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HomeMy WebLinkAboutWaterloo Development Corporation-4/16/2012 (2)Please return this copy to: City Clerk & Finance Department 715 Mulberry Street Waterloo, IA 50703 EXHIBIT B LEASE PURCHASE AGREEMENT BETWEEN CITY AND DEVELOPER This Lease Purchase Agreement, is made and entered into as of the I 1a1 day of L , 2012 (the "Lease Purchase Agreement" or "Lease"), by and betwe n the City of Waterloo, Iowa, a duly organized political subdivision of the State of Iowa (the "City"), and Waterloo Development Corporation, an Iowa nonprofit corporation (the "Developer"). "Parties" are City and Developer. WITNESSETH: WHEREAS, the Developer and City have entered into a Development and Property Transfer Agreement dated December 19, 2011 (the "Development Agreement"), which Development Agreement provides that the Developer will privately finance and construct a public sportsplex facility (the "Improvements" (as defined in the Development Agreement)) on certain City -owned property more specifically described on Exhibit "A" attached hereto (the "Property"), which Developer will then lease to City, with a right on the part of the City to purchase the same at the end of the lease term; and WHEREAS, this Lease Purchase Agreement shall provide the terms and conditions of the lease of the Improvements, management of the Improvements by the City, and potential purchase of the Improvements by the City from the Developer; and WHEREAS, the Developer proposes to lease the Property and the Improvements to the City, and the City desires to lease the Property and the Improvements from the Developer, upon the terms and conditions set forth in this Lease. LEASING CLAUSE The Developer hereby leases to the City, and the City hereby leases and takes from the Developer, the following: (i) All of the Developer's right, title and interest in the Property; and (ii) The Improvements situated or to be situated thereon, together with all items of Furnishings which are or will be situated on or in the Property. TERM AND CONSIDERATION TO HAVE AND TO HOLD the Property unto the City, in consideration of the Rent provided in Section 4.01 of this Lease Purchase Agreement to be paid by the City 1 and the terms, covenants and conditions to be performed and kept by the City commencing on the Effective Date, for a term as defined in Section 3.02. This Lease Purchase Agreement is granted and accepted in consideration of the following representations, terms, covenants and conditions of the parties, and the Developer and the City hereby agree to keep and perform all the terms, covenants and conditions hereof on their part to be kept and performed as follows: ARTICLE I DEFINITIONS Section 1.01. Defined Terms Generally. In addition to the words and terms elsewhere defined in this Lease or in the Development Agreement, the following words and terms as used in this Lease shall have the following meanings unless the context or use indicates another or different meaning or intent and such definitions shall be equally applicable to both the singular and plural forms of any of the words and terms herein defined: "Business Day" means any day other than a Saturday, a Sunday, a day on which banking institutions are authorized by law to close for general banking purposes in the State of Iowa or a day on which the City offices are not open for the transaction of business. "Contractors" means each general contractor, subcontractor or material supplier providing services or materials or both for the construction or installation of the Project. "Effective Date" means the date defined in Section 3.02(1). "Event of Default" means an Event of Default described in Section 10.01 of this Lease Purchase Agreement which has not been cured. "Furnishings" means the items defined in Section 5.02. "Hazardous Materials" means, without limitation, any flammable explosives, radioactive materials, hazardous waste, hazardous or toxic substances or related materials defined in the Comprehensive Environmental Response, Comprehensive and Liability Act of 1980, as amended (42 U.S.C. SS 9601, et. seq.) and The Hazardous Materials Transportation Act, as amended (40 U.S.C. SS 1801, et. seq.), and the regulations adopted and publications promulgated pursuant thereto, or any other federal, state, or environmental law, ordinance, name, or regulation with respect to such materials. 2 "Indebtedness" means all outstanding Project -related indebtedness of the Developer related to the Improvements as defined by Section 13.01. "Lease Term" or "Term" means the period during which this Lease is in effect pursuant to Section 3.02. "Lease Termination Date" means the date defined in Section 3.02(2). "Notice of Purchase Right" means the notice described in Section 13.01(1). "Notice of Termination of Lease Purchase Agreement" means the notice described in Section 13.01(2). "Project" means the construction and operation of the Improvements as defmed in the Development Agreement. "Project -related indebtedness" means indebtedness relating to the construction of the Project. "Purchase Right" means the purchase right described in Section 13.01(1). "Put Option" means the option described in Section 13.01(2). "Put Option Termination Date" means the date described in Section 13.01(2)(a). "Rent" means rent payable to the Developer under Section 4.01 of this Lease. "Statement" means the detailed notarized written statement showing all Indebtedness, described in Section 13.01. "Special Warranty Deed" means the deed to the Property described in Section 13.01. "Surplus Income" means the amounts as defmed in Section 13.03. Section 1.02. Additional Provisions as to Interpretation. This Lease shall be interpreted in accordance with and governed by the laws of the State of Iowa. The words "herein" and "hereof' and words of similar import, without reference to any particular section or subdivision, refer to this Lease as a whole rather than to any particular section or subdivision hereof. 3 References herein to any particular section or subdivision hereof are to the section or subdivision of this instrument as originally executed. ARTICLE II REPRESENTATIONS Section 2.01. Representations by the City. The City makes the following representations: (1) The City is a duly organized and existing municipal corporation of the State of Iowa. (2) The execution and delivery of this Lease Purchase Agreement and the performance of all covenants and agreements of the City contained in this Lease Purchase Agreement are authorized by the Constitution and laws of the State of Iowa and the execution, delivery, and performance of this Lease Purchase Agreement by the City are authorized and have been duly authorized by resolution of the City. (3) The City has not made, done, executed or suffered and warrants that it will not make, do, execute or suffer any act or thing whereby its leasehold interest in the Property may be impaired or charged or encumbered other than as provided herein. (4) There is no litigation pending or, to the best of its knowledge, threatened against the City relating to this Lease Purchase Agreement or questioning the organization, powers or authority of the City. (5) The execution and delivery of this Lease and the consummation of the transactions herein contemplated will not materially conflict with or constitute a material breach of or default under any bond, debenture, note or other evidence of indebtedness or any contract, loan agreement or lease to which the City is a party or by which it is bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of the City contrary to the terms of any instrument or agreement. (6) The City will maintain Property at all times free of Hazardous Material or other material, the removal of which is required or the maintenance of which is prohibited or penalized under any federal, state, or local law 4 (7) The City confirms that the Property is properly zoned for the uses thereof contemplated by the Development Agreement. (8) This Lease Purchase Agreement is a valid and legally binding instrument of City, enforceable in accordance with its material terms, except as the same may be limited by bankruptcy, insolvency, reorganization, or other laws relating to or affecting creditors' rights generally. Section 2.02. Representations by the Developer. The Developer makes the following representations: (1) The Developer is a nonprofit corporation duly organized and validly existing and in good standing and is authorized to transact business in the State of Iowa. (2) Neither the execution and delivery of this Lease Purchase Agreement nor the covenants, agreements or obligations of the Developer under this Lease Purchase Agreement constitute a material default (or an event which, with notice or the lapse of time, or both, would constitute a material default) under any contract, agreement or other instrument or document to which the Developer is a party or by which the Developer or its property is bound. The execution and delivery of this Lease Purchase Agreement by the Developer and the observance and performance by the Developer of its covenants, agreements and obligations under this Lease Purchase Agreement do not require the consent or approval of any governmental authority which has not been obtained. (3) The Developer has duly authorized by proper corporate action its execution, delivery, observance and performance of this Lease Purchase Agreement. Assuming the due authorization, execution and delivery thereof by the City, this Lease Purchase Agreement and all instruments and documents contemplated in this Lease Purchase Agreement which are executed and delivered by the Developer constitute and will constitute legal, valid, binding and enforceable obligations or representations, as the case may be, of the Developer , except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and except to the extent that the enforceability thereof may be affected by general principles of equity. 5 (6) Neither this Lease Purchase Agreement nor the covenants, agreements or obligations of the Developer under this Lease Purchase Agreement contravene the Developer's articles of incorporation or by-laws, or violate in any material respect any statute, rule, regulation or other law, or any court or administrative order, applicable to the Developer. ARTICLE III TITLE AND TERM Section 3.01. Title. During the term of this Lease Purchase Agreement, and so long as City is not in default as provided in Article X (and which default has not been cured), title to the Property and Improvements and any and all repairs, replacements, substitutes and modifications to the Property or Improvements shall be in City, although a Special Warranty Deed to the Property shall not be issued by Developer to the City until the City exercises its Purchase Right under Section 13.01(1). Section 3.02. Term. (1) Effective Date: No party has any rights or obligations under this Lease Purchase Agreement until the Improvements (Phase I) have been completed, the Improvements have been initially equipped pursuant to Section 5.02 of this Lease Purchase Agreement, and the City has issued a certificate of occupancy. No certificate of occupancy shall be issued by the City until the Improvements have been initially equipped pursuant to Section 5.02 of this Lease Purchase Agreement. The effective date of this Lease Purchase Agreement ("Effective Date") is the date the City issues the certificate of occupancy. As of the Effective Date, possession of the Improvements and title to the Improvements is automatically transferred from Developer to City for the management and operation of Improvements ("Management Services") under Article VI of this Lease Purchase Agreement. (a) The Improvements are contemplated to be constructed in two Phases, Phase I and Phase II. The Effective Date as defined above refers to the completion of Phase I of the Improvements. Upon the completion of Phase II of the Improvements (if Phase II is approved and constructed pursuant to the Development Agreement), the City will automatically assume a title and leasehold interest in the Phase II Improvements, as well as the Management Services of the Phase II Improvements. 6 (2) Term: The term of this Lease Purchase Agreement ("Term") shall commence on the Effective Date and shall continue thereafter for eight (8) years ("Lease Termination Date"), unless earlier terminated pursuant to the provisions of this Lease Purchase Agreement or the Development Agreement. The Lease Purchase Agreement may be terminated earlier than the Lease Termination Date under the following circumstances: (a) The occurrence of an Event of Default, which is not cured, which results in termination of this Lease Purchase Agreement under Section 10.02; (b) The exercise by the City of its option to purchase the Property and Improvements through the Purchase Right in Section 13.01(1) or (c) The exercise of the Put Option by the City under Section 13.01(2). ARTICLE IV RENT Section 4.01. Rent Payment. City shall make a rent payment of $100.00 per year each January 1. The first rent payment shall be a prorated amount if the Effective Date of the Lease Purchase Agreement is before January 1 and shall be paid within five (5) Business Days of the Effective Date. Payments due on January 1 are timely if made within five (5) Business Days of January 1. The rent payment is payable solely and only from the net revenues of the Improvements and not from the City's general fund. ARTICLE V FURNISHINGS, USE, MAINTENANCE AND TAXES Section 5.01. Relationship between the Parties. The relationship between the City and Developer is an independent contractor relationship and not one of employment, agency, partnership or other type of relationship. below: Section 5.02. Furnishings. Furnishings for the Improvements shall be as provided (1) The Developer shall provide at its sole cost and expense a turnkey multi- use recreational and athletic facility that shall include all furnishings, fixtures, and equipment ("Furnishings") necessary for the operation of the Improvements, including without limitation, all sporting and fitness equipment and supplies, tables, chairs, tableware and all other equipment 7 necessary for the operation of the Improvements, but not to exceed, in the aggregate, the amount provided for such Furnishings in the construction budget as set forth in the plans and specifications approved by the parties. The Developer guarantees that the Furnishings will be sufficient to provide the services of a multi -use community recreational and athletic facility as of the Effective Date. (2) The Furnishings and location for the installation of the same shall be mutually agreed upon by the Developer and the City. Section 5.03. Use of Leased Property. The City covenants that throughout the term hereof it will use and operate the Property and Improvements as public property in furtherance of its essential governmental functions, as further provided herein, and in compliance with all laws, regulations and ordinances applicable thereto. Section 5.04. Quiet Enjoyment. The City acknowledges that as of the Effective Date it is in possession of the Property and Improvements. The Developer agrees that the City upon paying the Rent and performing the covenants herein agreed by it to be performed shall and may peaceably and quietly have, hold, and enjoy the said Property and Improvements for the Lease Term. The Developer shall have the right at all reasonable times during the Lease Term to enter the Property for the purpose of examining or inspecting the Property and Improvements. Nothing in this Section shall imply any duty upon the part of the Developer to examine the Property and Improvements or to do or pay for any work which under any provision of this Lease Purchase Agreement the City is required to perform, and the performance thereof by the Developer shall not constitute a waiver of the City's default in failing to perform the same. Section 5.05. Net Lease. This is a net lease and, as of and after the Effective Date, the Developer shall not be required to make any expenditures whatsoever in connection with the Improvements or the Property or to make any repairs or to maintain the Improvements. Section 5.06. Maintenance of Property and Improvements by City. The City agrees that during the Lease Term it will keep the Property in good repair and good operating condition at its own cost, and upon the expiration or termination of the Lease Term it will, unless it shall have elected to exercise its option to purchase the Property via the Purchase Right, surrender the Property and Improvements to the Developer in as good condition as prevailed at the time it was put in full possession thereof, loss by fire or other casualty covered by insurance, ordinary wear and tear, obsolescence and acts of God excepted, subject to the provisions of Section 5.07 of this Lease Purchase Agreement. 8 Section 5.07. Alterations. The City shall have the privilege of remodeling the Property and Improvements or making alterations, additions, modifications and improvements to the Property and Improvements from time to time as the City, in its discretion exercised after consultation with the Developer, may deem to be desirable for its uses and purposes, provided that such alterations, additions, modifications and improvements shall not adversely affect the structural integrity or value of the Property and Improvements and shall be located within the boundaries of the said Property and Improvements. The cost of such alterations, additions, modifications and improvements shall be paid by the City and the same shall be the property of the City and be included under the terms of this Lease Purchase Agreement as and shall become part of the Property and Improvements. Section 5.08. Removal of Leased Equipment. The Developer shall not be under any obligation to renew, repair or replace any inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary equipment constituting part of the Property and Improvements. The City shall have the privilege from time to time of substituting for Property and Improvements, furnishings, machinery, equipment and related property, provided that such property so substituted shall not impair the operating unity or productive capacity of the Property and Improvements. Any such substituted property shall become the property of the City and be included under the terms of this Lease Purchase Agreement. The City may also at any time while it is not in default under this Lease remove from the Property or Improvements any machinery or equipment purchased and installed by it pursuant to this Section 5.08. In the event any removal of machinery or equipment under this Section causes damage to existing buildings or structures, the City shall restore the same or repair such damage at its sole expense. Section 5.09. Taxes, Other Governmental Charges and Other Charges. The City will pay, as the same respectively become due, all taxes, special assessments, and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Property or Improvements or any Furnishings, equipment or other property, including sales, use and other excise taxes, and all claims for rent, royalties, labor, materials, supplies, utilities and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Property and Improvements. The City may, at its expense and in its own name and behalf or in the name and behalf of the Developer in good faith contest any such taxes, payments in lieu of taxes, assessments and other charges and, in the event of any such contest, may permit the taxes, payments in lieu of taxes, assessments or other charges so contested to remain 9 unpaid during the period of such contest and any appeal therefrom. The Developer will cooperate with the City in permitting the City to conduct any such contest. Section 5.10. Payment of Permits and Licenses; Sales and Use Taxes. The City shall apply, procure and pay for and maintain all permits and licenses that are required or necessary for the management, use, or operation of the Improvements. The Developer shall fully cooperate with the City with its efforts as they relate to licenses and permits and shall execute any and all agreements, instruments and documents and take such actions to accomplish these purposes. The City shall pay the cost of all applicable licenses, permits, or sales and use taxes or other fees or expenses required to operate the Improvements. Section 5.11. Payment of Utilities. The City shall make application for, obtain and pay for, and be solely responsible for, all utilities required, used, or consumed on the Property and the improvements thereon, including, but not limited to gas, water, electricity, sewer service, garbage collection services, or any similar service. Section 5.12. Capital Cost Responsibilities. As of the Effective Date, the City shall be responsible for all costs for the repair or maintenance of the Improvements that are defined under generally accepted accounting principles as "capital" costs. Section 5.13. Hazardous Materials. The City agrees promptly: (1) to transmit to the Developer copies of any governmental citations, orders or notices received with respect to Hazardous Materials which may result in a penalty, liability, or cost greater than $1,000; (2) to observe and comply with any and all laws, ordinances, rules, regulations, licensing requirements or conditions relating to the use, maintenance or disposal of Hazardous Materials and all orders or directives from any official, court, or governmental agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment, or other disposal of such Hazardous Material; and (3) to pay or otherwise dispose of any fine, charge, or imposition relating thereto which, if unpaid, would constitute a lien upon Property or any part thereof. 10 ARTICLE VI MANAGEMENT SERVICE Section 6.01. Management Services. As of the Effective Date, the Developer hereby grants to the City the exclusive right and license to perform the following services ("Management Services") and the City accepts the responsibility of performing the Management Services, subject to the terms and conditions contained in this Lease Purchase Agreement: (1) Operate, manage, market, and determine programming and services of the Improvements. (a) City will receive all revenues and be responsible for all operating costs, beginning on the Effective Date of this Lease Purchase Agreement. All revenues generated by the Improvements shall be subject to the control and direction of the City. The City shall keep separate records of all income and expenditures. (b) City shall annually, as part of the regular City budget, prepare a budget for the operation of the Improvements, and shall annually account to the Developer for all income received and expenditures made in respect of operation of the Improvements or Property, which may nonetheless be deposited to or withdrawn from the City's general fund, as the City shall determine. All operating income shall be used to defray current operating expenses of the completed Improvements, to maintain equipment replacement and other operating reserves at the levels established in the annual budget for the Improvements approved by the City Council, to reimburse the City for its Project -related expenses (but not including the costs of acquiring the Property), and otherwise shall be retained and used exclusively for other budgeted Project purposes, including but not limited to the cost of any future phase of the Improvements, and the funding, to the maximum extent possible consistent with the expense payments and funding allocations described above, of a debt service reserve for the payment at the Lease Termination Date of any outstanding Project -related indebtedness of the Developer (regardless of whether City exercises its Purchase Right). (2) Provide and sell, and/or sublicense for the provision and sale of, all food, beverages, souvenirs, merchandise, printed materials and any other items or services at the Improvements. 11 (3) Provide, at City's cost, all services required for the operation, management, marketing, and programming of the Improvements, including, but not limited to, the employment and/or contracting of staff for the Improvements. (4) Determine and impose admission costs, if any, to patrons of all events held at the Improvements and charges, if any, for the use of the Improvements. (5) Determine all programming and maintain all schedules for activities and events held at the Improvements. (6) Cooperate with the Cedar Valley Sports Commission and the Convention and Visitors' Bureau in the marketing of the Improvements. Section 6.02. Compensation to City. City shall not be entitled to any compensation from Developer for the Management Services described in this Lease Purchase Agreement. Section 6.03. Management Standards. Except as otherwise provided in this Lease Purchase Agreement, the City will comply with the following minimum standards for the operation of the Improvements: (1) The City will provide management, supervision, and direction for the Improvements comparable to the other Waterloo Leisure Services operations, including but not limited to the following standards of facility maintenance: (a) Operate the Improvements as an attractive and high-quality multi- use community recreational and sports facility (b) Use the Waterloo Leisure Service Departments' existing communication systems to inform and attract patrons to the Improvements. (c) No later than the Effective Date, adopt a written, comprehensive, maintenance management plan to address specific custodial practices, maintenance practices, and preventative maintenance to be undertaken on a daily, weekly, monthly or annual basis, and related requirements for staffing, resources, and recordkeeping. Said plan shall be subject to review and approval by the Developer, which consent shall not be unreasonably withheld, conditioned or delayed. 12 (d) During each third year of the Lease Term, engage the services of a recreation facilities operations consultant of the City's choice to review City's operation of the Improvements and its marketing methods and take affirmative measures to implement reasonable recommendations made by the consultant. (2) The City shall operate and conduct all operations of the Improvements with the objective that all persons who patronize the Improvements shall be treated in an orderly, safe, non-discriminatory and courteous manner. (3) The City shall act reasonably to prevent any nuisance or hazardous activity to occur at, on, about or within the Improvements. ARTICLE VII MAINTENANCE OF RECORDS Section 7.01. Maintenance of Records. City will keep at all times proper books of record and account in which full, true and correct entries will be made of all dealings and transactions of or in relation to the business and affairs of City in connection with this Lease Purchase Agreement. ARTICLE VIII INSURANCE Section 8.01. Insurance Requirements. Pursuant to Section 11.1(b) of the Development Agreement, City shall ensure that property, liability and worker's compensation insurance coverage is in effect as of the Effective Date of this Lease Purchase Agreement through the Lease Termination Date. Developer shall be named as an additional insured on each policy maintained by City that is required by this Lease Purchase Agreement or the Development Agreement. Section 8.02. Fire and Extended Coverages and Boiler and Machinery Insurance. The City may self -insure against damage to or destruction of the Property and Improvements in the same manner as the City insures itself against damage to or destruction of other property of the City, or the City may insure such property under a blanket insurance policy or policies which cover not only the Property and Improvements but other properties of the City, which policy or policies may contain such reasonable deductible and coinsurance provisions as the City may deem necessary or appropriate and prudent. 13 Section 8.03. Damage and Repairs. In the event of damage to the In provements, City agrees to comply with Sections 11.1(d) and (e) of the Development Agreement. ARTICLE IX WARRANTIES Section 9.01. Design of Improvements. The Improvements have been designed by or on behalf of the Developer and the Contractors have been selected the Developer. Section 9.02. Architect's Covenants. The Developer agrees to include in its architectural design contract for design of the Improvements the requirement that the architect must agree to City's status as a third party beneficiary under that contract and must consent to City's right to enforce the Developer's rights under the architectural design contract. Section 9.03. Contractors' Covenants. The Developer agrees to include in its contract documents for construction of the Improvements the requirement that the Contractor(s) must agree to City's status as a third party beneficiary under that contract, must consent to City's right to enforce the Developer's rights under the contract documents and must secure a maintenance bond as described by the Development Agreement. Section 9.04. Enforcement by City. The Developer hereby assigns to the City for and during the Lease Term and at all times thereafter, all of its interest in all architect and Contractor warranties and guarantees, express or implied, issued on or applicable to the Property or Improvements. The Developer agrees that City shall be entitled to enforce the warranties and guarantees of the architect and the Contractor(s) assigned to Developer as above provided, and in consideration thereof, the City agrees not to assert or attempt enforcement of any such warranty or guarantee with respect to the design or construction of the Improvements against the Developer, or to attempt the recovery of damages from Developer on account of any breach or failure to observe such warranties or guarantees. ARTICLE X DEFAULT AND REMEDIES Section 10.01. In General. Each of the following shall constitute an Event of Default under this Lease Purchase Agreement: (1) Occurrence of an Event of Default under the Development Agreement. (2) Developer files or is the subject of any voluntary or involuntary petition in 14 (3) bankruptcy under Title 11 of the U.S. Code or any other formal or informal proceeding for dissolution, liquidation, settlement, composition, readjustment, or similar relief under any other state or federal law, or Developer admits in writing its inability to pay its debts generally as they become due. Any party is in default under the terms of this Lease Purchase Agreement or is in breach of any material provision of this Lease Purchase Agreement, or Developer is otherwise in breach of any covenants that run with the land pursuant to the Deed or the Development Agreement. (4) Any representation or warranty made by Developer in this Lease Purchase Agreement or the Development Agreement, any Exhibit thereto, or in any written statement or certificate furnished by Developer pursuant to this Lease Purchase Agreement or Development Agreement, shall prove to have been incorrect, incomplete or misleading in any material respect on or as of the date of the issuance or making thereof. (5) Failure by either party to substantially observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Lease Purchase Agreement or the Development Agreement. Section 10.02. Remedies on Default. Except as otherwise provided in this Lease Purchase Agreement or the Development Agreement, in the event of any default or breach of this Lease Purchase Agreement, or any of its terms or conditions, by either party herein, or any successor to such party, such party (or successor) shall, upon written notice from the other, proceed immediately to cure or remedy such default or breach, and in any event within thirty (30) days after receipt of such notice; provided, however, that no such opportunity to cure shall be allowed in the event of a default under subsections (2) or (4) of Section 10.01. If any such other default or breach remains unremedied after such thirty (30) day period, the non -defaulting party shall, without limitation, have the right to (i) suspend the non -defaulting party's performance under this Lease Purchase Agreement, (ii) require payment by the defaulting party of any costs incurred by the non - defaulting party in connection with the default, (iii) terminate this Lease Purchase Agreement and the Development Agreement, and (iv) exercise any other remedy available under applicable law. Section 10.03. Other Rights and Remedies of City; No Waiver by Delay. City shall have the right to institute such actions or proceedings or to exercise any other remedies available under applicable law as it may deem desirable for effectuating the purposes of this Article; provided, that any delay by City in instituting or prosecuting any such actions or proceedings or otherwise asserting its rights under this Article shall not operate as a waiver of such rights or to deprive it of or limit such rights in any way; nor 15 shall any waiver in fact made by City with respect to any specific default by Developer under this Article be considered or treated as a waiver of the rights of City with respect to any other defaults by Developer under this Article or with respect to the particular default except to the extent specifically waived in writing. Section 10.04. Enforced Delay in Performance for Causes Beyond Control of Party. Performance by any party under this Lease Purchase Agreement shall be subject to Unavoidable Delays. Section 10.05. Rights and Remedies Cumulative. The rights and remedies of the parties to this Lease Purchase Agreement, whether provided by law or by this Lease Purchase Agreement, shall be cumulative, and the exercise by either party of any one or more of such remedies shall not preclude the exercise by it, at the same time or at different times, of any other such remedies for the same default or breach or of any of its remedies for any other default or breach by the other party. No waiver made by either such party with respect to the performance, or manner or time thereof, or any obligation of the other party or any condition to its obligations under this Lease Purchase Agreement shall be considered a waiver of any rights of the party making the waiver with respect to the particular obligation of the other party or condition to its own obligation beyond those expressly waived in writing and to the extent thereof, or a waiver in any respect in regard to any other rights of the party making the waiver or any other obligations of the other party. Section 10.06. Mortgagee's Option to Cure Defaults. Whenever City shall deliver any notice or demand to Developer with respect to any breach or default by Developer in its obligations or covenants under this Lease Purchase Agreement, City shall at the same time forward a copy of such notice or demand to each holder of any Mortgage authorized by the Development Agreement at the last address of such holder shown in the records of City. After any breach or default, each such holder (insofar as the rights of City are concerned) shall have the option to cure or remedy such breach or default and to add the cost thereof to the Mortgage debt and the lien of its Mortgage; provided, that if the breach or default is with respect to construction of the Improvements, nothing contained in this Section or any other Section of the Development Agreement shall be deemed to permit or authorize such holder, either before or after foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the Improvements (beyond the extent necessary to conserve or protect Improvements or construction already made) without first having expressly assumed the obligation to City, by written agreement satisfactory to City, to complete, in the manner provided in the Development Agreement, the Improvements on the Property or the part thereof to which the lien or title of such Mortgage holder relates. 16 ARTICLE XI ASSIGNMENT AND LIENS Section 11.01. Assignment. Neither the Developer nor the City shall sell, assign, sublease or otherwise dispose of or encumber this Lease Purchase Agreement in any way without the prior written consent of the other party. Section 11.02. Liens or Encumbrancers. Developer shall comply with all provisions of the Development Agreement in regard to liens or other encumbrances on the Property or Improvements. ARTICLE XII PRE -LEASE OBLIGATIONS AND INDEMNIFICATION Section 12.01. Pre -Lease Obligations. Notwithstanding anything to the contrary in this Lease Purchase Agreement, the City shall not be responsible for any debts, mortgages, obligations, claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs ("Debt or Claims"), relating to the construction or equipping of the Improvements or for any Debt or Claims that occurred or accrued prior to the Effective Date. The Developer hereby agrees to indemnify, defend and hold harmless the City and its officers, commissioners, employees, agents, or representatives from and against any and all claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of, or relating to, Debt or Claims that occurred or accrued prior to the Effective Date. Section 12.02. Indemnification. To the extent authorized by law, the City hereby agrees to indemnify, defend and hold harmless the Developer and its officers, employees, agents, or representatives from and against any and all claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of, relating to, resulting from, or caused by the negligence or willful misconduct of the City, its officers, employees, agents, servants, subcontractors or representatives relating to the City's operation of the Improvements from the Effective Date until the Lease Termination Date. The City shall be given prompt notice of any claims for which the indemnification will be sought and shall be given full and complete cooperation from the Developer in the defense or settlement of all such claims, and shall be given full authority in the defense or settlement of any such 17 claims. Neither party shall have the authority to bind the other to any settlement without such party's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. The Developer hereby agrees to indemnify, defend and hold harmless the City and its officers, commissioners, employees, agents, or representatives from and against any and all claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of, or relating to claims regarding the construction or initial equipping of the Improvements and all claims that arose or accrued prior to the Effective Date, except as set forth in Article IX. ARTICLE XIII PURCHASE RIGHT AND PUT OPTION Section 13.01. Purchase Right or Put Option. Not more than 90 nor less than 30 days before the Lease Termination Date, the City may elect, at its sole discretion, to either purchase the Property and the Improvements for $1.00 from the Developer under the "Purchase Right" provision or terminate the Lease Purchase Agreement under the "Put Option" provision, both as described below: Prior to the exercise of either the Purchase Right or the Put Option, City shall conduct a lien search on the Property and Improvements and, within five (5) Business Days of the City's request, Developer shall provide City with a detailed notarized written statement ("Statement") showing all outstanding Project -related indebtedness of the Developer related to the Improvements ("Indebtedness"); (1) To exercise the Purchase Right: (a) If the City's lien search shows that the Developer's mortgage financing with respect to the Improvements (or any other liens) remains unpaid and/or if Developer's Statement shows there remains any Indebtedness, City may elect, in its sole discretion, to pay off any existing liens or allow such liens to remain on the Property and/or Improvements. City may also elect, in its sole discretion, to pay off any Indebtedness or allow such Indebtedness to remain as to the Property and/or Improvements. If the City elects, in its sole discretion, to proceed to exercise this Purchase Right, City shall deliver to Developer a Notice of Purchase Right election, referencing this Section of this Lease Purchase Agreement and $1.00. Within 30 days, Developer shall deliver to City (i) a Special Warranty Deed showing title in the Property and Improvements in 18 the name of the City and, if applicable, subject to any unpaid Indebtedness, and (ii) a bill of sale showing title in the Improvements in the name of the City. Each party shall execute such deeds, bills of sale, or other documents of transfer or conveyance as the other party may reasonably request to effectuate this Purchase Right; (b) If the lien search shows that the Developer's mortgage financing with respect to the Improvements (or any other liens) are fully paid and there is no Indebtedness, City may elect, in City's sole discretion, to proceed to exercise this Purchase Right. If the City elects, in its sole discretion, to proceed to exercise this Purchase Right, City shall deliver to Developer a Notice of Purchase Right election, referencing this Section of this Lease Purchase Agreement and $1.00. Within 30 days, Developer shall deliver to City (i) a Special Warranty Deed showing title in the Property and Improvements in the name of the City and (ii) a bill of sale showing title in the Improvements in the name of the City. Each party shall execute such deeds, bills of sale, or other documents of transfer or conveyance as the other party may reasonably request to effectuate this Purchase Right; (2) To exercise the Put Option: (a) City shall deliver a Notice of Termination of the Lease Purchase Agreement to Developer referencing this Section of this Lease Purchase Agreement, which notice shall state that the City desires to terminate this Lease Purchase Agreement in accordance with the Put Option of this Lease. Such Notice shall state that the Purchase Right is cancelled and shall set a date not earlier than 90 days from the date of such Notice of Termination, which date shall be the Put Option Termination Date of this Lease Purchase Agreement. As of the Put Option Termination Date, the City shall disclaim all right, title, or interest in the Property and Improvements, the Developer shall assume operation and management of the Property and Improvements, and the City shall have no further responsibility for the Property and Improvements. Each party shall immediately execute such documents of transfer or conveyance as the other party may reasonably request to effectuate the Put Option Termination as of the Put Option Termination Date. 19 (3) If City does not take affirmative steps to exercise the Put Option as described above not later than 30 days before the Lease Termination Date, the City will be deemed to have exercised the Purchase Right. Section 13.02. Handling of Funds upon Exercise of Purchase Right or Put Option. (1) Purchase Right: If at the time of exercise of the Purchase Right there remains any outstanding Indebtedness as shown by the Developer's Statement pursuant to Section 13.01, then any Surplus Revenues as defined in Section 13.03 shall be applied to such Indebtedness. If the Statement shows there is no Indebtedness, then the City shall retain all Surplus Revenues. (2) Put Option: If at the time of exercise of the Put Option there remains any outstanding Indebtedness as shown by the Developer's Statement pursuant to Section 13.01, then any Surplus Revenues as defined in Section 13.03 shall be applied to such Indebtedness. If the Statement shows there is no Indebtedness, then the City shall transfer all Surplus Revenues to the Developer; provided, however, that all such Surplus Revenues shall be used by the Developer exclusively for the purpose of operating, maintaining or enhancing the Improvements. Section 13.03. Surplus Revenues. For purposes of Section 13.02, any operating income remaining after the subtraction of the current annual operating expenses of the completed Improvements, including amounts budgeted for equipment replacement and other operating reserves at the levels established in the annual budget for the Improvements approved by the City Council and a debt service reserve for the payment at the Lease Termination Date of any outstanding Project -related indebtedness of the Developer, shall be called Surplus Revenue. Section 13.04. Relative Position of this Article and Article X. The rights and options granted to the City in this Article shall be and remain prior and superior to Article X hereof and may be exercised whether or not the City is in default under this Lease, provided that such default will not result in nonfulfillment of any condition to the exercise of such right or option. ARTICLE XIV MISCELLANEOUS Section 14.01. Notices. Any notice under this Lease Purchase Agreement shall be in writing and shall be delivered in person, by overnight air courier service, by United 20 States registered or certified mail, postage prepaid, or by facsimile (with an additional copy delivered by one of the foregoing means), and addressed: (a) if to City, to City of Waterloo, 715 Mulberry Street, Waterloo, Iowa 50703, facsimile number 319-291-4571, Attention: Mayor. (b) if to Developer, to Waterloo Development Corporation, 10 W. 4th Street, Suite 300, Waterloo, Iowa 50701, facsimile number 319-235-2353, Attention: Executive Vice President. Delivery of notice shall be deemed to occur (i) on the date of delivery when delivered in person, (ii) three (3) business days following the date of deposit if mailed by United States registered or certified mail, postage prepaid, or (iii) when transmitted by facsimile so long as the sender obtains written electronic confirmation from the sending facsimile machine that such transmission was successful. Section 14.02. Amendment, Modification, and Waiver. No amendment, modification, or waiver of any condition, provision, or term of this Lease Purchase Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or by its duly authorized representative, and specifying with particularity the extent and nature of the amendment, modification, or waiver. Any waiver by any party of any default by another party shall not affect or impair any rights arising from any subsequent default. Section 14.03. Severability of Provisions. Each provision, section, sentence, clause, phrase, and word of this Lease Purchase Agreement is intended to be severable. If any portion of this Lease Purchase Agreement shall be deemed invalid or unenforceable, whether in whole or in part, the offending provision or part thereof shall be deemed severed from this Lease Purchase Agreement and the remaining provisions of this Lease Purchase Agreement shall not be affected thereby and shall continue in full force and effect. If, for any reason, a court finds that any portion of this Lease Purchase Agreement is invalid or unenforceable as written, but that by limiting such provision or portion thereof it would become valid and enforceable, then such provision or portion thereof shall be deemed to be written, and shall be construed and enforced, as so limited. Section 14.04. Dispute Resolution. Any dispute, controversy, or claim arising out of or relating to this Lease Purchase Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, including the Emergency Interim Relief Procedures. Any award rendered shall be final and conclusive upon the parties and shall be accompanied by findings of fact and a statement of reasons for the decision. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. All costs and expenses, including attorneys' fees, shall be borne by the party determined to 21 be liable in respect of such dispute; provided, however, that if complete liability is not assessed against only one party, the parties shall share the total costs in proportion to their respective amounts of liability so determined. Except where clearly prevented by the area in dispute, the parties agree to continue performing their respective obligations under this Lease Purchase Agreement while the dispute is being resolved. Section 14.05. Entire Agreement. This Lease Purchase Agreement, together with the Development Agreement and Special Warranty Deed, constitutes the entire agreement of the parties and supersedes all prior or contemporaneous negotiations, discussions, understandings, or agreements, whether oral or written, with respect to the subject matter hereof. Section 14.06. No Third Party Beneficiaries. This Lease Purchase Agreement is not intended by any of the provisions hereof to make any person or entity not a party to this Lease Purchase Agreement a third party beneficiary hereunder, and is not intended to benefit any such third party. Section 14.07. Captions. All captions, headings, or titles in the paragraphs or sections of this Lease -Purchase Agreement are inserted only as a matter of convenience and/or reference, and they shall in no way be construed as limiting, extending, or describing either the scope or intent of this Lease -Purchase Agreement or of any provisions hereof. Section 14.08. Binding Effect. This Lease Purchase Agreement shall be binding and shall inure to the benefit of the parties and their respective successors, assigns, and legal representatives. Section 14.09. Time of Essence. Time is of the essence of this Lease Purchase Agreement. [Remainder of this page intentionally left blank. Signature pages to follow] 22 IN WITNESS WHEREOF, the City and the Developer have caused this Lease Purchase Agreement to be executed in their respective names and attested by duly authorized officers all as of the date set forth above. CITY OF WATERLOO, IOWA By: By. WATERLOO DEVELOPMENT CORPORATION By: west G. Clark, Mayor Daniel B. Watters, President Suzy S 4 es, City Clerk STATE OF IOWA ) ss. BLACK HAWK COUNTY ) On t \ LQ , 2012, before me, a Notary Public in and for the State of Iowa personal appeared Ernest G. Clark and SuzySchares, to me personally known, P Y Pp P Y who being duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Waterloo, Iowa, and that the instrument was signed on behalf of the corporation by authority of its City Cou i1, as contained in the resolution adopted by the City Council under Roll Call No. I < < on A " ` L_ I Lr , 2012, and that Ernest G. Clark and Suzy Schares acknowledged the execution of the instrument to be their voluntary act and deed and the voluntary act and deed of the corporation, by it voluntarily executed. 23 STATE OF IOWA ) ss. BLACK HAWK COUNTY ITY ) On __ , 2012, before me, a Notary Public in and for the State of Iowa, personally appeared Daniel B. Watters, to me personally known, who being by me duly sworn, did say that he is the President of Waterloo Development Corporation, and that said instrument was signed on behalf of the said corporation by authority of its board of directors; and Daniel B. Watters acknowledged the execution of said instrument to be the voluntary act and deed of the corporation by it voluntarily executed. aAL MICHELLE L1(LEINSCHMIDT o Commission Number 196198 • My Com_ �ssi9J;Expires U'Y Notary Public 24 -Itiimocitaid), 4"0( i4Fr7F EXHIBIT "A" Legal Description of Property All that part of Block Fourteen (14), including Twenty (20) foot alley, in the Original Plat, on the West Side of the Cedar River in the City of Waterloo, Black Hawk County, Iowa, EXCEPT That part of Twenty (20) foot alley in said Block Fourteen (14), lying Southeasterly of the Southwesterly extension of the Northwest line of the Southeast Forty (40) feet of Lot Three (3), said Block Fourteen (14), AND EXCEPT Lots One (1) and Two (2) and the Southeast Forty (40) feet of Lot (3), all in said Block Fourteen (14), AND EXCEPT Lots Nos. Nine (9) and Ten (10) except the. Southwesterly Thirty (30) feet of said Lots, in Block No. Fourteen (14). AND That part of the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, described as follows: Beginning at the most Southerly corner of Block Thirteen (13), aforesaid Original Plat; thence Northeasterly along the Southeasterly line of said Block Thirteen (13) to the most Easterly corner of said Block Thirteen (13); thence Southeasterly to the most Northerly corner of Block Fourteen (14), aforesaid Original Plat; thence Southwesterly along the Northwesterly line of said Block Fourteen (14) to the most Westerly corner of said Block Fourteen (14); thence Northwesterly to the point of beginning; AND That part of a parcel lying Southwest of Block Fourteen (14), the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, described as follows: Beginning at the most Southerly corner of aforesaid Block Fourteen (14); thence Southwest Thirty (30) feet along the Southwesterly extension of the Southeast line of said Block Fourteen (14); thence Northerly to the most Westerly corner of said Block Fourteen (14); thence Southeasterly along aforesaid Southwest line of Block Fourteen (14) to the point of beginning. AND All of Lots One (1), Two (2), Three (3), Four (4), Five (5), and Twenty (20) foot alley, Block Thirteen (13) in the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa. AND The Northeasterly One Hundred Ten (110) feet of Lots Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Thirteen (13) in the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, EXCEPT those parts conveyed to the State of Iowa in 607 CLD 684 AND EXCEPT those parts conveyed to the City of Waterloo in 661 CLD 853. AND That part of Lots Eight (8), Nine (9) and Ten (10), Block Thirteen (13), Original Plat of West Waterloo, Black Hawk County Iowa, bounded as follows: On the Northeast by the Southwest line of the Northeasterly One Hundred Ten (110) feet of said Lots Eight (8), Nine (9) and Ten (10); On the Northwest by the Northwesterly line of the Southeasterly Ten (10) feet of said Lot Eight (8); On the Southwest by a line drawn from a point on the Northwesterly line of said Southeasterly ten (10) feet of Lot Eight (8), which is One Hundred Eighteen (118) feet Southwest of the Northeasterly line of said Lot Eight (8), said line extending to a point on the Southeasterly line of said Lot Ten (10) which is One Hundred Thirty- seven and Five Tenths (137.5) feet Southwesterly of the Northeast corner of said Lot Ten (10). 25 EXHIBIT B LEASE PURCHASE AGREEMENT BETWEEN CITY AND DEVELOPER This Lease Purchase Agreement, is made and entered into as of the I 1.41 day of L , 2012 (the "Lease Purchase Agreement" or "Lease"), by and between the City of Waterloo, Iowa, a duly organized political subdivision of the State of Iowa (the "City"), and Waterloo Development Corporation, an Iowa nonprofit corporation (the "Developer"). "Parties" are City and Developer. WITNESSETH: WHEREAS, the Developer and City have entered into a Development and Property Transfer Agreement dated December 19, 2011 (the "Development Agreement"), which Development Agreement provides that the Developer will privately finance and construct a public sportsplex facility (the "Improvements" (as defined in the Development Agreement)) on certain City -owned property more specifically described on Exhibit "A" attached hereto (the "Property"), which Developer will then lease to City, with a right on the part of the City to purchase the same at the end of the lease term; and WHEREAS, this Lease Purchase Agreement shall provide the terms and conditions of the lease of the Improvements, management of the Improvements by the City, and potential purchase of the Improvements by the City from the Developer; and WHEREAS, the Developer proposes to lease the Property and the Improvements to the City, and the City desires to lease the Property and the Improvements from the Developer, upon the terms and conditions set forth in this Lease. LEASING CLAUSE The Developer hereby leases to the City, and the City hereby leases and takes from the Developer, the following: (i) All of the Developer's right, title and interest in the Property; and (ii) The Improvements situated or to be situated thereon, together with all items of Furnishings which are or will be situated on or in the Property. TERM AND CONSIDERATION TO HAVE AND TO HOLD the Property unto the City, in consideration of the Rent provided in Section 4.01 of this Lease Purchase Agreement to be paid by the City 1 and the terms, covenants and conditions to be performed and kept by the City commencing on the Effective Date, for a term as defined in Section 3.02. This Lease Purchase Agreement is granted and accepted in consideration of the following representations, terms, covenants and conditions of the parties, and the Developer and the City hereby agree to keep and perform all the terms, covenants and conditions hereof on their part to be kept and performed as follows: ARTICLE I DEFINITIONS Section 1.01. Defined Terms Generally. In addition to the words and terms elsewhere defined in this Lease or in the Development Agreement, the following words and terms as used in this Lease shall have the following meanings unless the context or use indicates another or different meaning or intent and such definitions shall be equally applicable to both the singular and plural forms of any of the words and terms herein defmed: "Business Day" means any day other than a Saturday, a Sunday, a day on which banking institutions are authorized by law to close for general banking purposes in the State of Iowa or a day on which the City offices are not open for the transaction of business. "Contractors" means each general contractor, subcontractor or material supplier providing services or materials or both for the construction or installation of the Project. "Effective Date" means the date defined in Section 3.02(1). "Event of Default" means an Event of Default described in Section 10.01 of this Lease Purchase Agreement which has not been cured. "Furnishings" means the items defined in Section 5.02. "Hazardous Materials" means, without limitation, any flammable explosives, radioactive materials, hazardous waste, hazardous or toxic substances or related materials defmed in the Comprehensive Environmental Response, Comprehensive and Liability Act of 1980, as amended (42 U.S.C. SS 9601, et. seq.) and The Hazardous Materials Transportation Act, as amended (40 U.S.C. SS 1801, et. seq.), and the regulations adopted and publications promulgated pursuant thereto, or any other federal, state, or environmental law, ordinance, name, or regulation with respect to such materials. 2 "Indebtedness" means all outstanding Project -related indebtedness of the Developer related to the Improvements as defined by Section 13.01. "Lease Term" or "Term" means the period during which this Lease is in effect pursuant to Section 3.02. "Lease Termination Date" means the date defined in Section 3.02(2). "Notice of Purchase Right" means the notice described in Section 13.01(1). "Notice of Termination of Lease Purchase Agreement" means the notice described in Section 13.01(2). "Project" means the construction and operation of the Improvements as defined in the Development Agreement. "Project -related indebtedness" means indebtedness relating to the construction of the Project. "Purchase Right" means the purchase right described in Section 13.01(1). "Put Option" means the option described in Section 13.01(2). "Put Option Termination Date" means the date described in Section 13.01(2)(a). "Rent" means rent payable to the Developer under Section 4.01 of this Lease. "Statement" means the detailed notarized written statement showing all Indebtedness, described in Section 13.01. "Special Warranty Deed" means the deed to the Property described in Section 13.01. "Surplus Income" means the amounts as defined in Section 13.03. Section 1.02. Additional Provisions as to Interpretation. This Lease shall be interpreted in accordance with and governed by the laws of the State of Iowa. The words "herein" and "hereof' and words of similar import, without reference to any particular section or subdivision, refer to this Lease as a whole rather than to any particular section or subdivision hereof. 3 References herein to any particular section or subdivision hereof are to the section or subdivision of this instrument as originally executed. ARTICLE II REPRESENTATIONS Section 2.01. Representations by the City. The City makes the following representations: (1) The City is a duly organized and existing municipal corporation of the State of Iowa. (2) The execution and delivery of this Lease Purchase Agreement and the performance of all covenants and agreements of the City contained in this Lease Purchase Agreement are authorized by the Constitution and laws of the State of Iowa and the execution, delivery, and performance of this Lease Purchase Agreement by the City are authorized and have been duly authorized by resolution of the City. (3) The City has not made, done, executed or suffered and warrants that it will not make, do, execute or suffer any act or thing whereby its leasehold interest in the Property may be impaired or charged or encumbered other than as provided herein. (4) There is no litigation pending or, to the best of its knowledge, threatened against the City relating to this Lease Purchase Agreement or questioning the organization, powers or authority of the City. (5) The execution and delivery of this Lease and the consummation of the transactions herein contemplated will not materially conflict with or constitute a material breach of or default under any bond, debenture, note or other evidence of indebtedness or any contract, loan agreement or lease to which the City is a party or by which it is bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of the City contrary to the terms of any instrument or agreement. (6) The City will maintain Property at all times free of Hazardous Material or other material, the removal of which is required or the maintenance of which is prohibited or penalized under any federal, state, or local law 4 (7) (8) The City confirms that the Property is properly zoned for the uses thereof contemplated by the Development Agreement. This Lease Purchase Agreement is a valid and legally binding instrument of City, enforceable in accordance with its material terms, except as the same may be limited by bankruptcy, insolvency, reorganization, or other laws relating to or affecting creditors' rights generally. Section 2.02. Representations by the Developer. The Developer makes the following representations: (1) The Developer is a nonprofit corporation duly organized and validly existing and in good standing and is authorized to transact business in the State of Iowa. (2) Neither the execution and delivery of this Lease Purchase Agreement nor the covenants, agreements or obligations of the Developer under this Lease. Purchase Agreement constitute a material default (or an event which, with notice or the lapse of time, or both, would constitute a material default) under any contract, agreement or other instrument or document to which the Developer is a party or by which the Developer or its property is bound. (3) The execution and delivery of this Lease Purchase Agreement by the Developer and the observance and performance by the Developer of its covenants, agreements and obligations under this Lease Purchase Agreement do not require the consent or approval of any governmental authority which has not been obtained. (4) The Developer has duly authorized by proper corporate action its execution, delivery, observance and performance of this Lease Purchase Agreement. (5) Assuming the due authorization, execution and delivery thereof by the City, this Lease Purchase Agreement and all instruments and documents contemplated in this Lease Purchase Agreement which are executed and delivered by the Developer constitute and will constitute legal, valid, binding and enforceable obligations or representations, as the case may be, of the Developer , except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and except to the extent that the enforceability thereof may be affected by general principles of equity. 5 (6) Neither this Lease Purchase Agreement nor the covenants, agreements or obligations of the Developer under this Lease Purchase Agreement contravene the Developer's articles of incorporation or by-laws, or violate in any material respect any statute, rule, regulation or other law, or any court or administrative order, applicable to the Developer. ARTICLE III TITLE AND TERM Section 3.01. Title. During the term of this Lease Purchase Agreement, and so long as City is not in default as provided in Article X (and which default has not been cured), title to the Property and Improvements and any and all repairs, replacements, substitutes and modifications to the Property or Improvements shall be in City, although a Special Warranty Deed to the Property shall not be issued by Developer to the City until the City exercises its Purchase Right under Section 13.01(1). Section 3.02. Term. (1) Effective Date: No party has any rights or obligations under this Lease Purchase Agreement until the Improvements (Phase I) have been completed, the Improvements have been initially equipped pursuant to Section 5.02 of this Lease Purchase Agreement, and the City has issued a certificate of occupancy. No certificate of occupancy shall be issued by the City until the Improvements have been initially equipped pursuant to Section 5.02 of this Lease Purchase Agreement. The effective date of this Lease Purchase Agreement ("Effective Date") is the date the City issues the certificate of occupancy. As of the Effective Date, possession of the Improvements and title to the Improvements is automatically transferred from Developer to City for the management and operation of improvements ("Management Services") under Article VI of this Lease Purchase Agreement. (a) The Improvements are contemplated to be constructed in two Phases, Phase I and Phase II. The Effective Date as defined above refers to the completion of Phase I of the Improvements. Upon the completion of Phase II of the Improvements (if Phase II is approved and constructed pursuant to the Development Agreement), the City will automatically assume a title and leasehold interest in the Phase H Improvements, as well as the Management Services of the Phase II Improvements. 6 (2) Term: The term of this Lease Purchase Agreement ("Term") shall commence on the Effective Date and shall continue thereafter for eight (8) years ("Lease Termination Date"), unless earlier terminated pursuant to the provisions of this Lease Purchase Agreement or the Development Agreement. The Lease Purchase Agreement may be terminated earlier than the Lease Termination Date under the following circumstances: (a) The occurrence of an Event of Default, which is not cured, which results in termination of this Lease Purchase Agreement under Section 10.02; (b) The exercise by the City of its option to purchase the Property and Improvements through the Purchase Right in Section 13.01(1) or (c) The exercise of the Put Option by the City under Section 13.01(2). ARTICLE IV RENT Section 4.01. Rent Payment. City shall make a rent payment of $100.00 per year each January 1. The first rent payment shall be a prorated amount if the Effective Date of the Lease Purchase Agreement is before January 1 and shall be paid within five (5) Business Days of the Effective Date. Payments due on January 1 are timely if made within five (5) Business Days of January 1. The rent payment is payable solely and only from the net revenues of the Improvements and not from the City's general fund. ARTICLE V FURNISHINGS, USE, MAINTENANCE AND TAXES Section 5.01. Relationship between the Parties. The relationship between the City and Developer is an independent contractor relationship and not one of employment, agency, partnership or other type of relationship. below: Section 5.02. Furnishings. Furnishings for the Improvements shall be as provided (1) The Developer shall provide at its sole cost and expense a turnkey multi- use recreational and athletic facility that shall include all furnishings, fixtures, and equipment ("Furnishings") necessary for the operation of the Improvements, including without limitation, all sporting and fitness equipment and supplies, tables, chairs, tableware and all other equipment 7 necessary for the operation of the Improvements, but not to exceed, in the aggregate, the amount provided for such Furnishings in the construction budget as set forth in the plans and specifications approved by the parties. The Developer guarantees that the Furnishings will be sufficient to provide the services of a multi -use community recreational and athletic facility as of the Effective Date. (2) The Furnishings and location for the installation of the same shall be mutually agreed upon by the Developer and the City. Section 5.03. Use of Leased Property. The City covenants that throughout the term hereof it will use and operate the Property and Improvements as public property in furtherance of its essential governmental functions, as further provided herein, and in compliance with all laws, regulations and ordinances applicable thereto. Section 5.04. Quiet Enjoyment. The City acknowledges that as of the Effective Date it is in possession of the Property and Improvements. The Developer agrees that the City upon paying the Rent and performing the covenants herein agreed by it to be performed shall and may peaceably and quietly have, hold, and enjoy the said Property and Improvements for the Lease Term. The Developer shall have the right at all reasonable times during the Lease Term to enter the Property for the purpose of examining or inspecting the Property and Improvements. Nothing in this Section shall imply any duty upon the part of the Developer to examine the Property and Improvements or to do or pay for any work which under any provision of this Lease Purchase Agreement the City is required to perform, and the performance thereof by the Developer shall not constitute a waiver of the City's default in failing to perform the same. Section 5.05. Net Lease. This is a net lease and, as of and after the Effective Date, the Developer shall not be required to make any expenditures whatsoever in connection with the Improvements or the Property or to make any repairs or to maintain the Improvements. Section 5.06. Maintenance of Property and Improvements by City. The City agrees that during the Lease Term it will keep the Property in good repair and good operating condition at its own cost, and upon the expiration or termination of the Lease Term it will, unless it shall have elected to exercise its option to purchase the Property via the Purchase Right, surrender the Property and Improvements to the Developer in as good condition as prevailed at the time it was put in full possession thereof, loss by fire or other casualty covered by insurance, ordinary wear and tear, obsolescence and acts of God excepted, subject to the provisions of Section 5.07 of this Lease Purchase Agreement. 8 Section 5.07. Alterations. The City shall have the privilege of remodeling the Property and Improvements or making alterations, additions, modifications and improvements to the Property and Improvements from time to time as the City, in its discretion exercised after consultation with the Developer, may deem to be desirable for its uses and purposes, provided that such alterations, additions, modifications and improvements shall not adversely affect the structural integrity or value of the Property and Improvements and shall be located within the boundaries of the said Property and Improvements. The cost of such alterations, additions, modifications and improvements shall be paid by the City and the same shall be the property of the City and be included under the terms of this Lease Purchase Agreement as and shall become part of the Property and Improvements. Section 5.08. Removal of Leased Equipment. The Developer shall not be under any obligation to renew, repair or replace any inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary equipment constituting part of the Property and Improvements. The City shall have the privilege from time to time of substituting for Property and Improvements, furnishings, machinery, equipment and related property, provided that such property so substituted shall not impair the operating unity or productive capacity of the Property and Improvements. Any such substituted property shall become the property of the City and be included under the terms of this Lease Purchase Agreement. The City may also at any time while it is not in default under this Lease remove from the Property or Improvements any machinery or equipment purchased and installed by it pursuant to this Section 5.08. In the event any removal of machinery or equipment under this Section causes damage to existing buildings or structures, the City shall restore the same or repair such damage at its sole expense. Section 5.09. Taxes, Other Governmental Charges and Other Charges. The City will pay, as the same respectively become due, all taxes, special assessments, and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Property or Improvements or any Furnishings, equipment or other property, including sales, use and other excise taxes, and all claims for rent, royalties, labor, materials, supplies, utilities and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Property and Improvements. The City may, at its expense and in its own name and behalf or in the name and behalf of the Developer in good faith contest any such taxes, payments in lieu of taxes, assessments and other charges and, in the event of any such contest, may permit the taxes, payments in lieu of taxes, assessments or other charges so contested to remain 9 unpaid during the period of such contest and any appeal therefrom. The Developer will cooperate with the City in permitting the City to conduct any such contest. Section 5.10. Payment of Permits and Licenses; Sales and Use Taxes. The City shall apply, procure and pay for and maintain all permits and licenses that are required or necessary for the management, use, or operation of the Improvements. The Developer shall fully cooperate with the City with its efforts as they relate to licenses and permits and shall execute any and all agreements, instruments and documents and take such actions to accomplish these purposes. The City shall pay the cost of all applicable licenses, permits, or sales and use taxes or other fees or expenses required to operate the Improvements. Section 5.11. Payment of Utilities. The City shall make application for, obtain and pay for, and be solely responsible for, all utilities required, used, or consumed on the Property and the improvements thereon, including, but not limited to gas, water, electricity, sewer service, garbage collection services, or any similar service. Section 5.12. Capital Cost Responsibilities. As of the Effective Date, the City shall be responsible for all costs for the repair or maintenance of the Improvements that are defined under generally accepted accounting principles as "capital" costs. Section 5.13. Hazardous Materials. The City agrees promptly: (1) to transmit to the Developer copies of any governmental citations, orders or notices received with respect to Hazardous Materials which may result in a penalty, liability, or cost greater than $1,000; (2) to observe and comply with any and all laws, ordinances, rules, regulations, licensing requirements or conditions relating to the use, maintenance or disposal of Hazardous Materials and all orders or directives from any official, court, or governmental agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment, or other disposal of such Hazardous Material; and (3) to pay or otherwise dispose of any fine, charge, or imposition relating thereto which, if unpaid, would constitute a lien upon Property or any part thereof. 10 ARTICLE VI MANAGEMENT SERVICE Section 6M1. Management Services. As of the Effective Date, the Developer hereby grants to the City the exclusive right and license to perform the following services ("Management Services") and the City accepts the responsibility of performing the Management Services, subject to the terms and conditions contained in this Lease Purchase Agreement: (1) Operate, manage, market, and determine programming and services of the Improvements. (a) City will receive all revenues and be responsible for all operating costs, beginning on the Effective Date of this Lease Purchase Agreement. All revenues generated by the Improvements shall be subject to the control and direction of the City. The City shall keep separate records of all income and expenditures. (b) City shall annually, as part of the regular City budget, prepare a budget for the operation of the Improvements, and shall annually account to the Developer for all income received and expenditures made in respect of operation of the Improvements or Property, which may nonetheless be deposited to or withdrawn from the City's general fund, as the City shall determine. All operating income shall be used to defray current operating expenses of the completed Improvements, to maintain equipment replacement and other operating reserves at the levels established in the annual budget for the Improvements approved by the City Council, to reimburse the City for its Project -related expenses (but not including the costs of acquiring the Property), and otherwise shall be retained and used exclusively for other budgeted Project purposes, including but not limited to the cost of any future phase of the Improvements, and the funding, to the maximum extent possible consistent with the expense payments and funding allocations described above, of a debt service reserve for the payment at the Lease Termination Date of any outstanding Project -related indebtedness of the Developer (regardless of whether City exercises its Purchase Right). (2) Provide and sell, and/or sublicense for the provision and sale of, all food, beverages, souvenirs, merchandise, printed materials and any other items or services at the Improvements. 11 (3) Provide, at City's cost, all services required for the operation, management, marketing, and programming of the Improvements, including, but not limited to, the employment and/or contracting of staff for the Improvements. (4) Determine and impose admission costs, if any, to patrons of all events held at the Improvements and charges, if any, for the use of the Improvements. (5) Determine all programming and maintain all schedules for activities and events held at the Improvements. (6) Cooperate with the Cedar Valley Sports Commission and the Convention and Visitors' Bureau in the marketing of the Improvements. Section 6.02. Compensation to City. City shall not be entitled to any compensation from Developer for the Management Services described in this Lease Purchase Agreement. Section 6.03. Management Standards. Except as otherwise provided in this Lease Purchase Agreement, the City will comply with the following minimum standards for the operation of the Improvements: (1) The City will provide management, supervision, and direction for the Improvements comparable to the other Waterloo Leisure Services operations, including but not limited to the following standards of facility maintenance: (a) Operate the Improvements as an attractive and high-quality multi- use community recreational and sports facility (b) Use the Waterloo Leisure Service Departments' existing communication systems to inform and attract patrons to the Improvements. (c) No later than the Effective Date, adopt a written, comprehensive, maintenance management plan to address specific custodial practices, maintenance practices, and preventative maintenance to be undertaken on a daily, weekly, monthly or annual basis, and related requirements for staffmg, resources, and recordkeeping. Said plan shall be subject to review and approval by the Developer, which consent shall not be unreasonably withheld, conditioned or delayed. 12 (d) During each third year of the Lease Term, engage the services of a recreation facilities operations consultant of the City's choice to review City's operation of the Improvements and its marketing methods and take affirmative measures to implement reasonable recommendations made by the consultant. (2) The City shall operate and conduct all operations of the Improvements with the objective that all persons who patronize the Improvements shall be treated in an orderly, safe, non-discriminatory and courteous manner. (3) The City shall act reasonably to prevent any nuisance or hazardous activity to occur at, on, about or within the Improvements. ARTICLE VII MAINTENANCE OF RECORDS Section 7.01. Maintenance of Records. City will keep at all times proper books of record and account in which full, true and correct entries will be made of all dealings and transactions of or in relation to the business and affairs of City in connection with this Lease Purchase Agreement. ARTICLE VIII INSURANCE Section 8.01. Insurance Requirements. Pursuant to Section 11.1(b) of the Development Agreement, City shall ensure that property, liability and worker's compensation insurance coverage is in effect as of the Effective Date of this Lease Purchase Agreement through the Lease Termination Date. Developer shall be named as an additional insured on each policy maintained by City that is required by this Lease Purchase Agreement or the Development Agreement. Section 8.02. Fire and Extended Coverages and Boiler and Machinery Insurance. The City may self -insure against damage to or destruction of the Property and Improvements in the same manner as the City insures itself against damage to or destruction of other property of the City, or the City may insure such property under a blanket insurance policy or policies which cover not only the Property and Improvements but other properties of the City, which policy or policies may contain such reasonable deductible and coinsurance provisions as the City may deem necessary or appropriate and prudent. 13 Section 8.03. Damage and Repairs. In the event of damage to the Iiprovements, City agrees to comply with Sections 11.1(d) and (e) of the Development Agreement. ARTICLE IX WARRANTIES Section 9.01. Design of Improvements. The Improvements have been designed by or on behalf of the Developer and the Contractors have been selected the Developer. Section 9.02. Architect's Covenants. The Developer agrees to include in its architectural design contract for design of the Improvements the requirement that the architect must agree to City's status as a third party beneficiary under that contract and must consent to City's right to enforce the Developer's rights under the architectural design contract. Section 9.03. Contractors' Covenants. The Developer agrees to include in its contract documents for construction of the Improvements the requirement that the Contractor(s) must agree to City's status as a third party beneficiary under that contract, must consent to City's right to enforce the Developer's rights under the contract documents and must secure a maintenance bond as described by the Development Agreement. Section 9.04. Enforcement by City. The Developer hereby assigns to the City for and during the Lease Term and at all times thereafter, all of its interest in all architect and Contractor warranties and guarantees, express or implied, issued on or applicable to the Property or Improvements. The Developer agrees that City shall be entitled to enforce the warranties and guarantees of the architect and the Contractor(s) assigned to Developer as above provided, and in consideration thereof, the City agrees not to assert or attempt enforcement of any such warranty or guarantee with respect to the design or construction of the Improvements against the Developer, or to attempt the recovery of damages from Developer on account of any breach or failure to observe such warranties or guarantees. ARTICLE X DEFAULT AND REMEDIES Section 10.01. In General. Each of the following shall constitute an Event of Default under this Lease Purchase Agreement: (1) Occurrence of an Event of Default under the Development Agreement. (2) Developer files or is the subject of any voluntary or involuntary petition in 14 (3) bankruptcy under Title 11 of the U.S. Code or any other formal or informal proceeding for dissolution, liquidation, settlement, composition, readjustment, or similar relief under any other state or federal law, or Developer admits in writing its inability to pay its debts generally as they become due. Any party is in default under the terms of this Lease Purchase Agreement or is in breach of any material provision of this Lease Purchase Agreement, or Developer is otherwise in breach of any covenants that run with the land pursuant to the Deed or the Development Agreement. (4) Any representation or warranty made by Developer in this Lease Purchase Agreement or the Development Agreement, any Exhibit thereto, or in any written statement or certificate furnished by Developer pursuant to this Lease Purchase Agreement or Development Agreement, shall prove to have been incorrect, incomplete or misleading in any material respect on or as of the date of the issuance or making thereof. (5) Failure by either party to substantially observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Lease Purchase Agreement or the Development Agreement. Section 10.02. Remedies on Default. Except as otherwise provided in this Lease Purchase Agreement or the Development Agreement, in the event of any default or breach of this Lease Purchase Agreement, or any of its terms or conditions, by either party herein, or any successor to such party, such party (or successor) shall, upon written notice from the other, proceed immediately to cure or remedy such default or breach, and in any event within thirty (30) days after receipt of such notice; provided, however, that no such opportunity to cure shall be allowed in the event of a default under subsections (2) or (4) of Section 10.01. If any such other default or breach remains unremedied after such thirty (30) day period, the non -defaulting party shall, without limitation, have the right to (i) suspend the non -defaulting party's performance under this Lease Purchase Agreement, (ii) require payment by the defaulting party of any costs incurred by the non - defaulting party in connection with the default, (iii) terminate this Lease Purchase Agreement and the Development Agreement, and (iv) exercise any other remedy available under applicable law. Section 10.03. Other Rights and Remedies of City; No Waiver by Delay. City shall have the right to institute such actions or proceedings or to exercise any other remedies available under applicable law as it may deem desirable for effectuating the purposes of this Article; provided, that any delay by City in instituting or prosecuting any such actions or proceedings or otherwise asserting its rights under this Article shall not operate as a waiver of such rights or to deprive it of or limit such rights in any way; nor 15 shall any waiver in fact made by City with respect to any specific default by Developer under this Article be considered or treated as a waiver of the rights of City with respect to any other defaults by Developer under this Article or with respect to the particular default except to the extent specifically waived in writing. Section 10.04. Enforced Delay in Performance for Causes Beyond Control of Party. Performance by any party under this Lease Purchase Agreement shall be subject to Unavoidable Delays. Section 10.05. Rights and Remedies Cumulative. The rights and remedies of the parties to this Lease Purchase Agreement, whether provided by law or by this Lease Purchase Agreement, shall be cumulative, and the exercise by either party of any one or more of such remedies shall not preclude the exercise by it, at the same time or at different times, of any other such remedies for the same default or breach or of any of its remedies for any other default or breach by the other party. No waiver made by either such party with respect to the performance, or manner or time thereof, or any obligation of the other party or any condition to its obligations under this Lease Purchase Agreement shall be considered a waiver of any rights of the party making the waiver with respect to the particular obligation of the other party or condition to its own obligation beyond those expressly waived in writing and to the extent thereof, or a waiver in any respect in regard to any other rights of the party making the waiver or any other obligations of the other party. Section 10.06. Mortgagee's Option to Cure Defaults. Whenever City shall deliver any notice or demand to Developer with respect to any breach or default by Developer in its obligations or covenants under this Lease Purchase Agreement, City shall at the same time forward a copy of such notice or demand to each holder of any Mortgage authorized by the Development Agreement at the last address of such holder shown in the records of City. After any breach or default, each such holder (insofar as the rights of City are concerned) shall have the option to cure or remedy such breach or default and to add the cost thereof to the Mortgage debt and the lien of its Mortgage; provided, that if the breach or default is with respect to construction of the Improvements, nothing contained in this Section or any other Section of the Development Agreement shall be deemed to permit or authorize such holder, either before or after foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the Improvements (beyond the extent necessary to conserve or protect Improvements or construction already made) without first having expressly assumed the obligation to City, by written agreement satisfactory to City, to complete, in the manner provided in the Development Agreement, the Improvements on the Property or the part thereof to which the lien or title of such Mortgage holder relates. 16 ARTICLE XI ASSIGNMENT AND LIENS Section 11.01. Assignment. Neither the Developer nor the City shall sell, assign, sublease or otherwise dispose of or encumber this Lease Purchase Agreement in any way without the prior written consent of the other party. Section 11.02. Liens or Encumbrancers. Developer shall comply with all provisions of the Development Agreement in regard to liens or other encumbrances on the Property or Improvements. ARTICLE XII PRE -LEASE OBLIGATIONS AND INDEMNIFICATION Section 12.01. Pre -Lease Obligations. Notwithstanding anything to the contrary in this Lease Purchase Agreement, the City shall not be responsible for any debts, mortgages, obligations, claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs ("Debt or Claims"), relating to the construction or equipping of the Improvements or for any Debt or Claims that occurred or accrued prior to the Effective Date. The Developer hereby agrees to indemnify, defend and hold harmless the City and its officers, commissioners, employees, agents, or representatives from and against any and all claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of, or relating to, Debt or Claims that occurred or accrued prior to the Effective Date. Section 12.02. Indemnification. To the extent authorized by law, the City hereby agrees to indemnify, defend and hold harmless the Developer and its officers, employees, agents, or representatives from and against any and all claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of, relating to, resulting from, or caused by the negligence or willful misconduct of the City, its officers, employees, agents, servants, subcontractors or representatives relating to the City's operation of the Improvements from the Effective Date until the Lease Termination Date. The City shall be given prompt notice of any claims for which the indemnification will be sought and shall be given full and complete cooperation from the Developer in the defense or settlement of all such claims, and shall be given full authority in the defense or settlement of any such 17 claims. Neither party shall have the authority to bind the other to any settlement without such party's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. The Developer hereby agrees to indemnify, defend and hold harmless the City and its officers, commissioners, employees, agents, or representatives from and against any and all claims, demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of, or relating to claims regarding the construction or initial equipping of the Improvements and all claims that arose or accrued prior to the Effective Date, except as set forth in Article IX. ARTICLE XIII PURCHASE RIGHT AND PUT OPTION Section 13.01. Purchase Right or Put Option. Not more than 90 nor less than 30 days before the Lease Termination Date, the City may elect, at its sole discretion, to either purchase the Property and the Improvements for $1.00 from the Developer under the "Purchase Right" provision or terminate the Lease Purchase Agreement under the "Put Option" provision, both as described below: Prior to the exercise of either the Purchase Right or the Put Option, City shall conduct a lien search on the Property and Improvements and, within five (5) Business Days of the City's request, Developer shall provide City with a detailed notarized written statement ("Statement") showing all outstanding Project -related indebtedness of the Developer related to the Improvements ("Indebtedness"); (1) To exercise the Purchase Right: (a) If the City's lien search shows that the Developer's mortgage financing with respect to the Improvements (or any other liens) remains unpaid and/or if Developer's Statement shows there remains any Indebtedness, City may elect, in its sole discretion, to pay off any existing liens or allow such liens to remain on the Property and/or Improvements. City may also elect, in its sole discretion, to pay off any Indebtedness or allow such Indebtedness to remain as to the Property and/or Improvements. If the City elects, in its sole discretion, to proceed to exercise this Purchase Right, City shall deliver to Developer a Notice of Purchase Right election, referencing this Section of this Lease Purchase Agreement and $1.00. Within 30 days, Developer shall deliver to City (i) a Special Warranty Deed showing title in the Property and Improvements in 18 the name of the City and, if applicable, subject to any unpaid Indebtedness, and (ii) a bill of sale showing title in the Improvements in the name of the City. Each party shall execute such deeds, bills of sale, or other documents of transfer or conveyance as the other party may reasonably request to effectuate this Purchase Right; (b) If the lien search shows that the Developer's mortgage financing with respect to the Improvements (or any other liens) are fully paid and there is no Indebtedness, City may elect, in City's sole discretion, to proceed to exercise this Purchase Right. If the City elects, in its sole discretion, to proceed to exercise this Purchase Right, City shall deliver to Developer a Notice of Purchase Right election, referencing this Section of this Lease Purchase Agreement and $1.00. Within 30 days, Developer shall deliver to City (i) a Special Warranty Deed showing title in the Property and Improvements in the name of the City and (ii) a bill of sale showing title in the Improvements in the name of the City. Each party shall execute such deeds, bills of sale, or other documents of transfer or conveyance as the other party may reasonably request to effectuate this Purchase Right; (2) To exercise the Put Option: (a) City shall deliver a Notice of Termination of the Lease Purchase Agreement to Developer referencing this Section of this Lease Purchase Agreement, which notice shall state that the City desires to terminate this Lease Purchase Agreement in accordance with the Put Option of this Lease. Such Notice shall state that the Purchase Right is cancelled and shall set a date not earlier than 90 days from the date of such Notice of Termination, which date shall be the Put Option Termination Date of this Lease Purchase Agreement. As of the Put Option Termination Date, the City shall disclaim all right, title, or interest in the Property and Improvements, the Developer shall assume operation and management of the Property and Improvements, and the City shall have no further responsibility for the Property and Improvements. Each party shall immediately execute such documents of transfer or conveyance as the other party may reasonably request to effectuate the Put Option Termination as of the Put Option Termination Date. 19 (3) If City does not take affirmative steps to exercise the Put Option as described above not later than 30 days before the Lease Termination Date, the City will be deemed to have exercised the Purchase Right. Section 13.02. Handling of Funds upon Exercise of Purchase Right or Put Option. (1) Purchase Right: If at the time of exercise of the Purchase Right there remains any outstanding Indebtedness as shown by the Developer's Statement pursuant to Section 13.01, then any Surplus Revenues as defined in Section 13.03 shall be applied to such Indebtedness. If the Statement shows there is no Indebtedness, then the City shall retain all Surplus Revenues. (2) Put Option: If at the time of exercise of the Put Option there remains any outstanding Indebtedness as shown by the Developer's Statement pursuant to Section 13.01, then any Surplus Revenues as defined in Section 13.03 shall be applied to such Indebtedness. If the Statement shows there is no Indebtedness, then the City shall transfer all Surplus Revenues to the Developer; provided, however, that all such Surplus Revenues shall be used by the Developer exclusively for the purpose of operating, maintaining or enhancing the Improvements. Section 13.03. Surplus Revenues. For purposes of Section 13.02, any operating income remaining after the subtraction of the current annual operating expenses of the completed Improvements, including amounts budgeted for equipment replacement and other operating reserves at the levels established in the annual budget for the Improvements approved by the City Council and a debt service reserve for the payment at the Lease Termination Date of any. outstanding Project -related indebtedness of the Developer, shall be called Surplus Revenue. Section 13.04. Relative Position of this Article and Article X. The rights and options granted to the City in this Article shall be and remain prior and superior to Article X hereof and may be exercised whether or not the City is in default under this Lease, provided that such default will not result in nonfulfillment of any condition to the exercise of such right or option. ARTICLE XIV MISCELLANEOUS Section 14.01. Notices. Any notice under this Lease Purchase Agreement shall be in writing and shall be delivered in person, by overnight air courier service, by United 20 States registered or certified mail, postage prepaid, or by facsimile (with an additional copy delivered by one of the foregoing means), and addressed: (a) if to City, to City of Waterloo, 715 Mulberry Street, Waterloo, Iowa 50703, facsimile number 319-291-4571, Attention: Mayor. (b) if to Developer, to Waterloo Development Corporation, 10 W. 4th Street, Suite 300, Waterloo, Iowa 50701, facsimile number 319-235-2353, Attention: Executive Vice President. Delivery of notice shall be deemed to occur (i) on the date of delivery when delivered in person, (ii) three (3) business days following the date of deposit if mailed by United States registered or certified mail, postage prepaid, or (iii) when transmitted by facsimile so long as the sender obtains written electronic confirmation from the sending facsimile machine that such transmission was successful. Section 14.02. Amendment, Modification, and Waiver. No amendment, modification, or waiver of any condition, provision, or term of this Lease Purchase Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or by its duly authorized representative, and specifying with particularity the extent and nature of the amendment, modification, or waiver. Any waiver by any party of any default by another party shall not affect or impair any rights arising from any subsequent default. Section 14.03. Severability of Provisions. Each provision, section, sentence, clause, phrase, and word of this Lease Purchase Agreement is intended to be severable. If any portion of this Lease Purchase Agreement shall be deemed invalid or unenforceable, whether in whole or in part, the offending provision or part thereof shall be deemed severed from this Lease Purchase Agreement and the remaining provisions of this Lease Purchase Agreement shall not be affected thereby and shall continue in full force and effect. If, for any reason, a court fmds that any portion of this Lease Purchase Agreement is invalid or unenforceable as written, but that by limiting such provision or portion thereof it would become valid and enforceable, then such provision or portion thereof shall be deemed to be written, and shall be construed and enforced, as so limited. Section 14.04. Dispute Resolution. Any dispute, controversy, or claim arising out of or relating to this Lease Purchase Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, including the Emergency Interim Relief Procedures. Any award rendered shall be fmal and conclusive upon the parties and shall be accompanied by findings of fact and a statement of reasons for the decision. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. All costs and expenses, including attorneys' fees, shall be borne by the party determined to 21 be liable in respect of such dispute; provided, however, that if complete liability is not assessed against only one party, the parties shall share the total costs in proportion to their respective amounts of liability so determined. Except where clearly prevented by the area in dispute, the parties agree to continue performing their respective obligations under this Lease Purchase Agreement while the dispute is being resolved. Section 14.05. Entire Agreement. This Lease Purchase Agreement, together with the Development Agreement and Special Warranty Deed, constitutes the entire agreement of the parties and supersedes all prior or contemporaneous negotiations, discussions, understandings, or agreements, whether oral or written, with respect to the subject matter hereof. Section 14.06. No Third Party Beneficiaries. This Lease Purchase Agreement is not intended by any of the provisions hereof to make any person or entity not a party to this Lease Purchase Agreement a third party beneficiary hereunder, and is not intended to benefit any such third party. Section 14.07. Captions. All captions, headings, or titles in the paragraphs or sections of this Lease -Purchase Agreement are inserted only as a matter of convenience and/or reference, and they shall in 110 way be construed as limiting, extending, or describing either the scope or intent of this Lease -Purchase Agreement or of any provisions hereof. Section 14.08. Binding Effect. This Lease Purchase Agreement shall be binding and shall inure to the benefit of the parties and their respective successors, assigns, and legal representatives. Section 14.09. Time of Essence. Time is of the essence of this Lease Purchase Agreement. [Remainder of this page intentionally left blank. Signature pages to follow.] 22 IN WITNESS WHEREOF, the City and the Developer have caused this Lease Purchase Agreement to be executed in their respective names and attested by duly authorized officers all as of the date set forth above. CITY OF WATERLOO, IOWA WATERLOO DEVELOPMENT CORPORATION By: By: rnest G. Clark, Mayor Daniel B. Watters, President By- Suzy S res, City Clerk STAI'E OF IOWA ) ss. BLACK HAWK COUNTY ) On \ LP , 2012, before me, a Notary Public in and for the State of IowaPersonalIy appeared Ernest G. Clark and SuzySchares, to me personally known, , who being duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Waterloo, Iowa, and that the instrument was signed on behalf of the corporation by authority of its City Coup il, as contained in the resolution adopted by the City Council under Roll Call No. j g �� on Ard L 1 Lr , 2012, and that Emest G. Clark and SuzySchares acknowledged ed the execution of the instrument to g be their voluntary act and deed and the voluntary act and deed of the corporation, by it voluntarily executed. 23 STATE OF IOWA ) ) ss. BLACK HAWK COUNTY ) On , 2012, before me, a Notary Public in and for the State of Iowa, personally appeared Daniel B. Watters, to me personally known, who being by me duly sworn, did say that he is the President of Waterloo Development Corporation, and that said instrument was signed on behalf of the said corporation by authority of its board of directors; and Daniel B. Watters acknowledged the execution of said instrument to be the voluntary act and deed of the corporation by it voluntarily executed. Notary Public 24 EXHIBIT "A" Legal Description of Property All that part of Block Fourteen (14), including Twenty (20) foot alley, in the Original Plat, on the West Side of the Cedar River in the City of Waterloo, Black Hawk County, Iowa, EXCEPT That part of Twenty (20) foot alley in said Block Fourteen (14), lying Southeasterly of the Southwesterly extension of the Northwest line of the Southeast Forty (40) feet of Lot Three (3), said Block Fourteen (14), AND EXCEPT Lots One (1) and Two (2) and the Southeast Forty (40) feet of Lot (3), all in said Block Fourteen (14), AND EXCEPT Lots Nos. Nine (9) and Ten (10) except the. Southwesterly Thirty (30) feet of said Lots, in Block No. Fourteen (14). AND That part of the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, described as follows: Beginning at the most Southerly corner of Block Thirteen (13), aforesaid Original Plat; thence Northeasterly along the Southeasterly line of said Block Thirteen (13) to the most Easterly corner of said Block Thirteen (13); thence Southeasterly to the most Northerly corner of Block Fourteen (14), aforesaid Original Plat; thence Southwesterly along the Northwesterly line of said Block Fourteen (14) to the most Westerly corner of said Block Fourteen (14); thence Northwesterly to the point of beginning; AND That part of a parcel lying Southwest of Block Fourteen (14), the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, described as follows: Beginning at the most Southerly comer of aforesaid Block Fourteen (14); thence Southwest Thirty (30) feet along the Southwesterly extension of the Southeast line of said Block Fourteen (14); thence Northerly to the most Westerly corner of said Block Fourteen (14); thence Southeasterly along aforesaid Southwest line of Block Fourteen (14) to the point of beginning. AND All of Lots One (1), Two (2), Three (3), Four (4), Five (5), and Twenty (20) foot alley, Block Thirteen (13) in the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa. AND The Northeasterly One Hundred Ten (110) feet of Lots Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Thirteen (13) in the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, EXCEPT those parts conveyed to the State of Iowa in 607 CLD 684 AND EXCEPT those parts conveyed to the City of Waterloo in 661 CLD 853. AND That part of Lots Eight (8), Nine (9) and Ten (10), Block Thirteen (13), Original Plat of West Waterloo, Black Hawk County Iowa, bounded as follows: On the Northeast by the Southwest line of the Northeasterly One Hundred Ten (110) feet of said Lots Eight (8), Nine (9) and Ten (10); On the Northwest by the Northwesterly line of the Southeasterly Ten (10) feet of said Lot Eight (8); On the Southwest by a line drawn from a point on the Northwesterly line of said Southeasterly ten (10) feet of Lot Eight (8), which is One Hundred Eighteen (118) feet Southwest of the Northeasterly line of said Lot Eight (8), said line extending to a point on the Southeasterly line of said Lot Ten (10) which is One Hundred Thirty- seven and Five Tenths (137.5) feet Southwesterly of the Northeast corner of said Lot Ten (10). 25