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HomeMy WebLinkAboutMINUTES - 11052002 - C105 -TO: BOARD OF SUPERVISORS intra FROM: JOHN SWEETEN, CAO ("'tistr DATE: NOVEMBER 5,2002A..a �,,�A... SUBJECT: APPROVE FINANCING AGREEMENT V FOR IMPROVEMENTS AND PURCHASE OF MODULAR BUILDINGS AND EQUIPMENT AT VARIOUS LEASED COUNTY FACILITIES IN AN AMOUNT NOT TO EXCEED$2,700,000 SPECIFIC REQUEST(S)OR RECOMMENDATION(S)3 BACKGROUND AND JUSTIFICATION RECOMMENDATION: APPROVE an agreement with Transocean Funding, Inc. to finance County tenant improvements and purchase of modular buildings and equipment at various leased County facilities, in an amount not to exceed $2,700,000, and AUTHORIZE the Director of General Services to execute said agreement and take any other action as required to implement the agreement. FISCAL IMPACT. The following table summarizes the project costs, borrowing costs, terms and anticipated debt service costs associated with this financing: Project Department Amount Term Annual Annual Net Borrowing (years) Payments County Cost Concord Health Clinic Health $1,000,000 10 $129,000 $-0- Antioch Health Clinic Health 575,000 6 114,000 -0- Emergency Communications DoIT 1,000,000 S -155,000 46,500 Subtotal $2,575,000 Six Mos. Capitalized Interest 60,000 Grand Total $2,635,000 $419,000 $48,500 Health Services -- The proposed agreement provides funding to expand the County's health clinics in Concord and Antioch. The annual payments charged to the Health Services Department for the expansion of these two clinics will be fully offset by State and federal revenue. These costs are budgeted in the Health Services Department's FY 2002/2003 Budget. DolT - Approximately $155,000 in annual payments under this lease agreement will be charged to the Department of Information Technology for the installation of a modular building and upgrades to the County's emergency communications system. Approximately 70% of these costs will be offset by revenues collected through charges assessed to users of the emergency communications system. The estimated tax-exempt interest rate for this financing agreement of 4.6%represents a savings of roughly 3 percentage points over commercial taxable interest rates, currently in the 7.5%--8.0%range. BACKGROUND: Concord and Antioch Health Clinics On October 1, 2002, the Board of Supervisors approved lease renewals at 3052 Willow Pass Rd., Concord (Concord Clinic)and 3505 Lone Tree Way,Antioch(Antioch Clinic).These lease renewals included provisions for additional space, which, Once remodeled, will provide 15 additional exam rooms. This financing agreement will fund the improvements necessary to expand these two health clinics. In light of current economic and demographic trends, these improvements will provide needed additional capacity to meet the growing demand for County health services in Central and East County. ell Idl-' Emergency Communications Improvements The Department of Information Technology (DoIT) has determined that the County's aging emergency Communications system requires short-term improvements to Continue functioning until a long-term solution to the County's emergency Communications needs is implemented. This financing includes acquisition of equipment that will enhance the Capacity of the existing emergency Communications system to handle increased Communications traffic and the purchase Of a new modular building to house equipment at the County's Communications site on Kreger Peak. ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE _APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON PPROVE AS RECOMMENDED 94"eft— VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN UNANIMOUS(ABSENT �1v2/YLC 1 AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. ABSENT: ABSTAIN: CONTACT: Laura Loo mood 5-1093 ATTESTED_JOHN CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: CAO GSD(Lease Mempffw t) Health S DoIT BY ,DEPUTY MASTER LEASE/OPTION AGREEMENT dated as of November 1,2002, between TMC INVESTMENTS,INC., as Lessor and COUNTY OF CONTRA COSTA, as Lessee ARTICLE I CAPACITY OF PARTIES TO LEASE This MASTER LEASE/OPTION AGREEMENT("Lease")is entered into by and between the County of Contra Costa, a political subdivision of the State of California ("Lessee") and TRIC Investments, Inc., a Nevada corporation ("Lessor") for the personal property and tenant improvements described on Exhibit B ("Property"), attached hereto and incorporated by reference herein. Lessor and Lessee represent that they each have full power and authority to execute and to deliver this Lease, to enter into the transactions contemplated by this Lease, and to carry out their mutual obligations hereunder. Upon execution of the Lease by all parties,this Lease will constitute a legal, valid and binding agreement enforceable against the Lessee in accordance with its terms. Lessee covenants and agrees to do all things within its power to preserve and keep the Lease in full force and effect,subject to Section 4.2 (c)hereof. Lessee represents and warrants that the Lease of the Property is necessary and essential to enable the Lessee to operate,maintain and provide governmental services;and that the Lease Payments during the Lease Term (as such terms are defined herein)are equivalent to,and do not exceed,the fair rental value for the Property. ARTICLE II LEASE OF PROPERTY Section 2.1. Lease. Lessor hereby leases the Property to Lessee, and Lessee hereby leases the Property from Lessor,upon the terms and conditions set forth in this Lease. Section 2.2. Possession and Enjoyment. Lessor hereby covenants to provide Lessee during the term of this Lease with the quiet use and enjoyment of the Property,and Lessee shall during the term of the Lease peaceably and quietly have and hold and enjoy the Property,without suit or hindrance from Lessor,except as expressly set forth in this Lease. Lessor will,at the request of Lessee and at Lessee's cost,join in any legal action in which Lessee asserts its right to such possession and enjoyment to the extent Lessor lawfully may do so. Section 2.3. Lessor Access to Prolerty. Lessee agrees that Lessor shall have the right at all reasonable times to examine and inspect the Property. Lessee further agrees that Lessor shall have such rights of access to the Property as may be reasonably necessary to cause the proper maintenance of the Property in the event of failure by Lessee to perform its obligations hereunder. ARTICLE III WARRANTIES NEITHER LESSOR NOR ANY ASSIGNEE OF LESSOR MAKES ANY WARRANTIES WITH RESPECT TO THE PROPERTY, EITHER EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE AND EXPRESSLY DISCLAIMS THE SAME. NEITHER LESSOR NOR ANY ASSIGNEE OF LESSOR SHALL HAVE ANY LIABILITY TO LESSEE FOR ANY CLAIM, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY, INDIRECTLY, INCIDENTALLY OR CONSEQUENTIALLY BY THE PROPERTY, BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN, BY ANY INCIDENT WHATSOEVER IN CONNECTION THEREWITH ARISING IN STRICT LIABILITY, FROM LESSOR'S NEGLIGENCE OR OTHERWISE, OR IN ANY WAY RELATED TO OR ARISING OUT OF THIS LEASE AND EXPRESSLY DISCLAIM THE SAME. The obligation of Lessee to pay the Lease Payments as defined in Section 4.2 below, shall not be abated, impaired or reduced by reason of any claims of Lessee with respect to the condition,quality,workmanship,delivery,shipment, installation,defects or other matters involving the Property. ARTICLE IV 2 TERM OF LEASE, LEASE PAYMENTS; TITLE TO PROPERTY;SECURITY INTEREST Section 4.1. Lease Term. Following Lessee's execution of said Lease, this Lease shall become effective upon the execution hereof by Lessor. The term of this Lease("Lease Term")shall commence and end as defined in Exhibit C applicable to the Property. Section 4.2.Lease Payments. (a) Lessee agrees to pay total lease payments ("Lease Payments") set forth in Exhibit C respecting the specific schedules of Property to which such exhibit relates, including interest, on the dates and in the amounts specified in an Exhibit C, for and in consideration for the right of possession of, and continued quiet use and enjoyment of, the Property during each payment period. Said Lease Payments shall be payable without notice or demand at the office of the Lessor specified in this Lease (or such other place as Lessor may from time to time designate in writing) on the business day preceding the payment dates set forth in such Exhibit C. Any notice, invoicing, purchase orders, quotation or other forms or procedures required by Lessee as a condition precedent to payment shall be fully explained and provided to Lessor or its assignee sufficiently in advance of payment due date for the completion thereof by Lessor or its assignee prior to such payment date. Except as provided in Section 4.2(c) hereof, Lease Payments shall be paid absolutely and unconditionally in all events and without assertion of any right to any set-off,defense or counterclaim. (b) Lessee reasonably believes that funds will be available to make all Lease Payments during the Lease Term and hereby represents that the County officials responsible for preparing budgets for payments of sums due hereunder will do all things within the normal course of business to recommend that Lease Payments be made. It is Lessee's intent to make Lease Payments for the full Lease Term to the extent it has legally available funds. (c) If sufficient funds are not appropriated by Lessee's Board and other funds, if any, are not legally available for payment of the Lease Payments due during the succeeding fiscal year of Lessee and if Lessee provides Lessor with written notice of such non-appropriation ninety (90) days prior to the expiration of the fiscal year for which funds were appropriated, the Lease shall terminate and be cancelled and Lessee shall immediately, upon the exhaustion of the funding authorized for the then current fiscal year,surrender possession of the Property in the same condition as when delivered to the Lessee,without any rights of Lessee in and to the Property. (d)Reserved. (e)Lease Payments for each payment period during the term of this Lease shall constitute the total amount due for said payment period, and shall be paid by Lessee for and in consideration of(1)the right of possession of, and the continued quiet use and enjoyment of the Property during each such payment period, and (2)the option to purchase the Property by payment of the amount prescribed in Article XI. (f) Lessor and Lessee understand and intend that the obligation of the Lessee to pay lease 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. Section 4.3. Title to Prom: Sy Interest. To secure all of its obligations hereunder, Lessee hereby grants to Lessor a security interest in any and all right, title and interest of Lessee in the Property, agrees that this Lease may be filed to evidence such security interest, and agrees to execute and deliver all instruments as necessary or appropriate to evidence such security interest. Lessee shall have no right, title or interest in the Property or any additions, repairs, replacements or modifications thereto except as expressly set forth in the Lease. 3 Section 4.4. Office Lease Representations. Lessee hereby represents to Lessor that(a)except as otherwise indicated on Exhibit B attached hereto,the Property will be located in the leased premises at the locations identified on Exhibit B hereto pursuant to an existing office lease between and Lessee and an existing office lease between ,and Lessee(together,the"Office Leases"),(b)Lessee has furnished true and complete copies of the Office Leases to Lessor,(c)the Office Leases have not been amended or supplemented and are in full force and effect,(d)Lessee will pay all amounts when due under the Office Leases and will comply with all other terms and conditions of the Office Leases,and(e)no event currently exists as far as the Lessee is aware that constitutes,or with the giving of notice or the passage of time or both would constitute,an event of default either by Lessee under an Office Lease or by a lessor under a Office Lease(a"Office Lease Default"). Lessee(a)will comply with all of its obligations under the Office Leases,(b)will not amend or supplement either Office Lease in any manner that may decrease the term thereof or otherwise adversely affect Lessor's interest in the Property or Lessee's interest in the space where the Property is located,(c)will promptly furnish copies of any amendments or supplements of either Office Lease to Lessor, (d)will not voluntarily terminate either Office Lease prior to the expiration of the term specified therein, and (e) will promptly notify Lessor in writing of any Office Lease Default of which it has knowledge. ARTICLE V USE;REPAIRS; ALTERATION Section 5.1.Use:Repairs. Lessee shall use the Property in a careful manner and shall comply with all laws, ordinances and regulations relating to, and shall pay all costs, claims, damages, fees and charges arising out of, the Lease and the Property. Lessee,at its expense,shall keep the Property in good condition. . Section 5.2. Alteration. Lessee may make any alterations, additions or improvements to the Property provided such alterations, additions or improvement do not diminish the value of the Property and do not create any liens or encumbrances on the Property. ARTICLE VI LOSS;IRREPARABLE DAMAGE Lessee shall bear the entire risk of loss or damage to the Property from any cause whatsoever,and no such loss or damage to or condemnation of the Property nor defect therein nor unfitness or obsolescence thereof shall relieve Lessee of the obligation to make Lease Payments or any other obligation under the Lease,except as provided in subparagraph(b)below. In the event of damage to the Property,Lessee shall immediately place the same in good repair. If Lessor determines that the Property is destroyed or damaged beyond repair, or condemned, Lessee at its option and its sole cost shall: (a)replace the same with new improvements of equal or greater value,or (b)pay Lessor in cash all of the following: (i)all amounts then owed by Lessee to Lessor under this Lease, and (ii) an amount equal to the total acquisition cost of the Property paid for by Lessor plus any applicable premiums, non-asset funded amounts (including unamortized costs of issuance) and costs incurred by Lessor in reviewing such non-replacement less the principal component of the Lease Payments previously made by Lessee for the Property as determined by Lessor prior to payment of such portion of the Prepayment Purchase Price(in Exhibit Q by Lessee(the "Proportionate Purchase Price"). Upon Lessor's receipt of such payment, Lessee shall be entitled to whatever interest Lessor may have in the Property in its then condition and location, without warranty expressed or implied;and in the event of payment of such Proportionate Purchase Price,the portion of Lease Payments relating to the destroyed or condemned item, in the amount determined by Lessor,shall be abated. The risk of loss and damage that the Lessee agrees to assume under this Section shall be insured against under Article VII below respecting insurance. From Lessee's insurance proceeds(or other funds if Lessee breaches its obligation to insure),the Lessee is obligated to repair the Property,or if repair is not possible,to either replace the 4 Property or pay the Lessor the value of the Property pursuant to the procedure for the Proportionate Purchase Price set forth above. When the Proportionate Purchase Price is paid to Lessor,the portion of the Lease Payment equivalent to the lost or destroyed Property,for which the Proportionate Purchase Price is paid to Lessor,shall be abated. ARTICLE VII INSURANCE Lessee shall, during the term of this Lease, insure all Property under this Lease against casualty occurrences, including the perils of fire, lightning, windstorm, hail, explosion, aircraft, vehicles, smoke, riot, civil commotion, strikes, locked-out workmen or theft, burglary and water damage in an amount equal to the higher of total unpaid balance of the acquisition cost at the time (plus any unpaid charges and expenses and any unamortized costs of issuance) or the cost of replacement of all Property and shall insure public liability and property damage insurance sufficient to protect Lessor from liability in all events. Insurance shall be maintained by self-insurance or with standard insurers, reasonably acceptable to Lessor, and the Lessee shall give the Lessor thirty days notice of cancellation or non-renewal. Lessee shall procure during the term of this Lease rental interruption insurance equal to at least the lease payments due hereunder for the following 18 months as of the commencement date of the insurance, with third party insurers reasonably acceptable to Lessor. All payments for physical damage to Property and rental interruption insurance shall be payable to the Lessor or other assignee as additional insured as their interest may appear under the terms and conditions of the Lease. Upon acceptance of the Property and upon each insurance renewal date,Lessee shall deliver to Lessor or its assignee a duly authenticated Certificate evidencing such insurance. In the event of any loss, damage, injury or accident involving the Property,Lessee shall promptly provide Lessor with written notice thereof and make available to Lessor all information and documentation relating thereto. ARTICLE VIII LIENS AND TAXES Lessee shall keep the Property free and clear of all levies and encumbrances. Lessee shall pay, when due, all charges and taxes(local, state and federal) including, but not limited to sales, use, excise and property taxes and penalties and interest advanced upon behalf of the Lessee which may now or thereafter be imposed upon the ownership, leasing, rental, sale, purchase, possession or use of the Property, excluding, however, all taxes on or measured by Lessor's net taxable income. If Lessee fails to pay said charges and taxes when due, Lessor shall have the right, but shall not be obligated,to pay said charges and taxes. In the event the Lessor has paid such charges or taxes,Lessee shall pay immediately Lessor the amount advanced upon behalf of the Lessee. ARTICLE IX INDEMNIFICATION To the extent permitted by law, Lessee shall indemnify Lessor against and hold Lessor harmless from any and all claims, actions, proceedings, expenses, damages, liabilities, costs or similar charges of whatever nature, including environmental claims, and environmental consultants' or attorney's fees, arising out of or connection with the Property. To the extent permitted by law,Lessee shall indemnify Lessor and hold Lessor harmless against any and all claims, actions, proceedings, expenses, liabilities, damages, costs or similar charges of whatever nature, including attorneys' fees, in connection with any property or transfer taxes which may be assessed against the Property or the transaction contemplated by this Lease. 5 Lessee represents, warrants and covenants that throughout the term of this Lease it will not take or permit any of its officers, employees or agents to take any action which would cause the tax-exempt nature of the obligations evidenced by this Lease to be contested,challenged or denied by applicable governmental authorities. In the event any such action by Lessee results in the denial or revocation of the tax-exempt status of such obligations, Lessee shall be responsible for all taxes, penalties, and interest arising in connection therewith to Lessor or any assignee. ARTICLE X ASSIGNMENT AND SUBLEASING Section 10.1. Assig ment by Lessor. This Lease, 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 (INCLUDING PAYING AGENTS OR TRUSTEES)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 Lessee shall have received notice of the assignment or reassignment disclosing the name and address of the assignee or subassignee. 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. Upon assignment by the Lessor, Lessee shall make payments only to assignee or a designated agent of assignee. UPON REQUEST BY AN ASSIGNEE OF LESSOR,LESSOR SHALL DECLARE ITSELF AGENT pursuant to a Paying Agency Agreement between Lessor and First National Bank of Central California, as paying agent or any successor paying agent. Pursuant to any Paying Agency Agreement, Lessor has agreed to maintain a register containing the names and addresses of such registered owners. Lessor hereby agrees that upon execution and delivery of the Paying Agency Agreement it will provide a confirmation of same to Lessee. Section 10.2.No Sale,Assignment or Subleasine by Lessee. THIS LEASE AND THE INTEREST OF LESSEE IN THE PROPERTY MAY NOT BE SOLD, ASSIGNED, SUBLEASED OR ENCUMBERED BY LESSEE WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. SUCH CONSENT SHALL NOT BE UNREASONABLY WITHHELD BY LESSOR AND SHALL BE SUBJECT TO ASSUMPTION BY THE NEW ASSIGNEE OR SUBLESSEE OF LESSEE OF ALL TERMS OF THIS LEASE,AND COMPLIANCE WITH THE TERMS THEREOF. ANY SUBLEASE SHALL BE SUBORDINATE TO THIS LEASE AND SHALL NOT AFFECT ANY OBLIGATIONS OF LESSEE HEREUNDER, AND LESSEE SHALL EXECUTE AND FILE SUCH EVIDENCES OF ASSIGNMENT AS REASONABLY REQUESTED BY LESSOR ARTICLE XI OPTION TO PURCHASE;DEFEASANCE Lessee shall have the option to purchase all or part of the Property (on a location by location basis) commencing on any interest or principal payment date at the written request of the Lessee,delivered to the corporate offices of the Lessor thirty(30)days prior to such date on which Lessee intends to exercise its purchase option, at a price equal to the Prepayment Purchase Option Price set forth in Exhibit C for all the Property, or on a proportional basis,using the acquisition costs as set forth in Exhibit B for such location(but only on a location by location basis). The Prepayment Purchase Option Price set forth in Exhibit C, or such proportional amount, assumes the Lease Payment due on the same date has been paid. Upon payment of the Prepayment Purchase Option Price set forth in Exhibit C or such proportional amount and any Lease Payments due, and upon satisfaction of Lessor that Lessee is not on such date in default pursuant to any term of this Lease,Lessor shall deliver to Lessee a full release of Lessors right, title or interest of Lessor in and to the Property being prepaid, and shall execute such instruments as Lessee 6 � w�.e r' +.- may reasonably require. Lessee shall be responsible for paying any and all costs and expenses associated with the release of the Lessor's interest in such Property and the conveyance to Lessee of such title and interest Lessor has in such Property, including any and all escrow and title charges,taxes or impositions with respect thereto. In the event of a partial prepayment, Lessor will provide Lessee with a revised amortization schedule reflecting the prepayment within thirty(30)days of such prepayment,using the line item amortization schedules provided by Lessor to Lessee at inception of this Lease. Section 11.2. Defeasance of Rental PgMents. Lessee may at any time irrevocably deposit in escrow with a defeasance escrow agent for the purpose of paying all of the principal component and interest component accruing under a Schedule of Property for all the Property or a proportional amount thereto(on a location by location basis),a sum of cash and non-callable securities consisting of direct obligations of, or obligations the principal of an interest on which are unconditionally guaranteed by, the United States of America or any agency or instrumentality thereof, in such aggregate amount, bearing interest at such rates and maturing on such dates as shall be required to provide funds sufficient for this purpose. Upon such defeasance,all right,title and interest of Lessor in such Property under said Schedule of Property shall terminate. Lessee shall cause such investment to comply with the requirements of federal tax law so that the exclusion from gross income of the interest component of Rental Payments on said Schedule of Property is not adversely affected. Section 11.3. Mandatory Prepayments. (a) In the event Lessor does not receive, within 30 days from the date of funding of the Lease, the landlord and mortgagee waivers, construction contracts, purchase orders and payment and performance bonds with respect to any item of Property required by Section 2.02 of the Escrow Agreement (the "Escrow Agreement") of even date hereof among Lessor, Lessee and First National Bank of Central California, as escrow agent, Lessee shall prepay the Lease Payments attributable to that item of Property by paying the principal amount thereof, plus the accrued interest portion thereof, from sums available in the Property Acquisition Fund under the Escrow Agreement and from any other legally available funds. (b) In the event moneys in the Property Acquisition Fund in excess of$100,000 are to be paid to Lessor to reduce the outstanding Lease Payments in accordance with Section 2,03(b) of the Escrow Agreement, Lessee shall prepay a portion of the Lease Payments by paying the principal amount thereof plus the accrued interest portion thereof from such moneys in the Property Acquisition Fund. (c) Following such prepayments, Lessor shall provide Lessee with a revised amortization schedule reflecting such prepayments. ARTICLE XII EVENTS OF DEFAULT AND REMEDIES Section 12.1. Events of Default. An event of default ("Event of Default") under the Lease means the occurrence of any one or more the following events. (a) Lessee fails to make any Lease Payment(or any other payment) as it becomes due in accordance with the terms of this Lease,and any such failure continues for ten(10)days after the due date thereof; (b) Lessee fails to perform or observe any other covenant, condition, or agreement to be performed or observed by it hereunder or under the Lease and such failure is not cured within thirty(30)days after written notice by Lessor; (c) The discovery by Lessor that any material statement, representation or warranty made by Lessee in the Lease or in writing ever delivered by Lessee pursuant to or in connection with the Lease is false, misleading, or erroneous in any material respect;or (d)Lessee becomes insolvent or admits in writing its inability to pay its debts as they mature or applies for, consents to,or acquiesces in the appointment of a trustee,receiver or custodian for the Lessee or a substantial part of 7 its Property; or in the absence of such application, consent or acquiescence, a trustee, receiver or custodian is appointed for Lessee or a substantial part of its Property and is not discharged within thirty (30) days; or any bankruptcy, reorganization, debt arrangement, moratorium, or any proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceedings, is instituted by or against Lessee and, if instituted against Lessee, is consented to or acquiesced in by Lessee or is not dismissed within thirty(30)days. Section 12.2.Remedies.Upon the occurrence of an Event of Default under Section 12.1 of the Lease and as long as such Event of Default is continuing, Lessor may, at its option, exercise any one or more of the following remedies: (a)By written notice to Lessee, declare all amounts becoming due and payable under the Lease and during Lessee's current fiscal period to be immediately due and payable and during each succeeding fiscal period to be due and payable in such period; (b) By written notice to Lessee, request Lessee to, and Lessee agrees that it will, promptly surrender possession of the Property to Lessor and permit Lessor or any party designated by Lessor quiet enjoyment and use of the Property; (c)Enter and take immediate possession of the Property; (d) Sell or sublease the Property for the account of Lessee (including lease or sublease to any existing users), holding Lessee liable for all Lease Payments and other payments due to the effective date of such selling, leasing, or subleasing and for the difference between the purchase price, rental and other amounts paid by the purchaser, Lessee or sub-lessee pursuant to such sale, lease or sublease and the amounts payable by Lessee hereunder for the remaining Lease Term, but Lessee's liability under this subsection (d) shall not exceed the remaining amounts payable by Lessee during Lessee's current fiscal period;or (e)Exercise any other right, remedy or privilege which may be available to it under applicable laws of the State of California, or proceed by appropriate court action to enforce the terms of the Lease or to recover damages for the breach of the Lease,or to rescind the Lease as to any or all of the Property. ARTICLE XIII TAX COVENANTS AND EXPECTATIONS Section 13.1. Tax Covenants. Lessee covenants that it will not take or permit any of its officers,employees or agents to take any action with respect to the Lease, the Property or the property described in Exhibit B to the Escrow Agreement(the `Financed Property")(including allowing such Property or Financed Property to be used in any private use),which would cause the Lease to be classified as a"private activity bond" or an "arbitrage bond"or "federally guaranteed" within the meanings of Sections 141, 148 and 149 respectively of the Internal Revenue Code of 1986,as amended or superseded(the"Code"),and any regulations from time to time adopted thereunder or which would cause the interest portion of the Lease Payments to become includible in gross income under the Code, and the Lessee covenants that it will take all actions necessary to maintain such exclusion from gross income under the Code. In addition,the Lessee hereby represents that it is a public body corporate and politic and that all of the net proceeds of the Lease are to be used for local governmental activities of the Lessee. The Lessee further covenants that it will comply with the information reporting requirements of Section 149(e) of the Code, including filing of Form 8038-G with respect to the Lease. Section 13.2. Expectations. Lessee represents,warrants and covenants as follows with regard to the Lease, to its best information,knowledge and belief: (a) Lessee has entered into a contract to lease with option to purchase the Property in order to finance the costs of the Financed Property. The acquisition of the Financed Property by Lessor will proceed with due diligence and all proceeds received from the Lessor will be spent within six months of the date of the funding of this Lease as 8 to personal property and within two years of the date of the funding of this Lease as to real property(provided for real property that 10%of the funds are spent within the first six months following funding,45%within the first year, 75%within 18 months and the balance within two years). (b) No lease payment account has been or will be established with respect to the Lease. Lease Payments will be paid directly to the Lessor or its Assignee. (c) An escrow fund for proceeds of the Lease is being established pursuant to that certain Escrow Agreement of even date herewith,among the Lessor,Lessee and First National Bank of Central California,as escrow agent. No reserve fund or similar fund has been or will be established by Lessee with respect to the Lease. (d)Lessee has not established and does not expect to establish any sinking fund from which Lease Payments under the Lease will be paid or any fund for which there is reasonable assurance that amounts therein will be available to pay such Lease Payments if Lessee encounters financial difficulties. (e) Lessee has neither received notice that its certification may not be relied upon with respect to its obligations,nor been advised that any adverse action by the Commissioner of Internal Revenue is contemplated with respect thereto. ARTICLE XIV DELIVERY OF RELATED DOCUMENTS Lessee will execute or provide,as required by Lessor,the following documents and information satisfactory to Lessor: (a)Documents evidencing acceptance and delivery; (b)Essential Use Letter regarding Property; (c) Certificate of insurance or, at Lessor's sole option, Certificate that the Lessee is self insured under its funded self insurance program,as is acceptable to Lessor; (d)Current financial statements and copies of budget showing appropriations(as available); (e)Certificate of incumbency; (f)Resolution of Lessee approving this Lease; (g)Acknowledgment and Consent to Assignment and/or appointment of the Paying Agent;and (h)Other documents as reasonably requested by Lessor. ARTICLE XV MISCELLANEOUS Section 15.1. Notices. Except where another form of notice is specifically authorized in a section of this Lease,all notices to be given under this Lease to Lessee shall be made in writing and mailed by certified mail,return receipt requested to: COUNTY OF CONTRA COSTA, 1220 Morello Avenue, 1st floor,Martinez,CA 94553,Attn: Lease Management,925/313-7250; fax: 925/313-7299,email: echan gsd.co.contra-costa.ca.us, or at such address as the party may provide in writing from time to time. Notices to Lessor shall be addressed to it at Lessor's address at 2723 Pine Street, San Francisco, CA 94115, (415) 515-2080, fax: (415) 441-2060, email: 9 L'1f4 dbmunn(a7�,sbcglobal.net, or at such other address as Lessor or Lessor's assignee may provide in writing from time to time. Any such notice shall be deemed to have been received five(5)days subsequent to mailing. Section 15.2. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provisions of this Lease. Section 15.3. Governing Law. This Lease shall be governed by,and construed in accordance with,the laws of the State of California. Section 15.4. Inventory, Registration. Lessee shall maintain a detailed inventory of each item included on or comprising the facility that is being leased. SECTION 15.5.AMENDMENTS: MODIFICATIONS: LESSEE WAIVERS. ALL AMENDMENTS OR MODIFICATIONS OF THE TERMS OF THE LEASE MUST BE AGREED TO IN WRITING IN ADVANCE BY LESSEE AND LESSOR OR ITS ASSIGNEE, PROVIDED, HOWEVER, THAT NO AMENDMENTS OF THIS LEASE SHALL OPERATE TO REDUCE OR DELAY ANY LEASE PAYMENTS TO BE MADE HEREUNDER WITHOUT CONSENT OF LESSOR AND ITS ASSIGNEE, IF ANY,AT THE TIME OF AMENDMENT. Lessee's initials: Section 15.6. Entire Agreement: Waiver, This Lease and the other attachments, documents or instruments executed by Lessee and Lessor in connection herewith, including any applicable Exhibits A through H(incorporated by reference herein), constitute the entire agreement between the parties with respect to the Property. There is no understanding or agreement, oral or written, which is not set forth herein. The waiver by Lessor of any breach by Lessee of any term,covenant or condition hereof shall not operate as a waiver of any subsequent breach thereof. Section 15.7. 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 15.8. Severabili Clause. In the event of a dispute, controversy or litigation arising under this Agreement,the prevailing party shall be entitled to reasonable attorneys'fees. In the event any provision,phrase or term of this Agreement shall be deemed unenforceable, such unenforceability shall not affect any of the other terms hereof and this Agreement shall be construed thereafter as including all provisions hereof except the provision or term held unenforceable. Section 15.9. Special Resolution. Lessor and Lessee agree that the Resolution of Lessee identified on Exhibit H hereto is incorporated by reference herein as if fully set forth and shall apply to this Lease and to Lessor. 10 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 set forth below. TMC INVESTMENTS,INC., as Lessor By: Donald Munn President COUNTY OF CONTRA COSTA, as Lessee By: Barton J.Gilbert Director of General Services Attest: BY: Title: 11 EXHIBIT A COUNTY OF CONTRA COSTA MASTER LEASE/OPTION AGREEMENT DATED AS OF NOVEMBER 1,2002 The following list of Exhibits are made a part of this Lease. Exhibit B Schedule of Property Exhibit C Amortization Schedule Exhibit D Certificate of Acceptance Exhibit E Opinion of Lessee's Counsel Exhibit F Certificate of Essential Use Exhibit G Proof of Insurance Exhibit H Resolution Exhibit I Incumbency Certificate 12 EXHIBIT B COUNTY OF CONTRA COSTA, MASTER LEASE/OPTION AGREEMENT DATED AS OF NOVEMBER 1,2002 SCHEDULE OF PROPERTY The Property which is the subject of the attached MASTER LEASE / OPTION AGREEMENT is as follows: Description: Tenant improvements to County leased office space at: 1. 3052 Willow Pass Road,Concord,CA 94519(Concord clinic)($1,000,000)(9.5 years) 2. 2505 Lone Tree Way,Ste. 3 and 4,Antioch,CA 94509(Antioch clinic)($575,000)(5.5 years) 3. Building and Equipment improvements to County-owned microwave tower at 4723 Susanne Drive, Pittsburg,CA 94565(Kregor Peak)($1,000,000)(7.5 years) (Note: As assets are amortized,the liens will be released on an asset by asset basis.) 13 EXHIBIT C COUNTY OF CONTRA COSTA, MASTER LEASE/OPTION AGREEMENT DATED AS OF NOVEMBER 1,2002 SCHEDULE OF LEASE PAYMENTS This Exhibit applies to Property set forth on Exhibit B. Prepayment Concluding Purchase Payt No./Date Amount Principal Interest Balance Option* 1 5/1/2003 61,563.76 0.00 2,636,563.76 61,563.76 2 11/1/2003 223,605.84 162,042.07 2,636,563.76 61,563.76 3 5/112004 223,605.84 165,825.76 2,474,521.69 2,789,593.58 57,780.08 4 11/1/2004 223,605.84 169,697.79 2,308,695.93 2,598,817.28 53,908.05 5 511/2005 223,605.84 173,660.23 2,138,998.14 2,403,614.97 49,945.61 6 11/1/2005 223,605.84 177,715.20 1,965,337.91 2,203,883.96 45,890.64 7 511/2006 223,605.84 181,864.85 1,787,622.71 1,999,519.20 41,740.99 8 11/1/2006 223,605.84 186,111.39 1,605,757.86 1,790,413.17 37,494.45 9 5/1/2007 223,605.84 190,457.09 1,419,646.47 1,576,455.89 33,148.75 10 11/1/2007 223,605.84 194,904.27 1,229,189.38 1,357,534.79 28,701.57 11 5/1/2008 223,605.84 199,455.28 1,034,285.11 1,122,421.64 24,150.56 12 11/1/2008 156,908.58 137,415.31 834,829.83 895,471.80 19,493.28 13 5/1/2009 156,908.58 140,623.95 697,414.52 730,558.20 16,284.63 14 11/1/2009 156,908.58 143,907.52 556,790.57 561,818.60 13,001.06 15 5/1/2010 156,908.58 147,267.76 412,883.05 412,458.58 9,640.82 16 11/1/2010 70,324.87 64,122.76 265,615.28 265,325.02 6,202.12 17 5/1/2011 70,324.87 65,620.02 201,492.53 201,257.98 4,704.85 18 11/1/2011 70,324.87 67,152.25 135,872.50 135,704.59 3,172.62 14 19 5/1/2012 70,324.87 68,720.25 68,720.25 1.00 1,604.62 TOTAL: $3,206,555.97 *Assumes payment on this date has been made. Approved. County of Contra Costa Barton I Gilbert,Director of General Services 15 EXHIBIT D COUNTY OF CONTRA COSTA, MASTER LEASE/OPTION AGREEMENT DATED AS OF NOVEMBER 1,2002 CERTIFICATE OF ACCEPTANCE I,the undersigned,hereby certify that I am the duly qualified and acting Director of General Services of the COUNTY OF CONTRA COSTA ("Lessee"); and, with respect to the MASTER LEASE / OPTION AGREEMENT dated as of November 1, 2002 (the "Lease"), by and between Lessee and TMC Investments, Inc. (the"Lessor"),certify that: 1. Proceeds sufficient to acquire the Financed Property(as defined in the Lease), which proceeds will be used by Lessor to acquire the Financed Property, a portion of which is being leased to Lessee under the Lease together with certain other property (collectively, the "Property"), have been accepted by Lessee for disposition as provided in the Escrow Agreement among Lessor, Lessee and the First National Bank of Central California, as escrow agent. The Financed Property described in Exhibit B to the Escrow Agreement (as defined in the Lease), upon acceptance by Lessee,shall be complete in all respects,shall be inspected by the Lessee and shall be acceptable in all respects to Lessee. 2. Lessee has appropriated necessary monies sufficient to pay all Lease Payments required to be paid under the Lease during the current fiscal year of Lessee,and such monies will be applied in payment of all Lease Payments due and payable during such current fiscal year. 3. Lessee is exempt from all personal and real property taxes, and is subject to sales and/or use taxes with respect to the Property. To the extent any personal or real property taxes are required to be paid,Lessee on behalf of Lessor shall pay all such taxes and any applicable interest or penalties. 4. During the Lease Term,the Financed Property and Property will be used by Lessee to perform only the essential governmental functions specified in the Lease. 5. The Lease Payments do not exceed the fair rental value for the lease of the Property by the Lease. Dated: November 1,2002 LESSEE: COUNTY OF CONTRA COSTA By: Barton J.Gilbert Director of General Services 16 EXHIBIT E OPINION OF COUNSEL ON COUNSEL'S LETTERHEAD November 1,2002 Lessee: COUNTY OF CONTRA COSTA 1220 Morello Avenue Martinez,CA 94553 Lessor: TMC Investments,Inc. 111 Anza Boulevard,Ste. 107 Burlingame,CA 94010 RE: MASTER LEASE/OPTION AGREEMENT dated as of November 1,2002,by and between TMC Investments,Inc.("Lessor")and COUNTY OF CONTRA COSTA("Lessee") Ladies and Gentlemen: I have acted as counsel to the Lessee with respect to the MASTER LEASE/OPTION AGREEMENT described above(the "Lease")and various related matters,and in this capacity have reviewed a duplicate original or certified copy of the Lease and the Exhibits attached thereto. Based upon the examination of these and such other documents as I deem relevant,it is my opinion that: 1. Lessee is a political subdivision of the State of California(the "State"), duly organized, existing and operating under the constitution and laws of the State. The Lessee is organized under and pursuant to the Government Code of the State of California(Sections et seq.). 2. Lessee is authorized and has the power under State law to enter into the Lease, and to carry out its obligations thereunder and the transactions contemplated thereby. 3. The Lease has been duly authorized,approved,executed and delivered by and on behalf of Lessee,and is a valid and binding contract of Lessee enforceable in accordance with its terms, except to the extent limited by State and Federal laws affecting remedies and bankruptcy, reorganization or other laws of general application relating to or affecting the enforcement of creditors"rights. 4. The authorization, approval and execution of the Lease and all other proceedings of Lessee relating to the transaction contemplated thereby have been performed in accordance with all open meeting,public bidding and other laws,rules and regulations applicable to the Lessee. 5. The execution of the Lease and the appropriation of monies to pay the Lease Payments coming due thereunder,do not result in the violation of any constitution,statutory or other limitation relating to the manner,form or amount of indebtedness which may be incurred by Lessee. 17 6. There is no litigation, action, suit or proceeding pending or before any court, administrative agency, arbitrator or governmental body,that challenges the organization or existence of Lessee;the authority of its officers, the proper authorization, approval and/or execution of the Lease, the Exhibits and other documents contemplated thereby; the appropriation of monies, or any other action taken by Lessee to provide monies sufficient, to make Lease Payments under the Lease;the performance by Lessee of all its obligations under the Lease;the enforceability and enforcement of the Lease against the Lessee; or the ability of Lessee otherwise to perform its obligations under the Lease and the transactions contemplated thereby. You and your assigns are permitted to rely upon this opinion. Very truly yours, OFFICE OF THE COUNTY COUNSEL COUNTY OF CONTRA COSTA cc: Orix Public Finance LLC 18 t.- 1188 �7 EXHIBIT F COUNTY OF CONTRA COSTA MASTER LEASE/OPTION AGREEMENT DATED AS OF NOVEMBER 1,2002 CERTIFICATE OF ESSENTIAL USE The undersigned, as Director of General Services, of COUNTY OF CONTRA COSTA (the "Lessee"),hereby certifies that the Property described in Exhibit B to MASTER LEASE/OPTION AGREEMENT dated as of November 1,2002,with TMC Investments,Inc.(the "Lease")and the Financed Property(as defined in the Lease)is essential to the functions of the Lessee or to the services the Lessee provides. Further, the Lessee has an immediate need for, and expects to make immediate use of, all such Property and Financed Property, the need for which is not temporary or expected to diminish in the foreseeable future. Such Property and Financed Property will be used by the Lessee only for the purpose of performing one or more governmental or proprietary functions consistent with the permissible scope of authority. Specifically, such Property and Financed Property was selected by the Lessee to be used for the following governmental purposes: 1.Health programs 2.Emergency services programs 3.Administrative purposes 4.Communications and emergency response programs 5. Employment and Human Services programs This Exhibit relates to Exhibit B to the Lease. COUNTY OF CONTRA COSTA, as Lessee By: Barton J.Gilbert Director of General Services Date: November 1,2002 19 EXHIBIT G COUNTY OF CONTRA COSTA MASTER LEASE/OPTION AGREEMENT DATED AS OF NOVEMBER 1,2002 PROOF OF INSURANCE COVERAGE REQUIREMENTS 1. In accordance with Article VI of the MASTER LEASE/OPTION AGREEMENT between the undersigned as Lessee and TMC Investments, Inc. as Lessor ("Lease"), we have instructed the insurance agent named below(Please fill in name,address and telephone number). to issue: (a)All Risk Physical Damage Insurance on the Property as defined in the Lease,evidenced by a Certificate of Insurance and Long Form Loss Payable Clause naming Lessor and/or its assigns as an Additional Insured. (b)Public Liability Insurance evidenced by a Certificate of Insurance naming Lessor and/or its assigns as an Additional Insured. (c) Rental Interruption Insurance evidenced by a Certificate of Insurance naming Lessor and/or its assigns as an Additional Insured. Proof of insurance coverage will be provided to you prior to the time that the Property is delivered and accepted. This pertains to Property set forth on Exhibit B to the Lease. COUNTY OF CONTRA COSTA By: Authorized Officer Date: November 1,2002 20 EXHIBIT H COUNTY OF CONTRA COSTA MASTER LEASE/OPTION AGREEMENT DATED AS OF NOVEMBER 1,2002 RESOLUTION/BOARD ORDER OF BOARD OF SUPERVISORS TO BE INSERTED HERE 21 ,F EXHIBIT I INCUMBENCY CERTIFICATE do hereby certify that I am the duly elected or appointed and acting County of the COUNTY OF CONTRA COSTA,that I have custody of the records of such entity,and that,as of the date hereof, the individual named below is the duly elected or appointed officer of such entity holding the office set forth opposite his or her name. I further certify that(i)the signature set opposite his name and title is his or her true and authentic signature and(ii)such officer has the authority on behalf of such entity to enter into that certain Master Lease/Option Agreement dated as of November 1,2002,between such entity and TMC Investments,Inc. ("Lessor")and(iii)the authority is provided by a resolution of the Board of the Lessee or an internal policy of the Lessee. PRINTED NAME TITLE SIGNATURE Baron L Gilbe Director of General Services IN WITNESS WHEREOF,I have duly executed this Certificate as of the first day of November,2002. Authorized Signature 22 NOTICE OF ASSIGNMENT TMC Investments, Inc. ("Lessor") hereby gives notice to COUNTY OF CONTRA COSTA ("Lessee"), that Lessor has sold, assigned and transferred all of Lessor's right, title and interest in, to and under(a) that certain Master Lease/Option Agreement dated as of November 1, 2002 (the "Agreement"), by and between Lessor and Lessee, as respects Exhibits B and C, (b) the property described in Exhibit B to the Agreement (the "Property");and(c)all payments respecting the Property now or hereafter due or payable pursuant to the Agreement, including (but not limited to) rental payments and purchase option payments set forth on Exhibit C, to (the "Assignee"), ORIX PUBLIC FINANCE LLC (the "Assignee"), 2600 Grand Boulevard, Suite 380, Kansas, City, MO 64108(Tax I.D.:43-1926447). All payments should be sent to the Assignee at the following address: For:Regular First Class Mail ORIX Public Finance LLC P.O.Box 535223 Pittsburgh,PA 15253-5223 For: Overnight Mail Delivery ORIX Public Finance LLC 7 Parkway Center, Suite 802 Pittsburgh,PA 15220 Attn. Cindy Choinicki/Accts.Receivable 412-922-9736 For: Wire Transfers Mellon Bank,Pittsburgh,PA ABA 043 000 261,FBO ORIX Public Finance LLC Acct.078-8504 Lessee confirms that nineteen(19)semi-annual payments in arrears of interest and eighteen semi- annual (18) payments in arrears of principal according to the schedule set forth on Exhibit C to the Agreement remain due as of the date set forth below, and that no event of default(or event which with the passage of time or giving of notice or both would mature into an event of default) of Lessee has occurred and is continuing under the Lease, and to Lessee's actual knowledge,no event of default(or event which with the passing of time or the giving of notice or both would mature into an event of default)of Lessor has occurred and is continuing and that there exists no defense, counterclaim, recoupment or similar occurrence(other than the right of non-appropriation)which would cause the Lessee not to make the remaining payments due under the Agreement. Dated as of the 1 st day of November,2002. TMC Investments,Inc., as Lessor/Assignor By: Donald Munn,President 23 c:Fri a:`%.�'• ,,�;:,, ,,„ �. ACKNOWLEDGED AND ACCEPTED. COUNTY OF CONTRA COSTA, as Lessee By: Barton J.Gilbert,Director of General Services ORIX PUBLIC FINANCE LLC, as Assignee By: Robert C.Neptune,President *mv0nNmw`Mm ME=I WoperW=1i p0013MIM mix chp 11M) 24