HomeMy WebLinkAbout0013_4_Exhibit C Lease AgreementStradling Yocca Carlson & Rauth
Draft of 10/3/16
RECORDING REQUESTED BY:
Lake Elsinore Facilities Financing Authority
AND WHEN RECORDED RETURN TO:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Brian Forbath, Esq.
[Space above for Recorder’s use.]
This Transaction is Exempt from California
Documentary Transfer Tax Pursuant to Section 11921
of the California Revenue and Taxation Code. This
Document is Exempt from Recording Fees Pursuant to
Section 27383 of the California Government Code.
Lease term is less than 35 years.
LEASE AGREEMENT
by and between
CITY OF LAKE ELSINORE
and
LAKE ELSINORE FACILITIES FINANCING AUTHORITY
Dated as of November 1, 2016
Relating to
$_________
Lake Elsinore Facilities Financing Authority
Lease Revenue Bonds, Series 2016A
TABLE OF CONTENTS
Page
i
ARTICLE I DEFINITIONS .......................................................................................................2
Section 1.01 Definitions..............................................................................................................2
ARTICLE II LEASE OF PROPERTY; TERM...........................................................................4
Section 2.01 Lease of Property....................................................................................................4
Section 2.02 Term; Occupancy....................................................................................................4
ARTICLE III RENTAL PAYMENTS..........................................................................................4
Section 3.01 Base Rental Payments.............................................................................................4
Section 3.02 Additional Rental Payments...................................................................................5
Section 3.03 Fair Rental Value....................................................................................................5
Section 3.04 Payment Provisions ................................................................................................6
Section 3.05 Appropriations Covenant........................................................................................6
Section 3.06 Rental Abatement...................................................................................................6
ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS.....................................7
Section 4.01 [Reserved]...............................................................................................................7
Section 4.02 Maintenance and Utilities.......................................................................................7
Section 4.03 Additions to Property..............................................................................................7
Section 4.04 Installation of City’s Equipment.............................................................................7
ARTICLE V INSURANCE .........................................................................................................8
Section 5.01 Commercial General Liability and Property Damage Insurance; Workers’
Compensation Insurance.........................................................................................8
Section 5.02 Title Insurance........................................................................................................9
Section 5.03 Additional Insurance Provision; Form of Policies..................................................9
Section 5.04 Self-Insurance.........................................................................................................9
ARTICLE VI DEFAULTS AND REMEDIES...........................................................................10
Section 6.01 Defaults and Remedies.........................................................................................10
Section 6.02 Waiver...................................................................................................................12
ARTICLE VII EMINENT DOMAIN; PREPAYMENT..............................................................13
Section 7.01 Eminent Domain...................................................................................................13
Section 7.02 Prepayment...........................................................................................................13
ARTICLE VIII COVENANTS......................................................................................................14
Section 8.01 Right of Entry.......................................................................................................14
Section 8.02 Liens .....................................................................................................................14
Section 8.03 Quiet Enjoyment...................................................................................................14
Section 8.04 Authority Not Liable.............................................................................................14
Section 8.05 Assignment and Subleasing..................................................................................15
Section 8.06 Title to Property....................................................................................................16
Section 8.07 Authority’s Purpose..............................................................................................16
Section 8.08 Representations of the City...................................................................................16
Section 8.09 Representation of the Authority............................................................................16
TABLE OF CONTENTS
(continued)
Page
ii
ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY;
SUBSTITUTION OR RELEASE.........................................................................16
Section 9.01 No Consequential Damages..................................................................................16
Section 9.02 Use of the Property...............................................................................................16
Section 9.03 Substitution or Release of the Property................................................................16
ARTICLE X MISCELLANEOUS.............................................................................................17
Section 10.01 Law Governing.....................................................................................................17
Section 10.02 Notices..................................................................................................................17
Section 10.03 Validity and Severability......................................................................................18
Section 10.04 Net-Net-Net Lease................................................................................................18
Section 10.05 Taxes.....................................................................................................................18
Section 10.06 Section Headings..................................................................................................18
Section 10.07 Amendments.........................................................................................................18
Section 10.08 Assignment...........................................................................................................19
Section 10.09 Execution..............................................................................................................19
Signatures ............................................................................................................................ S-1
EXHIBIT A DESCRIPTION OF THE PROPERTY....................................................................A-1
EXHIBIT B BASE RENTAL PAYMENT SCHEDULE .............................................................B-1
S-1
LEASE AGREEMENT
THIS LEASE AGREEMENT (this “Lease Agreement”) executed and entered into as of
Novmber 1, 2016, is by and between the CITY OF LAKE ELSINORE (the “City”), a municipal
corporation and general law city duly organized and existing under and by virtue of the Constitution
and laws of the State of California, as lessee, and the LAKE ELSINORE FACILITIES FINANCING
AUTHORITY (the “Authority”), a joint exercise of powers entity duly organized and existing under
and by virtue of the laws of the State of California, as lessor.
RECITALS
WHEREAS, the City and the Authority desire to finance a portion of the costs of the
acquisition, construction and installation of various public improvements (the “Project”);
WHEREAS, in order to finance the Project the City will lease certain real property and the
improvements located thereon (the “Property”) to the Authority pursuant to a Ground Lease, dated as
of the date hereof, and the City will sublease the Property back from the Authority pursuant to this
Lease Agreement;
WHEREAS, the City and the Authority have determined that it would be in the best interests
of the City and the Authorityto provide the funds necessary to finance the Project through the issuance
by the Authority of bonds payable from the base rental payments (the “Base Rental Payments”) to be
made by the City under this Lease Agreement;
WHEREAS, the City and the Authority have determined that it would be in the best interests
of the City and the Authority to provide for the issuance of such bonds payable from the Base Rental
Payments pursuant to an Indenture, dated as of the date hereof, by and among the Authority, the City
and Wilmington Trust, National Association, as trustee (the “Trustee”);
WHEREAS, all rights to receive the Base Rental Payments have been assigned without
recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date
hereof; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to
have been performed precedent to and in connection with the execution and entering into of this Lease
Agreement do exist, have happened and have been performed in regular and due time, form and manner
as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the
parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this
Section shall, for all purposes of this Lease Agreement, have the meanings herein specified, which
meanings shall be equally applicable to both the singular and plural forms of any of the terms herein
defined. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms
in the Indenture.
“Additional Bonds” means bonds other than the Series 2016A Bonds issued under the
Indenture in accordance with the provisions thereof
“Additional Rental Payments” means all amounts payable by the City as Additional Rental
Payments pursuant to Section 3.02 hereof.
“Authority” means the Lake Elsinore Facilities Financing Authority, a joint exercise of powers
authority organized and existing under the laws of the State of California.
“Base Rental Deposit Date” means the 15th day of the month next preceding each Interest
Payment Date.
“Base Rental Payments” means all amounts payable to the Authority from the City as Base
Rental Payments pursuant to Section 3.01 hereof.
“Base Rental Payment Schedule” means the schedule of Base Rental Payments payable to
the Authority from the City pursuant to Section 3.01 hereof and attached hereto as Exhibit B.
“Bonds” means the Lake Elsinore Facilities Financing Authority Lease Revenue Bonds Series
2016A issued under the Indenture, and any Additional Bonds.
“City” means the City of Lake Elsinore, a municipal corporation and general law city duly
organized and existing under and by virtue of the Constitution and laws of the State of California.
“Delivery Date” means ________, 2016.
“Ground Lease” means the Ground Lease, dated as of the date hereof, by and between the
City and the Authority, as originally executed and as it may from time to time be amended in
accordance with to the provisions thereof and hereof.
“Indenture” means the Indenture, dated as of the date hereof, by and among the Authority, the
City and the Trustee, as originally executed and as it may from time to time be amended or
supplemented in accordance with the provisions thereof.
“Joint Powers Agreement” means the Joint Exercise of Powers Agreement, dated as of
September 1, 2016, by and between the City and the California Municipal Finance Authority as
originally executed and as it may from time to time be amended in accordance with the provisions
thereof.
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“Lease Agreement” means this Lease Agreement, as originally executed and as it may from
time to time be amended in accordance with the provisions hereof.
“Net Insurance Proceeds” means any insurance proceeds or condemnation award in excess
of $50,000, paid with respect to any of the Property, remaining after payment therefrom of all
reasonable expenses incurred in the collection thereof.
“Permitted Encumbrances” means, with respect to the Property, as of any particular time,
(a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City
may, pursuant to provisions of Article V hereof, permit to remain unpaid, (b) the Assignment
Agreement, (c) this Lease Agreement, (d) the Ground Lease, (e) any right or claim of any mechanic,
laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law as
normally exist with respect to properties similar to the Property for the purposes for which it was
acquired or is held by the City, (f) easements, rights of way, mineral rights, drilling rights and other
rights, reservations, covenants, conditions or restrictions which exist of record as of the Delivery Date
which the City certifies in writing will not affect the intended use of the Property or impair the security
granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment
Agreement and to which the Authority and the City consent in writing, and (g) easements, rights of
way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions
established following the Delivery Date which the City certifies in writing do not affect the intended
use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the
Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City
consent in writing.
“Property” means the real property described in Exhibit A hereto and the improvements
located thereon.
“Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental
Payments.
“Rental Period” means the twelve-month period commencing on April 1 of each year during
the term of the Lease Agreement.
“Series 2016A Bonds” means the Lake Elsinore Facilities Financing Authority Lease
Revenue Bonds, Series 2016A issued under the Indenture.
“Termination Date” means April 1, 2047, unless extended or sooner terminated as
provided in Section 2.02 hereof.
“Trustee” means the trustee appointed under the Indenture and referred to therein as the
Trustee.
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ARTICLE II
LEASE OF PROPERTY; TERM
Section 2.01 Lease of Property.
(a)The Authority hereby leases to the City and the City hereby leases from the
Authority the Property, on the terms and conditions hereinafter set forth, subject to all Permitted
Encumbrances.
(b)The leasing of the Property by the City to the Authority pursuant to the Ground
Lease shall not effect or result in a merger of the City’s leasehold estate pursuant to this Lease
Agreement and its fee estate as lessor under the Ground Lease, and the Authorityshall continue to have
a leasehold estate in the Property pursuant to the Ground Lease throughout the term thereof and hereof.
The leasehold interest granted by the City to the Authority pursuant to the Ground Lease is and shall
be independent of this Lease Agreement; this Lease Agreement shall not be an assignment or surrender
of the leasehold interest granted to the Authority under the Ground Lease.
Section 2.02 Term; Occupancy. The term of this Lease Agreement shall commence on the
Delivery Date and shall end on the Termination Date, unless such term is extended or sooner terminated
as hereinafter provided. If on the Termination Date the Bonds shall not be fully paid, or provision
therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged
by its terms, or if the Rental Payments shall remain due and payable or shall have been abated at any
time and for any reason, then the term of this Lease Agreement shall be extended until the date upon
which (i) all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the
Indenture, or (ii) the Indenture shall be discharged by its terms and all Rental Payments shall have been
paid in full. Notwithstanding the foregoing, the term of this Lease Agreement shall in no event be
extended more than ten years beyond such Termination Date. Such extended date being the
“Maximum Lease Term.” If prior to the Termination Date, all Bonds shall be fully paid, or provision
therefor made in accordance with Article X of the Indenture, the Indenture shall be discharged by its
terms and all Rental Payments shall have been paid in full, the term of this Lease Agreement shall end
simultaneously therewith.
ARTICLE III
RENTAL PAYMENTS
Section 3.01 Base Rental Payments.
(a)Subject to the provisions hereof relating to a revision of the Base Rental
Payment Schedule pursuant to subsection (b) of this Section, the City shall pay to the Authority, as
Base Rental Payments (subject to the provisions of Section 3.06 and Article VII hereof) the amount at
the times specified in the Base Rental Payment Schedule, a portion of which Base Rental Payments
shall constitute principal, and a portion of which shall constitute interest. Rental Payments, including
Base Rental Payments, shall be paid by the City to the Authority for and in consideration of the right
to use and occupy the Property and in consideration of the continued right to the quiet use and
enjoyment thereof during each Rental Period for which such Rental Payments are to be paid.
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The obligation of the City to make the Base Rental Payments does not constitute a debt
of the City or of the State of California, or of any political subdivision thereof, within the meaning of
any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which
the City or the State of California is obligated to levy or pledge any form of taxation or for which the
City or the State of California has levied or pledged any form of taxation.
(b)If the term of this Lease Agreement shall have been extended pursuant to
Section 2.02 hereof, the obligation of the City to pay Rental Payments shall continue to and including
the Base Rental Deposit Date preceding the date of termination of this Lease Agreement (as so
extended pursuant to Section 2.02 hereof). Upon such extension, the Base Rental Payments shall be
established so that they will be sufficient to pay all extended and unpaid Base Rental Payments;
provided, however, that the Rental Payments payable in any Rental Period shall not exceed the annual
fair rental value of the Property.
Section 3.02 Additional Rental Payments. The City shall also pay, as Additional Rental
Payments, such amounts as shall be required for the payment of the following:
(a)all taxes and assessments of any type or nature charged to the Authority or the
City or affecting the Property or the respective interests or estates of the Authority or the City therein;
(b)all reasonable administrative costs of the Authority relating to the Property
including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses,
compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees
of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative
costs of the Authorityor charges required to be paid by it in order to maintain its existence or to comply
with the terms of the Indenture or the Lease Agreement or to defend the Authority and its members,
officers, agents and employees;
(c)insurance premiums for all insurance required pursuant to Article V hereof;
(d)any amounts with respect to the Lease Agreement or the Bonds required to be
rebated to the federal government in accordance with Section 148(f) of the Code; and
(e)all other payments required to be paid by the City under the provisions of this
Lease Agreement or the Indenture.
Amounts constituting Additional Rental Payments payable hereunder shall be paid by the City
directly to the person or persons to whom such amounts shall be payable. The City shall pay all such
amounts when due or at such later time as such amounts may be paid without penalty or, in any other
case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional
Rental Payments then due and payable and the purpose thereof.
Section 3.03 Fair Rental Value. The parties hereto have agreed and determined that the
annual fair rental value of the Property is not less than the maximum annual Rental Payments due in
any year. In making such determination of fair rental value, consideration has been given to the uses
and purposes that may be served by the Property and the benefits therefrom which will accrue to the
City and the general public. Payments of the Rental Payments for the Property during each Rental
Period shall constitute the total rental for said Rental Period.
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Section 3.04 Payment Provisions. Each installment of Base Rental Payments payable
hereunder shall be paid in lawful money of the United States of America to or upon the order of the
Authority at the principal office of the Trustee in Los Angeles, California, or such other place or entity
as the Authority shall designate. Each Base Rental Payment shall be deposited with the Trustee no
laterthan the Base Rental Deposit Date preceding the Interest Payment Date on which such Base Rental
Payment is due. Any Base Rental Payment which shall not be paid by the City when due and payable
under the terms of this Lease Agreement shall bear interest from the date when the same is due
hereunder until the same shall be paid at the rate equal to the highest rate of interest on any of the
Outstanding Bonds. Notwithstanding any dispute between the Authority and the City, the City shall
make all Rental Payments when due without deduction or offset of any kind and shall not withhold
any Rental Payments pending the final resolution of such dispute. In the event of a determination that
the City was not liable for said Rental Payments or any portion thereof, said payments or excess of
payments, as the case may be, shall be credited against subsequent Rental Payments due hereunder or
refunded at the time of such determination. Amounts required to be deposited by the City with the
Trustee pursuant to this Section on any date shall be reduced to the extent of available amounts on
deposit in the Base Rental Payment Fund, the Interest Fund or the Principal Fund.
Section 3.05 Appropriations Covenant. The City covenants to take such action as may be
necessary to include all Rental Payments due hereunder as a separate line item in its annual budgets
and to make necessary annual appropriations for all such Rental Payments. The City will deliver to
the Authority and the Trustee a Certificate of the City stating that its final annual budget includes all
Base Rental Payments due in such fiscal year within ten days after the filing or adoption thereof. The
covenants on the part of the City herein contained shall be deemed to be and shall be construed to be
duties imposed by law and it shall be the duty of each and every public official of the City to take such
action and do such things as are required by law in the performance of the official duty of such officials
to enable the City to carry out and perform the covenants and agreements in this Lease Agreement
agreed to be carried out and performed by the City.
Section 3.06 Rental Abatement. Except as otherwise specifically provided in this Section,
during any period in which, by reason of material damage to, or destruction or condemnation of, the
Property, or any defect in title to the Property, there is substantial interference with the City’s right to
use and occupy any portion of the Property, Rental Payments shall be abated proportionately, and the
City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other
rights to terminate the Lease Agreement by virtue of any such interference, and the Lease Agreement
shall continue in full force and effect. The amount of such abatement shall be agreed upon by the City
and the Authority; provided, however, that the Rental Payments due for any Rental Period shall not
exceed the annual fair rental value of that portion of the Property available for use and occupancy by
the City during such Rental Period. The City and the Authority shall calculate such abatement and
shall provide the Trustee with a certificate setting forth such calculation and the basis therefor. Such
abatement shall continue for the period commencing with the date of interference resulting from such
damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the
Property, ending with the substantial completion of the work of repair or replacement of the Property,
or the portion thereof so damaged or destroyed; and the term of this Lease Agreement shall be extended
as provided in Section 2.02 hereof, except that the term shall in no event be extended beyond the
Maximum Lease Term.
Notwithstanding the foregoing, to the extent that moneys are available for the payment of
Rental Payments in any of the funds and accounts established under the Indenture, Rental Payments
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shall not be abated as provided above but, rather, shall be payable by the City as a special obligation
payable solely from said funds and accounts.
ARTICLE IV
MAINTENANCE, ALTERATIONS AND ADDITIONS
Section 4.01 [Reserved]
Section 4.02 Maintenance and Utilities. Throughout the term of this Lease Agreement, as
part of the consideration for rental of the Property, all improvement, repair and maintenance of the
Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the
payment of all utility services supplied to the Property, which may include, without limitation, janitor
service, security, power gas, telephone, light, heating, ventilation, air conditioning, water and all other
utility services, and shall pay for or otherwise arrange for payment of the cost of the repair and
replacement of the Property resulting from ordinary wear and tear or want of care on the part of the
City or any assignee or sublessee thereof. In exchange for the Rental Payments, the Authority agrees
to provide only the Property.
Section 4.03 Additions to Property. Subject to Section 8.02 hereof, the City and any
sublessee shall, at its own expense, have the right to make additions, modifications and improvements
to the Property. To the extent that the removal of such additions, modifications or improvements would
not cause material damage to the Property, such additions, modifications and improvements shall
remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall
have any interest therein. Such additions, modifications and improvements shall not in any way
damage the Property or cause it to be used for purposes other than those authorized underthe provisions
of state and federal law; and the Property, upon completion of any additions, modifications and
improvements made pursuant to this Section, shall be of a value which is at least equal to the value of
the Property immediately prior to the making of such additions, modifications and improvements.
Section 4.04 Installation of City’s Equipment. The City and any sublessee may at any
time and from time to time, in its sole discretion and at its own expense, install or permit to be installed
items of equipment or other personal property in or upon the Property. All such items shall remain the
sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any
interest therein. The City or such sublessee may remove or modify such equipment or other personal
property at any time, provided that such party shall repair and restore any and all damage to the
Property resulting from the installation, modification or removal of any such items. Nothing in this
Lease Agreement shall prevent the City or any sublessee from purchasing items to be installed pursuant
to this Section under a conditional sale or lease purchase contract, or subject to a vendor’s lien or
security agreement as security for the unpaid portion of the purchase price thereof, provided that no
such lien or security interest shall attach to any part of the Property.
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ARTICLE V
INSURANCE
Section 5.01 Commercial General Liability and Property Damage Insurance;
Workers’ Compensation Insurance.
(a)The City shall maintain or cause to be maintained, throughout the term of this
Lease Agreement, a standard commercial general liability insurance policy or policies in protection of
the City, the Authority and their respective members, officers, agents and employees. Said policy or
policies shall provide for indemnification of said parties against direct or contingent loss or liability
for damages for bodily and personal injury, death or property damage occasioned by reason of the use
or ownership of the Property. Said policy or policies shall provide coverage in the minimum liability
limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or
deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for
damage to property (subject to a deductible clause of not to exceed [$100,000]) resulting from a single
accident or event. Such commercial general liability and property damage insurance may, however,
be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability
insurance may be maintained as part of or in conjunction with any other liability insurance coverage
carried or required to be carried by the City, and may be maintained in whole or in part in the form of
self-insurance by the City provided such self-insurance complies with the provisions of Section 5.04
hereof. The Net Insurance Proceeds of such liability insurance shall be applied toward extinguishment
or satisfaction of the liability with respect to which the Net Insurance Proceeds of such insurance shall
have been paid.
(b)The City shall maintain or cause to be maintained, throughout the term of this
Lease Agreement, workers’ compensation insurance issued by a responsible carrier authorized under
the laws of the State of California to insure employers against liability for compensation under the
California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof,
such workers’ compensation insurance to cover all persons employed by the City in connection with
the Property and to cover full liability for compensation under any such act; provided, however, that
the City’s obligations under this subsection may be satisfied by self-insurance, provided such self-
insurance complies with the provisions of Section 5.04 hereof.
(c)The City shall maintain or cause to be maintained, fire, lightning and special
extended coverage insurance (which shall include coverage for vandalism and malicious mischief, but
need not include coverage for earthquake damage) on all improvements constituting any part of the
Property in an amount equal to the greater of 100% of the replacement cost of such improvements or
100% of the outstanding principal amount of the Bonds. The City has an insurance policy which
provides replacement cost coverage. All insurance required to be maintained pursuant to this
subsection may be subject to a deductible in an amount not to exceed [$500,000]. The City’s
obligations under this subsection may be satisfied by self-insurance, provided such self-insurance
complies with the provisions of Section 5.04 hereof.
(d)The City shall maintain rental interruption insurance to cover the Authority’s
loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of any
part of the Property as a result of any of the hazards required to be covered pursuant to subsection (c)
of this Section in an amount sufficient at all times to pay an amount not less than the product of two
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times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period.
The City shall not be permitted to self-insure its obligation under this subsection.
(e)The insurance required by this Section shall be provided by reputable insurance
companies with claims paying abilities determined, in the reasonable opinion of a professionally
certified risk manager or an independent insurance consultant, to be adequate for the purposes hereof.
Section 5.02 Title Insurance. The City shall provide, at its own expense, one or more
CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the
initial aggregate principal amount of the Series 2016ABonds, said policy or policies shall insure (a) the
fee interest of the City in the Property, (b) the Authority’sground leasehold estate in the Property under
the Ground Lease, and (c) the City’s leasehold estate hereunder in the Property, subject only to
Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies shall be
deposited with the Trustee and applied as provided in Section 5.04 of the Indenture. So long as any of
the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or this
Lease Agreement or required thereby or hereby shall provide that all proceeds thereunder shall be
payable to the Trustee for the benefit of the Bond Owners.
Section 5.03 Additional Insurance Provision; Form of Policies. The City shall pay or
cause to be paid when due the premiums for all insurance policies required by Section 5.01 hereof, and
shall promptly furnish or cause to be furnished evidence of such payments to the Trustee. All such
policies shall provide that the Trustee shall be given 30 days notice of the expiration thereof or any
intended cancellation thereof. The Trustee shall be fully protected in accepting payment on account
of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee.
The City shall cause to be delivered to the Trustee on or before August 30 each year,
commencing August 30, 2017, a schedule of the insurance policies being maintained in accordance
herewith and a Certificate of the City stating that such policies are in full force and effect and that the
City is in full compliance with the requirements of this Article. The Trustee shall be entitled to rely
upon said Certificate of the City as to the City’s compliance with this Article. The Trustee shall not
be responsible for the sufficiency of coverage or amounts of such policies.
Section 5.04 Self-Insurance. Insurance provided through a California joint powers
authority of which the City is a member or with which the City contracts for insurance shall be deemed
to be self-insurance for purposes hereof. Any self-insurance maintained by the City pursuant to this
Article shall comply with the following terms:
(a)the self-insurance program shall be approved in writing by a professionally
certified risk manager or by an independent insurance consultant;
(b)the self-insurance program shall include an actuarially sound claims reserve
fund out of which each self-insured claim shall be paid, the adequacy of each such fund shall be
evaluated on an annual basis by a professionally certified risk manager or by an independent insurance
consultant and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance
with the recommendation of a professionally certified risk manager or such independent insurance
consultant, as applicable; and
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(c)in the event the self-insurance program shall be discontinued, the actuarial
soundness of its claims reserve fund, as determined by a professionally certified risk manager or by an
independent insurance consultant, shall be maintained.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01 Defaults and Remedies.
(a)(i) If the City shall fail (A) to pay any Rental Payment payable hereunder when
the same becomes due and payable, time being expressly declared to be of the essence in this Lease
Agreement, or (B) to keep, observe or perform any other term, covenant or condition contained herein
or in the Indenture to be kept or performed by the City, or (ii) upon the happening of any of the events
specified in this subsection or in subsection (b) of this Section, the City shall be deemed to be in default
hereunder and it shall be lawful for the Authority to exercise any and all remedies available pursuant
to law or granted pursuant to this Lease Agreement. The City shall in no event be in default in the
observance or performance of any covenant, condition or agreement in this Lease Agreement on its
part to be observed or performed, other than as referred to in clause (i)(A) or (ii) of the preceding
sentence, unless the City shall have failed, for a period of 30 days or such additional time as is
reasonably required to correct any such default after notice by the Authority to the City properly
specifying wherein the City has failed to perform any such covenant, condition or agreement. Upon
any such default, the Authority, in addition to all other rights and remedies it may have at law, shall
have the option to do any of the following:
(1)To terminate this Lease Agreement in the manner hereinafter provided
on account of default by the City, notwithstanding any re-entry or re-letting of the Property as
hereinafter provided for in subparagraph (2) hereof, and to re-enter the Property and remove all persons
in possession thereof and all personal property whatsoever situated upon the Property and place such
personal property in storage in any warehouse or other suitable place, for the account of and at the
expense of the City. In the event of such termination, the City agrees to surrender immediately
possession of the Property, without let or hindrance, and to pay the Authority all damages recoverable
at law that the Authority may incur by reason of default by the City, including, without limitation, any
costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry
upon the Property and removal and storage of such property by the Authority or its duly authorized
agents in accordance with the provisions herein contained. Neither notice to pay Rental Payments or
to deliver up possession of the Property given pursuant to law nor any entry or re-entry by the Authority
nor any proceeding in unlawful detainer, or otherwise, brought by the Authority for the purpose of
effecting such re-entry or obtaining possession of the Property nor the appointment of a receiver upon
initiative of the Authority to protect the Authority’s interest under this Lease Agreement shall of itself
operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of
default by the City shall be or become effective by operation of law or acts of the parties hereto, or
otherwise, unless and until the Authority shall have given written notice to the City of the election on
the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no
surrender of the Property or of the remainder of the term hereof or any termination of this Lease
Agreement shall be valid in any manner or for any purpose whatsoever unless stated by the Authority
by such written notice.
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(2)Without terminating this Lease Agreement, (x) to collect each
installment of Rental Payments as the same become due and enforce any other terms or provisions
hereof to be kept or performed by the City, regardless of whether or not the City has abandoned the
Property, or (y) to exercise any and all rights of entry and re-entry upon the Property. In the event the
Authoritydoes not elect to terminate this Lease Agreement in the manner provided for in subparagraph
(1) hereof, the City shall remain liable and agrees to keep or perform all covenants and conditions
herein contained to be kept or performed by the City and, if the Property is not re-let, to pay the full
amount of the Rental Payments to the end of the term of this Lease Agreement or, in the event that the
Property is re-let, to pay any deficiency in Rental Payments that results therefrom; and further agrees
to pay said Rental Payments and/or Rental Payment deficiency punctually at the same time and in the
same manner as hereinabove provided for the payment of Rental Payments hereunder, notwithstanding
the fact that the Authority may have received in previous years or may receive thereafter in subsequent
years Rental Payments in excess of the Rental Payments herein specified, and notwithstanding any
entry or re-entry by the Authority or suit in unlawful detainer, or otherwise, brought by the Authority
for the purpose of effecting such re-entry or obtaining possession of the Property. Should the Authority
elect to re-enter as herein provided, the City hereby irrevocably appoints the Authority as the agent
and attorney-in-fact of the City to re-let the Property, or any part thereof, from time to time, either in
the Authority’s name or otherwise, upon such terms and conditions and for such use and period as the
Authority may deem advisable and to remove all persons in possession thereof and all personal
property whatsoever situated upon the Property and to place such personal property in storage in any
warehouse or other suitable place, for the account of and at the expense of the City, and the City hereby
indemnifies and agrees to save harmless the Authority from any costs, loss or damage whatsoever
arising out of, in connection with, or incident to any such re-entry upon and re-letting of the Property
and removal and storage of such property by the Authority or its duly authorized agents in accordance
with the provisions herein contained. The City agrees that the terms of this Lease Agreement constitute
full and sufficient notice of the right of the Authority to re-let the Property in the event of such re-entry
without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority
in effecting such re-letting shall constitute a surrender or termination of this Lease Agreement
irrespective of the use or the term for which such re-letting is made or the terms and conditions of such
re-letting, or otherwise, but that, on the contrary, in the event of such default by the City the right to
terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive
manner provided for in subparagraph (1) hereof. The City further agrees to pay the Authority the cost
of any alterations or additions to the Property necessary to place the Property in condition for re-letting
immediately upon notice to the City of the completion and installation of such additions or alterations.
The City hereby waives any and all claims for damages caused or which may be caused
by the Authority in re-entering and taking possession of the Property as herein provided and all claims
for damages that may result from the destruction of or injury to the Property and all claims for damages
to or loss of any property belonging to the City, or any other person, that may be in or upon the Property.
(b)If (i) the City’s interest in this Lease Agreement or any part thereof be assigned
or transferred, either voluntarily or by operation of law or otherwise, without the written consent of the
Authority and, as hereinafter provided for, or (ii) the City or any assignee shall file any petition or
institute any proceeding under any act or acts, state or federal, dealing with or relating to the subject
or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a
bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby the City asks
or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the City’s debts
or obligations, or offers to the City’s creditors to elect a composition or extension of time to pay the
City’s debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a
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readjustment of the City’s debts, or for any other similar relief, or if any such petition or any such
proceedings of the same or similar kind or character be filed or be instituted or taken against the City,
or if a receiver of the business or of the property or assets of the City shall be appointed by any court,
except a receiver appointed at the instance or request of the Authority, or if the City shall make a
general assignment for the benefit of the City’s creditors, or (iii) the City shall abandon or vacate the
Property, then the City shall be deemed to be in default hereunder.
(c)In addition to the other remedies set forth in this Section, upon the occurrence
of an event of default, the Authority and its assignee shall be entitled to proceed to protect and enforce
the rights vested in the Authority and its assignee by the Lease Agreement or by law. The provisions
of the Lease Agreement and the duties of the City and of its city council, officers or employees shall
be enforceable by the Authority or its assignee by mandamus or other appropriate suit, action or
proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing,
the Authority and its assignee shall have the right to bring the following actions:
(i)Accounting. By action or suit in equity to require the City and its city
council, officers and employees and its assigns to account as the trustee of an express trust.
(ii)Injunction. By action or suit in equity to enjoin any acts or things which
may be unlawful or in violation of the rights of the Authority or its assignee.
(iii)Mandamus. By mandamus or other suit, action or proceeding at law or
in equity to enforce the Authority’s or its assignee’s rights against the City (and its city council, officers
and employees) and to compel the City to perform and carry out its duties and obligations under the
law and its covenants and agreements with the City as provided herein.
Each and all of the remedies given to the Authority hereunder or by any law now or
hereafter enacted are cumulative and the single or partial exercise of any right, power or privilege
hereunder shall not impair the right of the Authority to the further exercise thereof or the exercise of
any or all other rights, powers or privileges. The term “re-let” or “re-letting” as used in this Section
shall include, but not be limited to, re-letting by means of the operation by the Authority of the
Property. If any statute or rule of law validly shall limit the remedies given to the Authorityhereunder,
the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or
rule of law.
In the event the Authorityshall prevail in any action brought to enforce any of the terms
and provisions of this Lease Agreement, the City agrees to pay a reasonable amount as and for
attorney’s fees incurred by the Authority in attempting to enforce any of the remedies available to the
Authority hereunder.
Notwithstanding anything to the contrary contained in this Lease Agreement, the
Authority shall have no right upon a default hereunder by the City to accelerate Rental Payments.
(d)Notwithstanding anything to the contrary contained in this Lease Agreement,
the termination of this Lease Agreement by the Authority and its assignees on account of a default by
the City under this Section shall not effect or result in a termination of the Ground Lease.
Section 6.02 Waiver. Failure of the Authority to take advantage of any default on the part
of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which
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may grow up between the parties in the course of administering this instrument be construed to waive
or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or
condition hereof, or to exercise any rights given the Authority on account of such default. A waiver
of a particular default shall not be deemed to be a waiver of any other default or of the same default
subsequently occurring. The acceptance of Rental Payments hereunder shall not be, or be construed
to be, a waiver of any term, covenant or condition of this Lease Agreement.
ARTICLE VII
EMINENT DOMAIN; PREPAYMENT
Section 7.01 Eminent Domain. If all of the Property (or portions thereof such that the
remainder is not usable for public purposes by the City) shall be taken under the power of eminent
domain, the term hereof shall cease as of the day that possession shall be so taken. If less than all of
the Property shall be taken under the power of eminent domain and the remainder is usable for public
purposes by the City at the time of such taking, then the Lease Agreement shall continue in full force
and effect as to such remainder, and the parties waive the benefits of any law to the contrary, and in
such event there shall be a partial abatement of the Rental Payments in accordance with the provisions
of Section 3.06 hereof. So long as any Bonds shall be Outstanding, any award made in eminent domain
proceedings for the taking of the Property, or any portion thereof, shall be paid to the Trustee and
applied to the redemption of Bonds as provided in subsection (a) of Section 4.01 of the Indenture, in
the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are
issued and in Section 5.03 of the Indenture. Any such award made after all of the Bonds, and all other
amounts due under the Indenture and hereunder, have been fully paid, shall be paid to the Authority
and to the City as their respective interests may appear.
Section 7.02 Prepayment.
(a)The City may prepay all or a portion of the Base Rental Payments attributable
to the Series 2016A Bonds which are payable on or after April 1, 20__, from any source of available
funds, on any date on or after April 1, 20__, by paying (i) all or a portion, as selected by the City, of
the principal components of such Base Rental Payments, and (ii) the accrued but unpaid interest
component of such Base Rental Payments to be prepaid to the date of such prepayment.
(b)The City may prepay, from any source of available funds, all or any portion of
the Base Rental Payments attributable to the Series 2016A Bonds by depositing with the Trustee
moneys or securities as provided, and subject to the terms and conditions set forth, in Article X of the
Indenture sufficient to make such Base Rental Payments when due or to make such Base Rental
Payments through a specified date on which the City has a right to prepay such Base Rental Payments
pursuant to subsection (a) of this Section, and to prepay such Base Rental Payments on such
prepayment date, at a prepayment price determined in accordance with subsection (a) of this Section.
(c)If less than all of the Base Rental Payments attributable to the Series 2016A
Bonds are prepaid pursuant to this Section then, as of the date of such prepayment pursuant to
subsection (a) of this Section, or the date of a deposit pursuant to subsection (b) of this Section, the
principal and interest components of such Base Rental Payments shall be recalculated in order to take
such prepayment into account. The City agrees that if, following a partial prepayment of such Base
Rental Payments, the Property is damaged or destroyed or taken by eminent domain, or a defect in title
to the Property is discovered, the City shall not be entitled to, and by such prepayment waives the right
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of, abatement of such prepaid Base Rental Payments and the City shall not be entitled to any
reimbursement of such Base Rental Payments.
(d)If all of the Base Rental Payments areprepaid in accordance with the provisions
of this Lease Agreement then, as of the date of such prepayment pursuant to subsection (a) of this
Section and, if applicable, the corresponding provisions hereof relating to the prepayment of Base
Rental Payments attributable to Additional Bonds, or deposit pursuant to subsection (b) of this Section
and, if applicable, such corresponding provisions, and payment of all other amounts owed under this
Lease Agreement, the term of this Lease Agreement shall be terminated.
(e)Prepayments of Base Rental Payments attributable to the Series 2016A Bonds
made pursuant to this Section shall be applied to the redemption of the Series 2016A Bonds as directed
by the City and as provided in Section 4.01 of the Indenture.
(f)Before making any prepayment pursuant to this Article, the City shall give
written notice to the Authority and the Trustee specifying the date on which the prepayment will be
made, which date shall be not less than 45 nor more than 60 days from the date such notice is given to
the Authority.
ARTICLE VIII
COVENANTS
Section 8.01 Right of Entry. The Authority and its assignees shall have the right to enter
upon and to examine and inspect the Property during reasonable business hours (and in emergencies
at all times) for any purpose connected with the Authority’s rights or obligations under this Lease
Agreement, and for all other lawful purposes.
Section 8.02 Liens. In the event the City shall at any time during the term of this Lease
Agreement cause any changes, alterations, additions, improvements, or other work to be done or
performed or materials to be supplied, in or upon the Property, the City shall pay, when due, all sums
of money that may become due for, or purporting to be for, any labor, services, materials, supplies or
equipment furnished or alleged to have been furnished to or for the City in, upon or about the Property
and which may be secured by a mechanics’, materialmen’s or other lien against the Property or the
Authority’s interest therein, and will cause each such lien to be fully discharged and released at the
time the performance of any obligation secured by any such lien matures or becomes due, except that,
if the City desires to contest any such lien, it may do so as long as such contestment is in good faith.
If any such lien shall be reduced to final judgment and such judgment or such process as may be issued
for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the
City shall forthwith pay and discharge said judgment.
Section 8.03 Quiet Enjoyment. The parties hereto mutually covenant that the City, by
keeping and performing the covenants and agreements herein contained, shall at all times during the
term of this Lease Agreement peaceably and quietly have, hold and enjoy the Property without suit,
trouble or hindrance from the Authority.
Section 8.04 Authority Not Liable. The Authority and its directors, officers, agents and
employees, shall not be liable to the City or to any other party whomsoever for any death, injury or
damage that may result to any person or property by or from any cause whatsoever in, on or about the
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Property. To the extent permitted by law, the City shall, at its expense, indemnify and hold the
Authority and the Trustee and all directors, members, officers and employees thereof harmless against
and from any and all claims by or on behalf of any person, firm, corporation or governmental authority
arising from the acquisition, construction, occupation, use, operation, maintenance, possession,
conduct or management of or from any work done in or about the Property or from the subletting of
any part thereof, including any liability for violation of conditions, agreements, restrictions, laws,
ordinances, or regulations affecting the Property or the occupancy or use thereof, but excepting the
negligence or willful misconduct of the persons or entity seeking indemnity. The City also covenants
and agrees, at its expense, to pay and indemnify and save the Authority and the Trustee and all
directors, officers and employees thereof harmless - against and from any and -all claims arising from
(a) any condition of the Property and the adjoining sidewalks and passageways, (b) any breach or
default on the part of the City in the performance of any covenant or agreement to be performed by the
City pursuant to this Lease Agreement, (c) any act or negligence of licensees in connection with their
use, occupancy or operation of the Property, or (d) any accident, injury or damage whatsoever caused
to any person, firm or corporation in or about the Property or upon or under the sidewalks and
passageways and from and against all costs, reasonable counsel fees, expenses and liabilities incurred
in any action or proceeding brought by reason of any claim referred to in this Section, but excepting
the negligence or willful misconduct of the person or entity seeking indemnity. In the event that any
action or proceeding is brought against the Authority or the Trustee or any director, member, officer
or employee thereof, by reason of any such claim, the City, upon notice from the Authority or the
Trustee or such director, member, officer employee thereof, covenants to resist or defend such action
or proceeding by counsel reasonably satisfactory to the Authority or the Trustee or such director,
member, officer or employee thereof.
Section 8.05 Assignment and Subleasing. Neither this Lease Agreement nor any interest
of the City hereunder shall be sold, mortgaged, pledged, assigned, or transferred by the City by
voluntary act or by operation by law or otherwise. The Property may not be subleased in whole or in
part by the City without the prior written consent of the Authority. Any such sublease shall be subject
to all of the following conditions:
(a)this Lease Agreement and the obligation of the City to make all Rental
Payments hereunder shall remain the primary obligation of the City;
(b)the City shall, within 30 days after the delivery thereof, furnish or cause to be
furnished to the Authority and the Trustee a true and complete copy of such sublease;
(c)no such sublease by the City shall cause the Property to be used for a purpose
other than a governmental or proprietary function authorized under the provisions of the Constitution
and laws of the State of California;
(d)any sublease of the Property by the City shall explicitly provide that such
sublease is subject to all rights of the Authority under the Lease Agreement, including, the right to
re-enter and re-let the Property or terminate the Lease Agreement upon a default by the City; and
(e)the City shall furnish the Authority and the Trustee with an Opinion of Counsel
to the effect that such sublease will not, in and of itself, cause the interest on the Bonds to be included
in gross income for federal income tax purposes.
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Section 8.06 Title to Property. Upon the termination or expiration of this Lease Agreement
(other than as provided in Section 6.01 and Section 7.01 hereof), and the first date upon which the
Bonds are no longer Outstanding, all right, title and interest in and to the Property shall vest in the City.
Upon any such termination or expiration, the Authority shall execute such conveyances, deeds and
other documents as may be necessary to effect such vesting of record.
Section 8.07 Authority’s Purpose. The Authority covenants that, prior to the discharge of
this Lease Agreement and the Bonds, it will not engage in any activities inconsistent with the purposes
for which the Authority is organized, as set forth in the Joint Powers Agreement.
Section 8.08 Representations of the City. The City represents and warrants to the
Authority that (a) the City has the full power and authority to enter into, to execute and to deliver this
Lease Agreement and the Indenture, and to perform all of its duties and obligations hereunder and
thereunder, and has duly authorized the execution and delivery of this Lease Agreement and the
Indenture, and (b) the Property will be used in the performance of essential governmental functions.
Section 8.09 Representation of the Authority. The Authority represents and warrants to
the City that the Authority has the full power and authority to enter into, to execute and to deliver this
Lease Agreement, the Assignment Agreement and the Indenture, and to perform all of its duties and
obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease
Agreement, the Assignment Agreement and the Indenture.
ARTICLE IX
NO CONSEQUENTIAL DAMAGES;
USE OF THE PROPERTY; SUBSTITUTION OR RELEASE
Section 9.01 No Consequential Damages. In no event shall the Authority or the Trustee be
liable for any incidental, indirect, special or consequential damage in connection with or arising out of
this Lease Agreement or the City’s use of the Property.
Section 9.02 Use of the Property. The City will not use, operate or maintain the Property
improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated
by this Lease Agreement. In addition, the City agrees to comply in all respects (including, without
limitation, with respect to the use, maintenance and operation of the Property) with all laws of the
jurisdictions in which its operations may extend and any legislative, executive, administrative or
judicial body exercising any power or jurisdiction over the Property; provided, however, that the City
may contest in good faith the validity or application of any such law or rule in any reasonable manner
which does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to
any of the Property or its interest or rights under this Lease Agreement.
Section 9.03 Substitution or Release of the Property. The City shall have the right to
substitute alternate real property for any portion of the Property or to release a portion of the Property
from this Lease Agreement. All costs and expenses incurred in connection with such substitution or
release shall be borne by the City. Notwithstanding any substitution or release of Property pursuant to
this subsection, there shall be no reduction in or abatement of the Base Rental Payments due from the
City hereunder as a result of such substitution or release. Any such substitution or release of any
portion of the Property shall be subject to the following specific conditions, which are hereby made
conditions precedent to such substitution or release:
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(a)an independent certified real estate appraiser selected by the City shall have
found (and shall have delivered a certificate to the City and the Trustee setting forth its findings) that
the Property, as constituted after such substitution or release, (i) has an annual fair rental value at least
equal to the maximum Base Rental Payments payable by the City in any Rental Period, and (ii) has a
useful life in excess of the final maturity of any Outstanding Bonds;
(b)the City shall have obtained or caused to be obtained a CLTA or ALTA title
insurance policy or policies with respect to any substituted property in the amount at least equal to the
aggregate principal amount of any Outstanding Bonds of the type and with the endorsements described
in Section 5.02 hereof;
(c)the City shall have provided the Trustee with an Opinion of Counsel to the
effect that such substitution or release will not, in and of itself, cause the interest on the Bonds to be
included in gross income for federal income tax purposes;
(d)the City, the Authority and the Trustee shall have executed, and the City shall
have caused to be recorded with the Riverside County Recorder, any document necessary to reconvey
to the City the portion of the Property being released and to include any substituted real property in the
description of the Property contained herein and in the Ground Lease; and
(e)the City shall have provided notice of such substitution to each rating agency
then rating the Bonds.
ARTICLE X
MISCELLANEOUS
Section 10.01 Law Governing. THIS LEASE AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF
CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST.
Section 10.02 Notices. All written notices, statements, demands, consents, approvals,
authorizations, offers, designations, requests or other communications hereunder shall be given to the
party entitled thereto at its address set forth below, or at such other address as such party may provide
to the other parties in writing from time to time, namely:
If to the City:City of Lake Elsinore
130 South Main Street
Lake Elsinore, California 92530
Attention: City Manager
If to the Authority:Lake Elsinore Facilities Financing Authority
c/o City of Lake Elsinore
130 South Main Street
Lake Elsinore, California 92350
Attention: Executive Director
Each such notice, statement, demand, consent, approval, authorization, offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
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addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic
communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate
answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt
requested, deposited with the United States mail postage prepaid, 72 hours after such notice is
deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid,
24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at
the address specified in this Section.
Section 10.03 Validity and Severability. If for any reason this Lease Agreement shall be
held by a court of competent jurisdiction to be void, voidable or unenforceable by the Authority or by
the City, or if for any reason it is held by such a court that any of the covenants and conditions of the
City hereunder, including the covenant to pay Rental Payments, is unenforceable for the full term
hereof; then and in such event this Lease Agreement is and shall be deemed to be a Lease Agreement
under which the Rental Payments are to be paid by the City annually in consideration of the right of
the City to possess, occupy and use the Property, and all of the terms, provisions and conditions of this
Lease Agreement, except to the extent that such terms, provisions and conditions are contrary to or
inconsistent with such holding, shall remain in full force and effect.
Section 10.04 Net-Net-Net Lease. This Lease Agreement shall be deemed and construed to
be a “net-net-net lease” and the City hereby agrees that the Rental Payments shall be an absolute net
return to the Authority, free and clear of any expenses, charges or set-offs whatsoever and
notwithstanding any dispute between the City and the Authority.
Section 10.05 Taxes. The City shall pay or cause to be paid all taxes and assessments of any
type or nature charged to the Authority or affecting the Property or the respective interests or estates
therein; provided, however, that with respect to special assessments or other governmental charges that
may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such
installments as are required to be paid during the term of this Lease Agreement as and when the same
become due.
The City or any sublessee may, at the City’s or such sublessee’s expense and in its name, in
good faith contest any such taxes, assessments, utility and other charges and, in the event of any such
contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the
period of such contest and any appeal therefrom unless the Authority or the Trustee shall notify the
City or such sublessee that, in the opinion of independent counsel, by nonpayment of any such items,
the interest of the Authority in the Property will be materially endangered or the Property, or any part
thereof, will be subject to loss or forfeiture, in which event the City or such sublessee shall promptly
pay such taxes, assessments or charges or provide the Authority with full security against any loss
which may result from nonpayment, in form satisfactory to the Authority and the Trustee.
Section 10.06 Section Headings. All section headings contained herein are for convenience
of reference only and are not intended to define or limit the scope of any provision of this Lease
Agreement.
Section 10.07 Amendments.
(a)This Lease Agreement and the Ground Lease may be amended and the rights
and obligations of the Authority and the City hereunder and thereunder may be amended at any time
by an amendment hereto or thereto which shall become binding upon execution and delivery by the
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Authority and the City, but only with the prior written consent of the Owners of a majority of the
principal amount of the Bonds then Outstanding pursuant to the Indenture, provided that no such
amendment shall (i) extend the payment date of any Base Rental Payments, reduce the interest
component or principal component of any Base Rental Payments or change the prepayment terms and
provisions, without the prior written consent of the Owner of each Bond so affected, or (ii) reduce the
percentage of the principal amount of the Bonds the consent of the Owners of which is required-for
the execution of any amendment of this Lease Agreement or the Ground Lease.
(b)This Lease Agreement and the Ground Lease and the rights and obligations of
the Authority and the City hereunder and thereunder may also be amended at any time by an
amendment hereto or thereto which shall become binding upon execution by the Authority and the
City, without the written consents of any Owners, but only to the extent permitted by law and only for
any one or more of the following purposes:
(i)to add to the agreements, conditions, covenants and terms required by
the Authority or the City to be observed or performed herein or therein other agreements, conditions,
covenants and temps thereafter to be observed or performed by the Authority or the City, or to
surrender any right or power reserved herein or therein to or conferred herein or therein on the
Authority or the City, and which in either case shall not materially adversely affect the interests of the
Owners, as evidenced by an Opinion of Bond Counsel;
(ii)to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein or therein or in regard to
questions arising hereunder or thereunder which the Authority or the City may deem desirable or
necessary and not inconsistent herewith or therewith, and which shall not materially adversely affect
the interests of the Owners, as evidenced by an Opinion of Bond Counsel;
(iii)to make such additions, deletions or modifications as may be necessary
or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest
on the Bonds;
(iv)to provide for the substitution or release of a portion of the Property in
accordance with the provisions of Section 9.03 hereof;
(v)to provide for the issuance of Additional Bonds in accordance with
Article III of the Indenture; or
(vi)to make such other changes herein or therein or modifications hereto
or thereto as the Authority or the City may deem desirable or necessary, and which shall not materially
adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel.
Section 10.08 Assignment. The City and the Authority hereby acknowledge the assignment
of this Lease Agreement (except for the Authority’s obligations and its rights to give consents or
approvals hereunder), and the Base Rental Payments payable hereunder, to the Trustee pursuant to the
Assignment Agreement.
Section 10.09 Execution. This Lease Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all together shall constitute but one
and the same Lease Agreement.
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to
be executed by their respective officers thereunto duly authorized, all as of the day and year first above
written.
CITY OF LAKE ELSINORE
By:
Grant Yates
City Manager
ATTEST:
Susan M. Domen, MMC
City Clerk
LAKE ELSINORE FACILITIES FINANCING
AUTHORITY
By:
Grant Yates
Executive Director
ATTEST:
Susan M. Domen, MMC
Secretary
APPROVED AS TO FORM:
Stradling Yocca Carlson & Rauth,
Special Counsel
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in the Property conveyed under the foregoing to the City of
Lake Elsinore, a municipal corporation and a general law city duly organized and existing under the
Constitution and laws of the State of California, is hereby accepted by the undersigned officer or agent
on behalf of the City Council of the City of Lake Elsinore, pursuant to authority conferred by
resolutions of the said City Council adopted on _______, 2016 and the grantee consents to recordation
thereof by its duly authorized officer.
Dated: _________, 2016 CITY OF LAKE ELSINORE
By:
Jason Simpson
Assistant City Manager
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On ___________________ before me, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who
proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On ___________________ before me, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who
proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC
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EXHIBIT A
DESCRIPTION OF THE PROPERTY
All that real property situated in the County of Riverside, State of California, described as
follows:
B-1
EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE
Date Principal Component Interest Component Total Base Rental