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HomeMy WebLinkAbout1987-08-11; City Council; Resolution 91891 2 3 4 5 6 7 8 9 10 11 1% 12 14 1E 2c 21 22 2: 24 2E 2E 27 28 RESOLUTION NO. 9189 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA ACCEPTING THE PROPOSAL OF SECURITY PACIFIC PERCHANT BANKING GROUP FOR THE LEASE PURCHASE OF THE BUILDING LOCATED AT 2075 US PAWS DRIVE, CARLSBAD, CALIFORNIA, AND APPROPRIATING FUNDS FOR 1987-88 LEASE PAYMENTS. WHEREAS, the City Council has previously authorized the purchase of the building located at 2075 Las Palmas Drive, Carlsbad, California, and WHEREAS, the City Council desires to enter into a leaselpurchase agreement with a financial institution to provide funding for the acquisition of this property, and WHEREAS, proposals from six qualified financial institutions have been received and analyzed by City staff, and WHEREAS, the proposal of Security Pacific Merchant Banking Group provides the most advantageous combination of interest rates, terms and payment schedules, and WHEREAS, the City Council has determined that a true and very real need exists for the acquisition of the property located at 2075 Las Palmas Drive, Carlsbad, California, and WHEREAS, the City Council has taken the necessary steps under applicable law to arrange for the acquisition of the property. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the terms of said Municipal Lease and Option Agreement are in the best interests of the City for the acquisition of such property. /// /// 1 2 3 4 F E 7 E E 1( 1: 1: 1: 11 1: 11 1' 1 1 2 21 2; 2: 2 2 2' 2 2 2. That the Mayor is hereby authorized to execute the attached agreement and the City Manager, Finance Director, and City Attorney are authorized to sign and execute Exhibits A through G attached to the Municipal Lease Agreement and the City Clerk is hereby authorized to attest to said documents. 3. That the City Manager is hereby authorized to approve any modifications in the form or conditions of this agreement that, in the opinion of the City Attorney, are minor or administrative in nature. That the amount of $125,000 is hereby appropriated from the 4. Public Facilities Fee Unappropriated Fund balance to Account Number 320-840-1810-3266 for the 1987-88 lease payments. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad held on the llthday of August , 1987, by the following vote, to wit: - AYES: Council Members Lewis, Kulchin, and Mamaux NOES: None ABSENT: Council/ Members Pet Larsm ATTEST : -2- ., . -, . Oreement No. 2024 MUNICIPAL LEASE AND OPTION AGREEMENT Lessor: Security Pacific Me'rchant Bank 300 South Grand Avenue, HCP211 Los Angeles, California 90071 Lessee: City of Carlsbad 1200 Elm Avenue Carlsbad, California 92008-1989 This Municipal Lease and Option Agreement (the "Agreement") entered into between Security Pacific Merchant Bank, a Division of Security Pacific National Bank, a national banking association ("Lessor"), and City of Carlsbad ("Lessee"), a body corporate and politic duly organized and existing under the laws of the State of California ("State"); WITNESSETH: WHEREAS, Lessor desires to lease the Property, as hereinafter defined, to Lessee, and Lessee desires to lease the Property from Lessor, subjGct to the terms and conditions of and for the purposes set forth in this Agreement; and WHEREAS, Lessee is authorized under the Constitution and laws of the NOW, THEREFORE, for and in consideration of the premises hereinafter State to enter into this Agreement for the purposes set forth herein; contained, the parties hereby agree as follows: ARTICLE I COVENANTS OF LESSEE Lessee represents, covenants and warrants, for the benefit of Lessor and its assignees, as follows: (a) Lessee is a public body, duly organized and existing under the Constitution and laws of the State. (b) Lessee will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a body corporate and politic. Lessee is authorized under the Constitution and laws of the State to enter into this Agreement and the transaction contemplated hereby, and to perform all of its obligations hereunder. (d) Lessee has been duly authorized to execute and deliver this Agreement under the terms and provisions of the resolution of its governing body, attached hereto as Exhibit A, or by other appropriate official (c) -1 - -. . _, ereement No. 2024 approval, and further represents and warrants that all requirements have been met, and procedures have occurred in order to ensure the enforceability of this Agreement, and Lessee has complied with such public bidding requirements as may be applicable to this Agreement and the acquisition by Lessee of the Property acquired hereunder. Lessee shall cause to be executed an opinion of its counsel substantially in the form attached hereto as Exhibit 6. (e) During the term of this Agreement, the Property will be used by Lessee only for the purpose of performing one or more governmental or proprietary functions of Lessee consistent with the permissible scope of Lessee's authority and will not be used in a trade or business of any person or entity other than the Lessee. (f) During the period this Agreement is in force, Lessee will annually provide Lessor with current financial statements, budgets, proof of appropriation for the ensuing fiscal year and such other financial information relating to the ability of Lessee to continue this Agreement as may be reasonably requested by Lessor or its assignee. (9) The Property will have a useful life in the hands of the Lessee that is substantially in excess of the Lease Term. (h) Lessee has, by resolution, designated the lease obligation contemplated by this Agreement as a "qualified tax-exempt obligation", as such term is used in Section 265(b)(3) of the Internal Revenue Code. Q (i) Lessee will not take any action which, if taken, or omit to take any action which, if omitted, would adversely affect the exemption of the interest component of the Rental Payments (shown in Exhibit E) from Federal income taxation or from taxation under the laws of the State of California. ARTICLE I1 DEFINITIONS The following terms will have meanings indicated below unless the context clearly requires otherwise: "Agreement" means this Municipal Lease and Option Agreement, i ncl uding the Exhibits attached hereto, as the same may be supplemented or amended from time to time in accordance with the terms hereof. "Certificate of Acceptance" means the Certificate of Acceptance attached hereto as Exhibit F, whereby Lessee acknowledges acceptance of the Property. "Commencement Date" is the date when the term of the Agreement begins and Lessee's obligation to pay rent accrues, which date shall be the date on which the Property is accepted by Lessee as indicated on the Certificate of Acceptance. -2 - areement No. 2024 "Lease Term'' means the term specified in this Agreement under Article IV. "Lessee" means the entity which is described in the first paragraph of this Agreement and which is leasing the Property from Lessor under the provision of this Agreement. "Lessor" means (i) Security Pacific Merchant Bank, a Division of Security Pacific National Bank, a national banking association, acting as Lessor hereunder; (ii) any surviving, resulting or transferee corporation; and (iii) except where the context requires otherwise, any assignee(s) of Lessor. "Original Term" means the period from the Commencement Date until the end of the fiscal year of Lessee in effect at the Commencement Date. "Property" means the property described in Exhibit D and which is the subject of this Agreement. "Purchase Price" means the amount which Lessee may, in its discretion, pay to Lessor in order to purchase the Property, as set forth in Exhibit E hereto. "Renewal Terms'' means the automatic renewal terms of this Agr'eement as provided for in Article IV of this Agreement, each having a duration of one year and a term co-extensive with the Lessee's fiscal year, except the last of such automatic renewal terms which shall end on the due date of the last Rental Payment set forth in Exhibit E to this Agreement. "Rental Payments" means the rental payments payable by Lessee pursuant to the provisions of this Agreement during the Lease Term, payable in consideration of the right of Lessee to use the Property during the then current Original or Renewal Term. Rental Payments shall be payable by Lessee to the Lessor or its assignee in the amounts and at the times during the Lease Term, as set forth in Exhibit E of this Agreement. "Vendor" means the dealer or agent of manufacturer from whom Lessor purchased or is purchasing the Property. ARTICLE I11 TAX COVENANTS Tax Covenants. The Lessee will not make or direct any use of the proceeds of the obligation provided herein or any other funds of the Lessee which will cause such obligation to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (herein the "Code"), to be "federally guaranteed" within the meaning of Section 149(b) of the Code, or to be a "private activity bond'' within the meaning of Section 141(a) of the Code. To that end, so long as any rental payments are unpaid, the Lessee, with respect to such proceeds and such other funds, will comply with all requirements of such Code sections and all regulations of the United States Department of the Treasury issued thereunder to the extent that such requirements are, at the time, applicable and in effect. The Lessee will not use or permit the use of the Property by any person for a "private business usel' within the meaning of Section 141(b) of the Code in such manner or to such extent as would result in the inclusion of interest received hereunder in gross income for federal income tax purposes under Section 103 of the Code. -3 - areement No. 2024 The Lessor and the Lessee shall at all times do and perform all acts and things permitted by law which are necessary or desirable in order to assure that the interest component of the Rental payment will not be included in gross income for federal income tax purposes. ARTICLE IV LEASE TERM Section 4.01. Lease of ProDerty. Lessor hereby demises, leases and lets to Lessee, and Lessee rents, leases and hires from Lessor, the Property, in accordance with the provisions of this Agreement, to have and to hold for the Lease Term. Section 4.02. Commencement of Lease Term. The Original Term of this Agreement shall commence on the date of acceptance and shall terminate the last day of Lessee’s current fiscal year. The Lease Term will be automatically renewed at the end of the Original Term or any Renewal Term for an additional one year, unless the Lessee gives written notice to Lessor not less than 90 days prior to the end of the Original Term or Renewal Term then in effect, or such greater notice as may be provided in Artitle VI, of Lessee’s intention to terminate this Agreement at the end of the Original Term or the then current Renewal Term upon payment of the then applicable Purchase Price pursuant to Article XI or Article VI, as the case may be. The terms and conditions during any Renewal Term shall be the same as the terms and conditions during the Original Term, except that the Rental Payments shall be as provided in Exhibit E of this Agreement. Section 4.03. Termination of Lease Term. The Lease Term will terminate upon the earliest of any of the following events: (a) the exercise by Lessee of the option to purchase the Property granted under the provisions of Articles IX or XI of this Agreement; (b) a default by Lessee and Lessor’s election to terminate this Agreement under Article XIII; or (c) the payment by Lessee of a17 Rental Payments authorized or required to be paid by Lessee hereunder. -4 - areement No. 2024 ARTICLE V ENJOYMENT OF PROPERTY Lessor hereby covenants to provide Lessee during the Lease Term with quiet use and enjoyment of the Property, and Lessee shall during the Lease Term peaceably and quietly have and hold and enjoy the Property, without suit, trouble or hindrance from Lessor, except as expressly set forth in this Agreement. Lessor shall have the right at all reasonable times during business hours to enter into and upon the property of Lessee for the purpose of inspecting the Property. ARTICLE VI RENTAL PAYMENTS Section 6.01. Rental Payments to Constitute a Current ExPense of Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments hereunder shall constitute a current dxpense of Lessee and shall not in any way be construed to be a debt of Lessee in contravention of any applicable constitutional or statutory limitations or requirements concerning the creation of indebtedness by Lessee, nor shall anything contained herein constitute a pledge of the general tax revenues, funds or moneys of Lessee. Section 6.02. Payment of Rental Payments. The Lessee agrees to pay to the Lessor, its successor or assigns, without deduction or offset of any kind, as rental for the use of the Property, the following amounts at the following times: (a) Base Rental. The Lessee shall pay to the Lessor as a base rental (herein called the "Base Rental") annual rental payments with principal and interest components, paid semiannually, in accordance with the Rental Payment Schedule attached hereto as Exhibit E and made a part hereof. Each Base Rental payment shall be payable not less than ten (10) business days preceding its due date. The interest components of the Base Rental payment shall be paid by the Lessee as and constitute interest paid on the principal components of the Base Rental payments to be paid by the Lessee hereunder computed on the basis of a 360-day year composed of twelve 30-day months. Each annual payment of Base Rental (to be payable in two installments as aforesaid) shall be for the agreement of the Lessor to acquire and install or cause to be made available for use by the Lessee the Property and, following completion of the provision of the Property, for the use of the Property for the twelve-month period commencing on of the year in which such rental is payable. -5- 0 .. dreement No. 2024 (b) Additional Rental. The Lessee shall pay, as Additional Rental hereunder in addition to the foregoing Base Rental, to the Lessor such amounts (herein called the "Additional Rental") in each year as shall be required by the Lessor for the payment of any costs and expenses incurred by the Lessor in connection with the execution, performance or enforcement of this Lease, the ownership of the Property and the lease of the Property to the Lessee, the use of the Property, including but not limited to payment of all fees, costs and expenses and all administrative costs of the Lessor in connection with the Property, expenses (including, without limitation, attorney's fees and disbursements), fees of auditors or attorneys, insurance premiums not otherwise paid hereunder and all other necessary administrative costs of the Lessor or charges required to be paid by it in order to comply with the terms of the Agreement. Lessee shall not be responsible for Lessor's separate expenses associated with its management of this agreement. This shall include costs incured as a result of assignment or re-assignment of the lease, auditing in connection with Lessor's federal or state tax requirements or other expenses not assessable solely against the requirement of this agreement. Such Additional Rental shall be billed to the Lessee by the Lessor from time to time, together with a statement certifying that the amount so billed has been paid by the Lessor for one or more of the items above described, or that such amount is then payable by the Lessor for such items. Amounts so billed shall be due and payable by the Lessee within thirty (30) days after receipt of the bill by the Lessee. Such payments of Base Rental and Additional Rental for each rental payment period during the term of this Lease shall constitute the total rental for such rental payment period, and shall be paid by the Lessee in each rental payment period, following completion of the acquisition, installation and provision of the Property, for and in consideration of the right to the use and the continued quiet enjoyment of the Property during each such rental payment period for which such rental is paid. The parties hereto have agreed and determined that such total rental represents the fair rental value of the Property. In making such determination, consideration has been given to the costs of the acquisition, installation and provison of the Property to be financed by the Lessor, other obligations of the parties under this Lease, the uses and purposes which may be served by the Property and the benefits therefrom which will accrue to the Lessee and .the general public. Each installment of rental payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Lessor at 300 South Grand Avenue, HCP211, Los Angeles, California 90071. Any such installment of rental accruing hereunder, including the interest and principal components of the Base Rental, which shall not be paid when due shall bear interest at the rate of twelve per cent (12%) per annum from the date when the same is due hereunder until. the same shall be paid. Notwithstanding any dispute between the Lessee and the Lessor, the Lessee shall make all rental payments when due without deduction or offset of any kind and shall not withold any rental payments pending the final resolution of such dispute. Section 6.03. Annual Budqets. The Lessee covenants to take such action as may be necessary to include all such Rental Payments due hereunder in its annual budgets and to make the necessary annual appropriations for all such Rental Lessee reasonably believes that legally avail able funds of Payments. -6 - e I, agreement No. 2024 an amount sufficient to make all Rental Payments during the Original Term and each of the Renewal Terms can be obtained. Commencing with fiscal year 1988-89, the Lessee will furnish to the Lessor copies of each annual budget of the Lessee within ten (10) days after the filing of the adopted budget with the Board of Trustees of the Lessee. 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 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 agreements and covenants in this Lease agreed to be carried out and performed by the Lessee. Section 6.04. Application of Rental Payments. All Rental Payments received shall be applied first to the interest components of the Base Rental due hereunder, then to the principal components of the Base Rental due hereunder and thereafter to all Additional Rental due hereunder, but no such application of any payments which are less than the total rental due and owing shall be deemed a waiver of any default hereunder. Section 6.05. Nonsubstitution. The Lessee agrees that, until the end of the term of this Lease, it will not enter into any contract for the acquisition of property or services which would displace the Property. ARTICLE VI1 TITLE TO PROPERTY; SECURITY INTEREST Section 7.01. Title to the Property. During the term of this Agreement, title to the Property and any and all additions, repairs, replacements or modifications shall vest in Lessee, subject to the rights of Lessor under this Agreement. In the event of default, as set forth under Article XIII, title to Property shall immediately vest in Lessor, and Lessee will reasonably surrender possession of the Property to Lessor. Section 7.02. Securitv Interest. To secure the payment of all of Lessee’s obligations under this Agreement, Lessee grants to Lessor in addition to title to the Property, a security interest constituting a first lien on the Property and on all additions, attachments, accessions and substitutions thereto, and on any proceeds therefrom. Lessee agrees to execute such additional documents, including financing statements, mortgage waivers, affidavits, notices and similar instruments, in form satisfactory to Lessor, which Lessor deems necessary or appropriate to establish and maintain its security interest, and upon assignment, the security interest of any assignee of Lessor, in the Property. ARTICLE VI11 MAINTENANCE; MODIFICATION; TAXES; INSURANCE AND OTHER CHARGES Section 8.01. Maintenance of ProDertv bv Lessee. Lessee agrees that at all times during the Lease Term Lessee will, at Lessee’s own cost and expense, maintain, preserve and keep the Property in good repair, working order and condition, and that Lessee will from time to time make or cause to -7- Qreement No. 2024 be made all necessary and proper repairs, replacements and renewals. Lessor shall have no responsibility in any of these matters, or for the making of improvements or additions to the Property. Section 8.02. Taxes, Other Governmental Charqes and Utility Charqes. The parties to this Agreement contemplate that the Property will be used for a governmental or proprietary purpose of Lessee and, therefore, that the Property will be exempt from all taxes presently assessed and levied with respect to real property. In the event that the use, possession or acquisition and construction of the Property is found to be subject to taxation in any form (except for income taxes of Lessor), Lessee will pay during the Lease Term, as the same respectively come due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Property or other property acquired by Lessee in substitution for, as a renewal or replacement of, or a modification, improvement or addition to the Property, as well as all gas, water, steam, electricity, heat, power, telephone, utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Property; provided that, with respect to any governmental charges that may lawfully be paid in installments over a period of years, Lessee shall be obligated to pay only such installments as have accrued during the time this Agreement is in effect. Section 8.03. Provisions Reqardinq Insurance. At its own expense Lessee shall cause casualty, public liability and property damage insurance and rental interruption insurance to be carried and maintained, or shall demonstrate to the satisfaction of Lessor that adequate self-insurance is provided with respect to the Property, sufficient to protect the Full Insurable Value (as that term is hereinafter defined) of the Property, and to protect Lessor from liability in all events. All insurance proceeds from casualty losses shall by payable as hereinafter provided in this Agreement. Lessee shall furnish to Lessor Certificates evidencing such coverage throughout the Lease Term. Alternatively, Lessee may insure the Property under a blanket insurance policy or policies which cover not only the Property but other properties. If Lessee shall insure similar properties by self-insurance, Lessee will insure the Property by means of an adequate insurance fund set aside and maintained out of its earnings. The term "Full Insurable Value" as used herein shall mean the full replacement value of the Property. Any insurance policy pursuant to this Section 8.03 shall be so written or endorsed as to make losses, if any, payable to Lessee and Lessor as their respective interests may appear. The Net Proceeds (as defined in Section 9.01) of,the insurance required in this Section 8.03 shall be applied as provided in Article IX hereof. Each insurance policy provided for in this Section 8.03 shall contain a provision to the effect that the insurance company shall not cancel the policy or modify it materially and adversely to the interest of Lessor without first giving written notice thereof to Lessor at least 10 days in advance of such cancellation. Section 8.04. Advances. In the event Lessee shall fail to maintain the full insurance coverage required by this Agreement or shall fail to keep the -8- areement No. 2024 Property in operating condition, Lessor may (but shall be under no obligation to) purchase the required policies of insurance and pay the premiums on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by Lessor shall become additional rent, which amounts, together with interest thereon at the rate of 12% per annum, Lessee agrees to pay. ARTICLE IX DAMAGE, DESTRUCTION AND CONDEMNATION: USE OF NET PROCEEDS Section 9.01. Damaqe, Destruction and Condemnation. Unless Lessee shall have exercised its option to purchase the Property by making payment of the Purchase Price as provided herein, if prior to the termination of the Lease Term (a) the Property or any portion thereof is destroyed (in whole or in part) or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Property or any part thereof or the estate of Lessee or Lessor in the Property or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, Lessee a'nd Lessor will cause the Net Proceeds of any insurance claim or condemnation award to be applied to the prompt repair, restoration, modification or improvement of the Property. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to Lessee. For purposes of Section 8.03 and this Article IX, the term "Net Proceeds" shall mean the amount remaining from the gross proceeds of any insurance claim or condemnation award after deducting all expenses (including attorneys' fees) incurred in the collection of such claim or award. Section 9.02. Insufficiencv of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to in Section 9.01 hereof, Lessee shall either (a) complete the work and pay any cost in excess of the amount of the Net Proceeds, lessee shall make any payments pursuant to the provisions of this Section 9.02, lessee shall not be entitled to any reimbursement therefor from Lessor nor shall Lessee be entitled to any diminution of the amounts payable under Article VI hereof, or (b) if Lessee is not in default hereunder, Lessee shall pay to Lessor the amount of the then applicable Purchase Price, and upon such payment, the Lease Term shall terminate and Lessor's title and security interest in the Property shall terminate as provided in Article XI of this Agreement. The amount of the Net Proceeds in excess of the then applicable Purchase Price, if any, may be retained by Lessee. -9- areement 2024 ARTICLE X D I S C LA I M E R 0 F W A R RA NT I E S ; C 0 NT RA C TOR’ S WARRANTIES; USE OF THE PROPERTY Section 10.01. Disclaimer of Warranties. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE OF THE PROPERTY, OR WARRANTY WITH RESPECT THERETO. In no event shall Lessor be liable for an incidental, indirect, special or consequential damage in connection with or arising out of this Agreement or the existence, furnishing, functioning or Lessee’s use of any item or products or services provided for in this Agreement. Section 10.02. Contractor’s Warranties. Lessor hereby irrevocably appoints Lessee its agent and attorney-in-fact during the Lease Term, so long as Lessee shall not be in default hereunder, to assert from time to time whatever claims and rights, including warranties of the Property, which Lessor may have against the Vendor of the Property. Lessee’s sole remedy for the breach of such warranty, indemnification or representatio! shall be against the Vendor of the Property, and not against Lessor, nor shall such matter have any effect whatsoever on the rights and obligations of Lessor with respect to this Agreement, including the right to receive full and timely payments hereunder. Lessee expressly acknowledges that Lessor makes, and has made, no representation or warranties whatsoever as to the existence or availability of such warranties of the Vendor of the Property. Section 10.03. Use of the ProDertv. Lessee will not install, use, operate or maintain the Property improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Agreement. Lessee shall provide all permits and licenses, if any, necessary for the installation and operation of the Property. In addition, Lessee agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of each item of the Property) with all laws of the jurisdictions in which its operations involving any item of Property may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the items of the Property; provided, however, that Lessee may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not, in the opinion of Lessor, adversely affect the estate of Lessor in and to any of the items of the Property or its interest or rights under this Agreement. -10- areement No. 2024 ARTICLE XI OPTION TO PURCHASE At the request of Lessee, Lessor’s title and security interest in the Property will be terminated and this Agreement shall terminate: (a) at the end of the Lease Term (including Renewal Terms), upon payment in full of Rental Payments due hereunder; or (b) at the end of the Original Term or any Renewal Term, upon payment by Lessee of the then applicable Purchase Price; or (c) if the Lease Term is terminated pursuant to Article IX of this Agreement, in the event of total damage, destruction or condemnation of the Property and, if Lessee is not on such date in default under this Agreement, upon payment of the then applicable Purchase Price to Lessor. ARTICLE XI1 ASSIGNMENT, SUBLEASING, INDEMNIFICATION MORTGAGING AND SELLING 9 Section 12.01. Assiqnment bv Lessor. This Agreement, and the obligations of Lessee to make payments hereunder, may be assigned and reassigned in whole or in part to one or more assignees or subassignees by Lessor at any time subsequent to this execution, without the necessity of obtaining the consent of Lessee; provided, however, that no such assignment or reassignment shall be effective unless and until (i) Lessee shall have received notice of the assignment or reassignment disclosing the name and address of the assignee or subassignee, and (ii) in the event that such assignment or reassignment is made to a bank or trust company, such bank or trust company agrees to maintain, or cause to be maintained, a book-entry system by which a record of the names and addresses of such holders as of any particular time is kept and agrees, upon request of Lessee, to furnish such information to Lessee. Upon receipt of notice of assignment, Lessee agrees to reflect in a book entry the assignee designated in such notice of assignment, and to make all payments to the assignee designated in the notice of assignment, notwithstanding any claim, defense, set-off or counterclaim whatsoever (whether arising from a breach of this Agreement or otherwise) that Lessee may from time to time have against Lessor, or the assignee. Lessee agrees to execute all documents, including notices of assignment and chattel mortgages or financing statements which may be reasonably requested by Lessor or its assignee to protect their interests in the Property and in this Agreement. Section 12.02. No Sale, Assiqnment or Subleasinq by Lessee. This Agreement and the interest of Lessee in the Property may not be sold, assigned or encumbered by Lessee without the prior written consent of Lessor. -11- areement No. 2024 Section 12.03. Release and Indemnification Covenants. To the extent permitted by the laws and Constitution of the State, Lessee shall protect, hold harmless and indemnify Lessor from and against any and all liability, obligations, losses, claims and damages whatsoever, regardless of cause thereof, and expenses in connection therewith, including, without limitation, counsel fees and expenses, penalties and interest arising out of or as the result of the entering into of this Agreement, the ownership of any item of the Property, the ordering, acquisition and construction, use, operation, condition, purchase, delivery, rejection, storage or return of any item of the Property or any accident in connection with the operation, use, condition, possession, storage or return of any item of the Property resulting in damage to property or injury to or death to any person. The indemnification arising under this paragraph shall continue in full force and effect notwithstanding the full payment of all obligations under this Agreement or the termination of the Lease Term for any reason. Lessee agrees not to withhold or abate any portion of the payments required pursuant to this Agreement by reason of any defects, malfunctions, breakdowns or infirmities of the Property. ARTICLE XI11 9 EVENTS OF DEFAULT AND REMEDIES Section 13.01. Events of Default Defined. The following shall be "events of default" under this Agreement and the terms "event of default" and "default" shall mean, whenever they are used in this Agreement, any one or more of the following events: (a) Failure by Lessee to pay any Rental Payment or other payment required to be paid hereunder at the time specified herein; and (b) Failure by Lessee to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in Section 13.01 (a), for a period of 30 days after written notice, specifying such failure and requesting that it be remedied as given to Lessee by Lessor, unless Lessor shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, Lessor will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by Lessee within the applicable period and diligently pursued until the default is corrected. If by reason of force ma.ieure Lessee is unable in whole or in part to carry out its agreement on its part herein contained, other than the obligatins onthe part of Lessee contained in Article VI hereof, Lessee shall not be deemed in default during the continuance of such inability. The term ''force majeure'' as used herein shall mean, without limitation, the following: acts of God, strickes, lockouts or other industrial disturbances; acts of public enemies, orders or restraints of any kine of the government of the United States of America or of the state wherein Lessee is located or any of their departments, agencies or officials, or any civil or military -12- .. . . breement No. 2024 authority; insurrections; riots; 1 andsl ides; earthquakes; fires; storms; droughts; floods; or explosions. Section 13.02. Remedies on Default. Whenever any event of default referred to in Section 13.01 hereof shall have happened and be continuing, Lessor shall have the right, at its sole option without further demand or notice, to take one or any combination of the following remedial steps: (a) With or without terminating this Agreement, retake possession of the Property and sell, lease or sublease the Property for the account of Lessee, holding Lessee liable for the rents and other amounts payable by Lessee hereunder to the end of the Original Term or the then current Renewal Term; and (b) Take whatever action at law or in equity may appear necessary or desirable to enforce its rights as the owner of the Property. Section 13.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any defiult 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. ARTICLE XIV M ISC E L LAN E OUS Section 14.01. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, to the parties at their respective places of business. Section 14.02. Bindins Effect. This Agreement shall inur’e to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns. Section 14.03. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 14.04. Amendments. The terms of this Agreement shall not be waived, altered, modified, supplemented or amended in any manner whatsoever except by written instrument signed by the Lessor and the Lessee, nor shall any such amendment that affects the rights of Lessor’s assignee be effective without such assignee’s consent. Section 14.05. Execution in CounterDarts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. -13- .. . " 0 Agreement No. 2024 Section 14.06. ADDlicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State. Section 14.07. CaDtions. The captions or headings in this Agreement are for convenience only and no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. Section 14.08. Entire Aqreement. This Agreement constitutes the entire agreement between Lessor and Lessee. No waiver, consent, modification or change of terms of this Agreement shall bind either party unless in writing signed by both parties, and then such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given. There are no understandings, agreements, representations or warranties, express or implied, not specified herein regarding this Agreement or the Property leased hereunder. Any terms and conditions of any purchase order or other document (with the exception of Supplements) submitted by Lessee in connection with this Agreement which are in addition to or inconsistent with the terms and conditions of this Agreement will not be binding on Lessor and will not apply to this Agreement. Lessee by the signature below of its authorized representative acknowledges that it has read this Agreement, understands it, and agrees to be bound by its terms and conditions. IN WITNESS WHEREOF, Lessor has executed this Agreement in its corporate name with its corporate seal hereunto affixed and attested by its duly authorized officers, and Lessee has caused this Agreement to be executed in its corporate name with its corporate seal hereunto affixed and attested by its duly authorized officers. All of the above occurred as of the date first written below. 9 LESSOR: Security Pacific Merchant Bank Attest: By: Title: Attest: By: Title: Title: Mayor Date: -14- -, .I . 1 2 ? 4 5 6 7 e 9 1c 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Exhibit "A" RESOLUTION NO. 9189 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA ACCEPTING THE PROPOSAL OF SECURITY PACIFIC MERCHANT BANKING GROUP FOR THE LEASE PURCHASE OF THE BUILDING LOCATED AT 2075 LAS PALMAS DRIVE, CARLSBAD, CALIFORNIA, AND APPROPRIATING FUNDS FOR 1987-88 LEASE PAYMENTS. WHEREAS, the City Council has previously authorized the purchase of the building located at 2075 Las Palmas Drive, Carlsbad, California, and WHEREAS, the City Council desires to enter into a leaselpurchase agreement with a financial institution to provide funding for the acquisition of this property, and WHEREAS, proposals from six qualified financial institutions have been received and analyzed by City staff, and WHEREAS, the proposal of Security Pacific Merchant Banking Group provides the most advantageous combination of interest rates, terms and payment schedules, and WHEREAS, the City Council has determined that a true and very real need exists for the acquisition of the property located at 2075 Las Palmas Drive, Carlsbad, California, and WHEREAS, the City Council has taken the necessary steps under applicable law to arrange for the acquisition of the property. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the terms of said Municipal Lease and Option Agreement are in the best interests of the City for the acquisition of such property. //I /// -. .. . 1 2 3 4 5 6 7 e 9 1c 11 12 12 14 15 1E 17 1E 1E 2c 21 22 2: 2t 2: 2. That the Mayor is hereby authorized to execute the attached agreement and the City Manager, Finance Director, and City Attorney are authorized to sign and execute Exhibits A through G attached to the Municipal Lease Agreement and the City Clerk is hereby authorized to attest to said documents. 3. That the City Manager is hereby authorized to approve any modifications in the form or conditions of this agreement that, in the opinion of the City Attorney, are minor or administrative in nature. 4. That? the amount of $125,000 is hereby appropriated from the Public Facilities Fee Unappropriated Fund balance to Account Number 320-840-1810-3266 for the 1987-88 lease payments. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad held on the llthday of August , 1987, by the following vote, to wit: - AYES: Council Members Lewis, Kulchin, and Mamaux NOES: None ABSENT: Council Menhers Pet Larson CLAmE A. LEWIS, ,Mayor ATTEST : JzzJLL4 ALETHA L. RAUTENKRANZ, City Cle (SEAL) -2- CITY OF CARLSBAD VINCENT F. BIONDO, JR. RONALD R. BALL CITY ATTORNEY ASSISTANT CITY ATTORNEY 1200 ELM AVENUE CARLS BAD, CALIFORNIA 92008-1 989 (61 9) 434-2891 AGREEMENT NO. 2024 EXHIBIT B oPrNrori OF LESSEE'S COUNSEL Lessee: City of Carlsbad Date of Aareement: Security Pacific Merchant Bank 300 South Grand Avenue, HCP211 Los Angeles, California 90071 Municipal Lease and Option Agreement No. 2024: As counsel for City of Carlsbad ("Lessee"), I have examined , 19 , between duly executed originals of the Municipal Lease and Option Agreement (the "Agreement" 1 dated Lessee and Security Pacific Merchant Bank ( "Lessor" 1, and the proceedings taken by Lessee to authorize and execute the Agreement. Rased upon the examination and upon such other examination as I have deemed necessary or appropriate, I am of the opinion that: - 1. Lessee is a public body corporate and politic; legally existing under the laws of the State of California. 2. The Aqreement has been duly authorized, executed and delivered by Lessee, pursuant to Constitutional, statutory and/or home rule provision which authorizes this transaction and Resolution No. 9189 , attached as Exhibit A to the Aqreement. 3. The Agreement is a legal, valid and bindina obligation of Lessee, enforceable in accordance with its terms. In the event the Lessor obtains a judgement against Lessee in money damages, as a result of an event of default under the Agreement, Lessee will be obliqated to pay such judgement. 4. Applicable public bidding requirements have been complied with. .. . .. . 5. To the best of my knowledqe, no litigation is pending or threatened in any court or other tribunal, state or Federal, in any way questioninq or affecting the validity of the resolution or the Agreement. 6. The signatures of the officers of City of Carlsbad which appear on the Agreement are true and genuine; I know said officers and know them to hold the offices set forth below their names. 7. The City of Carlsbad is a political subdivision within the meaning of Section 103 of the Internal Revenue Code and the related regulations and rulings and that the poortion of payrnents identified as deferred interest charqes to maturity, upon receipt, will not be includable in Federal gross incomes under statutes, regulations, court decisions and rulings existing on the date of this opinion and consequently, will be exempt from present Federal incone taxes and income tax of the State of California. Very truly yours, \ City Attorney arb -2- EXHIBIT C CERTIFICATE AS TO ARBITRAGE I, the undersigned officer of the City of Carlsbad (the "Lessee") being the person duly charged, with others, with responsibility for issuing the Lessee's obligation in the form of that certain agreement entitled "Municipal Lease and Option Agreement" (the "Agreement") dated , 19-, and issued said date HEREBY CERTIFY that: 1. The Agreement was issued by the Lessee under and pursuant to State of California law to finance the acquisition of certain property described therein. 2. Pursuant to the Agreement, the Lessee is entitled to receive said property in consideration for the obligation of the Lessee under the Agreement. Said property will be used in furtherance of the public purposes of the Lessee. The Lessee does not intend to sell said property or said Agreement or to otherwise dispose of said Property during the term of the Agreement. The Lessee will not receive any moneys, funds, pr other ''proceeds" as a result of the Agreement. 9 3. The Lessee expects to make payments under the Agreement from its general funds on the basis of annual appropriations in amounts equal to the required payments under the Agreement. The remaining general funds of the Lessee are not reasonably expected to be used to make such payments and no other moneys are pledged to the Agreement or reasonably expected to be used to pay principal and interest on the Agreement. 4. The Lessee has not received notice that its Certificate may not be relied upon with respect to its own issues nor has it been advised that any adverse action by the Commissioner of Internal Revenue is contempl ated. To the best of my knowledge, information and belief the expectation herein expressed are reasonable and there are no facts, estimates or circumstances other than those expressed herein that would materially affect the expectations herein expressed. IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of August ,1987. , -' L LESSEE: City ofCarl sbad _- - *, __ Title: Finance- Director Y .. . .. . (I)greement No. 2024 EXHIBIT D DESCRIPTION OF PROPERTY The Property which is the subject of the attached Municipal Lease and Option Agreement is as follows: SEE ATTACHED SCHEDULE 1 FOR LEGAL DESCRIPTION Property Location: 2075 LAS PALMAS, CARLSBAD, CALIFORNIA 92008 Together with all additions, accessions, and replacements thereto. Lessee hereby certifies that the description of the property set forth above constitutes an accurate description of the "Property", as defined in the attached Municipal Lease and Option Agreement .I LESSEE: City of Cgrlsbad ' ' ~ , -_ I \. Dater Aygust 17, 1987 -_ Schedule 1 ( Page 1 of 2 ) 0 LEGAL DESCRIPTION THE LAND REFERRED TO IN THIS REPORT IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: LOT 5 OF CARLSBAD TRACT NO. 80-33, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 10061, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON APRIL 15, 1981 AS FILE NO. 81-115129 OF OFFICIAL RECORDS. Schedule 1 ( Page 2 of 2 0 .. * . .. . -. M CI) I Og QOa .. I *- . EXi-iIiiIT E= SCI-IEDULE OF PAYMENTS - Pr i nc ipal ‘l‘~x e s Total Purchase Frnt DaLe-Due Repayment Lnt-.cresi; Payment-,( 1) Due Paymerkt Price 1. 2 3 4 .5 6 7 n 9 -1 0 11 12 13 14 15 16 17 18 19 20 TOTALS : 54139.15 56272.23 584.89.35 60793.83 631.89.11 65678.76 68266.51 70956.21 76657.70 79678.02 82817.33 86080.34 89471.90 92997.03 100469.63 104428.13 108542.60 112819.05 73751. aa 96661. ia 6312S.10 117264.25 60992.0% 117264.25 58774.90 117264.25 56470.42 117264.25 54075.14 117264.25 51585.49 117264.25 46308.04 117264.25 43512.37 117264.25 40b06.55 117264.25 37586.23 117264.25 31446.92 1.17264.25 31183.91 117264.25 27792.35 117264.25 24267.16 117264.25 20603.07 117264.25 16794.62 117264.25 12836.12 117264.25 8721.65 117264.25 4445.20 117264.25 48997.74. 117264.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11.7264.25 1615240.77 117264.25 1562828.40 117264.25 1498309.61 117264.25 1431613.31 117264.25 1362666.01 117264.25 1291391.73 117264..25 1217711.96 117264.25 1141 545.48 117264.25 9814.13.93 117264.25 897272.40 117264.25 810291.09 1.17264.25 720374.16 117%6,4.25 627422.54 11.7264.. 25 432002.07 117264.25 32931.7. E39 117264.25 2231.68.12 117264.25 113435.79 117264.25 0.00 n7264.25 io62aoa.m 1177G4.25 531333.80 1602160.00 743125.00 2345285.00 0.00 234S285.00 C 1) Semi-Annual Payments Due in ARHFBS / ,A LESSEE: CITY ,OF C&LSRAD ,, , ,J Titled --F_ih-ange Director Date( Piugust 17, 1987 i I I :’ agreement No. 2024 EXHIBIT F CERTIFICATE OF ACCEPTANCE The undersigned, as Lessee under the Municipal Lease and Option Agreement (the "Agreement") dated 9 19- with Security Pacific Merchant Bank ("Lessor"), acknowledges receipt in good condition of all of the Property described in the Agreement and in Exhibit D thereto this day of and certifies that Lessor has fully and satisfactorily performed all of its covenants and obligations required under the Agreement. Lessee confirms that the Commencement Date of the Agreement is and it will commence payments in accordance with Article VI of the Agreement. The undersigned officer of the Lessee hereby reaffirms in all respects the Certificate as to Arbitrage attached as Exhibit C to the Agteement, and represents that, to the best of his or her knowledge, information and belief, the expectations therein expressed were reasonable as of the date on which they were made, and are reasonable as of the Commencement Date, and that there were, and are as of the Commencement Date, no facts, estimates or circumstances other than those expressed therein that would materially affect the expectations expressed therein. Title: Finance Direct6r ! . 1200 ELM AVENUE CARLSBAD, CA 92008-1989 August 17, 1987 MitQ af QInrlsbab FINANCE DEPARTMENT AGREEMENT NO. 2024 Security Pacific Merchant Bank 300 South Grand Avenue, HCP211 Los Angeles, CA 90071 MUNICIPAL LEASE & OPTION AGREEMENT NO. 2024 Reference is made to that certain Municipal Le S d Option Agre,ement Number 2024, dated , between Security Pacific Merchant Bank and City of Carlsbad, leasing the Property described in Exhibit D to such Lease. the function of the undersigned or to the service we provide to our citizens. This confirms and affirms that the Property is essential to TELEPHONE (61 9) 434-2867 Further, we have an immediate need for, and expect to make immediate use of, substantially all the Property, which need is not temporary or expected to diminish in the foreseeable future. The Property will be used by us only for the purpose of performing one or more of our governmental or proprietary functions consistent with the permissible scope of our authority. Specifically, the Property was selected by us to be used as follows: The property at 2075 Las Palmas Drive provides offices for the City’s Community Development Director, Planning, Engineering, Building Inspection Departments and Utilities/Maintenance Administration. A staff of approximately 80 employees occupy the building. has been used by the City for one year under a Lease Agreement with the property owner, Mitsui-Fudosan. a The building The prior Lease Agreement provided purchase option which the City has elected to exercise. The property will be operated, controlled and maintained by the City of Carlsbad. No subleases or uses other than those described above are anticipated. The City will provide funding for lease payments from the Public facil- ities Fee Fund and the City General Fund, if necessary, during the life of this agreement. These funds derive income from development activity e c I. , and various taxes such as property tax and sales tax. The City anticipates continued revenue from these sources during the life of this agreement. This property satisfies the City's requirement for City office space as described in the City's Growth Management Program and Public Facilities Fee Policy. JAMES F. ELLIOTT Finance Director 5 JFE : smp /