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HomeMy WebLinkAboutA4552 - FINANCE AUTHORITY DOWNTOWN PARKING STRUCT BONDS LEASE FA25 R20390 City Council Action Summary November 4, 2015 Page 6 11.72 "PUBLIC NUISANCES" OF THE PALM SPRINGS MUNICIPAL CODE TO EXPAND PROPERTY MAINTENANCE REQUIREMENTS TO VACANT PROPERTY AND VACANT LAND, AND TO CLARIFY REGISTRATION AND MONITORING PROGRAM REQUIREMENTS FOR VACANT PROPERTIES AND IDENTIFYING ENFORCEMENT AND CIVIL PENALTIES FOR VIOLATIONS: Item Tabled. 4. UNFINISHED BUSINESS: None. 5. NEW BUSINESS: 5.A. APPROVE A FACADE GRANT AGREEMENT WITH JOSEPH T. LIZOTTE, FOR A RETAIL STORE LOCATED AT 611 SOUTH PALM CANYON, SUITE 12, IN THE AMOUNT OF $2,536.06: ACTION: 1) Approve a Facade Grant Agreement in the amount of $2,536.06 with Joseph T. Lizotte for a retail store located at 611 South Palm Canyon, Suite 12; and 2) Authorize the City Manager to execute all necessary documents. 680�,. Motion Mayor Pro Tern Lewin, seconded by Councilmember Foat and unanimously carried on a roll call vote. 5.B. APPROVE ISSUANCE OF BONDS TO CONVERT 2002 CERTIFICATES OF. PARTICIPATION ISSUED TO FINANCE THE DOWNTOWN PARKING STRUCTURE FROM VARIABLE RATE TO FIXED RATE: ,., ACTION: City Council:Adopt Resolution No. �� 9 �� , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, - _APPROVING A SITE LEASE AND LEASE AGREEMENT IN h+R-� > ,rr CONNECTION WITH THE ISSUANCE OF CITY OF PALM SPRINGS FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2015 SERIES A AND TAXABLE LEASE REVENUE REFUNDING BONDS, 2015 SERIES B, APPROVING SALE OF SUCH BONDS AND OFFICIAL STATEMENT AND PROVIDING OTHER MATTERS PROPERLY RELATING THERETO." Financing Authority Board: Adopt Resolution No. ; ', "A RESOLUTION OF THE FINANCING AUTHORITY OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING ISSUANCE OF CITY OF PALM SPRINGS FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, 2015 SERIES A AND TAXABLE LEASE REVENUE REFUNDING BONDS, 2015 SERIES B, APPROVING AND AUTHORIZING AND DIRECTING EXECUTION OF INDENTURE OF TRUST AND OTHER DOCUMENTS RELATING THERETO, AUTHORIZING SALE OF SUCH BONDS, APPROVING OFFICIAL STATEMENT AND PROVIDING OTHER MATTERS PROPERLY RELATING THERETO." Motion Councilmember Mills, seconded by Mayor Pougnet and unanimously carried on a roll call vote. 5.C. RECRUITMENT BONUS PROGRAM FOR HIRING LATERAL POLICE OFFICERS: 1 CITY OF PALM SPRINGS FINANCING AUTHORITY $5,680,000 2015 LEASE REVENUE REFUNDING BONDS BOND PURCHASE AGREEMENT December 1,2015 City of Palm Springs Financing Authority c/of City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs,California 92262 City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, California 92262 Ladies and Gentlemen: The undersigned Stifel, Nicolaus & Company Incorporated (the "Underwriter"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (which, together with Exhibit A, is referred to as the "Purchase Agreement") with the City of Palm Springs Financing Authority (the "Authority") and the City of Palm Springs, California (the "City"), which, upon the acceptance by the Authority and the City, will be binding upon the parties hereto. By execution of this Purchase Agreement, the Authority, the City and the Underwriter acknowledge the terns hereof and recognize that they will be bound by certain of the provisions hereof, and to the extent binding thereupon, acknowledge and agree to such terms. This offer is made subject to acceptance by the Authority and by the City by the execution of this Purchase Agreement and delivery of the same to the Underwriter prior to 11:59 P.M., Pacific time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to the acceptance hereof by the Authority and the City. Capitalized terns used herein and not otherwise defined shall have the meanings set forth in the Indenture(defined herein). The City and Authority acknowledge and agree that: (i)the purchase and sale of the Bonds (defined herein),pursuant to this Purchase Agreement is an ann's-length commercial transaction between the City and the Authority, on one hand, and the Underwriter, on the other; (ii)in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended); (iii)the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City or the Authority with respect to the offering contemplated hereby or the discussions,undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City or the Authority on other matters); (iv) the Underwriter has financial and other interests that differ from those of the City and the Authority; and (v)the City and the Authority have consulted their own legal, financial and other advisors to the extent they have deemed appropriate. 48967356.5 1 Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase from the Authority and the City, and the Authority and the City hereby agree to issue, sell and deliver to the Underwriter all (but not less than all) of the City of Palm Springs Financing Authority 2015 Lease Revenue Refunding Bonds (the"Bonds"). The Bonds will be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually on November I and May 1, in each year (each an "Interest Payment Date") commencing November 1, 2016 and will bear interest at the rates and on the dates as set forth in Exhibit A hereto. The purchase price for the Bonds shall be$6,643,737.40 (which represents the principal amount of the Bonds in the amount of $5,680,000.00,plus an original issue premium in the amount of$1,006,277.40,less an Underwriter's discount of$42,540.00). The Underwriter agrees to make a bona fide public offering of the Bonds at the initial offering yields set forth in the Official Statement (defined herein); however, the Underwriter reserves the right to make concessions to dealers and to change such initial offering yields as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection with the public offering and initial delivery of the Bonds to the purchasers thereof from the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the final Official Statement prepared in connection with the Bonds, for the time period required under Rule 15c2-12 promulgated under the Securities Exchange Act of 1934,as amended("Rule 15c2-12"). Terns defined in the Official Statement are used herein as so defined. Section 2. The Bonds. The Bonds shall be secured by revenues consisting primarily of rental payments ("Lease Payments") to be paid by the City pursuant to the Lease Agreement, dated as of December 1, 2015 (the"Lease Agreement"),by and between the Authority and the City. The Authority's right to receive the Lease Payments due under the Lease Agreement and to exercise remedies upon default under such Lease Agreement shall be assigned to the Trustee for the benefit of the owners of the Bonds pursuant to an Assignment Agreement, dated as of December 1, 2015 (the "Assignment Agreement"), by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"). The Bonds shall be as described in, and shall be secured under and pursuant to the Indenture of Trust, dated as of December 1,2015 (the"Indenture"),by and between the Authority and the Trustee. The Bonds are being issued to refinance an existing lease relating to the City's outstanding Taxable Variable Rate Demand Certificates of Participation 2002 Series A (Downtown Parking Project) and to pay the costs of issuing the Bonds. Section 3. Public Offering. The Underwriter agrees to make an initial public offering of all the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering,the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. Section 4. The Official Statement. By their acceptance of this Purchase Agreement, the Authority and the City ratify, confirm and approve of the use and distribution by the Underwriter prior to the date hereof of the Preliminary Official Statement relating to the Bonds, dated November 20, 2015 (including the cover page, all appendices and all information incorporated therein and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the "Preliminary Official Statement") that authorized officers of the City deemed "final" as of its date, for purposes of Rule 15c2-12 except for certain omissions permitted to be omitted therefrom by Rule 15c2-12. The Authority and the City hereby agree to deliver or cause to be delivered to the Underwriter, within seven (7) business days of the date hereof, 48967356.5 2 copies of the final official statement, dated the date hereof, relating to the Bonds (including all information previously permitted to have been omitted by Rule 15c2-12, the cover page, all appendices, all information incorporated therein and any amendments or supplements as have been approved by the Authority, the City and the Underwriter (the "Official Statement")) in such quantity as the Underwriter shall reasonably request to comply with Securities and Exchange Commission Rule 15c2-12(b)(4) and the rules of the Municipal Securities Rulemaking Board(the"MSRB"). The Underwriter hereby agrees that it will not request that payment be made by any purchaser of the Bonds prior to delivery by the Underwriter to the purchaser of a copy of the Official Statement. The Underwriter agrees to (i)provide the Authority and the City with final pricing information on the Bonds on a timely basis and (ii)promptly file a copy of the final Official Statement, including any supplements prepared by the Authority or the City with the MSRB on its Electronic Municipal Markets Access ("EMMA") system at http://emma.msrb.org. The Authority and the City hereby approve of the use and distribution by the Underwriter of the final Official Statement in connection with the offer and sale of the Bonds. The Authority and the City will cooperate with the Underwriter in the filing by the Underwriter of the Official Statement with EMMA. Section 5. Closing. At 8:00 a.m., California time, on December 15, 2015, or at such other time or date as the Authority, the City and the Underwriter agree upon, the Authority shall deliver or cause to be delivered to the Trustee, and the Trustee shall deliver or cause to be delivered through the facilities of The Depository Trust Company, New York, New York ("DTC"), the Bonds in definitive form, duly executed and authenticated. Concurrently with the delivery of the Bonds, the Authority and the City shall deliver the documents hereinafter mentioned at the offices of Jones Hall, A Professional Law Corporation, San Francisco,California or another place to be mutually agreed upon by the Authority, the City and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents referenced herein,is called the"Closing." The Bonds shall be registered in the naive of Cede& Co., as nominee of DTC in denominations of five thousand dollars ($5,000) or any integral multiple thereof, and shall be made available to the Underwriter at least one (1)business day before the Closing for purposes of inspection and packaging. The Authority and the City acknowledge that the services of DTC will be used initially by the Underwriter to permit the issuance of the Bonds in book-entry form, and agree to cooperate fully with the Underwriter in employing such services. Section 6. Representations,Warranties and Covenants of the Authority. The Authority represents,warrants and covenants to the Underwriter and the City that: (a) The Authority is and will be at the date of Closing a joint exercise of powers authority organized and existing under the laws of the State of California, including Section 6500 et seq. of the California Government Code (the "JPA Act") with all necessary power and authority to enter into and perform its duties under the Site and Facilities Lease, dated as December 1, 2015 (the"Site Lease"), by and between the City and the Authority, the Lease Agreement, the Indenture, the Assignment Agreement, the Irrevocable Refunding Instructions, dated December 15, 2015 (the "Refunding Instructions"), given by the City and the Authority to The Bank of New York Mellon Trust Company, N.A., as trustee (the "Prior Trustee") for Taxable Variable Rate Demand Certificates of Participation (Downtown Parking Project) (the"Prior Certificates")under the trust agreement for the Prior Certificates (the "Prior Trust Agreement"), and this Purchase Agreement. The Site Lease, Lease Agreement, Indenture, Assignment Agreement and Refunding Instructions are collectively referred to herein as the "Authority Documents"). 48967356.5 3 (b) The Authority has complied with all filing requirements of the JPA Act. (c) By official action of the Authority prior to or concurrently with the acceptance hereof, the Authority has duly approved the distribution of the Preliminary Official Statement and the distribution of the Official Statement (including in electronic form), and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained, in the Authority Documents. When executed and delivered, each Authority Document will constitute the legal, valid and binding obligation of the Authority enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally. (d) Prior to the date hereof, the Authority has provided to the Underwriter for its review the Preliminary Official Statement that an authorized officer of the Authority has deemed final for purposes of Rule 15c2-12, has approved the distribution of the Preliminary Official Statement and the Official Statement and has duly authorized the execution and delivery of the Official Statement(including in electronic form). The Preliminary Official Statement, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to snake the statements therein (other than the information relating to DTC and its book-entry system, as to which no view is expressed), in light of the circumstances under which they were made, not misleading. At the date hereof and on the Closing,the final Official Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information relating to DTC and its book-entry system, as to which no view is expressed), in light of the circumstances under which they were made,not misleading. (e) To the knowledge of the undersigned officer of the Authority, the execution and delivery by the Authority of the Authority Documents and the approval and execution by the Authority of the Official Statement and compliance with the provisions on the Authority's part contained in the Authority Documents, will not conflict with or constitute a breach of or default under any law, administrative regulation,judgment, decree, loan agreement, indenture,bond,note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject to, which conflict, breach or default has or may have a material adverse effect on the ability of the Authority to carry out its obligations under the Authority Documents, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any material lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents. (f) The Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (g) To the knowledge of the undersigned officer of the Authority, the Authority is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument, in 48967356.5 4 each case which breach or default has or may have a material adverse effect on the ability of the Authority to perform its obligations under the Authority Documents. (h) As of the time of acceptance hereof and as of the date of Closing,no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending or, to the knowledge of the officers of the Authority, threatened (i)in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices, (ii)affecting, contesting or seeking to prohibit,restrain or enjoin the execution or delivery of any of the Bonds, or in any way contesting or affecting the validity of the Bonds or the Authority Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from gross income for federal income tax purposes or contesting the powers of the Authority to enter into the Authority Documents or(iii) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clause(i) through(iii) of this sentence. (i) Any certificate signed by any officer of the Authority authorized to execute such certificate in connection with the issuance, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the Authority to the Underwriter and the City as to the statements made therein but not of the person signing such certificate. Section 7. Representations,Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriter and the Authority that: (a) The City is and will be at the date of Closing a charter city and a municipal corporation duly organized and existing pursuant to and under the Constitution and laws of the State of California and has all necessary power and authority to enter into and perform its duties under the Continuing Disclosure Certificate relating to the Bonds (the"Continuing Disclosure Certificate"), the Site Lease,the Lease Agreement,the Refunding Instructions and this Purchase Agreement(together,the"City Documents" and, together with the Authority Documents, the "Legal Documents") and has by official action duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the City Documents for the purpose of refinancing the Prior Certificates. (b) By official action of the City prior to or concurrently with the acceptance hereof, the City has duly approved the distribution of the Preliminary Official Statement and the distribution of the Official Statement(including in electronic form), and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained, in the City Documents. When executed and delivered, each City Document will constitute the legally valid and binding obligation of the City enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally. (c) The Preliminary Official Statement heretofore delivered to the Underwriter is hereby deemed final by the City as of its date and as of the date hereof, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(i) of Rule 15c2-12. The Preliminary Official Statement, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information 48967356.5 5 relating to DTC and its book-entry system, as to which no view is expressed), in the light of the circumstances under which they were made, not misleading. At the date hereof and on the Closing, the final Official Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the inforination relating to DTC and its book-entry system, as to which no view is expressed),in the light of the circumstances under which they were made,not misleading. (d) To the knowledge of the undersigned officer of the City, the execution and delivery by the City of the City Documents and the approval by the City of the Official Statement and compliance with the provisions on the City's part contained in the City Documents, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject to, which conflict, breach or default has or may have a material adverse effect on the ability of the City to carry out its obligations under the City Documents,nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any material lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument, except as provided by the City Documents. (e) The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental Authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (f) To the knowledge of the undersigned officer of the City, after reasonable inquiry, the City is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument, in each case which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the City Documents. (g) The financial statements relating to the receipts, expenditures and cash balances of the City as of June 30, 2014 as set forth in the Official Statement fairly represent the revenues, expenditures and fund balances of the General Fund. The estimated final results for the Fiscal Year ending June 30, 2015 relating to the revenues, expenditures and fund balances of the City as set forth in the Official Statement are an accurate depiction of the estimated revenues, expenditures and fund balances of the General Fund in all material respects. Except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the General Fund or in its operations since June 30, 2014 and, except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise disclosed in writing to the Underwriter, there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. (h) As of the time of acceptance hereof and as of the date of Closing,no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending or,to the knowledge of the officers of the City, threatened(i)in any way 48967356.5 6 questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii)affecting, contesting or seeking to prohibit, restrain or enjoin the execution or delivery of any of the Bonds, or in any way contesting or affecting the validity of the Bonds or the City Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from gross income for federal income tax purposes or contesting the power of the City to enter into the City Documents; (iii)which may result in any material adverse change to the financial condition of the City or to its ability to pay the Lease Payments when due; or (iv)contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to snake the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clause(i) through(iv) of this sentence. (i) To the extent required by law,the City will undertake,pursuant to the Continuing Disclosure Certificate, to provide annual reports and notices of certain events. A description of this undertaking is set forth in Appendix C to the Preliminary Official Statement and will also be set forth in the final Official Statement. Except as otherwise disclosed in the Official Statement, the City has never failed to comply in all material respects with any previous undertakings with regard to the Rule 15c2-12 to provide annual reports or notices of enumerated events with respect to the last five years. 0) ' Any certificate signed by any officer of the City authorized to execute such certificate in connection with the issuance, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the City to the Underwriter and the Authority as to the statements made therein but not of the person signing such certificate. (k) As of the date hereof, the City does not have any material obligations secured by payments from the General Fund of the City,except as disclosed in the Official Statement. Section 8. Conditions to the Obligations of the Underwriter. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the date of the Closing shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the statements of the officers and other officials of the Authority and of the City, as well as authorized representatives of Bond Counsel, the Trustee, Disclosure Counsel and the Financial Advisor made in any Bonds or other documents furnished pursuant to the provisions hereof; to the performance by the Authority and the City of their obligations to be performed hereunder at or prior to the date of the Closing; and to the following additional conditions: (a) The representations, warranties and covenants of the City and the Authority contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing; (b) At the time of Closing, the Legal Documents shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the Legal Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and all such reasonable actions as, in the opinion of Bond Counsel,shall reasonably deem necessary in connection with the transactions contemplated hereby; (c) At the time of the Closing,no default shall have occurred or be existing under the Authority Documents, the City Documents, or any other agreement or document pursuant to which any of 48967356.5 7 the City's financial obligations were executed and delivered, and the City shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would adversely impact the ability of the City to make the Lease Payments; (d) In recognition of the desire of the Authority, the City and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, this Agreement shall be subject to termination in the absolute discretion of the Underwriter by notification, in writing, to the Authority and the City prior to delivery of and payment for the Bonds, if at any time prior to such time, regardless of whether any of the following statements of fact were in existence or known of on the date of this Purchase Agreement: G) any event shall occur which snakes untrue any statement or results in an omission to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made,not misleading, which event, in the reasonable opinion of the Underwriter would materially or adversely affect the ability of the Underwriter to market the Bonds; or (ii) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State of California, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage(by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department,the Internal Revenue Service or other federal or State authority affecting the federal or State tax status of the Authority or the City, or the interest on or with respect to bonds or notes (including the Bonds); or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which materially adversely affects the market price of the Bonds; or (iv) an order, decree or injunction issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other forin of notice or communication issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that: (i) obligations of the general character of the Bonds, or the Bonds,including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, 48967356.5 8 offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; or (v) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or (vi) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any domestic governmental authority or by any domestic national securities exchange, which are material to the marketability of the Bonds; or (vii) a general banking moratorium shall have been declared by federal, State or New York authorities, or the general suspension of trading on any national securities exchange; or (viii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is materially adverse such as to make it, in the sole judgment of the Underwriter, impractical to proceed with the purchase or delivery of the Bonds as contemplated by the final Official Statement (exclusive of any amendment or supplement thereto); or (ix) any rating of the Bonds or the rating of any obligations of the City secured by the City's general fund shall have been downgraded or withdrawn by a national rating service, which, in the opinion of the Underwriter, materially adversely affects the market price of the Bonds; or (x) the commencement of any action, suit or proceeding described in Section 6(h) or Section 7(h); (e) at or prior to the Closing, the Underwriter shall receive the following documents, in each case to the reasonable satisfaction in form and substance of the Underwriter: (i) all resolutions relating to the Bonds adopted by the Authority and certified by an authorized official of the Authority authorizing the execution and delivery of the Bonds,the Authority Documents and the Official Statement; (ii) all resolutions relating to the Bonds adopted by the City and certified by an authorized official of the City authorizing the execution and delivery of the City Documents and the delivery of the Bonds and the Official Statement; (iii) the Legal Documents duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Underwriter; 48967356.5 9 (iv) the approving opinion of Jones Hall, A Professional Law Corporation, Bond Counsel, dated the date of Closing and addressed to the Authority and the City, in substantially the form attached as Appendix D to the Official Statement, and a reliance letter thereon addressed to the Underwriter; (v) a supplemental opinion of Bond Counsel dated the date of Closing and addressed to the Underwriter,to the effect that: (A) the statements on the cover of the Official Statement and in the Official Statement under the captions "INTRODUCTION," "THE BONDS," "THE FINANCING PLAN," "THE LEASED PROPERTY," "SOURCES OF PAYMENT FOR THE BONDS," and "LEGAL MATTERS —Tax Exemption," and in"APPENDIX A—SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" and "APPENDIX D —PROPOSED FORM OF BOND COUNSEL OPINION," excluding any material that may be treated as included under such captions and appendices by any cross-reference, insofar as such statements expressly summarize provisions of the Bonds, the Site Lease, the Lease Agreement, the Assignment Agreement, the Indenture, the Refunding Instructions and Bond Counsel's final opinion concerning certain federal tax matters relating to the Bonds, are accurate in all material respects as of the date of Closing; provided, that Bond Counsel need not express any opinion with respect to any financial or statistical data contained therein or with respect to DTC or the book-entry system in which the Bonds are initially delivered; (B) The Purchase Agreement and the Refunding Instructions have been.duly authorized, executed and delivered by the City and the Authority and are the valid, legal and binding agreements of the City and the Authority enforceable in accordance with their terms, except that the rights and obligations under the Purchase Agreement and the Refunding Instructions are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State, and provided that no opinion is expressed with respect to any indemnification or contribution provisions contained therein. (C) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939,as amended. (vi) the Official Statement,executed on behalf of the Authority and the City; (vii) Evidence that the ratings on the Bonds are as described in the Official Statement; (viii) a certificate, dated the date of Closing, signed by a duly authorized officer of the Authority satisfactory in form and substance to the Underwriter to the effect that: (i)the representations, warranties and covenants of the Authority contained in this Purchase Agreement are true and correct in all material respects on and as of the date of Closing with the same effect as if made on the date of the Closing by the Authority, and the Authority has complied with all of the terms and conditions of this Purchase 48967356.5 10 Agreement required to be complied with by the Authority at or prior to the date of Closing; (ii) to such officer's knowledge, no event affecting the Authority has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii)the information and statements contained in the Official Statement (other than information relating to DTC and its book-entry system) did not as of its date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; and (iv) to its knowledge, the Authority is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, which would have a material adverse impact on the Authority's ability to perform its obligations under the Authority Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; (ix) a certificate, dated the date of Closing, signed by a duly authorized officer of the City satisfactory in form and substance to the Underwriter to the effect that: (i)the representations, warranties and covenants of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the date of Closing with the same effect as if made on the date of the Closing by the City, and the City has complied with all of the terms and conditions of the Purchase Agreement required to be complied with by the City at or prior to the date of Closing; (ii)to such officer's knowledge, no event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii)the information and statements contained in the Official Statement (other than information relating to the DTC and its book-entry system) did not as of its date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to snake the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; (iv)to its knowledge after reasonable investigation, the City is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture,bond,note,resolution,agreement(including but not limited to the Lease Agreement) or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City's ability to perform its obligations under the City Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; and (v)no further consent is required for inclusion of its audited financial statements in the Official Statement; 48967356.5 11 (x) an opinion dated the date of Closing and addressed to the Underwriter, the Trustee and Bond Counsel, of the Office of the City Attorney of the City of Palm Springs, as Counsel to the Authority,to the effect that: (A) the Authority is a joint exercise of powers authority organized and existing under the laws of the State of California; (B) the resolution of the Authority approving and authorizing the execution and delivery of the Authority Documents, the Bonds and the Official Statement and other actions of the Authority was duly adopted at a meeting of the governing body of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the resolution is now in full force and effect and has not been amended or superseded in any way; (C) the Authority Documents are valid, legal and binding agreements of the Authority enforceable against the Authority (assuming due authorization, execution and delivery by and validity against the other parties thereto); (D) to the knowledge of such counsel there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending with respect to which the Authority has been served or, to the such counsel's knowledge, threatened against or affecting the Authority, except as may be disclosed in the Official Statement, which would materially adversely impact the Authority's ability to complete the transactions contemplated by the Authority Documents, the Official Statement or any other document or certificate related to such transactions, restrain or enjoin the collection of Lease Payments with respect to the Lease Agreement, or in any way contesting or affecting the validity of the Bonds, the Official Statement, the Authority Documents or the transactions described in and contemplated thereby wherein an unfavorable decision, ruling or finding would materially adversely affect the validity and enforceability of the Bonds or the Authority Documents or in which a final adverse decision could materially adversely affect the operations of the Authority; (E) the execution and delivery of the Authority Documents and the issuance of the Bonds and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the Authority a breach of or default under any agreement or other instrument to which the Authority is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the Authority is subject, which breach or default has or may have a material adverse effect on the ability of the Authority to perform its obligations under the Authority Documents; (F) no authorization, approval, consent, or other order of the State of California or any other governmental body within the State of California is required for the valid authorization, execution and delivery of the Authority Documents or the Official Statement by the Authority or the consummation by the Authority of the transactions on its part contemplated therein, except such as have been obtained and except such as may be required under state securities or 48967356.5 12 blue sky laws in connection with the purchase and distribution of the Bonds by the Underwriter; and (G) based on the information made available to such counsel in its role as counsel to the Authority, and without having undertaken to detennine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement under the caption entitled "INTRODUCTION—The Authority," nothing has come to its attention which would lead it to believe that the statements contained in the above- referenced caption as of the date of the Official Statement and as of the date of Closing contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading; (xi) an opinion dated the date of Closing and addressed to the Underwriter, the Trustee and the Bond Counsel, of the Office of the City Attorney of the City of Palm Springs, to the effect that: (A) the City is a charter city and a municipal corporation duly organized and validly existing under the Constitution and laws of the State of California; (B) the resolution of the City approving and authorizing the execution and delivery of the City Documents and approving and authorizing the issuance of the Bonds and the delivery of the Official Statement and other actions of the City was duly adopted at a meeting of the governing body of the City which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the resolution is now in full force and effect and has not been amended or superseded in any way; (C) the City Documents are valid, legal and binding agreements of the City enforceable against the City (assuming due authorization, execution and delivery by and validity against the other parties thereto); (D) there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending with respect to which the City has been served or,to such City Attorney's knowledge,threatened against or affecting the City, except as may be disclosed in the Official Statement, which would materially adversely impact the City's ability to complete the transactions contemplated by the City Documents, the Official Statement or any other document or certificate related to such transactions, restrain or enjoin the collection of Lease Payments with respect to the Lease Agreement, or in any way contesting or affecting the validity of the Bonds, the Official Statement or the City Documents; (E) the execution and delivery of the City Documents and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law,regulation, court order or consent decree to which 48967356.5 13 the City is subject, which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the City Documents; (F) no authorization, approval, consent, or other order of the State of California or any other governmental body within the State of California is required for the valid authorization, execution and delivery of the City Documents or the consummation by the City of the transactions on its part contemplated therein, except such as have been obtained and except such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Bonds by the Underwriter; and (G) based on the information made available to City Attorney, and without having undertaken to detennine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, nothing has come to its attention which would lead it to believe that the Official Statement as of its date and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed and information relating to the Authority and DTC and its book entry system) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to snake the statements therein, in the light of the circumstances under which they were made,not misleading; (xii) an opinion of Norton Rose Fulbright US LLP, Disclosure Counsel to the Authority and the City dated the date of Closing and addressed to the Authority,the City, the Underwriter and the Financial Advisor in form and substance acceptable to the City and the Underwriter; (xiii) an opinion of counsel to the Trustee, addressed to the Underwriter and the Authority, dated the date of the Closing,to the effect that: (A) the Trustee is a national banking association duly organized and validly existing under the laws of the United States, having full corporate power to undertake the trust created under the Indenture; (B) the Indenture and the Assigmnent Agreement (collectively, the "Trustee Documents") have each been duly authorized, executed and delivered by the Trustee and, assuming due authorization, execution and delivery by the other parties thereto, the Trustee Documents constitute the valid, legal and binding obligations of the Trustee enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy,insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles,if equitable remedies are sought; (C) the Trustee has duly authenticated the Bonds upon the order of Authority; (D) the Trustee's actions in executing and delivering the Trustee Documents are in full compliance with, and do not conflict with any applicable law or governmental regulation and, to the best of such counsel's knowledge, 48967356.5 14 after reasonable inquiry with respect thereto, do not conflict with or violate any contract to which the Trustee is a party or any administrative or judicial decision by which the Trustee is bound; and (E) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is or will be required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Trustee Documents. (xiv) a certificate, dated the date of Closing, signed by a duly authorized officer of the Trustee satisfactory in form and substance to the Underwriter, to the effect that: (A) the Trustee is duly organized and existing as a national banking association under the laws of the United States of America, having the full corporate power and authority to enter into and perform its duties under the Trustee Documents; (B) the Trustee is duly authorized to enter into the Trustee Documents and has duly executed and delivered the Trustee Documents, and assuming due authorization and execution by the other parties thereto, the Trustee Documents are legal,valid and binding upon the Trustee and enforceable against such party in accordance with its terms; (C) the Trustee has duly authenticated the Bonds under the Indenture and delivered the Bonds to or upon the order of the Underwriter; and (D) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Trustee Documents. (xv) an opinion of counsel to the Prior Trustee, addressed to the Underwriter and the Authority, dated the date of the Closing,to the effect that: (A) the Prior Trustee is a national banking association duly organized and validly existing under the laws of the United States of America, having full corporate power to undertake the duties created under the Refunding Instructions and the Prior Trust Agreement; (B) the Refunding Instructions have been duly authorized, executed and delivered by the Prior Trustee and, assuming due authorization, execution and delivery by the other parties thereto,the Refunding Instructions constitute the valid, legal and binding obligation of the Prior Trustee enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles,if equitable remedies are sought; 48967356.5 15 (C) the Prior Trustee's actions in executing and delivering the Refunding Instructions are in full compliance with, and do not conflict with any applicable law or governmental regulation and, to the best of such counsel's knowledge, after reasonable inquiry with respect thereto, do not conflict with or violate any contract to which the Prior Trustee is a party or any administrative or judicial decision by which the Prior Trustee is bound; and (D) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Prior Trustee that has not been obtained is or will be required for the consummation by the Prior Trustee of its obligations under the Refunding Instructions and the Prior Trust Agreement. (xvi) a certificate, dated the date of Closing, signed by a duly authorized official of the Prior Trustee satisfactory in form and substance to the Underwriter, to the effect that: (A) the Prior Trustee is duly organized and existing as a national banking association under the laws of the United States,having the full corporate power and authority to enter into and perform its duties under the Refunding Instructions and the Prior Trust Agreement; (B) the Prior Trustee is duly authorized to enter into the Refunding Instructions and have duly executed and delivered the Refunding Instructions, and assuming due authorization and execution by the other parties thereto, the Refunding Instructions are legal, valid and binding upon the Prior Trustee and enforceable against such party in accordance with their terns; and (C) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Prior Trustee that has not been obtained is required for the consummation by the Prior Trustee of its obligations under the Refunding Instructions and the Prior Trust Agreement. (xvii) the preliminary and final Statement of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the California Government Code and Section 8855(g) of the Government Code; (xviii) a copy of the executed Blanket Issuer Letter of Representations by and between the City and DTC relating to the book-entry system; (xix) the tax and nonarbitrage certificate by the Authority and the City relating to the Bonds in form and substance to the reasonable satisfaction of Bond Counsel and the Underwriter; (xx) a title policy in forn and substance acceptable to Bond Counsel, the Underwriter and Underwriter's Counsel; (xxi) evidence of insurance in compliance with the requirements of the Lease Agreement in forn and substance acceptable to the Underwriter; 48967356.5 16 (xxii) an opinion Stradling Yocca Carlson &Rauth, a Professional Corporation ("Underwriter's Counsel") in fonn and substance acceptable to the Underwriter; (xxiii) a certificate, dated the date of the Preliminary Official Statement, of the City,as required under Rule 15c2-12; (xxiv) a certificate, dated the date of the Preliminary Official Statement, of the Authority, as required under Rule 15c2-12; (xxv) a certificate, dated the date of the Official Statement, of Harrell & Company Advisors, LLC regarding the Official Statement in forin and substance acceptable to the Underwriter; and (xxvi) such additional legal opinions, Bonds, proceedings, instruments or other documents as the Underwriter or Underwriter's Counsel may reasonably request. Section 9. Changes in Official Statement. Within 90 days after the Closing or within 25 days following the"end of the underwriting period" (as defined in Rule 15c2-12), whichever occurs first, if any event shall occur as a result of which it is necessary,in the opinion of the Underwriter, to amend or supplement the Official Statement in order to snake the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to snake the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The City and the Authority shall cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Official Statement with the EMMA. The Underwriter acknowledges that the "end of the underwriting period"will be the date of Closing unless the Underwriter otherwise notifies the City in writing that it still owns some or all of the Bonds. Section 10. Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated,the Underwriter shall be under no obligation to pay, and the Authority shall pay only from the proceeds of the Bonds, but only as the Authority and such other party providing such services may agree, all expenses and costs of the Authority and the City incident to the performance of their obligations in connection with the authorization, issuance, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, rating agency fees and charges, initial fees of the Trustee and Prior Trustee, including fees and disbursements of its counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel and other professional advisors employed by the Authority or the City, title insurance, costs of preparation, printing, signing, transportation, delivery and safekeeping of the Bonds and for expenses (included in the expense component of the spread) incurred by the Underwriter. The Underwriter shall pay all out-of-pocket expenses of the Underwriter, including, without limitation, the fees and expenses of its counsel, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds. Section 11. Notices. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel Nicolaus & Company, Incorporated, One Montgomery Street, 37th Floor, San Francisco, California 94104, Attention: Sara Brown, Managing Director. All notices or communications hereunder by any party shall be given and served upon each other party. Any notice or communication to be given the Authority under 48967356.5 17 this Purchase Agreement may be given by delivering the saine in writing to the City of Palm Springs Financing Authority, c/of City of Palm Springs, 3200 E. Tahquitz Canyon Way, Palm Springs, California 92262, Attention: Executive Director. Any notice or communication to be given the City under this Purchase Agreement may be given by delivering the same in writing to the City of Palm Springs, 3200 E. Tahquitz Canyon Way, Palm Springs, California 92262, Attention: City Manager, with a copy to the Finance Director. Section 12. Parties in Interest. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements of the Authority and the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Bonds. Section 13. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. [Remainder of page intentionally left blank.] 48967356.5 18 Section 14. Governing Law. This Purchase.Agreement shall.be governed by the laws of the State of California. STIFEL NICOLAUS &COMPANY,INCORPORATED By: na ' g Die tor. Accepted: CITY OF PALM SPRINGS FINANCING AUTHORITY APPROVED AS TO FORM By: Executive Director Bond Counsel Time of Execution: .m.Pacific Time Accepted: CITY OF PALM SPRINGS APPROVED AS TO FORM By: City Manager City Attorney Time of Execution: .m.Pacific Time APPROVED AS TO FORM Harrell&Company Advisors 49967356.5 19 Section 14. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California. STIFEL NICOLAUS&COMPANY,INCORPORATED By: Managing Director Accepted: CITY OF PALM SPRINGS FINANCING AUTHORITY APPROVy,,D AS TO FZ— QTA2ou i By: . k Q.L Executive Director Bond Counsel�— Time of Execution:, _.m.Pacific Tim Accepted: CITY OF PALM SPRINGS APPR O FORM City Manager City Atto ey Time of Execution: Pacific Tim APPROVED BY CITY COUNCIL APPROVED AS TO FORM r11&41.2a15 .5e�i�j A 8 FMieM Company Advisors ATTEST: :;ie7Thormpson, City Clerk 48967356.5 19 EXHIBIT A MATURITY SCHEDULE CITY OF PALM SPRINGS FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS,2015 SERIES A Maturity Date Principal Interest (November 1) Amount Rate Yield Price 2016 $125,000 2.000% 0.500% 101.311 2017 295,000 2.000 0.870 102.099 2018 340,000 4.000 1.120 108.132 2019 365,000 4.000 1.340 110.017 2020 425,000 5.000 1.510 116.350 2021 455,000 5.000 1.740 118.137 2022 485,000 5.000 1.930 119.682 2023 570,000 5.000 2.140 120.630 2024 590,000 5.000 2.280 121.746 2025 630,000 5.000 2.450 122.249 2026 690,000 5.000 2.690 121.656 2027 710,000 5.000 2.870 121.307 48967356.5 A-1 DOC as 002-417004 07/31/2 8:00A Fee:NC P e 1 of 34 Recorded in Official Records County of Riverside Gary L. Orso TO BE RECORDED AND WHEN Assessor, county Clerk & Recorder RECORDED RETURN TO: III II IIIIII Iilll IIII II IIII IIIIII II IIII III III Burke,Williams &Sorensen, LLP, 18301 Von Karman Avenue, Suite 1050 Irvine, California 92612-1009 M PAGE, SIZE OA PCOR NOGGR SMF MISG Attn: Robert F. Messinger, Esq. A R L COPY LONG REFON� NCHG EXAM THIS TRANSACTION IS EXEMPT TROM 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. LM LEASE AGREEMENT PS Financing Authority Lease Agreement - Bonds AGREEMENT #4552 Dated as of August 1,2002 FA25 R20390 7-17-02 By and between CITY OF PALM SPRINGS FINANCING AUTHORITY And CITY OF PALM SPRINGS Relating to $8,000,000 City of Palm Springs Taxable Variable Rate Demand Certificates of Participation,2002 Series A (Downtown Parking Project) IRV#23079 v3 Execution Copy TABLE OF CONTENTS Page No. Section1. Definitions............................................................................................... 2 Section 2. Lease Term; Transfer of Title To City...................................................... 4 Section3. Rent......................................................................................................... 5 3.1 Rental Payments. ..................................................................................... 5 3.2 Consideration........................................................................................... 7 3.3 Budget; Delivery of Adopted Annual Budget and Audited Financial Statements to Credit Bank and Confirming Credit Entity. ........................ 7 3.4 Payment: Credit. ...................................................................................... 8 3.5 Rental Abatement. ................................................................................... 8 3.6 Triple Net Lease. ..................................................................................... 9 Section 4. Affirmative Covenants of the Authority and the City. .............................. 9 4.1 Replacement. Maintenance and Repairs. .................................................. 9 4.2 Taxes. Other Governmental Charges and Utility Charges....................... 10 4.3 Insurance. .............................................................................................. 10 4.4 Liens...................................................................................................... 13 4.5 Compliance with Laws, Regulations, Etc. .............................................. 13 4.6 Environmental Compliance.................................................................... 14 4.7 Condemnation........................................................................................ 15 Section 5. Application of Insurance Proceeds......................................................... 16 5.1 General. ................................................................................................. 16 5.2 Title Insurance. ...................................................................................... 16 Section 6. Eminent Domain.................................................................................... 16 6.1 Total Condemnation. ............................................................................. 16 6.2 Partial Condemnation............................................................................. 16 Section7. Assignment............................................................................................ 17 Section 8. Additions and Improvements;Removal. ................................................ 17 Section9. Right of Entry........................................................................................ 17 Section 10. Quiet Enjoyment...............................................................................I.... 18 IRV 823079 v3 _i_ Execution Copy IIIIIII IIIIII IIIII IIIIII II IIIIIII IIIII III IIIII IIII IIII 07, 3�1�200£208 00R Section 11. Indemnification and Hold Harmless Agreement..................................... 18 Section 12. Default by City. ..................................................................................... 18 12.1 Events of Default. .................................................................................. 18 12.2 Remedies on Default.............................................................................. 18 Section13. Waiver................................................................................................... 19 Section 14. DISCLAIMER OF WARRANTIES....................................................... 19 Section15. Prepayment............................................................................................ 20 Section 16. Release and Substitution. ....................................................................... 20 Section17. Notices. ................................................................................................. 22 Section18. Validity.................................................................................................. 23 Section 19. Execution in Counterparts...................................................................... 23 Section 20. Law Governing...................................................................................... 23 Section21. Amendment. .......................................................................................... 23 Section 22. Excess Payments.................................................................................... 25 Section23. No Merger. ............................................................................................ 25 Section 24. Rights of Credit Bank. ........................................................................... 25 Section 25. Third-Party Beneficiaries. ...................................................................... 26 Section 26. References to Credit Bank Ineffective.................................................... 26 Section 27. Further Assurances and Corrective Instruments...................................... 26 Section 28. Default by Authority;No Right to Terminate......................................... 26 Exhibit A- Legal Description of Property.......................................................................A-1 Exhibit B-1 -Base Rental Payment Schedule (Certificates in the Weekly Rate Mode).B-1-1 Exhibit B-2-Base Rental Payment Schedule (Certificates in the Fixed Rate Mode).....B-2-1 n2V#23079 v3 -ii- Execution Copy IIII III III I I II II I I III II II III 07 301�i2 012 0884 : 3 of 34 LEASE AGREEMENT THIS LEASE AGREEMENT, dated as of August 1, 2002 (this "Lease Agreement'), by and between the CITY OF PALM SPRINGS (the"City'), a municipal corporation and charter city organized and existing under the Constitution and laws of the State of California (the "State") and the Charter of the City of Palm Springs, as lessee, and the CITY OF PALM SPRINGS FINANCING AUTHORITY (the "Authority"), a joint powers authority duly organized and existing under a joint exercise of powers agreement and the laws of the State, as lessor: WITNESSETH: WHEREAS, the Authority is a joint powers authority duly organized and existing under that certain Joint Exercise of Powers Agreement, dated February 1, 1991, by and between the City and the Community Redevelopment Agency of the City of Palm Springs, and under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the"Land') WHEREAS, the City has the present need to construct and improve certain capital projects,which may be financed most efficiently concurrently as a lease-purchase financing; and WHEREAS, in order to create a source of funding for the foregoing Project (as defined hereinafter), the City has determined to authorize the execution and delivery of $8,000,000 aggregate principal amount of its Taxable Variable Rate Demand Certificates of Participation, 2002 Series A (the"Certificates"), to be executed and delivered under and pursuant to the terms hereof; and WHEREAS, in order to create a source of payments sufficient to provide for the payment of the principal and interest evidenced and represented by the Certificates, the City has determined to lease certain of its real property(the"Property') to the Authority and to lease the Property from the Authority pursuant to this Lease Agreement under which the City will pay base rental payments to the Authority for the use and occupancy of the Property; NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows: IRV#23079 v3 _1_ Exemdon Copy 1111111111 III II II III 1111 II III II ©7 30�a 01f as¢a0p 4 02 34 Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section 1 shall, for all purposes of this Lease, have the meanings as set forth below. All other capitalized terms used herein without definition shall have the meanings as set forth in the Trust Agreement (as hereafter defined). "Additional Rental"means the amounts specified as such in Section 3.1(c)hereof. "Asbestos Containing Materials" means material in friable form containing more than one percent (1%) of the asbestiform varieties of (a) chrysotile (serpentine); (b) crocidolite (ricbeckite); (c) amosite (cummington-itegrinerite); (d) anthophyllite; (e) tremolite; and (f) actinolite. "Authority" means the City of Palm Springs Financing Authority created pursuant to that certain Joint Exercise of Powers Agreement dated February 1, 1991 by and between the Community Redevelopment Agency of the City of Pahn Springs and the City of Palm Springs. "Base Rental"means the amounts specified as such in Section 3.1(a)(i) and (ff)hereof, as such amounts may be adjusted from time to time in accordance with the terms hereof,but does not include Additional Rental. "Business Day" means a day other than (a) Saturday or Sunday, (b) a day on which banking institutions in the city or cities in which the principal office of the Trustee,the principal office of the Remarketing Agent or the office of the Credit Bank at which requests for purchase under the Letter of Credit are made or office of Confirming Credit Entity or the Confirming Credit Entity's Depository Bank, as set forth in the Confirmation Agreement, are located, are authorized or required by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. If the date for making any payment or the last date for performance of any act or the exercising of any right,as provided in the Trust Agreement or the Lease Agreement, shall not be a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day, with the same force and effect as if done on the nominal date provided in the Trust Agreement or the Lease Agreement and,unless otherwise specifically provided in the Trust Agreement, the Lease Agreement, Reimbursement Agreement or Confirmation Agreement, no interest shall accrue for the period from and after such nominal date. "Certificates" means the City of Palm Springs Taxable Variable Rate Demand Certificates of Participation, 2002 Series A executed and delivered by the Trustee pursuant to the Trust Agreement. "City" means the City of Palm Springs. "City Representative"means the Mayor, Mayor Pro Tem, City Manager, the Director of Finance and Treasurer or another official designated by the City Council and authorized to act on behalf of the City under or with respect to this Lease and all other agreements related hereto. IRV#23079 v3 _2- Execution Copy IIIIII IIIIII IIIII IIIIII II IIIIIII IIIIII III IIIII IIII IIII 07 30a 02 00R 5 of 3 4 "Environmental Regulations" means all Laws and Regulations, now or hereafter in effect, with respect to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as amended(42 U.S.C. Section 9601, et seg.)) (together with the regulations promulgated thereunder, "CERCLA"), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, et seq. (together with the regulations promulgated thereunder, "RCRA"), the Emergency Planning and Community Right-to-Know Act, as amended (42 U.S.C. Section 11001, et seq. (together with the regulations promulgated thereunder, "Title III"), the Clean Water Act, as amended (33 U.S.C. Section 1321, et se .)(together with the regulations promulgated thereunder, "CWA"), the Clean Air Act, as amended (42 U.S.C. Section 7401, et seg. (together with the regulations promulgated thereunder, "CAA") and the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et seg. (together with the regulations promulgated thereunder, "TSCA"), and any state or local similar laws and regulations and any so-called local,state or federal"superfund" or"superlien" law. "Fiscal Year" means the fiscal year of the City, which at the date of this Lease is the period from July 1 to and including the following June 30. "Hazardous Materials"has the meaning provided in Section 4.5(b) "Laws and Regulations"has the meaning provided in Section 4.5(b). "Lease" means this Lease Agreement, including any amendments or supplements hereto made or entered into in accordance with the terms hereof and of the Trust Agreement. "Lease Event of Default" means the occurrence and continuation of any event specified in Section 12(a)hereof. "Lease Term"means the term of this Lease, as provided in Section 2 hereof. "Lease Year" means the period from the Closing Date through August 1, 2002 and thereafter the period from each August 2, to and including the following August 1, during the Lease Term. "Permitted Encumbrances" means, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent; (b) any right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law after the Closing Date and which will be paid in the ordinary course of business or are being contested in good faith by the City (c) easements, rights-of-way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date; (f) easements, rights-of-way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which do not reduce the value of the Property. "Project" means the acquisition of a site and the construction of a multi-level parking structure thereon and the improvement of certain City-owned surface parking lots. EiV#23079 v3 -3- Execution Copy IIII II III I II111111111111111111111111111 II 97r 1/2002MOOA 6 of 34 "Property" means the real property, including all buildings and improvements at any time thereon, as described in Exhibit A hereto, including any real property substituted therefor pursuant to Section 16 hereof but excluding real property which has been released or for which new real property has been substituted in accordance with Section 16. "Release" has the meaning provided in Section 4.5(b). "Rental Payments"means all Base Rental and Additional Rental payable hereunder. "Trust Agreement"means that certain Trust Agreement, dated as of the date hereof,by and among the City, the Authority and the Trustee,including any amendments or supplements thereto made or entered into in accordance with its terms. "Trustee" means BNY Western Trust Company, as trustee acting in its capacity as such under the Trust Agreement or any successor appointed as therein provided. Section 2. Lease Term,Transfer of Title To City. (a) In consideration of the payment of a lease payment of $8,000,000 by the Authority less the Underwriters' Discount, the payment of Costs of Issuance, and in consideration of the execution of this Lease Agreement by the City, and other good and valuable consideration, the City hereby leases to the Authority, and the Authority hereby leases from the City, the Property for the final maturity of the Certificates, plus one week following the final maturity of the Certificates; (b) The Authority hereby leases the Property to the City, and the City hereby leases the Property from the Authority, upon the terms and conditions set forth in this Lease Agreement. (c) The City hereby takes possession of the Property on the Delivery Date. (d) The Term of this Lease Agreement shall commence on August 1, 2002 and shall end on August 1, 2027, unless such term is extended as hereinafter provided or unless Lease Payments have been paid or prepaid in full or provision shall have been made for such payment pursuant to Section 15 hereof. If on August 1, 2027, the Trust Agreement shall not be discharged by its term or if the Lease Payments payable hereunder shall have been abated at any time and for any reason, then the Term of this Lease Agreement shall be extended until the earlier of August 1, 2037, or the date the Trust Agreement shall be discharged by its terms. If prior to August 1, 2027, or the date the Trust Agreement shall be discharged by its terms and any amounts then owned to the Trustee have been paid in full, the Term of this Lease Agreement shall thereupon end. (e) The City will complete the acquisition, construction, improvement, equipping and installation of the Project, and will cause the work under construction or installation contracts to be diligently performed after payment of the lease payment by the Authority pursuant to this Section 2. The City will use its best efforts to ensure that the Project will be substantially completed in accordance with plans and specifications approved by the City and accepted by the City on or prior to August 1, 2003. Said date represents the final completion IRV#23079 v3 -4_ Execution Copy IIIII II 11111 I III 111111111111111111111111111111111111 97 20Q 7e fla©s4oea date of the Project, and the parties agree and understand that the Project is expected to be completed prior to such date. Upon completion of the acquisition, construction, improvement and equipping or installation of the Project satisfactory to the City,but in any event not later than thirty (30) days following such completion, the City shall deliver to the Trustee a Certificate of Completion with respect to the Project. Section 3. Rent. 3.1 Rental Payments. The City hereby agrees, subject to the terms hereof, to pay from any legally available funds to the Authority the Base Rental and to pay to the parties entitled thereto Additional Rental in an aggregate amount no greater than the fair rental value of the Property in each Lease Year. In satisfaction of its obligations hereunder, the City shall pay the Base Rental and Additional Rental in the amounts, at the times and in the manner hereinafter set forth, such amounts constituting in the aggregate rent payable under this Lease. (a) (i) Base Rental (Weekly Rate). Subject to the provisions of Section 3.5 hereof and the provisions of Sections 6 and 15 hereof, the principal and interest components of the Base Rental evidenced by the Certificates in the Weekly Rate Mode (the"Weekly Rate Base Rentar) shall be paid by the City in the amounts and at the times specified in the Base Rental Payment Schedule (Weekly Rate) attached as Exhibit B-1 hereto. The interest components of the Weekly Rate Base Rental shall be paid by the City as and constitute interest paid on the principal components of the Weekly Rate Base Rental. The interest components of the Weekly Rate Base Rental shall accrue at the Weekly Rate, calculated as provided in the Trust Agreement. Notwithstanding the foregoing, the interest components of Weekly Rate Base Rental evidenced by Bank Certificates shall accrue at the Draw Rate or Default Rate, as applicable, calculated as provided in the Reimbursement Agreement. In addition, the principal and interest components of the Weekly Rate Base Rental evidenced by Bank Certificates shall be paid by the City in the amounts and at the times specified in the Trust Agreement and the Reimbursement Agreement. To secure the performance of its obligation to pay the Weekly Rate Base Rental, the City shall deposit the Weekly Rate Base Rental payable on any Interest Payment Date or Principal Payment Date with the Trustee on or before the date that is three days prior to the Interest Payment Date or Principal Payment Date, in each case for application by the Trustee in accordance with the terms of the Trust Agreement. In the event the Weekly Rate is set between the date the City pays Base Rental to the Trustee and the payment date, the City shall estimate the Interest component of such Base Rental Payment on the last effective Weekly Rate. In the event any such date of deposit is not a Business Day, such deposit shall be made on the first prior day that is a Business Day. (ii) Base Rental (Fixed Rate). Subject to the provisions of Section 3.5 hereof and the provisions of Sections 6 and 15 hereof, the principal and interest components of the Base Rental evidenced by the Certificates in the Fixed Rate Mode (the "Fixed Rate Base Rentar) shall be paid by the City in the amounts and at the times specified in the Base Rental Payment Schedule (Fixed Rate) attached as Exhibit'B-2 hereto. The interest components of the Fixed Rate Base IRV X23079 v3 -5- Execution Copy IIIIII IIIIII IIII IIIIII II IIII II(IIII III IIIII IIII IIII 290 07 0 8 8 £2 3¢00R Rental shall be paid by the City as and constitute interest paid on the principal components of the Fixed Rate Base Rental. The interest components of the Fixed Rate Base Rental shall accrue at the Fixed Rate, calculated as provided in the Trust Agreement. Fixed Rate Base Rental payable on July 15 in any year shall be for the period from February 2 of the prior year to August 1 of such year, and Fixed Rate Base Rental payable on January 15 in any year shall be for the period from August 2 of such year to February 1 of such succeeding year. To secure the performance of its obligation to pay the Fixed Rate Base Rental, the City shall deposit the Fixed Rate Base Rental payable on August 1 of any year with the Trustee on or before July 15 of such year and shall deposit the Fixed Rate Base Rental payable on February 1 of any year with the Trustee on or before January 15 of the preceding year, in each case for application by the Trustee in accordance with the terms of the Trust Agreement. In the event any such date of deposit is not a Business Day, such deposit shall be made on the next succeeding Business Day. (b) In no event shall the amount of Base Rental payable on any date exceed the aggregate amount of Principal and interest required to be paid or prepaid on such date with respect to the Outstanding Certificates, according to their tenor. (c) Additional Rental. In addition to the Base Rental set forth herein,the City agrees to pay as Additional Rental, to the extent permitted by law, all of the following: (i) All taxes and assessments of any nature whatsoever, including but not limited to excise taxes, ad valorem taxes, ad valorem and specific lien special assessments and gross receipts taxes, if any, levied upon the Property or upon any interest of the Authority, the Trustee or the Owners therein or in this Lease; (ii) Insurance premiums, if any, on all insurance required under the provisions of Section 4.3 hereof; (iii) All fees, costs and expenses (not otherwise paid or provided for out of the proceeds of the sale of the Certificates) of the Trustee and any paving agent in connection with the Trust Agreement; (iv) Any other fees,costs or expenses incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of this Lease or any assignment hereof or of the Trust Agreement or any of the transactions contemplated hereby or thereby or related to the Property; (v) Amounts required to be paid to the Trustee for deposit in the Reserve Fund; (vi) All fees, charges and expenses payable to the Credit Bank and the Confirming Credit Entity pursuant to the Reimbursement Agreement and the Confirmation Agreement, other than amounts payable to the Credit Bank and the Confirming Credit Entity with respect to Bank Certificates; IRV#23079 v3 _(_ Execution Copy IIIIII HE 11111111111111111111111111111 IN II 07 3g1,' 20 2 o1f 3 4a0R 9 0 34 (vii) All other payments required to be paid by the City under the provisions of this Lease or the Trust Agreement. Amounts constituting Additional Rental payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City shall pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee or the Authority, as applicable, to the City stating the amount of Additional Rental then due and payable and the purpose thereof. (d) Notwithstanding anything herein to the contrary, the City shall not be obligated to pay the Base Rental, other than Base Rental payable from proceeds of the Certificates representing capitalized interest at an interest rate of 4.5% in lieu of Base Rental and interest earnings thereon deposited in the Interest Account of the Base Rental Payment Fund pursuant to Section 7.01 of the Trust Agreement until the Project has been acquired, constructed and installed as evidenced by a Certificate of Completion delivered to the Trustee pursuant to Section 2 of this Lease Agreement. 3.2 Consideration. (a) The payments of Rental Payments under this Lease for each Fiscal Year or portion thereof during the Lease Term shall constitute the total rental for such Fiscal Year or portion thereof and shall be paid by the City for and in consideration for the right to the use and occupancy, and the continued quiet use and enjoyment, of the Property by the City for and during such Fiscal Year or portion thereof. The parties hereto have agreed and determined that such total rental in any Fiscal Year is not and will not be in excess of the total fair rental value of the Property for such Fiscal Year. In making such determination, consideration has been given to the uses and purposes served by the Property and the benefits therefrom that will accrue to the parties by reason of this Lease and to the general public by reason of the City's use of the Property. (b) The City hereby represents and warrants that the Property is an essential facility for the operations of the City. 3.3 Budget, Delivery of Adopted Annual Budget and Audited Financial Statements to Credit Bank and Confirming Credit Entity. The City hereby covenants to take such action as may be necessary to include all Rental Payments due in each fiscal year hereunder in its annual budget and to make the necessary annual appropriations for all such Rental Payments, subject to Section 3.5 hereof. The City further covenants, to the extent permitted by law, to take such action as may be necessary to include in its annual budget and to make appropriations from any legally available funds sufficient funds to make all Rental Payments in excess of any insurance to ensure completion of any reconstruction, repair, restoration, modification or improvements to the Property. Notwithstanding the foregoing, the obligation of the City to make Base Rental or Additional Rental payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Certificates nor the obligation of the City to make Base Rental or IRV#23079 0 _7_ Execution Copy IIIIII IIIII IIIII II III II(IIIIII IIIIII III IIIIII III(III 07 200 2 0 o£ 4 08 00R Additional Rental payments constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The City shall annually during the term hereof and so long as the Letter of Credit is in effect (a) deliver a copy of the City's annual budget to the Credit Bank and the Confirming Credit Entity within thirty (30) days of the adoption thereof by the governing board of the City and (b) deliver a copy of the annual audited financial statement of the City to the Credit Bank and the Confirming Credit Entity within 120 days of the end of each Fiscal Year of the City. 3.4 Payment: Credit. Amounts necessary to pay Base Rental shall be deposited by the City on the dates set forth in Section 3.1(a) hereof in lawful money of the United States of America, at the Principal Office of the Trustee, or at such other place or places as may be established in accordance with the Trust Agreement. Except as provided in Section 3.5 hereof, any amount necessary to pay any Base Rental or portion thereof that is not so deposited shall remain due and payable until received by the Trustee. Notwithstanding any dispute between the City and the Authority hereunder, the City shall make all Rental Payments when due and shall not withhold any Rental Payments pending the final resolution of such dispute or for any other reason whatsoever. The City's obligation to make Rental Payments in the amount and on the terms and conditions specified hereunder shall be absolute and unconditional without any right of set-off or counterclaim, and without abatement, subject only to the provisions of Section 3.5 hereof. Amounts required to be deposited with the Trustee pursuant to this Section 3.4 on any date shall be reduced to the extent of amounts on deposit on such date in the Base Rental Payment Fund (except with respect to amounts on deposit in the Base Rental Payment Fund as a result of a transfer from the Reserve Fund), the Interest Account and the Principal Account of the Base Rental Payment Fund held by the Trustee under the Trust Agreement, except for amounts being held therein for the payment of Certificates that have matured or been called but have not been surrendered for payment. 3.5 Rental Abatement. Except to the extent of (i) available amounts held by the Trustee in the Base Rental Payment Fund, the Interest Account or the Principal Account or in the Reserve Fund, (ii) amounts, if any, received in respect of rental interruption insurance, and (iii) amounts, if any, otherwise legally available to the City for payments in respect of this Lease Agreement or to the Trustee for payments in respect of the Certificates, Rental Payments due hereunder shall be subject to abatement in accordance with this Section 3.5 during any period in which, by reason of non-completion of the construction of the Project, material damage, destruction or condemnation of the Property or any portion thereof, or defects in title to the Property or any portion thereof, there is substantial interference with the right to the use and occupancy of the Property or any portion thereof by the City. The amount of annual rental abatement shall be such that the resulting Rental Payments in any Lease Year during which such interference continues, excluding any amounts described in clauses (i), (ii) or (iii) above, do not exceed the annual fair rental value of the portions of the Property with respect to which there has not been substantial interference, as evidenced by a certificate of a City Representative. Such abatement shall continue for the period commencing with the date of such non-completion of construction, IRV#23079 v3 _8_ Execution Copy I IIIII III IIIII III III III IIIIII II IIIII III IIII 07 3@1/I I of 8400R damage, destruction, condemnation or discovery of such title defect and ending with the substantial completion of construction or restoration of the Property or portion thereof to tenantable condition or correction of the title defect. To the extent permitted by law and so long as the Insurance Policy is in full force and effect, upon cessation of the abatement event, the Property shall be appraised to determine its current fair rental value. If such value has increased since the date of delivery of the Certificates, so long as the Insurance Policy is in full force and effect and to the extent permitted by law, Base Rental shall be increased up to the amount of such increase in fair rental value to the earlier of (i) the end of the remaining term or (h) until such time as all abated and unpaid Base Rental(without interest thereon)have been paid. In the event of any such damage, destruction, condemnation or title defect,this Lease shall continue in full force and effect, except as set forth in Sections 5 and 6 hereof. 3.6 Triple Net Lease. This Lease is intended to be a triple net lease. The City agrees that the Rental Payments provided for herein shall be an absolute net return to the Authority free and clear of any expenses, charges or set-offs whatsoever. Section 4. Affirmative Covenants of the Authority and the City. The Authority and the City are entering into this Lease in consideration of, among other things, the following covenants: 4.1 Replacement. Maintenance and Repairs. The City shall, at its own expense, during the Lease Term maintain the Property, or cause the same to be maintained, in good order, condition and repair. The City shall replace any portion of the Property that is destroyed or damaged to such an extent that there is substantial interference with the right to the use and occupancy of the Property or any portion thereof by the City that would result in an abatement of Rental Payments or any portion thereof pursuant to Section 3.5 hereof, whether or not there are sufficient insurance or condemnation proceeds to pay for such replacement; provided,however, that the City shall not be required to repair or replace any such portion of the Property pursuant to this Section 4.1 if there shall be applied to the prepayment of Outstanding Certificates insurance or condemnation proceeds or other legally available funds sufficient to prepay (i) all of the Certificates Outstanding and all other amounts due hereunder and under the Trust Agreement, or (ii) any portion thereof such that the resulting Rental Payments payable pursuant to Section 3.1 hereof in any Lease Year following such partial prepayment are sufficient to pay in the then current and any future Lease Year the Principal and interest with respect to all Certificates to remain Outstanding and all other amounts due hereunder and under the Trust Agreement, to the extent it is due and payable in such Lease Year, immediately after such partial prepayment. The City shall provide or cause to be provided all security service, custodial service, janitorial service and other services necessary for the proper upkeep and maintenance of the Property. It is understood and agreed that in consideration of the payment by the City of the Rental Payments herein provided for, the City is entitled to use and occupy the Property and the Authority shall have no obligation to incur any expense of any kind or character in connection with the management, operation or maintenance of the Property during the Lease IRV#23079 v3 -9- Execution Copy II II I IIII IIII II II II II II I 111111111 III 07 3��2001£08 400R Term. The Authority shall not be required at any time to make any improvements, alterations, changes, additions, repairs or replacements of any nature whatsoever in or to the Property. The City hereby expressly waives the right to make repairs or to perform maintenance of the Property at the expense of the Authority and(to the extent permitted by law)waives the benefit of Sections 1932, 1941 and 1942 of the California Civil Code relating thereto. The City shall keep the Property free and clear of all liens, charges, security interests and encumbrances other than (i) those existing on or prior to the Closing Date or on or prior to the date any property is substituted for any of the Property pursuant to Section 16 hereof which are covered by the exceptions and exclusions set forth in the title policies delivered pursuant to Section 4.3 or Section 16, as applicable, and expressly approved by the City, the Authority and the Credit Bank, and (ii) any liens of mechanics, materialmen, suppliers, vendors or other persons or entities for work or services performed or materials furnished in connection with the Property that are not due and payable or the amount, validity or application of which is being contested in accordance with Section 4.4 hereof. 4.2 Taxes. Other Governmental Charges and Utility Charges. The Authority and the City contemplate that the Property will be used for a governmental or proprietary purpose of the City and, therefore, that the Property will be exempt from all taxes presently assessed and levied with respect to the Property. Nevertheless, the City hereby agrees to pay during the Lease Term, as the same respectively become due, all taxes (except for income or franchise taxes of the Authority), utility charges and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Property; provided, however, that, with respect to any 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 accrued during such time as this Lease is in effect; and provided further, that the City may contest in good faith the validity or application of any tax, utility charge or governmental charge in any reasonable manner that, in the opinion of Independent Counsel does not adversely affect the right, title and interest of the Authority in and to any portion of the Property or its rights or interests under this Lease or subject any portion of the Property to loss or forfeiture. Any such taxes or charges shall constitute Additional Rental under Section 3.1(c) hereof and shall be payable directly to the entity assessing such taxes or charges. 4.3 Insurance. (a) The City shall secure and maintain or cause to be secured and maintained, at all times with insurers of recognized responsibility, and such insurers shall be rated in the two (2) highest rating categories of S&P or Moody's, or through a program of self-insurance to the extent specifically permitted in this Section 4.3, all coverage on the Property required by this Section 4.3. (1) A policy or policies of insurance against loss or damage to the Property known as "all risk," excluding earthquake insurance. Such insurance shall be maintained at any time in an amount not less than the lesser of the full replacement value of the Property or the aggregate Principal amount of Certificates at such time Outstanding. The term "full replacement value" as used herein shall mean the cost of IRV#23079 v3 _10_ Execution Copy II II I III III II II III I II I I I II 07 31 2002708400R 3 of 34 repair or replacement of the Property, without deduction for depreciation. Such insurance may at any time include a deductible clause providing for a deductible not to exceed $500,000 (or such greater amount approved by the Authority) from all losses in any year;provided,however, that in the event the City is unable to secure and maintain, or cause to be secured and maintained, the insurance required under this clause (1), the City shall self-insure to the extent necessary to enable it to repair or replace the Property in accordance with the provisions of Section 4. 1 hereof; (2) Comprehensive general liability coverage against claims for damages including death, personal injury, bodily injury or property damage arising from operations involving the Property. Such insurance shall afford protection with a combined single limit of not less than $500,000 per occurrence with respect to bodily injury, death or property damage liability;provided,however,that the City's obligations under this clause (2)may be satisfied by self-insurance; (3) Machinery coverage against loss or damage by explosion of pressure vessels and similar apparatus now or hereafter installed in an amount not less than $7,500,000 per accident: provided, however, that the City's obligations under this clause (3) may be satisfied by self-insurance; (4) Workers' compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers'compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act; provided, however, that the City's obligations under this clause (4) may be satisfied by self-insurance; and (5) Rental interruption insurance to cover loss, total or partial, of the use of any part of the Property as a result of any of the hazards covered by the insurance required pursuant to clause (1) above,in an amount sufficient at all times to pay the total rent payable under this Lease for a period adequate to cover the period of repair or replacement. Such policy shall provide that the amount payable thereunder shall not be less than an amount equal to two times the maximum Base Rental payable for a period of 24 months, provided, however, that for purposes of calculating said maximum amount, the interest component of Base Rental evidenced by Certificates in a Weekly Rate Mode shall be deemed to accrue at a rate per annum of 12%;provided, further that the City's obligations under this clause (5)may not be satisfied by self-insurance. All policies or certificates issued by the respective insurers for insurance, with the exception of workers' compensation insurance, shall provide that such policies or certificates shall not be canceled or materially changed without at least 30 days' prior written notice to the Trustee and the Credit Bank. No more often than once per calendar year during the Lease Term, the City shall provide, on or after March 1, 2003, for the Trustee a certificate of the City's Risk Manager, or an independent insurance consultant or actuary, stating whether all policies or self-insurance required by this Section 4.3 have been obtained and are in full force and effect. IRV#23079 v3 _11_ Execution Copy III I IIIIII III IIIIII II IIIIIII IIIII III IIII I I III e7r3010 14 o 0E40eF 4 0£ 34 All policies or certificates of insurance provided for in this Section 4.3(a) shall name the City as a named insured, and the Authority and the Trustee as additional insureds. All policies or certificates of insurance maintained under clauses (1), (3) and (5) above, shall name the Trustee as loss payee, and the proceeds of such insurance shall be deposited with the Trustee for application pursuant to the Trust Agreement. All proceeds of insurance maintained under clauses (2) and (4) shall be deposited with the City. Notwithstanding the generality of the foregoing (with the exception of the rental interruption insurance required by clause (5) above), the City shall not be required to maintain or cause to be maintained (i) more insurance than is specifically referred to above or (ii) any policies of insurance other than standard policies of insurance with standard deductibles offered by reputable insurers at a reasonable cost in the open market. (b) Any self-insurance maintained by the City pursuant to this Section 4.3 shall comply with the following terms: (1) The self-insurance program shall be approved in writing by an independent insurance consultant and the insurer; (2) The self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid; the adequacy of each such fund shall be evaluated on an annual basis by the independent insurance consultant; and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of aforementioned independent insurance consultant; (3) The self-insured claims reserve fund shall be held in a separate trust fund by an independent trustee, which may be the Trustee serving as such under the Trust Agreement; and (4) In the event the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by the independent insurance consultant, shall be maintained; and (5) The self-insurance programs shall be in effect as of the date hereof, or if a new program of self-insurance is established, or if coverages are being increased, then the City shall obtain the prior written consent of the Credit Bank. (c) The City shall deliver to the Trustee as soon as practicable after the Closing Date, (i) a copy of an CLTA Owner's policy of title insurance with respect to the Property, issued in an amount equal to the aggregate principal amount of Certificates Outstanding by a title insurance company acceptable to the Authority and the Credit Bank, naming the City as insured and showing fee title to the Property in the name of the City; and(ii) a copy of an CLTA Leasehold Owner's Policy naming the Authority and the City as insureds, and insuring the validity and priority of the this Lease (and the interest of the Authority thereunder, as assigned to the Trustee). All endorsements and restrictions to the policies delivered hereunder must be acceptable to the Credit Bank. The policies delivered hereunder may not permit the title insurer to purchase any Certificates in lieu of providing payment under the policy unless, upon IRV#23079 v3 -12- Execution Copy II I III 11111111111111111111111111111111111111111111115 9�3A0 of e4aea uF 24 purchase, such Certificates are cancelled, or to settle claims with any person other than the Trustee, acting with the consent of the Credit Bank. 4.4 Liens. The City promptly shall pay or cause to be paid all sums of money that may become due for any labor, services, materials, supplies or equipment alleged to have been furnished or to be furnished to or for, in, upon or about the Property and that may be secured by any mechanic's, materialman's or other lien against the Property, or the interest of the Authority therein, and shall cause each such lien to be fully discharged and released; provided, however, that the City or the Authority(i)may contest in good faith any such claim or lien without payment thereof so long as such non-payment and contest stays execution or enforcement of the lien, but if such lien is reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not stayed, or if stayed and the stay thereafter expires, then and in any such event the City shall forthwith pay and discharge such judgment or lien, or (ii) delay payment without contest so long as and to the extent that such delay will not result in the imposition of any penalty or forfeiture. 4.5 Compliance with Laws,Regulations,Etc. (a) The City agrees to observe and comply with all rules, regulations and laws applicable to the City with respect to the Property and the operation thereof. The cost,if any, of such observance and compliance shall be borne by the City, and the Authority shall not be liable therefor. The City agrees further to place,keep,use,maintain and operate the Property in such a manner and condition as will provide for the safety of its agents, employees, invitees, subtenants, licensees and the public. (b) The City has, after due inquiry,no knowledge and has not given or received any written notice indicating that the Property or the past or present use thereof or any practice, procedure or policy employed by it in the conduct of its business materially violates any applicable law, regulation, code, order, rule, judgment or consent agreement, including, without limitation, those relating to zoning, building, use and occupancy, fire safety, health, sanitation, air pollution, ecological matters, environmental protection. hazardous or toxic materials, substances or wastes, conservation, parking, architectural barriers to the handicapped, or restrictive covenants or other agreements affecting title to the Property (collectively, "Laws and Regulations"). Without limiting the generality of the foregoing, neither the City nor to the best of its knowledge, after due inquiry, any prior or present owner, tenant or subtenant of any of the Property has, other than as set forth in subsections (b) and (c) of this Section or as may have been remediated in accordance with Laws and Regulations, (i) used, treated, stored, transported or disposed of any material amount of flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated substances or related materials, as defined in CERCLA,RCRA,CWA,CAA,TACA and Title III, and the regulations promulgated pursuant thereto, and in all other Environmental Regulations applicable to the City, any of the Property or the business operations conducted by the City thereon (collectively "Hazardous Materials") on, from or beneath its Property, (h) pumped, spilled, leaked, disposed of, emptied, discharged or released(hereinafter collectively referred to IRV#23079 v3 -13- Execution Copy IIIIII 11111111111111111 II 1111111111111 III 111111 III 111107 30�2s 2 08884 as"Release") any material amount of Hazardous Materials on, from or beneath the Property, or (iii) stored any material amount of petroleum products at the Property in underground storage tanks. (c) Excluded from the representations and warranties in subsection (a) hereof with respect to Hazardous Materials are those Hazardous Materials in those amounts ordinarily found in the inventory of or used in the operations of a facility, the use, treatment, storage, transportation and disposal of which has been and shall be in compliance with all Laws and Regulations. (d) No Property located in an area of high potential incidence of radon has an unventilated basement or subsurface portion which is occupied or used for any purpose other than the foundation or support of the improvements to such Property. 4.6 Environmental Compliance. (a) The City shall not use or permit the Property or any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, if necessary to maintain the improvements on the Property and then, only in compliance with all Environmental Regulations, and any state equivalent laws and regulations,nor shall it permit, as a result of any intentional or unintentional act or omission on its part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee and agent, the storage, transportation, disposal or use of Hazardous Materials or the Release or threat of Release of Hazardous Materials on, from or beneath the Property or onto any other property excluding, however, those Hazardous Materials in those amounts ordinarily found in the inventory of or used in the operation of a facility, the use, storage, treatment, transportation and disposal of which shall be in compliance with all Environmental Regulations. Upon the occurrence of any Release or threat of Release of Hazardous Materials, the City shall promptly commence and perform, or cause to be commenced and performed promptly, without cost to the Authority, all investigations, studies, sampling and testing, and all remedial removal and other actions necessary to clean up and remove all Hazardous Materials so Released, on, from or beneath the Property or other property, in compliance with all Environmental Regulations. Notwithstanding anything to the contrary contained herein, underground storage tanks shall only be permitted subject to compliance with subsection (d) and only to the extent necessary to maintain the improvements on the Property. (b) The City shall comply with, and shall use its best efforts to assure that its tenant's subtenants, agents, licensees, employees, contractors, and agents comply with, all Environmental Regulations and shall keep the Property free and clear;provided,however, that notwithstanding that a portion of this covenant is limited to the City's use of its best efforts, the City shall remain solely responsible for ensuring such compliance and such limitation shall not diminish or affect in any way the City's obligations contained in subsection (c) hereof as provided in subsection (c) hereof. Upon receipt of any notice from any person with regard to the Release of Hazardous Materials on,from or beneath the Property,the City shall give prompt written notice thereof to the Credit Bank, (and, in any event, prior to the expiration of any period in which to respond to such notice under any Environmental Regulation). IRV#23079 v3 _14_ Execution Copy ��� �11 III111111111111111111111111111111 ��� 07.30@ 17 101£a 34 (c) Irrespective of whether any representation or warranty contained in Section 4.5 is not true or correct, the City shall defend, indemnify and hold harmless the Authority, the holders of Certificates, the Trustee, the Credit Bank and the Confirming Credit Entity, its partners, depositors and each of its and their employees, agents, officers, directors, trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys' fees (including, without limitation, attorneys'fees incurred to enforce the indemnification contained in this Section 4.6), consultants' fees, investigation and laboratory fees, liabilities, settlements (five Business Days' prior notice of which the Authority, Trustee, the Credit Bank or the Confirming Credit Entity, as appropriate, shall have delivered to the City), court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in part, arising out of, or in any way related to (i) the presence, disposal, Release, threat of Release, removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the Property, (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials, (iii) any lawsuit brought or threatened, settlement reached (five Business Days'prior notice of which the Authority, the Trustee, the Credit Bank or the Confirming Credit Entity, as appropriate, shall have delivered to the City), or governmental order relating to Hazardous Materials on, from or beneath any of the Property, (iv) any violation of Environmental Regulations or subsection (a) or (b) or (e) hereof by it or any of its agents, tenants, employees, contractors, licensees, guests, subtenants or invitees, and(v) the imposition of any governmental lien for the recovery of environmental cleanup or removal costs. To the extent that the City is strictly liable under any Environmental Regulation, its obligation to the holders of Certificates and the Credit Bank and other indemnitees under the foregoing indemnification shall likewise be without regard to fault on its part with respect to the violation of any Environmental Regulation which results in liability to any indemnitee. Its obligations and liabilities under this Section 4.6 shall survive any foreclosure of the security interest in the Property or the delivery of any instrument in lieu of foreclosure, and the satisfaction of all Certificates. (d) The City shall conform to and carry out a reasonable program of maintenance and inspection of all underground storage tanks, and shall maintain, repair, and replace such tanks only in accordance with Laws and Regulations, including but not limited to Environmental Regulations. 4.7 Condemnation. The City hereby covenants and agrees, to the extent it may lawfully do so, that so long as any of the Certificates remain outstanding and unpaid, the City will not exercise the power of condemnation with respect to the Property. The City further covenants and agrees,to the extent it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fail or refuse to abide by such covenant and condemns the Property, the appraised value of the leased property shall not be less than the greater of (i) if such Certificates are not then subject to redemption, the amount necessary to defease such Certificates to the first available redemption date in accordance with the Trust Agreement. IRV#23079 Q _1 j_ Execution Copy I IIIIII IIIIII IIIII IIIIII II IIIIIII IIIIII III IIIIII III IN 07 3@©18 2 0of 400 Section 5. Application of Insurance Proceeds. 5.1 General. Proceeds of insurance received in respect of destruction of or damage to any portion of the Property by fire or other casualty or event shall be paid to the Trustee for application in accordance with the provisions of Section 7.06 of the Trust Agreement. If there is an abatement of Rental Payments pursuant to Section 3.5 hereof as a result of such casualty or event, and the City elects pursuant to Section 7.06 of the Trust Agreement to apply such insurance proceeds and such other sums as are deposited by the City pursuant to such section to the prepayment of Certificates rather than to the replacement or repair of the destroyed or damaged portion of the Property, then this Lease shall terminate with respect to the destroyed or damaged portion of the Property as of the later of the date of such election by the City or the date the amount required by Section 7.06 of the Trust Agreement is received by the Trustee and in either case, after payment of any Additional Rental owed hereunder. If the City elects, pursuant to Section 7.06 of the Trust Agreement to apply such proceeds to the repair or replacement of the portion of the Property that has been damaged or destroyed, in the event there has been an abatement of Rental Payments pursuant to Section 3.5 hereof, then Rental Payments shall again begin to accrue with respect thereto upon repair or replacement of such portion of the Property. 5.2 Title Insurance. Proceeds of title insurance received with respect to the Property shall be paid to the Trustee for application in accordance with the provisions of Section 7.07 of the Trust Agreement, Section 6. Eminent Domain. 6.1 Total Condemnation. If the Property, or so much thereof as to render the remainder of the Property unusable for the City's purposes under this Lease, shall be taken under the power of eminent domain, then this Lease shall terminate as of the later of the day possession shall be so taken and the date of entry of the interlocutory judgment and in either case, after payment of any Additional Rental owed hereunder. 6.2 Partial Condemnation. If less than a substantial portion of the Property shall be taken under the power of eminent domain, and the remainder is useable for the City's purposes, then this Lease shall continue in full force and effect as to the remaining portions of the Property, subject only to such rental abatement as is required by Section 3.5 hereof. The City and the Authority hereby waive the benefit of any law to the contrary. Any award made in eminent domain proceedings for the taking shall be paid to the Trustee for application in accordance with the provisions of Section 7.06 of the Trust Agreement. If the City elects, pursuant to Section 7.06 of the Trust Agreement, to apply such proceeds to the replacement of the condemned portion of the Property, in the event there has been an abatement of Rental Payments pursuant to Section 3.5 IRV#23079 0 _16_ Execution Copy z� II 11 Hill 1111111111111111III III III11il IN e7 �1 e1z 03 460 hereof, then Rental Payments shall again begin to accrue with respect thereto upon replacement of such portion of the Property. Section 7. Assignment. (a) The City shall not sell, mortgage, pledge, assign or transfer any interest of the City in this Lease or in the Property by voluntary act or by operation of law, or otherwise; provided, however, that the City may grant concessions to others involving the use of any portion of the Property whether or not such concessions purport to convey a leasehold interest or a license to use a portion of the Property. Any sublease or concession shall specifically state that it is subject and subordinate in all respects to this Lease. Subject to the limitations set forth herein, the City shall at all times remain liable for the performance of the covenants and conditions on its part to be performed under this Lease, notwithstanding any subletting or granting of concessions which may be made. Nothing herein contained shall be construed to relieve the City of its primary obligation to pay Rental Payments as provided in this Lease or to relieve the City of any other obligations contained herein. In no event shall the City sublease to or permit the use of all or any part of the Property by any person so as to cause the interest component with respect to the Certificates to be includable in gross income for federal income tax purposes or to be subject to State personal income tax. (b) The Authority shall, concurrently with the execution hereof, absolutely and irrevocably assign all of its right, title and interest in and to this Lease (except for its right to payment of its expenses under Section 3.1(d) hereof, its right to indemnification pursuant to Section 11 hereof and its right to receive certain notices under Section 18 hereof), including without limitation its right to receive Base Rental payable hereunder, to the Trustee pursuant to the Assignment Agreement, and the City hereby approves such assignment. The parties hereto further agree to execute any and all documents necessary and proper in connection therewith. Section 8. Additions and Improvements;Removal. The City shall have the right during the Lease Term to make any additions or improvements to the Property, to attach fixtures, structures or signs, and to affix any personal property to the Property, so long as the fair rental value of the Property is not thereby reduced. Title to all fixtures, equipment or personal property placed by the City on the Property shall remain in the City to the extent that such items may be removed from the property without damage. Title to any personal property, improvements or fixtures placed on any portion of the Property by any sublessee or licensee of the City shall be controlled by the sublease or license agreement between such sublessee or licensee and the City, which sublease or license agreement shall not be inconsistent with this Lease. Section 9. Right of Entry. Representatives of the Authority shall, subject to reasonable security precautions, have the right to enter upon the Property during reasonable business hours (and in emergencies at all times) (i) to inspect the same, (ii) for any purpose connected with the rights or obligations of the Authority under this Lease, or(iii)for all other lawful purposes. 1P V M079 v3 _17_ Execution Copy IIIIII IIII IIIII I IIII II IIIIII IIIIII I I IIIIIII II IIII 2902-417884 072 Qo£03400R Section 10. Quiet Enjoyment. The Authority covenants and agrees that the City, upon keeping and performing the covenants and agreements herein contained, shall, at all times during the Lease Term,peaceably and quietly have,hold, and enjoy the Property. Section 11. Indemnification and Hold Harmless Agreement. To the extent permitted by law and subject to the provisions of Section 4.6(c)herein, the City hereby agrees to indemnify and hold the Authority and the Trustee and their respective officers and directors harmless against any and all liabilities that might arise out of or are related to the Property or any portion thereof, the Trust Agreement, the Lease, the Assignment Agreement, the Certificates or any disclosure document related to the Certificates and the City further agrees to defend the Authority and the Trustee and their respective officers and directors in any action arising out of or related to the Property and the Certificates; provided, however, that the City shall not indemnify and hold the Trustee and its officers and directors harmless against any liability that might arise out of the negligence or willful misconduct of the Trustee or its officers and directors. The provisions of this Section 11 and the obligation of the City to pay Additional Rental to the Trustee shall survive the termination of this Lease. Section 12. Default by City. 12.1 Events of Default. The following shall be events of default hereunder: (i) the City shall fail to deposit with the Trustee any Base Rental payment required to be so deposited pursuant to Section 3.1(a)hereof by the close of business on the day such deposit is required to be deposited pursuant to Section 3.1(a)hereof; (ii) the City shall fail to pay any item of Additional Rental as and when the same shall become due and payable pursuant to Section 3.1(d)hereof; or (iii) the City shall breach any other terms, covenants or conditions contained herein or in the Trust Agreement, and shall fail to remedy any such breach with all reasonable dispatch within a period of 30 days after written notice thereof from the Trustee, Authority, or its assignee or the Credit Bank to the City, or, if such breach cannot be remedied within such 30-day period, shall fail to institute corrective action within such 30-day period and diligently pursue the same to completion. 12.2 Remedies on Default. Upon an Event of Default, the Authority or its assignee shall have the right to exercise the remedies provided hereunder,but such right shall be subject to the right of the Credit Bank to approve and direct the exercise of such remedies. The Authority or its assignee shall have the right, without any further demand or notice (i) to reenter the Property and eject all parties in possession therefrom and, without terminating this Lease, relet the Property as the agent and for the account of the City upon such terms and conditions as the Authority may deem IRV#23079 0 -18- Execution Copy IIIIII 111111 HE111111111111111111111111111111111 IN 0�/2002-417684 21 Bof 400R advisable, in which event the rents received on such reletting shall be applied as set forth in the Trust Agreement; provided, that if a sufficient sum shall not be realized to pay such sums and other charges then the City shall pay to the Authority any net deficiency existing on the date when the Base Rental or Additional Rental is due hereunder; provided, however, that such reentry and reletting shall be done only with the consent of the City, which consent is hereby irrevocably given; (ii)in lieu of the above, so long as the Authority does not terminate this Lease or the City's possession of the Property, to enforce all of its rights and remedies under this Lease,including the right to recover Base Rental payments as they become due under this Lease pursuant to section 1951.4 of the California Civil Code by pursuing any remedy available in law or in equity, except as expressly provided herein or (iii) terminate this Lease and re-enter the Property and remove all persons in possession thereof and all personal property whatsoever situated upon the Property and place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City. In the event of such termination, the City agrees to surrender immediately possession of the Property,without let or hindrance, by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Property and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions contained herein. Any reentry pursuant to this Section 12 shall be allowed by the City without hindrance, and the Authority shall not be liable in damages for any reentry or be guilty of trespass. Notwithstanding any other provision of this Lease or the Trust Agreement, in no event shall the Authority have the right to accelerate the payment of any Base Rental hereunder. Each and every remedy of the Authority or any assignee of the rights of the Authority hereunder is cumulative and the exercise of one remedy shall not impair the right of the Authority or its assignee to any or all other remedies. If any statute or rule validly shall limit the remedies given to the Authority or any assignee of the rights of the Authority hereunder, the Authority or its assignee nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law. All damages and other payments received by the Authority pursuant to this Section 12 shall be applied in the manner set forth in Section 3 hereof. Section 13. Waiver. The waiver by the Authority of any breach by the City, and the waiver by the City of any breach by the Authority of any term, covenant or condition hereof shall not operate as a waiver of any subsequent breach of the same or any other term, covenant or condition hereof. Section 14. DISCLAIMER OF WARRANTIES. NEITHER THE AUTHORITY NOR ANY PERSON ACTING ON ITS BEHALF HAS MADE OR MAKES ANY WARRANTY OR REPRESENTATION AS TO THE PAST, PRESENT OR FUTURE CONDITION OF THE PROPERTY NOT HEREIN EXPRESSED, AND THE CITY HAS ENTERED INTO THIS LEASE WITHOUT REPRESENTATIONS OR WARRANTIES WITH RESPECT THERETO ON THE PART OF THE AUTHORITY, ITS AGENTS,REPRESENTATIVES OR EMPLOYEES. IRV#23079 d3 -19_ Execution Copy 1111 III IIIII II II III 1111 IIII II 07 30 2©ie0400R 22 0£ 3 Section 15. Prepayment. The City shall have the option to purchase on any Business Day the Authority's interest in the Property upon payment of an option price in an amount sufficient to provide funds to pay the aggregate amount for the entire remaining Lease Term of the total rent hereunder and to discharge the Certificates in accordance with the requirements of Section 12.01 of the Trust Agreement. Any such payment shall be made to the Trustee to pay the principal and interest with respect to the Certificates. If the Business Day on which the City intends to exercise its option hereunder is, in accordance with Sections 4.02 of the Trust Agreement, a date on which Certificates are subject to optional prepayment, then the City shall give notice to the Trustee and the Credit Bank of its intention to exercise its option hereunder not later than thirty days prior to the date on which the Trustee is required to send notice of prepayment to the Owners pursuant to the Trust Agreement. If the Business Day on which the City intends to exercise its option hereunder is not a date on which Certificates are subject to optional payment, then the City shall exercise its option to purchase by giving notice thereof to the Trustee not later than five days prior to the Business Day on which it desires to exercise such option. On any Business Day as to which the City shall properly have exercised the option granted it pursuant hereto, and shall have paid or made provision (as set forth in the preceding paragraph) for the payment of the required option price,the Authority shall execute and deliver to the City a quitclaim deed conveying to the City or its nominee the Authority's right, title and interest in the affected portion of the Property. If the City shall properly exercise the option provided in this Section 15 prior to the expiration of the Lease Term to purchase the entire Property, and the Authority shall execute and deliver the quitclaim deed to the Property as aforesaid, then this Lease shall terminate, but such termination shall not affect the City's obligation to pay the option price on the terms herein set forth. Section 16. Release and Substitution. If no Lease Event of Default has occurred and is continuing hereunder, this Lease may be modified or amended at any time, and the Trustee may consent thereto without the consent of the Owners, if such amendment is to modify or amend the description of the Property or to release from this Lease any portion of the Property, or to substitute other property and improvements for the Property, provided that the City shall have obtained the prior written consent of the Credit Bank and the Confirming Credit Entity and shall have delivered to the Trustee, S&P and Moody's all of the following: (i) Executed copies of the Lease or amendments thereto containing the amended legal description of the Property; (ii) Evidence satisfactory to the Credit Bank that copies of the Lease and the Assignment Agreement or amendments thereto containing the amended legal description of the Property have been duly recorded in the official records of the County Recorder of the County of Los Angeles; IRV#23079 v3 _20_ Execution Copy I IIIIII IIIIII IIIII IIIIII II IIIIIII lull 11111111111111 07 301/230208400R (iii) A certificate of the City Representative, accompanied by evidence satisfactory to the Credit Bank evidencing that the annual fair rental value of the property which will constitute the Property after such release or substitution will be at least equal to 100% of the maximum amount of Base Rental payments becoming due in the then current Lease Year or in any subsequent Lease Year; (iv) An MAI fair market appraisal setting forth the fair replacement value of the property which will constitute the Property or any portion thereof after such release or substitution and evidencing that such fair replacement value is equal to or greater than such replacement value of the released Property or any portion thereof; (v) In the case of substitution of property for the then existing Property, a ALTA Owner's policy or policies and a ALTA Leasehold Owner's policy or policies, in each case meeting the requirements of Section 4.3(c) hereof, or a commitment or commitments for such policies or amendments or endorsements to existing policies resulting in title insurance with respect to the Property after such substitution in an amount at least equal to the amount of such insurance provided with respect to the Property prior to such substitution. Each such insurance instrument, when issued, shall insure such substituted property subject only to such exceptions as do not substantially interfere with the City's right to use and occupy such substituted property and as will not result in an abatement of Base Rental payments payable by the City under this Lease; (vi) A certificate of the City Representative stating that such removal or substitution does not materially adversely affect the interest of the Owners of the Certificates then Outstanding and that the property which will constitute the Property is essential to the operations of the City; (vii) An opinion of special counsel stating that such amendment or modification(1) is authorized or permitted by the Constitution and laws of the State and by this Lease; (2) complies with the terms of the Constitution and laws of the State and of this Lease; (3) will, upon the execution and delivery thereof, be valid and binding upon the Authority and the City in accordance with its terms; and (4)will not cause the interest component of the Base Rental payments to be included in gross income for federal income tax purposes; (viii) A certificate of useful life demonstrating that the useful life of the property which will constitute the Property after such release or substitution meets or exceeds the remaining term of the Certificates; and (ix) A certificate of the City Representative evidencing that the property which will constitute the Property after such release or substitution is not encumbered by any prior liens (other than liens described in the last paragraph of Section 4. 1 or in Section 4.4 and liens which do not in the aggregate, prohibit the use of the Property in the manner intended by the City). IRV#23079 v3 _21_ Execution Copy II II III I I II I I III II I I II 07 2002-417684 1 o 3GOA 0 4 24 of 4 Section 17. Notices. All notices,requests, demands and other communications under this Lease shall be in writing (unless otherwise specified herein) and shall be sufficiently given on the date of service if served personally upon the person to whom notice is to be given or if mailed by first class registered or certified mail,return receipt requested, postage prepaid, and properly addressed as follows: (a) if to the City,to: City of Palm Springs 3200 E.Tahquitz Canyon Way Palm Springs, CA 92262 Attention: City Manager (b) if to the Authority,to: City of Palm Springs Financing Authority 3200 E.Tahquitz Canyon Way Palm Springs, CA 92262 Attention: Executive Director (c) if to the Trustee,to: BNY Western Trust Company 700 S. Flower Street, Suite 500 Los Angeles, CA 90017 (d) if to the Credit Bank to Union Bank of California,N.A. Public Finance Unit 445 South Figueroa Street, G16-450 Los Angeles, California 90071 Re: City of Palm Springs Telephone No.: (213) 236-6434 Telecopy No.: (213) 236-6450 with all reimbursements of Draws on the Letter of Credit wired to: Union Bank of California,N.A. ABA No. 1220-00496 Ref: Letter of Credit No. 3065234302 Credit to Account No. 30516196431 Attention: SCAL IOC STANDBY LOC IRV#23079 v3 _22- Execution Copy I IIIIII 1111110111 fie 01111IIIIIIIIII NMI 111111 07 311200o9$4 00R (e) if the Confirming Credit Entity,to: California State Teachers'Retirement System 7667 Folsom Boulevard Sacramento, California 95826 Ref.: Confirming Letter of Credit No.55 Telephone: No.: (916) 229-3854 Telecopier No.: (916) 229-3790 or to such other address or addresses as any such person shall have designated to the others by notice given in accordance with the provisions of this Section 17. Section 18. Validity. If any one or more of the terms, provisions, promises, covenants or conditions of this Lease shall to any extent be adjudged invalid,unenforceable,void or voidable for any reason whatsoever by a court of competent jurisdiction, then each and all of the remaining terms, provisions, promises, covenants and conditions of this Lease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. If for any reason this Lease shall be held by a court of competent jurisdiction to be void,voidable or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants and agreements of the City hereunder, including the covenant to pay Rental Payments hereunder, is unenforceable for the full term hereof, then and in such event for and in consideration of the right of the City to possess,occupy and use the Property, which right in such event is hereby granted, this Lease shall thereupon become and shall be deemed to be a lease from year to year under which the annual Base Rental payments and Additional Rental payments herein specified will be paid by the City. Section 19. Execution in Counterparts. This Lease may be executed in several counterparts, each of which shall be deemed to be an original,and all of which together shall constitute but one and the same agreement. Section 20, Law Governing. This Lease is made in the state of California under the Constitution and laws of California and is to be so construed. Section 21. Amendment. (a) This Lease and the rights and obligations of the Authority and the City hereunder and thereunder, may be amended at any time by an amendment hereto or thereto which shall become binding upon execution by the City and the Authority,but only with the prior written consent of the Credit Bank (so long as the Credit Bank is not in default under the Letter of Credit) and the Owners of a majority of the principal evidenced by the Certificates then Outstanding, provided that no such amendment shall (i) extend the payment date of any Base Rental, reduce the interest component or principal component of any Base Rental or change the prepayment terms and provisions, without the prior written IP.V#23079 v3 _23_ Execution Copy IIIII II E II IIIIIII 111111 III 1111111 II IN 30� 26 0£9640FF Base Rental, reduce the interest component or principal component of any Base Rental or change the prepayment terms and provisions,without the prior written consent of the Owner of each Certificate so affected, (ii) reduce the percentage of the principal evidenced by the Certificates the consent of the Owners of which is required for the execution of any amendment of this Lease, or (iii) modify any of the rights or obligations of the Credit Bank without the prior written consent of the Credit Bank. (b) This Lease, and the rights and obligations of the City and the Authority hereunder and thereunder, may also be amended at any time by an amendment hereto or thereto which shall become binding upon execution by the City and the Authority, with the written consent of the Credit Bank (so long as the Credit Bank is not in default under the Letter of Credit), but without the written consents of any Owners,but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the Authority or the City to be observed or performed herein or therein other agreements, conditions, covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein or therein to or conferred herein or therein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Credit Bank or the Owners; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or therein or in regard to questions arising hereunder or thereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith or therewith, and which shall not materially adversely affect the interests of the Credit Bank or the Owners; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest components of Base Rental; (iv) to provide for the execution and delivery of Additional Certificates in accordance with the provisions of the Trust Agreement or to provide for the substitution or release of a portion of the Property in accordance with the provisions of Section 16 hereof; or (v) to make such other changes herein or therein or modifications hereto or thereto as the Authority or the City may deem desirable or necessary, and which shall not materially adversely affect the interests of the Credit Bank or the Owners. (c) This Lease, and the rights and obligations of the Authority and the City hereunder and thereunder, may also be amended as of any Conversion Date by an amendment hereof or thereof which shall become binding on such Conversion Date with the prior written consent of the Credit Bank (so long as the Credit Bank is not in default in its payment obligations under the Letter of Credit), but without the written consents of any Owners, but only to the extent permitted by law and only if the Certificates have been remarketed by the Remarketing Agent pursuant to subsection (d) of Section 5.02 of the Trust Agreement for IRV#23079 v3 _24_ Execution Copy IIIIIIIIIII IIIIII IIIIII 0 III IIIIIIII III1111111111 07 3027 of 34QQA purchase on such Conversion Date with such amended rights or obligations of the Authority and the City under this Lease. (d) No amendment of this Lease shall become effective unless a copy of such amendment shall have been sent to Moody's and S&P at least ten (10) days prior to the effective date of such amendment. Section 22. Excess Payments. Notwithstanding anything contained herein or in the Trust Agreement to the contrary,if for any reason, including but not limited to damage, destruction, condemnation, transfer, sale or disposition, the City or the Trustee receives payments, proceeds or awards with respect to the Property in excess of the amount necessary to pay or prepay or provide in accordance with the Trust Agreement for the payment or prepayment of all of the Outstanding Certificates and all other amounts due hereunder and under the Trust Agreement, and the Reimbursement Agreement, such excess shall represent the City's equity interest in the Property and shall all be paid to the City. Section 23. No Merger. If both the Authority's and the City's estate under this or any other lease relating to the Property or any portion thereof shall at any time for any reason become vested in one owner, this Lease and the estate created hereby shall not be destroyed or terminated by the doctrine of merger unless the City so elects as evidenced by recording a written declaration so stating and with the consent of the Credit Bank and, unless and until the City so elects, the City shall continue to have and enjoy all of its rights and privileges as to the separate estates. Section 24. Rights of Credit Bank. (a) As long as the Letter of Credit is in effect and the Credit Bank is not in default in respect of its payment obligations thereunder, the Credit Bank shall be deemed to be the sole and exclusive Owner of the Outstanding Certificates for purposes of all approvals, consents, waivers, institution of any action, and the direction of all remedies, including but not limited to approval of or consent to any amendment or supplement to this Lease Agreement which requires the consent or approval of the Owners of a majority of the principal evidenced by the Certificates then Outstanding; provided, however, that the Credit Bank shall not be deemed to be the sole and exclusive Owner of the Outstanding Certificates with respect to any amendment or supplement to this Lease Agreement which seeks to amend or supplement the Lease Agreement for the purposes set forth in clause (i) or (ii) of subsection (a) of Section 21 hereof, and, provided, further, that the Credit Bank shall not be deemed the sole and exclusive Owner of the Outstanding Certificates for such purposes, and shall not have the right to direct or consent to City, Authority, Trustee or Owner action, during any period if: (i) the Credit Bank shall fail to make any payment under the Letter of Credit when due and such failure shall continue for three Business Days; or IRV#23079 v3 _25_ Execution Copy I IIIIIII IIIIII IIIII IIIIII II IIIIIII IIIIII III IIIIIII II IIII 2 07 A�as � 0P £$3 04 (ii) any material provision of the Letter of Credit shall be held to be invalid by a final, non-appealable order of a court of competent jurisdiction, or the validity or enforceability thereof shall be contested by the Credit Bank. Section 25. Third-Party Beneficiaries. The Credit Bank and the Confirming Credit Entity are third-party beneficiaries of this Lease Agreement. Section 26. References to Credit Bank Ineffective. If the Letter of Credit and the Confirming Letter of Credit are no longer in effect, and all obligations to the Credit Bank and the Confirming Credit Entity under the Reimbursement Agreement and the Confirmation Agreement, respectively, have been paid in full, then all references in this Lease Agreement to the Credit Bank, the Confirming Credit Entity, the Letter of Credit, the Confirming Letter of Credit,the Reimbursement Agreement and the Confirmation Agreement shall be of no effect. Section 27. Further Assurances and Corrective Instruments. The City and the Authority agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property leased hereby or intended to be so leased or for carrying out the express intention of this Lease. Section 28. Default by Authority,No Right to Terminate. The City shall not have the right to terminate this Lease for default by the Authority in the performance of any of its obligations or covenants hereunder. [Remainder of page intentionally left blank.] IRV#23079 v3 -26- Execution Copy IIIIII IIIIII IIIII IIIIII II IIIIIII IIIIII III IIIIIII II IN 07 3 0 29 2 0of 2460R IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement as of the date first above written. CITY OF PALM SPRINGS By: Finance Director-Treasurer T-TEST: jwr,�,Ze— City Clerk CITY OF PALM SPRINGS FINANCING AUTHORITY Treasurer A-TTEST: Secretary _ _ 4 ..tl_€ -c IRV#23079 V3 1 1 I-27_ Execution Copy IIII I I�IIII I��II�IIIII II IIIIII IIIIII I I II I II II IIII 0' 31,12002 0 1£ 4 8 00R CALIFORNIA ALL-PURPOIPACKNOWLEDGMENT • State of SCounty of ✓ i2c-�F (j � It j On ��� C©� before me, GAiyc / C�<=✓<r�i y '1 ,��,,P ;g./3 iC - j J DaIEtA Name and Title of ORiCer to g "lane Doe,Nolaryr/blic") � personally appeared � usm��1 i �dX7Z9c�Ai L 2,2 3 aJe�t��t�n.��G�7r�c%r V Narrow of 6i personally known to me-®R—F proved-to�ne-on-tklerbasis-of-satisfactory-evidence to be the person J(; whose naml ism&subscribed to the within instrument I<( and acknowledged to me that he/sh62/tgy)executed the ^I same in his/hetfhRjr uthorized capacity esl, and that by his/he /Cfhe'iisignature(®on the instrument the person(§), 6-M or the entity upon behalf of which the personasy acted,3� FLAINE' L.WEDEKIND IJco��a�.a�2assaaexecuted the instrument. NOTARY PUELIC-CALIFORNIA K> RIVERXP.FEB 3,20WITNESS m hand and official seal.COMM_EXP.FEB.3,20a3 `` ` y 3 Jl I< SignaNre of Notary Pubb (�> "'� OPTIONAL Though the information below is not required bylaw,it may prove valuable to persons relying on the document and could prevent >' fraudulent removal and reattachment of this form to another document. �I Description of Attached Document Title or Type of Document: �! Document Date: Number of Pages: �i Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) 16 Signer's Name: Signer's Name: F ❑ Individual ❑ Individual �20 ❑ Corporate Officer ❑ Corporate Officers Title(s): Title(s): ❑ Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General rl ❑ Attorney-in-Fact ❑ Attorney-in-Fact ❑ Trustee ❑ Trustee ;S ❑ Guardian or Conservator ❑ Guardian or Conservator 4 �< ❑ Other: Top of thumb here ❑ Other: Top of thumb here Irk Signer Is Representing: Signer Is Representing: rll ,< ✓�:`,:v-.� _ti .-(."�-C,�-C. C.—�,C.'.�C�.^.i��:..� r� �.u��> �� ^✓, �:v.v'� �,("— „-r,%,"✓ v�✓:Jt�..� ©1995 National Notary Ae oclaten•8236 Hammer Ave.,PO.Box 7184•Canega Park,CA 91309-7184 Prod No 5907 Reorder.Call Toll-Free 1-800-876-6827 111II111111III II III 1111111111111111111111111111111e�/300al of a4 at 2 sa EXHIBIT A-LEGAL DESCRIPTION OF PROPERTY THE PROPERTY REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE,AND IS DESCRIBED AS FOLLOWS: Parcel 1: All that portion of Parcel 1 of Parcel Map No. 13574 as recorded in Parcel Map Book 73 at page 52, records of Riverside County, California and all of Lots 17 and 18 and a portion of Lot 19 of Block 28 of Palm Springs Townsite as recorded in Map Book 9 at page 423, records of San Diego County,California, described as follows: Commencing at the southeast corner of said Parcel 1, thence north 00°-05'-38" west along the east line of said Parcel 1 and the east Pule of said Lots 17, 18 and 19 a distance of 325.06 feet; thence south 890-52'-48" west a distance of 82.71 feet; Thence north 00°-05'-27" west a distance of 25.01 feet to the north line of said Lot 19; Thence south 89°-52'-48" west along said north line a distance of 62.62 feet to the northwest corner of said Lot 19; Thence south 00°-05'-27" along the west line of said Lots 19, 18, 17 and portion of the westerly line of said Parcel 1 a distance of 350.06 feet to the south line of said Parcel 1; Thence north 89°-53'-07" east along said south line a distance of 145.35 feet to the point of beginning. Subject to all easements and rights of way record if any. Parcel 2: The easterly 90.5 feet of Lots 23 and 24 in Block 28 of Palm Springs,in the City of Palm Springs, as per Map recorded in book 9,page(s) 432 of Maps,in the office of the County Recorder of San Diego County, California. Parcel 3: The northerly 5 feet of the easterly 90.5 feet of Lot 22 in Block 28 of Palm Springs, in the City of Palm Springs, as per Map recorded in book 9, page(s) 432 of maps, in the office of the County Recorder of San Diego County,California. Parcel 4: The northerly 5 feet of Lot 20 and all of Lots 21 and 22, except from Lot 22 the northerly 5 feet thereof, in Block 28 of Palm Springs, in the City of Palm Springs, County of Riverside, State of California, as per Map recorded in book 9, page(s)s 432 of Maps, in the office of the County Recorder of San Diego County,California. IRV#23079 v3 A-1 Execufion Copy III II IIIIII IIII IIIIII II IIIIIII IIIII II IIII III III wr Qe z elz G8:09M 2 cf 24 EXHIBIT B-1 BASE RENTAL PAYMENT SCHEDULE (CERTIFICATES IN THE WEEKLY RATE MODE) I. The Principal component of the Weekly Rate Base Rental Payments for the Certificates shall be paid in the amounts and on the dates specified below: Payment Date Principal Component of Base (July 27) Rental Payment 2003 0 2004 0 2005 0 2006 0 2007 0 2008 0 2009 0 2010 190,000 2011 205,000 2012 215,000 2013 230,000 2014 245,000 2015 355,000 2016 375,000 2017 400,000 2018 430,000 2019 455,000 2020 485,000 2021 520,000 2022 550,000 2023 590,000 2024 625,000 2025 665,000 2026 710,000 2027 755,000 II. In addition to the payments listed above, so long as the Certificates remain in the Weekly Rate Mode, the interest component of the Weekly Rate Base Rental shall be paid on the first business day of each calendar month, in an amount equal to the amount of interest accruing at the Weekly Rates in effect for the preceding month, calculated as provided in the Trust Agreement. IRV#23079 v3 B-1-1 Execution Copy IIIIII II 111111111111111111111111111IN 20933 0£63460R EXHIBIT B-2 BASE RENTAL PAYMENT SCHEDULE (CERTIFICATES IN THE FIXED RATE MODE) I. The Principal component of the Fixed Rate Base Rental Payments for the Certificates shall be paid in the amounts and on the dates specified below: Payment Date Principal Component of Base (July 15) Rental Payment 2003 0 2004 0 2005 0 2006 0 2007 0 2008 0 2009 0 2010 190,000 2011 205,000 2012 215,000 2013 230,000 2014 245,000 2015 355,000 2016 375,000 2017 400,000 2018 430,000 2019 455,000 2020 485,000 2021 520,000 2022 550,000 2023 590,000 2024 625,000 2025 665,000 2026 710,000 2027 755,000 I1. In addition to the payments listed above,upon conversion of the Certificates to the Fixed Rate Mode, the interest component of the Fixed Rate Base Rental shall be paid on January 15 and July 15 of each calendar year. IRV 423079 v3 B-2-1 Execution Copy II II IIIII III II I I II II I II II III 07 3�f132002 4 of03400Fl