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HomeMy WebLinkAbout*AGMT - Municipal Finance Corporation (PD Motorcycle Lease) S LEASE WITH OPTION TO PURCHASE #02- 110 -AF • This LEASE WITH OPTION TO PURCHASE dated February 27, 2003 (this "Lease ") is by and between MUNICIPAL FINANCE CORPORATION,. ( "Corporation ") a corporation duly organized and operating under the. laws of the State of California as lessor and CITY OF SEAL BEACH, a political body duly organized and existing under the laws of the State of California ( "Lessee. ") as lessee. RECITALS: • WHEREAS; Lessee deems it essential for Lessee . to acquire the property described herein for its own public purposes; and WHEREAS, it is intended that this Lease be treated as a tax - exempt obligation of Lessee for federal income tax purposes; and WHEREAS, Lessee and Corporation agree to mutually cooperate now and hereafter, to the extent possible, in order to sustain the intent of this Lease and the bargain of both parties hereto.. WITNESSETH NOW, THEREFORE in .consideration of the mutual scovenants hereinafter set forth, the parties hereto agree as follows: SECTION 1. Lease. Corporation hereby leases to Lessee, and- . Lessee hereby leases and hires from Corporation all property (the "Property ") described in the schedule or schedules (collectively, the "Schedule ") executed by the parties concurrently herewith and hereafter and made a part hereof. Hereinafter, reference to Corporation means. Corporation and Corporation's assigns for those rights, interests and obligations that may be assigned by Corporation. SECTION 2. Term. The terms and conditions of this Lease shall become effective upon the authorized execution of this Lease by the parties .hereto. The rental term of the Property leased hereunder commences and terminates.on the dates specified in the Schedule. SECTION 3. Representations and Warranties of Lessee. Lessee represents and warrants to Corporation that: (a) Lessee is a political body- and political subdivision, duly organized and existing under the Constitution and laws of the State of California with authority to enter into this Lease and to perform all of its obligations hereunder. • (b) Lessee's governing body has duly authorized the execution and delivery of this Lease and further represents and warrants that,all requirements have been met and procedures followed to ensure its enforceability. (c)• The execution; delivery and performance of this Lease do not and will not result in any breach of or constitute a default under any indenture, mortgage, contract, agreement or instrument to which Lessee is a party or by which it or its property is bound. . • (d) There is no pending or, to the knowledge of Lessee, threatened action or proceeding before any court or_ administrative agency which will materially adversely affect the ability of Lessee to perform its obligations under this Lease. (e) Lessee has complied with all public bidding laws or provisions of the California Public Contract. Code 'applicable to the • acquisition of the Property leased hereunder. (f) The Property being leased is essential to Lessee in the performance .of its governmental functions and its estimated useful life - to Lessee exceeds the term of this Lease. • SECTION 4. Representations and Warranties of Corporation. • Corporation represents•and warrants to Lessee that: (a) Corporation is duly organized, validly existing and in ,good • standing under the laws of the State of California, with full corporate power and authority to lease and own real .and personal property. (b) Corporation has full power, authority and legal right to enter into and perform its obligations under this Lease, and the execution, delivery and performance of this Lease have been duly' authorized by all necessary - corporate -actions on the part of • Corporation and do not require any further, approvals or consents. (c) The execution, delivery and performance of this Lease do not and will not result in any breach of or constitute a default under any indenture, mortgage, contract, agreement or instrument to which Corporation is a party by which it or its property is bound.• • (d) There is no pending or, to the knowledge of Corporation, threatened action -or proceeding before any court or administrative .agency which will materially adversely affect, the ability of • Corporation to perform its obligations under this Lease. _ SECTION 5. • Property Acquisition. Corporation hereby appoints Lessee as its purchasing agent to acquire the Property leased, hereunder and Lessee hereby accepts said appointment (hereinafter, 'the "Agency "). The Agency is limited to i) negotiation of terms, conditions and acquisition costa of acquiring the • Property from suppliers and Contractors (collectively, the "Supplier ") selected by Lessee; ii) to the inspection and acceptance of the Property upon .its delivery and • installation; and iii) to the exercise of any rights or remedies with 'respect to Property warranties or guarantees. All warranties and • guarantees, either express or implied,, that inure to Corporation . virtue of the. Agency are hereby passed through to Lessee to prosecute . at Lessee's sole discretion. • SECTION 6. Lease Proceeds. Moneys available to pay Property - costs set forth on the Schedule are defined as "Lease Proceeds Disbursement of Lease Proceeds to pay Property costs can be made either . directly to the or to Lessee as a reimbursement of its prior . expenditures for Property costs. Lessee shall deliver to Corporation a disbursement authorization form along with Supplier invoices and required reconciliation documents prior to Corporation making a 2 • • • • • • • disbursement to the Supplier or a reimbursement to Lessee. Disbursements of Lease Proceeds in advance of Lessee executing a Certificate of Acceptance may be made pursuant to the following terms . and conditions: (a) the principal amount of each disbursement shall accrue interest (interim rent) at the interest rate referred to on the Schedule from the disbursement date to the Property acceptance date; (b) the total principal amount of the disbursements shall not exceed the Lease Proceeds amount referred to on the Schedule, and (c) no disbursement shall be made on or after six months from the date of this Lease. • . SECTION 7. Rental Payments. LESSEE SHALL PAY CORPORATION RENTAL PAYMENTS (the "Rental Payments") IN THE AMOUNTS AND AT THE TIMES SET FORTH IN THE SCHEDULE, AT THE OFFICE OF CORPORATION OR TO SUCH OTHER PERSON OR AT SUCH OTHER PLACE AS CORPORATION MAY FROM TIME TO . TIME DESIGNATE IN WRITING. Should Lessee fail to pay any part of the Rental Payments herein within fifteen (15) days from the due date • thereof, Lessee shall.upon Corporation's written request, pay interest on such - delinquent Rental. Payment from the date said Rental Payment was due until paid at the rate of twelve percent (120) per annum or the maximum legal rate, whatever is less. Lessee shall pay Rental Payments . exclusively from legally available funds, in lawful -money of the United States of America, to Corporation. The obligation of Lessee to pay Rental Payments hereunder shall constitute. a current expense 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 of Lessee.: Except as specifically provided in Section 29, the obligation of Lessee to pay the Rental Payments will be absolute and unconditional in all events, and will not be subject to set -off, defense, abatement, reduction,.. counterclaim, or recoupment for any reason whatsoever. The periodic Rental Payments paid by Lessee shall be conclusive as to its fair value for the possession, use and /or occupancy of the Property. • SECTION -8: Security Interest. As'security for the payment of • all of Lessee's obligations hereunder, .Lessee hereby .grants Corporation,' its_ successors or assigns, a security interest in the . Property, its accessions and attachments thereto and replacement .thereof and substitutions therefor and all proceeds and products of-.any of the foregoing. Lessee agrees to execute. such additional documents, including financing • statements, which Corporation deems necessary or appropriate to establish and maintain Corporation's security interest. • SECTION 9. Use. Lessee shall use the Property in a careful and proper manner and shall comply with and conform to all national, state, municipal, police, and other laws, ordinances, and regulations in anyway relating to the possession, use, or maintenance of the Property. SECTION 10. Acceptance. Lessee . shall acknowledge receipt, inspection and acceptance of the Property by executing a "Certificate of Acceptance ". SECTION 11. Corporation's Inspection. Upon forty -eight (48) hours prior notice, the Corporation shall at any and all times during 3 • • 111 411 normal business hours have the right to enter into and upon Lessee's Premises where the Property is located for the purpose of inspecting , the same or observing its use. Lessee shall give Corporation immediate notice of any attachment or other judicial process affecting the Property. SECTION 12. Property Selection arid Ordering Lessee • has . selected ,or will select the type and quantity of the Property leased hereunder. Lessee shall ensure that all Property is properly invoiced to Corporation. Corporation shall not be liable for, nor shall the validity, enforceability or effectiveness of this Lease be affected by, any delay in or failure of delivery of the Property. Lessee acknowledges that it is solely responsible for determining the - suitability of the Property for its intended use. Corporation shall have no duty to inspect the Property.. If the Property is •not properly • installed, does not operate as represented or warranted by the Supplier, or is unsatisfactory for any reason, Lessee shall make any . claim on account thereof solely against the Supplier.. Lessee hereby assumes the risks, burdens and obligations to the Supplier on .account of nonacceptance of the Property and /or cancellation of this Lease and upon the occurrence of any such event, Corporation will assign to Lessee, without recourse or warranty, its- rights and title to the • Property and any documents related thereto. SECTION 13 Disclaimer of Warranty. CORPORATION NOT BEING THE • MANUFACTURER OR SUPPLIER OF THE PROPERTY NOR A DEALER. IN SIMILAR PROPERTY, HAS NOT MADE AND DOES NOT MAKE ANY'REPRESENTATION, WARRANTY, OR . COVENANT; EXPRESS OR IMPLIED, WITH RESPECT TO THE. DESIGN, DURABILITY, FITNESS FOR USE, SUITABILITY, OR MERCHANTABILITY OF THE PROPERTY IN ANY RESPECT, AND AS BETWEEN CORPORATION AND LESSEE, ALL PROPERTY SHALL BE ACCEPTED AND LEASED BY LESSEE "WHERE IS," AS IS," AND "WITH ALL FAULTS," AND CORPORATION SHALL NOT BE RESPONSIBLE FOR ANY PATENT OR LATENT DEFECTS THEREIN. LESSEE AGREES TO SETTLE DIRECTLY SUCH • CLAIMS WITH THE SUPPLIER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST CORPORATION. • SECTION 14. - Alterations and Attachments. All additions and• improvements that are made to the Property shall belong to and become the property of the Corporation except that separately, identifiable attachments added to the Property by Lessee may remain the property of Lessee as long as (i) the attachment is paid for in full by Lessee and (ii) Lessee agrees to remove the attachment and restore the Property to substantially as good condition as when received, normal wear and tear excepted,' if and when the Property may be returned to Corporation. SECTION 15. Relocation. Lessee shall provide Corporation, prior written notice of its intent t� relocate the Property. Lessee assumes all risks of loss to the Property attendant to its movement and relocation. The Property location shall be lander Lessee's full control for its own governmental purpose. SECTION 16. • Maintenance and Repairs. Lessee, at its own cost and expense, shall furnish necessary labor and materials to maintain the Property in good repair, condition, and working order. Lessee's obligations to maintain the Property does not relieve the Supplier of 4 • • • • its responsibility to fully perform with respect to all applicable Property warranties and. guarantees. • SECTION 17: . ,Risk of Loss; Damage; Destruction. With the .exception of acts resulting from intentional misconduct or gross negligence. by Corporation, its agents and representatives, Lessee hereby assumes and shall bear the entire risk of loss_ and damage to. the Property from any and every cause whatsoever. No loss or damage_to the Property' or any part thereof shall impair any obligation of Lessee under this Lease, which shall continue in full force and effect. Lessee waives the ,benefit of Civil Code Sections 1932 (2) and 1933 (4) and any and all other rights to terminate this Lease by virtue of any damage or destruction to the Property. • SECTION 18'. Physical Damage /Public Liability Insurance. Lessee shall keep the Property insured, as nearly as practicable, against risk of loss or damage from any peril covered under an "all- risk" insurance .policy for not less than the replacement value thereof, and Lessee 'shall carry public liability and property damage insurance covering. the Property. All said insurance shall be in form and amount and with reputable companies and shall name.. Corporation as an additional insured . and loss. payee'. Lessee shall pay the premiums therefore and deliver certification of said policies to Corporation. Each insurer shall agree, by endorsement upon the policy or policies issued by it or by independent instrument furnished to Corporation, that it will give Corporation thirty (30) days' written notice before the policy or policies shall be altered or canceled. The proceeds of such insurance, . at the option of Lessee, shall be applied: (a) toward the replacement, restoration, or repair of the Property, or (b) toward payment of the total remaining obligations of Lessee hereunder; provided, however, • that Lessee shall be responsible for the amount by which such insurance proceeds are insufficient to satisfy the cost of option (a) or option ' .(b) above, as applicable. Should Lessee replace, restore, or repair the Property as set out in option (a) above, this Lease shall continue in full force and effect. Lessee may self- insure up to specified limits as evidenced by a certificate of self insurance to be attached hereto in • form and amount acceptable to Corporation. Any sell-insurance .program in which Lessee is- a participant shall comply with the provisions under this Lease respecting cancellation and modification and payment of losses to the Corporation as its respective interests may appear. Such self- insurance shall be maintained on a basis which - is actuarially sound as established by. Lessee's risk manager or an independent insurance consultant which determination shall be made annually. Any deficiency shall be corrected within sixty (60) days of Lessee becoming aware .of such deficiency. • SECTION 19. Liens and Taxes. .Lessee shall keep the Property • free and clear of all levies,_ liens, and encumbrances and shall promptly pay all fees, assessments, charges, and taxes (municipal, state and federal), including personal property taxes, which may now or hereafter be imposed upon the ownership, leasing, renting, sale, possession, or use of the Property, - excluding, however, all taxes on or measured by Corporation's income. • SECTION 20. Indemnity. Subject to California law concerning contribution and enforceability of indemnifications, Lessee shall 5 • • • . .indemnify Corporation against and hold Corporation harmless from any and all claims, actions, suits, proceedings, costs,. expenses, damages, and liabilities, including attorneys' fees, arising out of, connected with or resulting from the selection, possession, use, operation, or return.of the Property excepting that Lessee shall not be required to indemnify Corporation in the event that such liability or damages are caused by the gross negligence or intentional, misconduct of Corporation, its agents or representatives. •SECTION 21. Events of. Default. The term. "Event of Default ", as used in this Lease, means the occurrence of any one or more of the following events: (a) Lessee fails to make any Rental Payment (or any other. payment) within fifteen (15) days after the due date thereof or Lessee fails to perform or observe any other covenant, condition or agreement to be performed or observed by it hereunder and such failure to either make the payment or . perform the covenant, condition or . agreement is not cured within ten - (10) days after written notice thereof by Corporation; (b) Corporation discovers that any statement, representation or warranty made by Lessee in this Lease, the Schedule or in any document ever delivered by Lessee pursuant hereto or in connection herewith is false, misleading or erroneous in any material . respect; or (c) Lessee becomes insolvent, is unable to pay its debts as . they become due, makes an assignment .for the benefit of creditors, applies or consents' to the appointment of a receiver, trustee, conservator or liquidator of Lessee or of all or a substantial part of its assets, or a petition.for relief is filed by Lessee under federal bankruptcy, insolvency or similar laws. SECTION 22. Remedies. Upon Lessee's failure to cure an Event of Default within ten (10) days after the Corporation's written notice • thereof,• Lessee's rights under this Lease shall terminate and . Corporation will become entitled to retain all Rental .Payments previously paid and ,to . recover all past due payments together with interest thereon to the 'end of Lessee's current fiscal year.' The Corporation may pursue all of its available remedies at law and in equity including, but not limited to, the repossession' and sale of the Property. No right or remedy conferred Corporation is exclusive of any other right or remedy, but each shall be cumulative of every other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise, and may be enforced concurrently therewith or from time to time; provided, however, that notwithstanding any provisions to the contrary herein, Corporation shall,not under any circumstances. have the right to accelerate the Rental Payments that fall due in future rental periods or otherwise declare any Rental Payments not then in default to be immediately due and payable. SECTION 23. Non- Waiver. No covenant or condition to be performed by Lessee under this Lease can be waived except by the written, • consent of Corporation. Forbearance or indulgence by Corporation in any regard whatsoever shall not constitute a waiver of the covenant or condition in question. Until performance by Lessee of said covenant or condition is complete, Corporation shall.be entitled to invoke any remedy available to Corporation under this Lease or by law or in equity despite said forbearance or indulgence. • 6 • III SECTION 24. Assignment and Subleasing. Lessee shall not (a) assign, transfer, pledge, or hypothecate this Lease, the Property, or any part thereof, or any interest therein, or (b) sublet or lend the Property or any part thereofexcept with the prior written consent of Corporation which, in the case of subletting, shall not be unreasonably withheld; provided such subletting shall. not affect the tax - exempt status of the interest components of. the Rental Payments payable by Lessee hereunder. No such pledge, assignment, sublease or any other • transfer shall in any event affect or reduce the obligation of Lessee to make the Rental Payments due hereunder. Consent to any of the foregoing acts applies only in the given instance and is not a consent to any subsequent like act by Lessee or.any other person. Corporation .- shall.not assign its obligations under this Lease with the exception of its obligation to issue default notices and its obligations pursuant to Section 28. Corporation may assign its right, 'title and interest in this Lease, the Rental Payments and other amounts due hereunder and the Property in whole or in part to one or more assignees or subassignees at any time, ,without the consent of Lessee. Any such assignment by Corporation or its assigns shall comply with the requirements of. Sections 5950 -5955 of the California Government Code. No such assignment shall be effective as against Lessee unless and until Corporation shall have filed with Lessee a copy of such assignment or written notice•thereof. Lessee shall pay•all Rental Payments hereunder pursuant to the direction' of Corporation -or the. assignee named in the most recent_. assignment or notice of assignment filed with Lessee. During this Lease term, Lessee shall keep .a complete and accurate record of all such assignments or notices of assignment. Subject to the foregoing, this Lease inures to the benefit of, and is binding upon, the successors and assigns of the parties hereto. . SECTION 25. Ownership. The Property is and shall at all times be and remain the sole and exclusive property of Corporation, and Lessee shall have no right, title, or interest therein or thereto except as expressly set forth in Sections 27 and 28. Lessee shall take all actions necessary to insure that legal title to the Property being acquired by Lessee hereunder, whether by Lessee or by a third .party acting on behalf of Lessee, is, vested in'Corporation. SECTION 26. Personal Property. The Property is and shall at all times be and remain personal property notwithstanding that the Property or any part thereof may now be or hereafter become in any manner affixed or attached to or imbedded in, or permanently resting upon, real property or any building thereon,. or - attached in any manner to what is-permanent by means of cement, plaster, nails, bolts, screws or otherwise. • SECTION - 27. Purchase Option. If Lessee is not in default of any . term, condition or payment specified hereunder, Lessee may exercise options to prepay this Lease and purchase not less than all of the Property in "as -is" and "where -is" condition on the specified dates and for the specified amounts set forth in the Schedule. The purchase. option price specified for a particular date is in addition to the Rental Payment due on the same date. SECTION 28. _ Release of Liens. Upon Lessee either making all of the Rental Payments scheduled herein or making a purchase option 7 • payment, Corporation, its successors or assigns shall cause i) legal title to the Property to be transferred to Lessee and ii) the release of all liens, encumbrances or security interests on the Property created.pursuant to Corporations rights under this Lease. . SECTION 29. Early Termination.Lessee may terminate this Lease in its entirety as of the end of any fiscal year based solely upon , Lessee's failure to appropriate funds for the subsequent fiscal year's •Rental Payments after exercising reasonable efforts to appropriate funds from any and all of its legally available sources. Lessee agrees to deliver notice to Corporation of such termination promptly upon adoption of Lessee's final budget if no appropriation is included therein to make Rental Payments as set forth in the Schedule. Upon termination of this - .Lease due to Lessee's failure to budget and appropriate funds, Lessee, at its ekpense, shall redeliver the Property . to Corporation at a location within the. State of California designated by Corporation in substantially as good a condition as when received, normal wear and tear excepted. If Lessee terminates this Lease, Corporation may retain all amounts previously paid by Lessee and may collect and retain any amounts due and unpaid to the end of Lessee's then current fiscal year. Corporation shall remit to, 'Lessee any proceeds from the subsequent sale of the Property in excess of the then applicable purchase option price SECTION 30. Nonsubstitution. To the. extent permitted by California law, if this Lease is terminated by Lessee with respect to the Property in accordance with Section - 29 Lessee agrees not to purchase, lease or rent personal property to perform the same function or functions taking the place of, those performed by such Property and agrees not to permit such functions to be performed by -its own employees or by any agency or entity affiliated with or hired by Lessee for a period of three hundred sixty- five (365) days succeeding such •.termination; provided,. however, that these restrictions shall not be applicable in the event the Property shall be sold by Corporation and the amount received from such sale, less all costs of such sale, is sufficient to pay the then applicable purchase option price relating thereto as set" forth in the Schedule; or if or:to the extent that the application of these restrictions is unlawful and would affect the validity of this Lease. SECT -ION 31 Tax Covenants. • (a) Generally. Lessee shall not take. any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would . cause, the interest components of the Rental Payments to become includable -in gross income for federal income tax purposes. (b) Private Activity Bond Limitation. Lessee shall assure that the Lease Proceeds are not so used as to cause this Lease to satisfy the private business tests of Section 141(b) of the.Internal Revenue Code of 1986, as amended (the "Code "), or the private loan financing test of Section 141(c) of the Code. • (c) No Arbitrage. Lessee will not take any action or omit to take any action which action or omission, if reasonably expected on the date 8 • �. • • of this Lease, would have caused this Lease to,`be an "arbitrage bond" within the meaning of Section 148(a) of the Code. • (d) Federal Guarantee Prohibition. The Rental Payments are not directly guaranteed or indirectly guaranteed in whole or in part by the United States or any agency or instrumentality of the United States so- as to cause the Rental Payments to be .' guaranteed" within the meaning of Section 149(b) of the Code. (e) Reimbursement Regulations The Lease Proceeds used for reimbursement of prior expenditures will be made pursuant to and in compliance with Income Tax Regulations Section 1.150 -2. • (f) Arbitrage Rebate. Lessee shall- take any and all actions necessary to assure compliance with Section 148(f) of the Code, relating to the rebate'of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to this Lease. SECTION 32. • .Extraordinary Costs. In the case of litigation, the prevailing party shall be entitled to recover from the opposing party all costs and expenses, including attorneys' fees (which may be the allocable cost of in -house counsel), 'incurred by the prevailing party in exercising any of its rights or remedies hereunder or enforcing any of the terms, conditions or provisions hereof. SECTION 33. Severability. If any provision of this Lease shall - be held invalid or, unenforceable by a court of competent jurisdiction, such holdings shall not invalidate or render unenforceable any -other • provision of this Lease, unless elimination of such provision materially alters the rights and obligations embodied in this Lease. SECTION 34. Entire Agreement. This Lease, the Schedule, and any .agreements that specifically refer to this Lease that are duly executed by authorized agents of the parties hereto constitute the entire agreement between Corporation and Lessee, and it shall not be further amended, altered, or changed except by .a written agreement that is properly authorized.and executed by the parties hereto. SECTION 35. Notices. Service of all notices under this Lease - shall be sufficient if given personally or mailed to the party involved at its respective address hereinafter set'forth.or at such address as such party may provide in writing from time to time. Any such notice mailed to such address shall be effective when deposited in the United States, mail, duly addressed and with postage prepaid. • SECTION 36. Titles. The titles to the Sections of this Lease are solely for the convenience of the parties and are not an aid in the interpretation thereof. SECTION 37. Further Assurances and Corrective Instruments. Corporation and 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 be reasonably required for correcting any inadequate or incorrect 9 description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease. SECTION 38. Execution in Counterparts. This Lease may be - executed in several .counterparts, each of which shall be. original and • all of which shall constitute but one and the same instrument. SECTION 39. Time. Time is of the essence in this Lease and each - and all of its provisions. SECTION 40.• Lease Interpretation.' This Lease and the rights of the parties hereunder shall be determined in accordance with the laws of the State of California. IN WITNESS WHEREOF, the parties hereto have caused their authorized • . agents to•execute this Lease on the. dates specified below. MUNICIPAL FINANCE CORPORATION CITY OF SEAL BEACH 23945 Calabasas. Road; "Suite 103 211 Eight .t -e.' • Calabasas, CA • 91302 Seal Be- � '` A 9i740 (lessor) ' le -sue ) BY By John' ahorski Title • Title / bit Manaser • • Date . Dat January 27, _2003 • • • • • 10