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G. Melikian, Esq. THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX UNDER SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. LEASE AGREEMENT Dated as of January 1, 2013 between the SAN LEANDRO PUBLIC FINANCING AUTHORITY, as lessor and the CITY OF SAN LEANDRO, as lessee Relating to $______________ San Leandro Public Financing Authority 2013 Refunding Lease Revenue Bonds -i-TABLE OF CONTENTS ARTICLE I DEFINITIONS; RULES OF INTERPRETATION SECTION 1.1. Definitions........................................................................................................... .......... 2 SECTION 1.2. Interpretation ................................................................................................................. 2 ARTICLE II COVENANTS, REPRESENTATIONS AND WARRANTIES SECTION 2.1. Covenants, Representations and Warranties of the City .............................................. 3 SECTION 2.2. Covenants, Representations and Warranties of the Authority ...................................... 4 ARTICLE III DEPOSIT AND APPLICATION OF FUNDS; SUBSTITUTION AND RELEASE OF PROPERTY SECTION 3.1. Deposit of Moneys ........................... .............................................................................. 5 SECTION 3.2. Substitution of Property ................................................................................ ................. 5 SECTION 3.3. Release of Property ....................................................................................................... 6 ARTICLE IV LEASE OF LEASED PROPERTY; TERM OF THIS LEASE; LEASE PAYMENTS: SECTION 4.1. Lease of Leased Property ............................................................................................. 7 SECTION 4.2. Term .............................................................................................................................. 7 SECTION 4.3. Lease Payments................................. ........................................................................... 7 SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate ......................................... 8 SECTION 4.5. Additional Rental Payments .......................................................................................... 9 SECTION 4.6. Quiet Enjoyment ................................... ......................................................................... 9 SECTION 4.7. Title......................................................................................................... ...................... 9 ARTICLE V MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS SECTION 5.1. Maintenance, Utilities, Taxes and Assessments ........................................................ . 10 SECTION 5.2. Modification of Leased Property .................................................................................. 10 SECTION 5.3. Liability and Property Damage Insurance ................................................................... 11 SECTION 5.4. Casualty Insurance ................................................................................................ ...... 11 SECTION 5.5. Rental Interruption Insurance ...................................................................................... 11 SECTION 5.6. Recordation Hereof; Title Insurance ........................................................................... 11 SECTION 5.7. Insurance Net Proceeds; Form of Policies ........................................................ .......... 12 SECTION 5.8. Installation of City’s Personal Property ........................................................................ 12 SECTION 5.9. Liens .................................... ........................................................................................ 12 SECTION 5.10. Advances..................................................................................... ................................ 13 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1. Application of Net Proceeds ................................................... ..................................... 13 SECTION 6.2. Termination or Abatement Due to Eminent Domain ................................................... 13 SECTION 6.3. Abatement Due to Damage or Destruction ................................................................. 13 ARTICLE VII OTHER COVENANTS OF THE CITY SECTION 7.1. Disclaimer of Warranties ........................... .................................................................. 14 SECTION 7.2. Access to the Leased Property ................................................................................... 14 -ii-SECTION 7.3. Release and Indemnification Covenants ..................................................................... 14 SECTION 7.4. Assignment and Subleasing by the City .................... .................................................. 15 SECTION 7.5. Amendment Hereof ..................................................................................................... 15 SECTION 7.6. Tax Covenants ............................................................................................................ 16 SECTION 7.7. Continuing Disclosure ...................... ........................................................................... 17 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES SECTION 8.1. Events of Default Defined ..................................... ...................................................... 17 SECTION 8.2. Remedies on Default ................................................................................................... 18 SECTION 8.3. No Remedy Exclusive ................................................................................................. 19 SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses ...................................................... 19 SECTION 8.5. No Additional Waiver Implied by One Waiver ............................................................. 20 SECTION 8.6. Application of Proceeds .............................................................................................. 20 SECTION 8.7. Trustee and Bond Owners to Exercise Rights ............................................................ 20 ARTICLE IX PREPAYMENT OF LEASE PAYMENTS SECTION 9.1. Security Deposit .......................................................... ................................................ 20 SECTION 9.2. Optional Prepayment ................................................................................................... 21 SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain .......... 21 SECTION 9.4. Credit for Amounts on Deposit ........................................................ ............................ 21 ARTICLE X MISCELLANEOUS SECTION 10.1. Notices ........................................................................................................................ 21 SECTION 10.2. Binding Effect .............................................................................................................. 22 SECTION 10.3. Severability .......................... ........................................................................................ 22 SECTION 10.4. Net-net-net Lease ........................................................................... ............................ 22 SECTION 10.5. Third Party Beneficiary ................................................................................................ 22 SECTION 10.6. Further Assurances and Corrective Instruments ........................................................ 22 SECTION 10.7. Execution in Counterparts. .................................................... ...................................... 22 SECTION 10.8. Applicable Law ............................................................................................................ 22 SECTION 10.9. Authority and City Representatives ............................................................................. 22 SECTION 10.10. Captions ............................................. ......................................................................... 22 APPENDIX A DESCRIPTION OF THE LEASED PROPERTY APPENDIX B SCHEDULE OF LEASE PAYMENTS LEASE AGREEMENT This LEASE AGREEMENT (this "Lease"), dated for convenience as of January 1, 2013, is between the SAN LEANDRO PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California, as lessor (the "Authority"), and the CITY OF SAN LEANDRO, a municipal corporation organized and chartered city duly organized and existing under the Constitution and laws of the State of California, as lessee (the "City"). B A C K G R O U N D : 1. The City has previously caused the execution and delivery of its (a) 2001 Certificates of Participation (Joint Project Area Financing) in the aggregate initial principal amount of $5,020,000 (the "2001 Certificates") for the purpose of financing certain capital projects within or benefit to the Joint Project Area of the Redevelopment Agency of the City of San Leandro and (b) 2003 Certificates of Participation (City Hall Refinancing Project) in the aggregate initial principal amount of $12,550,000 (the "2003 Certificates") for the purpose of refunding, on a current basis, the City of San Leandro Certificates of Participation (1993 Seismic Retrofit Financing Project), which were executed and delivered to finance improvements to the City Hall of the City and to refund, on an advance basis, the Parking Authority of the City of San Leandro 1982 Parking Lease Revenue Bonds, which were issued to finance certain parking improvements for the City. 2. The City is proceeding to refinance its outstanding 2001 Certificates and its outstanding 2003 Certificates (collectively, the "Prior Certificates"). 3. To that end, the City has leased the real property constituting its City Hall, including land and improvements (the "Leased Property"), to the Authority under a Site Lease dated as of January 1, 2013 (the "Site Lease"), in consideration of the payment by the Authority of an upfront rental payment (the "Site Lease Payment") which is sufficient to provide funds for the prepayment of the Prior Certificates. 4. The Authority has authorized authorized the issuance of its San Leandro Public Financing Authority 2013 Refunding Lease Revenue Bonds in the aggregate principal amount of $______________ (the "Bonds") under an Indenture of Trust dated as of January 1, 2013 by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee") for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with the Site Lease. 5. In order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bonds, the Authority will lease the Leased Property back to the City under this Lease, under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder. 6. The lease payments made by the City under the Lease have been assigned by the Authority to the Trustee for the security of the Bonds under an Assignment Agreement, dated as of January 1, 2013, between the Authority as assignor and the Trustee as assignee. 7. The City and the Authority have found and determined that all acts and proceedings required by law necessary to make this Lease, when executed by the City and the -2-Authority, the valid, binding and legal obligations of the City and the Authority, and to constitute this Lease a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Lease have been in all respects duly authorized. A G R E E M E N T : In consideration of the material covenants contained in this Lease, the parties hereto hereby formally covenant, agree and bind themselves as follows: ARTICLE I DEFINITIONS; RULES OF INTERPRETATION SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Lease have the respective meanings given them in the Indenture. SECTION 1.2. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular includes the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and includes the neuter, masculine or feminine gender, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof. (c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding 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 to any particular Article, Section or subdivision hereof. -3-ARTICLE II COVENANTS, REPRESENTATIONS AND WARRANTIES SECTION 2.1. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Authority and the Trustee as of the date of the execution and delivery of this Lease: (a) Due Organization and Existence. The City is a municipal corporation organized and chartered city duly organized and validly existing under the Constitution and laws of the State of California, has full legal right, power and authority under the laws of the State of California to enter into the Site Lease and this Lease and to carry out and consummate all transactions contemplated hereby, and by proper action the City has duly authorized the execution and delivery of the Site Lease and this Lease. (b) Due Execution. The representatives of the City executing the Site Lease and this Lease have been fully authorized to execute the same under a resolution duly adopted by the City Council of the City. (c) Valid, Binding and Enforceable Obligations. The Site Lease and this Lease have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding obligations of the City enforceable against the City in accordance with their respective terms. (d) No Conflicts. The execution and delivery of the Site Lease and this Lease, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, 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 the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease and this Lease or the financial condition, assets, properties or operations of the City. (e) Consents and Approvals. No consent or approval of any trustee or holder of 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 governmental authority is necessary in connection with the execution and delivery of the Site Lease and this Lease, or the consummation of any transaction therein and herein 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 governmental -4-authority 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 City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Site Lease and this Lease, or upon the financial condition, assets, properties or operations of the City, and the City 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 the consummation of the transactions contemplated by the Site Lease and this Lease or the financial conditions, assets, properties or operations of the City. SECTION 2.2. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the City and the Trustee as of the date of the execution and delivery of this Lease: (a) Due Organization and Existence. The Authority is a joint exercise of powers authority duly organized and existing under a joint powers agreement and the laws of the State of California; has power to enter into this Lease, the Site Lease, the Assignment Agreement and the Indenture; is possessed of full power to own and hold, improve and equip real and personal property, and to lease the same; and has duly authorized the execution and delivery of each of the aforesaid agreements and such agreements constitute the legal, valid and binding obligations of the Authority, enforceable against the Authority in accordance with their respective terms. (b) Due Execution. The representatives of the Authority executing this Lease, the Site Lease, the Assignment Agreement and the Indenture are fully authorized to execute the same pursuant to official action taken by the governing body of the Authority. (c) Valid, Binding and Enforceable Obligations. This Lease, the Site Lease, the Assignment Agreement and the Indenture have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms. (d) No Conflicts. The execution and delivery of this Lease, the Site Lease, the Assignment Agreement and the Indenture, the consummation of the transactions herein and therein contemplated 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 notice or the passage of time or both) under any applicable law or administrative rule or regulation, 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 the Authority is a party or by which it or its properties are otherwise subject or or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which -5-conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site Lease, the Assignment Agreement and the Indenture or the financial condition, assets, properties or operations of the Authority. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Lease, the Site Lease, the Assignment Agreement or the Indenture, 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 governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Lease, the Site Lease, the Assignment Agreement or the Indenture, or upon the financial condition, assets, properties or operations of the Authority, and the Authority 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 the consummation of the transactions contemplated by this Lease, the Site Lease, the Assignment Agreement or the Indenture or the financial conditions, assets, properties or operations of the Authority. ARTICLE III DEPOSIT AND APPLICATION APPLICATION OF FUNDS; SUBSTITUTION AND RELEASE OF PROPERTY SECTION 3.1. Deposit of Moneys. On the Closing Date, the Authority will cause the proceeds of sale of the Bonds to be deposited with the Trustee. The Trustee shall deposit such proceeds in accordance with Section 3.02 of the Indenture. SECTION 3.2. Substitution of Property. The City has the option at any time and from time to time, to substitute other real property (the "Substitute Property") for the Leased Property or any portion thereof (the "Former Property"), upon satisfaction of all of the following requirements which are hereby declared to be conditions precedent to such substitution: (a) No Event of Default has occurred and is continuing. (b) The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the Alameda County Recorder sufficient -6-memorialization of, an amendment hereof which adds the legal description of the Substitute Property to Appendix A and deletes therefrom the legal description of the Former Property. (c) The City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate hereunder in the Substitute Property, subject only to Permitted Encumbrances, in an amount at least equal to the estimated value thereof. (d) The City has certified in writing to the Authority and the Trustee that the Substitute Property serves the municipal purposes of the City and constitutes property which the City is permitted to lease under the laws of the State of California, and has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City. (e) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made herein. (g) The City has filed with the Authority and the Trustee a written certificate of the City or other written evidencing stating that the useful life of the Substitute Property at least extends to October 1, 2031, that the estimated value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the aggregate Outstanding principal amount of the Bonds, and the fair rental value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the Lease Payments thereafter coming due and payable hereunder. (h) The City has mailed written notice of such substitution to each rating agency which then maintains a rating on the Bonds. Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Former Property and commence as to the Substitute Property, and all references 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 the Lease Payments whatsoever as a result of any substitution of property under this Section. The Authority and the City will execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Former Property and to cause the Substitute Property to become subject to all of the terms and conditions of the Site Lease, this Lease and the Assignment Agreement. SECTION 3.3. Release of Property. The City has the option at any time and from time to time to release any portion of the Leased Property from this Lease (the "Released Property") provided that the City has satisfied all of the following requirements which are hereby declared to be conditions precedent to such release: (a) No Event of Default has occurred and is continuing. (b) The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the Alameda County Recorder sufficient -7-memorialization of, an amendment hereof which removes the Released Property from the Site Lease and this Lease. (c) The City has certified in writing to the Authority and the Trustee that the value of the property which remains subject to this Lease following such release is at least equal to the aggregate Outstanding principal amount of the Bonds, and the fair rental value of the property which remains subject to this Lease following such release is at least equal to the Lease Payments thereafter coming due and payable hereunder. (d) The City has mailed written notice of such release to each rating agency which then maintains a rating on the Bonds. Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon 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 Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Released Property. ARTICLE IV LEASE OF LEASED PROPERTY; TERM OF THIS LEASE; LEASE PAYMENTS SECTION 4.1. Lease of Leased Property. The Authority hereby leases the Leased Property to the City and the City hereby leases the Leased Property from the Authority, upon the terms and conditions set forth in this Lease. SECTION 4.2. Term. The Term of this Lease commences on the Closing Date and ends on the date on which the Indenture is discharged in accordance with Section 10.03 thereof, but under any circumstances not later than October 1, 2041. The provisions of this Section are subject to the provisions of Section 6.2 relating to the taking in eminent domain of the Leased Property in whole or in part. SECTION 4.3. Lease Payments. (a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, the Lease Lease Payments in the respective amounts specified in Appendix B attached to this Lease, to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in Appendix B, and to be deposited by the City with the Trustee on each of the Lease Payment Dates specified in Appendix B. Any amount held in the Bond Fund, the Interest Account and the Principal Account on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole under Article IX, and amounts required for payment of past due principal or interest on any Bonds not presented for payment) will be credited towards the Lease Payment then required to be paid hereunder. The City is not required to deposit any Lease Payment with the Trustee on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest Account and the Principal Account are at least equal to the Lease Payment then required to to be deposited with the Trustee. The Lease Payments payable in any -8-Rental Period are for the use of the Leased Property during