Loading...
Resolution - 2003 - 01 - Execute A Municipal Real Estate Lease Agreement/City & Wells Fargo Brokerage Services Llc - 01/07/2003 CITY OF EAGLE RESOLUTION NO. 03-01 A RESOLUTION OF THE CITY OF EAGLE, ADA COUNTY, IDAHO, APPROVING THE EXECUTION OF A MUNICIPAL REAL ESTATE LEASE AGREEMENT BETWEEN THE CITY OF EAGLE AND WELLS FARGO BROKERAGE SERVICES, LLC; AUTHORIZING THE MAYOR AND CITY CLERK, RESPECTIVELY, TO EXECUTE AND ATTEST THE MUNICIPAL REAL ESTATE LEASE AGREEMENT ON BEHALF OF THE CITY; PROVIDING FOR RELATED MATTERS; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EAGLE, Ada County, Idaho, as follows: Section 1: The Municipal Real Estate Lease Agreement ("Agreement") between the City of Eagle and Wells Fargo Brokerage Services, LLC, substantially in the form attached to this Resolution as Exhibit A and incorporated herein by reference, is hereby approved. Section 2: The Mayor and City Clerk are hereby authorized to execute and attest, respectively, the Agreement on behalf of the City. Section 3: The Mayor is authorized to sign any and all other documents necessary to effectuate the intent of the Agreement and to complete the lease-purchase of a new city hall facility. Section 4: approval. That this Resolution shall be effective as of the date of its passage and DATED this 7th day of January, 2003. CITY OF EAGLE Ada County, Idaho [SEAL] ATTEST: l.Q t'.i-.J--c." ~ \<.. 'fY)~ ~ Sharòn K. Moore, City CI~rk ORIGINAL REAL ESTATE IMPROVEMENTS FORM MUNICIPAL REAL ESTATE LEASE AGREEMENT THIS MUNICIPAL REAL ESTATE LEASE AGREEMENT (the "Agreement") dated as of January , 2003 by and between the City of Eagle, Idaho ("Lessee") having its principal offices at 310 East State Street, Eagle, state of Idaho (said state being referred to throughout this Agreement as the "State") and WELLS FARGO BROKERAGE SERVICES, LLC ("Lessor"), WITNESSETH WHEREAS, with regard to the construction of a new City Hall (the "Improvements") on land owned by Lessor, Lessee understands that said Improvements will be constructed on this Land with the proceeds of this financing and Lessee desires to lease said Land and Improvements from Lessor through the financing herein provided; NOW, THEREFORE, in consideration of the covenants herein, the parties agree in entering the Agreement, as amended from time to time as follows: I. Title to and Rights in the Improvements: Lease to Lessee;, Term; Tax Certifications Section 1.1. Title to and Rights in the Improvements. This Lease with Lessee covers the real property and improvements described in Exhibit "B" hereto (the "Land and Improvements") for term as described in 1.3 below. It is understood that the Lessor will acquire the title to the Improvements identified on Exhibit "B" (the "City Hall") hereto as they are constructed on the Land by Lessee on behalf of Lessor with the funds as described in Exhibit B-1, and Lessor will lease the same to the Lessee pursuant to this Agreement. Nevertheless, to the extent that Lessee has or may hereafter acquire any rights to the Improvements, Lessee assigns to Lessor all rights, if any, which Lessee has or may hereafter acquire in the Improvements. It is further understood that Lessor will convey title to the Land and Improvements in trust (the "Trust Conveyance") to Wells Fargo Bank Northwest, National Association as trustee (the "Trustee") with the provision that the Trustee will convey said property to Lessor or its assignee(s) in the Event of Default or Event of Nonappropriation hereunder or to Lessee in the event Lessee pays in full its obligations hereunder for the Initial Term and all Renewal Terms under Sections 1.2 and 1.3 below. Section 1.2. Lease to Lessee. Subject to the terms hereof, Lessor agrees to lease the Improvements to Lessee, and Lessee will purchase the Improvements from Lessor by making the lease purchase payments (the "Lease Purchase Payments") according to the schedule set forth in Exhibit "A" hereto and only during the Term hereof as defined in Section 1.3. The cost of the Improvements, Lessor's legal expenses, origination fees, and all other related costs will be included in the total cost of the Improvements as shown in Exhibit "A". -1- Section 1.3. Term. This Agreement will be effective on the date hereof. The initial term of this Agreement (the "Initial Tenn") begins as of the date hereof and expires at midnight on the last day of the Lessee's current fiscal year (the "Fiscal Year"). Beginning at the expiration of the Initial Term, the term of this Agreement shall be extended for a renewal term (the "Renewal Term") upon the successive appropriation by Lessee's governing body of amounts sufficient to pay the Lease Purchase Payments and other amounts payable hereunder. The term of this agreement may be so extended for the number of Renewal Terms as necessary for all Lease Purchase Payments to be paid in full unless this Agreement is terminated as provided herein. The term of this Agreement shall expire upon the first to occur of (i) the expiration of the Initial Term or any Renewal Term hereunder during which the term of this Agreement is not renewed or extended by appropriation of the Lessee, which is determined by the failure or refusal of Lessee's governing body to appropriate by September 30th in any year hereunder moneys sufficient to pay Lease Purchase Payments and other amounts due hereunder for Lessee's next succeeding Fiscal Year (an "Event of Nonappropriation"), (ii) the day after the last scheduled Lease Purchase Payment due hereunder is paid in full, (iii) the day after the aggregate principal amount of Lease Purchase Payments are prepaid in full or (iv) an Event of Default under this Agreement and termination of Lessee's rights hereunder as provided herein. Lessee hereby agrees to notify Lessor immediately of the occurrence of an Event of Nonappropriation under this Agreement. Section 1.4. Title, Title Insurance and Related Matters. Title to the Land and Improvements have been and are being acquired by Lessor without conveyance by Lessee and will be conveyed by Lessor to Lessee upon Lessee's payment of all Lease Purchase Payments for all Renewal Terms subject to the Lessor's rights and other terms hereunder. Lessee shall cause to be furnished to Lessor, such environmental reports, title policies and/or other reports and information as Lessor may require. Section 1.5. Tax Certification and Indemnification. (a) Lessee agrees and certifies as follows: (1) Moneys on deposit in any fund or account related to this Agreement will not be used in a way that will cause the interest component of any Lease Purchase Payment to be includable in Lessor's income for federal tax purposes; (2) No use will be made of proceeds of the Agreement, or any funds or accounts of Lessee which may be deemed to be such proceeds, which would cause the Agreement to be an "arbitrage bond" under Section 148 of the Internal Revenue Code of 1986, as amended, and applicable regulations thereunder (the "Code"). Lessee will comply with the requirements of Section 148 of the Code; (3) Lessee will not take, cause to be taken or fail to take any action, the result of which would cause the interest component of any Lease Purchase Payment to be ineligible for exclusion from Lessor's gross income under Section 103 of the Code or would cause the Agreement to be a "private activity bond" or to fail to meet any applicable requirement of Section 149 of the Code; (4) Lessee will file the information report required by Section 149(e) of the Code, and provide to Lessor other evidence of the Lessee's filing of all necessary documents unless Lessor opts to make such filings as provided for under Section 6.1(c) below. (5) The Agreement will not at any time be a "private activity bond" (as defined in Section 141 of the Code); (6) the reasonably anticipated amount of tax exempt obligations as described in Section 103(a) of the Code ("Tax Exempt Obligation") (including qualified 501(c)(3) bonds and excluding other private activity bonds) which will be issued by Lessee and its subordinate entities during the current calendar year will not exceed $10,000,000. Not more than $10,000,000 of obligations issued by Lessee during the current calendar year will be designated by Lessee for purposes of Section 265(b)(3) of the Code. This Agreement has been entered into on the basis that Lessor will be entitled to the exception contained in Section 265(b)(3) of the Code (the "Exception") with respect to the deduction of interest expense allocable to tax-exempt interest. If, as a result of the falsity or breach of Lessee's representations or agreements in this Section 1.6, Lessor will not have or will lose the right to claim the Exception, upon thirty (30) days' written notice to Lessee by Lessor, Lessee shall, to the extent permitted by the Agreement and by applicable law, pay Lessor an amount which, in the reasonable opinion of Lessor and after deduction of all taxes required to be paid by Lessor with respect to receipt of such amount, will cause the net after-tax return of Lessor or its assignees over the term of this Agreement to equal the net after-tax return that would have been available if Lessor had been entitled to the Exception. (b) Lessee is exempt from the arbitrage rebate requirements of Section 148(0 of the Code because: (1) Under Section 148(0(4)(D) of the Code (i) it is a political subdivision of the State with general taxing powers and is not a subordinate entity of any other political subdivision, (ii) this will not at any time be a "private activity bond" (as defined in Section 141 of the Code), (iii) 95% or more of the net proceeds of this Agreement will be used for local governmental activities of the Lessee within the meaning of Section 148(0(4)(D)(i)(III) of the Code, (iv) Lessee has not issued any Tax Exempt Obligations in this calendar year other than this Agreement and those referenced in Section 1.6(a) above, (v) the aggregate face amount of all Tax Exempt Obligations (other than private activity bonds), including this Agreement, which will be issued by Lessee and its subordinate entities during the calendar year will not exceed $5,000,000; and/or (2) Lessee is entitled to the exception under Section 148(0(4)(B)(1) of the Code because the gross proceeds (as defined in Section 148(0(6)(B) of the Code) of this Agreement (including costs of issuance) will be expended for and allocated to the governmental purposes of this Agreement within six months after the date hereof. (c) To the extent Lessee fails to qualify for either of the above rebate exceptions, it will (i) timely pay to the United States any -2- payments necessary to preserve the tax-exempt status of the interest component of the Lease Purchase Payments (provided, that this section is not intended to create a debt for purposes of the Constitution of the State) and (ii) take all such actions that may be necessary to comply with the rebate requirements of Section 148(0 of the Code. (d) Lessor will pay the proceeds of this Agreement to the Lessee no later than five (5) business days after the date of this Agreement. Lessee expects to expend the funds for construction of the Improvements within two (2) years of the date hereof. Lessee therefore reasonably expects that such proceeds will be spent within the three-year temporary period provided in the Treasury Regulations issued or proposed under the Code including amendments and successor provisions thereto (the "Regulations"). (e) Lessee has investigated the facts, estimates and circumstances in existence on the date hereof, together with Lessee's exceptions as to future events. These are true and are complete in all material respects, and on the basis of such, it is not expected that the use of the sale proceeds hereof or any other moneys or the Improvements will be used in a manner which will cause this Agreement to be an arbitrage bond within the meaning of Section 148 of the Code. Such expectations are reasonable, and there are no other facts, estimates or circumstances that would materially change such expectations. (0 None of the proceeds hereof will be used, directly or indirectly, in any trade or business carried on by any person other than a Governmental Unit, which is defined to include any state of the United States and any political subdivision, agency, instrumentality or entity acting by or on behalf of a state, but not including the United States or any agency or instrumentality thereof, no more than 10% of the Improvements will be used directly or indirectly in a trade or business carried on by any such person, and no more than 5% of the Improvements will be used directly or indirectly in a trade or business carried on by any such person which is not related to any government use of such Improvements. (g) The payment of the Lease Payments will not be directly or indirectly (i) used for a private business use or payments in respect thereof, or (ii) derived from payments in respect of, or borrowed money used or to be used for, private business. (h) None of the proceeds hereof will be used, directly or indirectly, to make or finance loans to persons other than a Governmental Unit. (i) No person, other than Lessee or another Governmental Unit, will use the Improvements on any basis other than the same basis as the general public; and no person other than a Governmental Unit will be a user of the Improvements as a result of (i) ownership, or (ii) actual or beneficial use pursuant to a lease or a management or incentive payment contract, or (iii) any other similar arrangement. (j) Subsequent to fifteen (15) days before the date hereof, Lessee has not sold (nor will it deliver within fifteen (15) days after the date hereof) any other obligations pursuant to the same plan of financing, which will be paid from substantially the same source of funds (or which will have substantially the same claim to be paid from substantially the same source of funds) without regard to guarantees from unrelated parties as this Agreement or which will be paid directly or indirectly from the proceeds hereof. (k) The Improvements are not expected to be sold or otherwise disposed of prior to the expiration of the fmal renewal term hereof. (1) The certifications and representations made herein are intended, and may be relied upon, as a certification described in Section 1.148-2(b)(2) of the Regulations. (m) Lessor represents as follows: (1) The interest rate on this Agreement is not unreasonably high. (2) Lessor enters into this Agreement for investment and not for assignment to others, without achieving full compliance with the Securities Act of 1933 and any applicable state laws. (n) Should the payments hereunder be deemed by the State or the federal government not to be exempt from income taxation, Lessee agrees that it will pay as additional sums hereunder sufficient funds to adjust the interest to be paid hereunder to an amount equivalent to the income contemplated hereunder as a tax exempt transaction. Said adjustment will be retroactive and apply to any lease payments already paid by Lessee to Lessor to the extent that any ruling by any such taxing authority requires the payment of additional tax upon payments already received by Lessor. This obligation will survive the full performance of this Agreement. II. Pavment; Warranty Disclaimers Section 2.1. Aereement to Pay. Subject to the limitation of Section 2.5 of this Agreement, Lessee will pay Lessor from funds appropriated therefor and any other moneys legally available for that purpose at the place set forth in Exhibit "A", in such amounts, including principal and interest, and on such date as called for in Exhibit "A" hereto along with the reasonable expenses of Lessor related hereto, except expenses included in the cost of the Land and Improvements pursuant to Section 1.2, and any other payment required under the Agreement. If any amount payable hereunder is not paid within ten (10) days after it is due, Lessee will pay to Lessor an amount equal to five percent (5%) of such overdue payment plus interest on such overdue payment at the rate of eighteen percent (18%) per annum as a supplemental payment. Lessee's payment obligation hereunder is not subject to any defense, right of setoff or counterclaim arising out of any breach by Lessor, hereunder or otherwise, or out of any indebtedness or any liability at any time owing by Lessor, except as provided in this Agreement. Lessor HAS NO RIGHT TO COMPEL LESSEE TO LEVY OR COLLECT TAXES TO MAKE ANY PAYMENTS REQUIRED HEREUNDER, OR TO EXPEND -3 - FUNDS BEYOND THE AMOUNT PROVIDED FOR IN THE THEN CURRENT FISCAL YEAR OF LESSEE. Section 2.2 Warranties. Lessor MAKES NO EXPRESS OR IMPLIED WARRANTIES AS TO ANY MATTER WHATSOEVER, INCLUDING THE EXTENT OF OR ENFORCEABILITY OF ANY CLAIM, WARRANTY, AGREEMENT OR REPRESENTATION OF THE IMPROVEMENTS NO DEFECT OR UNFITNESS OF THE IMPROVEMENTS WILL RELIEVE LESSEE OF ITS OBLIGATIONS HEREUNDER. Lessor MAKES NO REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED, WITH RESPECT TO THE IMPROVEMENTS, OR ITS DELIVERY, INSTALLATION, DESIGN, PERFORMANCE, SPECIFICATIONS, CONDITION, DURABILITY, SUITABILITY, FITNESS FOR USE OR MERCHANTABILITY. Under no circumstances will Lessor be liable for actual, special, incidental, consequential or other damages of or to Lessee or any other entity arising out of or in connection with the maintenance, use or performance of the Land and Improvements. Section 2.3. Prepayment. If no Event of Default, or event which with notice or lapse of time, could become an Event of Default, exists, upon thirty (30) days prior written notice Lessee may prepay the purchase price of the Land and Improvements on any Lease Purchase Payment Due Date by paying the applicable Option Price known as the After Payment Termination Value set forth in Exhibit "A" plus the Installment Payment due on such date, whereupon Lessor will transfer title to the Improvements to Lessee by a quit claim deed. Section 2.4. Appropriations. (a) The Lessee, by entering into this Agreement, acknowledges its current intention to make all payments due during its current fiscal year on the dates such payments are then due but does not commit to a legal or other obligation to make such payments or to incur any liability beyond the revenue and income provided during its then current fiscal year. In the event the Lessee's governing body fails to include in its proposed budget or related documents for the ensuing fiscal year or fails to appropriate sufficient funds to fully fund all of Lessee's obligations to make payments hereunder for any future fiscal year, or otherwise chooses not to renew the term of this Agreement for an additional fiscal year, then the Lessee will immediately notify the Lessor or its assignee of such occurrence and the Lessee's right to possession of the Land and Improvements and all its interest in the Land and Improvements, will terminate as of September 30 of the fiscal year in which the failure to appropriate occurs. In such case, the liability and obligations of the Lessee and remedies of Lessor will be limited to recovery only of funds appropriated for payments for the then current fiscal year. (b) If sufficient funds are appropriated and budgeted by it for the next fiscal year for the lease of the Land and Improvements, then the Term of this Agreement will be deemed renewed for such fiscal year and will be effective for such fiscal year. Section 2.5. Nonannrooriation. If the governing body of the Lessee fails to specifically appropriate sufficient funds to make the payments due in any Fiscal Year with regard to the Land and Improvements and no such appropriation is legally made within two weeks after demand by Lessor, an event of nonappropriation ("Event of Nonappropriation") will have occurred, and the term of this Agreement will be deemed not to have been renewed and this Agreement will terminate at the end of the then current Fiscal Year, whereupon Lessee will be obligated to pay those amounts then due subject to the provisions herein. At the end of such Fiscal Year, Lessor or the Trustee, if Lessor has conveyed the Land and Improvements to Trustee, will have the right to take possession of the Land and the Improvements. Nothing in this Section or elsewhere in this Agreement will be deemed in any way to obligate the Lessee beyond its current fiscal year. If the Lessee fails or refuses to renew the term of this Agreement for the next fiscal year as permitted above, makes any payment due for that purpose and relinquishes the Land and the Improvements as provided in this Agreement, then Lessee will have no further liability under this Agreement and the Land and the Improvements will be surrendered to Lessor or the Trustee, if Lessor has conveyed the Land and Improvements to Trustee. III. Duties of Lessor. So long as no Event of Default or Event of Nonappropriation has occurred Lessor agrees to cooperate with Lessee, at Lessee's expense, in asserting all such rights related to the Land and Improvements, provided that Lessee shall, to the extent permitted by law, indemnify and hold harmless Lessor from and against all related claims, costs, damages, losses and liabilities. If no Event of Default or Event of Nonappropriation has occurred, Lessee's use of the Land and Improvements will not be interrupted by Lessor or anyone claiming solely through or under Lessor. IV. Duties of Lessee. Section 4.1. Use and Maintenance of The Land and Improvements. Lessee will comply with all laws, rules and regulations with respect to the use, maintenance and operation of the Improvements, and if any additional improvement to the Improvements is required, Lessee will do so at its own expense. Section 4.2. Sale and Encumbrance. Lessee will not attempt to sell, lease or encumber the Land or the Improvements and will continue to use it for the public purposes of Lessee provided that it may sublease a portion of the Improvements to the Ada County Sheriff. Section 4.3. Inspection At any time during Lessee's normal working hours, Lessor may inspect the Improvements where it is located and inspect all related records of Lessee. Section 4.4. Insurance: Damage or Destruction. Lessee will provide public liability insurance and all risks insurance including physical damage and loss provision acceptable to Lessor with respect to the Improvements in amounts not less than those specified in Exhibit "B" with either a responsible insurance -4- company authorized to do business in the State. or an actuarially sound self-insurance program acceptable to Lessor. Each policy will name Lessor as an additional insured and loss payee and provide that it may be altered or canceled only after thirty (30) days' written notice to Lessor. Lessee will deliver to Lessor on demand evidence satisfactory to Lessor showing the existence of such insurance, and will deliver to Lessor evidence satisfactory to Lessor showing renewal or replacement of such insurance within thirty (30) days prior to expiration or cancellation. If Lessee fails to maintain such insurance, Lessor may obtain such insurance as Lessor deems necessary, and Lessee will reimburse Lessor for all premiums therefor together with interest at eighteen percent (18%) per annum. Lessee will immediately notify Lessor of any loss for which an insurance claim may be made, and shall, at Lessee's option: (a) Exercise its option to prepay under section 2.3; or (b) Place any damaged portion of the Improvements in as good a condition as before such damage, and replace any missing portion of the Improvements with similar Improvements of at least equal value. Any such replacement will be subject to this Agreement, and Lessee grants a security interest therein free of all liens. Section 4.5. Taxes. Lessee shall, to the extent permitted by law, pay when due and indemnify Lessor against all taxes and charges of any nature imposed against Lessor, Lessee or the Land or Improvements with respect to the Land or the Improvements or its purchase, ownership, delivery, leasing, possession, use, or disposition, or upon the rentals or earnings therefrom, or with respect to the Agreement, unless Lessee is contesting such in good faith and by appropriate proceedings. If any report or return is required with respect to any obligation of Lessee under this Section, Lessee will notify Lessor and make such report or return in a manner satisfactory to Lessor. Section 4.6. Indemnification. Lessee will indemnify, protect, and hold harmless Lessor or assignee or transferee of Lessor and their respective agents and servants from and against all claims, causes of action, damages, liability (including strict liability in tort and environmental liability), costs, fees, or expenses (including attorney's fees) incurred in any manner by or for the account of any of them relating to the Improvements or any part thereof including without limitation the construction, purchase, delivery, installation, ownership, leasing or return of the Improvements or as a result of the use, maintenance, repair, replacement, operation or condition, thereof (whether defects are latent or discoverable by Lessor or by Lessee) except such as may result from the negligence or willful misconduct of Lessor, or assignee or transferee thereof and their respective agents and servants. Lessee agrees to give Lessor prompt notice of any claim or liability hereby indemnified against. Lessor agrees to cooperate with Lessee in any defense or other action which Lessee is by this Article obligated to undertake. Section 4.7. Mortgages. Liens. Etc.. Lessee will not directly or indirectly create, incur, assume, or permit the existence of any mortgage, security interest, pledge, lien, charge, encumbrance, or claim on or with respect to the Land or the Improvements, title thereto or any interest therein except the respective rights of Lessor and Lessee as herein provided and liens for taxes either not yet due or being contested in good faith and by appropriate proceedings. Lessee will promptly, at its own expense, take such actions as may be necessary duly to discharge any such mortgage, security interest, pledge, lien, charge encumbrance, or claim not specifically excepted above. Section 4.8. Lessor Fees. Lessee agrees to pay to Trustee its fees for its services as required under the Trust Conveyance referenced in Section 1.1 hereof according to a schedule provided to Lessee by Trustee. V. Events of Default and Remedies. Section 5.1. Events of Default. The following will be Events of Default: (a) Lessee's failure to pay any payment hereunder 10 days after it is due; (b) Lessee's failure to maintain the insurance required under section 4.4; (c) Lessee's failure to perform any other covenant, condition or agreement under the Agreement within 30 days after written notice requesting that such failure be remedied; (d) Any representation or warranty made by Lessee to Lessor being materially false or misleading when made; (e) Lessee will become insolvent or bankrupt or make an assignment for the benefit of creditors or consent to the appointment of a trustee or receiver, or a trustee or a receiver will be appointed for Lessee for a substantial part of its property without its consent and will not be dismissed within a period of sixty (60) days, or bankruptcy, reorganization or insolvency proceedings will be instituted by or against Lessee and, if instituted against Lessee, will not be dismissed for a period of sixty (60) days. Section 5.2. Remedies. Whenever an Event of Default has occurred, subject to the limitation of Section 2.5 of this Agreement, Lessor may exercise any one or more of the following remedies: (a) By written notice to Lessee, declare all amounts coming due during the current Fiscal Year for all the Land and Improvements to be immediately due and payable; (b) Take possession, or have Trustee take possession, of the Land and the Improvements, sell or lease the Land and the Improvements, and retain the proceeds, holding Lessee liable for an amount equal to (i) all amounts payable hereunder to the end of the then current fiscal year less (ii) the proceeds of such sale or lease, however, if the proceeds of such sale or lease exceed the amount required to compensate Lessor for all payments contemplated under this Agreement plus any expenses related to said sale or lease, any costs to repair or replace the Improvements and any other expenses related thereto, then such excess proceeds will be paid to Lessee; and, (c) Take any action at law or in equity necessary or desirable to enforce its rights hereunder or as holder of title to the Land and Improvements, provided that in no event shall Lessee be obligated to pay amounts exceeding the funds appropriated by it for its then current fiscal year. Section 5.3. No Remedy Exclusive: Repossession. (a) No remedy herein is exclusive, and every remedy is in addition to every other remedy at law or in equity. No delay in exercising or failure to -5- exercise any right or power will be a waiver thereof. No notice will be necessary to entitle Lessor to exercise any remedy, except as required in this Article. To the extent permitted by law, Lessee waives any requirements of law, now or hereafter in effect, which might limit or modify Lessor's remedies; (b) If Lessor is entitled to take possession of the Land and Improvements, Lessee shall, if Lessor requests, relinquish possession thereof and execute and deliver such documents as may be required to restore clear title to Lessor. Once the Lessee has relinquished possession of the Land and Improvements and made any payments from funds appropriated by it for the then current fiscal year, Lessee shall have no further liability or obligation under this Agreement. VI. Renresentations. Covenants and Warranties of Lessee. Section 6.1. Representations. Covenants and Warranties of Lessee. (a) Lessee represents, covenants and warrants for the benefit of Lessor that Lessee is a political subdivision of the State with statutory authority to enter into this Agreement, and has been duly authorized to execute, deliver and carry out its obligations under this Agreement and will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a body politic and corporate. Lessee is not subject to any legal or contractual provision which restricts or prevents it from entering into performing under this Agreement, except laws affecting municipalities and creditors' rights generally. There is no known pending or threatened action, proceeding, or investigation affecting Lessee, nor to the best knowledge of Lessee is there any basis therefor, wherein an unfavorable result would adversely affect this Agreement except as noted in the opinion of Lessee's counsel referenced in Section 6.2 herein; (b) There are no known Hazardous Substances on the Land or in the Improvements and the Lessee shall comply with all Hazardous Substance laws relating to the Land and the Improvements as though Lessee were an owner of the Improvements; and (c) Lessee will file all necessary statements under Section 149(e)(2) of the Code to allow the interest payable under this Agreement to be excluded from the Lessor's income that is subject to federal and State income tax and will furnish to seller evidence of such filing, or at Lessor's option, it will notify Lessee of its intent to file necessary tax filings on behalf of Lessee after which Lessee will provide Lessor all needed cooperation to facilitate such tax filings. The execution and performance of this Agreement will not violate any judgment, order, law or regulation, constitute a default under any instrument binding upon Lessee, or create any encumbrance upon any assets of Lessee or the Improvements, except as herein provided. Lessee has never non -appropriated or defaulted under any of its obligations under any lease -purchase contract, bond, or other debt obligation. Lessee has been duly authorized to execute and deliver this Agreement under the terms and provisions of its duly adopted Resolution and further represents covenants and warrants that all requirements have been met and procedures have occurred in order to ensure the due authorization of this Agreement. No approval, consent, or withholding of objection is required from any governmental authority other than Lessee with respect to the entering into or performance by Lessee of this Agreement. The balance sheet of Lessee for its most recent fiscal year and the related earnings statement of Lessee for such fiscal year have been furnished to Lessor and fairly present Lessee's financial condition as of such date and the result is of it's operations for such year in accordance with generally accepted accounting principles consistently applied, and since such date there has been no material adverse change in such conditions or operations. Section 6.2. Oninion of Counsel. Lessee will deliver to Lessor an opinion of Lessee's legal counsel on and as of the date of this Agreement with respect to the matters in Section 6.1 and such other matters as Lessor reasonably requests. In addition, Lessee agrees to provide Lessor with any other documents reasonably requested by Lessor prior to Lessor's funding of this Agreement. VII. Assienments. Lessor may convey, assign or grant a security interest in any of its rights, duties or interests in and to this Agreement and the Improvements. It is understood that Lessor intends to assign the rights to receive the Lease Purchase Payments herein and other duties and/or rights herein in order to obtain the funds referenced in Section 1.1. above. Lessee will not convey, assign or grant a security interest in this Agreement or the Land and Improvements in whole or in part. VIII. Lessor's Rights to Perform for Lessee.(a) Subject to the limitations set forth within this Agreement, if Lessee fails to perform or comply with any of its agreements contained herein, Lessor may, but will not be required to, make any payment or perform or comply with any covenant or agreement contained herein, and all reasonable expenses of Lessor incurred in connection therewith will be payable by Lessee upon demand together with interest at the rate set forth in Exhibit B-1 from the date of payment to the date of reimbursement; (b) Lessee will promptly and duly execute and deliver to Lessor such further documents or instruments of further assurance and take such further action as Lessor may from time to time reasonably request in order to carry out the intent and purpose of this Agreement and to establish and protect the rights and remedies created or intended to be created in favor of Lessor hereunder, if requested, at the expense of Lessee. IX. Miscellaneous. The Agreement will be governed by the laws of the State of Idaho. Notice to either party will be sufficient if sent by first class United States Mail to the address shown below the party's signature. If a provision of the Agreement is invalid or unenforceable, the remainder may be enforced to the fullest extent permitted by law. This Agreement may be executed in multiple original counterparts. The Agreement will bind and inure to the benefit of the parties' permitted successors and assigns. The headings herein will not in any way affect the Agreement. The Agreement is the entire agreement of the parties and supersedes all prior agreements and understandings, both written and oral, with respect to the subject matter hereof. The Agreement may not be amended, changed or modified except by written agreement executed by both parties hereto. Idaho Code Section 9-505 -6- provides that a promise or commitment to lend money or to grant or extend credit in an original principal amount of Fifty Thousand Dollars ($50,000) or more, made by a person or entity engaged in the business of lending money or extending credit, must be in writing to be enforceable. IN WITNESS WHEREOF, Lessee and Lessor have executed this Agreement as of the date first above written. CITY OF EAGLE, IDAHO "Lessee" (SEAL) By: Its: Attested and Countersigned: Lessee's Clerk Notice address: 310 East State Street Eagle, Idaho 83616 Attention: Sharon Moore, City Treasurer WELLS FARGO BROKERAGE SERVICES, LLC "Lessor" By: Its: Vice President Notice address: Wells Fargo Bank Northwest, National Association Corporate Trust Services MAC U1859-031 999 Main Street, 3rd Floor Boise, Idaho 83702 -7- EXHIBIT "A" PAYMENT SCHEDULE (Subject to Annual Appropriation) (to come) -8- EXHIBIT "B" THE IMPROVEMENTS DESCRIPTION 1. The street address of the Improvements is: 2. The legal description of the Land where the Improvements will be placed is as set forth below: See attached Legal Description of City's land Eagle Village, LLC — Lots 6 & 7, Parcel I and Parcel II, egress and ingress 3. The description of the Improvements to be constructed is as follows: Construction of a new City Hall on the property for public use, including the telephone system, audio-visual system, furniture, fixtures and equipment, and the exterior monument sign leased from Lessor. -9- EXHIBIT "B-1" DATE: 1. GENERAL IMPROVEMENTS INFORMATION: CONSTRUCTION OF A NEW CITY HALL ON LAND PREVIOUSLY LEASED THROUGH WELLS FARGO BROKERAGE SERVICES, LLC. 2. PAYMENT AMORTIZATION SCHEDULE: The Improvements and Land Cost to be paid by Lessor $4,000,000.00 Less Down Payment $ 0.00 Equals Amount Financed $4,000,000.00 Lessee will pay 15 payments per the amortization schedule attached herein as Exhibit "A" each on a annual basis starting on 3. THIS OBLIGATION EARNS INTEREST AT AN ANNUAL PERCENTAGE RATE OF 5.37%. The payments herein will be composed of principal and interest. In the event of changes in the Annual Percentage Rate due to events as outlined in 1.6 (q) of this Agreement (Tax Indemnification), this payment and amortization schedule will be modified to seller's equivalent taxable annual percentage rate in order to preserve Seller's anticipated after tax yield. 4. The minimum amount of insurance to be provided by Lessee with respect hereto is as follows: Please provide a copy of your insurance. See copy of insurance rider attached herein. 5. LESSEE'S BILLING ADDRESS: 310 East State Street Eagle, Idaho 83616 6. ADDRESS PAYMENTS TO (Place of Payment): Wells Fargo Brokerage Services, LLC 608 Second Avenue South, Fifth Floor Attn: Mary Webster P.O. Box 1450 Minneapolis, MN 55485-8210 or as directed by Lessor. 7. PREPAYMENT - OPTION PRICE: The After Payment Termination Value is the Option Price and is found on the amortization schedule, attached hereto as Exhibit A, and this lease can be paid off early in full on any payment date.