DRAFT
Attachment C - Lease Agreement.docx
10005302
LEASE AGREEMENT
Dated as of September [__], 2026
by and between the
FINANCE AUTHORITY OF LONG BEACH,
as Sublessor
and the
CITY OF LONG BEACH,
as Sublessee
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I D EFINITIONS; RULES OF INTERPRETATION ....................................................2 Section 1.1. Definitions..............................................................................................2 Section 1.2. Other Interpretive Provisions ...............................................................15 Section 1.3. Accounting Terms ................................................................................15 Section 1.4. Times of Day........................................................................................16 Section 1.5. Interest Rates; Benchmark Notifications .............................................16 ARTICLE II C OVENANTS, REPRESENTATIONS AND WARRANTIES ..................................16 Section 2.1. Covenants, Representations and Warranties of the City ......................16 Section 2.2. Covenants, Representations and Warranties of the Authority .............20 ARTICLE III R EVOLVING COMMITMENT .........................................................................22 Section 3.1. Advances ..............................................................................................22 Section 3.2. Borrowings, Conversions and Continuations of Advances .................23 Section 3.3. Prepayments .........................................................................................23 Section 3.4. Termination or Permanent Reduction of Revolving Commitment ......24 Section 3.5. Repayment of Advances ......................................................................24 Section 3.6. Interest and Default Rate .....................................................................24 Section 3.7. F ees ......................................................................................................25 Section 3.8. Computation of Interest and F ees ........................................................25 Section 3.9. Evidence of Debt..................................................................................25 Section 3.10. Payments ..............................................................................................25 Section 3.11. Extension of Commitment Termination Date ......................................26 Section 3.12. Highest Lawful R ate ............................................................................26 S
ection 3.13. Inability to Determine Interest Rates; Illegality...................................27 Section 3.14. Benchmark Replacement .....................................................................27 Section 3.15. T axability .............................................................................................28 Section 3.16. Conditions of Effectiveness of this Agreement; Authority; Enforceability .......................................................................................28 Section 3.17. Conditions to All Advances .................................................................32 Section 3.18. Survival ................................................................................................33 ARTICLE IV L EASE OF PROPERTY; LEASE PAYMENTS ....................................................33 Section 4.1. Sublease of Property by the Authority Back to the City ......................33 Section 4.2. Term .....................................................................................................34 Section 4.3. Lease Payments ....................................................................................34 Section 4.4. Quiet Enjoyment ..................................................................................37 Section 4.5. Title ......................................................................................................37 Section 4.6. Release of Excess Property ..................................................................37 Section 4.7. Substitution of Property .......................................................................38
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ARTICLE V M AINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS ......................39 Section 5.1. Maintenance, Utilities, Taxes and Assessments ..................................39 Section 5.2. Modification of Property......................................................................40 Section 5.3. Public Liability Insurance ....................................................................40 Section 5.4. Casualty Insurance; Flood Insurance ...................................................41 Section 5.5. Rental Interruption Insurance ..............................................................42 Section 5.6. Worker’s Compensation Insurance ......................................................42 Section 5.7. Recordation Hereof; Title Insurance ....................................................42 Section 5.8. Insurance Net Proceeds; Form of Policies ...........................................43 Section 5.9. Installation of City’s Personal Property ...............................................43 Section 5.10. Liens .....................................................................................................43 Section 5.11. Advances ..............................................................................................44 Section 5.12. Environmental Covenants ....................................................................44 Section 5.13. City Consent to Assignment Agreement..............................................45 Section 5.14. Certificates of Insurance ......................................................................45 ARTICLE VI E MINENT DOMAIN; USE OF NET PROCEEDS ................................................46 Section 6.1. Eminent Domain ..................................................................................46 Section 6.2. Application of Net Proceeds ................................................................46 Section 6.3. Abatement of Lease Payments in the Event of Damage or Destruction ..............................................................................................................48 Section 6.4. Uninsured Casualty ..............................................................................49 ARTICLE VII O THER COVENANTS OF THE CITY ...............................................................49 Section 7.1. Disclaimer of Warranties .....................................................................49 Section 7.2. Access to the Property; Grant and Conveyance of Right of Entry ......49 S
ection 7.3. Release and Indemnification Covenants ..............................................50 Section 7.4. Assignment by the Authority ...............................................................50 Section 7.5. Assignment and Subleasing by the City ..............................................50 Section 7.6. Amendment of Lease Agreement ........................................................51 Section 7.7. Financial Statements; Budgets; Other Information ..............................51 Section 7.8. Records and Accounts..........................................................................51 Section 7.9. Observance of Laws and Regulations ..................................................51 Section 7.10. Notices .................................................................................................52 ARTICLE VIII E VENTS OF DEFAULT AND REMEDIES .........................................................52 Section 8.1. Events of Default Defined ...................................................................52 Section 8.2. Remedies on Default ............................................................................54 Section 8.3. No Remedy Exclusive..........................................................................56 Section 8.4. Agreement to Pay Attorneys’ Fees and Expenses ...............................56 Section 8.5. No Additional Waiver Implied by One Waiver ...................................56 Section 8.6. Assignee to Exercise Rights.................................................................57 Section 8.7. Judicial Reference ................................................................................57
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ARTICLE IX P REPAYMENT OF LEASE PAYMENTS ............................................................58 Section 9.1. Mandatory Prepayment ........................................................................58 Section 9.2. Optional Prepayment ...........................................................................58 Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain .................................................................................................58 ARTICLE X M ISCELLANEOUS ........................................................................................59 Section 10.1. Notices .................................................................................................59 Section 10.2. Binding Effect ......................................................................................60 Section 10.3. Severability ..........................................................................................60 Section 10.4. Net-net-net Lease .................................................................................60 Section 10.5. Payments Set Aside..............................................................................60 Section 10.6. Further Assurances and Corrective Instruments ..................................60 Section 10.7. Assignee as Third Party Beneficiary ....................................................60 Section 10.8. Execution in Counterparts....................................................................61 Section 10.9. Applicable Law ....................................................................................61 Section 10.10. Captions ...............................................................................................61 Section 10.11. No Merger ............................................................................................61 Section 10.12. US QFC Stay Rules .............................................................................62
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EXHIBIT A D ESCRIPTION OF THE SITE
EXHIBIT B D ESCRIPTION OF THE FACILITY
EXHIBIT C F ORM OF ADVANCE REQUEST
EXHIBIT D F ORM OF NOTICE OF ADVANCE PREPAYMENT
ATTACHMENT C
LEASE AGREEMENT
This LEASE AGREEMENT (this “Lease Agreement” or this “Agreement”), dated as of September [__], 2026, is by and between FINANCE AUTHORITY OF LONG BEACH, a joint exercise of powers entity organized and existing under the laws of the State of California, as sublessor (the “Authority”), and CITY OF LONG BEACH, a charter city and municipal corporation duly organized and existing under its charter and the Constitution and laws of the State of California, as sublessee (the “City”);
WITNESSETH:
WHEREAS, pursuant to that certain Site and Facility Lease, dated as of September [__], 2026 (together with any supplements, amendments, annexations, extensions or renewals thereof are referred to hereinafter as the “Site and Facility Lease” ), the City has leased those certain parcels of real property situated in Los Angeles County, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (the “Site” ), and those certain improvements thereon, more particularly described in Exhibit B hereto (the “Facility” and, with the Site, the “Property”), to the Authority, all for the purpose of providing funds to the City for various operational needs of the City;
W
HEREAS, the Authority proposes to lease the Property back to the City pursuant to this Lease Agreement and to assign all of its rights, title and interest in, to and under this Lease Agreement, including its right to receive lease payments under this Lease Agreement (the “Lease Payments”), its right to enforce payment of the Lease Payments and otherwise to enforce its interest and rights under this Lease Agreement in the event of a default hereunder by the City and its rights under the Site and Facility Lease, to Wells Fargo Bank, National Association (together with its successors and assigns, the “Assignee”), pursuant to that certain Assignment Agreement, dated as of September [__], 2026, by and between the Authority and the Assignee (together with any supplements, amendments, annexations, extensions or renewals thereof are referred to hereinafter as the “Assignment Agreement”); and
W
HEREAS, the City and the Authority have agreed to enter into this Lease Agreement providing for Lease Payments with an outstanding and revolving aggregate principal component in the amount of up to $50,000,000 for the purpose of implementing the financing transactions described above and the City agrees to repay the Assignee for Advances (as defined herein) made by the Assignee under the Revolving Commitment (as defined herein) and to pay the Assignee all other amounts arising under or pursuant to this Lease Agreement.
A
GREEMENT:
NOW, THEREFORE, for and in consideration of the premises and the covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind themselves as follows:
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ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
Section 1.1. Definitions. All terms defined in this Section 1.1 have the meanings herein specified for all purposes of this Lease Agreement.
“Additional Payments” means the amounts specified as such in Section 4.3(b) hereof. “Advance” has the meaning specified in Section 3.1 hereof. “Advance Request” means a notice of an Advance pursuant to Section 3.2(a) hereof which shall be substantially in the form of Exhibit C attached hereto or such other form as may be approved by the Assignee (including any form on an electronic platform or electronic transmission system as be approved the Assignee), appropriately completed and signed by a City Representative.
“Applicable Environmental Laws” means and shall include, all laws (including common laws) including but shall not be limited to, the Comprehensive Environmental Response, Compensation, and Liability Act ( “CERCLA”), 42 USC Sections 9601 et seq.; the Resource Conservation and Recovery Act ( “RCRA”), 42 USC Sections 6901 et seq.; the Federal Water Pollution Control Act, 33 USC Sections 1251 et seq .; the Clean Air Act, 42 USC Sections 7401 et seq. (“CAA”); the Occupational Health and Safety Act, 29 USC Section 654 et seq, (“OSHA”); the Asbestos Hazard Emergency Response Act; the California Hazardous Waste Control Law (“HWCL”), California Health & Safety Code Sections 25100 et seq .; the Hazardous Substance Account Act ( “HSAA”), California Health & Safety Code Sections 25300 et seq .; the Porter - Cologne Water Quality Control Act (the “Porter-Cologne Act”), California Water Code Sections 1300 et seq.; the Air Resources Act, California Health & Safety Code Sections 3900 et seq.; the Safe Drinking Water & Toxic Enforcement Act, California Health & Safety Code Sections 25249.5 et seq.; and the regulations under each thereof; and any other local, state, and/or federal laws or regulations, whether currently in existence or hereafter enacted, that govern:
(a) the existence, cleanup, and/or remedy of contamination on property; (b) the protection of human health, safety or the environment from Hazardous Substances or spilled, deposited, or otherwise emplaced contamination; (c) the control of hazardous wastes; or
(d) the management, use, generation, transport, treatment, removal, or recovery of or exposure to Hazardous Substances, including building materials. “Applicable Factor” means eighty percent (80%).
“Applicable Law” means (a) all applicable common law and principles of equity and (b) all applicable provisions of all (i) constitutions, statutes, rules, regulations and orders of all
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Governmental Authorities, (ii) Applicable Environmental Laws, (iii) applicable seismic building code requirements at the time of construction, and (iv) orders, decisions, judgments, writs, injunctions and decrees of all courts (whether at law or in equity) and arbitrators and all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. “Applicable Spread” has the meaning set forth in the Fee Letter. “Approving Opinion” means, with respect to any action or matter that may affect an Advance, an opinion delivered by Bond Counsel to the effect that such action (i) is permitted by this Agreement and the other Related Documents and (ii) will not adversely affect the exclusion of interest on any Advance from gross income of the Assignee or any Participant for purposes of federal income taxation.
“Assignee” means initially, Wells Fargo Bank, National Association and its successors, as assignee of all rights, title and interests of the Authority hereunder, and (b) any other entity to whom the rights of the Authority hereunder are assigned, including subsequent assignees of the Assignee.
“Assignment Agreement” means the Assignment Agreement, dated as of September [__], 2026, by and between the Authority, as assignor, and the Assignee, as assignee, as originally executed or as thereafter amended under any duly authorized and executed amendments thereto. “Authority” means Finance Authority of Long Beach, a joint exercise of powers entity, organized and existing under the laws of the State.
“Authority Representative” means the Chairman or the Treasurer or the designee of any such official, or any other person authorized by resolution of the Authority delivered to the Assignee to act on behalf of the Authority under or with respect to the Site and Facility Lease, the Lease Agreement and the Assignment Agreement.
“Authorized Amount” means $50,000,000.
“Availability Period” means the period from and including the Closing Date to the Commitment Termination Date.
“Available Commitment” means, on any date, an initial amount equal to $50,000,000 and thereafter such initial amount adjusted from time to time as follows: (a) downward in an amount equal to any Advance made to the City under the Revolving Commitment; (b) upward in an amount equal to the principal amount of any Advance made to the City under the Revolving Commitment, that is repaid or prepaid, as applicable, in the manner provided herein; (c) downward in an amount equal to any reduction thereof effected pursuant to Section 3.4 hereof; and (d) downward to zero
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upon the expiration or termination of the Available Commitment in accordance with the terms hereof; provided, that, after giving effect to any of the foregoing adjustments the Available Commitment shall never exceed $50,000,000 at any one time. “Benchmark” means, initially, Daily Simple SOFR; provided, however, that if a Benchmark Transition Event has occurred with respect to Daily Simple SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has become effective pursuant to the provisions of this Agreement. “Benchmark Administrator” means, initially, the SOFR Administrator, or any successor administrator of the then-current Benchmark or any insolvency or resolution official with authority over such administrator.
“Benchmark Floor” means a rate of interest equal to zero percent (0%). “Benchmark Replacement” means the sum of: (A) the alternate rate of interest that has been selected by Assignee as the replacement for the then-current Benchmark; and (B) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by Assignee , in each case, giving due consideration to (x) any selection or recommendation by the Relevant Governmental Body at such time for a replacement rate, the mechanism for determining such a rate, the methodology or conventions applicable to such rate, or the spread adjustment, or method for calculating or determining such spread adjustment, for such rate, or (y) any evolving or then- prevailing market convention for determining a rate of interest as a replacement to the then -current Benchmark, the methodology or conventions applicable to such rate, or the spread adjustment, or method for calculating or determining such spread adjustment, for such alternate rate for U.S. dollar - denominated syndicated or bilateral credit facilities at such time; provided, however , that if the Benchmark Replacement as determined as provided above would be less than the Benchmark Floor, then Benchmark Replacement shall be deemed to be the Benchmark Floor, subject to any other applicable floor rate provision.
“Benchmark Replacement Conforming Changes” means any technical, administrative or operational changes (including, without limitation, changes to the definition of “U.S. Government Securities Business Day,” the timing and frequency of determining rates and making payments of interest, prepayment provisions and other technical, administrative or operational matters) that Assignee decides may be appropriate to reflect the adoption and implementation of a Benchmark Replacement and to permit the administration thereof by Assignee. “Benchmark Replacement Date” means the date specified by Assignee in a notice to the City following a Benchmark Transition Event.
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then -current Benchmark: a public statement or publication of information by or on behalf of the Benchmark Administrator or a regulatory supervisor for the Benchmark Administrator announcing that (A) the Benchmark Administrator has ceased or will
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cease to provide the Benchmark permanently or indefinitely or (B) the Benchmark is no longer, or as of a specified future date will no longer be, representative of underlying markets. “Bond Counsel” means (a) Kutak Rock LLP, or (b) any other attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations of state and local government entities.
“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday on which banking institutions in New York, New York or the State are authorized by law to close, (b) a day on which the New York Stock Exchange or the Federal Reserve Assignee is closed or (c) a day on which either (i) the principal office of the Assignee is closed or (ii) the office of the Assignee in which it makes an Advance hereunder is closed; ; provided that, when used in connection with an Advance, the term “Business Day” shall also exclude any day that is not a U.S. Government Securities Business Day.
“Charter” means the Charter of the City of Long Beach , as amended from time to time under which the City is organized and operates.
“City” means the City of Long Beach, a charter city and municipal corporation organized and existing under the Charter and the Constitution and laws of the State. “City Representative” means the Mayor, the City Manager, the Director of Financial Management or the City Treasurer or the designee of any such official, or any other person authorized by resolution delivered to the Authority and the Assignee to act on behalf of the City under or with respect to the Site and Facility Lease and this Lease Agreement. “Closing Date” means September [__], 2026, the date this Lease Agreement or a memorandum thereof is recorded in the office of the County Recorder of Los Angeles County. “Code” means the Internal Revenue Code of 1986, as amended, and when appropriate, any statutory predecessor or successor thereto, and all applicable regulations (whether proposed, temporary or final ) thereunder and any applicable official rulings, announcements, notices, procedures and judicial determinations relating to the foregoing. “Commitment Fee” has the meaning set forth in the Fee Letter. “Commitment Termination Date” shall mean the earlier of:
(a) [September 1], 2027, or such later date as may be established pursuant to Section 3.11 hereof; and
(b) the date the Revolving Commitment is reduced to zero pursuant to Section 3.4 or Section 8.2 hereof.
“Daily Simple SOFR ” means, with respect to any day (a “SOFR Rate Day” ), a rate per annum equal to SOFR for the day (such day, the “SOFR Determination Day”) that is two (2) U.S.
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Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S.
Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website; provided, however, that if Daily Simple SOFR determined as provided above would be less than the Benchmark Floor, then Daily Simple SOFR shall be deemed to be the Benchmark Floor. If by 5:00 p.m. (New York City time) on the second (2
nd) U.S. Government Securities Business Day immediately following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which SOFR was published on the SOFR Administrator’s Website; provided that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days.
“Debt” of any Person means at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay t he deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) all obligations of such Person as lessee under capital or finance leases, (e) all obligations under any Bank Agreement or Swap Contract , (f) all debt of others secured by a lien on any asset of such Person, whether or not such Debt is assumed by such Person, and (g) all guarantees by such Person of debt of other Persons.
“Debtor Relief La ws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect. “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default. “Default Rate” means, for any day and for any Advance or Obligation outstanding, the highest of (a) the Prime Rate plus 4.00%, (b) the Federal Funds Rate plus 5.00% and (c) 10.00%.
Each change in the Default Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate, as applicable. “Determination of Taxability” means and shall be deemed to have occurred on the first to occur of the following:
(i) on the date when the City or the Authority files any statement, supplemental statement or other tax schedule, return or document which discloses that interest paid or payable on any Advance is includable, in whole or in part, in the gross income of the recipient thereof for federal income tax purposes;
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(ii) on the date when the Assignee notifies the City and the Authority that it has received a written opinion (which shall not be a reasoned opinion and shall be subject only to customary assumptions and exclusions) by a nationally recognized firm of attorneys of substantial expertise on the subject of tax exempt municipal fi nance to the effect that interest paid or payable on any Advance is includable, in whole or in part, in the gross income of the Assignee or any Participant for federal income tax purposes unless, within two hundred seventy (270) days after receipt by the City and the Authority of such notification from the Assignee , the City or the Authority shall deliver to the Assignee , a ruling or determination letter issued to or on behalf of the City or the Authority by the Commissioner of the Internal Revenue Service or the Director of Tax -Exempt Bonds of the Tax-Exempt and Government Entities Division of the Internal Revenue Service (or any other government official exercising the same or a substantially similar function from time to time) to the effect that, after taking into consideration such facts as form the basis for the opinion that interest paid and payable all Advances is not includable, in whole or in part, in the gross income of the recipient thereof for federal income tax purposes; (iii) on the date when the City or the Authority shall be advised in writing by the Commissioner of the Internal Revenue Service or the Director of Tax -Exempt Bonds of the Tax-Exempt and Government Entities Division of the Internal Revenue Service (or any other government official exercising the same or a substantially similar function from time to time, including an employee subordinate to one of these officers who has been authorized to provide such advice) that, based upon filings of the City or the Authority, or upon any review or audit of the City or the Authority or upon any other ground whatsoever, that interest paid or payable on any Advance is includable, in whole or in part, in the gross income of the recipient thereof for federal income tax purposes; or (iv) on the date when the City and the Authority shall receive notice from the Assignee that the Internal Revenue Service (or any other government official or agency exercising the same or a substantially similar function from time to time) has assessed the interest paid or payable on any Advance as being includable, in whole or in part, in the gross income of the recipient thereof for federal income tax purposes; provided, however, no Determination of Taxability shall occur under subparagraph (iii) or (iv) hereunder unless the City or the Authority has been afforded the reasonable opportunity, at its expense, to contest any such assessment, and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined; provided further, however, that upon demand from the Assignee , the City shall promptly reimburse the Assignee for any payments, including any taxes, interest, penalties or other charges, the Assignee shall be obligated to make as a result of the Determination of Taxability.
“Dollar” and “$” mean lawful money of the United States. “Event of Default” means any of the events of default as defined in Section 8.1 hereof.
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“Facility” means those certain existing facilities more particularly described in Exhibit B to the Site and Facility Lease and in Exhibit B attached hereto, as the same may be revised from time to time pursuant to substitution or release as provided herein. “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotation for such day on such transactions received by the Assignee from three federal funds brokers of recognized standing selected by the Assignee. Notwithstanding the foregoing, if the Federal Funds Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. “Fee Letter” means the Fee and Interest Rate Agreement, dated September [__], 2026, among the City and the Assignee, providing for payment of the Commitment Fee and other fees to be payable to the Assignee related to the Advances and this Lease Agreement and for the determination of the Applicable Spread, together with any supplements, amendments, restatements and modifications thereto.
“Fitch” means Fitch Ratings, Inc., and any successor rating agency. “Floating Rate” means a fully floating rate per annum that is equal to the sum of (a) the product of (i) Daily Simple SOFR and (ii) the Applicable Factor plus (b) the Applicable Spread; provided, however, that immediately and upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuation of such Event of Default, “Floating Rate” shall mean the Default Rate.
“Fiscal Year” means each twelve-month period during the Term of this Lease Agreement commencing on October 1 in any calendar year and ending on September 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period. “General Fund” means the “General Fund” of the City that is the general operating fund of the City.
“Governmental Authority” means any governmental or quasi -governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, city or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law.
“Hazardous Substance” means any substance that shall, at any time, be listed as “hazardous” or “toxic” pursuant to any Applicable Environmental Law or that has been or shall be determined at any time by any agency or court to be a hazardous or toxic substance or wastes or other pollutants regulated under Applicable Environmental Laws; including, without limitation, all explosive or radioactive substances or wastes, raw materials, building components, the products
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of any manufacturing, or other activities on the Property, wastes, petroleum or petroleum distillates, natural gas, natural gas liquids, asbestos or asbestos -containing materials, polychlorinated biphenyls, mold, radon, infectious or medical wastes and all other substances, wastes, chemicals, pollutants, contaminants or compounds of any nature in any form regulated pursuant to any Applicable Environmental Law and source, special nuclear, or by-product material as defined by the Atomic Energy Act of 1954, as amended (42 USC Sections 3011 et seq.). “Highest Lawful Rate” means the maximum interest rate permitted by applicable law. “Interest Payment Date” means, as to any Advance, the first Business Day of each calendar month and the Commitment Termination Date, provided that if an Advance is funded on the Closing Date, the initial Interest Payment Date with respect thereto shall be October 1, 2026. “IRS” means the United States Internal Revenue Service. “Lease Agreement” means this Lease Agreement, dated as of September [__], 2026, between the Authority and the City, together with any supplements, amendments, restatements and modifications thereto.
“Lease Payment Date” means each date a Lease Payment, Advance or interest thereon is due and payable as provided herein.
“Lease Payments” means all payments required to be paid by the City under Article III, Section 4.3, including any prepayment thereof under Sections 9.1, 9.2 or 9.3 and the repayment of all Advances and interest thereon.
“Lease Revenue Debt” means any Debt issued by or on behalf of the City, the payment of which is payable from and/or secured by lease revenue rental payments payable from the General Fund.
“Lending Office” means, the office or offices of the Assignee as the Assignee may from time to time notify the City.
“Letter Agreement” means the Letter Agreement for Purchase dated as of September [__], 2026 between the City and the Assignee, together with any supplements, amendments, restatements and modifications thereto.
“Letter Agreement Event of Default” means any “event of default” as defined or described under the Letter Agreement.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the City or the Property; (b) a material impairment of the ability of the City to perform its respective obligations under any Related Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the City or the Authority of any Related Document to which it is a party.
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“Material Litigation” means any action, suit, proceeding, inquiry or investigation against the City in any court or before any arbitrator of any kind or before or by any Governmental Authority, (a) that may have a Material Adverse Effect, (b) seek to restrain or enjoin any of the transactions contemplated by this Lease Agreement or any Related Document, or (c) may adversely affect (i) the exemption of the interest component of the Lease Payments for state income tax purposes or (ii) the ability of the City to perform its obligations under this Lease Agreement or any Related Document.
“Maximum Federal Corporate Tax Rate” means the maximum rate of income taxation imposed on corporations pursuant to Section 11(b) of the Code, as in effect from time to time (or, if as a result of a change in the Code, the rate of income taxation imposed on corporations generally shall not be applicable to the Assignee , the maximum statutory rate of federal income taxation which could apply to the Assignee). As of the Closing Date, the Maximum Federal Corporate Tax Rate is 21%.
“Moody’s” means Moody’s Ratings and any successor rating agency. “Net Proceeds” means any insurance or eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers), paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof.
“Notice of Advance Prepayment” means a notice of prepayment with respect to an Advance, which shall be substantially in the form of Exhibit E attached hereto or such other form as may be approved by the Assignee (including any form on an electronic platform or electronic transmission system as shall be approved by the Assignee), appropriately completed and signed by an Authorized Representative.
“Obligations” means the obligations of the City under each of the Related Documents, including to repay (i) all Advances, Lease Payments, Additional Payments and the obligations due under the Fee Letter, together with interest thereon, pursuant to and in accordance with this Lease Agreement, the Fee Letter and the other Related Documents, (ii) all fees, and (iii) all expenses and charges payable or reimbursable hereunder or under any other Related Document to the Assignee or the Authority (including, without limitation, any amounts to reimburse the Assignee or the Authority for any advances or expenditures by it under any of such documents) and all other payment obligations of the City to the Authority or the Assignee arising under or in relation to this Lease Agreement, the Fee Letter or the other Related Documents, in each, case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired.
“Outstanding Amount” means with respect to Advances on any date, the aggregate outstanding principal amount thereof after giving effect to any Advance and prepayments or repayments of Advances occurring on such date.
“Permitted Encumbrances” means, as of any time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under
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Article VI hereof; (b) the Site and Facility Lease, this Lease Agreement and the Assignment Agreement; (c) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (d) the exceptions disclosed in the title insurance policy issued with respect to the Property issued as of the Closing Date which the City certifies in writing will not interfere with the City’s beneficial use and enjoyment of, or otherwise adversely affect the intended use of, the Property, or adversely affect the rights and interests of Assignee under this Lease Agreement or the Site and Facility Lease or result in any abatement of Lease Payments hereunder; and (e) any easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date and which the City certifies in writing will not materially impair the use of the Property for its intended purposes or interfere with the City’s beneficial use and enjoyment of, or otherwise adversely affect the intended use of, the Property, or adversely affect the rights and interests of Assignee under this Lease Agreement or the Site and Facility Lease or result in any abatement of Lease Payments hereunder.
“Person” means an individual, partnership, corporation (including a business trust), trust, unincorporated association, joint venture or other entity, including a government or political subdivision or any agency or instrumentality thereof.
“Prime Rate” means at any time the rate of interest most recently announced within the Assignee at its principal office as its prime rate, with the understanding that the Prime Rate is one of the Assignee’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as the Assignee may designate; provided, however, that if Prime Rate determined as provided above would be less than zero percent (0%), then Prime Rate shall be deemed to be zero percent (0%). “Project” means capital expenditures and other general municipal purposes of the City permitted by the Tax Certificate payable from the proceeds of this Lease Agreement. “Property” means, collectively, the Site and the Facility. “Rating” means the lowest long- term unenhanced debt rating assigned by any of Fitch, Moody’s or S&P to any Lease Revenue Debt of the City (without regard to bond insurance or any other form of credit enhancement).
“Rating Agency” or “Rating Agencies” means Moody’s, Fitch and/or S&P. “Related Documents” means the Site and Facility Lease, this Lease Agreement and the Assignment Agreement, the Fee Letter, the Letter Agreement, the Resolution, the Tax Certificate and any other documents related to any of the foregoing or executed in connection therewith, and any and all future renewals and extensions or restatements of, or amendments or supplements to, any of the foregoing permitted hereunder and thereunder.
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“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.
“Relevant Governmental Body ” means the Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of New York or any successor thereto.
“Rental Period” means each period during the Term of this Lease Agreement commencing on and including [September 2] in each year and extending to and including the next succeeding [September 1]. However, the first Rental Period begins on the Closing Date and ends on September 1, 2027.
“Resolution” means, collectively, (i) the resolution of the City adopted on _______, 2026, together with any other resolutions or proceedings taken by the City in connection with the execution and delivery of this Lease Agreement and the other Related Documents and (ii) the resolution of the Authority adopted on _______, 2026, together with any other resolutions or proceedings taken by the Authority in connection with the execution and delivery of this Lease Agreement and the other Related Documents.
“Revolving Commitment” means the Assignee’s obligation to make Advances to the City pursuant to Section 3.1 hereof. The Revolving Commitment on the Closing Date shall initially be $50,000,000.
“S&P” means S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC, and any successor rating agency.
“Sanctioned Country” means at any time, a country, region or territory which is itself (or whose government is) the subject or target of any Sanctions (including, as of the Closing Date, Cuba, Iran, North Korea, Syria, Venezuela and Crimea).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including OFAC’s Specially Designated Nationals and Blocked Persons List and OFAC’s Consolidated Non-SDN List), the U.S. Department of State, the United Nations Security Council, the European Union, any European member state, His Majesty’s Treasury, or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any such Person or Persons described in clauses (a) and (b), including a Person that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Person(s) or (d) any Person otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program. “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and restrictions and anti -terrorism laws, including but not limited to those imposed, administered or enforced from time to time by the U.S. government
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(including those administered by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union, any European member state, His Majesty’s Treasury, or other relevant sanctions authority in any jurisdiction in which (a) the Authority or any of its Subsidiaries or Affiliates is located or conducts business, (b) in which any of the proceeds of the Advances will be used, or (c) from which repayment of the Advances will be derived. “Site” means that certain real property more particularly described in Exhibit A to the Site and Facility Lease and in Exhibit A to the Lease Agreement, as the same may be revised from time to time pursuant to substitution or release as provided herein. “Site and Facility Lease” means the Site and Facility Lease, dated as of September [__], 2026, by and between the City, as lessor, and the Authority, as lessee, together with any duly authorized and executed amendments, supplements, restatements and modifications thereto. “SOFR” means a rate per annum equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator ” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time. “SOFR Determination Day” has the meaning specified in the definition of “Daily Simple SOFR”.
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR.” “Specified Letter Agreement Covenants” means Sections 7.01(b)(i) of the Letter Agreement.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross -currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement” ), including any such obligations or liabilities under any Master Agreement.
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“State” means the State of California.
“Subsidiary” means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding equity interests having ordinary voting power to elect a majority of the board of directors (or equivalent governing body) or other managers of such corporation, partnership, limited liability company or other entity is at the time owned by (directly or indirectly ) or the management is otherwise controlled by (directly or indirectly) such Person (irrespective of whether, at the time, equity interests of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). Unless otherwise qualified, references to “Subsidiary” or “Subsidiaries” herein shall refer to those of the Authority.
“Tax Certificate” means that certain Tax Compliance Certificate, dated the Closing Date, by the City and the Authority, relating to the Advances , as the same may be amended or supplemented from time to time.
“Taxable Date” means the date on which interest paid or payable on any Advance is first includable, in whole or in part, in the gross income of any recipient thereof as such a date is established pursuant to a Determination of Taxability (which Taxable Date may be earlier than the date of such Determination of Taxability).
“Taxable Period” has meaning specified in Section 3.15 hereof. “Taxable Rate” means, with respect to a Taxable Period, the product of (i) the interest rate on the Advance for each day during such period and (ii) the applicable Taxable Rate Factor. “Taxable Rate Factor” means for each day that the Taxable Rate is determined, the quotient of (i) one divided by (ii) one minus the Maximum Federal Corporate Tax Rate in effect as of such day, rounded upward to the second decimal place. “Term of this Lease Agreement” or “Term” means the time during which this Lease Agreement is in effect, as provided in Section 4.2.
“Total Outstandings” means the aggregate Outstanding Amount of all Advances. “United States” and “U.S.” mean the United States of America. “U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association, or any successor thereto, recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “Written” or “in writing” means any form of written communication or a communication by means of telex, telecopier device or electronic mail.
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Section 1.2. Other Interpretive Provis ions. With reference to this Agreement and the other Related Documents , unless otherwise specified herein or in the Fee Letter or the other Related Documents:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modi fications set forth herein or in the Fee Letter or the other Related Documents), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and w ords of similar import when used in Agreement or the other Related Documents , shall be construed to refer to such document in its entirety and not to any particular provision thereof, (iv) all references in Agreement or the other Related Documents to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, Agreement or the other Related Documents in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.” (c) Section headings herein and the other Related Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or the other Related Documents.
Section 1.3. Accounting Terms .
(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the audited financial statements, except as otherwise specifically prescribed herein.
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(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Related Document, and either the City or the Assignee shall so request, the Assignee and the City shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (A) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (B) the City shall provide to the Assignee financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
Section 1.4. Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern Time (daylight or standard, as applicable).
Section 1.5. Interest Rates; Benchmark Notifications. The Assignee does not warrant or accept any responsibility for, and shall not have any liability with respect to, ( a) the continuation of, administration of, submission of, calculation of or any other matter related to the Benchmark, any component definition thereof or rates referred to in the definition thereof , or with respect to any alternative, successor or replacement rate thereto (including any Benchmark Replacement) , including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 3.14, will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Benchmark or any other Benchmark prior to its discontinuance or unavailability, or ( b) the effect, implementation or composition of any Benchmark Replacement Conforming Changes. The Assignee and its Affiliates or other related entities may engage in transactions that affect the calculation of the Benchmark , any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto and such transactions may be adverse to the City and/or the Authority. The Assignee may select information sources or services in its reasonable discretion to ascertain the Benchmark, any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the City or the Authority or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
A
RTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 2.1. Covenants, Representations and Warranties of the City . The City makes the following covenants, representations and warranties to the Authority and the Assignee as of the date of the execution and delivery of this Lease Agreement:
(a) Due Organization and Existence. The City is a municipal corporation and chartered city, organized and existing under and by virtue of the laws of the State, has full legal right, power and authority under the laws of the State to enter into the Site and Facility
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Lease and this Lease Agreement and to carry out and consummate all transactions on its part contemplated hereby and thereby, and by proper action the City has duly authorized the execution and delivery by the City of the Site and Facility Lease and this Le ase Agreement.
(b) Due Execution . The representative of the City executing the Site and Facility Lease and this Lease Agreement has been fully authorized to execute the same by a resolution duly adopted by the City Council of the City. (c) Valid, Binding and Enforceable Obligations . The Site and Facility Lease and this Lease Agreement have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding agreements of the City enforceable against the City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Site and Facility Lease and this Lease Agreement, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site and Facility Lease or this Lease Agreement or the financial condition, assets, properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any Governmental Authority is necessary in connection with the execution and delivery of the Site and Facility Lease and this Lease Agreement, or the consummation of any transaction therein and herein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other Governmental Authority pending and notice of which has been served on the City or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a Material Adverse Effect upon the consummation of the transactions contemplated by or the validity of the Site and Facility Lease and this Lease Agreement or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any
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federal, state, municipal or other Governmental Authority, which default might have consequences that would have a Material Adverse Effect on the consummation of the transactions contemplated by this Lease Agreement, or the financial condition, assets, properties or operations of the City and on the City’s ability to make the Lease Payments. (g) [Reserved].
(h) No Defaults. The City has never non- appropriated or defaulted under any of its payment or performance obligations or covenants, either under any financing lease of the same general nature as this Lease Agreement, or under any of its bonds, notes, or other debt obligations payable from and/or secured by the General Fund. (i) Fee Title. The City is the owner in fee of title to the Property . No lien or encumbrance on the Property materially impairs the City’s use of the Property for the purposes for which it is, or may reasonably be expected to be, held. (j) Use of the Property. During the term of this Lease Agreement, the Property will be used by the City only for the purpose of performing one or more governmental or proprietary functions of the City consistent with the permissible scope of the City’s authority.
(k) Change in Financial Condition. The City has experienced no material change in its financial condition since September 30, 2025. (l) Hazardous Substances. The Property is free of all Hazardous Substances, and the City is in full compliance with all Applicable Environmental Laws. (m) Flooding Risk. The Property is not located in a 100-year flood zone and has never been subject to material damage from flooding.
(n) Value of Property . The value of the Property (real property replacement cost) is not less than $50,000,000.
(o) Essential to City Operations. The Property is essential to the City’s efficient and economic operations and the lease thereof for use by the City is in the best interest of the City.
(p) Financial Statements. The statement of financial position of the City as of September 30, 2025, and the related statement of activities and statement of cash flows and changes in financial position for the year then ended and the auditors’ reports with respect thereto, copies of which have heretofore been furnished to the Assignee, comprise the most recent audited financial statements of the City available and 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 period, and were prepared in accordance with generally accepted accounting principles. Since the period of such statements, there has been no
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(i) change which would have a Material Adverse Effect and (ii) no material increase in the indebtedness of the City.
(q) No Material Adverse Change . Since the most current date of the information, financial or otherwise, supplied by the City to the Assignee:
(i) 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.
(ii) The City has not incurred any obligations or liabilities which might reasonably be anticipated to cause a Material Adverse Effect. (iii) The City has not (A) incurred any material indebtedness payable from and/or secured by the General Fund, other than the Lease Payments, and trade accounts payable arising in the ordinary course of the City’s business and not past due, or (B) guaranteed the indebtedness of any other person that would be payable from and/or secured by the General Fund.
(r) Accuracy of Information. All information, reports and other papers and data furnished by the City to the Assignee were, at the time the same were so furnished, and are, at the time of execution and delivery of this Lease Agreement, complete and accurate in all material respects an d insofar as necessary to give the Assignee a true and accurate knowledge of the subject matter and were provided in expectation of the Assignee’s reliance thereon in entering into the transactions contemplated by this Lease Agreement.
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 financial statements previously furnished to the Assignee or in other such information, reports, papers and data or otherwise disclosed in writing to the Assignee prior to the Closing Date. Any financial, budget and other projections furnished to the Assignee by the City or its or their 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 date of this representation, represent the City’s best estimate of its future financial performance. No document furnished nor any representation, wa rranty or other written statement made to the Assignee in connection with the negotiation, preparation or execution of this Lease Agreement 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. (s) Facility. The Facility complies with all applicable restrictive covenants, zoning ordinances, building laws and other Applicable Laws (including without limitation, the Americans with Disabilities Act, as amended).
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(t) Sovereign Immunity. The City does not enjoy any rights of immunity on the grounds of sovereign immunity or immunity on other similar grounds (including, without limitation, governmental immunity) in respect of its obligations under this Lease Agreement or the other Related Documents to which it is a party . To the extent the City has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty or otherwise, the City hereby waives, to the extent permitted by law, such rights to immunity for itself in respect of its obligations arising under or related to this Lease Agreement and the other Related Documents to which it is a party.
(u) Role of the Assignee . The City acknowledges that (i) the Assignee under the Assignment Agreement, is acting solely for its own account and not as a fiduciary for the City or in the capacity of broker, dealer, placement agent, municipal securities underwriter or municipal advisor, (ii) the Assignee has not provided, and will not provide, financial, legal (including securities law), tax, accounting or other advice to or on behalf of the City or with respect to the Lease Payments, and (iii) the Assignee has expressed no view regarding the legal sufficiency of its representations for purposes of compliance with any legal requirements applicable to any other party, or the correctness of any legal interpretation made by counsel to any other part y with respect to any such matters. The Assignee is providing financing for the Advances. The Assignee does not operate, control or have possession of the Property and has no control over the work performed by any vendor with respect to the Property. The Assignee has no obligation with r espect to the installation, operation, use, storage and maintenance of the Property or any other obligations of the parties under this Lease Agreement or the Site and Facility Lease. (v) The City agrees that this Lease Agreement and none of the Related Documents shall not be (i) assigned a specific rating by any Rating Agency, (ii) registered with The Depository Trust Company or any other securities depository, (iii) offered or issued pursuant to any type of official statement, private placement memorandum or other offering document or (iv) placed or offered by a broker -dealer in the capacity of an underwriter or a placement agent
Section 2.2. Covenants, Representations and Warranties of the Authority . The Authority makes the following covenants, representations and warranties to the City and the Assignee as of the date of the execution and delivery of this Lease Agreement:
(a) Due Organization and Existence . The Authority is a joint exercise of powers entity, duly organized and existing under the laws of the State, has full legal right, power and authority to enter into the Site and Facility Lease, this Lease Agreement and the Assignment Agreement and to carry out and consummate all transactions on its part contemplated hereby and thereby, and by proper action the Authority has duly authorized the execution and delivery by the Authority of the Site and Facility Lease, this Lease Agreement and the Assignment Agreement.
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(b) Due Execution. The representative of the Authority executing the Site and Facility Lease, this Lease Agreement and the Assignment Agreement is fully authorized to execute the same under official action taken by the Board of Directors of the Authority. (c) Valid, Binding and Enforceable Obligations . The Site and Facility Lease, this Lease Agreement and the Assignment Agreement have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms. (d) No Conflicts. The execution and delivery of the Site and Facility Lease, this Lease Agreement and the Assignment Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consu mmation of the transactions contemplated by the Site and Facility Lease, this Lease Agreement and the Assignment Agreement or the financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any Governmental Authority is necessary in connection with the execution a nd delivery of the Site and Facility Lease, this Lease Agreement or the Assignment Agreement, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other Governmental Authority pending and notice of which has been served on the Authority or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Site and Facility Lease, this Lease Agreement or the Assignment Agreement, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other Governmental Authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated
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by the Site and Facility Lease, this Lease Agreement or the Assignment Agreement or the financial condition, assets, properties or operations of the Authority. (g) The Authority is not acting as a municipal advisor or financial advisor to the City, and has no financial advisory relationship, as that term is defined under Section 53590(c) of the California Government Code and has not assumed any advisory responsibility to the City with respect to the transaction contemplated hereby and the discussions, undertakings and proceedings leading thereto. (t) The Authority does not enjoy any rights of immunity on the grounds of sovereign immunity or immunity on other similar grounds (including, without limitation, governmental immunity) in respect of its obligations under this Lease Agreement or the other Related Documents to which it is a party. To the extent the Authority has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty or otherwise, the Authority hereby waives, to the extent permitted by law, such rights to immunity for itself in respect of its obligations arising under or related to this Lease Agreement and the other Related Documents to which it is a party.
(u) (i) None of ( A) the Authority , any Subsidiary or, to the knowledge of the Authority or such Subsidiary, any of their respective directors, officers, employees or Affiliates, or ( B) to the knowledge of the Authority, any agent or representative of the Authority or any Subsidiary that will act in any capacity in connection with or benefit from this Agreement , ( 1) is a Sanctioned Person or currently the subject or target of any Sanctions, (2) has its assets located in a Sanctioned Country, ( 3) is under administrative, civil or criminal investigation for an alleged violation of, or received notice from or made a voluntary disclosure to any governmental entity regarding a possible violation of, Anti - Corruption Laws, Anti-Money Laundering Laws or Sanctions by a governmental authority that enforces Sanctions or any Anti-Corruption Laws or Anti-Money Laundering Laws, or (4) directly or indirectly derives revenues from investments in, or transactions with, Sanctioned Persons.
( ii) [ Reserved.]
( iii) Each of the Authority and its Subsidiaries, and to the knowledge of the Authority, director, officer, employee, agent and Affiliate of the Authority and each such Subsidiary, is in compliance with all Anti-Corruption Laws, Anti-Money Laundering Laws in all material respects and applicable Sanctions.
A
RTICLE III
REVOLVING COMMITMENT
Section 3.1. Advances . Subject to the terms and conditions set forth herein and in the other Related Documents, the Assignee will make loans to the City the proceeds of which may be used by the City for capital expenditures and other general municipal purposes of the City
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permitted by the Tax Certificate (individually, a “Advance” and collectively, the “ Advances”) from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time the Available Commitment; provided, however, that after giving effect to any Advance, the Total Outstandings shall not exceed the Revolving Commitment, subject to any reductions thereof pursuant to the terms hereof. Subject to the other terms and conditions hereof, the City may borrow under this Section 3.1, prepay Advances under Section 3.3, and reborrow under this Section 3.1. Each Advance will bear interest at the Floating Rate. In the event the Assignee shall specify a Benchmark Replacement described in Section 3.14 hereof, the City and the Authority shall use their best efforts to provide an Approving Opinion. If the City and the Authority shall be unable to provide an Approving Opinion, the Taxable Rate shall apply to the Advances as of the effective date of such Benchmark Replacement.
Section 3.2. Borrowings, Conversions and Continuations of Advances. (a) Each Advance shall be made upon the City’s irrevocable notice to the Assignee, which may be given by an Advance Request. Each such notice must be received by the Assignee not later than 11:00 a.m. at least two (2) Business Days before the requested date of any Advance. Each Advance shall be in a principal amount of $100,000 or a whole multiple of $100,000 in excess thereof. Each Advance Request shall specify (i) that the City is requesting a Advance , (ii) the requested date of the Advance (which shall be a Business Day) and (iii) the principal amount of Advances to be borrowed. The Assignee shall not be obligated to honor more than one (1) request for an Advance per month.
(b) Following receipt of an Advance Request, upon satisfaction of the applicable conditions set forth in Section 3.17 (and, if such Advance is the initial Advance, Section 3.16), the Assignee shall make the requested funds available to the City either by (i) crediting the account of the City on the books of the Assignee with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance wi th instructions provided (and reasonably acceptable to) the Assignee by the City.
(c) During the existence of a Default or an Event of Default, no Advances may be requested.
Section 3.3. Prepayments.
(a) Optional. The City may, upon notice to the Assignee pursuant to delivery to the Assignee of a Notice of Advance Prepayment, at any time or from time to time voluntarily prepay Advances in whole or in part; provided that, unless otherwise agreed by the Assignee (A) such notice must be received by Assignee not later than 11:00 a.m. at least two (2) Business Days before the date of prepayment of an Advance and ( B) any prepayment of an Advance shall be in a principal amount of $100,000 or a whole multiple of $100,000 in excess thereof , provided that if the Total Outstandings is less than $100,000 such prepayment shall be in a principal amount equal to the Total Outstandings. Each such notice shall specify the date and amount of such prepayment.
If such notice is given by the City, the City shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of principal shall be accompanied by all accrued interest on the amount prepaid.
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(b) Mandatory.
(i) Revolving Outstandings. If for any reason the Total Outstandings at any time exceed the Revolving Commitment at such time, the City shall immediately prepay, or cause to be prepaid, Advances (together with all accrued but unpaid interest thereon) such that the Total Outstandings does not exceed the Revolving Commitment.
(ii) Application of Other Payments . Prepayments under the Revolving Commitment made pursuant to this Section 3.3(b), shall be applied to the outstanding Advances. A ll prepayments under this Section 3.3(b) shall be accompanied by interest on the principal amount prepaid through the date of prepayment.
Section 3.4. Termination or Permanent Reduction of Revolving Commitment . (a) Optional. The City may, upon notice to the Assignee, terminate the Revolving Commitment, or from time to time permanently reduce the Revolving Commitment; provided that (i) any such notice shall be received by the Assignee not later than 11:00 a.m. five (5) Business Days prior to the date of termination or permanent reduction, (ii ) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof , and (iii) the City shall not terminate or permanently reduce the Revolving Commitment if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Revolving Commitment and (iv) termination or reduction of the Revolving Commitment shall be subject to payment of the Termination Fee or Reduction Fee, as applicable. (b) Payment of Fees. All fees in respect of the Revolving Commitment accrued until the effective date of any termination of the Revolving Commitment shall be paid on the effective date of such termination.
Section 3.5. Repayment of Advances. The City shall repay , or cause to be repaid, to the Assignee on the Commitment Termination Date the aggregate principal amount of Advances outstanding on such date , all interest thereon and all Obligations outstanding hereunder. Any Advance not paid on the Commitment Termination Date shall bear interest at the Default Rate as set forth in Section 3.6(b).
Section 3.6. Interest and Default Rate .
(a) Interest. Subject to the provisions of subsection (b) below, each Advance shall bear interest on the outstanding principal amount thereof from the applicable Advance date at a rate per annum equal to the Floating Rate.
(b) Default Rate. (i) While any Event of Default exists, the City shall pay, or cause to be paid, interest on all outstanding Obligations hereunder (including, without limitation, all Advances) at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by Applicable Law.
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(ii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand. Any such amounts which constitute interest remaining unpaid when due shall be added to principal, and such interest shall, in turn, bear interest at the Default Rate until repaid and shall be payable upon demand. (c) Interest Payments. Interest on each Advance shall be due and payable by the City in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencemen t of any proceeding under any Debtor Relief Law.
Section 3.7. F ees. The City shall pay, or cause to be paid, to the Assignee a Commitment Fee and other amounts as required under the Fee Letter. The terms and provisions of the Fee Letter are incorporated herein by reference as if fully set forth herein. Any reference herein or in the Fee Letter to fees and/or other amounts or obligations payable hereunder shall include, without limitation, all fees and other amounts or obligations (including without limitation fees and expenses) payable pursuant to the Fee Letter, and any reference to this Lease Agreement shall be deemed to include a reference to the Fee Letter. The Fee Letter and this Lease Agreement shall be construed as one agreement between the City and the Assignee and all obligations under the Fee Letter shall be construed as obligations hereunder. All fees payable pursuant to this Lease Agreement shall be deemed to be fully earned when due and non-refundable when paid.
Section 3.8. Computation of Interest and Fees. All computations of interest shall be made on the basis of a year of three hundred sixty (360) days, and actual days elapsed. Interest shall accrue on each Advance for the day on which such Advance is made, and shall not accrue on an Advance, or any portion thereof, for the day on which the Advance or such portion is paid, provided that any Advance that is repaid on the same day on which it is made shall, subject to Section 3.10(a), bear interest for one day. Each determination by the Assignee of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.
Section 3.9. Evidence of Debt. The Advances made by the Assignee shall be evidenced by one or more accounts or records maintained by the Assignee in the ordinary course of business.
The accounts or records maintained by the Assignee shall be conclusive absent manifest error of the amount of the Advances made by the Assignee to the City and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the City hereunder to pay any amount owing with respect to the Obligations. The Advances shall be evidenced by this Lease Agreement and shall be payable to, the Assignee. The Assignee may maintain a record of Advances that reflects the date, amount and maturity of Advances and payments with respect thereto.
Section 3.10. Payments.
(a) General. All payments to be made by the City shall be made in Dollars and immediately available funds by debit to a deposit account , as described in this Lease Agreement or as authorized by the City and without condition or deduction for any counterclaim, defense, recoupment or setoff. If any payment to be made by the City shall come due on a day other than
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a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. For payments not made by direct debit, payments will be made to the Assignee at the Lending Office not later than 2:30 p.m. on the date specified herein. All payments received by the Assignee after 2:30 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Unless otherwise specified, all references in this Article III to times of day shall be references to Eastern Time (daylight or standard, as applicable). (b) Payments by the City. For any payment under this Lease Agreement made by debit to a deposit account, the City will maintain sufficient immediately available funds in the deposit account to cover each debit. If there are insufficient immediately available funds in the deposit account on the date the Assignee enters any such debit authorized by this Lease Agreement, the Assignee may reverse the debit.
Section 3.11. Extension of Commitment Termination Date . At least sixty (60) days prior to the Commitment Termination Date, the City may make a request to the Assignee, upon written notice, to extend the Commitment Termination Date. If the City requests an extension of the Commitment Termination Date at least two hundred ten (210) days prior to the Commitment Termination Date, the Assignee will use its best efforts to notify the City of the initial consent or nonconsent of the Assignee to such extension request, which consent shall be given at the sole and absolute discretion of the Assignee . In any case, n ot more than thirty (30) days from the date on which the Assignee shall have received any such notice from the City pursuant to the preceding sentence, the Assignee shall notify the City of the initial consent or nonconsent of the Assignee to such extension request, which consent shall be given at the sole and absolute discretion of the Assignee. The consent of the Assignee, if granted, shall be conditioned upon the preparation, execution and delivery of documentation in form and substance satisfactory to the Assignee which shall include, but not be limited to, the delivery of an Approving Opinion. Failure of the Assignee to respond to a request for extension of the Commitment Termination Date shall constitute denial of such extension.
Section 3.12. Highest Lawful Rate. Any interest payable pursuant to this Lease Agreement, the Fee Letter or any other Related Document shall not exceed the Highest Lawful Rate, and for such purpose all interest and other charges, fees, goods, things in action or any other sums, things of value and reimbursable costs that the City are or may become obligated to pay or reimburse in connection with this Lease Agreement, the Fee Letter or the other Related Documents, and which may be deemed to constitute “interest” pursuant to the laws of the State, shall be deemed to constitute items of interest in addition to the rate(s) of interest specified herein, which the City hereby contracts in writing to pay. In the event any interest required to be paid hereunder at any time exceeds the Highest Lawful Rate, the portion of such interest required to be paid on a current basis shall equal such Highest Lawful Rate; provided, however, that the differential between the amount of interest payable assuming no Highest Lawful Rate was then in effect and the amount paid on a current basis after giving effect to the Highest Lawful Rate shall be carried forward and shall be payable on any subse quent date of calculation so as to result in a recovery of interest previously unrealized (because of the limitation dictated by such Highest Lawful Rate) at a rate of interest, and as part of the interest payable, that, after giving effect to the recovery of such excess and all other interest paid and accrued hereunder to the date of calculation, does not exceed such
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Highest Lawful Rate. Notwithstanding the foregoing, on the date on which no Obligation remains unpaid, to the extent permitted by law, the City shall pay to the Assignee a fee equal to any accrued and unpaid excess interest.
Section 3.13. Inability to Determine Interest Rates; Illegality . Subject to Section 3.14 hereof, if the Assignee determines (any determination of which shall be conclusive and binding on the City and the Authority) that either (i) Daily Simple SOFR cannot be determined pursuant to the definition thereof other than as a result of a Benchmark Transition Event (an “Inability Determination”) or (ii) any law has made it unlawful, or that any governmental authority has asserted that it is unlawful, for Assignee to make or maintain an advance based on SOFR or Daily Simple SOFR, or to determine or charge interest rates based upon SOFR or Daily Simple SOFR (an “Illegality Determination”), then Assignee will so notify the City and the Authority. The outstanding principal balance of the Advances shall bear interest (computed on the basis of a 360- day year, actual days elapsed) at a fluctuating rate per annum determined by the Assignee to be equal to the Prime Rate in effect from time to time, from the date of an Inability Determination or an Illegality Determination until the Assignee revokes such Inability Determination or notifies the City and the Authority that the circumstances giving rise to such Illegality Determination no longer exist, as applicable. When interest is determined in relation to the Prime Rate, each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within the Assignee. Notwithstanding any of the foregoing to the contrary, if a Benchmark Replacement is subsequently determined in accordance with Section 3.14, that Benchmark Replacement, plus any applicable margin, will become effective on the Benchmark Replacement Date and will then supersede the Prime Rate and margin determined in accordance with this provision.
Section 3.14. Benchmark Replacement Provisions . Notwithstanding anything to the contrary contained in this Agreement or in any Related Documen t (for the purposes of this Section 3.14, a Swap Contract by and between the City and/or the Authority and the Assignee or any of its affiliates is not a Related Document):
(a) Benchmark Replacement. If a Benchmark Transition Event occurs, the applicable Benchmark Replacement will replace the then -current Benchmark for all purposes under this Agreement or under any Related Document. Any Benchmark Replacement will become effective on the applicable Benchmark Replacement Date without any further action or consent of the City or the Authority.
(b) Benchmark Replacement Conforming Changes. The Assignee will have the right to make Benchmark Replacement Conforming Changes from time to time and any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of the City or the Authority. (c) Notices; Standards for Decisions and Determinations. The Assignee will promptly notify the City and the Authority of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Assignee pursuant to this Section 3.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of
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an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and will be made in its sole discretion and without the City’s or the Authority’s consent.
Section 3.15. T axability. (a) In the event a Determination of Taxability occurs, (i) the City hereby agrees to pay to the Assignee or any Participant on demand therefor (A) an amount equal to the difference between (x) the amount of interest that would have been paid to the Assignee or such Participant, as applicable, on any Advances during the period for which interest on such Advances is includable in the gross income of the Assignee or such Participant (the “Taxable Period”) if such Advances had borne interest at the Taxable Rate, beginning on the Taxable Date, and (y) the amount of interest actually paid to the Assignee or such Participant, as applicable, during the Taxable Period, and (B) any interest, penalties or charges owed by the Assignee or the Participant, as applicable, as a result of interest on the Advances becoming includable in the gross income of the Assignee or such Participant, as applicable, together with any and all reasonable attorneys’ fees, court costs, or other out of pocket costs incurred by the Assignee or such Participant, as applicable, in connection therewith and (ii) any Advances affected thereby shall automatically convert to bear interest at the Taxable Rate. (b) The obligations of the City under this Section 3.15 shall survive the termination of the Revolving Commitment and this Agreement and the repayment of all other Obligations hereunder.
Section 3.16. Conditions of Effectiveness of this Agreement; Authority; Enforceability .
This Agreement shall become binding on the parties hereto upon the satisfaction of the following conditions precedent (all Related Documents and other documents to be delivered to the Assignee pursuant to this Section 3.16 shall be subject to prior approval as to form and substance by the Assignee, unless otherwise waived in writing):
The Assignee’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a City Representative and an Authority Representative, as applicable, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Assignee:
(a) executed original counterparts of this Lease Agreement, the Fee Letter, the Letter Agreement, the Site and Facility Lease, the Assignment Agreement and certified copies of all of the other Related Documents;
(i) the Assignee shall have received the following opinions, dated the Closing Date and addressed to the Assignee or on which the Assignee is otherwise expressly authorized to rely;
(A) [(i) an opinion of Bond Counsel to the effect that interest with respect to the Advance made by the Assignee to the City on the Closing Date will be excludable from gross income for federal income
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tax purposes and California personal income tax purposes; and (ii)]1 from Bond Counsel to the City, opinions as to the due authorization, execution, delivery and enforceability of this Lease Agreement, the Fee Letter, the Letter Agreement, the Site and Facility Lease, and the other Related Documents to which the City is a p arty, and such other customary matters as the Assignee may reasonably request;
(B) from counsel to the Authority, opinions as to the due authorization, execution, delivery and enforceability of this Lease Agreement, the Site and Facility Lease, and the other Related Documents to which the Authority is a party, and such other customary ma tters as the Assignee may reasonably request; and
(C) from counsel to the City as to the adoption of the Resolution (but only with respect to the Resolution of the City), the execution and delivery of this Lease Agreement, the Fee Letter, the Letter Agreement, the Site and Facility Lease and the other Related Documents to which the City is a party, and such other customary matters as the Assignee may reasonable request;
(ii) a certificate signed by a City Representative certifying that:
(1) the representations and warranties contained in Section 2.1 hereof and each other Related Document to which it is a party are true and correct on and as of the Closing Date as though made on such date; (2) no petition by or against the City has at any time been filed under the United States Bankruptcy Code or under any similar act; (3) all conditions precedent to the execution and delivery of this Lease Agreement, the Fee Letter, and the other Related Documents to which it is a party have been satisfied and the City has duly executed and delivered this Lease Agreement, the Fee Letter, and the other Related Documents to which it is a party;
(4) (x) no event that could reasonably be expected to have a Material Adverse Effect shall have occurred and (y) no material adverse change shall have occurred in the ability of the City to perform its obligations under the Related Documents to which it is a party, in each case subsequent to the date of the most recent audited financial statements of the City (except as may otherwise have been disclosed in writing to the Assignee prior to the Closing Date);
1 Include if an Advance will be made at closing.
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(5) no Default or Event of Default has occurred and is
continuing, or would result from, the execution and delivery of this Lease Agreement, the Fee Letter or any other Related Document to which it is a party; and
(6) certifying that the current Rating Documentation is true and accurate;
(iii) recent evidence that the unenhanced long- term rating assigned to Lease Revenue Debt is at least “A A-” by Fitch, and “AA-” by S&P, respectfully, (the “Rating Documentation”);
(iv) a certificate signed by an Authority Representative certifying that:
(1) the representations and warranties contained in Section 2.2 hereof and each other Related Document to which it is a party are true and correct on and as of the Closing Date as though made on such date; (2) no petition by or against the Authority has at any time been filed under the United States Bankruptcy Code or under any similar act; (3) all conditions precedent to the execution and delivery of this Lease Agreement and the other Related Documents to which it is a party have been satisfied and the Authority has duly executed and delivered this Lease Agreement and the other Related Documents to which it is a party; (4) (x) no event that could reasonably be expected to have a Material Adverse Effect shall have occurred and (y) no material adverse change shall have occurred in the ability of the Authority to perform its obligations under the Related Documents to which it is a party (except as may otherwise have been disclosed in writing to the Assignee prior to the Closing Date); and
(5) no Default or Event of Default has occurred and is
continuing, or would result from, the execution and delivery of this Lease Agreement, the Fee Letter or any other Related Document to which it is a party;
(v) evidence of due authorization, execution and delivery by the City of the Related Documents to which it is a party, which Related Documents shall be in form and substance satisfactory to the Assignee and its counsel; (vi) true and correct copies of all Governmental Approvals necessary for the City to enter into this Lease Agreement, the Fee Letter and the other Related Documents and the transactions contemplated by this Lease Agreement and the other Related Documents;
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(vii) (A) a certificate of the City Clerk of the City certifying the name, title, office and true signatures of the officers of the City authorized to sign this Lease Agreement, the Fee Letter and the other Related Documents to which it is a party; and (B) a certificate of the an authorized representative of the Authority certifying the name, title, office and true signatures of the officers of the Authority authorized to sign this Lease Agreement and the other Related Documents to which it is a party;
(viii) arrangements satisfactory to the Assignee have been made for the payment of the fees and expenses and all other amounts (including the fees and expenses of Assignee’s counsel) payable pursuant to this Lease Agreement, the Fee Letter and the Letter Agreemen t and other Related Documents and the Assignee shall have received reimbursement of the Assignee ’s fees and expenses and any other fees incurred in connection with the transaction contemplated by the Related Documents, including, without limitation, any fee payable to the California Debt and Investment Advisory Commission by the Purchaser with respect to the Related Documents and Chapman and Cutler LLP, as counsel to the Purchaser, shall have received payment of its legal fees and expenses incurred in connection with the preparation, review, negotiation, execution and delivery of the Related Documents; (ix) Evidence that all filings, recordings, re -filings and re -recordings shall have been made, notices given, all filing fees, taxes and expenses in connection therewith shall have been paid and all such action shall have been taken, which are necessary or advisable on the Closing Date to create a leasehold interest and subleasehold interest in the Property as contemplated the Site and Facility Lease and this Lease Agreement and the Assignment Agreement for the benefit of the Assignee; and
(x) the Assignee shall have received (A) aa certificate of the City setting forth the annual fair rental value of the Property and (B) a copy of the audited financial statements for the City for Fiscal Years ending September 30, 2025, 2024 and 2023, a copy of the City’s investment policy in effect on the Closing Date and a copy of the most recent budget of the City;
(xi) the Assignee shall have received a California Land Title Association (CLTA) lender’s title insurance policy in form and substance satisfactory to the Assignee in the amount of $50,000,000 insuring the Site and Facility Lease as a first priority lien on the Property and insuring this Lease Agreement and the Assignment Agreement, containing such endorsements and with such re-insurance as the Assignee may request, excepting only such items acceptable to the Assignee (but no exceptions for liens);
(xii) a flood zone determination and, if located within a special flood hazard area, evidence of flood insurance on the leased property would be required, in each case acceptable to the Assignee;]
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( xiii) 2[receipt of an ALTA Survey related to the leased property if recently completed certified to the Assignee and the title company; evidence of environmental compliance and compliance with zoning and availability of utilities; and copies of licenses, permits and related agreements;] (xiv) the Assignee shall have received an IRS Form 8038- G, as filed in connection with the Advance, in form and substance satisfactory to the Assignee;3 and
(xv) an executed flow of funds memorandum dated on or before the Closing Date executed by a Designated Representative.4
(xvi) such other documents, certificates and opinions as the Assignee or its counsel may reasonably request.
(b) No law, regulation, ruling or other action of the United States, the State of New York or the State of California or any political subdivision or authority therein or thereof shall be in effect or shall have occurred, the effect of which would be to prevent the Assignee from fulfilling its obligations under this Lease Agreement or the other Related Documents.
(c) All legal requirements provided herein incident to the execution, delivery and performance of this Lease Agreement, the Fee Letter, the Resolution and the other Related Documents, and the transactions contemplated hereby and thereby, shall have been complied with to the reasonable satisfaction of the Assignee and Assignee’s counsel.
Section 3.17. Conditions to All Advances . The obligation of the Assignee to honor any Advance Request with respect to a Advance is subject to the following conditions precedent:
(a) The representations and warranties of the City contained in Section 2.1 hereof and in each other Related Document and the representations and warranties of the City contained in Section 2.2 hereof and in each other Related Document , or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Advance , except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 3.17, the representations and warranties contained in Section 5.15 of the Letter Agreement shall be deemed to refer to the most recent statements furnished pursuant to clause (a) of Section 6.02 of the Letter Agreement.
2 The Bank is not requiring a new survey. If there is an existing survey for these properties, it should be delivered for closing. If there is not an existing survey, we will further revise to remove. 3 Only required to be delivered in the event that the City is requesting an Advance on the Closing Date. 4 Only required to be delivered in the event that the City is requesting an Advance on the Closing Date.
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(b) No Default or Event of Default shall exist, or would result from such proposed Advance or from the application of the proceeds thereof. (c) The Assignee shall have received an Advance Request in accordance with the requirements hereof.
(d) After giving effect to any Advance, the aggregate principal amount of all Advances outstanding hereunder shall not exceed the Commitment. (e) [Reserved].
(f) Such Advance shall not violate any order, judgment or decree of any court or authority of competent jurisdiction or any provision of law as then in effect. (g) [The Assignee shall not have received notice (either verbal or written) from the City, or Bond Counsel that any opinion delivered pursuant to Section 3.16(a)(i) hereof may no longer be relied upon.] (h) If not previously delivered, the Assignee shall have received the executed Tax Certificate and an opinion of Bond Counsel to the effect that interest with respect to the Advance will be excludable from gross income for federal income tax purposes and California personal income tax purposes. Such opinion may address future Advance s issued within a specified time frame as part of a single issue for federal tax purposes. (i) The Assignee shall have received a copy of the IRS Form 8038-G, as filed in connection with the Advance, in form and substance satisfactory to the Assignee. (j) The Assignee shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as the Assignee reasonably may require.
Each Advance Request submitted by the City shall be deemed to be a representation and warranty that the conditions specified in Sections 3.17(a) and (b) have been satisfied on and as of the date of the applicable Advance.
Section 3.18. Survival . All of the City’s obligations under this Article 3 shall survive termination of the Revolving Commitment and repayment of all other Obligations hereunder.
A
RTICLE IV
LEASE OF PROPERTY; LEASE PAYMENTS
Section 4.1. Sublease of Property by the Authority Back to the City . (a) The Authority hereby subleases the Property to the City, and the City hereby subleases the Property from the Authority, upon the terms and conditions set forth in this Lease Agreement.
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(b) The leasing of the Property by the City to the Authority pursuant to the Site and Facility Lease shall not affect or result in a merger of the City’s subleasehold estate pursuant to this Lease Agreement and its fee estate as lessor under the Site and Facility Lease.
Section 4.2. Term. The Term of this Lease Agreement commences on the date of recordation of this Lease Agreement or a memorandum hereof and ends on September 1, [2036], the date on which all of the Lease Payments have been paid in full pursuant to the terms of this Lease Agreement, or the date when all Lease Payments and all other Obligations outstanding have been paid in full, or prepaid in full pursuant to Sections 9.1, 9.2 or 9.3. If on September 1, [2036], any of the Lease Payments payable hereunder or any other Obligations shall have been abated at any time and for any reason and not otherwise paid from rental interruption insurance or other sources, or the City shall have defaulted in its payment of Lease Payments hereunder or any other Obligations or any Event of Default has occurred and continues without cure by the City, then the term of this Lease Agreement shall be extended for the actual period of abatement or for so long as the default remains uncured, as necessary to accommodate the final payment of all Lease Payments due hereunder and the payment of all other Obligations, not to exceed ten (10) years.
The provisions of this Section 4.2 are subject to the provisions of Section 6.1 relating to the taking in eminent domain of the Property or any portion thereof.
Section 4.3. Lease Payments.
(a) Obligation to Pay . Subject to the provisions of Sections 6.1 and 6.3 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments (denominated into components of principal and interest) to be due and payable in immediately available funds on each of the respective Lease Payment Dates and all o ther Obligations hereunder and under the other Related Documents, in the amounts and at the rates and times as and when due hereunder and thereunder; provided, however , that if any Lease Payment Date is not a Business Day, such Lease Payment shall be due on the next succeeding Business Day and interest shall continue to accrue on such Lease Payment. The Lease Payments payable in any Rental Period with respect to the Property shall be for the use of the Property during such Rental Period.
In addition to the payment of Lease Payments and the payment of Obligations as specified in this Lease Agreement and the other Related Documents as and when due at the times and in the amounts so specified, the principal component of Lease Payments shall also be paid on each September 1, commencing September 1, 2027, to and including September 1, [2036], unless the total amount has previously been paid or prepaid, in an amount equal to 1/10th of the total principal amount advanced by the Assignee to the City. If the amount advanced after September 1, 2027, shall be increased pursuant to an advance pursuant to Section 3.1, the amount of each subsequent principal component of Lease Payments to be paid shall be in an amount equal to such amount divided by the remaining years until September 1, [2036].
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(b) Additional Payments. In addition to the Lease Payments set forth herein, the City agrees to pay as Additional Payments all of the following:
(i) all amounts due under the Fee Letter and the Letter Agreement as and when due;
(ii) all taxes and assessments of any nature whatsoever, including but not limited to excise taxes, ad valorem taxes, ad valorem and specific lien special assessments and gross receipts taxes, if any, levied upon the Property or upon any interest of the Authority therein or in this Lease Agreement; provided, however, the City may, at the City’s expense and in its name, in good faith contest any such taxes and assessments and, in the event of such contest, may permit such taxes and assessments to remain unpaid during the period of such contest and appeal therefrom unless the Authority shall notify the City that, in the opinion of Bond Counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property, or any portion thereof, will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes and assessments or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority; (iii) insurance premiums, if any, on all insurance required under the provisions of Article V hereof; and
(iv) all other Obligations as and when due and any other reasonable fees, costs or expenses incurred by the Authority and the Assignee in connection with the execution, performance or enforcement of this Lease Agreement and the other Related Documents or any of the transactions contemplated hereby or thereby or related to the Property, including, without limitation, any amounts which may become due.
Amounts constituting Additional Payments payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City shall pay all such amounts when due or, if a due date or payment date is not specified herein or in such other Related Document, within 60 days after notice in writing from the Authority to the City stating the amount of Additional Payments then due and payable and the purpose thereof. (c) Effect of Prepayment. If the City prepays the Lease Payments in part but not in whole under Section 9.3, the remaining Lease Payments will be reduced in inverse order of payment date. (d) Rate on Upon Event of Default . Upon the occurrence and continuation of an Event of Default, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay a rate equal to the Default Rate from the date of default to the date of payment.
(e) Fair Rental Value. The Lease Payments coming due and payable during each Rental Period constitute the total rental for the Property for such Rental Period and will be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Property during each Rental Period. The parties
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hereto have agreed and determined that the total Lease Payments due during each Rental Period are not in excess of the fair rental value of the Property during such Rental Periods. In making this determination, consideration has been given to the estimated fair market value of the Property, the estimated replacement cost of the Property, 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. (f) Source of Payments; Budget and Appropriation. The Lease Payments are payable from any source of legally available funds of the City, subject to the provisions of Sections 6.1,
6.3 and 9.1. The City covenants to take such action as may be necessary to include all Lease Payments and all other Obligations in each of its annual budgets during the Term of this Lease Agreement and to make the necessary annual appropriations for all such Lease Payments and all other Obligations. The covenants on the part of the City herein contained constitute duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City.
(g) Allocation of Lease Payments . Except as otherwise provided in Article III or any other Section of this Lease Agreement or any other Related Document, all Lease Payments received shall be applied first to the interest components of the Lease Payments due hereunder, then to the principal components of the Lease Payments due hereunder, but no such application of any payments that are less than the total rental due and owing shall be deemed a waiver of any default hereunder.
(h) No Offsets. Notwithstanding any dispute between the Authority, or Assignee as the Authority’s assignee, and the City, the City shall make all Lease Payments when due without deduction or offset of any kind and shall not withhold any Lease Payments pending the final resolution of such dispute.
(i) Assignment Agreement. The City understands and agrees that all Lease Payments and the rights to payment of the Obligations and all rights under this Lease Agreement and the Site and Facility Lease and the Fee Letter have been assigned by the Authority to the Assignee under the Assignment Agreement executed concurrently herewith, and the City hereby consents to such assignment. The Authority hereby directs the City, and the City hereby agrees, to pay to the Assignee (or to its assignees) all payments payable by the City under Art icle III, the Fee Letter, this Section 4.3 and all amounts payable by the City under Article IX. Lease Payments shall be paid to the Assignee in accordance with the written wire instructions provided by Assignee to City. (j) Obligation Absolute and Unconditional. Except for the abatement of Lease Payments upon the occurrence of certain events of damage, destruction or condemnation as provided in Section 6.3 hereof, the City’s obligations to make Lease Payments, pay Obligations and to perform its other obligations hereunder and under the Site and Facility Lease and each other Related Document shall be absolute and unconditional in all events without diminution, deduction, set-off or defense for any reason.
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Section 4.4. Quiet Enjoyment . Throughout the Term of this Lease Agreement, the Authority will provide the City with quiet use and enjoyment of the Property and the City will peaceably and quietly have and hold and enjoy the Property, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease Agreement. The Authority will, at the request of the City and at t he City’s cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so.
Notwithstanding the foregoing, the Authority and the Assignee have the right to inspect the Property as provided in Sections 5.12(c) and 7.2.
Section 4.5. Title. At all times during the Term of this Lease Agreement, the City shall hold fee title to the Property and the Authority shall hold leasehold title to the Property, including all additions which comprise fixtures, repairs, replacements or modifications thereto, subject to Permitted Encumbrances and subject to the provisions of Section 7.2.
Upon the termination of this Lease Agreement (other than under Section 8.2(b) hereof), all right, title and interest of the Authority in and to the Property shall be transferred to and vested in the City. Upon the payment in full of all Lease Payments and all other Obligations, or upon the deposit by the City of security for such Lease Payments and all other Obligations as provided in Section 9.1, all right, title and interest of the Authority in and to the Property shall be transferred to and vested in the City. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer.
Section 4.6. Release of Excess Property. The City may, at any time and from time to time, release any portion of the Property (the “Released Property” ) from this Lease Agreement, with the prior written consent of the Assignee, which consent shall be at the Assignee’s sole discretion, and upon satisfaction of all of the following requirements which are conditions precedent to such release:
(a) The City shall certify to the Authority and the Assignee that no Event of Default has occurred and is continuing, and no event giving rise to an abatement of Lease Payments under Section 6.3 has occurred or is continuing with respect to the Property to be remaining following release of the Released Property; (b) Such release shall not cause the City to violate any of its covenants, representations and warranties made herein;
(c) The City shall file with the Authority and the Assignee, and cause to be recorded in the office of the Los Angeles County Recorder, an amendment to this Lease Agreement which deletes the Released Property from the description of the Property; (d) The City shall file with the Authority and the Assignee a written certificate of the City stating the City’s determination that the estimated value of the real property which will remain leased under this Lease Agreement following such release is at least equal to the the Authorized Amount (or if the Revolving Commitment as been reduced, the then-current Revolving Commitment) and upon request of the Assignee, the City shall
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provide to the Assignee additional information and documents to evidence the value of the remaining portion of the Property;
(e) The City shall file with the Authority and the Assignee a written certificate of the City stating the City’s determination that the value of the Property which will remain leased under this Lease Agreement following such release is at least equal to the Authorized Amount (or if the Revolving Commitment as been reduced, the then- current Revolving Commitment) and upon request of the Assignee, the City shall provide to the Assignee additional information and documents to evidence the value of the remaining portion of the Property. If requested by the Assignee, the City has delivered to the Assignee valuations prepared or confirmed by an independent third party, which might include, without limitation, an appraisal or a valuation by an insurance company; (f) The City shall file with the Authority and the Assignee a written certificate of the City stating the City’s determination that the estimated fair rental value, for each remaining Rental Period and in the aggregate, of the Property remaining after release of the Released Property is at least equal to the maximum possible Lease Payments for each remaining Rental Period and in the aggregate; and
(g) The City shall file with the Authority and the Assignee such other information, documents and instruments as the Authority or the Assignee shall reasonably request, including (if requested by the Assignee) evidence of the insurable value of the Property to be remaining following release of the Released Property, indicating that such value is in excess of the Authorized Amount and such endorsements to the title policy delivered on the Closing Date.
Upon the satisfaction of all such conditions precedent, the Term of this Lease Agreement will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge this Lease Agreement of record against the Released Property . The City shall be responsible for all costs, including the costs of the Assignee’s legal counsel, related to such release.
Section 4.7. Substitution of Property . (a) In the event of damage or destruction of the Property due to earthquake or other uninsured casualty for which rental interruption insurance is not available or in the event that following the condemnation of all or a portion of the Property the fair rental value of the Property remaining after such condemnation is less than the Authorized Amount, the City shall substitute under the Site and Facility Lease and this Lease Agreement one or more parcels of unimpaired and unencumbered essential real property, the fair rental value of which, for each remaining Rental Period and in the aggregate, shall be at least equal to the Authorized Amount. The City shall be responsible for all costs, including the costs of the Assignee’s legal counsel, related to such substitution. (b) If for any reason the City is unable to so substitute real property for the Property with a fair rental value at least equal to the Authorized Amount, the City shall use its best efforts to
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obtain other financing in an amount necessary to prepay the outstanding Lease Payments and other Obligations not supported by the fair rental value of the substituted property, if any.
Section 4.8. Adjustment of Rental Amounts. (a) To the extent any Advance or accrued interest thereon has not been paid as and when due or any deferred interest remains unpaid under Section 3.12, following the Commitment Termination Date and for so long thereafter as any Obligations remain unpaid, the City shall increase the amount of the r ental payable hereunder to the maximum fair rental value of the Property determined in accordance with subsection (b) below. (b) To the extent any Advance or accrued interest thereon has not been paid as and when due or any deferred i nterest remains unpaid under Section 3.12, following the Commitment Termination Date and for so long thereafter as any Obligations remain unpaid, unless this Lease Agreement has terminated in accordance with its terms, the City agrees, at the Assignee ’s sole written request, from time to time (but not more than once in any twelve month period), to determine or cause to be determined, the fair rental value for the Property. Upon consultation with special counsel and the Assignee, such determination shall be by a Class C appraisal or an MAI certified appraisal conducted by an employee of the City and shall be at the sole expense of the City. In addition, the City agrees to extend the term of this Lease Agreement , if, on the stated expiration thereof, any amounts remain owing to the Assignee hereunder or under any of the other Related Documents.
A
RTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this Lease Agreement, as part of the consideration for the rental of the Property, all improvement, repair and maintenance of the Property are the sole responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Property, as hereinbefore more specifically set forth . The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of this Lease Agreement.
The City will pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City is obligated to pay only such installments as are required to be paid during the Term of this Lease Agreement as and when the same become due.
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The City may, at the City’s expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority shall notify the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Property will be materially endangered or the Property or any part thereof will be subject to loss or forfeiture, in which event the City will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority.
The City shall promptly notify the Assignee of any tax, assessment, utility or other charge it elects to contest.
The City shall not install, use, operate, or maintain the Property (or cause the Property to be installed, used, operated or maintained) improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated hereby. The City shall provide all permits and licenses, if any, necessary for the Property. In addition, the City agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative, or judicial body, including, without limitation, all anti money laundering laws and regulations; provided that the City may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the opinion of Authority, adversely affect the interest of Authority in and to the Property or its interest or rights hereunder.
Section 5.2. Modification of Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Property or any portion thereof . All additions, modifications and improvements to the Property will thereafter comprise part of the Property and become subject to the provisions of this Lease Agreement . Such additions, modifications and improvements may not in any way damage the Property, or cause the Property to be used for purposes other than those authorized under the provisions of state and federal law; and the Property, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic’s or other lien to be established or remain against the Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by t he City under this Section; provided that if any such lien is established and the City first notifies the Authority of the City’s intention to do so, the City may in good faith contest any lien filed or established against the Property, and in such event m ay permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City.
Section 5.3. Public Liability Insurance. The City shall maintain or cause to be maintained throughout the Term of this Lease Agreement a standard commercial general liability insurance policy or policies in protection of the City, the Assignee and their respective members, officers, agents, employees and assigns. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury,
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death or property damage occasioned by reason of the operation of the Property. Such policy or policies must provide coverage with limits of at least $5,000,000 per occurrence and in aggregate for bodily injury and property damage coverage (such liability insurance coverage may be in a combination of primary general liability and/or excess liability umbrella coverage, and in all events in form and amount (including any deductibles) satisfactory to the Assignee. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City (including a self-insurance program), and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance.
The City will apply the proceeds of such liability insurance toward extinguishment or satisfaction of the liability with respect to which such proceeds have been paid.
Section 5.4. Casualty Insurance; Flood Insurance
(a) Casualty Insurance. The City will procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease Agreement, real property insurance against loss or damage to all buildings situated on the Property by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance.
Said extended coverage insurance shall cover loss or damage by fire, explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, including earthquake coverage if such coverage is available at commercially reasonable cost from a reputable insurer in the sole determination of the City. Such insurance shall be in an amount at least equal to the greater of the replacement value of the insured buildings and the Authorized Amount, with a lender’s loss payable endorsement. Such insurance must, as nearly as practicable, cover loss or damage by all “special form” perils. Such insurance shall be subject to a deductible of not to exceed $100,000. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City (including a self-insurance program), and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City will apply the Net Proceeds of such insurance as provided in Section 6.2.
(b) Flood Insurance. If at any time and for so long as the Property is located in a 100- year flood area as shown on a Flood Insurance Rate Map published by the Federal Emergency Management Agency, the policy or policies of casualty insurance provided under this Section 5.4 shall include insurance against loss or damage to the Property due to flooding. If the City obtains an exception or waiver to the designation of the Facilities as being within a 100- year flood area from the Federal Emergency Management Agency, the City shall not be required to provide flood insurance as set forth in this subsection (b). To the extent the City fails to procure adequate flood insurance within 30- days after receipt of notification that such flood insurance is required, Assignee may take such action as is necessary to procure such flood insurance, including advancing payment for such flood insurance, and the City shall be obligated to promptly (within 30 days) repay Assignee the cost of such flood insurance and all such advances as additional rental hereunder, with interest at the Default Rate.
(c) Federal or State Disaster Aid. Should the Property be damaged or destroyed as a result of an event for which federal or State disaster aid is available, the Authority and/or the City shall promptly apply for disaster aid. Any disaster aid proceeds received shall be used to repair,
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reconstruct, restore or replace the damaged or destroyed portions of the Property, or, at the option of the City and the Authority, to prepay the Lease Payments and other Obligations if permitted under the disaster aid program and the law.
(d) Self-Insurance. As an alternative to providing the insurance required by this Section, the City may provide a self -insurance method or plan of protection if and to the extent such self-insurance method or plan of protection affords reasonable coverage for the risks required to be insured against, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State other than the City and if the City demonstrates that such self -insurance method or plan of protection is properly established, funded, actuarially sound and that such self-insurance method or plan of protection is otherwise consistent with prudent business practices for insuring against such risks. Before such other method or plan may be provided by the City, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of this Lease Agreement, there shall be filed with the Authority and the Assignee a certificate of an actuary, insurance consultant or other qualified person (who may be an employee of the City), stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of this Section and, when effective, would afford reasonable coverage for the risks required to be insured against and is sufficiently funded to afford such coverage. There shall also be filed a certificate of the City setting forth the details of such substitute method or plan.
Section 5.5. Rental Interruption Insurance . The City will procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease Agreement, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Property and the improvements situated thereon as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount at least equal to the maximum Lease Payments coming due and payable during any future 24 month period. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City will apply the Net Proceeds of such insurance towards the payment of the Lease Payments as the same become due and payable.
Section 5.6. Worker’s Compensation Insurance. If required by applicable California law, the City shall carry worker’s compensation insurance covering all employees on, in, near or about the Property and, upon request, shall furnish to the Authority certificates evidencing such coverage throughout the Term of this Lease Agreement. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City (including a self -insurance program) and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance.
Section 5.7. Recordation Hereof; Title Insurance. On or before the Closing Date, the City shall, at its expense, (a) cause this Lease Agreement, the Site and Facility Lease and the Assignment Agreement, or a memorandum hereof or thereof in form and substance approved by the Assignee and its counsel, to be recorded in the office of the Los Angeles County Recorder with respect to the Property, and (b) obtain a CLTA title insurance policy insuring (i) the fee interest of the City in the Property, (ii) the Assignee’s leasehold interest in the Property under the under the
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Site and Facility Lease and (iii) the City’s sub- leasehold estate hereunder in the Property and (iv) the Assignee’s interests in the leasehold estate established under the Site and Facility Lease and under the Assignment Agreement in the Property, subject only to Permitted Encumbrances.
Said policy shall name the Assignee as insured and shall be in an amount equal to the Authorized Amount. The City will apply the Net Proceeds of such insurance as provided in Section 6.2.
Section 5.8. Insurance Net Proceeds; Form of Policies. All insurance policies (or riders) required by this Article V and provided by third party insurance carriers shall be taken out and maintained with responsible insurance companies organized under the laws of one of the states of the United States and qualified to do business in the State issued in form and amount s atisfactory to Assignee and by an insurance company that is authorized to do business in the State and having a financial strength rating by A.M. Best Company of “A-” or better, and shall contain a provision that the insurer shall not cancel or revise coverage thereunder without giving written notice to the insured parties at least ten days before the cancellation or revision becomes effective. Each insurance policy or rider required by Sections 5.3, 5.4 and 5.5 and provided by third party insurance carriers shall name the City and the Assignee as insured parties and the Assignee as loss payees and shall include a lender’s loss payable endorsement for the benefit of the Assignee. Prior to the Closing Date, the City will deposit with the Assignee policies (and riders and endorsements, if applicable) evidencing any such insurance procured by it, or a certificate or certificates of the respective insurers stating that such insurance is in full force and effect. Before the expiration of any such policy (or rider), the City will furnish to the Assignee evidence that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V unless such insurance is no longer obtainable, in which event the City shall notify the Assignee of such fact.
Section 5.9. Installation of City’s Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Property. All such items shall remain the sole property of the City, in which the Authority has no interest, and may be modified or removed by the City at any time. The City must repair and restore any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement prevents the City from purchasing or leasing items to be installed under this Section under a lease or conditional sale agreement, or subject to a vendor’s lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest may attach to any part of the Property.
Section 5.10. Liens. The City will not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Assignee do not materially and adversely affect the leasehold estate in the Property hereunder and for which the Assignee provides its prior written approval, which approval shall be at Assignee’s sole discretion. Except as expressly provided in this Article V, the City will 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 on the Property other than Permitted Encumbrances, if the same shall arise at any time. The City will reimburse the Assignee for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
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Section 5.11. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as additional rental hereunder, with interest at the Default Rate.
Section 5.12. Environmental Covenants .
(a) Compliance with Laws; No Hazardous Substances . The City will comply, and will cause all licensees, guests, invitees, contractors, employees and agents to comply with all Applicable Environmental Laws with respect to the Property and will not allow the presence of, or otherwise use, store, generate, treat, transport, manage, maintain, abate, remediate, disturb or dispose of any Hazardous Substance thereon except (i) in strict compliance with all Applicable Environmental Laws, and (ii) in a manner that would not cause any Hazardous Substance to later flow, migrate, leak, leach, be released at or otherwise come to rest on or in the Property.
Upon the occurrence of any release or threat of release of Hazardous Substance, the City shall promptly commence and perform, or cause to be commenced and performed promptly, at the City’s expense, all investigations, studies, sampling and testing, and all remedial, removal, abatement, and other actions necessary to clean up encapsulate and/or remove all Hazardous Substance so released, on, from or beneath the Property or other property, in compliance with all Applicable Environmental Laws. 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. Upon receipt of any notice from any person with regard to the release of any Hazardous Substance at, on, from or beneath the Property, the City shall give prompt written notice thereof to the Authority prior to the expiration of any period in which to respond to such notice under any Applicable Environmental Laws.
In connection with its covenants provided in this Section 5.12, the City shall specifically comply with all requirements of the Asbestos Hazard Emergency Response Act (referred to as “AHERA” and constituting an Applicable Environmental Law), including developing, maintaining and updating an Asbestos Management Plan (as hereafter defined) and keeping a copy at the Property; and performing re -inspections of Asbestos Containing Materials (as her eafter defined) at the Property every three years. The City shall maintain all Asbestos Containing Materials in an intact and undamaged state and perform any demolition, renovation or other activities in accordance with all Applicable Environmental Laws. As used herein, (i) the term “Asbestos Containing Materials” means material in friable form containing more than one percent (1%) of the asbestiform varieties of chrysotile (serpentine), crocidolite (ricbeckite), amosite (cummington-itegrinerite), anthophyllite, tremolite and antinolite; and (ii) the term “Asbestos Management Plan” means that written plan for the Property relating to monitoring and maintaining all Asbestos Containing Materials used or located on the Property in accordance with AHERA. (b) Notification of Assignee . The City will transmit copies of all notices, orders, or statements received from any governmental entity or any third party concerning violations or asserted violations of Applicable Environmental Laws with respect to the Property and any operations conducted thereon or any conditions existing thereon to the Assignee, and the City will
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notify the Assignee in writing immediately of any release, discharge, spill, or deposit of any Hazardous Substance that has occurred or is occurring that in any way affects or threatens to affect the Property, or the people, structures, or other property thereon, provided that no such notification shall create any liability or obligation on the part of the Assignee. (c) Access for Inspection. The City will permit the Assignee, its agents, or any experts designated by the Assignee to have full access to the Property during reasonable business hours for purposes of such independent investigation of compliance with all Applicable Environmental Laws, provided that the Assignee has no obligation to do so, or any liability for any failure to do so, or any liability should it do so.
Neither the Assignee nor the Authority shall be obligated to monitor compliance of the Property with Applicable Environmental Laws or other laws. So long as the City is in possession of the Property, neither the Assignee nor the Authority shall have any obligations or responsibility to involve itself with the Property under any circumstance, including any instance where either the Authority or Assignee is notified of any noncompliance of the Property with applicable environmental or other laws. The City represents that the Property is currently in full compliance with all Applicable Environmental Laws. It is expressly understood that neither the Assignee nor the Authority shall have the obligation to monitor the City’s compliance with Applicable Environmental Laws. The City hereby further represents and warrants to the Authority and Assignee that the City, its officers, employees or agents have neither ever caused or permitted and shall neither ever cause or permit Hazardous Substance to be generated, placed, housed, located or disposed of on, under or in the Property, except, and only to the extent, if necessary to operate or maintain the improvements on the Property and then, only in compliance with all Applicable Environmental Laws, and any state equivalent laws and regulations, nor ever use the Property as a dump site, permanent or temporary storage site or transfer station for any Hazardous Substance excluding, however, those Hazardous Substance in those amounts ordinarily found in the inventory of a school district, the use, storage, treatment, transportation and disposal of which shall be in compliance with all Applicable Environmental Laws.
Section 5.13. City Consent to Assignment Agreement . The Authority’s rights under this Lease Agreement (excluding the right to receive notices, the right to reimbursement of costs and to indemnification), including the right to receive and enforce payment of the Lease Payments, and the Site and Facility Leas e, are being assigned to the Assignee pursuant to the Assignment Agreement. The City hereby consents to such assignment and to any additional assignment of such rights by the Assignee or its assignees, including all assignments contemplated under Section 8.06 of the Letter Agreement. The City agrees to execute all documents, including notices of assignment and chattel mortgages or financing statements, which may be reasonably requested by the Assignee or its assignees to protect their interests in the Property and in this Lease Agreement and the other Related Documents.
Section 5.14. Certificates of Insurance . The City shall provide to the Assignee annual evidence of the property and rental interruption insurance and other insurance required pursuant to Article V hereof.
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ARTICLE VI
EMINENT DOMAIN; USE OF NET PROCEEDS
Section 6.1. Eminent Domain. Subject to the provisions of Sections 4.7 and 8.2, if all of the Property shall be taken permanently under the power of eminent domain or sold to a governmental entity threatening to exercise the power of eminent domain, the Term of this Lease Agreement shall cease as of the day possession shall be so taken. If less than all of the Property shall be taken permanently, or if all of the Property or any part thereof shall be taken temporarily under the power of eminent domain, (1) this Lease Agreement shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (2) there shall, subject to Sections 6.2(b) and 6.3, be a partial abatement of Lease Payments in an amount equal to the application of the Net Proceeds of any eminent domain award to the prepayment of the Lease Payments hereunder, in an amount to be agreed upon by the City and the Assignee such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Property.
Section 6.2. Application of Net Proceeds .
(a) From Insurance Award. (i) Any Net Proceeds of insurance against damage to or destruction of any part of the Property collected by the City in the event of any such damage or destruction shall be deposited by the City promptly upon receipt thereof in a special fund with the Assignee designated as the “Insurance and Condemnation Fund.” (ii) Within a reasonable time not to exceed sixty (60) days following the date of such deposit, the City shall determine and notify the Authority and the Assignee in writing of its determination either (A) that the replacement, repair, restoration, modification or improvement of the Property is not economically feasible or in the best interest of the City and the Net Proceeds, together with other moneys available therefor, are sufficient to cause the prepayment of all unpaid Lease Payments pursuant to Section 9.3 hereof, or (B) that all or a portion of such Net Proceeds are to be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property and the fair rental value of the Property following such repair, r estoration, replacement, modification or improvement will at least equal the Authorized Amount.
(iii) In the event the City’s determination is as set forth in clause (A) of subparagraph (ii) above, such Net Proceeds shall be promptly applied to the prepayment of Lease Payments and other amounts pursuant to Section 9.3 hereof ; provided, however, that in the event of damage or destruction of the Property in full, such Net Proceeds may be so applied only if sufficient, together with other moneys available therefor, to cause the prepayment of all unpaid Lease Payments, all accrued and unpaid interest and all other costs related to such prepayments pursuant to Section 9.3 hereof and all other Obligations outstanding and otherwise such Net Proceeds shall be applied to the prompt replacement, repair, restoration, modification or improvement of the Property; provided further, however, that in the event of damage or destruction of the Property in part, such Net Proceeds may be applied to the prepayment of Lease Payments only if the resulting Lease Payments following such prepayment from Net Proceeds represent fair consideration for the
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remaining portions of the Property and otherwise such Net Proceeds shall be applied to the prompt replacement, repair, restoration, modification or improvement of the Property, evidenced by a certificate signed by a City Representative.
(iv) In the event the City’s determination is as set forth in clause (B) of subparagraph (ii) above and the City certifies to the Assignee that such repair or replacement can be completed within 12 months or such longer period approved by Assignee, such Net Proceeds shall be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property by the City, and until the Property has been restored to its prior condition, the City shall not place any lien or encumbrance on the Property that is senior to this Lease Agreement without the prior written consent of the Assignee, at its sole discretion.
Any replacement, repair, restoration, modification or improvement or prepayment as provided above shall commence not later than 60 days after the occurrence of such destruction or damage and be pursued diligently to completion. The Authority may (but is not required to) in its own name or in the City’s name execute and deliver proofs of claim, receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any insurance policy, and the City hereby grants to the Authority a power of attorney coupled with an interest to accomplish all or any of the foregoing.
(b) From Eminent Domain Award. If all or any part of the Property shall be taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain) the Net Proceeds therefrom shall be deposited by the City in the Insurance and Condemnation Fund and shall be applied and disbursed as follows:
(i) If the City has given written notice to the Authority and the Assignee of its determination that (A) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under this Lease Agreement, and (B) such proceeds are not needed for repair or rehabilitation of the Property, the City shall so certify to the Authority and the Assignee, and the City shall apply such proceeds towards the prepayment of the Lease Payments pursuant to Section 9.3 hereof.
(ii) If the City has given written notice to the Authority and the Assignee of its determination that (A) such eminent domain proceedings have not materially affected the operation, use or occupancy by the City of the Property or the ability of the City to meet any of its obligations with respect to the Property under this Lease Agreement, and (B) such proceeds are needed for repair, rehabilitation or replacement of the Property, the City shall so certify to the Authority and the Assignee, and the City shall apply such amounts for such repair or rehabilitation.
(iii) If (A) less than all of the Property shall have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City has given written notice to the Authority and the Assignee of its determination that such eminent domain proceedings have materially affected the
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operation, use or occupancy by the City of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement or (B) all of the Property shall have been taken in such eminent domain proceedings, then the City shall credit such proceeds towards the prepayment of the Lease Payments pursuant to Section 9.3 hereof or to the substitution of Property as provided in Section 4.7 or 6.4 hereof.
(iv) In making any determination under this Section 6.2(b), the City shall at the request of Assignee, obtain at its expense, the report of an independent engineer or other independent professional consultant, a copy of which shall be filed with the Authority and the Assignee.
The City will provide the required written notices under this Section 6.2(b), and notice of its determination of how to proceed pursuant to Section 6.2(b)(iii) as applicable, to the Authority and the Assignee within a reasonable time not to exceed 60 days after the occurrence of such eminent domain proceedings. Any repair, rehabilitation, substitution or prepayment pursuant to Section 6.2(b)(ii) shall commence not later than 60 days after the occurrence of such taking and such repair or rehabilitation or substitution shall be pursued diligently to completion. (c) From Title Insurance. The Net Proceeds from a title insurance award shall be applied by the City towards the prepayment of Lease Payments required to be paid pursuant to Section 9.3 hereof.
Section 6.3. Abatement of Lease Payments in the Event of Damage or Destruction. Lease Payments shall be abated during any period in which, by reason of damage or destruction, there is substantial interference with the use and occupancy by the City of the Property or any portion thereof to the extent to be agreed upon by the City and the Assignee. The parties agree that the amounts of the Lease Payments under such circumstances shall not be less than the amounts of Lease Payments and Obligations then due and owing, unless such unpaid amounts are determined to be greater than the fair rental value of the portions of the Property not damaged or destroyed, based upon an appropriate method of valuation, in which event the Lease Payments shall be abated such that they represent said fair rental value. The City shall immediately notify Assignee upon the occurrence of any event causing substantial interference with the City’s beneficial use and enjoyment of any Property and the portion of the Property that is unavailable. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction as evidenced by a Certificate of a City Represent ative to the Authority and the Assignee. In the event of any such damage or destruction, this Lease Agreement shall continue in full force and effect and the City waives any right to terminate this Lease Agreement by virtue of any such damage and destruction. The City hereby waives the benefits of California Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate this Lease Agreement by virtue of any interference with the use and possession of the Property hereunder. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Insurance and Condemnation Fund are available to pay Lease Payments which would otherwise be abated under this Section 6.3, it being hereby
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declared that such proceeds and amounts constitute special funds for the payment of the Lease Payments.
Section 6.4. Uninsured Casualty . If at any time the Property is damaged or destroyed by earthquake or other uninsured casualty for which rental interruption insurance is not available, or in case of any condemnation or taking of or reverter of any portion of the Property to the grantor thereof, the City shall, promptly after the occurrence of such event, substitute and add as Property under this Lease Agreement other real or personal property of the City that is unimpaired and unencumbered, the fair rental value of which shall be at least equal to Authorized Amount and the Lease Payments due during each fiscal year for the remainder of the term of this Lease Agreement.
ARTICLE VII
OTHER COVENANTS OF THE CITY
Section 7.1. Disclaimer of Warranties . T HE AUTHORITY MAKES NO AGREEMENT ,
WARRANTY OR REPRESENTATION , EITHER EXPRESS OR IMPLIED , AS TO THE VALUE , DESIGN,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE
CONTEMPLATED BY THE CITY OF THE PROPERTY OR ANY PORTION THEREOF , OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROPERTY OR ANY PORTION THEREOF. THE
CITY ACKNOWLEDGES THAT THE CITY LEASES THE PROPERTY AS-IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no event is the Authority liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease Agreement for the existence, furnishing, functioning or use of the Property by the City.
Section 7.2. Access to the Property; Grant and Conveyance of Right of Entry . The City agrees that the Authority, and the Authority’s successors or assigns, has the right at all reasonable times, following at least 48 hours written notice provided to the City, to enter upon and to examine and inspect (to the extent permitted by law and public policy) the Property or any part thereof. The City further agrees that the Authority, and the Authority’s successors or assigns shall have such rights of access to the Property or any component thereof, following at least 48 hours written notice provided to the City, as may be reasonably necessary to cause the proper maintenance of the Property if the City fails to perform its obligations hereunder. Neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.
The City further grants, conveys and confirms to the Authority, for the use, benefit and enjoyment of the Authority, its successors and assigns in interest to the Property, including the Assignee, and its sublessees, and their respective employees, invitees, agents, independent contractors, patrons, customers, guests and members of the public visiting the Property, a right of entry which shall be irrevocable for the Term of this Lease Agreement over, across and under the property of the City adjacent to the Property to and from the Property for the purpose of:
(a) ingress, egress, passage or access to and from the Property by pedestrian or vehicular traffic; (b) installation, maintenance and replacement of utility wires, cables, conduits and pipes; and (c) other purposes and uses necessary or desirable for access to and from and for operation and maintenance of the Property.
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Section 7.3. Release and Indemnification Covenants . The City hereby indemnifies the Authority, the Assignee and their respective directors, officers, agents, employees, successors and assigns against all claims, losses and damages, including legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or from any work or thing done on the Property by the City or the City’s employees, agents, contractors, invitees or licensees, (b) any breach or default on the part of the City in the performance of any of its obligations under this Lease Agreement, (c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Property, (d) any intentional misconduct or negligence of any sublessee of the City with respect to the Property, the acquisition, construction, improvement and equipping of the Property, ( e) the presence, release, discharge, threat of release, generation, use presence, storage, disposal, abatement, remediation, management or clean-up of (or failure to clean- up), or exposure to, any Hazardous Substances or toxic wastes from the Property, (f) any lawsuit brought or threatened, settlement reached or governmental order relating to Hazardous Substances on, from or beneath the Property, ( g) the imposition of any governmental lien for the recovery of environmental cleanup or removal costs with respect to the Property, or ( h) any failure to comply with any Applicable Environmental Laws, or the authorization of payment of the costs thereof. No indemnification is made under this Section 7.3 or elsewhere in this Lease Agreement for willful misconduct or gross negligence under this Lease Agreement by the Authority, the Assignee, or their respective officers, agents, employees, successors or assigns.
Section 7.4. Assignment by the Authority. The Authority’s rights, title and interests under this Lease Agreement, including the right to receive and enforce payment of the Lease Payments to be made by the City hereunder, have been assigned to the Assignee; provided that the Authority’s rights to indemnification and payment or reimbursement for any costs or expenses hereunder 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. The City hereby consents to such assignment . Whenever in this Lease Agreement any reference is made to the Authority, such reference shall be deemed to refer to the Assignee (including its assignees).
The Assignee may make additional assignments of its rights, title and interests herein, but no such assignment will be effective as against the City unless and until the Assignee has filed with the City prior written notice thereof and an executed copy of a letter addressed to the City and the Authority substantially in the form of the letter delivered by the Assignee on the Closing Date. The City shall pay all Lease Payments and other payments hereunder to the Assignee, as provided in Section 4.3(h) hereof, or under the written direction of the assignee named in the most recent assignment or notice of assignment filed with the City. During the Term of this Lease Agreement, the City will keep a complete and accurate record of all such notices of assignment.
Section 7.5. Assignment and Subleasing by the City . This Lease Agreement may not be assigned, mortgaged, pledged or transferred by the City. The City may sublease the Property, or
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any portion thereof, with the prior written consent of the Assignee, at the Assignee’s sole and absolute discretion, subject to all of the following conditions:
(a) This Lease Agreement and the obligation of the City to make Lease Payments hereunder shall remain obligations of the City, and any sublease shall be subject and subordinate to this Lease Agreement.
(b) The City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Assignee a true and complete copy of such sublease. (c) No such sublease by the City may cause the Property to be used for a purpose other than as may be authorized under the provisions of the laws of the State. (d) Any such sublease shall be subject and subordinate in all respects to the Site and Facility Lease and this Lease Agreement.
Notwithstanding the foregoing, in connection with any sublease entered into for financing purposes, the Authorized Amount plus the principal component of the sublease payments shall not exceed the fair market value of the Property.
Section 7.6. Amendment of Lease Agreement . This Lease Agreement may be amended with the prior written consent of the Authority and the Assignee (at the Assignee’s sole discretion) provided such amendment does not, in the Assignee’s sole judgment, adversely affect the Assignee; provided that no amendment to the terms “Applicable Factor,” “Applicable Spread,” “Commitment Termination Date,” “Daily Simple SOFR,” and “Floating Rate” shall be permitted without the delivery of an Approving Opinion to the Assignee.
Section 7.7. Financial Statements; Budgets; Other Information. Within two hundred ten (210) days following the end of each Fiscal Year of the City during the Term of this Lease Agreement, the City will provide the Assignee with a copy of its audited financial statements for such Fiscal Year. Such audited financial statements shall include such information as is required by applicable Government Accounting Standards Board pronouncements and applicable State law.
Within sixty (60) days of adoption, but in no case later than sixty (60) days the end of each fiscal year, the City will provide the Assignee with a copy of its annual budget for the following fiscal year, including evidence that the Lease Payments have been budgeted and appropriated for such fiscal year. The City hereby agrees to provide the Assignee with such other information as may be reasonably requested by the Assignee.
Section 7.8. Records and Accounts . The City covenants and agrees that it shall keep proper books of record and accounts of its operations in accordance with GASB, in which complete and correct entries shall be made of all transactions relating to the City . Said books and records shall at all reasonable times be subject to the inspection of the Assignee upon 72 hours’ prior notice.
Section 7.9. Observance of Laws and Regulations . The City will well and truly keep, observe and perform or cause to be kept, observed and performed all valid and lawful obligations,
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regulations or Applicable Laws now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any officer, board, commission or Governmental Authority having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired and enjoyed by the City, including the City’s right to exist and carry on business as a municipal corporation and chartered city, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired.
Section 7.10. Notices. During the Term of this Lease Agreement, the City shall provide to the Assignee:
(a) immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes an Event of Default Date under this Lease Agreement, together with a detailed statement by a City Representative of the steps being taken by the City to cure the effect of such Event of Default. (b) prompt written notice of any Material Litigation, or any investigation, inquiry or similar proceeding by any Governmental Authority. (c) with reasonable promptness, such other information respecting the City, and the operations, affairs and financial condition of the City as the Assignee may from time to time reasonably request.
(d) Notices of filings with the Municipal Securities Regulatory Board’s EMMA system, other than regular annual filings.
(e) Notice of an event that could cause a Material Adverse Effect.
A
RTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default Defined . Any one or more of the following events constitutes an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or failure by the City to pay any Obligation or other payment required to be paid hereunder or under any Related Document at the time specified herein or therein, including the failure to prepay the Lease Payments and Obligations pursuant to Section 9.1 hereof; or the failure to maintain insurance as specified in Article V or the failure to observe or maintain unrestricted reserves as required by Section 2.1(g); or the failure to observe or comply with any of the Specified Letter Agreement Covenants.
(b) Failure by the City or the Authority to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, including failure to provide financial information referenced in Section 7.8 (other than those referred to in
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any other Event of Default under this Section 8.1), for a period of 30 days after the earlier to occur of (A) actual knowledge thereof by the City or the Authority or (B) written notice specifying such failure and requesting that it be remedied has been given to the City or the Authority by the Assignee.
(c) (i) A debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed by the City or the Authority or any Governmental Authority on the repayment when due and payable of the principal of or interest on any Lease Revenue Debt or Material Debt of the City or the Authority, or (ii) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, the City or the Authority seeks to have an order for relief entered with respect to it or the Property or seeking to adjudicate it or the Property insolvent or bankrupt or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or the Property or its debts or those of the Property, or (iii) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the City, the Authority or the Property or for any substantial part of the City’s or the Authority’s property, or the City or the Authority shall make a general assignment for the benefit of its creditors, or (iv) there shall be commenced against the City, the Authority or the Property any case, proceeding or other action of a nature referred to in clause (ii) and the same shall remain undismissed, or (v) there shall be commenced against the City, the Authority or the Property any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal, within sixty (60) days from the entry thereof, or (vi) the City or the Authority takes action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), (iii), (iv), (v) above, or (vii) the City or the Authority shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (d) Any statement, representation or warranty made by the City or the Authority in or pursuant to this Lease Agreement or its execution, delivery or performance shall have been false, incorrect, misleading or breached in any material respect on the date when made.
(e) Any default occurs under any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which the City is an obligor, if such default (i) arises under any other agreement for borrowing money, lease financing of property or provision of credit provided by the Assignee or any affiliate of the Assignee, or (ii) arises under any obligation under which there is outstanding, owing or committed an aggregated amount in excess of $300,000.
(f) Any default by the City to observe any covenant, condition or agreement on its part to be observed or performed under the Site and Facility Lease. (g) Any material provision of this Agreement or the other Related Documents shall at any time for any reason cease to be valid and binding on the City or the Authority
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or shall be declared to be null and void by any court or governmental authority or agency having jurisdiction over the City or the Authority, or the validity or the enforceability of any material provision of this Agreement or the other Related Documents shall at any time be contested by the City or the Authority in a judicial or administrative proceeding or the City or the Authority shall deny that it has any or further liability or obligation under any material provision of this Agreement, the Lease Agreement or the other Related Documents, or the validity or enforceability of any material provision of this Agreement or the other Related Documents shall be contested by any governmental agency or authority having jurisdiction over the City or the Authority.
(h) The City abandons any part of the Property or the City’s interest in Property or any part thereof be assigned or transferred, either voluntarily or by operation of law or otherwise, without the written consent of the Assignee. (i) Any Letter Agreement Event of Default or any “event of default” under any other Related Document shall have occurred and be continuing.
Section 8.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Default Rate shall be applicable and the Authority or the Assignee may exercise any and all remedies available under law or granted under this Lease Agreement; subject to the final paragraph of this Section 8.2, the Assignee may declare the Revolving Commitment of the Assignee to make Advances to be terminated by written notice to the City, whereupon such Revolving Commitment and obligation shall be terminated; the Authority or the Assignee may petition a court of competent jurisdiction to issue a mandamus order to the City to compel specific performance of the covenants of the City contained in any of the Related Documents; the Authority or the Assignee may either personally or by attorney or agent without bringing any action or proceeding, or by a receiver to be appointed by a court in any appropriate action or proceeding, may take whatever action at law or in equity may appear necessary or desirable to collect the amounts due and payable under this Lease Agreement and the other Related Documents or to enforce performance or observance of any obligation, agreement or covenant of the City under this Lease Agreement and the other Related Documents, whether for specific performance of any agreement or covenant of the City or in aid of the execution of any power granted to the Assignee in this Lease Agreement or other Related Documents; the Authority or the Assignee may exercise, or cause to be exercised, any and all remedies as it may have under this Lease Agreement and the other Related Documents; provided, however, that notwithstanding anything herein to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; provided, that no termination of this Lease Agreement shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise any one or more of the following remedies:
(a) Enforcement of Payments Without Termination. If the Authority does not elect to terminate this Lease Agreement in the manner hereinafter provided for in
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subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and the Authority may take whatever action at law or in equity that may appear necessary or des irable to collect each Lease Payment as it becomes due hereunder. The City hereby irrevocably appoints the Authority as the agent and attorney- in-fact of the City to enter upon and re - lease the Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Property, to place such property in storage or other suitable place in Los Angeles County for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re -leasing of the Property and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained.
The City shall reimburse the Authority for any deficiency arising out of the re -leasing of the Property, or, if the Authority is unable to re-lease the Property, then for the full amount of all Lease Payments to the end of the Term of this Lease Agreement, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re -entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property or the exercise of any other remedy by the Authority. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-lease the Property in the event of such re-entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such re-leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof. The City agrees to surrender and quit possession of the Property upon demand of the Authority for the purpose of enabling the Property to be re-let under this paragraph. The City further waives the right to any rental obtained by the Authority in excess of the sum of Lease Payments and hereby conveys and releases such excess to the Authority as compensation to the Authority for its expenses incurred by the Authority for its services in re-leasing the Property. (b) Termination of Lease . If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease Agreement and re-lease all or any portion of the Property, subject to the Site and Facility Lease. If the Authority terminates this Lease Agreement at its option and in the manner hereinafter provided due to a default by the City (and notwithstanding any re -entry upon the Property by the Authority in any manner whatsoever or the re -leasing of the Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments and Addi tional Payments. Any surplus received by the Authority from such re -leasing shall be applied by the Authority to Lease Payments due under this Lease Agreement. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the
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Authority shall of itself operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have give n written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the Property, or of the remainder of the Term hereof or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice.
(c) Proceedings at Law or In Equity . If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder. (d) Remedies under the Site and Facility Lease . If an Event of Default occurs and continues hereunder, the Authority may exercise its rights under the Site and Facility Lease.
Notwithstanding anything set forth herein to the contrary, upon the occurrence of an Event of Default under Section 8.1(c) hereof, the Revolving Commitment shall terminate immediately and automatically without notice or further action on the part of the Assignee.
Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII it shall not be necessary to give any notice, other than such notice as may be required in this Article VIII or by law.
Section 8.4. Agreement to Pay Attorneys’ Fees and Expenses. If either party to this Lease Agreement defaults under any of the provisions hereof and the non-defaulting party should employ attorneys (including in-house legal counsel) or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the non- defaulting party (including the Assignee) the reasonable fees of such attorneys (including allocable costs and expenses of in-house legal counsel, if any) and such other expenses so incurred by the non-defaulting party.
Section 8.5. No Additional Waiver Implied by One Waiver . If any agreement contained in this Lease Agreement is breached by either party and thereafter waived by the other party, such waiver is limited to the particular breach so waived and will not be deemed to waive any other breach hereunder. No delay or omission of the Authority or the Assignee to exercise any right or power arising upon the happening of any breach or event of default shall impair any such right or
ATTACHMENT C
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power or shall be construed to be a waiver of any such breach or event of default or any acquiescence therein, and every power and remedy given to the Authority or the Assignee may be exercised from time to time and as often as shall be deemed expedient by the Assignee in its sole discretion. No course of dealing and no delay or failure of the Authority or the Assignee in exercising any right, power or privilege under this Lease Agreement or the Site and Facility Lease shall affect any other or future exercise thereof or exercise of any right, power or privilege; nor shall any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, powe r or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of the Authority and the Assignee under this Lease Agreement and the Site and Facility Lease are cumulative and not exclusive of any rights or remedies which the Authority or the Assignee would otherwise have under this Lease Agreement or the Site and Facility Lease, at law or in equity.
Section 8.6. Assignee to Exercise Rights . Such rights and remedies as are given to the Authority under this Article VIII have been assigned by the Authority to the Assignee, to which assignment the City hereby consents. Such rights and remedies shall be exercised solely by the Assignee.
Section 8.7. J udicial Reference.
(a) Judicial Reference. The Authority and the City hereby agree: (i) each proceeding or hearing based upon or arising out of, directly or indirectly, this Lease Agreement, the Site and Facility Lease, the Property or any document related thereto (including the Assignment Agreement), any dealings between the City and the Authority related to the subject matter of this Lease Agreement, the Site and Facility Lease or any related transactions, and/or the relationship that is being established between the City and the Authority (hereinafter, a “Claim” ) shall be determined by a consensual general judicial reference (the “Reference”) pursuant to the provisions of Section 638 et seq. of the California Code of Civil Procedure, as such statutes may be amended or modified from time to time; (ii) upon a written request, or upon an appropriate motion by either the Authority or the City, as applicable, any pending action relating to any Claim and every Claim shall be heard by a single Referee (as defined below) who shall then try all issues (including any and all questions of law and questions of fact relating thereto), and issue findings of fact and conclusions of law and report a statement of decision. The Referee’s statement of decision will constitute the conclusive determination of the Claim. The Authority and the City agree that the Referee shall have the power to issue all legal and equitable relief appropriate under the circumstances before the Referee; (iii) the Authority and the City shall promptly and diligently cooperate with one another, as applicable, and the Referee, and shall perform such acts as may be necessary to obtain prompt and expeditious resolution of all Claims in accordance with the terms of t his Section 8.7; (iv) either the Authority or the City, as applicable, may file the Referee’s findings, conclusions and statement with the clerk or judge of any appropriate court, file a motion to confirm the Referee’s report and have judgment entered thereon. If the report is deemed incomplete by such court, the Referee may be required to complete the report and resubmit it; (v) the Authority and the City, as applicable, will each have such rights to assert such objections as are set forth in Section 638 et seq. of the California Code of Civil Procedure; and (vi) all proceedings shall be closed to the public and confidential, and all records relating to the Reference shall be permanently sealed when the order thereon becomes final.
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(b) Selection of Referee; Powers. The parties to the Reference proceeding shall select a single neutral referee (the “Referee” ), who shall be a retired judge or justice of the courts of the State, or a federal court judge, in each case, with at least ten (10) years of judicial experience in civil matters. The Referee shall be appointed in accordance with Section 638 of the California Code of Civil Procedure (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts). If within ten (10) days after the request or motion for the Reference, the parties to the Reference proceeding cannot agree upon a Referee, then any party to such proceeding may request or move that the Referee be appointed by the Presiding Judge of the Los Angeles City Superior Court, or of the U.S . District Court for the Southern District of California. The Referee shall determine all issues relating to the applicability, interpretation, legality and enforceability of this Section 8.7. (c) Provisional Remedies and Self Help. No provision of this Section 8.7 shall limit the right of either the Authority or the City, as the case may be, to (i) exercise such self-help remedies as might otherwise be available under applicable law, or (ii) obtain or oppose provisional or ancillary remedies, including without limitation injunctive relief, writs of possession, the appointment of a receiver, and/or additional or supplementary remedies from a court of competent jurisdiction before, after, or during the pendency of any Reference. The exercise of, or opposition to, any such remedy does not waive the right of the Authority or the City to the Reference pursuant to this Section 8.7(c).
(d) Costs and Fees. Promptly following the selection of the Referee, the parties to such Reference proceeding shall each advance equal portions of the estimated fees and costs of the Referee. In the statement of decision issued by the Referee, the Referee shall award costs, including reasonable attorneys’ fees, to the prevailing party, if any, and may order the Referee’s fees to be paid or shared by the parties to such Reference proceeding in such manner as the Referee deems just.
A
RTICLE IX
PREPAYMENT OF LEASE PAYMENTS
Section 9.1. Mandatory Prepayment. The City shall be required to prepay, or cause the prepayment of, all the outstanding Lease Payments and all Obligations, including interest thereon, in whole on [September 1], 2027 (the “Mandatory Prepayment Date”), by paying a prepayment price equal to all the outstanding Lease Payments and Obligations, including interest thereon.
Section 9.2. Optional Prepayment . The City may exercise its option to prepay the principal components of the Lease Payments in whole or in part on any date, upon 30 days’ notice to the Assignee, 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 Payment required to be paid on or accrued to such date without a premium plus payment of all other Obligations then due and payable.
Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City shall be obligated to prepay the unpaid principal components of the Lease
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Payments in whole or in part on any date, together with any accrued and unpaid interest, and any other costs related to such prepayment and all other Obligations due and payable, from and to the extent of any proceeds of insurance award or condemnation award with respect to the Property to be used for such purpose under Section 6.2. The City and the Authority hereby agree that such proceeds, to the extent remaining after payment of any delinquent Lease Payments and all other Obligations, shall be credited towards the City’s obligations under this Section 9.3. If the City prepays the Lease Payments in part but not in whole under this Section 9.3, the remaining Lease Payments will be reduced in inverse order of payment date.
A
RTICLE X
MISCELLANEOUS
Section 10.1. Notices. Any notice, request, complaint, demand or other communication under this Lease Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City and the Assignee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the Authority:
Finance Authority of Long Beach
[c/o City of Long Beach
411 West Ocean Boulevard, 6th Floor
Long Beach, CA 90802
Attention: City Treasurer
Phone: (562) 570-6843]
If to the City:
City of Long Beach
[411 West Ocean Boulevard, 6th Floor
Long Beach, CA 90802
Attention: City Treasurer
Phone: (562) 570-6843]
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If to the Assignee:
Wells Fargo Bank, National Association
_______________
_______________
Attention: _______________
Phone: _______________
Email: _______________
Section 10.2. Binding Effect. This Lease Agreement inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns.
Section 10.3. Severability. If any provision of this Lease Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.
Section 10.4. Net-net-net Lease. This Lease Agreement is a “net -net-net lease” and the City hereby agrees that the Lease Payments are an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.
Section 10.5. Payments Set Aside. To the extent that any payment by or on behalf of the City is made to the Assignee, or the Assignee exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Assignee in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
Section 10.6. Further Assurances and Corrective Instruments. The Authority and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby leased or intended to be so or for carrying out the expressed intention of this Lease Agreement. The City further agrees to provide such information and cooperate with the Assignee as reasonably requested by the Assignee, including, without limitation, furnishing budget and financial statements, verification of required insurance coverage, the value of the Pro perty, and providing assistance with requests from rating agencies for private rating analysis; provided that such assistance shall not be inconsistent with the provisions of this Lease Agreement and applicable law.
Section 10.7. Assignee as Third Party Beneficiary. The Assignee is recognized as and shall be deemed to be an irrevocable third party beneficiary of this Lease Agreement and may enforce the provisions of this Lease Agreement as if it were a party hereto.
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Section 10.8. Execution in Counterparts . This Lease Agreement may be executed in several counterparts, each of which is an original and all of which constitutes one and the same instrument.
Section 10.9. Applicable Law. (a) This Lease Agreement is governed by and construed in accordance with the laws of the State.
(b) T O THE EXTENT PERMITTED BY APPLICABLE LAW, THE CITY AND THE AUTHORITY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY AND ALL CLAIM OR CAUSES OF
ACTION BASED UPON OR ARISING OUT OF THIS LEASE AGREEMENT AND THE OTHER RELATED DOCUMENTS. IF AND TO THE EXTENT THAT THE FOREGOING WAIVER OF THE RIGHT TO A JURY TRIAL
IS UNENFORCEABLE FOR ANY REASON IN SUCH FORUM , EACH OF THE PARTIES HERETO HEREBY
CONSENTS TO THE ADJUDICATION OF ALL CLAIMS PURSUANT TO JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, AND THE JUDICIAL REFEREE SHALL BE EMPOWERED TO HEAR AND DETERMINE ALL ISSUES IN SUCH REFERENCE , WHETHER FACT OR LAW .
EACH OF THE PARTIES HERETO REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND CONSENT
AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS AND CONSENTS TO JUDICIAL REFERENCE FOLLOWING CONSULTATION WITH LEGAL COUNSEL ON SUCH MATTERS. IN THE
EVENT OF LITIGATION, A COPY OF THIS LEASE AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT OR TO JUDICIAL REFERENCE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638 AS PROVIDED HEREIN.
(c) E ACH PARTY HERETO CONSENTS TO AND SUBMITS TO IN PERSONAM JURISDICTION AND
VENUE IN THE STATE OF CALIFORNIA AND IN THE FEDERAL DISTRICT COURTS WHICH ARE LOCATED IN THE STATE OF CALIFORNIA. EACH PARTY 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 LEASE AGREEMENT. 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
.
Section 10.10. Captions . The captions or headings in this Lease Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease Agreement.
Section 10.11. No Merger. It is the express intention of the Authority and the City that this Lease Agreement and the obligations of the parties hereunder are separate and distinct from the Site and Facility Lease and the obligations of the parties thereunder, and that during the term of the Site and Facility Lease and this Lease Agreement no merger of title or interest may occur or be deemed to occur as a result of the respective positions of the Authority and the City thereunder and hereunder.
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Section 10.12. US QFC Stay Rules.
(a) Recognition of U.S. Resolution Regimes. In the event that any party that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of this Lease Agreement (and any interest and obligation in or under this Lease Agreement and any property securing this Lease Agreement) from such Covered Entity will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Lease Agreement (and any such interest, obligation and property) were governed by the laws of the United States or a state of the United States. In the event that any party that is a Covered Entity or a BHC Act Affiliate of such party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights against such party with respect to this Lease Agreement are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Lease Agreement were governed by the laws of the United States or a state of the United States. The requirements of this paragraph (a) apply notwithstanding the provisions of paragraph (b).
(b) Limitation on the Exercise of Certain Rights Related to Affiliate Insolvency Proceedings. Notwithstanding anything to the contrary in this Lease Agreement or any related agreement, but subject to the requirements of paragraph (a), no party to this Lease Agreement shall be permitted to exercise any Default Right against a party that is a Covered Entity with respect to this Lease Agreement that is related, directly or indirectly, to a BHC Act Affiliate of such Covered Entity becoming subject to Insolvency Proceedings, except to the extent the exercise of such Default Right would be permitted under 12 C.F.R. § 252.84, 12 C.F.R. § 47.5, or 12 C.F.R. § 382.4, as applicable. After a BHC Act Affiliate of a party that is a Covered Entity has become subject to Insolvency Proceedings, any party that seeks to exercise a Default Right against such Covered Entity with respect to this Lease Agreement shall have the burden of proof, by clear and convincing evidence, that the exercise of such Default Right is permitted hereunder. “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. “Covered Entity” means any of the following:
(a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(c) a “ covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
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“Insolvency Proceeding” means a receivership, insolvency, liquidation, resolution, or similar proceeding.
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd- Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder. [Remainder of page intentionally left blank]
ATTACHMENT C
Signature Page to Lease Agreement
IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written.
FINANCE AUTHORITY OF LONG BEACH
By: ____________________________________
Name: ______________________________
Title: _______________________________
Attest:
By: ____________________________________
Name: ______________________________
Title: _______________________________
C
ITY OF LONG BEACH
By: ____________________________________
Name: ______________________________
Title: _______________________________
Attest:
By: ____________________________________
Name: ______________________________
Title: _______________________________
ATTACHMENT C
EXHIBIT A
DESCRIPTION OF THE SITE
All that certain real property situated in City of Long Beach, Los Angeles County, State of California, described as follows:
[TO COME]
ATTACHMENT C
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Facility consists of [TO COME].
ATTACHMENT C
EXHIBIT C
FORM OF ADVANCE REQUEST
Wells Fargo Bank, National Association
[Telephone: [________]
Facsimile: [________]
Attention: [________]
Email: [________]]
Ladies and Gentlemen:
The undersigned, a City Representative , refers to the Lease Agreement dated as of September [__], 2026 (together with any amendments or supplements thereto, the “Agreement”), by and between the F
INANCE AUTHORITY OF LONG BEACH, a joint exercise of powers entity organized and existing under the laws of the State of California, as sublessor (the “Authority” ), and CITY OF LONG BEACH, a charter city and municipal corporation duly organized and existing under its charter and the Constitution and laws of the State of California, as sublessee (the “City”) (the terms defined therein being used herein as therein defined) and hereby requests, pursuant to Section 3.2 of the Agreement, a Advance and in that connection sets forth below the following information relating to such proposed Advance (the “Proposed Advance”):
1. The Business Day of the Proposed Advance is ___________, 20__ (the “Advance Date”).
2. The principal amount of the Proposed Advance is $[______________], which is not greater than the Available Commitment as of the Advance Date set forth in 1 above.
3. The aggregate amount of the Proposed Advance shall be used solely as permitted under the Agreement.
4. After giving effect to the Proposed Advance, the aggregate principal amount of all Advances outstanding under the Agreement will not exceed the Revolving Commitment. With respect to a Advance, the amount of such Advance is not in excess of the Available Commitment as of the Advance Date set forth in 1 above.
Solely with respect to a Advance , the undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the Advance Date, before and after giving effect thereto:
(a) the undersigned is a City Representative;
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(b) The representations and warranties of the City contained in Section 2.1 hereof and in each other Related Document and the representations and warranties of the Authority contained in Section 2.2 hereof and in each other Related Document , or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Advance , except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 3.17, the representations and warranties contained in Section 5.15 of the Letter Agreement shall be deemed to refer to the most recent statements furnished pursuant to clause (a) of Section 6.02 of the Letter Agreement.;
(c) no Default or Event of Default shall have occurred and be continuing on such Advance Date or would result from the proposed Advance or from the application of the proceeds thereof; and
(d) all conditions precedent to the Advance in Section 3.17 of the Agreement have been satisfied.
The Proposed Advance shall be made by the Assignee by wire transfer of immediately available funds to the undersigned in accordance with the instructions set forth below:
____________________
____________________
____________________
C
ITY OF LONG BEACH
By: ___________________________________
Name: ______________________________
Title: _______________________________
ATTACHMENT C
EXHIBIT D
FORM OF NOTICE OF ADVANCE PREPAYMENT
NOTICE OF ADVANCE PREPAYMENT
[Date]
Wells Fargo Bank, National Association
[Telephone: [________]
Facsimile: [________]
Attention: [________]
Email: [________]]
The undersigned, a City Representative, refers to the Lease Agreement dated as of September 1, 2026 (together with any amendments or supplements thereto, the “Agreement”), by and between the F
INANCE AUTHORITY OF LONG BEACH, a joint exercise of powers entity organized and existing under the laws of the State of California, as sublessor (the “Authority”), and CITY OF LONG BEACH, a charter city and municipal corporation duly organized and existing under its charter and the Constitution and laws of the State of California , as sublessee (the “City” ) (the terms defined therein being used herein as therein defined) and hereby notifies the Assignee that on _____________ pursuant to the terms of Section 3.3(a) Agreement, the City intends to prepay/repay the following Advances as more specifically set forth below:
1. The Business Day of the prepayment is ___________, 20__ (the “Prepayment Date”).
2. The principal amount of the prepayment is $[______________].
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Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission ( e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.
Very truly yours,
CITY OF LONG BEACH
By: ____________________________________
Name: ______________________________
Title: _______________________________
ATTACHMENT C