City Council and Municipal Improvements w h ,, lArts& ( ion COrpOraL V11 Memorandum TO: HONORABLE MAYOR, CITY COUNCIL, DATE: March 20, 2012 AND MUNICIPAL IMPROVEMENTS CORPORATION BOARD MEMBERS ITEM NO: 2 FROM: OFFICE OF THE CITY MANAGER WARD: 1 FINANCE DIVISON SUBJECT: PUBLIC HEARING — APPROVAL OF A $ 4 MILLION CAPITAL LEASE TRANSACTION WITH PINNACLE PUBLIC FINANCE, INC. TO PROVIDE FINANCING FOR A PORTION OF RYAN BONAMINIO PARK AT THE TEQUESQUITE ARROYO — RESOLUTION ISSUE The issue before the City Council and Municipal Improvements Corporation Board is approval of the financing for a portion of the project costs for Ryan Bonaminio Park at the Tequesquite Arroyo ( " the park "). The funding will be provided through a capital lease transaction with Pinnacle Public Finance, Inc. RECOMMENDATIONS That the City Council: 1. Conduct a public hearing to consider approval of a $ 4, 000, 000 capital lease with Pinnacle Public Finance, Inc. to finance a portion of the park; 2. Adopt the attached resolution ( Attachment " A ") authorizing proceedings to finance improvement to the park and approving related documents ( Attachments " C ", " D ", and " F ") and actions; and 3. Authorize the City Manager, or Finance Director, to execute all documents related to the transaction and to make minor, non - substantive changes. That the Municipal Improvements Corporation Board: 1. Adopt the attached resolution ( Attachment " B ") authorizing proceedings to assist the City of Riverside in financing improvements to the park and approving related documents and actions ( Attachments " C ", " D" and " E "); and 2. Authorize the President, Vice President, or Treasurer to execute all documents related to the transaction and to make minor, non - substantive changes. 2 - 1
Transcript
City Council and
Municipal Improvementsw h ,, lArts& ( ion COrpOraL V11 Memorandum
TO: HONORABLE MAYOR, CITY COUNCIL, DATE: March 20, 2012AND MUNICIPAL IMPROVEMENTS
CORPORATION BOARD MEMBERS ITEM NO: 2
FROM: OFFICE OF THE CITY MANAGER WARD: 1
FINANCE DIVISON
SUBJECT: PUBLIC HEARING — APPROVAL OF A $4 MILLION CAPITAL LEASETRANSACTION WITH PINNACLE PUBLIC FINANCE, INC. TO PROVIDEFINANCING FOR A PORTION OF RYAN BONAMINIO PARK AT THE
TEQUESQUITE ARROYO — RESOLUTION
ISSUE
The issue before the City Council and Municipal Improvements Corporation Board is approval of thefinancing for a portion of the project costs for Ryan Bonaminio Park at the Tequesquite Arroyo ( "thepark "). The funding will be provided through a capital lease transaction with Pinnacle PublicFinance, Inc.
RECOMMENDATIONS
That the City Council:
1. Conduct a public hearing to consider approval of a $4,000,000 capital lease with PinnaclePublic Finance, Inc. to finance a portion of the park;
2. Adopt the attached resolution ( Attachment "A ") authorizing proceedings to financeimprovement to the park and approving related documents (Attachments "C ", "D ", and "F ")
and actions; and
3. Authorize the City Manager, or Finance Director, to execute all documents related to thetransaction and to make minor, non - substantive changes.
That the Municipal Improvements Corporation Board:
1. Adopt the attached resolution (Attachment "B ") authorizing proceedings to assist the City ofRiverside in financing improvements to the park and approving related documents andactions (Attachments "C ", "D" and "E "); and
2. Authorize the President, Vice President, or Treasurer to execute all documents related to thetransaction and to make minor, non - substantive changes.
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Pinnacle Public Finance Capital Lease . Page 2
BACKGROUND
On December 6, 2011, the City Council approved the award of Bid Number 7016 for theconstruction of Tequesquite Park. On March 6, 2012, the City Council approved a change in thename of the park to Ryan Bonaminio Park at the Tequesquite Arroyo in honor of fallen RiversidePolice Department officer Ryan Bonaminio. Included in the December 6, 2011, actions taken by theCity Council was approval of a preliminary plan of finance for the park as described in detail in thefiscal impact section of this report. The plan of finance included $4,000,000 from a subsequent debtissuance which is the action to be approved today.
The proposed financing mechanism for the $4,000,000 component of the project cost is a capitallease with Pinnacle Public Finance, Inc. Staff reviewed various alternatives including a bank loan, abond transaction and a capital lease. Once the capital lease structure was determined to be themost advantageous, alternative proposals were obtained and the City selected the best proposalpresented. The interest rate for the transaction will be 3.05% and is below the rate that the Citycould achieve if it sought financing through other debt structures. Additionally, for a transaction ofthis size, the costs of issuance were substantially less for a capital lease than they would have beenfor other debt structures. The transaction will be for a term of 10 years with level, semi - annual debtservice payments of approximately $468,000 per year.
As part of the capital lease structure, assets are required to be leased first from the City to theMunicipal Improvements Corporation and then back from the Municipal Improvements Corporationto the City. This is similar to the structure utilized for the City's various outstanding certificates ofparticipation and is a standard structure for these types of financings. Pinnacle Public Finance, Inc.has required that the City pledge assets to the transaction that have a high level of essentiality tothe City — meaning that the City would not likely default on the debt service payments due to thecritical nature of the assets pledged to the transaction. Accordingly, in lieu of the park itself six firestations were selected as the collateral for the transaction. The aggregate value of the six stationsis slightly more than the $4,000,000 total amount of the proposed transaction, which is the reasonthat six stations were required. The fire stations that will be encumbered as a result of the leaseagreement are:
1. Fire Station 2 — Arlington2. Fire Station 3 — Magnolia Center3. Fire Station 4 — University4. Fire Station 8 — La Sierra
5. Fire Station 11 Orangecrest6. Fire Station 12 La Sierra South
At the conclusion of the lease term, the assets will be released from the lease. It should be notedthat at all times during the term of the lease, the assets will remain the property of the City, thoughsubject to the terms of the lease agreement.
The financing team for the transaction consists of representatives from Pinnacle Public Finance,Inc., Special Counsel from Best, Best, & Krieger, and internal staff from the City Manager's Officeand the City Attorney's Office.
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Pinnacle Public Finance Capital Lease . Page 3
FISCAL IMPACT
Annual debt service payments are expected to be approximately $468,000 per year and will befunded from the General Fund. The first payment will be due in Fiscal Year 2012/13 and will beincluded in the proposed budget to be submitted to the City Council in June.
Previously appropriated funding for the design and environmental study for the park was providedby the Local Park Fees Fund, the City's 2008 Certificates of Participation issuance, and the GeneralFund. The remainder of the project funding approved on December 6, 2011, was from the 2008Certificates of Participation issuance in the amount of $4,147,703. With the approval of thefinancing today, total project funding in the amount of $10,136,358will be available, all of which wasappropriated at or before the December 6, 2011, City Council meeting.
Prepared by: Scott Catlett, Assistant Finance DirectorCertified as to availabilityof funds: Brent A. Mason, Finance Director /Treasurer
Approved by: Brent A. Mason, Finance Director/Treasurerfor Scott C. Barber, City Manager
Approved as to form: Gregory P. Priamos, City Attorney
Attachments:
A. Resolution Authorizing Proceedings to Finance Improvement to the Park and ApprovingRelated Documents and Actions
B. Resolution Authorizing Proceedings to AssistImprovements to the Park and Approving Related
C. Lease AgreementD. Site and Facilities Lease
E. Assignment AgreementF. Project Fund Agreement
the City of Riverside in FinancingDocuments and Actions
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RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RIVERSIDE AUTHORIZING PROCEEDINGS TO FINANCE
IMPROVEMENTS TO THE RYAN BONAMINIO PARK AT THE
TEQUESQUITE ARROYO AND APPROVING RELATED
DOCUMENTS AND ACTIONS
WHEREAS, the City of Riverside ( the " City ") desires to finance
improvements to the Ryan Bonaminio Park at the Tequesquite Arroyo (the "Project')by entering into a lease /leaseback arrangement with the City of Riverside MunicipalImprovements Corporation (the "Corporation ") whereby the City will lease six Cityfire stations (the "Sites ") to the Corporation and the Corporation will immediatelylease the Sites back to the City; and
WHEREAS, the City Council has conducted a public hearing on the proposedfinancing, notice of which was duly published; and
WHEREAS, the City Council wishes at this time to approve proceedings tofinance the Project and to approve related documents and actions;
NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of theCity of Riverside as follows:
Section 1 . Approval of Financing. The City Council hereby approves thefinancing of the Project. To that end, the City Council hereby approves each of thefollowing agreements in substantially the respective forms on file with the CityClerk together with any changes therein or additions thereto deemed advisable by theCity Manager or Finance Director, and the execution thereof by the City Manager orFinance Director shall be conclusive evidence of such approval:
Site Lease between the City and the Corporation, whereby the Cityleases the Sites to the Corporation in consideration of the agreementof the Corporation to provide sufficient funds to finance the Project.
Lease Agreement between the City and the Corporation, wherebythe Corporation leases the Sites back to the City in consideration ofthe payment of semiannual lease payments by the City as rental forthe Sites.
Project Fund Agreement among the City, Pinnacle Public Finance,Inc. and The Bank of New York Mellon Trust Company, N.A., orsuch other financial institution as may be selected by the CityManager, Chief Financial Officer or Finance Director, under which
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financing proceeds will be held, invested and administered while theProject is being constructed.
Any of the City Manager or Finance Director are and each of them is herebyauthorized and directed for and in the name and on behalf of the City to execute thefinal form of each of the foregoing documents.
Section 2 . Material Terms of Lease Agreement. The Lease Agreementshall be for a term of not more than ten years, the aggregate principal amountof the lease payments shall not exceed $4,000,000 and the interest components ofthe lease payments thereunder shall be computed at an interest rate of 3.05% perannum.
Section 3 . Selection of Sites as Leased Property. The City intends to usethe following six fire stations as the Leased Property under the Site Lease and theLease Agreement: Magnolia Center Station at 6395 Riverside Avenue; ArlingtonStation located at 9449 Andrew Street; LaSierra Station located at 11076 Hole Avenue;LaSierra South Station located at 10692 Indiana; Station 4 located at 3510 CranfordStreet; and Station 11 located at 19595 Orange Terrace Parkway. If said fire stations,or any of them, cannot be leased as contemplated by the Site Lease and the LeaseAgreement, the City Manager is hereby directed and authorized to determine suchother City property that, in consultation with the City Attorney, will be suitable asthe Leased Property under the Site Lease and the Lease Agreement.
Section 4 . Official Actions. The City Manager and Finance Director and allother officers of the City are each authorized and directed in the name and onbehalf of the City to make any and all assignments, certificates, requisitions,agreements, notices, consents, instruments of conveyance, warrants and otherdocuments, which they or any of them might deem necessary or appropriate in orderto consummate any of the transactions contemplated by the agreements anddocuments approved under this Resolution. Whenever in this resolution any officerof the City is authorized to execute or countersign any document or take any action,such execution, countersigning or action may be taken on behalf of such officerby any person designated by such officer to act on his or her behalf in the casesuch officer is absent or unavailable.
Section 5 . Special Counsel. The law firm of Best Best & Krieger LLP ishereby retained as special counsel to the City in connection with the financingdescribed herein on the terms and conditions to be agreed upon by such firm inwriting with the Chief Financial Officer or Finance Director.
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Section 6 . Effective Date. This Resolution shall take effect from and afterthe date of its passage and adoption.
PASSED AND ADOPTED at a regular meeting of the City Council of theCity of Riverside on the day of 2012, by the followingvote:
AYES:
NOES:
ABSENT:
ABSTAIN
RONALD O. LOVERIDGE
Mayor of the City of RiversideAttest:
COLLEEN J. NICOL
City Clerk of the City of Riverside
IN WITNESS WHEREOF, I have hereunto set my hand and affixed theofficial seal of the City of Riverside, California, this day of
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CITY
OF RIVERSIDE MUNICIPAL IMPROVEMENTS CORPORATION
AUTHORIZING PROCEEDINGS TO ASSIST THE CITY OF
RIVERSIDE IN FINANCING IMPROVEMENTS TO THE RYAN
BONAMINIO PARK AT THE TEQUESQUITE ARROYO ANDAPPROVING RELATED DOCUMENTS AND ACTIONS
WHEREAS, the City of Riverside ( the " City ") desires to finance
improvements to the Ryan Bonaminio Park at the Tequesquite Arroyo (the "Project')by entering into a lease /leaseback arrangement with the City of Riverside MunicipalImprovements Corporation (the "Corporation ") whereby the City will lease six Cityfire stations (the "Sites ") to the Corporation and the Corporation will immediatelylease the Sites back to the City; and
WHEREAS, the Corporation has been organized for the purpose of assistingthe City in financing public improvements, including parks, and is authorized to enterinto financing and lease documents for that purpose; and
WHEREAS, the Board of Directors wishes at this time to approve
proceedings to assist the City in financing the Project and to approve relateddocuments and actions;
NOW, THEREFORE, IT IS HEREBY RESOLVED by the Board of Directorsof the City of Riverside Municipal Improvements Corporation as follows:
Section 1 . Approval of Financing. The Board of Directors hereby approvesassisting the City in financing the Project. To that end, the Board of Directorshereby approves each of the following agreements in substantially the respectiveforms on file with the City Clerk of the City together with any changes therein oradditions thereto deemed advisable by the President or Vice President or Treasurer,and the execution thereof by the President or Vice President or Treasurer shall beconclusive evidence of such approval:
Site Lease between the City and the Corporation, whereby the Cityleases the Sites to the Corporation in consideration of the agreementof the Corporation to provide sufficient funds to finance the Project.
Lease Agreement between the City and the Corporation, wherebythe Corporation leases the Sites back to the City in consideration ofthe payment of semiannual lease payments by the City as rental forthe Sites.
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Assignment Agreement between Pinnacle Public Finance, Inc. (theAssignee ") under which the Corporation assigns its rights underthe Lease to the Assignee.
Any of the President or Vice President or Treasurer are and each of them ishereby authorized and directed for and in the name and on behalf of theCorporation to execute the final form of each of the foregoing documents.
Section 2 . Material Terms of Lease Agreement. The Lease Agreementshall be for a term of not more than ten years, the aggregate principal amountof the lease payments shall not exceed $4,000,000 and the interest components ofthe lease payments thereunder shall be computed at an interest rate of 3.05% perannum.
Section 3 . Official Actions. The President, Vice President and Treasurerand all other officers of the Corporation are each authorized and directed in thename and on behalf of the Corporation to make any and all assignments,certificates, requisitions, agreements, notices, consents, instruments of conveyance,warrants and other documents, which they or any of them might deem necessary orappropriate in order to consummate any of the transactions contemplated by theagreements and documents approved under this Resolution. Whenever in thisresolution any officer of the Corporation is authorized to execute or countersign anydocument or take any action, such execution, countersigning or action may betaken on behalf of such officer by any person designated by such officer to acton his or her behalf in the case such officer is absent or unavailable.
Section 4 . Effective Date. This Resolution shall take effect from and afterthe date of its passage and adoption.
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PASSED AND ADOPTED at a regular meeting of the Board of Directors ofthe City of Riverside Municipal Improvements Corporation on the day of
2012, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
NANCY HART
Chair
Attest:
COLLEEN J. NICOL
City Clerk of the City of Riverside
IN WITNESS WHEREOF, I have hereunto set my hand and affixed theofficial seal of the City of Riverside, California, this day of
ARTICLE 11 COVENANTS, REPRESENTATIONS AND WARRANTIES ...... ..............................5
Section 2.1. Covenants, Representations and Warranties of the City . ..............................5Section 2.2. Covenants, Representations and Warranties of the Corporation ...................6
ARTICLE III DEPOSIT AND APPLICATION OF FUNDS; CONSTRUCTION OFPROJECT......................................................................... ...............................8
Section3.1. Deposit of Moneys .......................................................... ..............................8
Section 3.2. Appointment of City as Agent of Corporation ................ ..............................8
Section 3.3. Acquisition, Constriction, Rehabilitation and Installation oftheProject ................................................................... ..............................8
Section 3.4. Disposition of Excess Project Funds ............................... ..............................9
Section 3.5. Investment of Project Funds ............................................ ..............................9
ARTICLE IV LEASE PAYMENTS; SUBSTITUTION AND RELEASE OFPROPERTY...................................................................... ...............................9
Section 4.1. Lease of Leased Property ................................................ ..............................9
Section4.2. Term ................................................................................ ..............................9
ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NETPROCEEDS ...................................................................... .............................19
Section 6.1. Application of Net Proceeds ........................................... .............................19
Section 6.2. Termination or Abatement Due to Eminent Domain ..... .............................19
Section 6.3. Abatement Due to Damage or Destruction .................... .............................19
ARTICLE VII OTHER COVENANTS ....................................................... .............................20
Section 7.1. Disclaimer of Warranties ................................................ .............................20
Section 7.2. Access to the Leased Property ........................................ .............................20
Section 7.3. Release and Indemnification Covenants ........................ .............................20
Section 7.4. Assignment and Subleasing by the City ......................... .............................21
Section 7.5. Amendment of Lease Agreement ................................... .............................21
Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance orEminentDomain ........................................................ .............................27
Section 9.4. Credit for Amounts on Deposit ...................................... .............................27
ARTICLE X MISCELLANEOUS ........................................................... .............................27
APPENDIX A Description of the Leased PropertyAPPENDIX B Schedule of Lease Payments
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LEASE AGREEMENT
This LEASE AGREEMENT (this Lease "), dated as of March 27, 2012, is between the CITYOF RIVERSIDE MUNICIPAL IMPROVEMENTS CORPORATION, a California nonprofit corporation (the
Corporation "), as lessor, and the CITY OF RIVERSIDE, a charter city and municipal corporationorganized and existing under its charter and the Constitution and the laws of the State ofCalifornia (the "City "), as lessee.
BACKGROUND:
1. The City wishes to finance the acquisition, constriction, rehabilitation andinstallation of certain improvements to certain of the City's real property that will be a publicpark known as Ryan Bonaminio Park at the Tequesquite Arroyo (the "Project ").
2. The Corporation has been organized for the purpose of assisting the City infinancing public improvements, including parks, and is authorized to enter into financing andlease documents for that purpose.
3. In order to provide funds to finance the Proj ect, the City has agreed to lease to theCorporation the land and buildings, improvements and facilities which constitute the followingsix City fire stations: Magnolia Center Station at 6395 Riverside Avenue; Arlington Stationlocated at 9449 Andrew Street; LaSierra Station located at 11076 Hole Avenue; LaSierra SouthStation located at 10692 Indiana; Station 4 located at 3510 Cranford Street; and Station 11located at 19595 Orange Terrace Parkway, all in the City, and more particularly described inAppendix A attached hereto and by this reference incorporated herein ( such land andimprovements being herein referred to as the ` Leased Property "), under a Site and FacilityLease dated as of March 27, 2012 and recorded concurrently herewith, between the City as lessorand the Corporation as lessee, and the Corporation has agreed to lease the Leased Property backto the City.
4. The Corporation has assigned certain of its rights in this Lease to Pinnacle PublicFinance, Inc. under an Assignment Agreement dated as of March 27, 2012, which has beenrecorded concurrently herewith.
5. The City is authorized to enter into a lease - leaseback arrangement with theCorporation to provide financing for the Project under Sections 37350 and following of theCalifornia Government Code.
AGREEMENT:
In consideration of the foregoing and the material covenants hereinafter contained, theCity and the Corporation formally covenant, agree and bind themselves as follows:
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PAV
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
Section L L Definitions. All terms defined in this Section 1.1 have the meanings hereinspecified for all purposes of this Lease.
Assignee " means (a) initially, Pinnacle Public Finance, Inc., as assignee of certain rightsof the Corporation hereunder, and (b) any other entity to whom the rights of the Corporationhereunder are assigned.
Assignment" means the Assignment Agreement dated as of March 27, 2012, betweenthe Corporation as assignor and the Assignee as assignee, as originally executed or as thereafteramended under any duly authorized and executed amendments thereto.
Bond Counsel " means (a) Best Best & Krieger LLP, or (b) any other attorney or firm ofattorneys acceptable to the Assignee of nationally recognized expertise with respect to legalmatters relating to obligations the interest on which is excludable from gross income underSection 103 of the Tax Code.
Business Day" means a day other than a Saturday, Sunday or legal holiday, on whichbanking institutions are not closed in the State of California.
Closing Date " means the date of execution and delivery of this Lease by the partieshereto, being March 27, 2012.
Corporation " means the City of Riverside Municipal Improvements Corporation, aCalifornia nonprofit corporation duly organized and existing under the laws of the State ofCalifornia.
City " means the City of Riverside, a charter city and municipal corporation dulyorganized and existing under its charter and the Constitution and laws of the State of California.
Event ofDefault" means any of the events of default as defined in Section 8.1.
ExcessPiFunds " will have the meaning set forth in Section 3.4.
Fiscal Year" means each twelve -month period during the Term of this Leasecommencing on July I in any calendar year and ending on June 30 in the next succeedingcalendar year, or any other twelve -month period selected by the City as its fiscal year period.
Lease " means this Lease Agreement, dated as of March 27, 2012, between theCorporation, as lessee and sublessor, and the City as lessor and sublessee.
Lease Payment" means all payments required to be paid by the City under Section 43,including any prepayment thereof under Section 9.2 or 93.
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Lease Payment Date " means March 15 and September 15 in each year, commencingSeptember 15, 2012, and continuing to and including the date on which the Lease Payments arepaid in full.
Leased Property" means the real property which is more particularly described inAppendix A and all buildings, improvements and facilities at any time situated thereon,consisting generally of the following six City fire stations: Magnolia Center Station at 6395Riverside Avenue; Arlington Station located at 9449 Andrew Street; LaSierra Station located at11076 Hole Avenue; LaSierra South Station located at 10692 Indiana; Station 4 located at 3510Cranford Street; and Station 11 located at 19595 Orange Terrace Parkway, all in the City. In theevent of the substitution of any property under Section 4.5 or the release of any property underSection 4.6(a), the description of the Leased Property will be modified to reflect suchsubstitution or release.
Net Proceeds " means any eminent domain award (including any proceeds of sale to agovernmental entity under threat of the exercise of eminent domain powers) or any insuranceaward under Section 5.4, paid with respect to the Leased Property, to the extent remaining afterpayment therefrom of all expenses incurred in the collection thereof.
Permitted Encumbrances" means, as of any time, with respect to the Leased Property:a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which theCity may permit to remain unpaid under Article V of this Lease; (b) this Lease, the Site Leaseand the Assignment; (c) any right or claim of any mechanic, laborer, materialman, supplier orvendor not filed or perfected in the manner prescribed by law; (d) the exceptions disclosed in thetitle insurance policy issued with respect to the Leased Property issued as of the Closing Date;and (e) any easements, rights of way, mineral rights, drilling rights and other rights, reservations,covenants, conditions or restrictions which exist of record and which the City certifies in writingwill not materially impair the use of the Leased Property for its intended purposes.
Project" means the acquisition, constriction, rehabilitation and installation of certainimprovements in and to certain real property of the City that will be a public park known as RyanBonaminio Park at the Tequesquite Arroyo.
Project Costs" means, with respect to the Project, all costs of the acquisition,constriction, rehabilitation and installation thereof which are paid from moneys on deposit in theProject Fund, including but not limited to:
a) all costs required to be paid to any person under the terms of anyagreement for or relating to the Project;
b) obligations incurred for labor and materials in connection with the Project;
c) the cost of performance or other bonds and any and all types of insurancethat may be necessary or appropriate to have in effect in connection with the Project;
3-
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d) all costs of engineering, architectural services and other preliminaryinvestigation expenses, including the actual out -of- pocket costs for site investigations,surveys, hazardous materials investigations, test borings, surveys, estimates, plans andspecifications and preliminary investigations therefor, development fees, sales
commissions, and for supervising constriction, as well as for the performance of all otherduties required by or consequent to the Project;
e) any sums required to reimburse the City for advances made for any of theabove items or for any other costs incurred and for work done, including but not limitedto administrative costs of the City, which are properly chargeable to the Project; and
f) all financing costs incurred in connection with the Project, including butnot limited to financing costs incurred in connection with this Lease and the financing ofthe Project.
Project Fund" means the fund by that name established and held by the Project FundCustodian for the benefit of the City under Section 33.
Project Fund Agreement" means the Project Fund Agreement dated as of March 27,2012, among the City, the Assignee and the Project Fund Custodian, relating to theadministration of the Project Fund.
Project Fund Custodian" means The Bank of New York Mellon Trust Company, N.A.,its successors and assigns, as holder of the Project Fund under the Project Fund Agreement.
Rental Period" means (a) for each Lease Payment Date that occurs on March 15, theperiod from the preceding September 16 to (and including) such March 15; and (b) for eachLease Payment Date that occurs on September 15, the period from the preceding March 16 toand including) such September 15.
Site Lease " means the Site and Facility Lease dated as of March 27, 2012, between theCity as lessor and the Corporation as lessee of the Leased Property, as originally executed or asthereafter amended under any duly authorized and executed amendments and supplementsthereto.
Tax Code " means the Internal Revenue Code of 1986 as in effect on the Closing Date orexcept as otherwise referenced herein) as it may be amended to apply to obligations issued onthe Closing Date, together with applicable proposed, temporary and final regulationspromulgated, and applicable official public guidance published, under the Tax Code.
Terri of this Lease " or "Terri " means the time during which this Lease is in effect, asprovided in Section 4.2.
Section 1.2. Interpretation. (a) Unless the context otherwise indicates, words expressedin the singular include the plural and vice versa and the use of the neuter, masculine, or feminine
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gender is for convenience only and include the neuter, masculine or feminine gender, asappropriate.
b) Headings of articles and sections herein and the table of contents hereof are solelyfor convenience of reference, do not constitute a part hereof and do not affect the meaning,constriction or effect hereof.
c) All references herein to "Articles," "Sections" and other subdivisions are to thecorresponding Articles, Sections or subdivisions of this Lease; the words "herein," "hereof,"hereby," "hereunder" and other words of similar import refer to this Lease as a whole and not toany particular Article, Section or subdivision hereof.
ARTICLE 11
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 2.1. Covenants, Representations and Warranties of the City. The City makesthe following covenants, representations and warranties to the Corporation as of the ClosingDate:
a) Due Organization and Existence. The City is a charter city and municipalcorporation duly organized and validly existing under its charter and the Constitution andthe laws of the State of California, has full legal right, power and authority under the lawsof the State of California to enter into this Lease and the Site Lease and to carry out andconsummate all transactions contemplated hereby and thereby, and by proper action theCity has duly authorized the execution and delivery of this Lease and the Site Lease.
b) Due Execution. The representatives of the City executing this Lease andthe Site Lease have been fully authorized to execute the same under a resolution dulyadopted by the City Council of the City.
c) T'alid, Binding and Enforceable Obligations. This Lease and the Site
Lease have been duly authorized, executed and delivered by the City and constitute thelegal, valid and binding agreements of the City enforceable against the City in accordancewith their respective terms.
d) No Conflicts. The execution and delivery of this Lease and the Site Lease,the consummation of the transactions herein and therein contemplated and the fulfillmentof or compliance with the terms and conditions hereof, do not and will not conflict withor constitute a violation or breach of or default (with due notice or the passage of time orboth) under any applicable law or administrative rile or regulation, or any applicablecourt or administrative decree or order, or any indenture, mortgage, deed of trust, lease,contract or other agreement or instrument to which the City is a party or by which it or itsproperties are otherwise subject or bound, or result in the creation or imposition of anyprohibited lien, charge or encumbrance of any nature whatsoever upon any of the
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property or assets of the City, which conflict, violation, breach, default, lien, charge orencumbrance would have consequences that would materially and adversely affect theconsummation of the transactions contemplated by this Lease and the Site Lease or thefinancial condition, assets, properties or operations of the City.
e) Consents and Approvals. No consent or approval of any trustee or holderof any indebtedness of the City or of the voters of the City, and no consent, permission,authorization, order or license of, or filing or registration with, any governmentalauthority is necessary in connection with the execution and delivery of this Lease and theSite Lease, or the consummation of any transaction herein or therein contemplated,except as have been obtained or made and as are in full force and effect.
f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmentalauthority pending or, to the knowledge of the City after reasonable investigation,threatened against or affecting the City or the assets, properties or operations of the Citywhich, if determined adversely to the City or its interests, would have a material andadverse effect upon the consummation of the transactions contemplated by or the validityof this Lease or the Site Lease, or upon the financial condition, assets, properties oroperations of the City, and the City is not in default with respect to any order or decree ofany court or any order, regulation or demand of any federal, state, municipal or othergovernmental authority, which default might have consequences that would materiallyand adversely affect the consummation of the transactions contemplated by this Lease orthe Site Lease or the financial conditions, assets, properties or operations of the City.
g) Essential Use. The Leased Property is essential to the proper, efficientand economic operation of the City and serves an essential governmental function ofCity.
Section 2.2. Covenants, Representations and Warranties of the Corporation. The
Corporation makes the following covenants, representations and warranties to the City as of theClosing Date:
a) Due Organization and Existence. The Corporation is a nonprofitcorporation duly organized and existing under the laws of the State of California, has fulllegal right, power and authority to enter into this Lease, the Site Lease and theAssignment and to carry out and consummate all transactions contemplated hereby andthereby, and by proper action the Corporation has duly authorized the execution anddelivery of this Lease, the Site Lease and the Assignment.
b) Due Execution. The representatives of the Corporation executing thisLease, the Site Lease and the Assignment are fully authorized to execute the same underofficial action taken by the Board of Directors of the Corporation.
c) T'alid, Binding and Enforceable Obligations. This Lease, the Site Leaseand the Assignment have been duly authorized, executed and delivered by the
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Corporation and constitute the legal, valid and binding agreements of the Corporation,enforceable against the Corporation in accordance with their respective terms.
d) No Conflicts. The execution and delivery of this Lease, the Site Lease andthe Assignment, the consummation of the transactions herein and therein contemplatedand the fulfillment of or compliance with the terms and conditions hereof, do not and willnot conflict with or constitute a violation or breach of or default (with due notice or thepassage of time or both) under any applicable law or administrative rile or regulation, orany applicable court or administrative decree or order, or any indenture, mortgage, deedof trust, lease, contract or other agreement or instrument to which the Corporation is aparty or by which it or its properties are otherwise subject or bound, or result in thecreation or imposition of any prohibited lien, charge or encumbrance of any naturewhatsoever upon any of the property or assets of the Corporation, which conflict,violation, breach, default, lien, charge or encumbrance would have consequences thatwould materially and adversely affect the consummation of the transactions contemplatedby this Lease, the Site Lease and the Assignment or the financial condition, assets,properties or operations of the Corporation.
e) Consents and Approvals. No consent or approval of any trustee or holderof any indebtedness of the Corporation, and no consent, permission, authorization, orderor license of, or filing or registration with, any governmental authority is necessary inconnection with the execution and delivery of this Lease, the Site Lease or theAssignment, or the consummation of any transaction herein or therein contemplated,except as have been obtained or made and as are in full force and effect.
f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmentalauthority pending or, to the knowledge of the Corporation after reasonable investigation,threatened against or affecting the Corporation or the assets, properties or operations ofthe Corporation which, if determined adversely to the Corporation or its interests, wouldhave a material and adverse effect upon the consummation of the transactionscontemplated by or the validity of this Lease, the Site Lease or the Assignment, or uponthe financial condition, assets, properties or operations of the Corporation, and theCorporation is not in default with respect to any order or decree of any court or any order,regulation or demand of any federal, state, municipal or other governmental authority,which default might have consequences that would materially and adversely affect theconsummation of the transactions contemplated by this Lease, the Site Lease or theAssignment or the financial conditions, assets, properties or operations of the
Corporation.
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ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS; CONSTRUCTION OF PROJECT
Section 3.1. Deposit ofMoneys. As provided in the Assignment, the proceeds therefromin the amount of $4,000,000 will be deposited with the Project Fund Custodian on the ClosingDate and applied as follows: (a) $ will be applied to pay the costs of the financing onbehalf of the City; and (b) $ will be held, administered and invested for the purpose offinancing the Project as provided herein and in the Project Fund Agreement.
Section 3.2. Appointment of City as Agent of Corporation. The Corporation herebyappoints the City as its agent to carry out all phases of the Project under and in accordance withthe provisions hereof. The City hereby accepts its appointment as agent of the Corporation andassumes all rights, liabilities, duties and responsibilities of the Corporation regarding the Project.The City, as agent of the Corporation hereunder, will enter into, administer and enforce allpurchase orders or other contracts relating to the Project. The City will requisition the paymentof Project Costs from amounts held by the Project Fund Custodian in the Project Fund, pursuantto and in accordance with the Project Fund Agreement. All contracts for, and all work relatingto, the Project are subject to all applicable provisions of law relating to the acquisition,constriction, rehabilitation, improvement, and equipping of like facilities, equipment andproperty by the City.
Section 3.3. Acquisition, Construction, Rehabilitation and Installation of the Project.a) As agent of the Corporation, the City hereby agrees with due diligence to supervise andprovide for, or cause to be supervised and provided for, the acquisition, constriction,rehabilitation and installation of the Project in accordance with the plans and specifications,purchase orders, constriction contracts and other documents relating thereto and approved by theCity under all applicable requirements of law.
b) [ Reserved].
c) In order to ensure that moneys sufficient to pay the Project Costs will be availablewhen required, the Corporation shall deposit the sum of $4,000,000 in a special account (theProject Fund") to be established by the Project Fund Custodian as custodian for the benefit ofthe City. The Project Fund Custodian shall disburse moneys in the Project Fund from time totime to pay the Project Costs (or to reimburse the City for payment of such Project Costs) upondelivery to the Project Fund Custodian of written requests from the City which have beenapproved by the Assignee, each of which conforms to the requirements of the Project FundAgreement and is in substantially the form set forth as Schedule IB to the Project FundAgreement.
Notwithstanding anything in this Article III to the contrary, the City shall assure thatamounts in the Project Fund are expended solely in accordance with the requirements ofSection 7.6 relating to the observance of all tax provisions relating to the Project.
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Section 3.4. Disposition of Excess Project Funds. Upon the determination by the Citythat the acquisition, constriction, rehabilitation and installation of the Project have beencompleted and accepted by the City, the City will notify the Assignee and the Project FundCustodian of such fact and will request the Project Fund Custodian to close the Project Fund andtransfer all remaining amounts therein ( "Excess Project Funds "), in the City's discretion, (a) tothe City to finance additional projects and facilities of the City; provided, that the City deliver tothe Assignee an opinion of Bond Counsel (in form and substance acceptable to the Assignee) tothe effect that such transfer of Excess Project Funds will not adversely affect the excludability ofthe interest component of Lease Payments from gross income of the owners thereof for federalincome tax purposes, or (b) to the Assignee on any Lease Payment Date for payment of all or aportion of the Lease Payments due and owing in the succeeding twelve (12) months and anyremaining amounts shall be applied by the Assignee as prepayment of the principal componentof the remaining Lease Payments hereunder on a pro rata basis, subject to a two percent (2 %)prepayment premium as set forth in Section 9.2(b) hereof. If the amount remaining in the ProjectFund exceeds $ , the City will obtain the prior written consent of the Assignee (whichconsent will not unreasonably be withheld) before financing additional projects or facilities withsuch funds.
Section 3.5. Investment ofPi Funds. Amounts on deposit in the Project Fund maybe invested in interest - bearing instruments as set forth in written directions given to the ProjectFund Custodian by the City from time to time in accordance with the Project Fund Agreement.Such amounts may be invested solely in investments authorized for the investment of City fundsunder Government Code Sections 33601 and 16429.1. Principal and interest earnings from eachinvestment will be deposited directly into the Project Fund for disbursement under Section 33.Neither the Corporation nor the Assignee has any liability or responsibility for any loss ofmoneys resulting from any investment or the sale of any investment authorized by the City.
ARTICLE IV
LEASE PAYMENTS; SUBSTITUTION AND RELEASE OF PROPERTY
Section l.1. Lease of Leased Property. The Corporation hereby leases the LeasedProperty to the City, and the City hereby leases the Leased Property from the Corporation, uponthe terms and conditions set forth in this Lease.
Section 1.2. Term. The Term of this Lease commences on the date of execution and
delivery hereof and ends on the date on which all of the Lease Payments have been paid in full,but under any circumstances not later than March 15, 2032. The provisions of this Section 4.2are subject to the provisions of Section 4.5 relating to the substitution of property, the provisionsof Section 4.6 relating to the release of property and the provisions of Section 6.2 relating to thetaking in eminent domain of the Leased Property or any portion thereof. The City may notterminate this Lease as a remedy for a default by the Corporation.
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Section 1.3. Lease Payments.
a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and theprovisions of Article IX, the City agrees to pay to the Corporation, its successors and assigns, theLease Payments ( denominated into components of principal and interest) specified inAppendix B, attached hereto ( including any supplements thereto) and by this referenceincorporated herein, to be due and payable in immediately available funds on the Lease PaymentDates specified in Appendix B. The Lease Payments payable in any Rental Period are for theuse of the Leased Property during such Rental Period. The interest components of the LeasePayments have been calculated based on an interest rate of 3.05% per annum, on the basis of a360 -day year of twelve 30 -day months.
b) Effect of Prepayment. If the City prepays all Lease Payments in full underSection 9.2 or 93, the City's obligations under this Section with respect to such Lease Paymentswill thereupon cease and terminate. If the City prepays the Lease Payments in part but not inwhole under Section 9.2 or 93, the principal components of the remaining Lease Payments, asthe case may be, will be reduced on a pro rata basis; and the interest component of eachremaining Lease Payment, as the case may be, will be reduced on a pro rata basis.
c) Rate on Overdue Payments. If the City fails to make any of the payments requiredin this Section 43, the payment in default will continue as an obligation of the City until theamount in default has been fully paid, and the City agrees to pay the same with interest thereonfrom the date of default to the date of payment. Interest on the payment in default will becalculated at the same rate as the interest components of the defaulted Lease Payments for tenBusiness Days following the date of default and at the lesser of 8% per annum or the maximumrate allowed by law thereafter until the date of payment.
d) Fair Rental T aloe. The Lease Payments coming due and payable during eachRental Period constitute the total rental for the Leased Property for such Rental Period, and theCity will pay the Lease Payments in each Rental Period for and in consideration of the right ofthe use and occupancy of, and the continued quiet use and enjoyment of the Leased Propertyduring each Rental Period. The Corporation and the City have agreed and determined that thetotal Lease Payments represent the fair rental value of the Leased Property. In making thatdetermination, consideration has been given to the estimated fair market value of the LeasedProperty as of the Closing Date, other obligations of the City and the Corporation under thisLease, the uses and purposes which may be served by the Leased Property and the benefitstherefrom which will accrue to the City and the general public.
e) Source ofPayments; Budget and Appropriation. The Lease Payments are payablefrom any source of legally available funds of the City, subject to the provisions of Section 3.3and Articles VI and IX.
The City covenants to take such action as may be necessary to include all estimatedLease Payments due hereunder in each of its final approved budgets. The City further covenantsto make all necessary appropriations (including any supplemental appropriations) from anysource of legally available funds of the City for all the actual amount of Lease Payments which
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come due and payable during the period covered by each such budget. The covenants on the partof the City contained herein are duties imposed by law and it is the duty of each and every publicofficial of the City to take such action and do such things as are required by law in theperformance of the official duty of such officials to enable the City to carry out and perform thecovenants and agreements in this Lease agreed to be carried out and performed by the City. TheCity reasonably believes that sufficient funds will be obtained to make all Lease Payments andother amounts required to be paid by the City under the Lease.
f) Assignment. The City acknowledges that all Lease Payments and the other rights ofthe Corporation under this Lease and the Site Lease (subject to certain limited exceptions asprovided in the Assignment) have been assigned by the Corporation to the Assignee under theAssignment, and the City consents to such assignment. The Corporation directs the City, and theCity agrees to pay to the Assignee, all payments payable by the City under this Section 4.3 andall amounts payable by the City under Article IX. Further, the City and the Corporation herebyacknowledge and agree that the Assignee may further assign its rights under the this Lease andthe Site Lease with notice to but not consent of the City, except that unless otherwise agreed toby the City, (i) the City shall not be required to pay Lease Payments or pay prepayments to morethan one individual or entity or send notices or otherwise deal with respect to matters arisingunder this Lease or the Site Lease with or to more than one individual or entity and (ii) any suchassignment, transfer or conveyance shall be made only to sophisticated investors. Any suchassignment, transfer or conveyance may be to a trustee for the benefit of owners of certificates ofparticipation or to a servicer in connection with a participation arrangement so long as theconditions provided in the next preceding sentence are satisfied.
To the extent that Assignee assigns, transfers or conveys its rights and interests in amanner that results in more than one owner of all interests in this Lease, the City hereby appointsAssignee and Assignee hereby agrees, to act as a registration agent to keep, or cause to be kept, acomplete and accurate record of all such assignments in form necessary to comply withSection 149 of the Tax Code.
In the event of any sale, assignment or transfer of Assignee's interest under this Lease orin the Leased Property, the City shall attorn to Assignee's successor and shall recognize suchsuccessor as Assignee under this Lease, said attornment to be effective and self - operativewithout the execution of any other instruments on the part of either party hereto immediatelyupon such successor succeeding to the interest of Assignee hereunder, and this Lease shallcontinue in accordance with its terms between the City, as lessee, and such successor, as theCorporation.
g) Failure to Maintain Tax - Exemption. If Assignee either (i) receives notice, in anyform, from the Internal Revenue Service; or (ii) reasonably determines, based on an opinion ofindependent tax counsel selected by Assignee and approved by the City, which approval the Cityshall not unreasonably withhold, that the Assignee may not exclude the interest component ofany Lease Payment from federal gross income because the City breached a covenant contained inthis Lease, then the City shall pay to Assignee, within thirty (30) days after Assignee notifies theCity of such determination, the amount which, with respect to Lease Payments previously paidand taking into account all penalties, fines, interest and additions to tax (including all federal,
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state and local taxes imposed on the interest component of all Lease Payments due through thedate of such event) that are imposed on Lease Payments as a result of the loss of the exclusion,will restore Assignee the same after -tax yield on the transaction evidenced by this Leaseassuming tax at the highest marginal corporate tax rate) that it would have realized had theexclusion not been lost. Additionally, the City agrees that upon the occurrence of such an event,it shall pay additional rent to Assignee on each succeeding Lease Payment Date in such amountas will maintain such after -tax yield to Assignee.
Section 4.4. Title. At all times during the Term of this Lease, the City will hold title tothe Leased Property, subject to the Site Lease and other Permitted Encumbrances, including alladditions which comprise fixtures, repairs, replacements or modifications thereto, and subject tothe provisions of Section 5.2.
Upon the termination of this Lease ( other than under Section 8.2(b) hereof), theCorporation's leasehold estate in the Leased Property will automatically terminate. Upon thepayment in full of all Lease Payments, or upon the deposit by the City of security for such LeasePayments as provided in Section 9. 1, the Corporation's leasehold estate in the Leased Propertywill automatically terminate. The Corporation agrees to take any and all steps and execute andrecord any and all documents reasonably required by the City to consummate the termination ofits leasehold estate under this Section.
Section 4.5. Substitution ofProperty. The City has, and is hereby granted, the option atany time to substitute other real property similar in nature and characteristics to the LeasedProperty ( the ",Substitute Property") for the Leased Property or any portion thereof (theFormer Property "), provided that the City must satisfy all of the following requirements whichare hereby declared to be conditions precedent to such substitution:
a) The City will certify to the Corporation and the Assignee that no Event ofDefault has occurred and is continuing.
b) The City has filed with the Corporation and the Assignee, and caused to berecorded in the office of the Riverside County Recorder, sufficient memorialization of anamendment hereof which adds to Appendix A hereto a description of such SubstituteProperty and deletes therefrom the description of such Former Property.
c) The City has obtained a CLTA policy of title insurance which insures theCorporation's leasehold estate under a site lease (in form and substance substantiallysimilar to the Site Lease) in such Substitute Property, subject only to PermittedEncumbrances, in an amount at least equal to the aggregate amount of the principalcomponent of the outstanding Lease Payments.
d) The City has certified in writing to the Corporation and the Assignee thatsuch Substitute Property (i) has an estimated value at least equal to the aggregateprincipal amount of outstanding Lease Payments, (ii) serves the public purposes of theCity and constitutes property which the City is permitted to lease under the laws of theState of California, and (iii) has been determined to be essential to the proper, efficient
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and economic operation of the City and to serve an essential governmental function of theCity.
e) The City has obtained the prior written consent of the Assignee, whichconsent shall not be unreasonably withheld.
f) The Substitute Property does not cause the City to violate any of itscovenants, representations and warranties made herein.
g) The Assignee has received an opinion of Bond Counsel that thesubstitution of the Leased Property will not constitute reissuance of any of the LeasePayments for federal income tax purposes.
h) The Assignee has received an environmental survey or surveys withrespect to the Substitute Property, and other documents that the Assignee may reasonablyrequire; provided, hotivever, that if the environmental studies have recommended thatremedial action be taken with respect to the Substitute Property so that it will be incompliance with applicable environmental laws, the Corporation, at the direction of theAssignee, does not have an obligation or duty to accept the Substitute Property as LeasedProperty until such time as the remedial action has been completed and the Assignee hasreceived assurances to its satisfaction that the Substitute Property is in compliance withapplicable environmental laws.
Upon the satisfaction of all such conditions precedent, the Term of this Lease willthereupon end as to the Former Property and commence as to the Substitute Property, and allreferences to the Former Property will apply with full force and effect to the Substitute Property.The City is not entitled to any reduction, diminution, extension or other modification of theLease Payments whatsoever as a result of such substitution. The Corporation and the City willexecute, deliver and cause to be recorded all documents required to discharge this Lease, the SiteLease and the Assignment against the Former Property, and to cause the Substitute Property tobecome subject to all of the terms and conditions of this Lease, the Site Lease and theAssignment.
Section 1.6 Release ofProperty. (a) With the prior written consent of the Assignee, inits sole and absolute discretion, the City may, at any time and from time to time, release anyportion of the Leased Property from this Lease and the Site Lease (the "Released Property ")provided that the City has satisfied all of the following requirements which are hereby declaredto be conditions precedent to such release:
i) The City will certify to the Corporation and the Assignee that no Event ofDefault has occurred and is continuing.
ii) The City has filed with the Corporation and the Assignee, and caused to berecorded in the office of the Riverside County Recorder, if applicable, sufficientmemorialization of an amendment hereof which removes the Released Property from thisLease and the Site Lease.
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iii) The City has filed with the Corporation and the Assignee an appraisal orother written documentation prepared by a mutually agreeable third party that establishesthat the fair market value of the property which remains subject to this Lease and the SiteLease following such removal is at least equal to the aggregate outstanding principalamount of the Lease Payments, and the fair rental value of the property which remainssubject to this Lease and the Site Lease following such removal is at least equal to theLease Payments thereafter coming due and payable hereunder.
iv) The Assignee will have received an opinion of Bond Counsel to the effectthat the release of the Leased Property will not constitute a reissuance of any of the LeasePayments for federal income tax purposes.
Upon the satisfaction of all such conditions precedent, the Term of this Lease willthereupon end as to the Released Property. The City is not entitled to any reduction, diminution,extension or other modification of the Lease Payments whatsoever as a result of such release.The Corporation and the City will execute, deliver and cause to be recorded all documents, ifany, required to discharge this Lease and the Site Lease of record against the Released Property.
b) [Reserved].
Section 1.7. No Merger. It is the express intention of the Corporation and the City thatthis Lease and the obligations of the parties hereunder are separate and distinct from the SiteLease and the obligations of the parties thereunder, and that during the term of the Site Lease andthis Lease no merger of title or interest may occur or be deemed to occur as a result of therespective positions of the Corporation and the City thereunder and hereunder.
ARTICLE V
MAINTENANCE, TAXES, INSURANCE AND OTHER MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term ofthis Lease, as part of the consideration for the rental of the Leased Property, and in order toensure that the City maintain the Leased Property in proper working order so that it may be usedfor its intended purpose, all improvement, repair and maintenance of the Leased Property are thesole responsibility of the City, and the City will pay for or otherwise arrange for the payment ofall utility services supplied to the Leased Property, which may include, without limitation, janitorservice, security, power, gas, telephone, light, heating, water and all other utility services, andwill pay for or otherwise arrange for the payment of the cost of the repair and replacement of theLeased Property resulting from ordinary wear and tear or want of care on the part of the City orany assignee or sublessee thereof. In exchange for the Lease Payments herein provided, theCorporation agrees to provide only the Leased Property, as hereinbefore more specifically setforth. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) andSections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of therights of the City under the terms of this Lease.
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The City will also pay or cause to be paid all taxes and assessments of any type or nature,if any, charged to the Corporation or the City affecting the Leased Property or the respectiveinterests or estates therein; provided that with respect to special assessments or othergovernmental charges that may lawfully be paid in installments over a period of years, the City isobligated to pay only such installments as are required to be paid during the Term of this Leaseas and when the same become due.
The City may, at the City'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 andany appeal therefrom unless the Corporation notifies the City that, in its reasonable opinion, bynonpayment of any such items the interest of the Corporation in the Leased Property will bematerially endangered or the Leased Property or any part thereof will be subject to loss orforfeiture, in which event the City will promptly pay such taxes, assessments or charges orprovide the Corporation with full security against any loss which may result from nonpayment,in form satisfactory to the Corporation and the Assignee.
Section 5.2. Modification of Leased Property. The City has the right, at its ownexpense, to make additions, modifications and improvements to the Leased Property or anyportion thereof. All additions, modifications and improvements to the Leased Property willthereafter comprise part of the Leased Property and become subject to the provisions of thisLease. Such additions, modifications and improvements may not in any way damage the LeasedProperty, or cause the Leased Property to be used for purposes other than those authorized underthe provisions of state and federal law; and the Leased Property, upon completion of anyadditions, modifications and improvements made thereto under this Section, must be of a valuewhich is not substantially less than the value thereof immediately prior to the making of suchadditions, modifications and improvements. The City will not permit any mechanic's or otherlien to be established or remain against the Leased Property for labor or materials furnished inconnection with any remodeling, additions, modifications, improvements, repairs, renewals orreplacements made by the City under this Section; provided that if any such lien is establishedand the City first notifies the Corporation of the City's intention to do so, the City may in goodfaith contest any lien filed or established against the Leased Property, and in such event maypermit the items so contested to remain undischarged and unsatisfied during the period of suchcontest and any appeal therefrom and will provide the Corporation with full security against anyloss or forfeiture which might arise from the nonpayment of any such item, in form satisfactoryto the Corporation. The Corporation will cooperate fully in any such contest, upon the requestand at the expense of the City.
Section 5.3. Public Liability and Property Damage Insurance. The City will maintainor cause to be maintained, throughout the Term of this Lease, comprehensive general insurancein protection of the Corporation, the City and their respective members, officers, agents,employees and assigns. Such insurance must provide for indemnification of said parties againstdirect or contingent loss or liability for damages for bodily and personal injury, death or propertydamage occasioned by reason of the operation of the Leased Property. Such insurance must
provide coverage of at least $1,000,000 per occurrence, $3,000,000 in aggregate, and $5,000,000excess liability and be subject to such deductibles as the City deems adequate and prudent. Such
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insurance may be maintained as part of or in conjunction with any other insurance coveragecarried by the City, and may be maintained in whole or in part in the form of a program ofself - insurance by the City, or in the form of the participation by the City in a joint powersauthority or other program providing pooled insurance. The City will apply the proceeds of suchinsurance toward extinguishment or satisfaction of the liability with respect to which the netproceeds are paid.
Section 5.4. Casualty Insurance. The City will procure and maintain, or cause to beprocured and maintained, at all times throughout the Term of this Lease, casualty insuranceagainst loss or damage to the insured buildings, facilities and other improvements constitutingany part of the Leased Property, in an amount at least equal to the greater of (a) the replacementvalue of such buildings, facilities and improvements, or (b) the aggregate principal amount of theLease Payments outstanding. Such insurance must, as nearly as practicable, cover loss ordamage by fire, explosion, windstorm, riot, aircraft, vehicle damage, smoke and such otherhazards as are normally covered by such insurance. In the event the City delivers SubstituteProperty pursuant to Section 4.5 hereof, such coverage shall also include flood coverage if theCity would normally procure and maintain flood coverage for the Substitute Property and floodcoverage is available at reasonable cost from reputable insurers in the reasonable judgment of theCity. Such insurance may be subject to such deductibles as the City deems prudent. Such
insurance may be maintained as part of or in conjunction with any other insurance coveragecarried by the City, and may be maintained in whole or in part in the form of the participation bythe City in a joint powers authority or other program providing pooled insurance; provided thatsuch insurance may not be maintained by the City in the form of self - insurance. The City willapply the Net Proceeds of such insurance as provided in Section 6.1.
Section 5.5. Rental Interri ption Insurance. The City will procure and maintain, orcause to be procured and maintained, at all times throughout the Term of this Lease, rentalinterruption or use and occupancy insurance to cover loss, total or partial, of the use of thebuildings, facilities, and other improvements constituting any part of the Leased Rental Property,as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount atleast equal to the maximum Lease Payments coming due and payable during any twoconsecutive Fiscal Years during the remaining Term of this Lease. Such insurance may bemaintained as part of or in conjunction with any other insurance coverage carried by the City,and may be maintained in whole or in part in the form of the participation by the City in a jointpowers authority or other program providing pooled insurance; provided that such insurance maynot be maintained by the City in the form of self - insurance. The Net Proceeds of such insurance,if any, will be credited towards the payment of the Lease Payments allocable to the insuredimprovements and equipment as the same become due and payable.
Section 5.6 Recordation Hereof,• Title Insurance. The City will, at its expense, causethe Site Lease, the Assignment and this Lease to be recorded in the office of the RiversideCounty Recorder on or before the Closing Date. Concurrent with such recordation, the City willobtain a CLTA title insurance policy insuring the Corporation's leasehold estate in the LeasedProperty under the Site Lease, in an amount at least equal to the aggregate principal amount ofthe Lease Payments. All Net Proceeds received under such title insurance policy will be creditedtowards the prepayment of the Lease Payments under Section 93.
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Section 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurancemaintained under Sections 5.4, 5.5 and 5.6 must name the Assignee as loss payee and eachpolicy of insurance maintained under Sections 53, 5.4, 5.5 and 5.6 must name the Assignee asadditional insured so as to provide that all proceeds thereunder (except under proceeds of theinsurance required by Section 53) are payable to the Assignee. The City will pay or cause to bepaid when due the premiums for all insurance policies required by this Lease. All such policieswill provide that the Assignee is given 30 days' notice of each alteration or expiration ofcoverage, any intended cancellation thereof or reduction of the coverage provided thereby. TheAssignee is not responsible for the sufficiency, adequacy or amount of any insurance orself - insurance herein required and is fully protected in accepting payment on account of suchinsurance or any adjustment, compromise or settlement of any loss. Annually not later thanApril 1 in each year during the Term hereof, the City must furnish or cause to be furnished to theAssignee evidence of all insurance policies required to be maintained by this Article V, whichmay consist of a certificate describing material terms of such policies.
Section 5.8. Installation of City's Personal Property. The City may at any time andfrom time to time, in its sole discretion and at its own expense, install or permit to be installedother items of equipment or other personal property in or upon the Leased Property. All suchitems will remain the sole property of the City, in which neither the Corporation nor theAssignee has any interest, and may be modified or removed by the City at any time, providedthat the City must repair and restore any and all damage to the Leased Property resulting fromthe installation, modification or removal of any such items. Nothing in this Lease prevents theCity from purchasing or leasing items to be installed under this Section under a lease orconditional sale agreement, or subject to a vendor's lien or security agreement, as security for theunpaid portion of the purchase price thereof, provided that no such lien or security interestattaches to any part of the Leased Property.
Section 5.9. Liens. The City may not, directly or indirectly, create, incur, assume orsuffer to exist any mortgage, deed of trust, security interest, pledge, lien, charge, encumbrance orclaim on or with respect to the Leased Property (including the charge upon property purchasedunder conditional sales or other title retention agreements), other than as herein contemplatedand except for such encumbrances as the City certifies in writing to the Assignee do notmaterially and adversely affect the leasehold estate in the Leased Property hereunder. Except asexpressly provided in this Article, the City will promptly, at its own expense, take such action asmay be necessary to duly discharge or remove any such mortgage, pledge, lien, charge,encumbrance or claim, for which it is responsible, if the same will arise at any time. The Citywill reimburse the Corporation for any expense incurred by it in order to discharge or removeany such mortgage, deed of trust, security interest, pledge, lien, charge, encumbrance or claim.Notwithstanding the foregoing provisions, the City may create, assume or suffer to existPermitted Encumbrances with respect to the Leased Property.
Section 5.10. Environmental Covenants. ( a) Neither the Assignee nor the Corporationshall be obligated to monitor compliance of the Leased Property with applicable environmentalor other laws. Neither the Assignee nor the Corporation shall have any obligations orresponsibility to foreclose or otherwise further involve itself with the Leased Property under anycircumstance, including any instance where either the Corporation or the Assignee is notified of
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any non - compliance of the Leased Property with applicable environmental or other laws. TheCity represents that the Leased Property is currently in full compliance with all applicablefederal, state and local environmental laws. It is expressly understood that neither the Assigneenor the Corporation shall have the right or the obligation to monitor the City's compliance withenvironmental laws. The City hereby further represents and warrants to the Corporation that theCity, its officers, employees or agents have neither ever caused or permitted and shall neitherever cause or permit Hazardous Substances (as defined below) to be generated, placed, housed,located or disposed of on, under or in the Leased Property, nor ever use the Leased Property as adump site, permanent or temporary storage site or transfer station for any Hazardous Substance.The City further represents and warrants to the Corporation that is shall not allow any actual oralleged violation with respected to the Leased Property of any federal, state or locate statute,ordinance, rile regulation or other law pertaining to Hazardous Substances.
b) To the greatest extent permitted by law, the City agrees to hold harmless, indemnifyand defend the Corporation and the Assignee from and against any claim, demand, penalty, fee,lien, damage, loss expense or liability resulting from (i) any breach of the representations andwarranties made by it in this Section or any failure, for any reason to comply with environmentallaws, riles and regulations, including reasonable attorneys' fees and costs of, or in preparationfor, any trial or appellate review, and ( ii) any actual or alleged Hazardous Substancecontamination, including the clean -up of Hazardous Substances from the Leased Property or anyother properties resulting from any activities on the Leased Property during the City's ownership,possession or control of the Leased Property which directly or indirectly result in the LeasedProperty or any other property being contaminated with Hazardous Substances. This indemnityshall survive the termination hereof and shall continue to inure to the benefit of the Corporationand the Assignee notwithstanding any assignment of its other rights hereunder, as well as anyassignee of the Corporation's rights hereunder; provided, hotivever, that the obligations of theCity under this Section are specifically limited to payment from such moneys of the City as areavailable at such time from the proceeds of insurance, self - insurance and legally available funds.
c) The Corporation acknowledges that so long as the City operates the Leased Propertyfor purposes related to providing a municipal fire department, any Hazardous Substancegenerated, placed, housed or located on, under or in the Leased Property, in the ordinary courseof the City's operation of the Leased Property, shall not violate this Lease or the Site Lease, solong as the City complies with all federal, State or local statues, ordinances, riles, regulation orother laws applicable to the handling and disposal of such Hazardous Substances.
d) As used herein, "Hazardous Substance " shall mean any hazardous, toxic ordangerous substance, waste, material or underground storage tanks that are or may becomeregulated under any federal, State or local statute, ordinance, rile, regulation or other law now orhereafter in effect pertaining to environmental protection, contamination or clean -up.
Section 5.11. Advances. If the City fails to perform any of its obligations under thisArticle V, the Corporation may take any necessary action to cure the failure, including theadvancement of money, and the City will repay all such advances as additional rental hereunder,with interest at the rate set forth in Section 43(c).
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ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
Section 6.1. Application ofNet Proceeds. The Net Proceeds of any taking of the LeasedProperty or any portion thereof in eminent domain proceedings, and the Net Proceeds of anyinsurance award with respect to the Leased Property under Section 5.4, will be paid to theCorporation to be applied as hereinafter set forth in this Section 6.1.
If the Leased Property is taken in eminent domain proceedings at any time during theTerm of this Lease, or if the Leased Property is damaged or destroyed, the City shall as soon aspracticable after such event, with the prior written consent of the Corporation, apply the NetProceeds resulting therefrom either to: (a) repair the Leased Property to full use; or (b) replacethe Leased Property, at the City's sole cost and expense, with property of equal or greater valueto the Leased Property immediately prior to the time of the such destruction or damage, suchreplacement Leased Property to be subject to the Corporation's reasonable approval, whereuponsuch replacement shall be substituted in this Lease by appropriate endorsement. The City willnotify the Corporation of which course of action it desires to take within 15 days after theoccurrence of such destruction or damage. The Corporation may (but is not required to) in itsown name or in the City's name execute and deliver proofs of claim, receive all such moneys,endorse checks and other instruments representing payment of such moneys, and adjust, litigate,compromise or release any claim against the issuer of any such policy, and the City herebygrants to the Corporation a power of attorney coupled with an interest to accomplish all or any ofthe foregoing. The Net Proceeds of all insurance payable with respect to the Leased Propertyshall be available to the City and shall be used to discharge the City's obligations under thisSection.
Section 62. Termination or Abatement Due to Eminent Domain. If the Leased Propertyis taken permanently under the power of eminent domain or sold to a government threatening toexercise the power of eminent domain, the Term of this Lease will cease with respect thereto asof the day possession is so taken. If less than all of the Leased Property is taken permanently, orif the Leased Property is taken temporarily, under the power of eminent domain, (a) this Leasewill continue in full force and effect with respect thereto and will not be terminated by virtue ofsuch taking and the parties waive the benefit of any law to the contrary, and (b) there will be apartial abatement of Lease Payments, in an amount to be determined by the City such that theresulting Lease Payments, represent fair consideration for the use and occupancy of theremaining usable portions of the affected Leased Property.
Section 63. Abatement Due to Damage or Destruction. The amount of Lease Paymentswill be abated during any period in which by reason of damage or destruction (other than byeminent domain which is hereinbefore provided for) there is substantial interference with the useand occupancy by the City of the Leased Property or any portion thereof. The amount of suchabatement will be determined by the City such that the resulting Lease Payments represent fairconsideration for the use and occupancy of the portions of the affected Leased Property notdamaged or destroyed. Such abatement will continue for the period commencing with suchdamage or destruction and ending with the substantial completion of the work of repair or
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reconstruction. In the event of any such damage or destruction, this Lease will continue in fullforce and effect and the City waives any right to terminate this Lease by virtue of any suchdamage and destruction. Notwithstanding the foregoing, there will be no abatement of LeasePayments under this Section 6.3 to the extent that the proceeds of hazard insurance, rentalinterruption insurance are available to pay Lease Payments which would otherwise be abatedunder this Section 63, it being hereby declared that such proceeds and amounts constitute aspecial fund for the payment of the Lease Payments.
ARTICLE VII
OTHER COVENANTS
Section 7.1. Disclaimer of Warranties. THE CORPORATION MAKES NO AGREEMENT,WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE
USE CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORTION THEREOF, OR ANYOTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY
PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE CORPORATION IS NOT A MANUFACTURER
OF ANY PORTION OF THE LEASED PROPERTY OR A DEALER THEREIN, THAT THE CITY LEASES THELEASED PROPERTY AS -IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BEBORNE BY THE CITY. In no event will the Corporation be liable for incidental, indirect, special orconsequential damages, in connection with or arising out of this Lease for the existence,furnishing, functioning or the City's use of the Leased Property.
Section 7.2. Access to the Leased Property. The City agrees that the Corporation andany Corporation Representative, and the Corporation's successors or assigns, may at allreasonable times enter upon and to examine and inspect the Leased Property or any part thereof.The Corporation and any Corporation Representative have such rights of access to the LeasedProperty or any component thereof as may be reasonably necessary to cause the propermaintenance of the Leased Property in the event of failure by the City to perform its obligationshereunder; but neither the Corporation nor any of its assigns has any obligation to cause suchproper maintenance.
Section 7.3. Release and Indemnification Covenants. The City will indemnify theCorporation and the Assignee, and their respective officers, agents, successors and assignsagainst all claims, losses and damages, including legal fees and expenses, arising out of any ofthe following:
a) the use, maintenance, condition or management of, or from any work orthing done on the Leased Property by the City,
b) any breach or default on the part of the City in the performance of any ofits obligations under this Lease,
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c) any negligence, bad faith or willful misconduct of the City or of any of itsagents, contractors, servants, employees or licensees with respect to the Leased Property,or
d) any intentional misconduct or negligence of any sublessee of the City withrespect to the Leased Property.
No indemnification is made under this Section or elsewhere in this Lease for willful
misconduct or negligence under this Lease by the Corporation or the Assignee, or theirrespective officers, agents, employees, successors or assigns.
Section 7.4. Assignment and ,Subleasing by the City. After the date of recordation of thisLease, the City may sublease the Leased Property, or any portion thereof, with the prior writtenconsent of the Assignee (which will not unreasonably be withheld), and subject to all of thefollowing conditions:
a) This Lease and the obligation of the City to make Lease Paymentshereunder must remain obligations of the City.
b) The City must, within 30 days after the delivery thereof, furnish or causeto be furnished to the Corporation and the Assignee a true and complete copy of suchsublease.
c) No such sublease by the City may cause the Leased Property to be usedfor a purpose which is not authorized under the provisions of the laws of the State ofCalifornia.
d) The City will furnish the Corporation and the Assignee with a writtenopinion of Bond Counsel stating that such sublease does not cause the interestcomponents of any Lease Payments to become includable in gross income for purposesof federal income taxation or to become subject to personal income taxation by the Stateof California.
Section 7.5. Amendment of Lease Agreement. This Lease may be amended by themutual consent of the City and the Corporation, with the prior written consent of the Assignee.Prior to the effective date of any such amendment, and as a condition precedent to theeffectiveness thereof, the City at its expense will obtain an opinion of Bond Counsel stating thatsuch amendment will not adversely affect the exclusion from gross income of the interestcomponent of any Lease Payments.
Section 7.6 Tax Covenants.
a) Private Activity Bond Limitation. The City shall assure that proceeds of this Leaseare not used so as to cause the interest components of the Lease Payments to satisfy the privatebusiness tests of Section 141(b) of the Tax Code or the private loan financing test ofSection 141(c) of the Tax Code.
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b) Federal (guarantee Prohibition. The City shall not take any action or permit orsuffer any action to be taken if the result of the same would be to cause the Lease Payments to befederally guaranteed" within the meaning of Section 149(b) of the Tax Code.
c) Rebate Requirement. The City shall take any and all actions necessary to assurecompliance with section 148(f) of the Tax Code, relating to the rebate of excess investmentearnings, if any, to the federal government, to the extent that such section is applicable to theLease Payments.
d) No Arbitrage. The City shall not take, or permit or suffer to be taken by theAssignee or otherwise, any action with respect to the proceeds of this Lease which, if such actionhad been reasonably expected to have been taken, or had been deliberately and intentionallytaken, on the date of execution of this Lease would have caused this Lease to be "arbitragebonds" within the meaning of section 148 of the Tax Code.
Section 7.7. Financial Statements. The City shall deliver to the Assignee (as herebydirected by the Corporation) (a) annual audited financial statements (including (i) a balancesheet, (ii) a statement of revenues, expenses and changes in fund balances for budget and actual,iii) a statement of cash flows and (iv) footnotes, schedules and attachments to the financialstatements) within 30 days after completion; (b) such other financial statements and informationas the Assignee may reasonably request and (c) its annual budget for the following Fiscal Yearwhen approved, but not later than 30 days after its final adoption. The annual financial
statements shall be accompanied by an unqualified opinion of the City's auditor. Credit
information may be disseminated among the Assignee and any of its affiliates and any of theirrespective successors and assigns.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default Defined. Each of the following events constitutes anEvent of Default hereunder:
a) Failure by the City to pay any Lease Payment within ten Business Daysafter the applicable Lease Payment Date or other payment required to be paid hereunderin full at the time specified herein.
b) Failure by the City to observe and perform any covenant, condition oragreement on its part to be observed or performed herein, other than as referred to in thepreceding subsection (a), for a period of 30 days after written notice specifying suchfailure and requesting that it be remedied has been given to the City by the Corporation orthe Assignee. However, if the City notifies the Corporation and the Assignee that in itsreasonable opinion the failure stated in the notice can be corrected, but not within such30 day period, the failure will not constitute an Event of Default if the City commences to
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cure the failure within such 30 day period and thereafter diligently and in good faith curessuch failure in a reasonable period of time.
c) The filing by the City of a voluntary petition in bankruptcy, or failure bythe City promptly to lift any execution, garnishment or attachment, or adjudication of theCity as a bankrupt, or assignment by the City for the benefit of creditors, or the entry bythe City into an agreement of composition with creditors, or the approval by a court ofcompetent jurisdiction of a petition applicable to the City in any proceedings institutedunder the provisions of the Federal Bankruptcy Code, as amended, or under any similaracts which may hereafter be enacted.
d) Any representation or warranty made by the City herein proves to havebeen false, incorrect, misleading, or breached in any material respect on the date whenmade.
Any Event of Default described in the preceding clause (a) will give rise to the exerciseof remedies with respect to the Leased Property, and the City will not have the right to allocateits Lease Payment to a particular portion of the Leased Property.
Section 8.2. Remedies on Defaidt. Whenever any Event cifDefault has happened and iscontinuing, the C,'otporation may exercise any and all remedies available under Icn1) or grantedunder this Lease. Notirithstanding anything herein to the contrary, there is no fight under anycircumstances to accelerate the Lease Payments on otherwise declare any Lease Payments notthen in default to be immediately dire andpayable.
Each and every covenant hereof to be kept and performed by the City is expressly made acondition and upon the breach thereof the Corporation may exercise any and all rights grantedhereunder; provided, that no termination of this Lease will be effected either by operation of lawor acts of the parties hereto, except only in the manner herein expressly provided. Upon theoccurrence and during the continuance of any Event of Default, the Corporation may exerciseeach and every one of the following remedies, subject in all respects to the limitations set forth inSection 83:
a) Enforcement of Payments Without Termination. If the Corporation doesnot elect to terminate this Lease in the manner hereinafter provided for in subsection (b)of this Section, the City agrees to remain liable for the payment of all Lease Paymentsand the performance of all conditions herein contained, and the Corporation may takewhatever action at law or in equity may appear necessary or desirable, to collect eachLease Payment as it becomes due hereunder. The City will reimburse the Corporation forany deficiency arising out of the re- leasing or sale of the Leased Property or portionthereof, or, if the Corporation is unable to re -lease or sell the Leased Property, then forthe full amount of all Lease Payments to the end of the Term of this Lease, but said LeasePayments and /or deficiency will be payable only at the same time and in the samemanner as hereinabove provided for the payment of Lease Payments hereunder,notwithstanding such entry or re -entry by the Corporation or any suit in unlawfuldetainer, or otherwise, brought by the Corporation for the purpose of effecting such
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re -entry or obtaining possession of the Leased Property or portion thereof or the exerciseof any other remedy by the Corporation.
The City hereby irrevocably appoints the Corporation as the agent and attorney -in -fact of the City to enter upon and re -lease the Leased Property upon the occurrenceand continuation of an Event of Default and to remove all personal property whatsoeversituated upon the Leased Property, to place such property in storage or other suitableplace in the County of Riverside for the account of and at the expense of the City, and theCity hereby agrees to save harmless the Corporation from any costs, loss or damagewhatsoever arising or occasioned by any such entry upon and re- leasing of the LeasedProperty and the removal and storage of such property by the Corporation or its dulyauthorized agents in accordance with the provisions herein contained. The City agreesthat the terms of this Lease constitute full and sufficient notice of the right of theCorporation to re -lease the Leased Property in the event of such re -entry withouteffecting a surrender of this Lease, and further agrees that no acts of the Corporation ineffecting such re- leasing constitute a surrender or termination of this Lease irrespective ofthe term for which such re- leasing is made or the terms and conditions of such re- leasing,or otherwise, but that, on the contrary, in the event of such default by the City the right toterminate this Lease will vest in the Corporation to be effected in the sole and exclusivemanner hereinafter provided for in subsection (b) of this Section. The City agrees tosurrender and quit possession of the Leased Property upon demand of the Corporation forthe purpose of enabling the Leased Property to be re -let under this paragraph. Any rentalobtained by the Corporation in excess of the unpaid Lease Payments will be applied as acredit against future Lease Payments.
b) Termination of Lease. If an Event of Default occurs and is continuinghereunder, the Corporation at its option may terminate this Lease and re -lease all or anyportion of the Leased Property. If the Corporation terminates this Lease at its option andin the manner hereinafter provided on account of default by the City ( andnotwithstanding any re -entry upon the Leased Property by the Corporation in any mannerwhatsoever or the re- leasing of the Leased Property), the City nevertheless agrees to payto the Corporation all costs, loss or damages howsoever arising or occurring payable atthe same time and in the same manner as is herein provided in the case of payment ofLease Payments. Any surplus received by the Corporation from such re- leasing will beapplied as a credit against future Lease Payments. Neither notice to pay rent or to deliverup possession of the premises given under law nor any proceeding in unlawful detainertaken by the Corporation will of itself operate to terminate this Lease, and no terminationof this Lease on account of default by the City will be or become effective by operationof law, or otherwise, unless and until the Corporation has given written notice to the Cityof the election on the part of the Corporation to terminate this Lease. The City agreesthat no surrender of the Leased Property, or of the remainder of the Term hereof or anytermination of this Lease will be valid in any manner or for any purpose whatsoeverunless stated or accepted by the Corporation by such written notice.
c) Proceedings at Law or In Equity. If an Event of Default occurs and
continues hereunder, the Corporation may take whatever action at law or in equity may24-
26131.00008`,7234887.7
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appear necessary or desirable to collect the amounts then due and thereafter to becomedue hereunder or to enforce any other of its rights hereunder.
d) [Reserved].
e) Remedies under the Site Lease. If an Event of Default occurs and
continues hereunder, the Corporation may exercise its rights under the Site Lease.
Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to theCorporation is intended to be exclusive and every such remedy is cumulative and in addition toevery other remedy given under this Lease or now or hereafter existing at law or in equity. Nodelay or omission to exercise any right or power accruing upon the occurrence of any Event ofDefault will impair any such right or power or will be construed to be a waiver thereof, but anysuch right and power may be exercised from time to time and as often as may be deemedexpedient. In order to entitle the Corporation to exercise any remedy reserved to it in thisArticle VIII it is not necessary to give any notice, other than such notice as may be required inthis Article VIII or by law.
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. If either party to thisLease defaults under any of the provisions hereof and the non - defaulting party employs attorneysor incurs other expenses for the collection of moneys or the enforcement or performance orobservance of any obligation or agreement on the part of the defaulting party herein contained,the defaulting party agrees that it will on demand therefor pay to the non - defaulting party thereasonable fees of such attorneys and such other expenses so incurred by the non - defaultingparty.
Section 8.5. No Additional Waiver Implied by One Waiver. If any agreement containedin this Lease is breached by either party and thereafter waived by the other party, such waiverwill be limited to the particular breach so waived and will not constitute a waiver of any otherbreach hereunder.
Section 8.6 Assignee to Exercise Rights. Such rights and remedies as are given to theCorporation under this Article VIII have been assigned by the Corporation to the Assignee underthe Assignment, to which assignment the City hereby consents. Such rights and remedies shallbe exercised solely by the Assignee.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
Section 9.1. Security Deposit. Notwithstanding any other provision of this Lease, theCity may on any date secure the payment of the Lease Payments in whole or in part bydepositing with a trustee, escrow agent or other fiduciary selected by the City and acceptable tothe Assignee an amount of cash, which shall be held in a segregated trust or escrow fund under atrust or escrow agreement that is in form and content acceptable to the Assignee, which cash so
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held is either (a) sufficient to pay such Lease Payments, including the principal and interestcomponents thereof, in accordance with the Schedule of Lease Payments set forth inAppendix B, or (b) invested in whole or in part in non - callable Federal Securities in such amountas will, in the opinion of an independent certified public accountant (which opinion must be inform and substance, and with such an accountant, acceptable to the Assignee and addressed anddelivered to the Assignee), together with interest to accrue thereon and together with any cashwhich is so deposited, be fully sufficient to pay such Lease Payments when due underSection 43(a) as the City instructs at the time of said deposit; provided, hotivever, that at or priorto the date on which any such security deposit is established, the City shall deliver to theAssignee an opinion of Bond Counsel (in form and substance acceptable to the Assignee) to theeffect that any such security deposit will not adversely affect the excludability of the interestcomponent of Lease Payments from gross income of the owners thereof for federal income taxpurposes.
If the City posts a security deposit under this Section with respect to all unpaid LeasePayments, and notwithstanding the provisions of Section 4.2, (a) the Term of this Lease willcontinue, (b) all obligations of the City under this Lease, and all security provided by this Leasefor said obligations, will thereupon cease and terminate, excepting only the obligation of the Cityto make, or cause to be made, all of the Lease Payments from such security deposit and itsobligation provided in the next succeeding paragraph, and (c) the Corporation's leaseholdinterest in the Leased Property will terminate on the date of said deposit automatically andwithout further action by the City or the Corporation. Said security deposit constitutes a specialfund for the payment of Lease Payments in accordance with the provisions of this Lease.
Notwithstanding anything in this Section 9.1 or otherwise in this Lease to the contrary, ifthe amount held in such security deposit shall at any time be insufficient (for whatever reason) topay Lease Payments when due in full as provided in clause (a) or (b), as applicable, of the firstparagraph of this Section 9. 1, the City shall immediately pay to the Assignee on the applicabledue date or due dates the amount of any such shortfall from funds legally available for suchpurpose.
Section 9.2. Optional Prepayment. (a) The City may exercise its option to prepay theprincipal components of the Lease Payments in whole, but not in part (except as permitted inSection 9.2(b) hereof), on any Lease Payment Date, by paying a prepayment price equal to theaggregate principal components of the Lease Payments to be prepaid, together with the interestcomponent of the Lease Payment required to be paid on such date, plus a prepayment premiumequal to two percent (2 %) of the principal component being prepaid. The City will give theAssignee written notice of its intention to exercise its option not less than 45 days in advance ofthe date of exercise.
b) The City may exercise its option to prepay the principal components of the LeasePayments, as applicable, in part solely from Excess Project Funds allocable to such LeasePayments under Section 3.4, on any Lease Payment Date, by paying a prepayment price equal tothe aggregate principal components of the Lease Payments (as the case may be) to be prepaid,together with the interest component of such Lease Payment required to be paid on such date,plus a prepayment premium equal to two percent (2 %) of the principal component being prepaid.
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Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance or EminentDomain. The City is obligated to prepay the principal components of the Lease Payments, inwhole or in part on any Lease Payment Date, from and to the extent of any Net Proceeds ofinsurance award or eminent domain award allocated to the Project and to be applied for purposesof such prepayment under Article VI. The City and the Corporation hereby agree that such NetProceeds, to the extent remaining after payment of any delinquent Lease Payments (as the casemay be), will be credited towards the City's obligations under this Section 93.
Section 9.4. C1 foi Amounts on Deposit. If the City prepays the principalcomponents of the Lease Payments in full under Section 93, such that this Lease with respect tosuch Payments is discharged by its terms as a result of such prepayment, at the written electionof the City filed with the Assignee any or all amounts then on deposit in the Project Fund will becredited towards the amounts then required to be so prepaid with respect to the Lease Payments.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. Any notice, request, complaint, demand or other communicationunder this Lease may be given by first class mail or personal delivery to the party entitled theretoat its address set forth below, or by facsimile transmission or other form of telecommunication,at its number set forth below. Notice is effective either (a) upon transmission by facsimiletransmission or other form of telecommunication, (b) 72 hours after deposit in the United Statesof America first class mail, postage prepaid, or (c) in the case of personal delivery to any person,upon actual receipt. The Corporation, the City or the Assignee may, by written notice to theother parties, from time to time modify the address or number to which communications are tobe given hereunder.
If to the Corporation: City of Riverside Municipal Improvements Corporation3900 Main Street
Riverside, CA 92522Attention: Treasurer
If to the City: City of Riverside3900 Main Street
Riverside, CA 92522Attention: Chief Financial Officer
If to the Assignee: Pinnacle Public Finance, Inc.8377 E. Hartford Drive
Suite 115
Scottsdale, AZ 85255Attn: Cathy Jimenez
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I ,
Section 10.2. Binding Effect. This Lease inures to the benefit of and is binding upon theCorporation, the City and their respective successors and assigns.
Section 10.3. Severabifty. If any provision of this Lease is held invalid or unenforceableby any court of competent jurisdiction, such holding does not invalidate or render unenforceableany other provision hereof.
Section 10.4. Net-net -net Lease. This Lease is a "net- net -net lease" and the City herebyagrees that the Lease Payments are an absolute net return to the Corporation, free and clear ofany expenses, charges or set -offs whatsoever.
Section 10.5. Third Pasty Beneficiary. The Assignee is made a party beneficiaryhereunder with all rights of a third party beneficiary.
Section 10.6 Further Assurances and Corrective Instruments. The Corporation and theCity will, from time to time, execute, acknowledge and deliver, or cause to be executed,acknowledged and delivered, such supplements hereto and such further instruments as mayreasonably be required for correcting any inadequate or incorrect description of the LeasedProperty hereby leased or intended so to be or for carrying out the expressed intention of thisLease.
Section 10.7. Execution in Counterparts. This Lease may be executed in severalcounterparts, each of which will be an original and all of which will constitute but one and thesame instrument.
Section 10.8. Applicable Law. This Lease is governed by and construed in accordancewith the laws of the State of California.
Section 10.9. Corporation and City Representatives. Whenever under the provisions ofthis Lease the approval of the Corporation or the City is required, or the Corporation or the Cityis required to take some action at the request of the other, such approval or such request will begiven for the Corporation by a Corporation Representative and for the City by a CityRepresentative, and any party hereto will be authorized to rely upon any such approval orrequest.
Section 10.10. Captions. The captions or headings in this Lease are for convenience onlyand in no way define, limit or describe the scope or intent of any provisions or sections of thisLease.
Signature page to follow]
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IN WITNESS WHEREOF, the Corporation and the City have caused this Lease to beexecuted in their respective names by their duly authorized officers, all as of the date first abovewritten.
CITY OF RIVERSIDE MUNICIPAL IMPROVEMENTS
CORPORATION, as Lessor
ByName: Brent A. Mason
Title: Treasurer
CITY OF RIVERSIDE, CALIFORNIA, as Lessee
ByName: Brent A. Mason
Title: Finance Director
26131.00008`,7234887.7
KKK
ALL- PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On March 2012, before me, ( Notary Public),personally appearedwho proved to me on the basis of satisfactory evidence to be the person whose name issubscribed to the within instrument and acknowledged to me that he /she executed the same inhis /her authorized capacity, and that by his /her signature on the instrument the person, or theentity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERK JRY under the laws of the State of California that theforegoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature Seal)
AC KA01T'LED ElTENT OF CITFOFwcij hPRROi E TENTS CORROR3TION, _3S LESSOR
26131.00008`,7234887.7
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ALL- PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On March 2012, before me, ( Notary Public),personally appearedwho proved to me on the basis of satisfactory evidence to be the person whose name issubscribed to the within instrument and acknowledged to me that he /she executed the same inhis /her authorized capacity, and that by his /her signature on the instrument the person, or theentity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERK JRY under the laws of the State of California that theforegoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature
26131.00008`,7234887.7
4CKA'OY6ZED(ElE. \'TOF ('ITP OF RIi ERS7DE C_4LIF0RN_11, _4s LESSEE
Seal)
II I
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of the land located in the City of Riverside, County ofRiverside, State of California, which is described as follows, including all buildings,improvements and facilities at any time situated thereon:
A -126131.00008`,7234887.7
2 -45
APPENDIX B
SCHEDULE OF LEASE PAYMENTS
P1\ZT. PAYMENT PAYMENT INTEREST PRINCIPAL PURCHASE OUTSTANDING
This is to certify that the interest in real property conveyed by the Lease Agreement,dated as of March 27, 2012, from the Riverside Municipal Improvements Corporation, as lessor,to the City of Riverside, California, as lessee (the "City "), is hereby accepted by the undersignedofficer on behalf of the City pursuant to authority conferred by resolution of the City Council ofthe City adopted on March 20, 2012, and the City consents to recordation thereof by its dulyauthorized officer.
Dated as of March 27, 2012
CITY OF RIVERSIDE, CALIFORNIA
ByName: Brent A. Mason
Title: Finance Director
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To BE RECORDED AND WHEN RECORDED
RETURN TO:
Best Best & Krieger LLP3750 Universit Avenue, 4` FloorRiverside, CA 92501
Attention: Francis J. Baum, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO
SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT
FROM RECORDING FEES PURSUANT TO SECTION 273 83 OF THE CALIFORNIA GOVERNMENT CODE.
SITE AND FACILITY LEASE
This Site and Facility Lease (this ",Site Lease "), dated for convenience as of March 27,2012, is between the CITY OF RIVERSIDE, a charter city and municipal corporation duly organizedand existing under the Constitution and laws of the State of California, as lessor (the "City "),and the CITY OF RIVERSIDE MUNICIPAL IMPROVEMENTS CORPORATION, a California nonprofitcorporation duly organized and existing under the laws of the State of California, as lessee (theCorporation ");
BACKGROUND:
1. The City wishes to finance the acquisition, constriction, rehabilitation andinstallation of certain improvements in and to certain of the City's real property that will be apublic park known as Ryan Bonaminio Park at the Tequesquite Arroyo (the "Project ").
2. The Corporation has been organized for the purpose of assisting the City infinancing public improvements, including parks, and is authorized to enter into financing andlease documents for that purpose.
3. In order to provide funds to finance the Proj ect, the City has agreed to lease to theCorporation the land and buildings, improvements and facilities at any time situated thereonwhich constitute the following six City fire stations: Magnolia Center Station at 6395 RiversideAvenue; Arlington Station located at 9449 Andrew Street; LaSierra Station located at 11076Hole Avenue; LaSierra South Station located at 10692 Indiana; Station 4 located at 3510Cranford Street; and Station 11 located at 19595 Orange Terrace Parkway, all in the City, andmore particularly described in Appendix A attached hereto and by this reference incorporatedherein (such land and improvements being herein referred to as the `Leased Property "), under
this Site Lease, and the Corporation has agreed to lease the Leased Property back to the City, allunder a Lease Agreement dated as of March 27, 2012, which has been recorded concurrentlyherewith (the Lease "), between the Corporation as lessor and the City as lessee.
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4. The Corporation has assigned certain of its rights in the Lease to Pinnacle PublicFinance, Inc. (the "Assignee ") under an Assignment Agreement dated as of March 27, 2012,which has been recorded concurrently herewith.
5. The City is authorized to enter into a lease - leaseback arrangement with theCorporation to provide financing for the Project under Sections 37350 and following of theCalifornia Government Code.
AGREEMENT:
In consideration of the foregoing and the material covenants hereinafter contained, theCity and the Corporation formally covenant, agree and bind themselves as follows:
Section 1. Lease of Leased Property. The City hereby leases to the Corporation, andthe Corporation hereby leases from the City, the Leased Property (as described more fully inAppendix A hereto), on the terms and conditions hereinafter set forth.
Section 2. Term; Possession. The term of this Site Lease commences, and theCorporation becomes entitled to possession of the Leased Property, as of the date of recordationhereof. This Site Lease ends, and the right of the Corporation hereunder to possession of theLeased Property thereupon ceases, on the date on which all of the Lease Payments under theLease are paid in full, or provision is made for such payment in accordance with the Lease, andthe Lease has been discharged, but under any circumstances not later than March 15, 2032.
Section 3. Rental. The Corporation will pay to the City as and for rental of the LeasedProperty hereunder, the amount of $1.00 to be paid on or before the date of execution anddelivery hereof, the receipt of which by the City is hereby acknowledged. No other amounts ofrental will be due and payable by the Corporation for the use and occupancy of the LeasedProperty under this Site Lease.
Section 4. Acquisition, Construction, Rehabilitation and Installation of the Project.The purpose for which the City agrees to lease the Leased Real Property to the Corporationhereunder is to enable the Corporation to finance the acquisition, constriction, rehabilitation andinstallation of the Project. The Project will be acquired, constricted, rehabilitated and installedin accordance with the provisions of Article III of the Lease. The Corporation hereby agrees tolease the Leased Property to the City under the Lease.
Section 5. Assignments and ,Subleases. Unless the City is in default under the Lease,the Corporation may not assign its rights under this Site Lease or sublet all or any portion of theLeased Property, except as provided in the Lease, without the prior written consent of the City.If the City is in default under the Lease, the successor in interest to the Corporation may fullyand freely assign and sublease the Leased Property or any portion thereof, subject to this SiteLease.
Section 6 Substitution or Release ofProperty. If the City exercises its option underSection 4.5 of the Lease and satisfies the conditions therein provided to substitute property for
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the Leased Property in whole or in part, such substitution shall also automatically operate tosubstitute property for the Leased Property which is leased hereunder. If the City exercises itsoption under Section 4.6(a) of the Lease and satisfies the conditions therein provided to releaseany portion of the Leased Property from the Lease, such release shall also automatically operateto release property hereunder. The description of the property which is leased under the Leaseshall conform at all times to the description of the property which is leased hereunder.
Section 7. Right of Entry. The City reserves the right for any of its duly authorizedrepresentatives to enter upon the Leased Property, or any portion thereof, at any reasonable timeto inspect the same or to make any repairs, improvements or changes necessary for thepreservation thereof.
Section 8. Termination. The Corporation agrees, upon the termination of this SiteLease, to quit and surrender the Leased Property in the same good order and condition as theLeased Property was in at the time of commencement of the term hereof, reasonable wear andtear excepted, and agrees that all buildings, improvements and strictures then existing upon theLeased Property will remain thereon and the Corporation's leasehold estate in the LeasedProperty will automatically terminate. The Corporation agrees to take any and all steps andexecute and record any and all documents reasonably required by the City to consummate thetermination of its leasehold estate under this Section.
Section 9. Default. If the Corporation is in default in the performance of anyobligation on its part to be performed under the terms of this Site Lease, which default continuesfor 30 days following notice and demand for correction thereof to the Corporation, the City mayexercise any and all remedies granted by law, except that no merger of this Site Lease and of theLease will be deemed to occur as a result thereof and this Site Lease may not be terminated bythe City as a remedy for such default. Notwithstanding the foregoing, so long as the Leaseremains in effect, the City will continue to pay the Lease Payments to the Assignee.
In the event of the occurrence of an Event of Default under the Lease, the Corporationmay (i) exercise the remedies provided in the Lease, (ii) use the Leased Property for any lawfulpurpose, subject to any applicable legal limitations or restrictions, and (iii) exercise all optionsprovided herein.
Section 10. Amendruents. The Corporation and the City may at any time amend ormodify any of the provisions of this Site Lease, but only with the prior written consent of theAssignee.
Section 11. Quiet Enjoyment. The Corporation at all times during the term of this SiteLease will peaceably and quietly have, hold and enjoy all of the Leased Property, subject to theprovisions of the Lease and subject only to Permitted Encumbrances.
Section 12. Waiver ofPersonal Liability. All liabilities under this Site Lease on the partof the Corporation are solely corporate liabilities of the Corporation as a nonprofit corporation,and the City hereby releases each and every member and officer of the Corporation of and fromany personal or individual liability under this Site Lease. No member or officer of the
3-
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Corporation or its governing board is at any time or under any circumstances individually orpersonally liable under this Site Lease for anything done or omitted to be done by theCorporation hereunder.
Section 13. Taxes. The City will pay any and all assessments of any kind or characterand also all taxes, including possessory interest taxes, levied or assessed upon the LeasedProperty and any improvements thereon.
Section 14. Eminent Domain. If the whole or any part of the Leased Property, or anyimprovements thereon, are taken by eminent domain proceedings, the interest of the Corporationwill be the aggregate amount of the then unpaid principal components of the Lease Paymentspayable under the Lease and the balance of the award, if any, will be paid to the City. The Cityhereby waives any and all rights that it has or may hereafter have to acquire the interest of theCorporation in and to the Leased Property through the eminent domain powers of the City.However, the City hereby agrees, to the extent permitted by law, that the compensation to bepaid in any condemnation proceedings brought by or on behalf of the City with respect to theLeased Property located thereon shall be in an amount not less than the total unpaid principalcomponent of Lease Payments plus the interest component of Lease Payments accrued to thedate of payment of all Lease Payments under the Lease.
Section 15. Partial Invalidity. If any one or more of the terms, provisions, covenants orconditions of this Site Lease are to any extent declared invalid, unenforceable, void or voidablefor any reason whatsoever by a court of competent jurisdiction, the finding or order or decree ofwhich becomes final, none of the remaining terms, provisions, covenants and conditions of thisSite Lease will be affected thereby, and each provision of this Site Lease will be valid andenforceable to the fullest extent permitted by law.
Section 16 Notices. Any notice, request, complaint, demand or other communicationunder this Site Lease must be given by first class mail or personal delivery to the party entitledthereto at its address set forth below, or by telecopy, telex or other form of telecommunication, atits number set forth below. Notice will be effective either (a) upon transmission by telecopy,telex or other form of telecommunication, (b) 72 hours after deposit in the United States mail,postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. TheCity, the Corporation and the Assignee may, by written notice to the other parties, from time totime modify the address or number to which communications are to be given hereunder.
If to the Corporation: City of Riverside Municipal Improvements Corporation3900 Main Street
Riverside, CA 92522Attention: Treasurer
If to the City: City of Riverside3900 Main Street
Riverside, CA 92522Attention: Chief Financial Officer
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2 -51
If to the Assignee: Pinnacle Public Finance, Inc.8377 E. Hartford Drive
Suite 115
Scottsdale, AZ 85255Attn: Cathy Jimenez
Section 17. Governing Law. This Site Lease is governed by the laws of the State ofCalifornia.
Section 18. Third Pasty Beneficiary. The Assignee is hereby made a third partybeneficiary hereunder with all rights of a third party beneficiary.
Section 19. Binding Effect. This Site Lease inures to the benefit of and is binding uponthe Corporation, the City and their respective successors and assigns, subject, however, to thelimitations contained herein.
Section 20. Severabifty of Invalid Provisions. If any one or more of the provisionscontained in this Site Lease are for any reason held to be invalid, illegal or unenforceable in anyrespect, then such provision or provisions will be deemed severable from the remainingprovisions contained in this Site Lease and such invalidity, illegality or unenforceability will notaffect any other provision of this Site Lease, and this Site Lease will be construed as if suchinvalid or illegal or unenforceable provision had never been contained herein. The Corporationand the City each hereby declares that it would have entered into this Site Lease and each andevery other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that anyone or more Sections, paragraphs, sentences, clauses or phrases of this Site Lease may be heldillegal, invalid or unenforceable.
Section 21. No Merger. Neither this Site Lease, the Lease nor any provisions hereof orthereof shall be construed to effect a merger of the title of the City to the Leased Property underthis Site Lease and the City's leasehold interest therein under the Lease.
Section 22. 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 provisionof this Site Lease.
Section 23. Execution in Counterparts. This Site Lease may be executed in any numberof counterparts, each of which is an original but all together constitute one and the sameinstrument. It is also agreed that separate counterparts of this Site Lease may be separatelyexecuted by the Corporation and the City, all with the same force and effect as though the samecounterpart had been executed by both the Corporation and the City.
Section 24. Defined Terris. All capitalized terms used herein and not otherwise definedhave the respective meanings given those terms in the Lease.
Signature page to follow]
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IN WITNESS WHEREOF, the City and the Corporation have caused this Site Lease to beexecuted by their respective officers thereunto duly authorized, all as of the day and year firstabove written.
CITY OF RIVERSIDE, CALIFORNIA
ByName: Brent A. Mason
Title: Finance Director
CITY OF RIVERSIDE MUNICIPAL IMPROVEMENTS
CORPORATION
ByName: Brent A. Mason
Title: Treasurer
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2 -53
ALL- PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On March 2012, before me, ( Notary Public),personally appearedwho proved to me on the basis of satisfactory evidence to be the person whose name issubscribed to the within instrument and acknowledged to me that he /she executed the same inhis /her authorized capacity, and that by his /her signature on the instrument the person, or theentity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERK JRY under the laws of the State of California that theforegoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature
26131.00008`,7234890.6
4 C7 ,N -o ii ZEL >(EliE. \'TOF C 'ITP OF RIi ERS7DE C ' 4LIFORN -14
Seal)
2 -54
ALL- PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On March 2012, before me, ( Notary Public),personally appearedwho proved to me on the basis of satisfactory evidence to be the person whose name issubscribed to the within instrument and acknowledged to me that he /she executed the same inhis /her authorized capacity, and that by his /her signature on the instrument the person, or theentity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERK JRY under the laws of the State of California that theforegoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature ( Seal)
26131.00008`,7234890.6
1CKA'0YTTEDCEIIE. \'TOF ( 'ITP OF RIi ER vf)E AR ;wcij, iL LIIYROI EIIENT,S CORYOR4TIOX
2 -55
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of land located in the City of Riverside, County ofRiverside, State of California, which is described as follows, including all buildings,improvements and facilities at any time situated thereon:
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SITE AND FACILITY LEASE BETWEEN THE
CITY OF RIVERSIDE MUNICIPAL IMPROVEMENTS CORPORATION
AND
CITY OF RIVERSIDE, CALIFORNIA
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Site and Facility Lease,dated as of March 27, 2012, from the City of Riverside, California, as lessor, to the City ofRiverside Municipal Improvements Corporation, as lessee ( the " Corporation "), is herebyaccepted by the undersigned officer on behalf of the Corporation and the Corporation consents torecordation thereof by its duly authorized officer.
Dated as of March 27, 2012
CITY OF RIVERSIDE MUNICIPAL IMPROVEMENTS
CORPORATION
ByName: Brent A. Mason
Title: Treasurer
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To BE RECORDED AND WHEN RECORDED
RETURN TO:
Best Best & Krieger LLP3750 Universit Avenue, Fourth Floor
Riverside, CA 92501
Attention: Francis J. Baum, Esq.
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA
GOVERNMENT CODE.
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "Assignment Agreement "), made and entered into as
of March 27, 2012, is between the CITY OF RIVERSIDE MUNICIPAL IMPROVEMENTS
CORPORATION, a nonprofit corporation duly organized and existing under the laws of the State ofCalifornia (the " Corporation "), and PINNACLE PUBLIC FINANCE, INC., a Delaware corporation,as assignee (the "Assignee ").
BACKGROUND:
In the joint and mutual exercise of their powers, in consideration of the mutual covenantsherein contained, and for other valuable consideration, the parties hereto recite and agree asfollows:
I . The City of Riverside, California (the "City ") wishes to finance the
acquisition, constriction, rehabilitation and installation of certain improvements in and tocertain real property of the City that will be a public park known as Ryan BonaminioPark at the Tequesquite Arroyo (the "Project ").
2. In order to provide funds to finance the Project, the City has agreed tolease to the Corporation the land and buildings, improvements and facilities whichconstitute the six City fire stations, described as follows: Magnolia Center Station at 6395Riverside Avenue; Arlington Station located at 9449 Andrew Street; LaSierra Stationlocated at 11076 Hole Avenue; LaSierra South Station located at 10692 Indiana; Station4 located at 3510 Cranford Street; and Station 11 located at 19595 Orange TerraceParkway, all located in Riverside, California, and more particularly described inAppendix A attached hereto and by this reference incorporated herein (such land andimprovements being herein referred to as the ` Leased Property"), under a Site andFacility Lease dated as of March 27, 2012 and recorded concurrently herewith, betweenthe City as lessor and the Corporation as lessee, and the Corporation has agreed to leasethe Leased Property back to the City, all under a Lease Agreement dated as of March 27,2012, which has been recorded concurrently herewith ( the "Lease"), between theCorporation as lessor and the City as lessee.
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I
Under the Lease, the City is obligated to pay semiannual lease paymentsthe `Lease Payments"), all in consideration of the lease by it of the Leased Propertythereunder.
4. The Corporation wishes to assign its rights under the Lease as sublessor tothe City of the Leased Property, including but not limited to its right to receive andenforce the Lease Payments, to the Assignee for the purpose of providing the fundsrequired for the financing of the Project.
5. In consideration of the assignment to the Assignee of its rights under theLease, the Assignee has agreed to deposit or cause to be deposited an amount as set forthherein in the Project Fund (the "Project Fund ") established under the Project FundAgreement as hereinafter defined.
6. Each of the parties has authority to enter into this Assignment Agreement,and has taken all actions necessary to authorize its officers to execute it.
AGREEMENT:
In consideration of the material covenants contained in this Assignment Agreement, theparties hereto hereby formally covenant, agree and bind themselves as follows:
Section 1. Covenants, Representations and Warranties of the Corporation. The
Corporation makes the following covenants, representations and warranties to the Assignee as ofthe date of this Assignment Agreement:
a) Due Organization and Existence. The Corporation is a nonprofitcorporation duly organized and existing under the laws of the State of California, has fulllegal right, power and authority to enter into this Lease, the Site Lease and thisAssignment Agreement and to carry out and consummate all transactions contemplatedhereby and thereby, and by proper action the Corporation has duly authorized theexecution and delivery of this Lease, the Site Lease and this Assignment Agreement.
b) Due Execution. The representatives of the Corporation executing thisLease, the Site Lease and this Assignment Agreement are fully authorized to execute thesame under official action taken by the Board of Directors of the Corporation.
c) T alid, Binding and Enforceable Obligations. This Lease, the Site Leaseand this Assignment Agreement have been duly authorized, executed and delivered bythe Corporation and constitute the legal, valid and binding agreements of the Corporation,enforceable against the Corporation in accordance with their respective terms.
d) No Conflicts. The execution and delivery of this Lease, the Site Lease andthis Assignment Agreement, the consummation of the transactions herein and thereincontemplated and the fulfillment of or compliance with the terms and conditions hereof,do not and will not conflict with or constitute a violation or breach of or default (with due
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2 -59
notice or the passage of time or both) under any applicable law or administrative rile orregulation, or any applicable court or administrative decree or order, or any indenture,mortgage, deed of trust, lease, contract or other agreement or instrument to which theCorporation is a party or by which it or its properties are otherwise subject or bound, orresult in the creation or imposition of any prohibited lien, charge or encumbrance of anynature whatsoever upon any of the property or assets of the Corporation, which conflict,violation, breach, default, lien, charge or encumbrance would have consequences thatwould materially and adversely affect the consummation of the transactions contemplatedby this Lease, the Site Lease and this Assignment Agreement or the financial condition,assets, properties or operations of the Corporation.
e) Consents and Approvals. No consent or approval of any trustee or holderof any indebtedness of the Corporation, and no consent, permission, authorization, orderor license of, or filing or registration with, any governmental authority is necessary inconnection with the execution and delivery of this Lease, the Site Lease or thisAssignment Agreement, or the consummation of any transaction herein or thereincontemplated, except as have been obtained or made and as are in full force and effect.
f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmentalauthority pending or, to the knowledge of the Corporation after reasonable investigation,threatened against or affecting the Corporation or the assets, properties or operations ofthe Corporation which, if determined adversely to the Corporation or its interests, wouldhave a material and adverse effect upon the consummation of the transactionscontemplated by or the validity of this Lease, the Site Lease or this AssignmentAgreement, or upon the financial condition, assets, properties or operations of theCorporation, and the Corporation is not in default with respect to any order or decree ofany court or any order, regulation or demand of any federal, state, municipal or othergovernmental authority, which default might have consequences that would materiallyand adversely affect the consummation of the transactions contemplated by this Lease,the Site Lease or this Assignment Agreement or the financial condition, assets, propertiesor operations of the Corporation.
Section 2. Assignment. The Corporation hereby assigns to the Assignee all of theCorporation's rights under the Lease as sublessor of the Leased Property (excepting only theCorporation's rights under Sections 5.10, 7.3 and 8.4 of the Lease) and as lessee of the LeasedProperty under the Site Lease, including but not limited to:
a) the right to receive and collect all of the Lease Payments from the Cityunder the Lease,
b) the right to receive and collect any proceeds of any insurance maintainedthereunder with respect to the Leased Property, or any eminent domain award (orproceeds of sale under threat of eminent domain) paid with respect to the LeasedProperty,
26131.00008`,724808.8
c) the right to exercise such rights and remedies conferred on the Corporationunder the Lease as may be necessary or convenient (i) to enforce payment of the LeasePayments and any amounts required to be applied to the prepayment of the LeasePayments, or (ii) otherwise to protect the interests of the Assignee in the event of adefault by the City under the Lease, and
d) all right, title and interest of the Corporation in and to the Project Fundwhich has been established under the Project Fund Agreement with respect to the Lease.
The assignment made under this Section 2 is absolute and irrevocable, and withoutrecourse to the Corporation.
Section 3. Acceptance. The Assignee hereby accepts the assignments made herein forthe purpose of securing the payments due under the Lease to, and the rights under the Lease of,the Corporation.
Section 4. Consideration; Deposit ofFunds. In consideration of the assignment to theAssignee of the Lease Payments and certain other rights of the Corporation under Section 2, theAssignee hereby agrees to deposit or cause to be deposited on the Closing Date the amount of4,000,000 with The Bank of New York Mellon Trust Company, N.A., as custodian (theCustodian ") under that certain Project Fund Agreement dated as of March 27, 2012 (theProject Fund Agreement'), among the City, the Assignee and the Custodian. Of this amount,the City will cause the Custodian to (a) apply $ to pay the costs of the financing onbehalf of the City and (b) hold, administer and invest $ in the Project Fund for thepurpose of financing the Project in accordance with the Project Fund Agreement.
Section 5. Execution in Counterparts. This Assignment Agreement may be executedin any number of counterparts, each of which shall be deemed to be an original but all togethershall constitute but one and the same agreement. It is also agreed that separate counterparts ofthis Assignment may be separately executed by the Assignee and the Corporation, both with thesame force and effect as though the same counterpart had been executed by the Assignee and theCorporation.
Section 6 Defined Tennis. All capitalized terms used in this Assignment Agreementand not otherwise defined have the respective meanings given those terms in the Lease.
Section 7. Binding Effect. This Assignment Agreement inures to the benefit of andbinds the Corporation and the Assignee, and their respective successors and assigns, subject,however, to the limitations contained herein.
Section 8. Governing Law. This Assignment Agreement shall be construed inaccordance with and governed by the Constitution and laws of the State of California.
Signature Page to follow]
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2 -61
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by theirofficers thereunto duly authorized as of the day and year first written above.
CITY OF RIVERSIDE MUNICIPAL IMPROVEMENTS
CORPORATION, as Lessor
Name: Brent A. Mason
Title: Treasurer
PINNACLE PUBLIC FINANCE, INC., as Assignee
LMName: Paul T. Haerle
Title: President
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ALL- PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On March 2012, before me, ( Notary Public),personally appearedwho proved to me on the basis of satisfactory evidence to be the person whose name issubscribed to the within instrument and acknowledged to me that he /she executed the same inhis /her authorized capacity, and that by his /her signature on the instrument the person, or theentity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERK JRY under the laws of the State of California that theforegoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature ( Seal)
26131.00008`,724808.8
1CKA'0YTTEDCEIIE. \'TOF ( 'ITP OF RIi ER vf)E AR ;wcij, iL LIIYROI EIIENT,S CORYOR4TIOX
2 -63
ALL- PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF ARIZONA
COUNTY OF MARICOPA
SS:
On March 2012, before me, ( Notary Public),personally appearedwho proved to me on the basis of satisfactory evidence to be the person whose name issubscribed to the within instrument and acknowledged to me that he /she executed the same inhis /her authorized capacity, and that by his /her signature on the instrument the person, or theentity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERK JRY under the laws of the State of California that theforegoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature
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4C'I'.\'OY6LEL >(EIIEA "T OF PI.N -.V ('LE P rBLIC' FL \SL\ "C E, L \
Seal)
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APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of the land located in the City of Riverside, County ofRiverside, State of California, which is described as follows, including all buildings,improvements and facilities at any time situated thereon:
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PROJECT FUND AGREEMENT
This PROJECT FUND AGREEMENT ( this "Agreement "), dated as of March 27, 2012, isamong PINNACLE PUBLIC FINANCE, INC., a Delaware corporation (the "Assignee "), the CITY OF
RIVERSIDE, a charter city and municipal corporation duly organized and existing under its charterand the Constitution and the laws of the State of California (the "City "), and THE BANK OF NEw
YORK MELLON TRUST COMPANY, N.A. (the "Custodian ").
Reference is made to that certain Lease Agreement dated as of March 27, 2012 (theLease "), between the City of Riverside Municipal Improvements Corporation ( theCorporation ") and the City, relating to the financing of certain improvements in and to a City -owned property to be a public park known as Ryan Bonaminio Park at the Tequesquite Arroyo asdescribed therein ( the "Project "). Reference is further made to that certain AssignmentAgreement dated as of March 27, 2012, between the Corporation and the Assignee, under whichthe Corporation has assigned certain of its rights under the Lease to the Assignee, including theright to receive Lease Payments payable by the City under the Lease. It is a requirement of theLease that the funds for the acquisition, constriction, rehabilitation and installation of the Projectbe deposited with the Custodian hereunder for the purpose of providing a mechanism for theapplication of such amounts to the payment of Project Costs. Capitalized terms used in thisAgreement and not otherwise defined will have the respective meanings given such terms in theLease.
The parties agree as follows:
1. Payment ofDelivery Costs. The City and the Assignee agree that $ of the
amount deposited into the Project Fund pursuant to Section 2(a) hereof shall be used by theCustodian for payment of delivery costs related to the Lease to each payee listed as entitled tosuch payment in Schedule IA to this Project Fund Agreement and for which the Custodian hasreceived a written invoice.
2. C1 ofPi Fund. (a) There is hereby created a special trust fund to beknown as the "Ryan Bonaminio Park at the Tequesquite Arroyo Project Fund" (the "ProjectFund") to be held in trust by the Custodian for the purposes stated herein, for the benefit of theCity, to be held, disbursed and returned in accordance with the terms hereof. On the date hereof,the Corporation has caused the amount of $4,000,000 to be transferred to the Custodian fordeposit into the Project Fund.
b) The Custodian will invest and reinvest moneys on deposit in the Project Fund inQualified Investments in accordance with written instructions received from the City. The Citywill be solely responsible for ascertaining that all proposed investments and reinvestments areQualified Investments and that they comply with federal, state and local laws, regulations andordinances governing investment of such funds and for providing appropriate notice to theCustodian for the reinvestment of any maturing investment. Accordingly, neither the Custodiannor the Assignee has any responsibility for any liability, cost, expense, loss or claim of any kind,directly or indirectly arising out of or related to the investment or reinvestment of all or anyportion of the moneys on deposit in the Project Fund, and the City agrees to and does hereby
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release the Custodian and the Assignee from any such liability, cost, expenses, loss or claim.Interest on the Project Fund will become part of the Project Fund, and gains and losses on theinvestment of the moneys on deposit in the Project Fund will be borne by the Project Fund. Forpurposes of this Agreement, the term "Qualified Investments " means (a) any investments whichmeet the requirements of Sections 33601 and 16429.1 of the California Government Code; andb) investment in money market mutual funds having a rating in the highest investment categorygranted thereby from S &P or Moody's, including, without limitation any mutual fund for whichthe Custodian or an affiliate of the Custodian serves as investment manager, administrator,shareholder servicing agent, and /or custodian or subcustodian, notwithstanding that (i) theCustodian or an affiliate of the Custodian receives fees from funds for services rendered, (ii) theCustodian collects fees for services rendered pursuant to this Project Fund Agreement, whichfees are separate from the fees received from such funds, and (iii) services performed for suchfunds and pursuant to this Project Fund Agreement may at times duplicate those provided to suchfunds by the Custodian or an affiliate of the Custodian. IN THE ABSENCE OF WRITTEN
INSTRUCTIONS, THE CUSTODIAN IS HEREBY AUTHORIZED AND DIRECTED TO INVEST AND RE- INVESTALL FUNDS ON HAND IN THE
c) Unless the Project Fund is earlier terminated in accordance with the provisions ofparagraph (d) below, amounts in the Project Fund will be disbursed by the Custodian in paymentof amounts described in Section 3 upon receipt of written authorization(s) from the City andapproved by the Assignee, as more fully described in Section 3. If the amounts in the ProjectFund are insufficient to pay such amounts, the City will provide any balance of the funds neededto complete the acquisition, constriction, rehabilitation and installation of the Project.
d) The Project Fund will be terminated at the earliest of (i) the final distribution ofamounts in the Project Fund, (ii) written notice given by the City to the Custodian underSection 3.4 of the Lease requesting the Custodian to close the Project Fund and apply the ExcessProject Funds in accordance with such Section 3.4, (iii) written notice given by the Assignee ofthe occurrence of a default or termination of the Lease or (iv) on April 1, 2014, unless such dateis extended by the mutual consent of the City and the Assignee.
e) The Custodian may act in reliance upon any writing or instrument or signaturewhich it, in good faith, believes to be genuine and may assume the validity and accuracy of anystatement or assertion contained in such a writing or instrument. The Custodian is not liable inany manner for the sufficiency or correctness as to form, manner of execution, or validity of anyinstrument nor as to the identity, authority, or right of any person executing the same; and itsduties hereunder will be limited to the receipt of such moneys, instruments or other documentsreceived by it as the Custodian, and for the disposition of the same in accordance herewith.
f) Unless the Custodian is guilty of gross negligence or willful misconduct with regardto its duties hereunder, the City agrees to and does hereby release and indemnify the Custodianand hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings atlaw or in equity, or any other expense, fees or charges of any character or nature, which it mayincur or with which it may be threatened by reason of its acting as the Custodian under thisagreement; and in connection therewith, does to the extent permitted by law indemnify the
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Custodian against any and all expenses; including reasonable attorneys' fees and the cost ofdefending any action, suit or proceeding or resisting any claim.
g) The Custodian may consult with counsel of its own choice and will have full andcomplete authorization and protection with the opinion of such counsel. The Custodian will
otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts oromissions of any kind unless caused by its willful misconduct.
h) The City has no responsibility to reimburse the Custodian for its costs and expenses,including those of the Custodian's attorneys, agents and employees incurred for in connectionwith the administration of the Project Fund and the performance of the Custodian's powers andduties hereunder.
3. Acquisition, construction, rehabilitation and installation of the Project.
a) Construction Contracts; Purchase Orders. The City will arrange for, supervise andprovide for, or cause to be supervised and provided for, the acquisition, constriction,rehabilitation and installation of the Project with moneys available in the Project Fund, as hereinprovided. Neither the Assignee nor the Corporation has any liability under any of theconstriction contracts or purchase orders. The City will obtain all necessary permits andapprovals, if any, for the constriction, acquisition, rehabilitation and installation of the Project,and the operation and maintenance thereof.
b) Authorized Project Fund Disbursements. Disbursements from the Project Fund willbe made for the purpose of paying (including the reimbursement to the City for advances from itsown funds to accomplish the purposes hereinafter described) the cost of constricting, acquiring,rehabilitating and installing the Project.
c) Requisition Procedure. Prior to disbursement from the Project Fund there will befiled with the Custodian a requisition for such payment in the form of Disbursement Requestattached hereto as Schedule 113. Each such requisition will be signed by any of the CityManager, the Finance Director or the Assistant Finance Director or other authorizedrepresentative of the City (an "Authorized Representative ").
4. Deposit to Project Fund. Upon satisfaction of the conditions specified inSection 3.1 of the Lease, the Corporation will cause the Lease proceeds to be deposited with theCustodian for disbursement in accordance with this Agreement. The City agrees to pay any costswith respect to the Project in excess of amounts available therefor in the Project Fund.
5. Excess Project Funds. Following the final disbursement from the Project Fundupon completion of the Project, or termination of the Project Fund as otherwise provided herein,the Custodian will transfer any remainder from the Project Fund to the City or the Assignee, asdirected by the City, for application in accordance with Section 3.4 of the Lease.
6. Security Interest. The Custodian and the City acknowledge and agree that theProject Fund and all proceeds thereof are being held by the Custodian for disbursement or return
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as set forth herein. The City hereby grants to the Assignee a first priority perfected securityinterest in the Project Fund, and all proceeds thereof, and all investments made with any amountsin the Project Fund. If the Project Fund, or any part thereof, is converted to investments as setforth in this Agreement, such investments will be made in the name of the Custodian and theCustodian hereby agrees to hold such investments as bailee for the Assignee so that the Assigneeis deemed to have possession of such investments for the purpose of perfecting its securityinterest.
7. Control of Pi-oject Fund. In order to perfect the Assignee's security interest bymeans of control in (i) the Project Fund established hereunder, (ii) all securities entitlements,investment property and other financial assets now or hereafter credited to the Project Fund,iii) all of the City's rights in respect of the Project Fund, such securities entitlements, investmentproperty and other financial assets, and (iv) all products, proceeds and revenues of and from anyof the foregoing personal property (collectively, the "Collateral"), the City and the Custodianfurther agree as follows:
a) All terms used in this Section 7 which are defined in the Commercial
Code of the State of California ( " Commercial Code ") but are not otherwise defined
herein will have the meanings assigned to such terms in the Commercial Code, as ineffect on the date of this Agreement.
b) The Custodian will comply with all entitlement orders originated by theAssignee with respect to the Collateral, or any portion of the Collateral, without furtherconsent by the City.
c) The Custodian hereby represents and warrants that (i) the records of theCustodian show that the City is the sole owner of the Collateral, (ii) the Custodian has notbeen served with any notice of levy or received any notice of any security interest in orother claim to the Collateral, or any portion of the Collateral, other than the Assignee'sclaim under this Agreement, and (iii) the Custodian is not presently obligated to acceptany entitlement order from any person with respect to the Collateral, except forentitlement orders that the Custodian is obligated to accept from the Assignee under thisAgreement and entitlement orders that the Custodian, subject to the provisions ofparagraph (e) below, is obligated to accept from the City.
d) Without the prior written consent of the Assignee, the Custodian will notenter into any agreement by which the Custodian agrees to comply with any entitlementorder of any person other than the Assignee or, subject to the provisions of paragraph (e)below, the City, with respect to any portion or all of the Collateral. The Custodian willpromptly notify the Assignee if any person requests the Custodian to enter into any suchagreement or otherwise asserts or seeks to assert a lien, encumbrance or adverse claimagainst any portion or all of the Collateral.
e) Except as otherwise provided in this paragraph (e) and subject toSection I(b) hereof, the Custodian may allow the City to effect sales, trades, transfers andexchanges of Collateral within the Project Fund, but will not, without the prior writtenconsent of the Assignee, allow the City to withdraw any Collateral from the Project Fund.
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The Custodian acknowledges that the Assignee reserves the right, by delivery of writtennotice to the Custodian, to prohibit the City from effecting any withdrawals (includingwithdrawals of ordinary cash dividends and interest income), sales, trades, transfers orexchanges of any Collateral held in the Project Fund. Further, the Custodian herebyagrees to comply with any and all written instructions delivered by the Assignee to theCustodian (once it has had a reasonable opportunity to comply therewith) and has noobligation to, and will not, investigate the reason for any action taken by the Assignee,the amount of any obligations of the City to the Assignee, the validity of any of theAssignee's claims against or agreements with the City, the existence of any defaultsunder such agreements, or any other matter.
f) The City hereby irrevocably authorizes the Custodian to comply with allinstructions and entitlement orders delivered by the Assignee to the Custodian.
g) The Custodian will not attempt to assert control, and does not claim andwill not accept any security or other interest in, any part of the Collateral, and theCustodian will not exercise, enforce or attempt to enforce any right of setoff against theCollateral, or otherwise charge or deduct from the Collateral any amount whatsoever.
h) The Custodian and the City hereby agree that any property held in theProject Fund will be treated as a financial asset under such section of the CommercialCode as corresponds with Section 8 -102 of the Uniform Commercial Code,notwithstanding any contrary provision of any other agreement to which the Custodianmay be a party.
i) The Custodian is hereby authorized and instructed, and hereby agrees, tosend to the Assignee at its address set forth in Section 8 below, concurrently with thesending thereof to the City, duplicate copies of any and all monthly Project Fundstatements or reports issued or sent to the City with respect to the Project Fund.
8. Miscellaneous. This Agreement may not be amended except in writing signed bythe City, the Custodian and the Assignee. This Agreement may be executed in one or morecounterparts, each of which will be deemed to be an original instrument and each will have theforce and effect of an original and all of which together constitute, and will be deemed toconstitute, one and the same instrument. Notices hereunder will be made in writing and will bedeemed to have been duly given when personally delivered or when deposited in the mail, firstclass postage prepaid, or delivered to an express carrier, charges prepaid, or sent by facsimilewith electronic confirmation, addressed to each party at its address below:
If to the City: City of Riverside3900 Main Street
Riverside, CA 92522Attention: Chief Financial Officer
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If to the Assignee: Pinnacle Public Finance, Inc.8377 E. Hartford Drive
Suite 115
Scottsdale, AZ 85255Attn: Cathy Jimenez
If to the Custodian: The Bank of New York Mellon Trust Company, N.A.911 Washington Avenue, Suite 300St. Louis, MO 63 10 1Attn: James P. Agnew
Signature page to follow]
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IN WITNESS WHEREOF, the parties have executed this Project Fund Agreement as of thedate first above written.
CITY OF RIVERSIDE, CALIFORNIA
LMName: Brent A. Mason
Title: Finance Director
PINNACLE PUBLIC FINANCE, INC.
LMName: Paul T. Haerle
Title: President
THE BANK OF NEW YORK MELLON TRUST
Comi N.A., as Custodian
Name: James P. AgnewTitle: Senior Associate & Assistant
Secretary
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SCHEDULE IA
SCHEDULE OF DELIVERY COSTS
AUTHORIZED
PAYEE PURPOSE PAYMENT
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SCHEDULEIB
FORM OF DISBURSEMENT REQUEST
Re: Lease Agreement dated as of March 27, 2012, between theCity of Riverside Municipal Improvements Corporation and the
City of Riverside, California (the Lease ")
In accordance with the terms of the Project Fund Agreement dated as of March 27, 2012the "Project Fund Agreement ") among Pinnacle Public Finance, Inc. (the "Assignee "), the Cityof Riverside, California (the "City "), and The Bank of New York Mellon Trust Company, N.A.the "Custodian "), the undersigned hereby requests the Custodian pay the following persons thefollowing amounts from the Project Fund created under the Project Fund Agreement (theProject Fund ") for the following purposes:
PAYEE'S NAME AND ADDRESS DOLLAR AMOUNT PURPOSE
The undersigned hereby certifies as follows:
i) An obligation in the stated amount has been incurred by the City, and thesame is a proper charge against the Project Fund for Project Costs as described above andprovided in the Lease. Such obligation either (a) has not been previously paid by theCity, or (b) has been previously paid by the City in an amount which is not less than theamount for which the City is requesting to be reimbursed under this request. Attachedhereto is the original invoice with respect to such obligation or, if the City is requestingreimbursement, documentation evidencing that the City has previously paid suchobligation.
ii) The undersigned, as Authorized Representative, has no notice of anyvendor's, mechanic's or other liens or rights to liens, chattel mortgages, conditional salescontracts or security interest which should be satisfied or discharged before such paymentis made.
iii) This requisition contains no item representing payment on account, or anyretained percentages which the City is, at the date hereof, entitled to retain.
iv) The Leased Property is insured in accordance with the Lease.
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v) No Event of Default, and no event which with notice or lapse of time, orboth, would become an Event of Default, under the Lease has occurred and is continuingat the date hereof.
vi) No material adverse change in the City's financial condition has occurredsince the date of the Lease.
Dated:
CITY OF RIVERSIDE, CALIFORNIA
LMName:
Title:
Disbursement of funds from the ProjectFund in accordance with the foregoingDisbursement Request hereby is authorized
