EXHIBIT A
DESCRIPTION OF THE SITE
The land referred to herein is situated in the State of California, County of San Mateo, City of Brisbane, and described as follows:
PARCEL ONE:
LOTS 8, 9 AND 10, BLOCK 7, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "AMENDED MAP OF SUBDIVISION NOS. 1, 2 AND 3 OF THE CITY OF VISITACION, CALIFORNIA", FILED IN THE
OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON OCTOBER 14, 1908 IN BOOK 6 OF MAPS AT PAGE 45.
ASSESSOR'S PARCEL NOS. 007-281-070 and 007-281-080
JOINT PLANT NOS. 007-028-281-07A and 007-028-281-08A
PARCEL TWO:
LOTS 13 AND 14, BLOCK 7, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "AMENDED MAPS OF SUBDIVISION NOS. 1, 2 AND 3, OF THE CITY OF VISITACION, CALIFORNIA", FILED IN THE
OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE OF CALIFORNIA ON OCTOBER 14, 1908, IN BOOK 6 OF MAPS AT PAGE 45.
ASSESSOR'S PARCEL NO. 007-281-100
JOINT PLANT NO.007-028-281-10A
royalties from leases as reserved in Deed recorded in Book 1331 Page 360 of Official Records. 142
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Exhibit B
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Facility consists of the new 7,670-square-foot Brisbane Public Library located at 163 Visitacion Avenue in the City constructed in 2021. The library includes a Children’s Area, Teen Space, History Room, Community Room and Makerspace, complete with 3D printer, GoPro camera kits and more.
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Exhibit C
EXHIBIT C
SCHEDULE OF THE PRINCIPAL COMPONENTS OF LEASE PAYMENTS
Lease Total
Payment Principal Interest Lease
Date Component Component Payment
9/1/22 — $ 61,726.08 $ 61,726.08
3/1/23 — 70,768.75 70,768.75
9/1/23 $ 35,000 70,768.75 105,768.75
3/1/24 35,000 70,200.00 105,200.00
9/1/24 38,000 69,631.25 107,631.25
3/1/25 38,000 69,013.75 107,013.75
9/1/25 38,000 68,396.25 106,396.25
3/1/26 38,000 67,778.75 105,778.75
9/1/26 38,000 67,161.25 105,161.25
3/1/27 40,000 66,543.75 106,543.75
9/1/27 43,000 65,893.75 108,893.75
3/1/28 43,000 65,195.00 108,195.00
9/1/28 44,000 64,496.25 108,496.25
3/1/29 44,000 63,781.25 107,781.25
9/1/29 122,000 63,066.25 185,066.25
3/1/30 122,000 61,083.75 183,083.75
9/1/30 126,000 59,101.25 185,101.25
3/1/31 126,000 57,053.75 183,053.75
9/1/31 131,000 55,006.25 186,006.25
3/1/32 130,000 52,877.50 182,877.50
9/1/32 134,000 50,765.00 184,765.00
3/1/33 135,000 48,587.50 183,587.50
9/1/33 139,000 46,393.75 185,393.75
3/1/34 139,000 44,135.00 183,135.00
9/1/34 143,000 41,876.25 184,876.25
3/1/35 144,000 39,552.50 183,552.50
9/1/35 148,000 37,212.50 185,212.50
3/1/36 148,000 34,807.50 182,807.50
9/1/36 153,000 32,402.50 185,402.50
3/1/37 153,000 29,916.25 182,916.25
9/1/37 158,000 27,430.00 185,430.00
3/1/38 158,000 24,862.50 182,862.50
9/1/38 164,000 22,295.00 186,295.00
3/1/39 163,000 19,630.00 182,630.00
9/1/39 168,000 16,981.25 184,981.25
3/1/40 169,000 14,251.25 183,251.25
9/1/40 174,000 11,505.00 185,505.00
3/1/41 174,000 8,677.50 182,677.50
9/1/41 180,000 5,850.00 185,850.00
3/1/42 180,000 2,925.00 182,925.00
Total $4,355,000 $1,849,599.83 $6,204,599.83
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Quint & Thimmig LLP 01/27/22
02/18/22
02014.10
AFTER RECORDATION RETURN TO:
Quint & Thimmig LLP
900 Larkspur Landing Circle, Suite 270
Larkspur, CA 94939-1726
Attention: Brian D. Quint, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
ASSIGNMENT AGREEMENT
For Value Received, the BRISBANE/GUADALUPE VALLEY MUNICIPAL IMPROVEMENT DISTRICT FINANCING AUTHORITY (the “Authority”) without recourse does hereby sell, assign and transfer to BANK OF THE WEST and its successors and assigns (the “Assignee”), (i) all rights, title and interest in and to the Lease Agreement, dated as of March 1, 2022, in the amounts shown on Exhibit C attached thereto, a memorandum of which has been recorded concurrently herewith, by and between the Authority, as sublessor, and the City of Brisbane (the “City”), as sublessee (said Lease Agreement and any supplements, amendments, annexations, extensions or renewals thereof are referred to hereinafter as the “Lease Agreement”), as well as its rights to enforce payment of Lease Payments (as defined in the Lease Agreement) when due or otherwise to protect its interests and exercise all remedies in the event of a default or termination by the City under the Lease Agreement; provided that the Authority’s rights to indemnification and payment or reimbursement for any costs or expenses thereunder have been retained by the Authority to the extent such rights accrue to the Authority and shall have been assigned to the Assignee to the extent such rights accrue to the Assignee, (ii) all of its rights, title and interest in and to the Site and Facility Lease, dated as of March 1, 2022, which has been recorded concurrently herewith, by and between the City, as lessor, and the Authority, as lessee (the “Site and Facility Lease”), and (iii) all moneys, sums and amounts now due or hereinafter to become due under the Lease Agreement. The Site and Facility Lease and the Lease Agreement delivered to the Assignee are duly executed duplicate originals that comprise the entire writing, obligation and agreement between the Authority and the City respecting the leases made thereunder and the lease payments made therefor.
The Assignee, hereby accepts the foregoing assignment. The above assignment is intended to be an absolute and unconditional assignment to the Assignee and is not intended as a loan by the Assignee to the Authority. Accordingly, in the event of bankruptcy of the Authority, the assigned property shall not be part of the Authority’s estate. However, if the above assignment is deemed to be a loan by the Assignee to the Authority, then the Authority shall be deemed to have granted to the Assignee, and hereby grants to the Assignee, a continuing first priority security interest in the assigned property and all proceeds thereof as collateral security for all obligations of the Authority hereunder and all obligations of the City 145
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under the Lease Agreement and this Assignment Agreement shall be deemed a security agreement with respect to such loan.
The Authority represents and warrants as follows:
(1) it has made no prior sale or assignment of any interest in the Site and Facility Lease and the Lease Agreement;
(2) that the Lease Agreement and the Site and Facility Lease are genuine and in all respects are what they purport to be;
(3) that the Assignee is not liable for and does not assume responsibility for the performance of any of the covenants, agreements, duties or obligations specified in the Lease Agreement to be kept, paid or performed by the Authority, with exception of such covenants, agreements, duties and obligations (if any) which are expressly made the responsibility of the Assignee under the Lease Agreement; (4) that the Authority has the power, authority, and legal right to execute, deliver and perform this Assignment Agreement and this Assignment Agreement is a valid, binding, and enforceable obligation of the Authority, except as such enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally and by the application of equitable principles;
(5) that good and marketable title to the assigned property has been duly vested in the Assignee free and clear of any liens, security interests, encumbrances or other claims other than the rights of the City under the Lease Agreement, and the Authority has not assigned or transferred any of the assigned property or any interest in the assigned property to any party other than the Assignee; (6) that this Assignment Agreement has been duly authorized by all necessary action on the part of the Authority; and
(7) that the Authority agrees that it (a) shall not have any right to amend, modify, compromise, release, terminate or of the Lease Agreement, and (b) shall not take any action that may impair the payment of Lease Payments or the validity or enforceability of the Lease Agreement.
The Authority further represents and warrants that as of the date of this Assignment Agreement, the Lease Agreement and the Site and Facility Lease are in full force and effect and the City is not in default of any of the terms set forth therein.
By its acceptance of this Assignment Agreement, the Assignee, represents and warrants (i) the amount funded to the Authority for payment by the Authority to the City as an advance rental payment pursuant to the Site and Facility Lease in consideration for assignment of the Site and Facility Lease and the Lease Agreement is $4,355,000; (ii) that the Assignee reasonably expects to hold its interest in the Lease Agreement for its own account and does not presently expect to sell, assign, or otherwise transfer its interest in the Lease Agreement, subject to the Assignee’s right to dispose of or otherwise deal with its property (including its interest in the Lease Agreement) as it determines to be in its best interests from time to time; and (iii) that it will treat its interests in the Lease Agreement as a loan for federal income tax purposes.
This Assignment Agreement shall be construed and governed in accordance with the laws of the State of California applicable to contracts made and performed in the State of 146
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California. Any provision of this Assignment Agreement found to be prohibited by law shall be ineffective only to the extent of such prohibition, and shall not invalidate the remainder of this Assignment Agreement.
This Assignment Agreement binds and inures to the benefit of the parties and their respective successors and assigns.
The descriptions of the Site and the Facility which are the subject of the Site and Facility Lease and the Lease Agreement are set forth in Exhibits A and B attached hereto and by this reference incorporated herein.
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This Assignment Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Dated as of March 1, 2022
BRISBANE/GUADALUPE VALLEY
MUNICIPAL IMPROVEMENT DISTRICT
FINANCING AUTHORITY
By
Clayton L. Holstine
Executive Director
ACCEPTANCE OF ASSIGNMENT:
BANK OF THE WEST, as Assignee
By
Name
Title
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Exhibit A
EXHIBIT A
DESCRIPTION OF THE SITE
The land referred to herein is situated in the State of California, County of San Mateo, City of Brisbane, and described as follows:
PARCEL ONE:
LOTS 8, 9 AND 10, BLOCK 7, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "AMENDED MAP OF SUBDIVISION NOS. 1, 2 AND 3 OF THE CITY OF VISITACION, CALIFORNIA", FILED IN THE
OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON OCTOBER 14, 1908 IN BOOK 6 OF MAPS AT PAGE 45.
ASSESSOR'S PARCEL NOS. 007-281-070 and 007-281-080
JOINT PLANT NOS. 007-028-281-07A and 007-028-281-08A
PARCEL TWO:
LOTS 13 AND 14, BLOCK 7, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "AMENDED MAPS OF SUBDIVISION NOS. 1, 2 AND 3, OF THE CITY OF VISITACION, CALIFORNIA", FILED IN THE
OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE OF CALIFORNIA ON OCTOBER 14, 1908, IN BOOK 6 OF MAPS AT PAGE 45.
ASSESSOR'S PARCEL NO. 007-281-100
JOINT PLANT NO.007-028-281-10A
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Exhibit B
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Facility consists of the new 7,670-square-foot Brisbane Public Library located at 163 Visitacion Avenue in the City constructed in 2021. The library includes a Children’s Area, Teen Space, History Room, Community Room and Makerspace, complete with 3D printer, GoPro camera kits and more
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____________________________________________
SUPPLEMENTAL AGREEMENT
dated as of March 1, 2022,
between the
CITY OF BRISBANE
and
BANK OF THE WEST
_____________________________________________
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms.............................................................................................2 Section 1.02. Construction.............................................................................................................5 Section 1.03. Incorporation of Certain Definitions by Reference .................................................5 Section 1.04. Accounting Terms and Determinations...................................................................5
ARTICLE II
THE FUNDING
Section 2.01. Funding ....................................................................................................................5 Section 2.02. Amounts Evidenced by unpaid Lease Payments; Calculation of Interest; Other Payments........................................................................................................6
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Closing Conditions ..................................................................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Existence and Power..............................................................................................10 Section 4.02. Due Authorization..................................................................................................10 Section 4.03. Valid and Binding Obligations ..............................................................................10 Section 4.04. Noncontravention; Compliance with Law.............................................................11 Section 4.05. Pending Litigation and Other Proceedings............................................................11 Section 4.06. Financial Statements..............................................................................................11 Section 4.07. Defaults..................................................................................................................11 Section 4.08. Insurance ................................................................................................................11 Section 4.09. Accuracy of Information........................................................................................12 Section 4.10. Environmental Matters...........................................................................................12 Section 4.11. Essentiality.............................................................................................................13 Section 4.12. [Reserved]..............................................................................................................13 Section 4.13. Sovereign Immunity...............................................................................................13 Section 4.14. Usury......................................................................................................................13 Section 4.15. Fair Rental Value; Use and Occupancy.................................................................13 Section 4.16. Title to Property .....................................................................................................14
ARTICLE V
COVENANTS OF THE CITY
Section 5.01. Reporting Requirements ........................................................................................14 152
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Section 5.02. Notices ...................................................................................................................15 Section 5.03. Access to Property and Books, Records and Accounts; Communication with Accountant.....................................................................................................15 Section 5.04. Further Assurances.................................................................................................15 Section 5.05. Environmental Compliance ...................................................................................15 Section 5.06. No Condemnation ..................................................................................................17 Section 5.07. Maintenance of Existence ......................................................................................17 Section 5.08. Substitute Property.................................................................................................17 Section 5.09. Disposition of the Property; Uses..........................................................................17 Section 5.10. Increase of Lease Payments...................................................................................18 Section 5.11. Liens.......................................................................................................................18
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default ...................................................................................................19 Section 6.02. Consequences of an Event of Default....................................................................20 Section 6.03. Remedies Cumulative; Solely for the Benefit of Bank..........................................20 Section 6.04. Waivers or Omissions............................................................................................21 Section 6.05. Discontinuance of Proceedings..............................................................................21 Section 6.06. Injunctive Relief.....................................................................................................21
ARTICLE VII
INDEMNIFICATION; COSTS, EXPENSES AND TAXES; INCREASED PAYMENTS Section 7.01. Indemnification......................................................................................................21 Section 7.02. Costs, Expenses and Taxes....................................................................................22 Section 7.03. Increased Payments................................................................................................22 Section 7.04. Late Payment .........................................................................................................24 Section 7.05. Survival..................................................................................................................24
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Payment Account...................................................................................................24 Section 8.02. Amendments..........................................................................................................24 Section 8.03. Severability ............................................................................................................24 Section 8.04. Governing Law; Consent to Jurisdiction; Waiver Of Jury Trial............................25 Section 8.05. No Advisory or Fiduciary Responsibility..............................................................25 Section 8.06. Counterparts...........................................................................................................26 Section 8.07. Successors and Assigns..........................................................................................26 Section 8.08. Tax Identification Number.....................................................................................26 Exhibit A Lease Agreement and Assignment Agreement Terms........................................ A-1 Exhibit B City Long-Term Borrowing General Fund Obligations ......................................B-1 153
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SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT, dated as of March 1, 2022 (as the same may be amended, restated, supplemented or otherwise modified from time to time, this “Supplemental Agreement”), between the CITY OF BRISBANE, a municipal corporation and general law city duly organized and existing under the Constitution and the laws of the State of California (the “City”) and BANK OF THE WEST (the “Bank”).
RECITALS
WHEREAS, the City desires to finance the costs associated with the acquisition of the building and land of the former Bank of America branch located at 70 Old County Road in Brisbane for future City use (as more particularly defined in the hereinafter defined Lease Agreement, the “Project”);
WHEREAS, in order to provide funds to finance the Project, the City will lease certain real property and the improvements thereto comprising the Brisbane Public Library, a [_____]- story building containing approximately 7,670 square feet located at 163 Visitacion Avenue, Brisbane, California (collectively, as more particularly defined in the Lease Agreement, the “Property”) to the Brisbane/Guadalupe Valley Municipal Improvement District Financing Authority (as more particularly defined in the Lease Agreement, the “Authority”) pursuant to a Site and Facility Lease, dated as of the date hereof (as more particularly defined in the Lease Agreement, the “Site Lease”), and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (as more particularly defined herein, the “Lease Agreement”);
WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to cause the Bank to provide the funds to finance the Project in consideration of the assignment of the right to receive Lease Payments and Additional Payments under the Lease Agreement pursuant to an Assignment Agreement, dated as of the date hereof (as more particularly defined in the Lease Agreement, the “Assignment Agreement”); and WHEREAS, in consideration of such assignment, the Bank has agreed to provide the funds to finance the Project, and as a condition to such funding, the Bank has required the City to enter into this Supplemental Agreement.
NOW, THEREFORE, to induce the Bank to provide the funds to finance the Project, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the City and the Bank hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed thereto in the Lease Agreement. In addition to the terms defined in the recitals and elsewhere in this Supplemental Agreement and the Lease Agreement, the following terms shall have the following meanings:
“Asbestos Containing Materials” means material in friable form containing more than 1% of the asbestiform varieties of (a) chrysotile (serpentine), (b) crocidolite (ricbeckite), (c) amosite (cummington-itegrinerite), (d) anthophyllite, (e) tremolite, and (f) actinolite. “Bank” means Bank of the West, and its successors and assigns. “Change in Law” has the meaning set forth in Section 7.03 hereof. “City Long-Term Borrowing General Fund Obligation” means any long-term obligations to third parties in respect of borrowed moneys payable from the general fund of the City, including without limitation lease payments in connection with certificates of participation and lease revenue bonds, but excluding equipment leases. The City Long-Term Borrowing General Fund Obligations outstanding as of the Funding Date are listed on Exhibit B hereto. “City Long-Term Borrowing General Fund Obligation Issuing Document” means any Contract or resolution authorizing or evidencing the issuance or incurrence of any City Long-Term Borrowing General Fund Obligation.
“City Long-Term Borrowing General Fund Obligation Ratings” means the long-term unenhanced ratings assigned by one or more Rating Agencies to any City Long-Term Borrowing General Fund Obligation.
“Contract” means any indenture, contract, agreement (other than this Supplemental Agreement), other contractual restriction, lease, mortgage, instrument, guaranty, certificate of incorporation, charter or by-law.
“Default” means any event or condition that, with notice, the passage of time or both, would constitute an Event of Default.
“Default Rate” means [Interest Rate + 1]% per annum, calculated on the basis of a 360- day year and twelve 30-day months.
“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as enacted by the United States Congress, and signed into law on July 21, 2010, and all statutes, rules, guidelines or directives promulgated thereunder. “Environmental Regulations” means all Laws and Regulations, now or hereafter in effect, with respect to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C. Section 9601, 155
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et seq.) (together with the regulations promulgated thereunder, “CERCLA”), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, et seq.) (together with the regulations promulgated thereunder, “RCRA”), the Emergency Planning and Community Rightto-Know Act, as amended (42 U.S.C. Section 11001, et seq.) (together with the regulations promulgated thereunder, “Title III”), the Clean Water Act, as amended (33 U.S.C. Section 1321, et seq.) (together with the regulations promulgated thereunder, “CWA”), the Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.) (together with the regulations promulgated thereunder, “CAA”) and the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et seq.) (together with the regulations promulgated thereunder, “TSCA”), and any similar state or local Laws and Regulations and any so-called local, state or federal “superfund” or “superlien” law. “Event of Default” with respect to this Supplemental Agreement, has the meaning assigned to that term in Section 6.01 of this Supplemental Agreement and, with respect to any other Lease Document, has the meaning assigned therein.
“Event of Insolvency” means, with respect to any Person, the occurrence of one or more of the following events:
(a) the issuance, under the laws of any state or under the laws of the United States of America, of an order of rehabilitation, liquidation or dissolution of such Person; (b) the commencement by or against such Person of a case or other proceeding seeking liquidation, reorganization or other relief with respect to such Person or its debts under any bankruptcy, insolvency or other similar state or federal law now or hereafter in effect, including, without limitation, the appointment of a trustee, receiver, liquidator, custodian or other similar official for such Person or any substantial part of its property or there shall be appointed or designated with respect to it, an entity such as an organization, board, commission, authority, agency or body to monitor, review, oversee, recommend or declare a financial emergency or similar state of financial distress with respect to it or there shall be declared or introduced or proposed for consideration by it or by any legislative or regulatory body with competent jurisdiction over it, the existence of a state of financial emergency or similar state of financial distress in respect of it;
(c) the making of an assignment for the benefit of creditors by such Person; (d) the failure of such Person to generally pay its debts as they become due; (e) a debt moratorium, debt adjustment, debt restructuring or comparable restriction with respect to the payment of any indebtedness of such Person is declared or imposed by such Person or by any governmental authority having jurisdiction over such Person; (f) such Person shall admit in writing its inability to pay its debts when due; or (g) the initiation of any actions to authorize any of the foregoing by or on behalf of such Person.
“Funding Date” means March 24, 2022.
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“Generally Accepted Accounting Principles” means generally accepted accounting principles in effect from time to time in the United States and applicable to entities such as the City.
“Hazardous Materials” has the meaning set forth in Section 4.10 hereof. “Laws and Regulations” has the meaning set forth in Section 4.10 hereof. “Lease Agreement” means the Lease Agreement, dated as of March 1, 2022, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof.
“Lease Documents” means the Site Lease, the Lease Agreement, the Assignment Agreement and this Supplemental Agreement.
“Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business or operations of the City, (b) the ability of the City to carry out its business as of the Funding Date or as proposed in this Supplemental Agreement, the Lease Agreement or any other Lease Document to be conducted or to meet or perform its obligations under this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents on a timely basis, (c) the validity or enforceability of this Supplemental Agreement, the Lease Agreement or any other Lease Document, (d) the rights or remedies of the Bank under this Supplemental Agreement, the Lease Agreement or any other Lease Document, or (e) the exemption of interest components of Lease Payments from State personal income taxes.
“Material Litigation” has the meaning assigned to such term in Section 4.05 hereof. “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City and approved by the Bank.
“Person” means an individual, corporation, firm, association, partnership, limited liability company, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.
“Rating Agencies” or “Rating Agency” means one or all of Moody’s or S&P or, in the event that Moody’s or S&P no longer maintains a City Long-Term Borrowing General Fund Obligation Rating, any other nationally recognized bond rating agency acceptable to the Bank, but, in each instance, only so long as Moody’s, S&P or such other nationally recognized rating agency then maintains a City Long-Term Borrowing General Fund Obligation Rating. “Release” has the meaning set forth in Section 4.10 hereof. “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, 157
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its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City and approved by the Bank. “State” means the State of California.
“Transactions” means the execution and delivery of the Lease Documents, the providing of funds by the Bank to finance the Project, the lease of the Property and the performance by the City of its obligations (including payment obligations) under the Lease Documents (including any amounts to reimburse the Bank for any advances or expenditures by it under any of the Lease Documents).
Section 1.02. Construction. Unless the context of this Supplemental Agreement otherwise clearly requires, references to the plural include the singular, to the singular include the plural and to the part include the whole. The word “including” shall be deemed to mean “including but not limited to,” and “or” has the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereunder” and similar terms in this Supplemental Agreement refer to this Supplemental Agreement as a whole and not to any particular provision of this Supplemental Agreement. The Section headings contained in this Supplemental Agreement and the table of contents preceding this Supplemental Agreement are for reference purposes only and shall not control or affect the construction of this Supplemental Agreement or the interpretation thereof in any respect. Section, subsection and exhibit references are to this Supplemental Agreement unless otherwise specified. Each exhibit, schedule and annex attached hereto is incorporated by reference herein and is a constituent part of this Supplemental Agreement.
Section 1.03. Incorporation of Certain Definitions by Reference. Any capitalized term used herein and not otherwise defined herein shall have the meaning provided therefor in the Lease Agreement.
Section 1.04. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with Generally Accepted Accounting Principles consistently applied. In the event of changes to Generally Accepted Accounting Principles which become effective after the Funding Date, the City and the Bank agree to negotiate in good faith appropriate revisions of this Supplemental Agreement so as to perpetuate the meaning and effect of such provisions as originally negotiated and agreed upon.
ARTICLE II
THE FUNDING
Section 2.01. Funding. Upon the terms and conditions set forth herein, subject to fulfillment of each of the conditions precedent set forth in Article III hereof, and upon the basis of the representations set forth herein, the Bank hereby agrees to provide funds to the Authority in an aggregate principal amount equal to $[4,355,000], which amount will be paid by the Authority to the City as an advance rental payment pursuant to the Site Lease in consideration of the assignment by the Authority to the Bank of the right to receive Lease Payments and Additional Payments 158
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under the Lease Agreement pursuant to the Assignment Agreement. The Bank shall transfer all of such funds ($[4,355,000]) to the City on or before the Funding Date, and shall authorize release of such funds upon the terms and conditions set forth herein, subject to fulfillment of each of the conditions precedent set forth in Article III hereof, and upon the basis of the representations set forth herein.
Section 2.02. Amounts Evidenced by unpaid Lease Payments; Calculation of Interest; Other Payments. The funding provided by the Bank hereunder shall be evidenced by the unpaid Lease Payments under the Lease Agreement. The principal component of the Lease Payments shall be equal to the $[4,355,000] aggregate principal amount funded by the Bank hereunder.
Computations of any interest rates payable hereunder or under the Lease Documents and the interest component of the Lease Payments shall be made by the Bank on the basis of a 360-day year and twelve 30-day months. Each determination by the Bank of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Closing Conditions. The Bank has agreed to provide funds to finance the Project in reliance upon the representations, warranties and agreements of the City contained herein, and in reliance upon the representations, warranties and agreements of the City and the Authority to be contained in the documents and instruments to be delivered on the Funding Date and upon the performance by the City of its obligations hereunder as of the Funding Date. Accordingly, the Bank’s obligations under this Supplemental Agreement to provide funds to finance the Project shall be conditioned upon the performance by the City of its obligations to be performed hereunder and under such documents and instruments on or prior to the Funding Date, and shall also be subject to the following additional conditions, including the delivery by the City of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Bank and its counsel; provided that, unless set forth in a separate section of this Supplemental Agreement or in a Lease Document other than this Supplemental Agreement, the City’s obligation to satisfy any condition under this Section 3.01 shall exist only until the Funding Date and shall cease thereafter:
(a) The following Authority documents:
(i) A copy of the resolution of the Authority approving the execution and delivery of the Lease Documents to which the Authority is a party and the other matters contemplated hereby and thereby, certified by the Secretary of the Authority as being true and complete and in full force and effect on the Funding Date.
(ii) Certified copies of the Authority’s joint exercise of powers agreement, notice of a joint powers agreement filed with the Secretary of State and roster of public agencies filing and acknowledgment from the Secretary of State.
(iii) A certificate by the Secretary of the Authority certifying the names and signatures of the persons authorized to sign, on behalf of the Authority, the Lease Documents to which it is a party and the other documents to be delivered by it hereunder or thereunder. 159
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(b) The following City documents:
(i) A copy of the resolution of City Council of the City approving the execution and delivery of the Lease Documents to which the City is a party and the other matters contemplated hereby and thereby, certified by the City Clerk of the City as being true and complete and in full force and effect on the Funding Date. (ii) A certificate by the City Clerk of the City certifying the names and signatures of the persons authorized to sign, on behalf of the City, the Lease Documents to which it is a party and the other documents to be delivered by it hereunder or thereunder.
(c) The following financing documents:
(i) An executed original of each of the Lease Documents (including without limitation a Lease Agreement and an Assignment Agreement that include the terms set forth on Exhibit A hereto). (ii) Recording instructions for the recordation of such of the Lease Documents as may be required by the Bank.
(iii) Certificates signed by an authorized representative of the City and an authorized representative of the Authority, respectively, stating that on and as of the Funding Date, copies of each of the Lease Documents to which it is a party furnished to the Bank are true, correct and complete copies of such documents, such documents were duly issued, adopted or executed and delivered, have not been modified, amended or rescinded and are in full force and effect on and as of the Funding Date, and such other customary matters as the Bank may reasonably request. (iv) A certificate signed by an authorized representative of the City, stating that on and as of the Funding Date (i) all requirements and preconditions to the execution and delivery of the Lease Documents shall have been satisfied; (ii) the City has complied with all agreements and covenants and satisfied all conditions stated in this Supplemental Agreement on its part to be performed or satisfied at or prior to the Funding Date; (iii) each representation and warranty on the part of the City contained in this Supplemental Agreement and the other Lease Documents is true and correct as though made on and as of such date, (iv) no Default or Event of Default has occurred and is continuing or would result from the execution or performance of this Supplemental Agreement or the other Lease Documents to which the City is a party; and (v) and such other customary matters as the Bank may reasonably request.
(v) A certificate of the Authority, signed by an authorized representative of the Authority, stating that on and as of the Funding Date (i) the representations and warranties of the Authority contained in the Lease Documents to which the Authority is a party are true and correct on and as of the Funding Date as though made on and as of such date; (ii) no default or event of default under the Lease Documents to which the Authority is a party has occurred and is continuing, or would result from the Authority’s execution and performance of any of the Lease Documents to which the Authority is a party; (iii) all conditions precedent to the execution and delivery of the Lease Documents to which the Authority is a party have been satisfied; and (iv) and such other customary matters as the Bank may reasonably request.
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(vi) Confirmation that no CUSIP number has been assigned to this financing and that this financing is not rated and that the Bank’s right, title and interest in and to the Assignment Agreement shall be in a single denomination and shall not be divisible or transferable except to a bank, financial institution or a qualified investor that executes a bank’s letter addressed to the City and the Authority substantially in the form of the letter delivered by the Bank on the Funding Date. (vii) Confirmation that the Property shall consist of real property and/or improvements comprising Brisbane Public Library, a [_____]-story building containing approximately 7,670 square feet located at 163 Visitacion Avenue, Brisbane, California, satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with respect thereto. (viii) Evidence that the fair rental value as of the Funding Date is sufficient to fully amortize Lease Payments in an aggregate principal component of $[4,355,000] by March 1, 2042. (ix) Certificates of insurance evidencing the satisfaction of the insurance requirements as set forth in Article V of the Lease Agreement in form and substance satisfactory to the Bank; each policy (other than for worker’s compensation) shall name the Bank as additional insured and loss payee.
(x) A commitment from a title insurance company acceptable to the Bank in respect of the Property to issue CLTA owner’s and leasehold title insurance policies(the “Title Policy”), together with evidence satisfactory to the Bank that all premiums in respect of the Title Policy have been paid or provided for. The Title Policy shall (i) be in an aggregate amount at least equal to Lease Payments in an aggregate principal component of $[4,355,000], (ii) shall insure the Bank’s interests in the leasehold estate established under the Lease Agreement, (iii) be subject only to such liens and other exceptions as shall be approved by the Bank; (iv) name the Bank as an insured party thereunder; and (v) contain such endorsements and affirmative insurance as the Bank may request. The effectiveness of such commitment shall not be subject to confirmation of recording. (xi) The most recent adopted budget of the City and the audited financial statements of the City for the fiscal years ended June 30, 2021, 2020 and 2019. (xii) True and correct copies of any and all governmental approvals necessary for the City and the Authority to enter into this Supplemental Agreement and the City and the Authority to enter into the other Lease Documents to which it is a party and the transactions contemplated thereby and hereby and not otherwise covered by Section 3.01(a)(i) or Section 3.01(b)(i) hereof. (xiii) Written confirmation from the City that the only outstanding City Long-Term Borrowing General Fund Obligations as of the Funding Date, other than the Lease Agreement, are listed on Exhibit B hereto.
(xiv) Such other certifications as to matters of fact, due authorization, execution and delivery by the parties thereto of the Lease Documents, evidence of corporate authority, copies of governmental consents, permits, licenses and approvals, and other documents as shall be reasonably requested by the Bank, and the form and substance of any order or other official action granting any consent, permit, license or approval shall be satisfactory to the Bank. 161
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(d) The following opinions, addressed to the Bank or on which the Bank is otherwise expressly authorized to rely:
(i) From counsel to the Authority, as to the due authorization, execution and delivery of each of the Lease Documents to which it is a party, their validity, binding effect and enforceability, and such other customary matters as the Bank may reasonably request. (ii) From counsel to the City, as to the due authorization, execution and delivery of each of the Lease Documents to which it is a party, their validity, binding effect and enforceability, and such other customary matters as the Bank may reasonably request. (iii) From Special Counsel, in customary form, an approving opinion to the effect that the Lease Documents have been duly authorized and validly executed and delivered, that the interest components of Lease Payments are exempt from State personal income taxes, and as to such other customary matters as the Bank may reasonably request.
(e) Other conditions:
(i) Each representation and warranty contained in this Supplemental Agreement and the other Lease Documents is true and correct.
(ii) No Default or Event of Default has occurred and is continuing or would result from the execution or performance of this Supplemental Agreement or the other Lease Documents. (iii) Since the most current date of the information, financial or otherwise, supplied by the City to the Bank, there has been no change in the assets, liabilities, financial position or results of operations of the City which might reasonably be anticipated to cause a Material Adverse Effect and the City has not incurred any obligations or liabilities which might reasonably be anticipated to cause a Material Adverse Effect.
(iv) The Bank shall be reasonably satisfied that the fee of the California Debt and Investment Advisory Commission shall have been paid and that payment will be made promptly after demand therefor after the Funding Date of the Bank’s upfront fees and expenses (consisting solely of the Bank’s outside counsel legal fees and expenses) incurred in connection with the execution and delivery of this Supplemental Agreement, the Lease Agreement and the other Lease Documents. (v) All other legal matters pertaining to the execution and delivery of each of the Lease Documents shall be reasonably satisfactory to the Bank and its counsel. (vi) The Bank shall have completed all due diligence with respect to the City, the Property, the Authority and the Lease Documents (including any earthquake and flood zone determinations) in scope and determination satisfactory to the Bank.
(f) Such other instruments, documents and opinions as the Bank shall reasonably require to evidence and secure the obligations of the City under this Supplemental Agreement, the Lease Agreement and the other Lease Documents and to comply with the provisions of this Supplemental Agreement, the Lease Agreement and the other Lease Documents and the requirements of any governmental authority to which the Bank, the City or the Authority are subject. 162
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
All representations and warranties made herein to the Bank or incorporated herein for the benefit of the Bank are made with the understanding that the Bank is relying upon the accuracy of such representations and warranties. Notwithstanding that the Bank may conduct its own investigation as to some or all of the matters covered by the representations and warranties in this Supplemental Agreement, the Lease Agreement and the other Lease Documents, and any certificates, information, opinions or documents delivered in connection herewith and therewith, the Bank is entitled to rely on all representations and warranties as a material inducement to the Bank’s extension of the credit evidenced by this Supplemental Agreement, the Lease Agreement and the other Lease Documents. All representations and warranties made herein to the Bank or incorporated herein for the benefit of the Bank shall survive the making of and shall not be waived by the execution and delivery of this Supplemental Agreement, the Lease Agreement and the other Lease Documents.
Section 4.01. Existence and Power. The City is a municipal corporation and general law city duly organized, validly existing and in good standing under the Constitution and the laws of the State and has the corporate power and authority to own its properties and to carry on its businesses as now being conducted and as currently contemplated to be conducted hereafter and is duly qualified to do business in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of any material portion of its business (as now conducted and as currently contemplated to be conducted) makes such qualification necessary.
Section 4.02. Due Authorization.
(a) The City has the corporate power, and has taken all necessary corporate action to authorize this Supplemental Agreement, the Lease Agreement and the other Lease Documents, to execute, deliver and perform its obligations under this Supplemental Agreement, the Lease Agreement and each of the other Lease Documents to which it is a party in accordance with their respective terms.
The City has approved the form of the Lease Documents to which it is not a party. (b) The City is duly authorized and licensed to own the Property under the laws of all governmental authorities having the jurisdiction to license or regulate the Property, and the City has obtained all requisite approvals of all such governmental authorities required to be obtained for such purposes. All authorizations and approvals necessary for the City to enter into this Supplemental Agreement, the Lease Agreement and the other Lease Documents and to perform the transactions contemplated hereby and thereby and to conduct its business activities and own the Property have been obtained and remain in full force and effect and are subject to no further administrative or judicial review. No other authorization or approval or other action by, and no notice to or filing with, any governmental authority is required for the due execution, delivery and performance by the City of this Supplemental Agreement, the Lease Agreement and the other Lease Documents.
Section 4.03. Valid and Binding Obligations. This Supplemental Agreement, the Lease Agreement and each of the other Lease Documents to which the City is a party has been duly 163
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executed and delivered by one or more duly authorized officers of the City and are legal, valid and binding obligations of the City enforceable in accordance with their respective terms, except as such enforceability may be limited by (a) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally, (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (c) the exercise of judicial discretion in appropriate cases, or (d) the limitations on legal remedies against general law cities in the State.
Section 4.04. Noncontravention; Compliance with Law.
(a) The execution, delivery and performance of this Supplemental Agreement, the Lease Agreement and each of the other Lease Documents in accordance with their respective terms do not and will not (i) require any consent or approval of any creditor of the City, (ii) violate any applicable law, (iii) conflict in any material respect with, result in a material breach of or constitute a material default under any Contract to which the City is a party or by which it or any of its property may be bound or (iv) result in or require the creation or imposition of any lien upon or with respect to any property now owned or hereafter acquired by the City except such liens, if any, expressly created by any Lease Document.
(b) The City is in compliance with all applicable laws, except for noncompliance that, singly or in the aggregate, has not caused and could not reasonably be expected to cause a Material Adverse Effect or an adverse effect on the City’s ability to perform its obligations hereunder and under the other Lease Documents.
Section 4.05. Pending Litigation and Other Proceedings. There are no actions, suits or proceedings pending, nor are there any actions, suits or proceedings threatened, against the City or any property of the City in any court or before any arbitrator of any kind or before or by any governmental or nongovernmental body, which, in any case, (i) directly or indirectly relates to the Property or the enforceability of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents; or (ii) may have a Material Adverse Effect (any of the foregoing being herein referred to as “Material Litigation”).
Section 4.06. Financial Statements. The balance sheet of the City as of June 30, 2021 and the related statement of revenues and expenses and changes in financial position for such Fiscal Year and the auditors’ reports with respect thereto, copies of which have heretofore been furnished to the Bank pursuant to this Supplemental Agreement, are complete and correct and fairly present the financial condition, changes in financial position and results of operations of the City at such date and for such Fiscal Year, and were prepared in accordance with Generally Accepted Accounting Principles consistently applied. Since the period of such statements, there has been no change which would have a Material Adverse Effect.
Section 4.07. Defaults. No Event of Default and no Default has occurred and is continuing or exists.
Section 4.08. Insurance. The City currently maintains insurance as required by Article V of the Lease Agreement and as are customarily carried by, and insures against such risks as are customarily insured against by, public agencies with similar activities. 164
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Section 4.09. Accuracy of Information. All information, reports and other papers and data furnished by the City to the Bank were, at the time the same were so furnished, complete and correct in all material respects and insofar as necessary to give the Bank a true and accurate knowledge of the subject matter and were provided in expectation of the Bank’s reliance thereon in providing funds to finance the Project. No fact is known to the City which has had or, so far as the City can now reasonably foresee, may in the future have a Material Adverse Effect, which has not been set forth in the budget and financial statements previously furnished to the Bank or in other such information, reports, papers and data or otherwise disclosed in writing to the Bank prior to the Funding Date. Any financial, budget and other projections furnished to the Bank by the City or its agents were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable in light of the conditions existing at the time of delivery of such financial, budget or other projections, and represented, and as of the Funding Date, represent the City’s best estimate of its future financial performance. No document furnished by the City or its agents nor any representation, warranty or other written statement made by the City or its agents to the Bank in connection with the negotiation, preparation or execution of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents contains or will contain any untrue statement of a material fact or omits or will omit to state (as of the date made or furnished) any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were or will be made, not misleading.
Section 4.10. Environmental Matters.
(a) The City has, after due inquiry, no knowledge and has not given or received any written notice indicating that the Property or the past or present use thereof or any practice, procedure or policy employed by it in the conduct of its business materially violates any applicable law, regulation, code, order, rule, judgment or consent agreement, including, without limitation, those relating to zoning, building, use and occupancy, fire safety, health, sanitation, air pollution, ecological matters, environmental protection, hazardous or toxic materials, substances or wastes, conservation, parking, architectural barriers to the handicapped, or restrictive covenants or other agreements affecting title to the Property (collectively, “Laws and Regulations”). Without limiting the generality of the foregoing, neither the City nor to the best of its knowledge, after due inquiry, any prior or present owner, tenant or subtenant of the Property has, other than as set forth in paragraphs (a) and (b) of this Section or as may have been remediated in accordance with Laws and Regulations, (A) used, treated, stored, transported or disposed of any material amount of flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated substances or related materials, as defined in CERCLA, RCRA, CWA, CAA, TSCA and Title III, and the regulations promulgated pursuant thereto, and in all other Environmental Regulations applicable to the Authority or the City, the Property or the business operations conducted by the Authority or the City thereon (collectively, “Hazardous Materials”) on, from or beneath the Property, (B) pumped, spilled, leaked, disposed of, emptied, discharged or released (collectively “Release”) any material amount of Hazardous Materials on, from or beneath the Property, or (C) stored any material amount of petroleum products at the Property in underground storage tanks.
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(b) Excluded from the representations and warranties in paragraph (a) of this subsection with respect to Hazardous Materials are those Hazardous Materials in those amounts ordinarily found in the inventory of, or used in the maintenance of public libraries, the use, treatment, storage, transportation and disposal of which has been and shall be in compliance with all Laws and Regulations.
(c) No portion of the Property located in an area of high potential incidence of radon has an unventilated basement or subsurface portion which is occupied or used for any purpose other than the foundation or support of the improvements to the Property, respectively. (d) The City has not received any notice from any insurance company which has issued a policy with respect to the Property or from the applicable state or local government agency responsible for insurance standards (or any other body exercising similar functions) requiring the performance of any repairs, alterations or other work, which repairs, alterations or other work have not been completed at the Property, respectively. The City has not received any notice of default or breach which has not been cured under any covenant, condition, restriction, right-of-way, reciprocal easement, agreement or other easement affecting the Property which is to be performed or complied with by it.
Section 4.11. Essentiality. The Property is an essential asset of the City necessary to serve the needs of the residents of the City. The City believes that at all times while any Lease Payments or Additional Payments or any obligation of the City hereunder remains unpaid, the Property will remain an essential asset of the City.
Section 4.12. [Reserved]
Section 4.13. Sovereign Immunity. The City does not enjoy any rights of immunity on the grounds of sovereign immunity in respect of its obligations under the Lease Documents. To the extent the City has or hereafter may acquire under any applicable law any right to immunity from set-off or legal proceedings on the grounds of sovereignty, the City hereby waives, to the extent permitted by law, such rights to immunity for itself in respect of its obligations under the Lease Documents.
Section 4.14. Usury. The terms of this Supplemental Agreement, the Lease Agreement and the other Lease Documents regarding the calculation and payment of interest and fees do not violate any applicable usury laws.
Section 4.15. Fair Rental Value; Use and Occupancy. Lease Payments and Additional Payments payable under the Lease Agreement do not exceed the fair rental value of the Property for each period for which said rental is to be paid. In making such determination of fair rental value, consideration has been given to the uses and purposes which may be served by the Property and the benefits therefrom which will accrue to the City and the general public. The City currently has the use and occupancy of the Property and the City has the legal authority to pay Lease Payments and Additional Payments pursuant to the Lease Agreement for the use and occupancy of the Property.
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Section 4.16. Title to Property. The City has a valid and enforceable subleasehold interest in the Property, subject only to Permitted Encumbrances. The City is not in violation of any rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions on Schedule B of the Title Policy.
ARTICLE V
COVENANTS OF THE CITY
So long as any Lease Payments or Additional Payments or other amounts required to be paid under the Lease Agreement or any obligation of the City hereunder or under the Lease Documents remains unpaid or unperformed, the City shall comply with the following covenants hereunder and as additional covenants under the Lease Agreement, unless waived in writing by the Bank:
Section 5.01. Reporting Requirements. The City shall keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the City in accordance with Generally Accepted Accounting Principles consistently applied, and will furnish to the Bank each of the following:
(a) As soon as available, and in any event within 240 days after the close of each Fiscal Year of the City, the financial statements of the City which shall be audited and reported on without qualification by independent certified public accountants reasonably acceptable to the Bank and shall be certified to the City by such accountants as (i) having been prepared in accordance with Generally Accepted Accounting Principles consistently applied, (ii) fairly presenting the financial condition of the City as at the end of such Fiscal Year and reflecting its operations during such Fiscal Year, and (iii) showing all material liabilities, direct or contingent, and disclosing the existence of any off-balance sheet transactions, and shall include, without limitation, balance sheets, profit and loss statements and statements of cash flows, together with notes and supporting schedules, all on a consolidated and consolidating basis and in reasonable detail and including a copy of any management letter or audit report provided to the City by such auditors; (b) Simultaneously with the delivery of each set of financial statements referred to in subparagraph (a) above, a certificate signed by an authorized representative of the City stating that (i) under his/her supervision the City has made a review of its activities during the preceding annual period for the purpose of determining whether or not the City has complied with all of the terms, provisions and conditions of this Supplemental Agreement, the Lease Agreement and the other Lease Documents (including without limitation Section 4.3(f) (Budget and Appropriation), Article V (Maintenance; Taxes; Insurance; and Other Matters) and Section 7.5 (Assignment and Subleasing by the City) of the Lease Agreement and Section 5.07 (Maintenance of Existence), Section 5.09 (Disposition of the Property; Uses), Section 5.10 (Increase of Lease Payments) and Section 5.11 (Liens) of this Supplemental Agreement) and (ii) to the best of his/her knowledge the City is not in Default in the performance or observance of any of the terms, covenants, provisions or conditions of this Supplemental Agreement, the Lease Agreement or any of the Lease Documents, or if the City shall be in Default, such certificate shall specify each such Default, the nature and status thereof and any remedial steps taken or proposed to correct each such Default; 167
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(c) As soon as available and in any event within 60 days after adoption, the annual operating budget of the City for such Fiscal Year; and
(d) Such other information respecting the business, properties or the condition or operations, financial or otherwise, of the City or the Property as the Bank may from time to time reasonably request.
Section 5.02. Notices. The City shall provide to the Bank:
(a) immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes a Default or an Event of Default; (b) prompt written notice of any Material Litigation; and (c) prompt written notice of any event which has or is reasonably anticipated to have a Material Adverse Effect.
Section 5.03. Access to Property and Books, Records and Accounts; Communication with Accountant. The City shall permit the duly authorized representatives of the Bank, during the City’s normal administrative business hours, to enter the Property or any parts thereof at reasonable hours and under reasonable conditions, to examine and copy the City’s books, records and accounts and to discuss the affairs, finances, business and accounts of the City with the members of the City Council and the City’s officers and employees. The City authorizes the Bank to communicate directly with the City’s accountants, and authorizes and shall instruct such accountants to communicate with, disclose and make available to the Bank, any and all financial statements and other supporting financial documents, schedules and information relating to the City with respect to the business, results of operations and financial condition and other affairs of the City.
Section 5.04. Further Assurances. The City shall, and shall cause the Authority to, upon the request of the Bank, from time to time, execute and deliver and, if necessary, file, register and record such further financing statements, amendments, confirmation statements and other documents and instruments and take such further action as may be reasonably necessary to effectuate the provisions of this Supplemental Agreement, the Lease Agreement and the other Lease Documents. Except to the extent it is exempt therefrom, the City will pay or cause to be paid all filing, registration and recording fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment of such instruments of further assurance, and all federal or state fees and other similar fees, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Supplemental Agreement, the Lease Agreement, the other Lease Documents and such instruments of further assurance.
Section 5.05. Environmental Compliance.
(a) Neither the City nor the Authority shall use or permit the Property or any part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose of, transfer, produce or process Hazardous Materials, except, and only to the extent, in compliance with all Environmental Regulations, nor shall it permit, as a result of any intentional or unintentional act 168
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or omission on its part or by any tenant, subtenant, licensee, guest, invitee, contractor, employee or agent, the storage, transportation, disposal or use of Hazardous Materials or the Release or threat of Release of Hazardous Materials on, from or beneath the Property or onto any other property other than in compliance with all Environmental Regulations. Upon the occurrence of any Release or threat of Release of Hazardous Materials, the Authority or the City shall promptly commence and perform, or cause to be commenced and performed promptly, without cost to the Bank, all investigations, studies, sampling and testing, and all remedial, removal and other actions necessary to clean up and remove all Hazardous Materials so released on, from or beneath the Property or other property, in compliance with all Environmental Regulations. Notwithstanding anything to the contrary contained herein, underground storage tanks shall only be permitted subject to compliance with subsection (d) of this Section and only to the extent necessary to maintain the improvements on the Property.
(b) The City and the Authority shall comply with, and shall cause all tenants, subtenants, licensees, guests, invitees, contractors, employees and agents on the Property to comply with, all Environmental Regulations, and shall keep the Property free and clear of any liens imposed pursuant thereto (provided, however, that any such liens, if not discharged, may be bonded). The City and the Authority shall cause each tenant under any lease, and use their best efforts to cause all of such tenant’s subtenants, agents, licensees, employees, contractors, guests and invitees and the guests and invitees of all of the foregoing to comply with all Environmental Regulations with respect to the Property; provided, however, that notwithstanding that a portion of this covenant is limited to the City’s and Authority’s use of its best efforts, the Authority and the City shall remain solely responsible for ensuring such compliance and such limitation shall not diminish or affect in any way the Authority’s or the City’s obligations contained in subsection (c) of this Section. Upon receipt of any notice from any person with regard to the Release of Hazardous Materials on, from or beneath the Property, the City or the Authority, as appropriate, shall give prompt written notice thereof to the City or the Authority, as appropriate, the Bank prior to the expiration of any period in which to respond to such notice under any Environmental Regulation. (c) Irrespective of whether any representation or warranty contained in Section 4.10 hereof is not true or correct, the Authority and the City shall, to the extent permitted by law, defend, indemnify and hold harmless the Bank and each of its employees, agents, officers, directors, trustees, successors and assigns, from and against any claims, demands, penalties, fines, attorneys’ fees (including, without limitation, attorneys’ fees incurred to enforce the indemnification contained in this Section), consultants’ fees, investigation and laboratory fees, liabilities, settlements (five Business Days’ prior notice of which the Authority or the Bank shall have delivered to the City), court costs, damages, losses, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in part, arising out of, or in any way related to, (i) the presence, disposal, Release, threat of Release, removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the Property, (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials, (iii) any lawsuit brought or threatened, settlement reached (five Business Days’ prior notice of which the Authority or the Bank shall have delivered to the City), or governmental order relating to Hazardous Materials on, from or beneath the Property, (iv) any violation of Environmental Regulations or subsection (a) or (b) of this Section by either of them or any of their agents, tenants, employees, contractors. licensees, guests, subtenants or invitees, and (v) the imposition of any governmental lien for the recovery of environmental cleanup or 169
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removal costs. To the extent that either the Authority or the City is strictly liable under any Environmental Regulation, its obligation to the Bank and the other indemnitees under the foregoing indemnification shall likewise be without regard to fault on its part with respect to the violation of any Environmental Regulation which results in liability to any indemnitee. The obligations and liabilities under this subsection shall survive the payment in full of all Lease Payments and Additional Payments and the termination of the Lease Documents. (d) The City shall conform to and carry out a reasonable program of maintenance and inspection of all underground storage tanks, and shall maintain, repair and replace such tanks only in accordance with all Laws and Regulations, including but not limited to Environmental Regulations.
Section 5.06. No Condemnation. The City shall not condemn, nor consent to the condemnation of, the Property or any interest of the City, the Authority or the Bank therein.
Section 5.07. Maintenance of Existence. The City shall preserve and maintain its existence as a municipal corporation and general law city duly organized and validly existing under the Constitution and the laws of the State, and its rights, franchises and privileges material to the conduct of its business and shall not, without the prior written consent of the Bank, initiate proceedings to reorganize, merge or consolidate with or into any Person, wind up, liquidate or dissolve its affairs (or suffer any liquidation or dissolution) or convert, sell, assign, transfer, lease or otherwise dispose of (or agree to do any of the foregoing at any future time), whether in one transaction or a series of transactions, all or substantially all of its property or assets.
Section 5.08. Substitute Property. If, as a result of material damage to, or destruction of condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use or occupy any portion of the Property and Lease Payments shall be abated pursuant to Section 6.3 of the Lease Agreement, the City shall use its best efforts to substitute alternate real property and improvements for the Property from among the City’s properties, if available, subject to this Lease Agreement and the Assignment Agreement and the Site Lease satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with respect thereto.
Section 5.09. Disposition of the Property; Uses.
(a) The City shall not sell, lease or otherwise dispose of any portion of the Property, other than as permitted under Section 7.5 of the Lease Agreement.
(b) The City shall not abandon, vacate or close the Property, other than as permitted under Section 6.3 of the Lease Agreement.
(c) Without the prior written consent of the Bank, the City shall not (i) seek, make or consent to any change in the zoning, any entitlements or conditions of use of the Property, (ii) grant any easement, license or other right in the Property or any portion thereof that may in any way impair the value of the Property or the validity, priority or security of this Lease Agreement or the coverage of any title insurance policy insuring the City’s leasehold interest under the Lease 170
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Agreement or that could cause a material adverse effect on the permissible uses of the Property, (iii) make any application for or record any tract map, parcel map, condominium plan, condominium declaration, or plat of subdivision with respect to the Property, or (iv) otherwise record or execute any documents or instruments affecting the Property that may in any material way impair the value of the Property or the validity, priority or security of the Lease Agreement or the coverage of any title insurance policy insuring the Bank’s interests in the leasehold estate established under the Lease Agreement or that could cause a material adverse effect on the permissible uses of the Property.
(d) The City shall not use the Property or any portion thereof in violation of (i) any rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions [__________] on Schedule B of the Title Policy, or (ii) any other rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions [__________] on Schedule B of the Title Policy which use could in any way result in the loss of its fee simple interest in any portion of the Property.
If the City receives notice that it is in violation of any of such rights, reservations, covenants, conditions or restrictions on the Property contained in the documents or instruments listed as title exceptions on Schedule B of the Title Policy, the City shall, prior to the loss of its fee simple interest in such portion of the Property, substitute alternate real property and improvements for such portion of the Property from among the City’s properties, if available, subject to this Lease Agreement and the Assignment Agreement and the Site Lease satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with respect thereto.
Section 5.10. Increase of Lease Payments. Upon receipt of notice from the Bank pursuant to Section 6.02(b) hereof, as required by Section 6.02(b) hereof, the City shall amend the Lease Agreement to increase the Lease Payments payable by the City thereunder to an amount equal to the fair rental value of the Property for each period for which said rental is to be paid to the extent such fair rental value is greater than the Lease Payments which would otherwise be due under the Lease Agreement and amend Exhibit C to the Lease Agreement to increase the principal component of the Lease Payments in corresponding amounts, so as to cause the principal component of the Lease Payments remaining unpaid to be amortized over the shortest possible term supported by such fair rental value, such amendment of the Lease Agreement to be in form and substance satisfactory to the Bank.
Section 5.11. Liens. Without the prior written consent of the Bank, the City shall not directly or indirectly, create, incur, assume or suffer to exist any lien (including without limitation any mortgage, pledge, lien, charge, encumbrance or claim) on or with respect to any portion of the Property or otherwise record or execute any documents or instruments affecting the Property that may in any material way impair the coverage of any title insurance policy insuring the Bank’s interests in the leasehold estate established under the Lease Agreement. The City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the same shall arise at any time. If the City is unable to promptly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim in a manner satisfactory to the Bank, the City shall substitute alternate real property and improvements for such portion of the Property from among the City’s properties, if available, subject to this Lease Agreement and the Assignment Agreement and the Site Lease 171
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satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with respect thereto.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. The occurrence of any of the following events (whatever the reason for such event and whether voluntary, involuntary, or effected by operation of law) shall be an “Event of Default” hereunder and an additional Event of Default under the Lease Agreement entitling the Bank to the rights and remedies available under the Lease Agreement, unless waived in writing by the Bank:
(a) (i) the City shall fail to observe or perform any of the covenants, agreements or conditions on the part of the City set forth in Section 5.07, 5.09, 5.10 or 5.11 hereof or Section 4.3(f) (Budget and Appropriation), Article V (Maintenance; Taxes; Insurance; and Other Matters) or Section 7.5 (Assignment and Subleasing by the City) of the Lease Agreement, or (ii) the City fails to observe or perform any other of the covenants, agreements or conditions on the part the City in the Lease Agreement or in this Supplemental Agreement not otherwise described in Section 8.1 of the Lease Agreement or clause (i) of this Section 6.01(a), and, solely in the case of clause (ii) of this Section 6.01(a), the City fails to remedy the same within 30 days after the Bank has provided the City with written notice thereof;
(b) the City shall default in the payment of any amount when due in respect of any City LongTerm Borrowing General Fund Obligation, or default by the City under any City Long-Term Borrowing General Fund Obligation Issuing Document, and continuance of such default beyond the period of grace, if any, allowed with respect thereto; or the occurrence of any act or omission by the City under any such City Long-Term Borrowing General Fund Obligation Issuing Document which results in such City Long-Term Borrowing General Fund Obligation becoming, or being capable of becoming, immediately due and payable or being terminated early or being subject to early termination;
(c) this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents or any material provision of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents shall at any time, for any reason, cease to be the legal, valid and binding obligation of the City or the Authority or shall cease to be in full force and effect, or shall be declared to be unenforceable, invalid or void, or the validity or enforceability thereof shall be contested by the City or the Authority, or the City or the Authority shall renounce the same or deny that it has any further liability hereunder or thereunder, or any court of competent jurisdiction or other governmental authority with jurisdiction to rule on the validity of any provision of this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents shall find or rule that this Supplemental Agreement, the Lease Agreement or any of the other Lease Documents are not valid or not binding on the City or the Authority; (d) the City or the Authority is dissolved or its existence is terminated; 172
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(e) any representation or warranty made by the City herein or by the Authority or the City in any Lease Document or in any certificate, financial or other statement furnished by it pursuant to this Supplemental Agreement, the Lease Agreement or any of the Lease Documents shall prove to have been untrue or incomplete in any material respect when made or deemed made; (f) the long-term unenhanced ratings assigned to any City Long-Term Borrowing General Fund Obligation shall be withdrawn or suspended or otherwise unavailable for credit-related reasons or reduced below Baa3 by Moody’s Investors Service, Inc., BBB- by Standard & Poor’s Rating Service or BBB- by Fitch, Inc.;
(g) an Event of Insolvency shall occur with respect to the City or the Authority; or (h) any funds or investments on deposit in, or otherwise to the credit of, any of the funds or accounts established under the Lease Documents shall become subject to any writ, judgment, warrant or attachment, execution or similar process.
Section 6.02. Consequences of an Event of Default. In the case of any Event of Default, including any Event of Default specified in Section 6.01(h), that has occurred and is continuing, the Bank may, in its sole discretion, but shall not be obligated to, exercise all, or any of, the following rights and remedies in addition to any other rights or remedies available to the Bank under any other Lease Documents or under applicable law:
(a) deliver a notice to the City that an Event of Default has occurred and is continuing and that, upon the occurrence of such Event of Default, the interest components of the Lease Payments began to accrue at the Default Rate; and/or
(b) by notice to the City, require the City to amend the Lease Agreement to increase the Lease Payments payable by the City thereunder to an amount equal to the fair rental value of the Property for each period for which said rental is to be paid to the extent such fair rental value is greater than the Lease Payments which would otherwise be due under the Lease Agreement and amend Exhibit C to the Lease Agreement to increase the principal component of the Lease Payments in corresponding amounts, so as to cause the principal component of the Lease Payments remaining unpaid to be amortized over the shortest possible term supported by such fair rental value, such amendment of the Lease Agreement to be in form and substance satisfactory to the Bank; and/or (c) cure any Default, Event of Default or event of nonperformance hereunder or under any other Lease Document; provided, however, that the Bank shall have no obligation to effect such a cure; and/or
(d) exercise, or cause to be exercised, any and all remedies as it may have under the other Lease Documents and as otherwise available at law and at equity.
Except as expressly provided in this Section 6.02, procurement, demand, protest and all other notices of every kind are hereby expressly waived.
Section 6.03. Remedies Cumulative; Solely for the Benefit of Bank. To the extent permitted by, and subject to the mandatory requirements of, applicable law, each and every right, power and remedy herein specifically given to the Bank in the Lease Documents shall be cumulative, 173
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concurrent and nonexclusive and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy (whether specifically herein given or otherwise existing) may be exercised from time to time and as often and in such order as may be deemed expedient by the Bank, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy.
The rights and remedies of the Bank specified herein are for the sole and exclusive benefit, use and protection of the Bank, and the Bank is entitled, but shall have no duty or obligation to the City or any other Person or otherwise, to exercise or to refrain from exercising any right or remedy reserved to the Bank hereunder or under any of the other Lease Documents.
Section 6.04. Waivers or Omissions. No delay or omission by the Bank in the exercise of any right, remedy or power or in the pursuit of any remedy shall impair any such right remedy or power or be construed to be a waiver of any default on the part of the Bank or to be acquiescence therein.
No express or implied waiver by the Bank of any Event of Default shall in any way be a waiver of any future or subsequent Event of Default. No delay or omission on the part of the Bank in exercising any right to acceleration of the maturity of any of the Obligations, following any Event of Default as aforesaid, or any other option granted to the Bank hereunder in any one or more instances, or the acceptance by the Bank of any partial payment on account of the Obligations shall constitute a waiver of any such Event of Default and each such option shall remain continuously in full force and effect.
Section 6.05. Discontinuance of Proceedings. In case the Bank shall proceed to invoke any right, remedy or recourse permitted hereunder or under the Lease Documents and shall thereafter elect to discontinue or abandon the same for any reason, the Bank shall have the unqualified right so to do and, in such event, the City and the Bank shall be restored to their former positions with respect to the Obligations, the Lease Documents and otherwise, and the rights, remedies, recourse and powers of the Bank hereunder shall continue as if the same had never been invoked.
Section 6.06. Injunctive Relief. The City recognizes that in the event an Event of Default occurs, any remedy of law may prove to be inadequate relief to the Bank; therefore, the City agrees that the Bank, if the Bank so requests, shall be entitled to temporary and permanent relief in any such case.
ARTICLE VII
INDEMNIFICATION; COSTS, EXPENSES AND TAXES; INCREASED PAYMENTS Section 7.01. Indemnification. In addition to any and all other rights of reimbursement, indemnification, subrogation and other similar rights pursuant to the Lease Agreement, the other Lease Documents or under law or equity, the City hereby covenants and agrees, to the fullest extent permitted by law, to defend, indemnify and hold harmless the Bank and its affiliates, officers, directors, employees, representatives and agents (each, an “Indemnitee”) from and against any and all claims, causes of action, judgments, fines, penalties, damages, losses, liabilities, and expenses whatsoever (including reasonable attorneys’ fees) which may be incurred by an Indemnitee or 174
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which may be claimed against an Indemnitee by any Person whatsoever by reason of or directly or indirectly in connection with any of the Transactions; provided that the City shall not be required to indemnify an Indemnitee for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct or gross negligence of such Indemnitee as determined in a final, non-appealable judgment. Nothing under this Section 7.01 is intended to limit the City’s payment of its obligations under this Supplemental Agreement, the Lease Agreement or other Lease Documents.
Section 7.02. Costs, Expenses and Taxes. The City shall pay, as Additional Payments under the Lease Agreement, within 30 days after demand: (a) if an Event of Default shall have occurred, all costs and expenses of the Bank in connection with the enforcement (whether by means of legal proceedings or otherwise) of any of its rights under this Supplemental Agreement, the Lease Agreement, the other Lease Documents and such other documents which may be delivered in connection therewith; and (b) the reasonable fees and out of pocket expenses for counsel to the Bank in connection with the execution and delivery of this Supplemental Agreement, the Lease Agreement and the other Lease Documents; (c) the reasonable fees and out of pocket expenses for counsel or other reasonably required consultants to the Bank in connection with advising the Bank as to its rights and responsibilities under this Supplemental Agreement, the Lease Agreement and the other Lease Documents or in connection with responding to requests from the City for approvals, consents, amendments and waivers; and (d) any Excess Interest Fee payable pursuant to Section 4.3(a) of the Lease Agreement, any amounts payable pursuant to Section 4.3(b)(v) of the Lease Agreement and any fee set forth in the definition of “Default Rate” herein. In addition, if at any time any governmental authority shall require revenue or other documentary stamps or any other tax in connection with the execution or delivery of this Supplemental Agreement, the Lease Agreement or the other Lease Documents, then, if the City lawfully may pay for such stamps, taxes or fees, the City shall pay, when due and payable, for all such stamps, taxes and fees, including interest and penalties thereon, and the City agrees to save the Bank harmless from and against any and all liabilities with respect to or resulting from any delay or omission of the City in paying, such stamps, taxes and fees hereunder.
Section 7.03. Increased Payments. If, after the Funding Date, any change in applicable law, treaty, regulation, guideline or directive or the adoption of any law, treaty, regulation, guideline or directive, or any interpretation of any of the foregoing by any authority charged with the administration or interpretation thereof or any central bank or other fiscal, monetary or other authority having jurisdiction over the Bank or the transactions contemplated by this Supplemental Agreement, the Lease Agreement and the other Lease Documents (whether or not having the force of law) (each, a “Change in Law”), or compliance by the Bank therewith, shall: (i) subject the Bank to any tax, charge, fee, deduction or withholding of any kind with respect to this Supplemental Agreement, the Lease Agreement, the other Lease Documents or the payment by the City of Lease Payments, Additional Payments or other amounts under the Lease Documents, or any amount paid or to be paid by the Bank with respect to this Supplemental Agreement, the Lease Agreement, the other Lease Documents or the payment by the City of Lease Payments, Additional Payments or other amounts under the Lease Documents (other than any tax measured by or based upon the overall net income of the Bank); (ii) impose, modify or deem applicable any reserve, liquidity ratio, premium, special deposit or similar requirements against any assets held by, deposits with or for the account of, or loans, lines of credit or commitments by, an office of the Bank; (iii) change the basis of taxation of payments due the Bank in respect of this 175
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Supplemental Agreement, the Lease Agreement, the other Lease Documents or the payment by the City of Lease Payments, Additional Payments or other amounts under the Lease Documents (other than a change in taxation of the overall net income of the Bank); or (iv) impose upon the Bank any other condition with respect to such amount paid or payable to or by the Bank or with respect to this Supplemental Agreement, the Lease Agreement, the other Lease Documents or the payment by the City of Lease Payments, Additional Payments or other amounts under the Lease Documents, and the result of any of the foregoing is to increase the cost to the Bank of receiving payments by the City of Lease Payments, Additional Payments or other amounts under the Lease Documents, or to reduce the amount of any payment (whether of principal, interest or otherwise) receivable by the Bank or to require the Bank to make any payment on or calculated by reference to the gross amount of any sum received by it, in each case by an amount which the Bank in its reasonable judgment deems material, then: (x) the Bank shall, after making a determination to impose increased costs as a result of the occurrence of any of the foregoing, notify the City of such determination in writing; (y) after giving notice of such determination, the Bank shall also deliver to the City a certificate stating the change which has occurred or the reserve requirements or other costs or conditions which have been imposed on the Bank or the request, direction or requirement with which they have complied together with the date thereof, the amount of such increased cost, reduction or payment and the way in which such amount has been calculated, including a reasonably detailed calculation and the Bank’s determination of such amounts, absent fraud or manifest error, shall be conclusive; and (z) the City shall pay to the account of the Bank, from time to time as specified by the Bank but not later than 30 days after notice and demand to the City, such an amount or amounts as will compensate the Bank for such additional cost, reduction or payment, together with interest on such amount from, but including, the day specified by the Bank for payment at the Default Rate.
In addition to the foregoing, if after the Funding Date the Bank shall have determined that any Change in Law regarding capital adequacy or liquidity, or compliance by the Bank therewith, has or would have the effect of reducing the rate of return on the capital or liquidity of the Bank to a level below that which the Bank could have achieved but for such Change in Law (taking into consideration the policies of the Bank with respect to capital adequacy or liquidity) by an amount deemed by the Bank to be material, or affects or would affect the amount of capital or liquidity required or expected to be maintained by the Bank or any corporation controlling the Bank by an amount deemed by the Bank to be material, as a consequence of its obligations hereunder or with respect to the Lease Documents, then the City shall be obligated to pay or cause to be paid to the account of the Bank from time to time as specified by the Bank, but not later than 30 days after notice and demand to the City, such additional amount or amounts as will compensate the Bank for such reduction or capital or liquidity increase with respect to any period for which such reduction or capital or liquidity increase was incurred, together with interest on such amounts from, but including, the day specified by the Bank for such payment at the Default Rate. A certificate setting forth in reasonable detail such reduction in the rate of return on capital or liquidity, or such capital or liquidity increase, of the Bank as a result of any event mentioned in this paragraph shall be submitted by the Bank to the City and such certificate shall, in the absence of manifest error, be conclusive as to the amount thereof.
The protections of this Section shall be available to the Bank regardless of any possible contention of invalidity or inapplicability of the law, regulation or condition which has been imposed. Notwithstanding the foregoing (x) all requests, rules, guidelines or directives in 176
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connection with the Dodd-Frank Act shall be deemed to be a Change in Law, regardless of the date enacted, adopted or issued and (y) all requests, rules, guidelines or directives promulgated by:
(1) the Bank for International Settlements, (2) the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) or (3) any governmental authority shall be deemed a Change in Law regardless of the date enacted, adopted or issued.
Notwithstanding anything in this Section to the contrary, if such costs are to be incurred on a continuing basis and the Bank shall so notify the City in writing as to the amount thereof, such costs shall be paid by the City semi-annually in arrears on each Lease Payment Date and on the date on which all Lease Payments and Additional Payments have been paid in full.
Section 7.04. Late Payment. Any Lease Payment or Additional Payment or any other amount required to be paid under the Lease Agreement or hereunder which shall not be paid by the City when due and payable under the Lease Agreement or hereunder shall accrue interest until the same shall be paid at a rate equal to the Default Rate, and the City hereby agrees to pay such amounts to the Bank upon demand.
Section 7.05. Survival. The obligations of the City under this Article VII shall survive the payment in full of the Lease Payments and the Additional Payments and the termination of the Lease Documents.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Payment Account. All amounts payable to the Bank under the Lease Agreement or hereunder shall be transferred to the following account of the Bank, or such other account as may be subsequently designated by the Bank in writing to the City:
Bank of the West
13300 Crossroads Pkwy North
City of Industry, CA 91746
ABA #: 121100782
Account Name: Commercial Loan Servicing
Account #: 239855-332
Ref: City of Brisbane – Obligor #[__________] (Closed on 3/24/22) Attention: Rachel Perez
Section 8.02. Amendments. No amendment or waiver of any provision of this Supplemental Agreement nor consent to any departure by the parties hereto shall in any event be effective unless the same shall be in writing and signed by such parties, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 8.03. Severability. The provisions of this Supplemental Agreement are intended to be severable. If any provision of this Supplemental Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or 177
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enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
Section 8.04. Governing Law; Consent to Jurisdiction; Waiver Of Jury Trial. (a) This Supplemental Agreement shall be governed by, and construed and interpreted in accordance with the laws of the State.
(b) The City, the Authority (pursuant to the Lease Agreement) and the Bank each consents to and submits to in personam jurisdiction and venue in a court of record in the State of California located in the City and County of San Francisco or in the United States District Court for the Northern District of California located in the County of San Francisco. The City, the Authority (pursuant to the Lease Agreement) and the Bank each asserts that it has purposefully availed itself of the benefits of the laws of the State of California and waives any objection to in personam jurisdiction on the grounds of minimum contacts, waives any objection to venue, and waives any plea of forum non conveniens. This consent to and submission to jurisdiction is with regard to any action related to this Supplemental Agreement, the Lease Agreement and the other Lease Documents. Regardless of whether the party’s actions took place in the State of California or elsewhere in the United States, this submission to jurisdiction is nonexclusive, and does not preclude either party from obtaining jurisdiction over the other in any court otherwise having jurisdiction.
(c) The City, the Authority (pursuant to the Lease Agreement) and the Bank each, to the fullest extent permitted by law, waives its respective right to a trial by jury in any legal proceeding arising out of or relating to this Supplemental Agreement or any other Lease Document or the transactions contemplated hereby or thereby. The City and the Authority (pursuant to the Lease Agreement) each warrants and represents that such waiver has been intentionally, knowingly and voluntarily made, following consultation with its legal counsel. If the waiver of jury trial as set forth in this Section shall be declared void or unenforceable, the City, the Authority (pursuant to the Lease Agreement) and the Bank each agrees to refer the dispute to a judicial referee in accordance with the provisions of Section 638 et seq. of the California Code of Civil Procedure.
Section 8.05. No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated by this Supplemental Agreement, the Lease Agreement or the other Lease Documents (including in connection with any amendment, waiver or other modification hereof or of any other Lease Document), the City acknowledges and agrees that: (a) (i) the arranging, structuring and other services regarding this Supplemental Agreement, the Lease Agreement and the other Lease Documents provided by the Bank are arm’s length commercial transactions between the City on the one hand, and the Bank on the other hand, (ii) the City has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the City is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Supplemental Agreement, the Lease Agreement and the other Lease Documents; (b)(i) the Bank is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the City, or any other Person and (ii) the Bank does not have any obligation to the City with respect to the transactions contemplated by this Supplemental Agreement, the Lease Agreement and the other Lease Documents, except those obligations expressly set forth herein and therein; and (c) the 178
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Bank may be engaged in a broad range of transactions that involve interests that differ from those of the City, and the Bank does not have any obligation to disclose any of such interests to the City.
To the fullest extent permitted by applicable laws, the City hereby waives and releases any claims that it may have against the Bank with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by this Supplemental Agreement, the Lease Agreement and the other Lease Documents.
Section 8.06. Counterparts. This Supplemental Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.
Section 8.07. Successors and Assigns. This Supplemental Agreement is a continuing obligation and shall be binding upon the City, its permitted successors and assigns and shall inure to the benefit of the Bank and its permitted successors, transferees and assigns. The City may not assign or otherwise transfer or delegate any of its rights or obligations hereunder or under the other Lease Documents without the prior written consent of the Bank. The Bank may, in accordance with applicable law, from time to time and without the consent of the City or any other Person assign, sell or transfer in whole or in part, this Supplemental Agreement and any of its rights or interests hereunder and all or any part of its interest in the Lease Documents, subject to the limitations set forth in the Assignment Agreement. In addition, the Bank may at any time pledge or grant a security interest in all or any portion of its rights under the Lease Documents to secure obligations of the Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Bank from any of its obligations hereunder or substitute any such pledgee or assignee for the Bank as a party hereto.
Section 8.08. Tax Identification Number. The City’s tax identification number is [__]-[__________].
[Signatures begin on the following page.]
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[Signature page of Supplemental Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Agreement to be duly executed and delivered as of the date first above written.
CITY OF BRISBANE
By:
Name: Clayton L. Holstine
Title: City Manager
BANK OF THE WEST
By:
Name:
Title:
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Exhibit A
Lease Agreement and Assignment Agreement Terms
1. (a) Funding Date: March 24, 2022
(b) Funding Amount: $[4,355,000]
(c) Term: 20 years, with the final principal component of Lease Payments due on March 1, 2042
(d) Principal Payment Dates and Interest Payment Dates: interest shall be payable semi-annually on each March 1 and September 1, commencing September 1, 2022, and principal shall be payable semi-annually on each March 1 and September 1, commencing September 1, 2023 as set forth below:
Lease Payment
Date
Principal
Component
Interest Component Total Lease
Payment
September 1, 2022 $ $ $
March 1, 2023
September 1, 2023
March 1, 2024
September 1, 2024
March 1, 2025
September 1, 2025
March 1, 2026
September 1, 2026
March 1, 2027
September 1, 2027
March 1, 2028
September 1, 2028
March 1, 2029
September 1, 2029
March 1, 2030
September 1, 2030
March 1, 2031
September 1, 2031
March 1, 2032
September 1, 2032
March 1, 2033
September 1, 2033
March 1, 2034
September 1, 2034
March 1, 2035
September 1, 2035
March 1, 2036
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September 1, 2036
March 1, 2037
September 1, 2037
March 1, 2038
September 1, 2038
March 1, 2039
September 1, 2039
March 1, 2040
September 1, 2040
March 1, 2041
September 1, 2041
March 1, 2042
(f) Interest Rate: [_____]% per annum, calculated on the basis of a 360-day year and twelve 30-day months, except upon the occurrence and during the continuance of an Event of Default under the Lease Agreement, in which case the Default Rate will apply, calculated on the basis of a 360-day year and twelve 30-day months. (g) Default Rate: [Interest Rate + 1]% per annum, calculated on the basis of a 360-day year and twelve 30-day months.
(h) Prepayment: Only (i) mandatory prepayment, without prepayment premium, in accordance with Section 9.3 of the Lease Agreement from condemnation awards and insurance proceeds; (ii) optional prepayment on any Lease Payment Date, upon 30 days’ notice to the Bank, by paying a prepayment price equal to the aggregate principal components of the Lease Payments to be prepaid, together with the interest component of the Lease Payments to be paid on or accrued to such date together with a prepayment premium equal to 1% for any prepayment from the Closing Date through February 28, 2027 and a prepayment premium equal to 0% for any prepayment on March 1, 2027 or thereafter.
(h) Events of Default under the Lease Agreement: Includes Events of Default under this Supplemental Agreement.
(i) Tax Exemption: An opinion from Special Counsel as to the exemption of interest evidenced by the interest components of Lease Payments from State personal income taxes.
(j) Other Lease Terms: fair rental value sufficient to support payment of default interest; insurance requirements (including 24 months of rental interruption insurance) and repair and replacement of Property; payment of taxes and removal of liens; no amendment of Site Lease or Lease Agreement without Bank consent; no sale or other disposition of, or encumbrance of or lien on Property; covenant to budget and appropriate; environmental compliance; no abandonment of Property; Additional Payments includes all amounts (other than Lease Payments) due and payable under this Supplemental Agreement; payment of abated or excess Lease 182
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Payments at the earliest opportunity; Authority agrees to jurisdiction and waiver of jury trial provisions set forth in this Supplemental Agreement; required title insurance shall be in form and substance satisfactory to the Bank; no CUSIP number and in a single denomination; not rated.
(k) Assignability/Transferability: Not divisible or transferable except in whole to a bank, financial institution or a qualified investor that executes a bank’s letter addressed to the City and the Authority substantially in the form of the letter delivered by the Bank on the Funding Date.
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Exhibit B
City Long-Term Borrowing General Fund Obligations
Certificates of Participation
[]
Lease Purchase Agreement
None
Capital Leases
[]
Other
[]
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