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Home My WebLink AboutItem 4.11 CivicCtrCertParticipationRefi ~ . . CITY OF. DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: May 10, 1993 SUBJECT: Approval' of Documents Associated with a Proposed 1993 Civic Center Certificate of Participation Refinancing (Prepared by: Paul S. Rankin, Assistant City Manager) EXHIBITS ATTACHED: 1 . ~xecuti ve Summary of the Transaction 2. ./. Draft Resolution 3. / Sketch of Site p;ncumberedby Lease Note: Ci ty COuncil members have been provided under separate cover with copies of certain legal documents. Copies of these documents are also on file in the Office of the City Clerk. a. Lease Agreement b. Trust Agreement c. Escrow Agreement d. Contract of PurchaSe n~e. Preliminary Official Statement RECOMMENDATION: ,- Adopt Resolution. FINANCIAL STATEMENT: The primary purpose of undertaking this transaction is to obtain reduced.debt service payments in the near term. The exact amount of savings will not be determined until pricing information is obtained. DESCRIPTION: At the March 22, 1993 City COuncil meeting, the City council authorized Staff to secure the services of Financial Underwriters and Bond Counsel to initiate proceedings to refund the 1988 Certificates of Participation. Staff and the consultants have prepared the documents which will position the City to obtain specific pricing data on a refinancing. As previously indicated to the City Council, market conditions can greatly impact the outcome of any refinancing. Until the City has approved legal documents, it is not possible to obtain the pricing information necessary to complete the transaction. Approval of the documents which are described in the Executive Summary prepared by Bond Counsel (Exhibit 1) are necessary to take the next step in pursuing a reduction in the City's annual debt service costs associated" with the Civic Center project. DESCRIPTION OF DOCUMENTS The basic structure of the transaction follows the existing 1988 Certificates of Participation. Dublin Information, Inc. is the property owner and the City makes annual lease payments, which are used to payoff the Certificates. An overview of all of the documents is provided for in Exhibi t 1. The following points may be of particular interest. Lease AQreement: In the proposed agreement, the City .may substitute or release property currently encumbered by the lease. This provides a certain amount of flexibility in the event that changing economic conditions warrant this amendment. For example, certain tax restrictions on tax exempt debt will limi t the pri vate use of the portion of the project encumbered by the lease. This includes approximately 2 acres of vacant land south of the Civic Center (See Exhibit 3). If the City was able .to remove the lease conditions, -------------------------------~-----~--~-~-----~-----~-------~,~------ COPIES ITEM NO. 4~11 . . greater flexibility for use by private entities could be considered. There remain certain obligations which must be met to assure that the property covered by the Lease has adequate value in relation to the outstanding Certificates. The term of the lease will remain the same as the lease under the 1988 Certificates. Outstanding COP's can be called beginning in 1998 at a 1% premium, or at par beginning in 1999. Staff is anticipating that the proposed issue will include bond insurance. This will result in a higher rating, which lowers the City's interest rate. The certificate purchaser has more protection to assure that timely payments will be made. The insurance provisions in the lease follow the City's current operation, with the purchase of insurance coverage from ABAG PLAN. The City will be obtaining Title Insurance, which will be a cost of issuance pursuant to the proposed transaction. Trust AQreement: The Trust Agreement remains similar to the 1988 transaction. Based upon competitive proposals and references, Staff is recommending the engagement of First Interstate Bank of California to serve as Trustee. The Certificates in this transaction will be held in book-entry form by Depository Trust Company. (DTC) DTCserves as a clearinghouse which provides for payment and transfer of Certificates. These transactions are often completed electronically which reduces the City's cost of issuance, as well as the ongoing Trustee expen~es. Escrow AQreement: The Trustee for the 1988 COP is First Trust California (FTC). This firm succeeded Bank of California and Bankers Trust as a result of reorganizations. (Bank of California was the original Trustee on the 1988 COP's.) Staff is proposing to retain First Trust as the Trustee on the 1988 COP Escrow Fund, which will be established as a result of this refinancing. First Trust is also the escrow agent for the 1985 COP Escrow Fund. As escrow agent, First Trust will hold a portion of the proceeds from the 1993 COP issue. These funds are invested in Federal Securities and the principal and interest will be sufficient to prepay the refunded 1988 Certificates. Through a request for proposals, Staff has identified the accounting firm of Ernst & Young to act as ve:r:ification agent. The firm will undertake a review to assure mathematical accuracy of the computations shown in the schedules. A similar report was prepared with the 1988 COP offering. Preliminary Official Statement: This document is utilized to provide disclosure, as well as marketing of the proposed Certificates. Provided that the transaction is successfully completed, a final Official Statement will be prepared which will contain the final terms of the financing. Contract of Purchase: In consultation with Bond Counsel, Staff has reviewed the proposed purchase contract with Rauscher Pierce Refsnes (RPR). This document establishes the outside parameters under which the transaction can be completed. The contract also identifies the maximum discount rate as 1.4% (i.e. fee to be retained by the Underwriter). Staff has noted that this is a very competitive fee, when compared to other recent financings by public agencies. As previously indicated, if the financing is not completed for any reason, the City's liability is only for certain minor direct out of pocket expenses. -2- . . MARKET TIMING The ability to successfully bring an issue to market requires that the City have an authorized set of legal documents available. Approval of the documents and authorization for Staff to undertake certain actions will POsi tion the City to take advantage of declining interest rates. Staff will be evaluating any savings after deducting the cost of issuance. This will assure that the end result will be a significant savings to the City'S Treasury. At the March 22, 1993 meeting , the figures presented reflected market conditions as of March 16, 1993. At that time, a refinancing would have resulted in the following savings/yield: Net Present Value as a% of Refunded Par: True Interest Cost: 4.997% 5.53% On May 3, 1993, RPR had noted some deterioration in the market. This was viewed by the Underwriters as a market "adjustment, reflecting a very large $300 million refunding proposed to be sold on May 4, 1993. The following indicators would have applied to an issue on that date: Net Present Value as a % of Refunded Par: True Interest Cost: 2.754% 5.80% Typically an agency would not undertake a refinancing if the Net Present Value Savings was less than 3%. Based upon this benchmark, Staff will be consulting with RPR, prior to the active marketing of a refunded issue. RPR has indicated that the information contained in the Official statement is the most time sensitive. Therefore, it is important to only release the Preliminary Official Statement within six weeks of pricing. This assures that potential certificate holders receive accurate information and also assesses the level of interest in the issue. If information changes in a material manner prior to the release of the Preliminary Official Statement it may need to be updated. The City Council approval of the documents will allow Staff the ability to proceed in consultation with the City'S Consultants, once conditions indicate that proceeding could achieve a cost savings. RECOMMENDATION Bond Counsel, as well as representatives of RPR, will be available to respond to specific questions. Staff recommends that the City Council adopt the resolution. a:Sl0$bond.agenda#11 -3- . . ONE WORLC TRACE CENTER NEW YORK, N.Y. 10048-0557 TELEPHONE: 212-839-5300 FACSIMILE: 212-839-5599 BROWN & WOOD 815 CONNECTICUT AVENUE, N.W. WASHINGTON. D.C. 20006-4004 TELEPHONE: 202-223-0220 FACSIMILE: 202-223-0485 10900 WILSHIRE BOULEVARD LOS ANGELES, CA. 90024-3959 TEL.EPHON E: 310-443-0200 FACSIMILE: 3'0-208-5740 555 CALI FORN IA STREET SAN FRANCISCO, CA. 94104-1715 TELEPHONE: 4'5-398-3909 FACSIMILE: 415-397-4621 172 WEST STATE STREET TRENTON, N.J. 08608-1104 TELEPHONE: 609-393-0303 FACSIMILE: 609-393-'990 SHIROYAMA,JT MORI BUILDING, 15TH FLOOR 3-1. TORANOMON 4-CHOM E, M I NATO-KU TOKYO 105, JAPAN TELEPHONE: 03-5472-5360 FACSIMILE: 03-5472-5058 BLACKWELL HOUSE GUILDHALL YARD LONCON EC2V SAB TEL.EPHONE: 071-606-1888 F"ACSIMILE: 071-796-1807 CITY OF DUBLIR, CALIFORNIA CERTIFICATE OF PARTICIPATIOR FIRARCIRG Executive Summary of The Transaction The City of Dublin, California (the -City-) is currently considering entering into a Certificate of Participation (-Certificate- or -COP-) financing. The purpose of this transaction is to refund the City's previously issued 1988 Certificates of Participation (Civic Center Project) in the original principal amount of $17,230,000 (the -Refunded Certificates-). The proceeds of the Refunded Certificates were used to refinance the City's Civic Center. This memorandum provides a brief summary of the structure of the financing, as well as an explanation of the financing documents and the rights and obligations of the City under the financing documents. The summaries of and references to all documents in this Executive Summary do not purport to be comprehensive or definitive, and this Executive Summary is qualified in its entir~ty by reference to actual copies of such documents. There are five main documents involved in this COP financing. These are: 1. Lease Agreement, 2. Trust Agreement, 3. Assignment Agreement, 4. Escrow Agreement, and 5. Official Statement (and Preliminary Official Statement). EXHIBIT ~ . . LEASE AGREEMERT (Between City of Dublin and Dublin Information, Inc.) The Lease Agreement is the central financing document. It sets out the business terms of the financing and all other documents are ancillary to it. To refinance certain public facilities (collectively, the -Project-), the City and Dublin Information, Inc., a nonprofit public benefit corporation (the -Corporation-), will enter into a Lease Agreement, dated as of June 1, 1993 (the -Lease-). Pursuant to the Lease, the Corporation will lease the completed Project to the City and the City will agree to make annual lease payments to the Corporation. The Certificates sold to investors (the -Certificate Owners-) will represent interests in the stream of lease payments under the Lease. The portion of the lease payments representing interest payments under the Lease are exempt from federal and state income taxes, thus making the COP the equivalent of a tax-exempt bond to an investor. The Project and Interest in the Project The Corporation currently holds title to the Project and the Site during the term of the Lease. Upon satisfaction of. certain criteria specified in the Lease, the City may substitute or release all or a portion of the Project and Site. However, upon the expiration of the term of the Lease, after all payments due thereunder have been made, all right, title and interest of the Corporation in the Project will automatically-terminate and vest in the City. Lease Term The term of the Lease will commence on the date the Lease is executed and end on a specified date on which all of the lease payments and any additional sums required thereunder are scheduled to have been paid. The Lease Payments may also be prepaid, at the option of the City, beginning in 1998 from amounts available to the City at such time. The Lease term may also be shorter, however, if the City defaults on its obligations under the Lease and as a consequence of such default the Corporation elects to terminate the Lease. Alternatively, the Lease term may be extended beyond the specified date if the City has not met all of its obligations to make lease payments as scheduled, or the lease payments shall have been abated as a result of damage or destruction to the Project, resulting in the Certificates having not been paid in full by their maturity date. 2 . . Lease Payments Throughout the term of the Lease, the City will make lease payments for the use and possession of the Project and the Site. The City will make lease payments semiannually according to a predetermined lease payment schedule. Lease payments will be in amounts equal to the principal and interest due on the Certificates and, for this reason, the lease payment schedule will be determined at the time that the Certificates are sold and the Certificate interest rate is determined. Lease payments will be made directly to the trustee appointed under the Trust Agreement (the -Trustee"), as assignee of the Corporation under the Assignment Agreement. Any overdue lease payments will bear interest at a rate equal to the interest rate on the Certificates. The City covenants in the Lease to include all lease payments in the City's annual budget, and to certify to the Trustee that it has done so. Abatement Under California law, a lessee is required to make lease payments only for the period during which the lessee has actual use and possession of the subject property. As the lessee under the Lease, the City's obligation to make lease payments will be -abated- during any times in which the City does not have use and possession of the Project. However, regardless of whether or not the City's obligation to make lease payments has been abated, Certificate Owners will expect to receive timely payment of principal and interest on their Certificates. Consequently, the Lease provides for other sources of lease payments during periods of abatement. An example of one such source is moneys available under the rental interruption insurance pOlicy required to be carried by the City pursuant to the Lease. Damage, destruction, taking by eminent domain or condemnation with respect to the Project or the Site will result in abatement of the City's obligation to make lease payments in proportion to the portion of the Project or the Site damaged, destroyed, stolen, condemned or taken. The City is required under the Lease to insure against certain of these risks so that there will be moneys available with which to rebuild or replace the Project (which replacement will make the Project once again subject to lease payments), or to prepay the Certificates if the City determines the moneys available from such insurance, are not sufficient to pay the costs of rebuilding or replacing the Project and repair or replacement of the Project is not economically feasible or in the best interest of the City. If the Project is to be restored, the proceeds of rental interruption insurance will be used to make 3 . . lease payments while the Project is being restored. If the City determines that the Certificates will be prepaid and the Project will not be rebuilt or replaced, the Certificates will be prepaid without any prepayment penalty to the City. Other Costs During the term of the Lease, the City will pay all costs of repair, replacement and maintenance of the Project and the Site, as well as all taxes, assessments, utilities and other charges incurred with respect to the Project or the Site. In addition, the City also will be required to pay certain administrative costs associated with the Certificates, such as the Trustee's compensation, costs incurred by the Corporation and premiums for insurance required by the Lease. These obligations are in addition to the City's obligation to make lease payments. Events of Default Failure by the City to meet certain of its obligations under the Lease constitute -Events of Default.- Such Events of Default include (1) the failure of the City to make lease payments when due, (2) the failure of the City to perform any warranty, covenant, condition or agreement under the Lease for a period of 30 days after notice of such failure is given to the City, and (3) the occurrence of certain events of bankruptcy or insolvency with respect to the City. The occurrence of an Event of Default gives the Trustee, as assignee of the Corporation, the right to exercise certain remedies on behalf of the Certificate Owners. Remedies The Trustee represents the interests of the Certificate Owners and, as assignee of the Corporation's rights pursuant to the Assignment Agreement, the Trustee has two remedies available to it under the Lease should an Event of Default occur. First, the Trustee may elect to keep the Lease in effect and to repossess the Project and the Site and re-let it for the account of the City. The City will remain liable for all lease payments under the Lease, and will be obligated to make such payments as they become due; however, any rent received by the Trustee from the re-letting of the Project will be used to offset the City's obligation to make lease payments. Alternatively, the Trustee may elect to terminate the Lease and to repossess and re-let the Project and the Site. Should this option be chosen, the City will remain liable for all costs and damages resulting from the termination of the Lease, including any shortfall in the rent obtained by 4 . . the Trustee upon re-letting and the lease payments that would have been due under the Lease. In addition to these remedies specifically provided by the Lease, the Trustee may also exercise any other remedy available to it at law. Upon default by the City, the Trustee will not have the right under any circumstances to accelerate lease payments or to declare lease payments not yet due to be immediately due and payable. Summary of the City's Duties Under the Lease The City has the following duties under the Lease: 1) To make lease payments semiannually. 2) To include all lease payments in the City's proposed and actual annual budgets. 3) To pay all taxes, assessments, utilities, maintenance and repair costs and other charges relating to the Project. 4) To pay all administrative costs relating to the Project, including fees and expenses of the Trustee and the Corporation, as well as the fees of any auditors, accountants or engineers. 5) To obtain (a) title insurance, (b) rental interruption insurance, (c) public liability and property damage insurance, and (d) casualty and theft insurance, or with respect to (c) and (d), to self-insure in an actuarially responsible manner. 6) To indemnify the Corporation and its directors and employees against any loss or claim to which such parties may become subject in connection with the Lease. TRUST AGREEMENT (Among City of Dublin, Dublin Information, Inc. and First Interstate Bank of California) The Trust Agreement may be viewed as the mirror image of the Lease, in that the Trust Agreement sets forth the terms which translate the Lease obligations into Certificate rights and obligations. The Trust Agreement is signed by the Trustee, the City and the Corporation. The Trust Agreement sets out instructions to the Trustee for the deposit, investment and disbursement of the funds received from the sale of the 5 . . Certificates. The Trust Agreement also sets forth the terms of the Certificates and regulates the Trustee's actions vis-a-vis the Certificate Owners. In this financing, individual Certificates will be held in book-entry form by The Depository Trust Company, which will handle all procedures relating to payment and transfer of Certificates with respect to the actual beneficial owners of the Certificates. This procedure should lower the costs of the City with respect to printing of Certificates and trustee services. The Trustee In any bond, COP or similar transaction in which evidences of indebtedness are sold to the public, a trustee serves as a neutral third party to receive and disburse funds in accordance with the rules set forth in the trust agreement. In the City's COP financing, the Trustee will be a commercial bank chosen by the City to administer the funds received upon the sale of the Certificates. The Trustee will be compensated by the City at an annual rate to be agreed upon between the City and the Trustee prior to the execution of the Trust Agreement. In addition to this compensation, the Trust Agreement permits the Trustee to collect additional fees from the City in the event that the Trustee incurs costs in performing services beyond those contemplated for the administration of the funds held under the Trust Agreement. Such increased costs could be incurred, for example, if the City defaults under the Lease and the Trustee either repossesses and re-lets the Project or sues the City for damages caused by its default. Indemnification The Trust Agreement provides for indemnification of the Trustee by the City for all claims, losses and liabilities incurred in its role as Trustee. The Trustee is not, however, entitled to indemnification if its claims or losses are attributable to its own willful misconduct or negligence. Removal or Resignation As long as the City is not in default under the Trust Agreement, the City may remove the Trustee at any time and for any reason, provided that a successor trustee meeting certain requirements for minimum capitalization and the like are met. The Trustee may resign for any reason after giving the City written notice, but only upon the appointment of, and acceptance by, a successor trustee. 6 . . Funds The Trust Agreement requires that the Trustee hold all moneys that it receives in trust for the benefit of the Certificate Owners and that the Trustee expend such moneys only as provided in the Trust Agreement. The Trustee holds six funds created under the Trust Agreement for the City: 1. Deliverv Costs Fund. An amount equal to all items of expense directly or indirectly payable by or reimbursable to the City or the Corporation relating to the financing of the Project will be deposited in the Delivery Costs Fund from the proceeds of the Certificates. Delivery Costs are the costs of participating in a COP financing, and include legal fees, initial Trustee fees, rating agency fees, fees for printing the Official Statement, Preliminary Official Statement and the Certificates, title insurance premiums and any other costs to the City or the Corporation relating to the COPs. 2. Lease Payment Fund. All Lease Payments and Prepayments received by the Trustee, including but not limited to any advance rental payments, unexpended . Certificate proceeds and the rental interruption insurance proceeds, will be deposited in the Lease Payment Fund. These moneys will be used by the Trustee for the sole purpose of paying the principal and interest with respect to the Certificates. Lease payments will be made by the City to the Trustee by the 25th day of the month preceding the principal and interest payment dates for the Certificates. Moneys in the Lease Payment Fund will be invested and certain interest earnings thereon will be transferred to the Rebate Fund. 3. Reserve Fund. The Reserve Fund is the -rainy day- fund held by the Trustee and used to make payments to Certificate Owners should the City fail to make a lease payment. The Reserve Fund will be funded in an amount equal to the lesser of (1) the maximum aggregate annual lease payments payable under the Lease, (2) 125% of the average annual lease payments payable under the lease, and (3) 10% of the net proceeds from the sale of the Certificates. -Moneys in the Reserve Fund will be invested and interest earnings may be transferred to the Rebate Fund or the Lease Payment Fund. . 4. Prepayment Fund. Moneys deposited in this fund will be used to pay principal and interest represented by the Certificates prior to their maturity dates. Such prepayments may occur if the City exercises its option 7 . . under the Lease to prepay all or part of the lease payments. Prepayment of Certificates may also be made from the proceeds of insurance or condemnation awards which are not used to rebuild or replace lost or damaged parts of the Project. \ 5. Net Proceeds Fund. Any moneys received by the Trustee or the City as a result of any damage, taking by eminent domain or condemnation award with respect to the Project will be deposited in the Net Proceeds Fund. Moneys will be disbursed from this fund to pay the cost of any repair or replacement of the Project undertaken by the City. Should the City determine not to restore the Project, such moneys will be transferred to the Prepayment Fund and used to prepay Certificates. 6. Rebate Fund. Investment earnings on moneys held in the Lease Payment Fund, if and to the extent required by the Rebate Certificate, will be placed in this fund. The City or the Certificate Owners have no rights in or claim to such money, and the moneys in this fund is not pledged to the payment of Certificates. All moneys at any time deposited in the Rebate Fund will be held in trust for payment to the United States of America as may be required under the Rebate Certificate. Tax Covenants The City and the Corporation covenant in both the Lease and the Trust Agreement that they will make no use of the proceeds of the Certificates or of the Project which would jeopardize the tax-exempt status of interest represented by the Certificates. An example of an action which could jeopardize the tax-exempt status of such interest would be the City or the Corporation allowing the Project to be used for a purpose other than a governmental or proprietary function authorized by state law. Defeasance The rights and obligations of the parties to the Trust Agreement will be discharged in one of the following ways: 1. By the City paying all principal~ interest and prepayment premiums, if any, represented by the Certificates as such amounts become due; 2. By the City depositing with the Trustee cash in an amount which, together with other moneys held by the 8 . . Trustee, is sufficient to pay all principal, interest and prepayment premiums, if any, represented by the Certificates before their stated maturity; or 3. By the City depositing federal securities (e.g., United States Treasury bills) and cash with the Trustee in an amount which, together with interest earnings on such federal securities and other funds held by the Trustee, is sufficient to pay the principal, interest and premium, if any, represented by the Certificates either at or before their maturity. ESCROW AGREEMERT (Between City of Dublin and First Trust California) Pursuant to the Escrow Agreement, the City will deposit a portion of the net proceeds from the sale of the Certificates, together with certain other moneys held in funds and accounts relating to the Refunded Certificates, in a fund established and known as the Escrow Fund. Such amounts are to be invested in Federal Securities (i.e., U.S. Government Obligations, as further defined under the Escrow Agreement), the principal o,f and interest on which will be sufficient to prepay the Refunded Certificates. ASSIGRMEBT AGREEMERT (Between Dublin Information, Inc. and First Interstate Bank of California) In order to allow the Trustee to sell the Certificates, which represent interests in the stream of lease payments to be made by the City under the Lease, and to perform certain other acts with respect to the Certificates required by the Lease, the Corporation assigns certain of its rights under the Lease to the Trustee pursuant to the Assignment Agreement. Specifically, the Corporation assigns its right to receive lease payments, its right to receive the proceeds of certain insurance on the Project and its right to enforce remedies under the Lease. PRELIMINARY OFFICIAL STATEMENT MID OFFICIAL STATEMENT (Executed by City of Dublin) The Preliminary Official Statement (the -POS-) and the Official Statement (the -OS-) serve as disclosure and marketing documents for the Certificates. The POS and the OS describe the terms of the financing, the Project and the provisions of 9 . . the legal documents. The POS and the OS also contain financial, statistical and demographic data relating to the City and its geographic area which would be of interest to investors. The POS and the OS are prepared by the City in conjunction with Rauscher Pierce Refsnes, Inc., the City's underwriter, and its counsel, and are reviewed by Brown & Wood. The OS, which will contain the final terms of the financing, including the principal amount of the Certificates and interest rates thereon, will be distributed to all actual purchasers of the Certificates. 10 . . RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN AUTHORIZING THE EXECUTION, DELIVERY AND SALE OF RE~lJNDING CERTIFICATES OF PARTICIPATION, AND AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST AGREEMENT, A LEASE AGREEMENT, AN ESCROW AGREEMENT, A PURCHASE CONTRACT AND AN OFFICIAL STATEMENT AND CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Dublin (the -City-) is a municipal corporation duly organized and existing under the laws of the State of California (the "State-)i and WHEREAS, in order to refinance the acquisition, construction, remodeling and/or improvement of certain real property and public facilities comprising the City's Civic Center (COllectively, the -Project-) the City and Dublin Information, Inc. (the -Corporation-) have previously entered into an Amended and Restated Lease Agreement, dated as of March 1, 1988 (the -Prior Lease-), whereby the Corporation agreed to lease the Project and the site thereof (the -Site-) to the City and the City agreed to lease the Project and the Site from the Lessor; and WHEREAS, for the purpose of obtaining the moneys required to be deposited by it with the Trustee (as defined below) for refinancing the Project, the Lessee has previously caused to be executed and delivered its 1988 Refunding Certificates of Participation (Civic Center Project) in the original aggzegate principal amount of $17,230,000 (the -Refunded Certificates-), each evidencing the proportionate interests in lease payments made by the City under the Prior Lease; and WHEREAS, the City has determined that it is in the best interests of the City to provide for the ref~nancing of the City's obligations under the Prior Lease and, as a result thereof, to refund the Refunded Certificates; and WHEREAS, the City has determined that it is in its best interests to sell and deliver pursuant to the Trust Agreement (the -Trust Agreement"), by and among the City, the Corporation and First Interstate Bank of California, as trustee (the EXHIBIT J-- . . -Trustee-) Certificates of Participation (1993 Civic Center Refunding Project), in an aggregate principal amount not to exceed $19,000,000 (the -Certificates-), evidencing the proportionate interest in lease payments to be made by the City, pursuant to the Lease Agreement (the -Lease Agreement"), by and between the City and the Corporation; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBLIN AS FOLLOWS: SECTION 1. Findinas. The City hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to municipal affairs of the City. SECTION 2. Authorization of Certificates. The City hereby expresses its intention of refinancing the Project through the preparation, sale and delivery of the Certificates in an amount not to exceed $19,000,000. SECTION 3. Lease Aareement. The form of Lease Agreement, presented to this meeting and on file with the City Clerk of the City (the -City C~erk-), is hereby approved. The City Manager, the Assistant City Manager or the Finance Director or such other person as shall have been designated by such officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute, acknowledge and deliver to the Corporation said Lease Agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4. Trust Aareement. The form of Trust Agreement presented to this meeting and on file with the City Clerk is hereby approved. The City Manager, the Assistant City Manager or the Finance Director or such other person as shall have been designated by such officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Corporation and the trustee thereunder (the "Trustee") said Trust Agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 5. Escrow Agreement. The form of Escrow Agreement presented to this meeting and on file with the City Clerk is hereby approved. The City Manager, the Assistant City Manager or the Finance Director or such other person as shall have been designated by such officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Trustee said Escrow Agreement in substantially 2 84420001/6 . . said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 6. Contract of Purchase. The form of Certificate Purchase Agreement (the -Purchase Contract-) providing for the purchase of the Certificates by Rauscher Pierce Refsnes, Inc. (the "Underwriter-) presented to this meeting and on file with the City Clerk is hereby approved. The City Manager, the Assistant City Manager or the Finance Director or such other person as shall have been designated by such officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Underwriter said Purchase Contrgct in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the true interest cost with respect to the Certificates shall not exceed 6.5\, the underwriting discount (not including original issue discount) with respect to the Certificates shall not exceed 1.4\ and the principal amount of the Certificates shall not exceed $19,000,000. SECTION 7. preliminarv Official Statement. The form of Preliminary Official Statement (the -Preliminary Official Statement-) relating to the Certificates, presented to this meeting and on file with the City Clerk, is hereby approved. The Preliminary Official Statement in substantially said form, with such changes as the officers designated below may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof, shall hereinafter be referred to as the -Official Statement.- The City Manager, the Assistant City Manager or the Finance Director or such other person as shall have been designated by such officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Underwriter said Official Statement and to execute a certificate as to the finality of the Preliminary Official Statement with respect to SEC Rule l5c2-l2 under the Securities and Exchange Act of 1934. The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement and the Official Statement to persons who may be interested in the purchase of the Certificates, and the Underwriter is further directed to deliver copies of any final Official Statement to all actual purchasers of the Certificates. SECTION 8. Attestations. The City Clerk is hereby authorized and directed to attest the signature of the City Manager, the Assistant City Manager or the Finance Director and to affix and attest the seal of the City, as may be required or 3 84420001/6 . . appropriate in connection with the execution and delivery of said Lease Agreement, Trust Agreement, Escrow Agreement, Purchase Contract or related documents. SECTION 9. Other Actions. The City Manager, the Assistant City Manager or the Finance Director and such other officers of the City as have been designated by the City Manager, the Assistant City Manager or the Finance Director are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the sale of the Certificates, including, without limitation, negotiations with and selection of an insurer to provide bond insurance on the Certificates, including without limitation approval of all changes to the Lease Agreement and Trust Agreement requested by any such insurer which is selected, and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. Such actions heretofore taken by such officers in connection with the foregoing are hereby ratified, confirmed and approved. SECTION 10. Effect. This Resolution shall take effect immediately upon its passage. PASSED AND ADOPTED this lOth of May, 1993 by the following vote: AYES: Councilmember: NOES: Councilmember: ABSENT: Councilmember: Peter W. Snyder Mayor [SEAL] Attest: Kay Keck City Clerk 4 84420001/6 // /' " r'/ C ;_ //; , Re.~C\~ .,J S ~-\e, ~ ~ ()~l-\t1) ~~ \A,'b\\,,: r ~~("tt\o.:\~ ~ J :roc,. " - . . .. '-7.bI: J'''W 110(,'1 ..' ./ C.\1'( 1-I011l)l.t1!.1'lT (.~ 1112"\ .." \, ''''' !liAiID~~~~.. - - -r n l'lI,So '1, ~';-.- .~I BDUI.~VARD _1:.\_- """;i12.IlSlv I J ~~ ";' . __-~50' 1\ Ir- 1nltfSIQII.. DU\3I..l N 20~~._ _ -'C- ~ Nii~q.rs'I'W . ~I I Y b~O \-- _ - - -'2'1)'&1\ ~ <., / \ ' I 'I ~ I ::.- . I l. \ /;j I I, '1 \ .., I r.p:: \ \~ .~ / ~I: \ .; 7 / ... \ \i " iJ I~... '" / ) ~!!>'l.'U'QO~~c.fl.) F1r. '1\; rJV / I r, !\~ ~\~ ~I .-J r; ~ ~ q~'1 / . . ~ I", \r "'. I / : ~ _ " u \ \ R:H5.~o'. '7 I " , ' ~~ -r ~dh~~~, \~~~~~~~~~~;~~~~~~i~i,FO)l' g n ", Y filE BEl-ltr'1' -.J ,... I i> '~ \ / /{, of PML!.\. 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F. ~. riiOTECfF. t 1(; ~ , PLAT TO ACe LEGAL DESCl EXHIBlI:,.3 � I Brown & Wood Draft of 5/3/93 Recording Requested By: ) City of Dublin ) ) When Recorded Mail To: ) Brown & Wood ) 555 California Street ) Suite 5060 ) San Francisco, California 94104 ) Attn: David G. Casnocha, Esq. ). This document is recorded for the benefit of the City of Dublin and recording is fee exempt under §27383 of the Government Code. LEASE AGREEMENT Dated as of June 1, 1993 between DUBLIN INFORMATION, INC. , as Lessor and the CITY OF DUBLIN, as Lessee rymnq 4 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND EXHIBITS SECTION 1. 1 Definitions and Rules of Construction 2 SECTION 1 . 2 Exhibits 2 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES SECTION 2 . 1 Representations, Covenants and Warranties of the Lessee 3 SECTION 2 . 2 Representations , Covenants and Warranties of the Lessor 5 ARTICLE III PAYMENT OF ADDITIONAL PROJECT COSTS; SUBSTITUTION SECTION 3 . 1 Deposit of Certificate Proceeds 6 SECTION 3 .2 Payment of Delivery Costs 6 SECTION 3 .3 Substitution and Release 6 SECTION 3 . 4 Further Assurances and Corrective Instruments 7 ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS SECTION 4 . 1 Lease 7 SECTION 4 . 2 Term - 7 SECTION 4 . 3 Extension of Lease Term 8 SECTION 4 . 4 Lease Payments 8 SECTION 4 . 5 No Withholding 9 SECTION 4 . 6 Fair Rental Value 9 SECTION 4 . 7 Budget and Appropriation 9 SECTION 4 . 8 Assignment of Lease Payments 10 SECTION 4 . 9 Use and Possession 10 SECTION 4 . 10 Abatement of Lease Payments in Event of Loss of Use 10 SECTION 4 . 11 Additional Payments 11 SECTION 4 . 12 Net-Net-Net Lease 11 (i) 84420001/3 ARTICLE V INSURANCE SECTION 5 . 1 Public Liability and Property Damage 11 SECTION 5 .2 Fire and Extended Coverage Insurance 12 SECTION 5 .3 Rental Interruption Insurance 12 SECTION 5 .4 Title Insurance 12 SECTION 5 . 5 Insurance Net Proceeds; Form of Policies 13 SECTION 5 . 6 Cooperation 14 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6 . 1 Application of Net Proceeds 14 ARTICLE VII COVENANTS WITH RESPECT TO THE PROJECT AND THE SITE SECTION 7 . 1 Use of the Project and the Site 16 SECTION 7 . 2 Interest in the Project and the Site 16 SECTION 7 . 3 Option to Purchase 17 SECTION 7 .4 Quiet Enjoyment 17 SECTION 7 . 5 Installation of Lessee ' s Personal Property 17 SECTION 7 . 6 Access to the Project and the Site 17 SECTION 7 . 7 Maintenance, Utilities, Taxes and Assessments 18 SECTION 7 . 8 Modification of the Project 18 SECTION 7 . 9 Encumbrances 19 SECTION 7 . 10 Lessor ' s Disclaimer of Warranties 20 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8 . 1 Assignment by the Lessor 20 SECTION 8 .2 Assignment and Subleasing by the Lessee 20 SECTION 8 .3 Amendments and Modifications 21 (ii) 84420001/3 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9 . 1 Events of Default Defined 21 SECTION 9 .2 Remedies on Default 22 SECTION 9 . 3 No Remedy Exclusive _ SECTION 9 . 4 Agreement to Pay Attoreys ' Fees and Expenses 25 SECTION 9 . 5 No Additional Waiver Implied by One Waiver 25 SECTION 9 . 6 Application of the Proceeds from the Re-Lease of the Project and the Site 25 SECTION 9 . 7 Trustee and Owners to Exercise Rights 25 ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10 . 1 Security Deposit 26 SECTION 10 .2 Mandatory Prepayment From Net Proceeds 26 SECTION 10 .3 Optional Prepayment 26 SECTION 10 .4 Credit for Amounts on Deposit 27 SECTION 10 . 5 Effect of Prepayment 27 ARTICLE XI MISCELLANEOUS SECTION 11. 1 Notices 27 SECTION 11. 2 Binding Effect 28 SECTION 11. 3 Severability 28 SECTION 11 .4 Execution in Counterparts 28 SECTION 11 . 5 Applicable Law 28 Exhibit A - Schedule of Lease Payments A-1 Exhibit B - General Description of the Project B-1 Exhibit C - Lease Supplement Form C-1 Exhibit D - Legal Description of the Site D-1 (iii) 84420001/3 • i LEASE AGREEMENT THIS LEASE AGREEMENT, dated as of June 1, 1993 , by and between DUBLIN INFORMATION, INC. , a nonprofit public benefit corporation duly organized and existing under the laws of the State of California, including without limitation Section 5110 et sea. of the Corporations Code of the State of California, as lessor (the "Lessor" ) , and the CITY OF DUBLIN, a municipal corporation duly organized and existing under the laws of the State of California (the "State" ) , as lessee (the "Lessee") , amending and restating in its entirety the Amended and Restated Lease Agreement, dated as of March 1, 1988, by and between the Lessor and the Lessee; W I T N E S S E T H : WHEREAS, in order to refinance the acquisition, construction, remodeling and/or improvement of certain real property and public facilities comprising the Lessee' s Civic Center (collectively, the "Project" ) , the Lessee and the Lessor have previously entered into an Amended and Restated Lease Agreement, dated as of March 1, 1988 (the "Prior Lease" ) whereby the Lessor agreed to lease the Project and the site thereof (the "Site" ) to the Lessee and the Lessee agreed to lease the Project and the Site from the Lessor; and WHEREAS, for the purpose of obtaining the moneys required to be deposited by it with the Trustee (as defined below) for refinancing the Project, the Lessee has previously caused to be executed and delivered its 1988 Refunding Certificates of Participation (Civic Center Project) in the original aggregate principal amount of $17,230, 000 (the "Refunded Certificates" ) , each evidencing the proportionate interests in lease payments made by the Lessee under the Prior Lease; and WHEREAS, the Lessee has determined that it is in the best interests of the Lessee, at this time to provide for the refinancing of the Project; and WHEREAS, the Lessee desires to continue to lease the Site and the Project from the Lessor pursuant to the terms of this Lease which amends and restates in its entirety the Prior Lease; and NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows : ARTICLE I DEFINITIONS AND EXHIBITS SECTION 1. 1 Definitions and Rules of Construction. Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of this Lease, have the meanings specified in the Trust Agreement, dated as of the date hereof, by and among First Interstate Bank of California, as trustee thereunder (the "Trustee") , the Lessor, and the Lessee, together with any amendments thereof or supplements thereto permitted to be made thereunder; and the additional terms defined in this Section shall, for all purposes of this Lease, have the meanings herein specified. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa. The terms "hereby" , "hereof" , "hereto" "herein" , "hereunder" and any similar terms, as used in this Lease, refer to this Lease as a whole. "Permitted Encumbrances" means, as of any particular time: (i) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the Lessee may, pursuant to provisions of Section 7 . 7 hereof, permit to remain unpaid; (ii) the Assignment Agreement; (iii) this Lease and the Prior Lease; (iv) any contested right or claim of any mechanic, laborer, materialman, supplier, or vendor filed or perfected in the manner prescribed by law; (v) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which the Lessee certifies in writing will not materially impair the use of the Site or the Project by the Lessee; and (vi) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of this Lease and to which the Lessor and the Lessee consent in writing . "Project" means the Project described in Exhibit B' hereto. "Site" means the site described in Exhibit D hereto . SECTION 1.2 Exhibits . The following Exhibits are attached to, and by reference made a part of, this Lease: Exhibit A: Schedule of Lease Payments to be paid by the Lessee to the Lessor, showing the Certificate Payment Date and amount of each Lease Payment . Exhibit B: General Description of the Project . 2 84420001/3 Exhibit C: Lease Supplement Form. Exhibit D: Legal Description of the Site. ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES SECTION 2 . 1 Representations, Covenants and Warranties of the Lessee. The Lessee represents, covenants and warrants to the Lessor as follows : (a) Due Organization and Existence. The Lessee is a municipal corporation duly organized and existing under the laws of the State. (b) Authorization; Enforceability. The Constitution and laws of the State authorize the Lessee to enter into this Lease, the Escrow Agreement and the Trust Agreement, and to enter into the transactions contemplated by and to carry out its obligations under all of the aforesaid agreements ; the Lessee has duly authorized and executed all of the aforesaid agreements . This Lease, the Escrow Agreement and the Trust Agreement constitute the legal, valid, binding and enforceable obligations of the Lessee in accordance with their respective terms, except. to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (c) No Conflicts or Default; No Liens or Encumbrances . Neither the execution and delivery of this Lease, the Escrow Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Lessee is now a party or by which the Lessee is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Lessee, or upon the Project or the Site except for Permitted Encumbrances and the pledges contained in the Trust Agreement . (d) Execution and Delivery. The Lessee has duly authorized and executed this Lease in accordance with the Constitution and laws of the State. 3 84420001/3 (e) Indemnification of Lessor . The Lessee covenants to defend, indemnify and hold harmless the Lessor and its. directors and employees (collectively, the "Indemnified Party" ) against any and all losses, claims, damages or liabilities, joint or several, including fees and expenses incurred in connection therewith, to which such Indemnified Party may become subject under any statute or at law or in equity or otherwise in connection with the transactions contemplated by this Lease, and shall reimburse any such Indemnified Party for any legal or other expenses. incurred by it in connection with investigating any claims against it and defending any actions, insofar as such losses, claims, damages , liabilities or actions arise out of the transactions contemplated by this Lease. In particular, without limitation, the Lessee shall and hereby agrees to indemnify and save the Indemnified Party harmless from and against all claims, losses and damages, including. legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on the Project or the Site by the Lessee, (ii) any breach or default on the part of the Lessee in the performance of any of its obligations under this Lease, (iii) any act or negligence of the Lessee or of any of its agents, contractors, servants, employees or licensees with respect to the Project or the Site, or (iv) any act of negligence of any assignee or sublessee of the Lessee with respect to the Project or the Site. No indemnification is made under this Section or elsewhere in this Lease for claims, losses or. damages, including legal fees and expenses arising out of the willful misconduct, negligence, or breach of duty under this Lease by the Lessor, its officers, agents, employees, successors or assigns . (f) General Tax and Arbitrage Covenant . The Lessee hereby covenants that, notwithstanding any other provision of this Lease, it will make no use of the proceeds of the Certificates or of any other amounts or property regardless of the source or take any action or refrain from taking any action that may cause the obligations of the Lessee under this Lease to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code") . In addition, the Lessee covenants that it will not make any use of the proceeds of the obligations provided herein or in the Trust Agreement or any other funds of the Lessee or take or omit to take any other action that would cause such obligations to be a "private activity bond" within the meaning of Section 141 of the Code, or "federally guaranteed" within the meaning of Section 149 (b) of the Code. To that end, so long as any Lease Payment is unpaid, the Lessee, with respect 4 84420001/3 - - to such proceeds and other such funds, will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1954 , as amended, to the extent that such requirements are, at the time, applicable and in effect . SECTION 2 .2 Representations, Covenants and Warranties of the Lessor . The Lessor represents, covenants and warrants to the Lessee as follows : (a) Due Organization and Existence; Enforceabilitv. The Lessor is a nonprofit public benefit corporation duly organized, existing and in good standing under and by virtue of the laws of the State, has the power to enter into this Lease, the Assignment Agreement and the Trust Agreement; is possessed of full power to own and hold real and personal property, and to lease and sell the same; and has duly authorized the execution and delivery of all of the aforesaid agreements . This Lease, the Assignment Agreement and the Trust Agreement constitute the legal, valid, binding and enforceable obligations of the Lessor in accordance with their respective terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. (b) No Conflicts or Defaults ; No Liens or Encumbrances . Neither the execution and delivery of this Lease, the Assignment Agreement or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions. hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, conflicts with or results in a breach of the terms, conditions or provisions of the Articles of Incorporation or Bylaws of the Lessor or any restriction or any agreement or instrument to which the Lessor is now a party or by which the Lessor is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Lessor, or upon the Project or the Site except by Permitted Encumbrances and by the pledge contained in the Trust Agreement . (c) Execution and Delivery. The Lessor has duly authorized and executed this Lease in accordance with the Constitution and laws of the State. (d) Maintenance of Corporate Existence. To the extent permitted by law, the Lessor agrees that during the term hereof it will maintain its existence as a corporation, will 5 84420001/3 not dissolve or otherwise dispose of all or substantially all _ of its assets, if any, will not become a general or limited partner in any partnership or a joint venturer in any joint venture and will not combine or consolidate with or merge into any other entity or permit one or more other entities to consolidate with or merge into it . (e) Qualification in California . The Lessor agrees that throughout the term hereof it will be qualified to do business in the State. (f) General Tax and Arbitrage Covenant . The Lessor covenants that, notwithstanding any other provision of this Lease, it will make no use of the proceeds of the Certificates or of any other amounts or property regardless of the source or take any action or refrain from taking any action that may cause the obligations of the Lessee under this Lease to be "arbitrage bonds" subject to. federal income taxation by reason of Section 141 of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code. To that end, so long as any Lease Payment is unpaid, the Lessor, with respect to such proceeds and such other funds, will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1986, as amended, to the extent that such requirements are, at the time, applicable and in effect . ARTICLE III PAYMENT OF ADDITIONAL. PROJECT COSTS; SUBSTITUTION SECTION 3 . 1 Deposit of Certificate Proceeds . On the Closing Date the Lessor agrees to pay or cause to be paid to the Lessee moneys to be deposited with the Trustee as provided in Section 2 . 07 of the Trust Agreement . • SECTION 3 .2 Payment of Delivery Costs . Payment of the Delivery Costs shall be made from the moneys deposited with the Trustee in the Delivery Costs Fund as provided in Section 2 . 07 of the Trust Agreement, which shall be disbursed from the Delivery Costs Fund in accordance and upon compliance with Article III of the Trust .Agreement . SECTION 3 .3 Substitution and Release. The Lessee shall have the right to substitute alternate projects for the Project listed in Exhibit B or alternate sites to the Site listed in Exhibit D, but only by providing the Trustee with a supplement to this Lease substantially in the form attached as Exhibit C 6 84420001/3 d hereto. The Lessee shall also have the right to release a portion or portions of the Project listed in Exhibit B or a portion or portions of the Site listed in Exhibit D, but only by providing the Trustee with a supplement to this Lease substantially in the form attached as Exhibit C hereto. All costs and expenses incurred in connection with any such substitution or release shall be borne by the Lessee. Notwithstanding any substitution or release pursuant to this Section, there shall be no reduction in or abatement of the Lease Payments due from the Lessee hereunder as a result of such substitution or release. SECTION 3 .4 Further Assurances and Corrective Instruments . The Lessor and the Lessee 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 Project and the Site hereby leased or intended so to be or for carrying out the expressed intention of this Lease. ARTICLE IV AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS SECTION 4 . 1 Lease. The Lessor hereby leases the Project and the Site to the Lessee, and the Lessee hereby leases the Project and the Site from the Lessor, upon the terms and conditions set forth herein. The Lessor and the Lessee hereby agree and acknowledge that this Lease constitutes an amendment and restatement of the Prior Lease; provided, however, that the provisions of the Prior Lease regarding defeasance of the Refunded Certificates shall be given full force and effect as set forth in Section 10 . 1 thereof . SECTION 4 . 2 Term. The term of the Prior Lease shall not terminate pursuant to Section 4 .2 thereof and the term of this Lease as an amendment and restatement of the Prior Lease shall commence on the date of execution hereof and shall end on February 1, 2010, unless extended pursuant to Section 4 .3 hereof, or unless terminated prior thereto upon the earliest of any of the .following .events : (a) Default and Termination. A default by the Lessee and the Lessor ' s election to terminate this Lease under Section 9 .2 (b) hereof; (b) Payment of All Lease Payments . The payment by the Lessee of all Lease Payments required under Section 4 .4 hereof and any additional payments required under Section 4 . 11 hereof; or 7 84420001/3 (c) Prepayment . The deposit of funds or Federal Securities with the Trustee in amounts sufficient to pay all Lease Payments as the same shall become due, as provided by Section 10 . 1 hereof and as provided by Section 14 . 01 of the Trust Agreement . SECTION 4 . 3 . Extension of Lease Term. If on February 1, 2010, the Certificates shall not be fully paid, or if the Lease Payments hereunder shall have been abated at any time and for any reason, then the Term shall be extended until all Certificates shall be fully paid, except that the Term shall in no event be extended beyond May 31, 2033 . SECTION 4 . 4 Lease Payments . - (a) Time and Amount . Subject to the provisions of Section 4 . 10 (regarding abatement in event of loss of use of any portion of the Project or Site) and Article X (regarding prepayment of Lease Payments) , the Lessee agrees to pay to the Lessor, its successors and assigns, as annual rental for the use and possession of the Project and the Site, the Lease Payments (denominated into components of principal and interest, the interest components being paid semiannually) in the amounts specified in Exhibit A, to be due and payable in arrears on the 25th day of the month (or if such day is not a Business Day, the immediately preceding Business Day) preceding the respective Certificate Payment Dates specified in Exhibit A (the "Lease Payment Date") which are sufficient in both time and amount to pay when due the annual principal and interest represented by the Certificates . (b) Credits . Any amount held in the Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to Section 10 . 2 hereof and other amounts required for payment of past due principal with respect to any Certificates not presented for payment or interest) shall be credited towards the Lease Payment then due and payable. No Lease Payment need be made on any Lease Payment Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be paid. (c) Rate on Overdue Payments . In the event the Lessee should fail to make any of the Lease Payments required in this Section, the Lease Payment in default shall continue as an obligation of the Lessee until the amount in default shall have been fully paid, and the Lessee agrees to pay the same with interest thereon,, to the extent permitted by law, from the date such amount was originally payable at the rate equal to the original interest rate payable with respect to each Certificate. 8 84420001/3 SECTION 4 . 5 No Withholding. Notwithstanding any dispute between the Lessor and the Lessee, including a dispute as to the failure of any portion of the Project or the Site in use by or possession of the Lessee to perform the task for which it is leased, the Lessee shall make all Lease Payments when due and shall not withhold any Lease Payments pending the final resolution of such dispute. SECTION 4 . 6 Fair Rental Value. The Lease Payments and Additional Payments shall be paid by the Lessee in considera- tion of the right of possession of, and the continued quiet use and enjoyment of, the Project and the Site during each such period for which said rental is to be paid. The parties hereto have agreed and determined that such total rental represents the fair rental value of the Project and the Site. In making such determination, consideration has been given to the market value of the Site, the uses and purposes which may be served by the Project and the benefits therefrom which will accrue to the Lessee and the general , public . In the event that the Lessee and the Lessor, agree subsequent to the date hereof that Lease Payments and Additional Payments hereunder are less than the fair rental value of the Project, the Lessee and the Lessor may mutually agree that the Lessee shall increase the Lease Payments and Additional Payments payable hereunder to reflect such fair rental value. SECTION 4 . 7 Budget and Appropriation. The Lessee covenants to take such action as may be necessary to include all Lease Payments and Additional Payments (to the extent such Additional Payments are known to the Lessee at the time its annual budget is proposed) , due hereunder in its annual budget and to make the necessary annual appropriations therefor . During the Term, the Lessee will annually furnish to the Trustee a certificate of the Lessee Representative stating that all Lease Payments and Additional Payments due hereunder for the applicable Fiscal Year have been included in its annual budget and the amount so included, such certificate to be filed within thirty (30) days after the adoption of such budget and in any event no later than September 1 in the calendar year in which the Lessee adopts such budget . The covenants on the part of the Lessee herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the ministerial duty of each and every public official of the Lessee to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the Lessee to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the Lessee. 9 84420001/3 SECTION 4 . 8 Assignment of Lease Payments . Certain of the . Lessor ' s rights under this Lease, including the right to receive and enforce payment of the Lease Payments to be made by the Lessee hereunder, have been assigned to the Trustee, subject to certain exceptions, pursuant to the Assignment Agreement, to which assignment the Lessee hereby consents . The Lessor hereby directs the Lessee, and the Lessee hereby agrees to pay to the Trustee at the Trustee' s corporate trust office in San Francisco, California, or to the Trustee at such other place as the Trustee shall direct in writing, all Lease Payments or prepayments thereof payable by the Lessee hereunder . The Lessor will not assign or pledge the Lease Payments or other amounts derived from the Project and the Site and from its other rights under this Lease except as provided under the terms of this Lease, or its duties and obligations except as provided under the Assignment Agreement and the Trust Agreement. SECTION 4 . 9 Use and Possession. The total Lease Payments due in any Fiscal Year (other than the Lease Payments of advance rental) shall be for the use and possession of the Project and the Site for the rental period for which such Lease Payments are due. SECTION 4 . 10 Abatement of Lease Payments in Event of Loss of Use. The obligation of the Lessee to pay Lease Payments shall be abated during any period in which by reason of damage, destruction or taking by eminent domain or condemnation with respect to any portion of the Project or the Site there is substantial interference with the use and possession of such portion of the Project or the Site by the Lessee. The amount of such abatement shall be agreed upon between the Lessee and the Lessor, or alternatively, determined by an independent market valuation, such that the resulting Lease Payments represent fair consideration for the use and possession of the portion of the Project or the Site not damaged, destroyed or taken. Such abatement shall continue for the period commencing with such damage, destruction or taking and ending with the substantial completion. of the replacement or work or repair. Except as provided herein, in the event of any such damage, destruction or taking, this Lease shall continue in full force and effect and the Lessee waives any right to terminate this Lease by virtue of any such damage, destruction or taking . There shall be no abatement of Lease Payments to the extent that moneys derived from any person as a result of any defect in the construction or installation, as applicable, of any item or portion of the Project or the Site, are available to pay the amount which would otherwise be abated. Notwithstanding the foregoing sentence, however, there shall be no abatement if the Reserve Fund and the Lease Payment Fund are available to pay the amount which would otherwise be abated. 10 84420001/3 SECTION 4 . 11 Additional Payments . In addition to the Lease Payments, the Lessee shall also pay such amounts ("Additional Payments") as shall be required for the payment of all administrative costs of the Lessor relating to the Project or the Certificates, including without limitation all expenses, compensation and indemnification of the Trustee payable by the Lessee under the Trust Agreement, taxes of any sort whatsoever payable by the Lessor as a result of its ownership of the Project or undertaking of the transactions contemplated herein or in the Trust Agreement, fees of auditors, accountants, attorneys or engineers, and all other necessary administrative costs of the Lessor or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Certificates or of the Trust Agreement or to indemnify the Lessor and its officers and directors . SECTION 4 . 12 Net-Net-Net Lease. This Lease shall be deemed and construed to be a "net-net-net lease" and the Lessee hereby agrees that the Lease Payments shall be an absolute net return to the Lessor, free and clear of any expenses, charges or set-offs whatsoever, except as expressly provided herein. ARTICLE V INSURANCE SECTION 5 . 1 Public Liability and Property Damage. The Lessee shall maintain or cause to be maintained throughout the Term of this Lease, but only if and to the extent available at reasonable cost from reputable insurers, a standard comprehensive general public liability and property damage insurance policy or policies in protection of the Lessee, and its officers, agents and employees . Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Project . Said policy or policies shall provide coverage in the minimum liability limits of $1, 000, 000 for personal injury or death of each person and $3, 000, 000 for personal injury or deaths of two or more persons in each accident or event (subject to a deductible of not to exceed $250, 000) , and in a minimum amount of $150, 000 (subject to a deductible of not to exceed $75, 000) for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3 , 000,000 covering all such risks, subject to a deductible of not to exceed $250, 000 . Such liability insurance may maintained as part of or in conjunction with any other l iability insurance 11 84420001/3 • coverage carried by the Lessee, and may be maintained in whole or in part in the form of self-insurance by the Lessee, subject to the provisions of Sections 5 . 5 and 5 . 7 hereof . The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall have been paid. SECTION 5 .2 Fire and Extended Coverage Insurance. The Lessee shall procure and maintain, or cause to be procured and maintained throughout the Term of this Lease, insurance against loss or damage to the Project by fire and lightning, with extended coverage and vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be 'in an amount at least equal to the lesser of (a) the aggregate principal amount of the Outstanding Certificates, or (b) the replacement cost of the Project . Such insurance may be subject to deductible clauses of not to exceed $100, 000 for any one loss . Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the Lessee and may be maintained in whole or in part in the form of self-insurance by the Lessee, subject to the provisions of Sections 5 . 5 and 5 . 7 hereof . The Net Proceeds of such insurance shall be applied as provided in Section 6 . 1. SECTION 5 .3 Rental Interruption Insurance. The Lessee shall procure and maintain, or cause to be procured and maintained throughout the Term of this Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Project as a result of any of the hazards covered in the insurance required by Section 5 .2, in an amount at least equal to the maximum Lease Payments allocable to the Project and coming due and payable during any two consecutive Fiscal Years . The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be, credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. SECTION 5 .4 Title Insurance. Prior to or concurrent with the recordation hereof, the Lessee shall provide, at its own expense, a CLTA title insurance policy in the amount of not less than the aggregate principal amount of the Certificates, insuring the Lessee' s leasehold estate in the Site hereunder . All Net Proceeds received under such policy shall be deposited with the Trustee in the Lease Payment Fund and shall be credited towards the prepayment of the remaining Lease Payments pursuant to Section 6 . 1 hereof . 12 84420001/3 . SECTION 5 . 5 Insurance Net Proceeds; Form of Policies . Each policy of insurance required by Sections 5 .2 , 5 .3 and 5 .4 hereof shall name the Trustee as loss payee so as to provide that all proceeds thereunder shall be payable to the Trustee. The Lessee shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. All such policies shall provide that the Trustee shall be given thirty (30) days ' notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee shall not be responsible for the sufficiency of any insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss . The Lessee shall cause to be delivered to the Trustee annually, within sixty (60) days following the close of each Fiscal Year, a certificate stating that the insurance coverage required by this Lease is in full force and effect . In the event that any insurance required pursuant to Sections 5 . 1 or 5 .2 hereof shall be provided in the form of self-insurance, the Lessee shall file with the Trustee annually, concurrent with the delivery of the certificate described in the preceding paragraph, a statement of the risk manager of the Lessee or an independent insurance advisor engaged by the Lessee identifying the extent of such self-insurance and stating the determination that the Lessee maintains sufficient reserves with respect thereto . In the event that any such insurance shall be provided in the form of self-insurance by the Lessee, the Lessee shall not be obligated to make any payment with respect to any insured event except from such reserves . The Lessee covenants that' so long as any insurance maintained with respect to the Project is maintained in the form of self-insurance, in the event that the Lessee terminates any such program of self-insurance, it will maintain sufficient reserves or obtain a replacement insurance policy to cover any obligations that may thereafter arise during the Term hereof with respect to occurrences during the period for which such self-insurance was maintained. . It is hereby acknowledged by the Lessee and the Lessor that the Lessee may obtain insurance through the ABAG Plan Corporation in satisfaction of the requirements of Sections 5 . 1, 5 .2 and 5 . 3 hereof, so long as such insurance shall be in compliance with the provisions of this Article V. It is hereby further acknowledged by the Lessee and the Lessor that such insurance obtained from the ABAG Plan Corporation shall not constitute self-insurance pursuant to the terms of this Article V. 13 84420001/3 SECTION 5 . 6 Cooperation. The Lessor shall cooperate fully with the Lessee at the expense of the Lessee in filing any proof of loss with respect to any insurance policy maintained pursuant to this Article and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Project or any portion thereof . ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6 . 1 Application of Net Proceeds,. (a) Deposit in Net Proceeds Fund. Pursuant to Section 7 . 01 of the Trust Agreement, the Trustee shall deposit Net Proceeds of insurance which it receives in the Net Proceeds Fund as provided in Section 5 .2 hereof (regarding fire and extended coverage insurance) and Section 5 .4 hereof (regarding title insurance) promptly upon receipt thereof . The Lessee and/or the Lessor shall transfer to the Trustee any other Net Proceeds received by the Lessee and/or Lessor in the event of any accident, destruction, theft or taking by eminent domain or condemnation with respect to the Project, for deposit in the Net Proceeds Fund. (b) Disbursement for Replacement or Repair of the Project . Upon receipt of the certification described in paragraph (1) below and the requisition described in paragraph (2) below, the Trustee shall disburse moneys in the Net Proceeds Fund to the person, firm or corporation named in the requisition as provided in Section 7 . 02 of the Trust Agreement. (1) Certification. The Lessee Representative must certify to the Lessor and the Trustee that : (i) Sufficiency of Net Proceeds . The Net Proceeds available for such purpose, together with any other funds supplied by the Lessee for such purpose, are sufficient therefor, and (ii) Timely Completion. In the event that damage or destruction results in an abatement. of Lease Payments, such replacement or repair can be fully completed within a period not in excess of the period in which rental interruption insurance proceeds will be available to pay in full all Lease Payments coming due during such period as described in Section 5 . 3 hereof . 14 84420001/3 (2) Requisition. The. Lessee Representative must state with respect to each payment to be made (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid and (iv) that each obligation mentioned therein has been properly incurred, is a proper charge against the Net Proceeds Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied by a bill or a statement of account for such obligation. Any balance of the Net Proceeds remaining after such replacement or repair has been completed and after payment or provision for payment of all Certificates as provided in Section 7 . 02 of the Trust Agreement shall be paid to the Lessee . (c) Disbursement for Prepayment . If the Lessee Representative notifies the Trustee in writing of the Lessee' s determination that the certification provided in Section 6 . 1(b) (1) cannot be made and replacement or repair of any portion of the Project is not economically feasible or in the best interest of the Lessee, then the Trustee shall promptly transfer the Net Proceeds to the Prepayment Fund as provided in Section 7 . 02 of the Trust Agreement and apply them to prepayment of the Certificates as provided in Section 4 . 02 of the Trust Agreement and prepayment of Lease Payments as provided in Section 10 .2 hereof; provided that in the event of . damage or destruction in whole of the Project and in the event such Net Proceeds, together with funds then on hand in the Lease Payment Fund and Reserve Fund are not sufficient to prepay all the Certificates then Outstanding, then the Lessee shall not be permitted to certify that repair, replacement or improvement of all of the Project is not economically feasible or in the best interest of the Lessee. In such event, the Lessee shall proceed to repair, replace or improve the Project as described herein from legally available funds in the then current fiscal year and shall make the required notification to the Trustee pursuant to Section 7 . 02 of the Trust Agreement and the Trustee shall disburse moneys in the Net Proceeds Fund to the person, firm, or corporation named in the Requisition as provided therein. Notwithstanding the foregoing, as an alternative to repair, replacement or improvement of the Project as provided in the immediately preceding sentence, the Lessee shall be permitted to substitute all or a portion of the Project and the Site pursuant to Section 3 .3 hereof , in which event any Net Proceeds not needed to repair, replace or improve the Project as a result of such substitution shall be transferred to the Lessee. 15 84420001/3 ARTICLE VII COVENANTS WITH RESPECT TO THE PROJECT AND THE SITE SECTION 7 . 1 Use of the Project and the Site. The Lessee represents and warrants that it has an immediate need for, and expects to make immediate use of, all of the Project and the Site, which need is not temporary or expected to diminish in the foreseeable future. The Lessee agrees not to give priority in the appropriation of funds for the acquisition or use of any additional equipment or facilities, as the case may be, performing functions similar to that performed by the Project if such priority would adversely affect the interests of the Owners of the Certificates . SECTION 7 . 2 Interest in the Project and the Site. (a) Lessor Holds Leasehold Interest During Term. During the term of this Lease,, the Lessor shall hold title to the Project, and any and all additions which comprise repairs, replacements and modifications except for those modifications which are added to the Project by the Lessee and which may be removed without material damage to the Project and the Site. Notwithstanding any provisions under the Prior Lease to the effect that title to the Project and the Site shall vest in the Lessee upon deposit of Federal Securities (as defined in the Prior Lease) with the Trustee, including, Sections 4 . 6 and 10 . 1 thereof, the Lessor and the Lessee hereby acknowledge and agree. that the title to the Project and the Site shall not vest with the Lessee pursuant to the Prior Lease upon the deposit of Federal Securities (as defined in the Prior Lease) with the Trustee and that the Lessor ' s title to the Project and the Site as provided under. the Prior Lease is continued and maintained under this Lease as an amendment and restatement of such Prior Lease. Notwithstanding the foregoing, title to the Project and the Site shall vest with the Lessee pursuant to the terms of Sections 7. 2 (b) and 10 . 1 hereof . The Lessor and the Lessee shall take any and all actions reasonably required, including but not limited to executing and filing any and all documents, reasonably required to maintain and evidence their respective interests in the Project and the Site at all times during the Term of this Lease. (b) Interest Transferred to Lessee at End of Term. Upon ,expiration of the Term as provided in Section 4 . 2 hereof (except if such expiration is caused by a default of the Lessee as described in Section 4 . 2(a) ) , all right, title and interest of the Lessor in and to all of the Project and the Site shall be transferred to and vest in the Lessee without the necessity of any additional document of transfer . 16 . 84420001/3 SECTION 7 .3 Option to Purchase. The Lessee may exercise an option to purchase the Lessor ' s interest in the Project by paying a purchase price therefor equal to the amounts necessary to cause the termination of the Term as provided in Section 4 .2 hereof . SECTION 7. 4 Quiet Enjoyment . During the Term, the Lessor shall provide the Lessee with quiet use and enjoyment of the Project and the Site, and the Lessee shall during such Term peaceably and quietly have and hold and enjoy the Project and the Site, without suit, trouble or hindrance from the Lessor, or any person or entity claiming under or through the Lessor except as expressly set forth in this Lease. The Lessor will, at the request of the Lessee, join in any legal action in which the Lessee asserts its right to such possession and enjoyment to the extent the Lessor may lawfully do so. Notwithstanding the foregoing, the Lessor shall have the right to inspect the Project and the Site as provided in Section 7 . 6 hereof . SECTION 7. 5 Installation of Lessee' s Personal Property. The Lessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon any portion of the Site or the Project . All such items shall remain the sole personal property of the Lessee, regardless of the manner in which the same may be affixed to such portion of the Site or the Project, in which neither the Lessor nor the Trustee shall have any interest, and may be modified or removed by the Lessee at any time; provided that the Lessee shall repair and restore any and all damage to such portion of the Site or the Project resulting from the installation, modification or removal of any such items of equipment . Nothing in this Lease shall prevent the Lessee from purchasing items to be installed pursuant to this Section, provided that no lien or security interest shall attach to any part of the Site or the Project . SECTION 7. 6 . Access to the Project and the Site. The Lessee agrees that the Lessor, any Lessor Representative and the Lessor ' s successors, assigns or designees shall have the right at all reasonable times to enter upon the Project and the Site or any portion thereof to examine and inspect the Project and the Site. The Lessee further agrees that the Lessor, any such Representative, and the Lessor ' s successors, assigns or designees shall have such rights of access to the Project and the Site as may be reasonably necessary to cause the proper maintenance of the Project and the Site in the event of failure by the Lessee to perform its obligations hereunder . 17 84420001/3 SECTION 7 . 7 Maintenance, Utilities , Taxes and Assessments . (a) Maintenance; Repair and Replacement . Throughout the Term of this Lease, as part of the consideration for the rental of the Project and the Site, all repair and maintenance of the Project and the Site shall be the responsibility of the Lessee, and the Lessee shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Project and the Site resulting from ordinary wear and tear or want of care on the part of the Lessee or any sublessee thereof . In exchange for the Lease Payments herein provided, the Lessor agrees to provide only the Project and the Site, as hereinbefore more specifically set forth. The Lessee waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the Lessee under the terms of this Lease. (b) Tax and Assessments ; Utility Charges . The Lessee shall also pay or cause to be paid all taxes and assessments, including but not limited to utility charges of any type or nature charged to the Lessor or the, Lessee or levied, assessed or charged against any portion of the Project or the Site or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Lessee shall be obligated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due. (c) Contests . The Lessee may, at its expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom; provided that prior to such nonpayment it shall furnish the Lessor and the Trustee with the opinion of an Independent Counsel, to the effect that, by nonpayment of any such items, the interest of the Lessor in such portion of the Project or the Site will not be materially endangered and that the Project or the Site will not be subject to loss or forfeiture. Otherwise, the Lessee shall promptly pay such taxes, assessments or charges or make provisions for the payment thereof in form satisfactory to the Lessor . The Lessor will cooperate fully in such contest, upon the request and at the expense of the Lessee. SECTION 7 . 8 Modification of the Project . (a) Additions , Modifications and Improvements . The Lessee 'shall, at its own expense, have the right to make 18 84420001/3 additions , modifications, and improvements to any portion of the Project if such improvements are necessary or beneficial for the use of such portion of the Project. All such additions, modifications and improvements shall thereafter comprise part of the Project and be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in any way damage any portion of the, Project or cause it to be used for purposes other than those authorized under the •provisions of State and federal law or in any way which would impair the State tax-exempt status or the exclusion from gross income for federal income tax purposes of the interest components of the Lease Payments; and the Project, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is not substantially less than the value of the Project immediately prior to the making of such additions, modifications and improvements . (b) No Liens . Except for Permitted Encumbrances, the. Lessee will not permit any mechanic ' s or other lien to be established or remain against the Project or the Site for labor or materials furnished in connection with any additions, modifications or improvements made by the Lessee pursuant to this Section; provided that if any such lien is established and the Lessee shall first notify or cause to be notified the Lessor of the Lessee' s intention to do so, the Lessee may in good faith contest any lien filed or established against the Project or the Site, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Lessor with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Trustee as assignee of the Lessor . The Lessor will cooperate fully in any such contest, upon the request and at the expense of the Lessee. SECTION 7 . 9 Encumbrances . Except as provided in this Article VII (including without limitation Section 7 . 8 hereof and this Section 7 . 9) , the Lessee shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, liens, charges, encumbrances or claims, as applicable, on or with respect to the Project or the Site, other than Permitted Encumbrances and other than the respective rights of the Lessor and the Lessee as herein provided. Except as expressly provided in this Article VII , the Lessee shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time; provided that the Lessee may contest such liens if it desires to do so. The 19 84420001/3 Lessee shall reimburse the Lessor for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. SECTION 7 . 10 Lessor ' s Disclaimer. of Warranties .. THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE LESSEE OF THE PROJECT, THE SITE OR ANY PORTION THEREOF. THE LESSEE ACKNOWLEDGES THAT THE LESSOR IS NOT A MANUFACTURER OF PORTIONS OF THE PROJECT OR THE SITE, AND THAT THE LESSEE IS LEASING THE PROJECT AND THE SITE AS IS. In no event shall the Lessor be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease, the Escrow Agreement or the Trust Agreement for the existence, furnishing, functioning or Lessee ' s use and possession of the Project and the Site. ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8 . 1 Assignment by the Lessor . Except as provided herein, in the Trust Agreement and the Assignment Agreement, the Lessor will not assign this Lease to any other person, firm or corporation so as to impair or violate the representations, covenants and warranties contained in Section 2 . 2 hereof . SECTION 8 . 2 Assignment and Subleasing by the Lessee. (a) Assignment . This Lease may be assigned by the Lessee so long as such assignment does not, in the opinion of Special Counsel, adversely affect the State tax-exempt status or the exclusion from gross income for federal income tax purposes of the interest component of the Lease Payments . In the event that this Lease is assigned by the Lessee, the obligation to make Lease Payments hereunder shall remain the obligation of the Lessee. (b) Sublease. The Lessee may sublease all or any portion of the Project or the Site, subject to all of the following conditions : (i) This Lease and the obligation of the Lessee to make Lease Payments hereunder shall remain - obligations of the Lessee; (ii) No sublease by the Lessee shall cause the Project or the Site to be used for a purpose other 20 84420001/3 than a governmental or proprietary function authorized under the provisions of the laws of the State; and (iii) No sublease shall cause the interest component of the Lease Payments due with respect to the Project and the Site to become subject to federal income taxes or State personal income taxes . SECTION 8 .3 Amendments and Modifications . This Lease may be amended or any of its terms modified with the written consent of the Lessee and the Trustee as assignee of the Lessor, subject to and in accordance with Article X of the Trust Agreement. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9 . 1 Events of Default Defined. The following shall be "events of default" under this Lease and the terms "events of default" and "default" shall mean, whenever they are used in this Lease, any one or more of the following events : (a) Payment Default . Failure by the Lessee to pay any Lease Payment required to be paid hereunder by the next succeeding Certificate Payment Date following each corresponding Lease Payment Date; provided, however, that such failure shall not constitute an event of default if the amounts so unpaid have been transferred from the Reserve Fund or other special fund source to the Lease Payment Fund to make such Lease Payments pursuant to the terms of. the Trust Agreement . (b) Covenant Default . Failure by the Lessee to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed herein or otherwise with respect hereto or in the Trust Agreement, other than as referred to in clause (a) of this Section, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the Lessee by the Lessor, the Trustee or the Owners of not less than twenty percent (20%) in aggregate principal amount of Certificates then Outstanding; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Trustee, as assignee of the Lessor, or such Owners, as the case may be, shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Lessee within the applicable period and diligently pursued until the default is corrected. 21 84420001/3 . (c) Bankruptcy or Insolvency. The filing by the Lessee of a case in bankruptcy, or the subjection of any right or interest of the Lessee under this Lease to any execution, garnishment or attachment, or adjudication of the Lessee as a bankrupt, or assignment by the Lessee for the benefit of creditors, or the entry by the Lessee into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Lessee in any proceedings instituted under the provisions of the federal bankruptcy code, as amended, or under any similar act which may hereafter be enacted. SECTION 9 . 2 Remedies on Default . Whenever any event of default referred to in Section 9 . 1 hereof shall have happened and be continuing, it shall be lawful for the Lessor to exercise any and all remedies available pursuant to law or granted pursuant to this Lease. Notwithstanding anything herein or in the Trust Agreement to the contrary, THERE SHALL BE NO RIGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE LEASE PAYMENTS OR OTHERWISE DECLARE ANY LEASE PAYMENTS NOT THEN IN DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE. After the occurrence of an event of default hereunder, the Lessee will surrender possession of the Project and the Site to the Lessor, if requested to do so by the Lessor, the Trustee or the Owners, in accordance with the provisions of the Trust Agreement . (a) No Termination: Repossession and Re-Lease on Behalf of Lessee. In the event the Lessor does not elect to terminate this Lease in the manner hereinafter provided for in subparagraph (b) hereof, the Lessor may, with the consent of the Lessee, which consent is hereby irrevocably given, repossess the Project and the Site and re-lease it for the account of the Lessee, in which event the Lessee ' s obligation will accrue from year to year in accordance with this Lease and the Lessee will continue to receive the value of the use of the Project and the Site from year to year in the form of credits against its obligation to pay Lease Payments . The obligations of the Lessee shall remain the same as prior to such default, to pay fixed Lease Payments whether the Lessor re-enters or not . The Lessee agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions contained herein and shall reimburse the Lessor for any deficiency arising out of the re-leasing of the Project and the Site, or, in the event the Lessor is unable to re-lease the Project or the Site, then for the full amount of all Lease Payments to the end of the Term of this Lease, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as provided above for the payment of Lease Payments hereunder, notwithstanding such repossession 22 84420001/3 by the Lessor or any suit, brought by the Lessor for the purpose of effecting such repossession of the Project and the Site or the exercise of any other remedy by the Lessor . The Lessee hereby irrevocably appoints the Lessor as the agent and attorney-in-fact of the Lessee to repossess and re-lease the Project and the Site in the event of default by the Lessee in the performance of any covenants contained herein to be performed by the Lessee and to remove all perscnal property whatsoever situated upon the Project and the Site, to place such property in storage or other suitable place in the County of Alameda, for the account of and at the expense of the Lessee, and the Lessee hereby exempts and agrees to save harmless the Lessor from any costs, loss or damage whatsoever arising or occasioned by any such repossession and re-leasing of the Project and the Site. The Lessee hereby waives any and all claims for damage caused or which may be caused by the Lessor in repossessing the Project and the Site as provided herein and all claims for damages that may result from the destruction of or the injury to the Project and the Site and all claims for damages to or loss of any property belonging to the Lessee that may be in or upon the Project or the Site. The Lessee agrees that the terms of this Lease constitute full and sufficient notice of the right of the Lessor to re-lease the Project and the Site in the event of such repossession without effecting a surrender of this Lease, and further agrees that no acts of the Lessor in effecting such re-leasing shall constitute a surrender or termination of this Lease irrespective of the term for which such re-leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the Lessee the right to terminate this Lease shall vest in the Lessor to be effected in the sole and exclusive manner provided for in subparagraph (b) below. The Lessee further waives the right to any rental obtained by the Lessor in 'excess of the Lease Payments and hereby conveys and releases such excess to the Lessor as compensation to the Lessor for its services in re-leasing the Project and the Site. (b) Termination: Repossession and Re-Lease. In the event of the termination of this Lease by the Lessor at its option and in the manner hereinafter provided on account of default by the Lessee (and notwithstanding any repossession of the Project and the Site by the Lessor in any manner whatsoever or the re-leasing of the Project and the Site) , the Lessee nevertheless agrees to pay to the Lessor all costs, losses or damages howsoever arising or occurring payable at the same time and in the same manner as is provided herein in the case of payment of Lease Payments . Any proceeds of the re-lease or 23 84420001/3 other disposition of the Project or the Site by the Lessor shall be deposited into the Lease Payment Fund and be applied in accordance with the provisions of Section 5 . 04 of the Trust Agreement . Any surplus received by the Lessor from such . re-leasing shall be the absolute property of the Lessor and the Lessee shall have no right thereto, nor shall the Lessee be entitled to any credit in the event of a surplus in the rentals received by the Lessor from the Project or the Site. Neither notice to pay rent or to deliver up possession of the Project and the Site given pursuant to law nor any proceeding taken by the Lessor to recover possession of the Project and the Site shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the Lessee shall be or become effective by operation of law, or otherwise, unless and until the Lessor shall have given written notice to the Lessee of the election on the part of the Lessor to terminate this Lease. The Lessee covenants and agrees that no surrender of the Project or the Site for the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Lessor by such written notice. No such termination shall be effected either by operation of law or act of the parties hereto, except only in the manner herein expressly provided. The Lessor and Lessee hereby agree that Section 1951.2 of the California Civil Code shall apply to this Lease and that upon such termination, the Lessor may recover, in addition to all other damages available by contract or at law, from the Lessee: (i) the worth at the time of award of the unpaid rental which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rental which would have been earned. after termination until the time of award exceeds the amount of such rental loss . that the Lessor proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rental for the balance of the term after the time of the award exceeds the amount of such rental loss that the Lessor proves could have been reasonably avoided; and (iv) any other amount necessary to compensate the Lessor for all the detriment proximately caused by the Lessee' s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. The "worth• at the time of award" of the amounts referred to in clauses (i) , (ii) and (iii) above is computed by allowing interest at the. legal rate of interest per annum at which judgments for money in the State bear interest . SECTION 9 . 3 No Remedy Exclusive. No remedy conferred herein upon or reserved to the Lessor is intended to be 24 84420001/3 exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient . In order to entitle the Lessor to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice, other than such notice as may be required in this Article or by law. SECTION 9 .4 Agreement to Pay Attorneys ' Fees and Expenses . In the event either party to this Lease should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party. SECTION 9 . 5 No Additional Waiver Implied by One Waiver . In the event any agreement contained in this Lease should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so . waived and shall not be deemed to waive any other breach hereunder. SECTION 9 . 6 Application of the Proceeds from the Re-Lease of the Project and the Site. All amounts received by the Lessor under this Article IX (other than as provided in Section 9 . 2 (b) herein regarding certain surplus) shall be deposited by the Trustee in the Lease Payment Fund and credited towards the Lease Payments . SECTION 9 . 7 Trustee and Owners to Exercise Rights . Such rights and remedies as are given to the Lessor under this Article IX have been assigned by the Lessor to the Trustee under the Trust Agreement and the Assignment Agreement, to which assignment the Lessee hereby consents . Such rights and remedies shall be exercised by the Trustee and the Owners as provided in the Trust Agreement . 25 84420001/3 ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10 . 1 Security Deposit . Notwithstanding any other provision of this Lease, the Lessee may, on any date, secure the payment of Lease Payments by a deposit by it with the Trustee of cash and/or Federal Securities as provided in Section 14 . 01 of the Trust Agreement . In such event, all obligations of the Lessee under this Lease, and all security provided by this Lease for said obligations, shall cease and terminate, excepting only the obligation of the Lessee to make, or cause to be made, Lease Payments from such deposit . On the date of said deposit title to the Project and the Site shall vest in the Lessee automatically and without further action by the Lessee or the Lessor (except as provided herein) ; provided that title shall be subject to the subsequent payment of Lease Payments made from said deposit in accordance with the provisions hereof . Said deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with the provisions of this Lease. The Lessor shall execute and deliver such further instruments and take such further action as may reasonably be requested by the Lessee for carrying out the title transfer of the Project and the Site. SECTION 10 .2 Mandatory Prepayment From Net Proceeds . The Lessee shall be obligated to prepay the Lease Payments in whole or in part, from and to the extent of any Net Proceeds theretofore deposited in the Prepayment Fund pursuant to Section 7 . 02 of the Trust Agreement . The Lessee and the Lessor hereby agree that such Net Proceeds shall be credited towards the Lessee' s obligations hereunder (except in the case of such prepayment of the Lease Payments in whole) for the Lease Payments due on the Lease Payment Dates designated by the Lessee. SECTION 10 .3 Optional Prepayment . Subject to the terms and conditions of this Section 10 . 3 , the Lessor hereby grants an option to the Lessee to prepay in whole or in part, the principal amount of such Lease Payments specified in writing by the Lessee subject to and in accordance with Section 4 . 03 of the Trust Agreement, on the dates and at the prepayment prices provided therein. The Lessee shall execute said option by giving written notice to the Trustee thereof at least 60 days ' prior to the date of prepayment and depositing with said notice (1) accrued interest on the principal amount to be prepaid to the date of prepayment, plus (2) any Lease Payments then due but unpaid, plus (3) any prepayment premium described in said Section 4 . 03; provided that no such prepayment shall occur in a principal amount of less than $20, 000 plus any premium applicable. 26 84420001/3 s SECTION 10 . 4 Credit for Amounts on Deposit . In the event of prepayment of the principal components of the Lease Payments in full under this Article X such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all amounts then on deposit in the Lease Payment Fund and the Reserve Fund shall be credited toward the amounts then required to be so prepaid. SECTION 10 . 5 Effect of Prepayment .. (a) In Whole. In the event that the Lessee prepays all remaining Lease Payments (including any amounts owed to the Trustee) either by making a security, deposit with the Trustee as provided in Section 10 . 1 hereof, from Net Proceeds as provided in Section 10 . 2 hereof or from optional prepayment as provided in Section 10 .3 hereof, the Lessee' s obligations under this Lease shall thereupon cease and terminate, including but not limited to the Lessee ' s obligation to continue to pay Lease Payments under this Article X. (b) In Part . In the event the Lessee prepays less than all of the remaining principal components of the Lease Payments pursuant to Section 10 .2 hereof (from Net Proceeds) , the amount of such prepayment shall be applied to reduce the principal components of the remaining Lease Payments designated by the Lessee, corresponding to the resulting prepayment of principal with respect to the Certificates . ARTICLE XI MISCELLANEOUS SECTION 11 . 1 Notices . All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received five Business Days after deposit in the United States mail in certified form, postage prepaid, to the Lessee or the Lessor, as the case may be, at the following addresses : If to the Lessee: City of Dublin 100 Civic Plaza Dublin, California 94568 Attention: City Manager 27 84420001/3 If to the Lessor : Dublin Information, Inc. c/o City of Dublin 100 Civic Plaza Dublin, California 94568 Attention: City Manager The Lessor and the Lessee, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent . SECTION 11.2 Binding Effect . This Lease shall inure to the benefit of and shall be binding upon the Lessor and the Lessee and their respective successors and assigns . SECTION 11.3 Severability. In the event any provision of this Lease shall be held invalid or unenforceable by a court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof . SECTION 11.4 Execution in Counterparts . This Lease may be. executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 11 . 5 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California . 28 84420001/3 IN WITNESS WHEREOF, the Lessor has caused this Lease to be executed in its name by its duly authorized officers , and the Lessee has caused this Lease to be executed in its name by its duly authorized officers, as of the date first above written. DUBLIN INFORMATION, INC. , as Lessor By CITY OF DUBLIN, as Lessee By 29 84420001/3 STATE OF CALIFORNIA ) ) ss . COUNTY OF ) On before me, [insert date] personally appeared of Dublin Information, Inc. , personally known to me, or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which person acted, executed the instrument . WITNESS my hand and official seal . Signature [Seal] 30 84420001/3 STATE OF CALIFORNIA ) ) ss . COUNTY OF ) On before me, [insert date] personally appeared of the City of Dublin, personally known to me, or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon. behalf of which person acted, executed the instrument. WITNESS my hand and official seal . Signature [Seal] • 31 84420001/3 EXHIBIT A SCHEDULE OF LEASE PAYMENTS Certificate Payment Principal Interest Total Date Component Component Payment A-1 84420001/3 EXHIBIT B GENERAL DESCRIPTION OF THE PROJECT B-1 84420001/3 EXHIBIT C LEASE SUPPLEMENT FORM There is hereby subjected to the terms of that certain Lease Agreement, dated as of June 1, 1993 (the "Lease") , between Dublin Information, Inc . ( "Lessor" ) and the City of Dublin, California ("Lessee") the following items which shall comprise the Project and/or the Site, as defined therein: [Legal Description of Substituted Real Property and Facilities Note that such description shall be a restated description of the Project and Site which may constitute (i) the real property and facilities substituted in whole or in part for the. Project and Site as previously defined (along with any remaining unsubstantiated portion of the Project and/or Site) or (ii) a portion of the previous Project and Site after release of a portion of such Project and Site. ] I , the Lessee Representative, hereby certify that: (1) the fair rental value and the useful life of the above-described real property and facilities to be substituted for the real property and facilities which previously constituted all or a portion of the Project and the Site at least equals the fair rental value and the useful life represented by the Lease Payments (as defined under the Lease) remaining to be paid under the Lease; (2) the above-described substituted real property and facilities are currently owned by the Lessee; (3) to the extent such real property has been substituted, the Lessee has obtained title insurance on the above-described real property in compliance with the provisions of Section 5 . 4 of the Lease; and (4) The above-described real property and facilities constitute property which is essential to the operations of the Lessee. I , the Lessee Representative, hereby further certify that the above-described real property and facilities being substituted are free and clear of all liens or claims other than Permitted Encumbrances (as defined under the Lease) , C-1 84420001/3 J except for the lien of the Trust Agreement referred to in the Lease and the rights of the Lessee under the Lease. CITY OF DUBLIN By: Lessee Representative DUBLIN INFORMATION, INC. By: Lessor Representative C-2 84420001/3 EXHIBIT D LEGAL DESCRIPTIONS OF THE SITE D-1 84420001/3