HomeMy WebLinkAboutContracts & Agreements_16-2011_CCv0001.pdf SHARES LEASE AGREEMENT
This Shares Lease Agreement ("Lease") is entered into by and between the San
Bernardino Valley Municipal Water District, a California municipal water district ("Lessor") and
the City of Redlands, a general law city incorporated under the laws of the State of California
("Lessee"). Lessor and Lessee are sometimes individually referred to herein as a "Party" and,
together, as the "Parties."
RECITALS
WHEREAS, Lessor is the owner of shares of the common stock of the Bear Valley Mutual
Water Company, and
WHEREAS, Lessor has agreed to grant Lessee the exclusive option to purchase, and
Lessee has agreed to accept such option to purchase from Lessor, in installments, 10,000 shares
of Bear Valley Water Company owned by Lessor pursuant to that certain Stock Purchase Option
Agreement, dated March 1, 2011 ("Purchase Option Agreement"); and
WHEREAS, as a material term to the installment sale contemplated in the Purchase Option
Agreement, Lessee desires to lease all non-purchased shares (the "Leased Shares") from Lessor
on the terms and conditions hereinafter set forth;
Now, THEREFORE, in consideration of the mutual promises contained herein, Lessor and
Lessee agree as follows:
AGREEMENT
I. Lease. Lessor hereby agrees to lease the Leased Shares to Lessee and Lessee
agrees to lease the Leased Shares from Lessor for the purpose of providing water to Lessee.
Such water is not intended, nor shall it be used for human consumption or domestic purposes
until such time that Lessee treats such water in accordance with California Department of Health
Services, Office of Drinking Water Standards, and all other applicable state and local laws, rules
or regulations. The number of Leased Shares shall decrease during the Lease Term, defined
below, in proportion to the amount of Shares purchased each time Lessee remits a payment in
accordance with the terms of the Purchase Option Agreement.
2. Term. This Lease shall commence on the Effective Date (March 1, 2011) of the
Purchase Option Agreement and shall terminate on the fourth anniversary of the Closing, as
defined in the Purchase Option Agreement, unless earlier terminated upon Lessor's receipt of
final payment from Lessee under the Purchase Option Agreement or upon Lessee's failure to
make a payment pursuant to Section 6 below ("Lease Term"). Lessee understands and agrees
that neither this Lease, nor any of the rights and obligations of the Parties to this Lease, shall
extend beyond the Lease Term. Notwithstanding the foregoing, Lessee understands and agrees
that: (a) the real property owned by Lessor may be the subject of a condemnation proceeding or
other taking; (b) the Leased Shares are not currently subject to a condemnation proceeding or
other taking; (c) in the event the Leased Shares are the subject matter of a condemnation award
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or in the event the Leased Shares are the subject of a condemnation proceeding then, in that
event, the entire amount of any such award shall be the sole and exclusive property of Lessor,
and Lessee shall have no interest, claims or rights therein; and (d) in the event there is a taking of
the Leased Shares by condemnation then, in that event, this Lease shall automatically terminate
and Lessee shall be entitled to a pro rata refund of the Rent, as defined below.
3. Rent. As rent for the Leased Shares, Lessee shall pay Lessor, an amount equal to
the total number of Leased Shares multiplied by One Dollar and Fifty Cents (S1.50), together
with the annual Bear Valley Mutual Water Company per share stock assessment for such Leased
Shares ("Rental Amount"). The Rental Amount, which shall be due on or before the Closing, as
defined in the Purchase Option Agreement, and each anniversary thereafter, shall be paid in cash
or other immediately available funds. The number of Leased Shares used in calculating each
Rental Amount shall be based on the total number of unpaid shares existing on each Rental
Amount due date, as contemplated by this Section 3.
4. Assignability. Lessee shall not have the right to assign, sublet or otherwise
transfer or encumber the Leased Shares under this Lease.
5. Voting Rights. Lessor shall retain all the voting rights associated with ownership
of the Leased Shares.
f>. Default in Pa)Ipent. In the event Lessee fails to remit the Initial Payment or any
Annual Option Payment, as those terms are defined in the Purchase Option Agreement, on the
respective due dates, and such failure to pay has not been cured within ten (10) business days of
receipt of Lessor's written notice to Lessee of such failure, then this Lease shall automatically
terminate and the Parties shall have no further obligations hereunder, except for Lessee's
indemnification obligation contained in Section 7, which shall survive. Lessee shall have no
further right, claim or interest of any kind or nature in or to the Leased Shares and Lessor shall
have the right to sell, transfer or lease the Leased Shares to any other person or entity District
desires.
7. Hold Harmless. Lessee shall hold Lessor harmless from and against any loss,
costs, expenses, damages,penalties or claims related to or arising directly or indirectly out of. (a)
any condemnation of Lessor's real property or the Leased Shares prior to the expiration of this
Lease; (b) any default by Lessee of its obligations under this Lease or the Purchase Option
Agreement; and (c) any environmental or hazardous substance contamination of any water
attendant to the Leased Shares, from whatever cause. Lessee acknowledges that Lessor assumes
no responsibility and makes no representation as to the quality or purity of any water attendant to
the Leased Shares.
S. Entire Agreement. This Lease constitutes the entire agreement between Lessor
and Lessee regarding the leasing of the Leased Shares to Lessee. Any prior written or oral
agreements or representations respecting the leasing of the Leased Shares not expressly set forth
herein are null and void.
9. Attorneys' Fees. In the event any action is commenced to enforce or interpret the
terms or conditions of this Lease the prevailing Party shall, in addition to any costs and other
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relief, be entitled to the recovery of its reasonable attorneys' fees, including fees for use of in-
house counsel by a Party.
10. Waiver. The waiver by Lessor of the performance of any obligation hereunder
shall not invalidate this Lease nor shall it be considered a waiver by Lessor of any other
obligation hereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this I st day
of March, 2011.
LESSEE LESSOR
CITY OF REDLANDS SAN BiERNARDINO VALLEY
MUNICIP DISTRICT
r
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By:
Name: fete Aguilar Name: r. .
Its: Mayor Its: ��
Attest:
By:_
Nwme: Sam rwi , Secretary
Its: City Clerk
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