, agents, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the South Valle Improvements 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 South Valle Improvements, (iv) any act or omission of any sublessee of the City with respect to the South Valle Improvements, or (v) the payment of Delivery Costs. No indemnification is made under this Section 7.3 or elsewhere in this 21 Lease Agreement for willful misconduct, negligence or breach of duty under this Lease Agreement by the Authority, its officers, agents, employees, successors or assigns. 22 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT Section 8.1. Assiqnment 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 Trustee pursuant to the Assignment Agreement. Section 8.2. Assiqnment and Subleasinq by the City. This Lease Agreement may not be assigned by the City. The City may sublease the South Valle Improvements or any portion thereof, but only with the prior written consent of the Authority and the Bond Insurer and subject to all of the following conditions: (i) This Lease Agreement and the obligation of the City to make Lease Payments 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 such sublease shall cause the South Valle Improvements to be used for a purpose other than as may be authorized under the provisions of the Constitution and laws of the State; and (iv) The City shall furnish the Authority and the Trustee with a written opinion of nationally-recognized Bond Counsel, which shall be an Independent Counsel, stating that such sublease does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. Section 8.3. Amendment of this Lease Aqreement. (a) Substitution of South Valle Improvements. Upon the prior written consent of the Bond Insurer (which may be given in its sole discretion), the City shall have, and is hereby granted, the option at any time and from time to time during the 23 term of the Lease Agreement to substitute other land (a "Substitute Site") and/or a substitute facility or substitute facilities (a "Substitute Facility") for the Site (the "Former Site"), or a portion thereof, and/or the Facility (the "Former Facility"), or a portion thereof, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such substitution: (i) The City shall file with the Authority, the Trustee and Bond Insurer an amended Exhibit A to the South Valle Improvements and Facility Lease which adds thereto a description of such Substitute Site and/or Substitute Facility and deletes therefrom the description of the Former Site; (ii) The City shall file with the Authority, the Trustee and Bond Insurer an amended Exhibit A to this Lease Agreement which adds thereto a description of such Substitute Site and/or Substitute Facility and deletes therefrom the description of the Former Site; (iii) The City shall certify in writing to the Authority, the Trustee and Bond Insurer that such Substitute Site and/or Substitute Facility serve the purposes of the City, constitutes property that is unencumbered, subj ect to Permitted Encumbrances, and constitutes property which the City is permitted to lease under the laws of the State; (iv) The City delivers to the Trustee, the Authority and the Bond Insurer an MAl fair market appraisal evidencing that the Substitute Site and/or Substitute Facility are of equal or greater market and fair rental value than the Former Site and Former Facility; (v) The Substitute Site and/or Substitute Facility shall not cause the City to violate any of its covenants, representations and warranties made herein and in the Trust Agreement; (vi) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 24 hereof which adds thereto a description of the Substitute Site and deletes therefrom the description of the Former Site; and (vii) The City shall certify that the Substitute Site and/or the Substitute Facility is of the same or greater essentiality to the City as was the Former Site and/or the Former Facility. (b) Release of South Valle Improvements. Upon the prior written consent of the Bond Insurer (which may be given in its sole discretion), the City shall have, and is hereby granted, the option at any time and from time to time during the term of the Lease Agreement to release any portion of the South Valle Improvements, provided that the City shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such release: (i) The City shall file with' the Authority, the Trustee and the Bond Insurer an amended Exhibit A to the South Valle Improvements and Facility Lease which describes the South Valle Improvements, as revised by such release; (ii) The City shall file with the Authority and the Trustee an amended Exhibit A to this Lease Agreement which describes the South Valle Improvements, as revised by such release; (iii) The City delivers to the Trustee and the Authority and the Bond Insurer an MAI fair market appraisal evidencing that the South Valle Improvements, as revised by such release, is of a value at least equal to the value of the South Valle Improvements as of the Closing Date and of a fair rental value at least equal to the remaining Lease Payments; and (iv) The City shall obtain an amendment to the title insurance policy required pursuant to Section 5.6 hereof which describes the South Valle Improvements, as revised by such release. 25 (c) Additional Lease Pavments. Upon the written consent of the Bond Insurer, the City shall have, and is hereby granted, the option at any time and from time to time during the term of the Lease Agreement to amend this Lease Agreement to provide for the payment of additional lease payments for the use and occupancy of the South Valle Improvements, provided that: (i) such additional lease payments do not cause the total lease payments made by the City for the use and occupancy of the South Valle Improvements to exceed the fair rental value of the South Valle Improvements, based upon the opinion of an MAl appraiser with expertise in valuing such properties or other appropriate method of valuation; (ii) the City shall have obtained, and filed with the Authority and the Trustee, an appraisal of the South Valle Improvements, prepared by an MAl appraiser with expertise in valuing such properties, showing that the estimated fair market value of the South Valle Improvements is not less than the aggregate unpaid principal components of the Lease Payments and the aggregate principal components of such additional lease payments; and (iii) such additional lease payments are pledged or assigned for the payment of any bonds, notes, leases or other obligations the proceeds of which shall be applied to finance the construction or acquisition of land, facilities or other improvements which are authorized pursuant to law. (d) Generallv. Neither the City nor the Authority will alter, modify or cancel, or agree or consent to alter, modify or cancel this Lease Agreement, except in connection with a substitution or release permitted by this Section 8.3 and as may be permitted by Article X of the Trust Agreement. 26 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, anyone or more of the following events: or other specified (a) Failure payment required hereunder. by the City to pay any Lease Payment to be paid hereunder at the time (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 or under the Trust 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, the Trustee, or the Owners of not less than five percent (5%) in aggregate principal amount of Certificates then outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the Default is corrected. (c) Failure of the officers of the City to request that Lease Payments be included in the annual budget of the City. (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. 27 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 to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement; provided, however, that notwithstanding anything herein or in the Trust Agreement 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 currently 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 may exercise any and all rights of entry and reentry upon the South Valle Improvements, 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 reentry by the Authority, 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 Authority at the time and in the manner as herein provided, specifically: (a) In the event the Authority does not elect to terminate this Lease Agreement in the manner hereinafter provided for in subparagraph (b) hereof, the City 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 Authority for any deficiency arising out of the releasing of the South Valle Improvements, or, in the event the Authority is unable to re-lease the South Valle Improvements, 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 reentry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such reentry or obtaining possession of the South Valle Improvements or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in- fact of the City to enter upon and re-lease the South Valle Improvements in the Event of Default by the City in the performance 28 of any covenants herein contained to be performed by the City and to remove all personal property whatsoever situated upon the South Valle Improvements, to place such property in storage or other suitable place in the County of San Bernardino, California, for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the South Valle Improvements and the removal and storage of such property by the Authority or its 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 in reentering and taking possession of the South Valle Improvements as herein provided and all claims for damages that may result from the destruction of or injury to the South Valle Improvements and all claims for damages to or loss of any property belonging to the City that may be in or upon the South Valle Improvements. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-lease the South Valle Improvements in the event of such reentry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such releasing 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 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 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 as compensation to the Authority for its services in releasing the South Valle Improvements. (b) In an Event of Default hereunder, the Authority at its option may terminate this Lease Agreement and re- lease all or any portion of the South Valle Improvements. In the event of the termination of this Lease Agreement by the Authority at its option and in the manner hereinafter provided on account of Default by the City (and notwithstanding any reentry upon the South Valle Improvements by the Authority in any manner whatsoever or the re-leasing of the South Valle Improvements), the City nevertheless 29 agrees to pay to the Authority 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 from such re- leasing shall be credited toward 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 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 shall have given written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the South Valle Improvements 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 Authority by such written notice. Section 9.3. No Remedv Exclusive. No remedy herein conferred 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 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 IX or by law. Section 9.4. Aqreement to Pay Attornevs' Fees and Expenses. In the event either 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. 30 Section 9.5. No Additional Waiver Implied bv One Wai ver. 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. Application of Proceeds. All net proceeds received from the re-lease or other disposition of the South Valle Improvements under this Article IX, and all other amounts derived by the Authority or the Trustee as a result of an Event of Default hereunder, shall be transferred to the Trustee promptly upon receipt thereof and after payment of all fees and expenses of the Trustee, including attorneys fees, shall be deposited by the Trustee in the Lease Payment Fund to be applied as specified in Section 13.03 of the Trust Agreement. Section 9.7. Trustee and Certificate Owners to Exercise Riohts. Such rights and remedies as are given to the Authority under this Article IX have been assigned by the Authority to the Trustee under the Trust Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners of the Certificates as provided in the Trust Agreement and herein. 31 ARTICLE X PREPAYMENT OF LEASE PAYMENTS Section 10.1. Security Deposit. Notwithstanding any other provision of this Lease Agreement, the City may, on any date, secure the payment of all or a portion of the Lease Payments remaining due by an irrevocable deposit with the Trustee or an escrow holder under an escrow deposit and trust agreement as referenced in Section 14.01(b) of the Trust Agreement, of: (a) in the case of a security deposit relating to all Lease Payments, either (i) cash in an amount which, together with amounts on deposit in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, is sufficient to pay all unpaid Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Exhibit B, or (ii) Defeasance Obligations in such amount as will, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, together with interest to accrue thereon and, if required, all or a portion of moneys or Federal Securities or cash then on deposit and interest earnings thereon in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment Dates; or (b) in the case of a security deposit relating to a portion of the Lease Payments, a certificate executed by the City Representative (or such officer's designee, such designation to be evidenced by a writing delivered to the Trustee) designating the portion of the Lease Payments to which the deposit pertains, and either (i) cash in an amount which is sufficient to pay the portion of the Lease Payments designated in such City Representative's (or such officer's designee's) designation, such designation to be evidenced by a writing delivered to the Trustee) certificate, including the principal and interest components thereof, or (ii) Defeasance Obligations in such amount as will, together with interest to be received thereon, if any, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, be fully sufficient to pay the portion of the Lease Payments designated in the aforesaid City Representative's (or such officer's designee's, such designation to be evidenced by a writing delivered to the Trustee) certificate. 32 In the event of a deposit pursuant to this Section 10.1 as to all Lease Payments and the payment of all fees, expenses and indemnifications owed to the Trustee, all obligations of the City under this Lease Agreement shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, all payments from the deposit made by the City pursuant to this Section 10.1, and title to the South Valle Improvements shall vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said deposit and interest earnings thereon shall be deemed to be and shall constitute a special fund for the payments provided for by this Section 10.1 and said obligation shall thereafter be deemed to be and shall constitute the installment purchase obligation of the City for the South Valle Improvements. Upon said deposit, the Authority will execute or cause to be executed any and all documents as may be necessary to confirm title to the South Valle Improvements in accordance with the provisions hereof. In addition, the Authority hereby appoints the City as its agent to prepare, execute and file or record, in appropriate offices, such documents as may be necessary to place record title to the South Valle Improvements in the City. Section 10.2. Prepayment Option. The Authority hereby grants an option to the City to prepay the principal component of the Lease Payments attributable to the Certificates in full, or in part, together with a premium represented by a percentage of the portion of such principal component of Lease Payments attributable to the Certificates prepaid equal to the percentages set forth below: Prepayment Date Prepayment Premium August 15, 2009 through August 14, 2010 102~ August 15, 2010 through August 14, 2011 101~ August 15, 2011 and thereafter 100~ Said option may be exercised with respect to payments at tributable to the Certificates due on and after September 1, 2009, in whole at any time, or in part on any Lease Payment Date, commencing August 15, 2009. Said option shall be exercised by the City by giving written notice to the Authority and the Trustee of 33 the exercise of such option at least sixty (60) days prior to said payment date. Such option shall be exercised in the event of prepayment in full, by depositing with said notice cash in an amount, which, together with amounts then on deposit in the Reserve Fund, the Insurance and Condemnation Fund and the Lease Payment Fund, will be sufficient to pay the aggregate unpaid component of the Lease Payments attributable to the Certificates on said payment date, together with any Lease Payments attributable to the Certificates then due but unpaid, or, in the event of prepayment in part, by depositing with said notice cash in an amount divisible by $5,000 equal to the amount desired to be prepaid together with any Lease Payments attributable to the Certificates then due but unpaid. In the event of prepayment in part, the partial prepayment shall be applied against Lease Payments in such manner as the City shall determine and if the City shall fail to make such determination, pro rata among their payment dates. Lease Payments attributable to the Certificates 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 City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit B attached hereto taking into account said partial prepayment. Section 10.3. Mandatorv Prepayment From Net Proceeds of Insurance. Title Insurance or Eminent Domain. The City shall be obligated to prepay the Lease Payments allocable to the South Valle Improvements, in whole on any date or in part on any Lease Payment Date, from and to the extent of any Net Proceeds of an insurance, title insurance or condemnation award with respect to the South Valle Improvements theretofore deposited in the Lease Payment Fund for such purpose pursuant to Article VI hereof and Article VII of the Trust Agreement. The City and the Authority hereby agree that such Net Proceeds shall be applied first to the payment of any delinquent Lease Payments, and thereafter shall be credited toward the City's obligations under this Section 10.3. 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 City to the Trustee and which shall represent an adjustment to the schedule set forth in Exhibit B attached hereto taking into account said partial prepayment event of Section 10.4. prepayment of Credit for Amounts on Deposit. the principal components of the In the Lease 34 Payments in full under this Article X, such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, remaining amounts on deposit in the Lease Payment Fund, if any, or the Reserve Fund shall be credited toward the amounts then required to be so prepaid. 35 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 48 hours after deposit in the United States mail in first class form with postage fully prepaid: If to the City: City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 Attn: City Representative If to the Authority: San Bernardino Joint Powers Financing Authority 201 North "E" Street, Third Floor San Bernardino, CA 92401 Attn: Executive Director If to the Trustee: U.S. Bank Trust, National Association Corporate Trust Dept., Suite 3020 550 South Hope Avenue Los Angeles, CA 90071 If to the Bond Insurer: MBIA Insurance Corporation 113 King Street Armonk, New York 10504 Attn: Insured Portfolio Management Dept. 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 11.2. Bindinq 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 Agreement shall be held invalid or unenforceable by any 36 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, free and clear of any expenses, charges or set-offs whatsoever. 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 South Valle Improvements hereby leased or intended so to be or for carrying out the expressed intentions of this Lease Agreement. Section 11.6. Execution in Counteroarts. 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. Aoolicable law. This Lease Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.8. Authoritv and City Reoresentatives. 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 an 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. Caotions. 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. 37 IN WITNESS WHEREOF, the Authority has caused this Lease Agreement to be executed in its corporate name by its duly authorized officers and sealed with its seal; and the City has caused this Lease Agreement to be executed in its name by its duly authorized officers and sealed with its seal, as of the date first above written. CITY OF SAN~ERNARDINO L U-.-- By: ATTEST: By: .~~);1. Ct~~-.k.. 'ty Clerk / "--J SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY ATTEST: By: ~~;b.~ S retary By q~~~L It erson \ I "'-. I SBEO/0180/DOC/018.1 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On September 28, 1999 before me, Lisa A. Gomez, Notary Public, personally appeared Judith Valles, personally known to me fef provod to mo on tho basis of satisfaotory o'/idenoo) to be the person~ whose nam~ istafe subscribed to the within instrument and acknowledged to me that Re.lshe/thoy executed the same in ffis/herAAeH: authorized capacityfie6t, and that by l=Hs,lherAAeff signature~ on the instrument the person~, or the entity upon behalf of which the personW acted, executed the instrument. WITNESS my hand and official seal. L <<10 ~:'!!o~~.._....Jft....A 18_' - . USA A. GOMEZ it commission it 11~B9~ z ~, Notary Public - CalifaTIla ~ Z SOn Bernadino County ~ i_ _ _ ~~~~1~ (Seal) EXHIBIT A DIVISION ONE: PARCEL NO.1: HUNTS LANE EXISTING CITY OF SAN BERNARDINO RIGHT OF WAY BETWEEN REDLANDS BOULEVARD AND 200 FEET SOUTH OF THE SOUTHERN PACIFIC RAILROAD, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 65, RAHCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF HUNTS LANE AND THE SOUTH LINE OF REDLANDS BOULEVARD (82.50 FEET WIDE); THENCE SOUTH 1450.00 FEET, ALONG THE SAID CENTER LINE OF HUNTS LANE; THENCE EAST 44.00 FEET TO THE EAST LINE OF SAID HUNTS LANE; THENCE NORTH ALONG SAID EAST LINE OF HUNTS LANE, FOLLOWING ALL ITS VARIOUS COURSES AND DISTANCES, TO THE SOUTH LINE OF SAID REDLANDS BOULEVARD; THENCE WEST ALONG SAID SOUTH LINE OF REDLANDS BOULEVARD TO THE POINT OF BEGINNING. PARCEL NO.2: REDLANDS BOULEVARD EXISTING CITY RIGHT OF WAY BETWEEN HUNTS LANE AND WATERMAN AVENUE SOUTH BOUND OFF RAMP OF INTERSTATE 10 FREEWAY, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 64; AND A PORTION OF LOT 1, BLOCK 54, OF THE RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT A CENTER LINE INTERSECTION OF REDLANDS BOULEVARD AND HUNTS LANE, SAID POINT MARKED BY A CALIFORNIA DIVISION OF HIGHWAYS BRASS CAP MONUMENT AS SHOWN PER PARCEL MAP NO. 3818, IN BOOK 35 OF PARCEL MAPS, PAGE 35; THENCE NORTH ALONG SAID HUNTS LANE CENTER LINE TO THE NORTH LINE OF SAID REDLANDS BOULEVARD; THENCE EAST ALONG SAID NORTH LINE OF REDLANDS BOULEVARD FOLLOWING ITS VARIOUS COURSES AND DISTANCES TO THE INTERSECTION OF THE SOUTHEASTERLY PROLONGATION OF THE EASTERLY LINE OF THE WATERMAN AVENUE SOUTH BOUND OFF RAMP AS SHOWN PER STATE OF CALIFORNIA RIGHT OF WAY MAP NO. 910512 AND BEARING SOUTH 240 18' 00" EAST PER SAID STATE MAP; THENCE SOUTH 82.50 FEET TO THE SOUTH LINE OF SAID REDLANDS BOULEVARD; THENCE WEST ALONG SAID SOUTH LINE OF REDLANDS BOULEVARD FOLLOWING ITS VARIOUS COURSES AND DISTANCES TO SAID CENTER LINE OF HUNTS LANE; THENCE NORTH ALONG SAID CENTER LINE OF HUNTS LANE TO THE POINT OF BEGINNING. PARCEL NO.3: CAROLINE STREET EXISTING 60 FOOT RIGHT OF WAY BETWEEN WATERMAN AVENUE AND ITS WEST TERMINUS, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 65, OF THE RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID CO~ITY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHEASTERLY CORNER OF PARCEL 6, OF PARCEL MAP NO. 2803, IN THE CITY OF SAN BERNARDINO, RECORDED IN BOOK 34 OF PARCEL MAPS, PAGES 83 AND 84, RECORDS OF SAN BERNARDINO COUNTY, SAID POINT BEING ON THE SOUTH LINE OF CAROLINE STREET; THENCE NORTH 60.00 FEET ALONG THE EAST LINE OF SAID PARCEL 6 TO THE NORTH LINE OF SAID CAROLINE STREET; THENCE EAST ALONG SAID NORTH LINE OF CAROLINE STREET TO THE WEST LINE OF WATERMAN AVENUE (82.5 FEET WIDE); THENCE SOUTH ALONG THE WEST LINE OF WATERMAN AVENUE TO THE SOUTH LINE OF SAID CAROLINE STREET; THENCE WEST ALONG SAID SOUTH LINE OF CAROLINE STREET TO THE POINT OF BEGINNING. PARCEL NO.4: HUNTS LANE EXISTING CITY OF SAN BERNARDINO RIGHT OR WAY BETWEEN REDLANDS BOULEVARD AND "E" STREET, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOTS 1 AND 2, BLOCK 54 AND A PORTION OF LOTS 3 AND 4, BLOCK 65, BOTH OF THE RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF HUNTS LANE AND THE SOUTH LINE PROLONGATION OF "E" STREET BEARING NORTH 890 42' 56" EAST AS SHOWN ON PARCEL MAP NO. 4491, RECORDED IN BOOK 43 OF PARCEL MAPS, PAGE 42, RECORDS OF SAN BERNARDINO COUNTY; THENCE EAST ALONG SAID SOUTH LINE PROLONGATION OF "E" STREET TO THE EAST LINE OF HUNTS LANE; THENCE SOUTH ALONG SAID EAST LINE OF HUNTS LANE TO THE SOUTH LINE OF REDLANDS BOULEVARD; THENCE WEST TO A POINT THAT INTERSECTS THE SOUTH LINE OF STEEL ROAD AND THE WEST LINE OF HUNTS LANE; THENCE NORTH ALONG SAID WEST LINE OF HUNTS LANE AND ITS PROLONGATION TO THE SAID SOUTH LINE PROLONGATION OF "E" STREET; THENCE EAST ALONG SAID SOUTH LINE PROLONGATION OF "E" STREET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION LYING WITHIN THE CORPORATE CITY LIMITS OF THE CITY OF COLTON, CALIFORNIA AS SAID CITY LIMITS EXISTED ON JUNE 15, 1984. ALSO EXCEPTING THEREFROM THAT PORTION OF HUNTS LANE AS CONVEYED TO THE STATE OF CALIFORNIA, BY DEEDS RECORDED IN BOOK 3833, PAGE 474, OFFICIAL RECORDS; IN BOOK 3918, PAGE 82, OFFICIAL RECORDS; IN BOOK 5324, PAGE 520, OFFICIAL RECORDS; AND NOT RELINQUISHED TO THE CITY OF SAN BERNARDINO BY THE STATE OF CALIFORNIA, AS DESCRIBED IN THAT CERTAIN RELINQUISHMENT OF HIGHWAY RIGHT OF WAY DEED RECORDED IN BOOK 8154, PAGE 659, OFFICIAL RECORDS. ~ \'d ~ ~ ~ ~ ~~ ~ .~ ~ ~ ~ ~ ~" ~ ~" . , Recordin3 RGqu~!:tcd By CHICAGO TITLE COMPAN~ RECORDING REQUESTED BY: Recorded 1n Off1cial Recorde, County of san Bernard1no, Larry Walker, Recorder THE CITY OF SAN BERNARDINO Doc No. 19990410169 3:00pm 09/29/99 a,ica~ iiUe A I ~~1 AND WHEN RECORDED RETURN TO: SABO &. GREEN, a Professional Corporation Suite 2039 23801 Calabasas Road Calabasas, California 91302 THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSU&~T TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS' EXEMI?T FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. (Space Above. for Recorder's Use) ASSIGNMENT AGRE3MENT Dated as of Septe~ber 1, 1999 by and between the S~~ BERNARDINO JOINT POWERS FINANCING AUTHORITY and U.s. BANK TRUST NATIONAL ASSOCIATION as Trustee $15,480,000 Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects) Evidencir-g the Direct, Undivided Fractional Interest of the Owner Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority SBro\O,8C\OOC\< 9\28\99 9CO ]g ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT, made and entered into as of September 1, 1999, is by and between the SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California (the "Authority"), and u.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association duly organi~ed and existing under the laws of the United States of America, as trustee (the "Trustee")j WIT N E SSE T H: In the j oint and mutual exercise of their powers, in consideration of the mutual covenants herein contained and for other valuable consideration, the parties hereto recite and agree as follows: Section 1. Recitals. WHEREAS, pursuant to that certain Police Station Site and Facility Lease, dated as of September 1, 1999 (the "Police Station Site and Facility Lease"), Redevelopment Agency of the City of San Bernardino (the "Agency")has leased to the Authority that certain parcel of real property and the facility located thereon situated in the City of San Bernardino, County of San Bernardino, State of California (the "Police Station Site"); and WHEREAS, pursuant to that certain South Valle Site a~d Facilit.y Lease, dated as of September 1, 1999 (the "South Valle Site and Facility Lease"), City has leased to the Authority those certain parcels of real property with certain improvements located thereon situated in the City of San Bernardino, County of San Bernardino, State of California (the "South Valle Improvements"); and WHEREAS, pursuant to that certain 201 North E Street Site and Facility Lease, dated as at- September 1, 1999 (the "201 Noreh E Site and Facility Lease"), Agency has leased to the Authority that certain parce-l of real property and the facili ty located thereon situated in the City of San Bernardino, County of San Bernardino, Seate of California ("201 North E Street" and with the Police Station Site, the "Project"); and with the Police Station Site and the South Valle Improvements, the "Project"); and -1- WHEREAS, the South Valle Site and Facility Lease, the Police Station Site and Facility Lease and the 201 North E Site and Facility Lease (collectively the "Site and Facility Leases.) are being entered into for the purpose of enabling the Authority to assist the City in the refinancing of the Police Station Site and the South Valle Improvements and to provide additional funds to the Agency; and WHEREAS, the Authority proposes (i) to lease the Police Station Site to the City pursuant to that certain Police Station Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City (the "Police Station Lease Agreement) (ii) to lease the South Valle Improvements to the City pursuant to that certain South Valle Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City and (the "South Valle Lease Agreement") and (iii) to lease the 201 North E Street Site to the City pursuant to that certain 20.1 North E Street Lease Agreement, dated as of Septernber 1, 1999, by and between the Authority and the City (the "201 North E Street Lease Agreement") and with the Police Station Lease Agreement ,and the South Valle Lease Agreement, the "Lease Agreements"); and W::rER3AS, pursuant to the Trust Agreement dated as of September 1, 1999, among the Authority, City and Trustee, the Truscee will execute and deliver certificates of participation (the "Certificaces") evidencing the direct, undivided fractional interest of the owner thereof in lease payments to be made by the City as the rental for certain projects pursuant to Lease Agreements wlth the Authority; and WHEREAS, hereunder the Authority to the Trustee shall assign its right co receive lease payments under the Lease Agreements (the "Lease Payments"), its right to enforce payment 0: the Lease payments and otherwise to enforce its interest and rights under the Lease Agreements in the event of a default thereunder by the City, to Trustee. Section 2. Assignment. The Authority hereby transfers, assigns and sets over to the Trustee, for the benefit of the Owners of the Certificates, all of the Authority's rights, but none of its obligations, under the Lease Agreements (excepting only the Authority'S rights under Sections 7.3 and 9.4 of the Lease Agreements), including without limitation (i) the right to receive and collect all of the Lease Payments from the City under the Lease Agreements, (ii) the right to receive and collect any proceeds of any insurance maintained thereunder and of any condemnation award rendered 'N i th respect to the proj ect , and (i i i) the rlght to -2- exercise such rights and remedies conferred on the Authority pursuant to the Lease Agreements as may be necessary or convenient (A) to enforce payment of the Lease Payments and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund established under the Trust Agreement, or (8) otherwise to protect the interests of the Owners in the event of a default by the City under the Lease Agreements. All rights assigned by the Authority shall be administered by the Trustee in accordance with the provisions of the Trust Agreement for the equal and fractional benefit of the Owners of the Certificates. Section 3. Acceptance. The Trustee hereby accepts the assignments made herein for the purpose of securing, equally and fractionally, the payments due pursuant to the Lease Agreements and the Trust Agreement to, and the rights under the Lease Agreements and Trust Agreement of, the owners of the Certificates delivered pursuant to the Trust Agreement, all subject to the provisions of the Trust Agreement. Section 4. Conditions. This Assignment Agreement shall neither confer rights nor impose duties upon the Trustee beyond those expressly provided in the Lease Agreements and the Trust Agreement. The Trustee assumes no responsibility for the accuracy of the recitals herein, nor is the Trustee responsible for any representations, warranties or covenants of the Authority under the Lease Agreements. Section 5. Capacity of Trustee. The Trustee is entering into this Assignment Agreement solely in its capacity as Trustee under the Trust Agreement and the duties, powers and liabilities of the Trustee in acting hereunder shall be subject to the provisions of the Trust Agreement including, without li~itation, the provisions of Articles IX and XIII thereof. Section 6. Execution in Counterparts. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument. -3- . . IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by their duly authorized officers as of the day and year first written above. SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY By (SEAL) Attest: U.S. BAN~ TRJS7 NAT:ONA: ASSOCIATION, as Trus::ee By Authorized Officer SBEC\0193\DOC\4 -4 - STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) On Sectember 28. 1999 before me, Lisa A. Gomez. Notary Public. personally appeared Judith Valles. personally known to me ~ proved to mo an tAo basis af eatisfaQtory eviElenoe) to be the person{&} whose name{&} istafe subscribed to the within instrument and acknowledged to me that M./sheAAey- executed the same in ffi6/herAAeif authorized capacityfie6t, and that by RiefherAAeif signature{&} on the instrument the person{&}, or the entity upon behalf of which the person{&} acted, executed the instrument. WITNESS my hand and official seal. 1--- - ~~~~~-~ ~~ _"'bIIc-CaOluria ~ .. San Bemcrdlno County _ _ _ ~~~~l~~l (Seal) IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by their duly authorized officers as of the day and year first written above. SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY By Chairman (SEAL) Attest: Secretary U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By ~~ / - /"'-.J A tho. d Officer SBEO\OlaO\OOC\4 -4- STATE OF CALIFORNIA COUNTY OF LOS ANGELES On () /qa/qo before me, '- Tf;JJ);ft;{ !t1f!l!dJb JIlL (here injer~~tle of the officer), personally appeared ~~ ~ ' personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) isJ~ subscribed to the within instrument and acknowledged to me that he/i'l.-:-.'''R9j' executed the same in his/heF/t);j~iF authorized capacity (ies), and that by his/ncc/';:in' ~ signature (s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Signat (Seal) a ....MC~ o......MI.l1m- ~ McilaIY NlIO-:4 · LeI N'r(JIIa~ My CCllm\. ~_2Il. 2m .;r EXHIBIT A D:IVIS:ION ONE: PARCEL NO.1: HUNTS LANE EXISTING CITY OF SAN BERNARDINO RIGHT OF WAY BETWEEN REDLANDS BOULEVARD AND 200 FEET SOUTH OF THE SOUTHERN PACIFIC RAILROAD, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 65, RAHCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF HUNTS LANE AND THE SOUTH LINE OF REDLANDS BOULEVARD (82.50 FEET WIDE); THENCE SOUT:~ 1450.00 FEET, ALONG THE SAID CENTER LINE OF HUNTS LANE; THENCE EAST 44.00 FEET TO THE EAST LINE OF SAID HUNTS LANE; THENCE NORTH ALONG SAID EAST LINE OF HUNTS LANE, FOLLOWING ALL ITS VARIOUS COURSES AND DISTANCES, TO THE SOUTH LINE OF SAID REDLANDS BOULEVARD; TEENCE WEST ALONG SAID SOUTH LINE OF REDLANDS BOULEVARD TO THE POINT OF BEGINNING. PARCE:' NO.2: REDLANDS BOULEVA..W EXISTING CITY RIGHT OF WAY BETWEEN HUNTS LANE AND WATERJo'.A.'l AVENUE SOUTH BOUND OFF RAMP OF INTERSTATE 10 FREEWAY, IN THE CITY OF SAN BERNA..WINO, BEING A PORTION OF LOT 4, BLOCK 64; AND A PORTION OF LOT 1, BLOCK 54, OF THE RANCHO SAN BERNARDINO, IN THE COUNTY OF SAN BERNA..WINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID CO~~Y, ~~ DESCRIBED AS FOLLOWS: BEGINNING AT A CENTER LINE INTERSECTION OF REDLANDS BOULEVARD AND HUNTS LANE, SAID POINT MARKED BY A CALIFORNIA DIVISION OF HIGHWAYS BRASS CAP MONUMENT AS SHOWN PER PARCEL MAP NO. 3818, IN BOOK 35 OF PARCEL MAPS, PAGE 35; 7.~NCE NORTH ALONG SAID HUNTS LANE CENTER LINE TO Th~ NORTH LINE OF SAID REDLANDS BOULEVARD; THENCE EAST ALONG SAID NORTH LINE OF REDLANDS BOULEVARD FOLLOWING ITS VARIOUS COURSES AND DISTANCES TO THE INTERSECTION OF THE SOUTHEASTERLY PROLONGATION OF THE EASTERLY LINE OF THE WATERMAN AVENUE SOUTH BOUND OFF RAMP AS SHOWN PER STATE OF CALIFORNIA RIGHT OF WAY MAP NO. 910512 AND BEARING SOUTH 240 18' 00" EAST PER SAID STATE MAP; THENCE SOUTH 82.50 FEET TO THE SOUTH LINE OF SAID REDLA."IDS BOULEVARD; THENCE WEST ALONG SAID SOUTH LINE OF REDLANDS BOULEVARD FOLLOWING ITS VARIOUS COURSES AND DISTANCES TO SAID CENTER LINE OF HUNTS LANE; THENCE NORTH ALONG SAID CENTER LINE OF HUNTS LANE TO THE POINT OF BEGINNING. PA..~CEL NO.3: CA..~OLINE STREET EXISTING 60 FOOT RIGHT OF WAY BETWEEN WATERMAN AVENUE AND ITS WEST TERMINUS, IN THE CITY OF SAN BERNARDINO, BEING A PORTION OF LOT 4, BLOCK 65, OF THE RA..~CHO SA.~ BERNARDINO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOU'1'HEASTERLY CORNER OF PARCEL 6, OF PARCEL MAP NO. 2803, IN THE CITY OF SAN BERNARDINO, RECORDED IN BOOK 34 OF PARCEL MAPS, PAGES 83 AND 84, RECORDS OF SAN BERNARDINO COUNTY, SAID POINT BEING ON THE SOU'1'H LINE OF CAROLINE STREET; THENCE NORTH 60.00 FEET ALONG THE EAST LINE OF SAID PARCEL 6 TO THE NOR'!'H LINE OF SAID CAROLINE STREET; THENCE EAST ALONG SAID NORTH LINE OF CAROLINE STREET TO THE WEST LINE OF WATERMAN AVENUE (82.5 FEET WIDE); THENCE SOU'1'H ALONG THE WEST LINE OF WATERMAN AVENUE TO THE SOU'1'H LINE OF SAID CAROLINE STREET; THENCE WEST ALONG SAID SOU'1'H LINE OF CAROLINE STREET TO THE POINT OF BEGINNING. PARCEL NO.4: HUNTS LANE EXISTING CITY OF SAN BERN&~INO RIGHT OF 'WAY BETWEEN REDLANDS BOULEVARD AND "E" STREET, IN THE CITY OF SAN BERN&'IDINO, BEING A PORTION OF LOTS 1 AND 2, BLOCK 54 AND A PORTION OF LOTS 3 AND 4, BLOCK 65, BOTH OF THE RANCHO SAN BERN&~INO, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFC~~IA, AS PER PLAT RECORDED IN BOOK 7 OF ~~S, PAGE 2. RECORDS OF SAID COUNTY, AND DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF HUNTS LANE AND THE SOUTH LINE PROLONGATION OF "E" STREET BEARING NORTH 890 42' 56" EAST AS SHOWN ON PARCEL MAP NO. 4491, RECORDED IN BOOK 43 OF PARCEL MAPS, PAGE 42, RECORDS OF SA.~ BERNARDINO COUNTY; THENCE EAST ALONG SAID SOUTH LINE PROLONGATION OF "E" STREET TO THE EAST LINE OF HUNTS LANE; THENCE SOU'1'H ALONG SAID EAST LINE OF HUNTS LANE TO THE SOU'1'H LINE OF REDLA.~S BOULEVARD ; THENCE WEST TO A POINT THAT INTERSECTS THE SOUTH LINE OF STEEL ROAD AND THE WEST LINE OF HUNTS LANE; THENCE NORTH ALONG SAID WEST LINE OF HUNTS LANE AND ITS PROLONGATION TO THE SAID SOU'1'H LINE PROLONGATION OF "E" STREET; THENCE EAST ALONG SAID SOUTH LINE PROLONGATION OF "E" STREET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION LYING WITHIN THE CORPORATE CITY LIMITS OF THE CITY OF COLTON, CALIFORNIA AS SAID CITY LIMITS EXISTED ON JUNE 15, 1984. ALSO EXCEPTING THEREFROM THAT PORTION OF HUNTS LANE AS CONVEYED TO THE STATE OF CALIFO~~IA, BY DEEDS RECORDED IN BOOK 3833, PAGE 474, OFFICIAL RECORDS; IN BOOK 3918, PAGE 82, OFFICIAL RECORDS; IN BOOK 5324, PAGE 520, OFFICIAL RECORDS; A.~~ NOT RELINQUISHED TO THE CITY OF SAN BERNARDINO BY THE STATE OF CALIFO~~IA, AS DESCRIBED IN THAT CERTAIN RELINQUISHMENT OF HIGr~AY RIGHT OF WAY DEED RECORDED IN BOOK 8154, PAGE 659, OFFICIAL RECORDS. DIVISION TWO: PARCEL 1 OF PARCEL MAP NO. 14725, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 178, PAGES 32 THROUGH 34 INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. DIVISION TRR:!:!: PARCEL NO. 1A: r.~T PORTION OF BLOCK 13, CITY OF SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, com....ry OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 7 PAGE 1 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE EAST LINE OF "E" STREET WITH THE NORTH LINE OF "2ND" STREET AS DESCRIBED IN THAT CERTAIN DEED TO THE CITY OF SAN BERNk~INO RECORDED MAY 21, 1970 IN BOOK 7447 PAGE 275 OFFICIAL RECORDS OF SAID COUNTY; ~~CE SOUTH 890 56' 00. EAST ALONG SAID NORTH LIN3'111.67 FEET; r,.,ENCE NORTH 450 04' 11" EAST 9,90 FEET; THENCE NORTH 00 04' 11" EAST 112.21 FEET; THENCE NORTH 150 04' 11" EAST 100.46 FEET; THENCE NORTH 00 04' 11" EAST 111.75 FEET TO A LINE PARALLEL WITH AND DISTANT 225.92 FEET SOUTHERLY MEASu~D AT RIGHT ANGLES, FROM THAT CERTAIN COURSE RECITED AS "NORTH 890 55' 49" WEST 206.48 FEET" IN THE BOUNDARY DESCRIBED IN DEED TO THE REDEVE:'OPMENT AGENCY OF THE CITY OF SA."l' BERNARDINO, CALIFORNIA RECO~ED JUNE 4, 1970 IN BOOK 7455 PAGE 214 OFFICIAL RECORDS OF SAID COUNTY; THENCE NORTH 890 55' 49" WEST ALONG SAID PARALLEL LINE 137.19 FEET TO SAID EAST LINE OF "E" STREET; THENCE SOUTH 30 57' 51" WEST ALONG SAID EAST LINE 116.07 FEET; r..,ENCE CONTINUING ALONG SAID EAST LINE SOUTH 00 02' 25" EAST 212.20 FEET TO THE POINT OF BEGINNING. ALSO KNOWN AS PARCEL NO. 27 OF PARCEL MAP NO. 688 IN THE CITY OF SA..~ BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 25 OF PARCEL MAPS, PAGES 47 TO 58 INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL NO. 1B: TOGETHER WITH AN EASEMENT FOR VEHICULAR INGRESS AND EGRESS OVER THAT PORTION OF SAID BLOCK 13 DESCRIBED AS FOLLOWS: COMMENCING AT SAID INTERSECTION OF THE EAST LINE OF "E" STREET WITH 'rdE NORTH LINE OF "2ND" STREET; THENCE SOUTH 89. 56' 00" EAST ALONG SAID NORTH LINE lll.67 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 45. 04' 11" EAST ALONG THE EAST LINE OF THE ABOVE DESCRIBED PARCEL 9.90 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH O. 04' ll" EAST 112.21 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 150 04' 11" EAST 100.46 FEET; THENCE CONTINUING ALONG SAID EAST LINE NORTH 00 04'. ll" EAST 11. 75 FEET TO THE NORTH LINE OF SAID PARCEL; THENCE SOUTH 89. 55' 49" EAST ALONG THE EASTERLY PROLONGATION OF SAID NORTH LINE 30.50 FEET; THENCE SOUTH 00 04' II" WEST 138.74 FEET; THENCE SOUTH 150 04' II" WEST 113.98 FEET; THENCE SOU'TIl: 00 04' II" WEST 79.16 FEET TO SAID NORTH LINE OF "2ND" STREET; THENCE NORTH 890 57' 00" WEST 34.00 FEET TO THE POINT OF BEGINNING. AGENCY AGREEMENT Dated as of September 1, 1999 by and between the CITY OF SAN BERNARDINO and THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO $15,480,000 Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects) Evidencing the Direct, Undivided Fractional Interest of Thereof in Lease Payments to be Made by the CITY OF SAN BERNARDINO, CALIFORNIA As the Rental for Certain Projects Pursuant to Lease Agreements With the San Bernardino Joint Powers Financing Authority \i~ ~~ ~ ~ the Owner AGENCY AGREEMENT THIS AGENCY AGREEMENT, made and entered into as of September 1, 1999, is by and between the CITY OF SAN BERNARDINO (the "City"), and REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Agency"): WIT N E SSE T H: In the joint and mutual exercise of their powers, in consideration of the mutual covenants herein contained and for other valuable consideration, the parties hereto recite and agree as follows: Section 1. Recitals. WHEREAS, pursuant to that certain Police Station Site and Facility Lease, dated as of September 1, 1999 (the "Police Station Site and Facility Lease"), Redevelopment Agency of the City of San Bernardino (the "Agency")has leased to the A~thority that certain parcel of real property and the facility located thereon situated in the City of San Bernardino, County of San Bernardino, State of California (the "Police Station Site"); and WHEREAS, pursuant to that certain South Valle Site and Facility Lease, dated as of September 1, 1999 (the "South Valle Site and Facility Lease"), City has leased to the Authority those certain parcels of real property with certain improvements located thereon situated in the City of San Bernardino, County of San Bernardino, State of California (the "South Valle Improvements"); and WHEREAS, pursuant to that certain 201 North E Street Site and Facility Lease, dated as of September 1, 1999 (the "201 North E Site and Facility Lease"), Agency has leased to the Authority that certain parcel of real property and the facility located thereon situated in the City of San Bernardino, County of San Bernardino, State of California ("201 North E Street" and with the Police Station Site, the "Project"); and with the Police Station Site and the South Valle Improvements, the "Project"); and WHEREAS, the South Valle Site and Facility Lease, the Police Station Site and Facility Lease and the 201 North E Site and Facility Lease (collectively the "Site and Facility Leases") are being entered into for the purpose of enabling the Authority to assist the City in the refinancing of the Police Station Site and -2- the South Valle Improvements and to provide additional funds to the Agency; and WHEREAS, the Authority proposes (i) to lease the Police Station Site to the City pursuant to that certain Police Station Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City (the "Police Station Lease Agreement) (ii) to lease the South Valle Improvements to the City pursuant to that certain South Valle Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City and (the "South Valle Lease Agreement") and (iii) to lease the 201 North E Street Site to the City pursuant to that certain 201 North E Street Lease Agreement, dated as of September 1, 1999, by and between the Authority and the City (the "201 North E Street Lease Agreement") and with the Police Station Lease Agreement and the South Valle Lease Agreement, the "Lease Agreements"); and WHEREAS, pursuant to the Trust Agreement dated as of September 1, 1999, among the Authority, City and Trustee, the Trustee will execute and deliver certificates of participation (the "Certificates") evidencing the direct, unr;iivided fractional interest of the owner thereof in lease payments to be made by the City as the rental for certain projects (the "Projects") pursuan~ to Lease Agreements with the Authority; and WHEREAS, hereunder the Authority to the Trustee shall assign its right to receive lease payments under the Lease Agreements (the "Lease Payments"), its right to enforce payment of the Lease Payments and otherwise to enforce its interest and rights under the Lease Agreements in the event of a default thereunder by the City, to Trustee. Section 2. Agency. The Authority authorizes the Agency occupy the Projects and perform any and all repairs thereon to the extent said actions do not violate the Lease Agreements. Section 3. Execution in Counterparts. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument. -3- IN WITNESS WHEREOF, we have caused this Agency Agreement to be executed as of the date set forth below. Dated: September 29, 1999 CITY OF SAN BERNARDINO B