Norton Rose Fulbright US LLP draft of 5/14/24
ATTACHMENT NO. 3
201113666.4
LEASE AGREEMENT
by and between
WEBSTER BANK, NATIONAL ASSOCIATION
and
CITY OF NORWALK
Dated as of June 1, 2024
201113666.4
TABLE OF CONTENTS
Page
Section 1. Lease by the City. ......................................................................................................1 Section 2. Sublease by the Bank; No Merger .............................................................................1 Section 3. Term; Occupancy.......................................................................................................2 Section 4. Representations, Covenants and Warranties of the City ...........................................2 Section 5. Budget and Appropriation .........................................................................................5 Section 6. Representations and Warranties of the Bank.............................................................6 Section 7. Acquisition of Solar Photovoltaic Systems in Property. ...........................................6 Section 8. Deposit of Moneys.....................................................................................................7 Section 9. Rental Payments. .......................................................................................................7 Section 10. Fair Rental Value.......................................................................................................9 Section 11. Rental Abatement ......................................................................................................9 Section 12. Evidence of Leasehold Interest................................................................................10 Section 13. Use of Property ........................................................................................................10 Section 14. Easement/Bank Access to the Property ...................................................................10 Section 15. Disclaimer of Warranty ...........................................................................................10 Section 16. Fixtures ....................................................................................................................11 Section 17. Maintenance and Repairs.........................................................................................11 Section 18. Utilities ....................................................................................................................11 Section 19. Risk of Loss; Damage, Destruction or Condemnation ............................................11 Section 20. Insurance..................................................................................................................11 Section 21. Liens and Taxes .......................................................................................................13 Section 22. Indemnity.................................................................................................................13 Section 23. Events of Default .....................................................................................................14 Section 24. Remedies..................................................................................................................14 Section 25. Non-Waiver .............................................................................................................16 Section 26. Assignment and Subleasing.....................................................................................16 Section 27. Substitution and Release of Property.......................................................................17 Section 28. Prepayment Option ..................................................................................................17 Section 29. Release of Liens.......................................................................................................17 Section 30. Extraordinary Costs .................................................................................................17 Section 31. Severability ..............................................................................................................17 201113666.4- ii -
Section 32. Entire Agreement.....................................................................................................18 Section 33. Notices .....................................................................................................................18 Section 34. Titles ........................................................................................................................18 Section 35. Further Assurances and Corrective Instruments......................................................18 Section 36. Execution in Counterparts .......................................................................................18 Section 37. Time.........................................................................................................................19 Section 38. Governing Law ........................................................................................................19 EXHIBIT A DESCRIPTION OF PROPERTY..............................................................................1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE* .............................................................1 EXHIBIT C DEFINED TERMS ....................................................................................................1 EXHIBIT D FORM OF PURCHASER LETTER..........................................................................1 201113666.4
LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of June 1, 2024 (this “Lease”), is by and between the CITY OF NORWALK, a general law city duly organized and existing under and by virtue of the laws and Constitution of the State of California (the “City”), as lessor and sublessee, and WEBSTER BANK, NATIONAL ASSOCIATION, national banking association organized under the laws of the United States (the “Bank”), as lessee and sublessor. Hereinafter, reference to the Bank means the Bank and the Bank’s assigns for those rights, interests and obligations that may be assigned by the Bank.
W I T N E S S E T H :
WHEREAS, pursuant to the Energy Services Agreement, dated as of November 16, 2023, (the “Purchase Agreement”), by and between the City and Syserco Energy Solutions, Inc. (“Syserco”), the City proposes to acquire and install certain solar photovoltaic systems (the “Solar Photovoltaic Systems”) from Syserco; and
WHEREAS, the City is entering into this Lease to finance a portion of the cost of the Solar Photovoltaic Systems under the Purchase Agreement, pursuant to which, the City shall lease the Solar Photovoltaic Systems, as further described on Exhibit A attached hereto (the “Property”), to the Bank, and the Bank shall lease the Property back to the City; and WHEREAS, to assure that moneys are available when needed to pay the costs of the Solar Photovoltaic Systems, the Bank is prepared to deposit the full amount of the Site Leasing Payment (as defined in Section 8) with U.S. Bank National Association, as escrow agent (the “Escrow Agent”), pursuant to an Escrow Agreement, dated June 12, 2024, by and among the City, the Bank and the Escrow Agent; and
WHEREAS, in consideration of the right of possession of, and the continued quiet use and enjoyment of, the Property during each Rental Period under this Lease, the City agrees to make certain Rental Payments (as hereinafter defined); and
WHEREAS, the City and the Bank agree to mutually cooperate now and hereafter, to the extent possible, to sustain the intent of this agreement and the bargain of both parties hereto.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Lease by the City.. The City hereby leases to the Bank, and the Bank hereby leases from the City, on the terms conditions set forth the herein, the Property.
Section 2. Sublease by the Bank; No Merger. The Bank hereby subleases to the City, and the City hereby subleases from the Bank, the Property in accordance with the provisions herein for the full term of this Lease. Unless the context otherwise requires, defined terms used in this Lease shall have the meaning specified in Exhibit C hereto, which meanings shall be equally applicable to both the singular and plural forms of any of the terms herein defined. 201113666.4- 2 -
Section 3. Term; Occupancy. The terms and conditions of this Lease shall become effective upon the authorized execution of this Lease by the parties hereto. The rental term of the Property subleased and leased hereunder commences on June 12, 2024 (“Closing Date”) and terminates on June 1, 2040 (the “Scheduled Termination Date”), as it may be extended as provided in this Section. If on the Scheduled Termination Date the Rental Payments shall not be fully paid, or provision therefor made, or if such Rental Payments shall have been abated at any time and for any reason, then the term of this Lease shall be extended until the date upon which all such Rental Payments shall be fully paid, except that the term of this Lease shall in no event extend beyond June 1, 2050.
This Lease may be terminated prior to the Scheduled Termination Date (a) if the City exercises its option to prepay this Lease pursuant to Section 28, by paying the then applicable prepayment price set forth in Exhibit B of this Lease, then the term of this Lease shall end on the date of any prepayment in whole; or (b) if prior to the Scheduled Termination Date, all Rental Payments have been fully paid and retired or provision made satisfactory to the Bank for such payment and retirement, the term of this Lease shall end upon receipt by the Bank of all Rental Payments required to be paid to the Bank pursuant to this Lease.
Section 4. Representations, Covenants and Warranties of the City. The City represents, covenants and warrants to the Bank that:
(a) Organization and Authority. The City is a general law city, duly organized and validly existing under the Constitution and laws of the State with authority to enter into this Lease and to perform all of its obligations hereunder and thereunder. (b) Authorization. The City Council has duly authorized the execution and delivery of this Lease and the City further represents and warrants that all requirements have been met and procedures followed to ensure its enforceability. (c) No Conflicts. The execution and delivery of the Escrow Agreement and this Lease, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, 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 Escrow Agreement and this Lease or the financial condition, assets, properties or operations of the City. (d) 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 Escrow Agreement and 201113666.4- 3 -
this Lease, or the consummation of any transaction therein and herein contemplated, except as have been obtained or made and as are in full force and effect. (e) Interest in Property. The City has or will have upon delivery pursuant to the Purchase Agreement a good and merchantable fee interest in the Property and has authority to enter into and perform its obligations under this Lease. (f) No Encumbrances and Liens. There are, and will be, no liens or encumbrances on the Property other than Permitted Encumbrances. (g) Compliance with the Laws with Respect to the Property. The City is in compliance with all laws, regulations, ordinances and orders of public authorities applicable to the Property.
(h) 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 the City or the assets, properties or operations of the City which, if determined adversely to the City, would have a Material Adverse Effect upon the consummation of the transactions contemplated by or the validity of the Escrow Agreement and this Lease, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Escrow Agreement and this Lease.
(i) Compliance With Laws and Regulations. The City will keep, observe and perform or cause to be kept, observed and performed all valid and lawful obligations or regulations 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 or commission 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 general law 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.
(j) No Defaults. The City has, within the past five calendar years, 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, or under any of its bonds, notes, or other debt obligations. (k) Estimated Useful Life of Property. The estimated useful life of the Property exceeds the term of this Lease.
(l) Financial Statements. The statement of financial position of the City as of June 30, 2023 are complete and correct and fairly present the financial condition, changes in financial position and results of operations of the City as of such date and for such fiscal year, and were prepared in accordance with generally accepted accounting principles. Since 201113666.4- 4 -
the period of such statements, there has been no (i) change which would have a Material Adverse Effect and (ii) no material increase in the long-term indebtedness of the City. (m) No Material Adverse Change. Since June 30, 2023:
(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; and (iii) the City has not (A) incurred any material indebtedness, other than the Rental 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.
(n) Reporting. Within 210 days of the end of each fiscal year of the City during the term hereof, the City shall provide the Bank with a copy of its audited financial statements for such fiscal year. The City shall also furnish to the Bank copies of each final budget of the City no later than 60 days after the end of the fiscal year. In addition, the City shall furnish, at the request of the Bank, such additional information that the Bank may from time to time reasonably request.
(o) Books and Records. The City covenants and agrees that it shall keep proper books of record and accounts of its operations, in which complete and correct entries shall be made of all transactions relating to the City. Such books and records shall at all reasonable times be subject to the inspection of the Bank upon 72 hours’ prior notice. (p) Accuracy of Information. All information, reports and other papers and data furnished by the City to the Bank were, at the time furnished, accurate in all material respects. No fact is known to the City to have occurred which has had or, which given the passage of time or giving of notice will have, a Material Adverse Effect, which has not been set forth in the financial statements previously furnished to the Bank or in other such information, reports, papers and data or otherwise disclosed in writing to the Bank prior to the Closing Date. Any financial, budget and other projections furnished to the Bank 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.
(q) Taxes. The City is exempt from the payment of all federal, state and local taxes with respect to the Property.
(r) Notices. During the term of this Lease, the City shall provide to the Bank:
(i) immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes an Event of Default 201113666.4- 5 -
under this Lease, 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; (ii) prompt written notice of any Material Litigation, Material Adverse Effect, or any investigation, inquiry or similar proceeding by any Governmental Authority; and
(iii) with reasonable promptness, such other information respecting the City, and the operations, affairs and financial condition of the City as the Bank may from time to time reasonably request.
(s) Tax Covenants. The City covenants and agrees that it will comply with all provisions of the Tax Code necessary to establish and maintain the excludability of the interest component of the Base Rental Payments from gross income under section 103 of the Tax Code. Without limiting the preceding sentence, the City makes the following covenants, representations and warranties as of the date of the execution and delivery of this Lease:
(i)No Arbitrage. The City shall not take or omit to take, or permit to be taken, any action, if such action or omission would cause the Lease to be an “arbitrage bond” within the meaning of section 148 of the Tax Code. (ii)Compliance with Rebate Requirements. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government.
(iii)Private Activity Bond Limitation. The City shall assure that the proceeds of the Lease are not used in a manner that would cause the Lease to be a “private activity bond” within the meaning of section 141 of the Tax Code. (iv)Federal Guarantee Prohibition. The City shall not take or permit to be taken any action if such action would cause any portion of the Lease to be “federally guaranteed” within the meaning of section 149(b) of the Tax Code. (v)Bank Qualification. In accordance with the provisions of Section 265(b)(3) of the Tax Code, the City hereby designates the Lease to be a “qualified tax exempt obligation” in that the Lease is not a “private activity bond” as defined in the Tax Code and the reasonably anticipated amount of “qualified tax- exempt obligations” to be issued by the City (including all subordinate entities of the City) in calendar year 2024 does not exceed $10,000,000.
Section 5. Budget and Appropriation. The City shall take such action as may be necessary to include all Rental Payments in its annual budget and annually to appropriate an amount necessary to make such Rental Payments. The covenants on the part of the City shall be deemed and construed to be duties imposed by law and it shall be 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 agreed to be carried out and performed by the City. 201113666.4- 6 -
Section 6. Representations and Warranties of the Bank. The Bank represents and warrants to the City that:
(a) the Bank has been duly organized and is duly and validly existing as a national banking association organized under the laws of the United States with full corporate power to enter into and undertake its duties and obligations hereunder and has sufficient knowledge and experience in financial and business matters to be able to evaluate the economic risks and merits of the investment represented by this Lease; (b) the Bank is a Qualified Buyer on the Closing Date;
(c) the execution, delivery and performance of this Lease and the Purchaser Letter have been duly authorized by all necessary corporate actions on the part of the Bank and no further approvals or consents are required;
(d) the execution, delivery and performance of this Lease does not result in any breach of or constitute a default under any indenture, mortgage, contract, agreement or instrument to which the Bank is a party by which it or its property is bound; (e) there is no pending or, to the best knowledge of the Bank, threatened action or proceeding before any court or administrative agency which will materially adversely affect the ability of the Bank to perform its obligations under this Lease; (f) the Bank will not mortgage or encumber the Property or this Lease or assign this Lease or its rights to receive Rental Payments hereunder, except as expressly permitted herein; and
(g) the Bank has executed and delivered to the City and Raymond James & Associates, Inc., as lease placement agent, a Purchaser Letter in substantially the form set forth in Exhibit D.
Section 7. Acquisition of Solar Photovoltaic Systems in Property. (a) The City agrees that it will use the proceeds of the Site Leasing Payment solely to pay the costs of the Solar Photovoltaic Systems, fund Capitalized Interest and to pay or reimburse the costs of the transaction.
(b) The City Council has duly authorized the execution and delivery of the Purchase Agreement and the City further represents and warrants that all requirements have been met and procedures followed to ensure its enforceability. (c) The execution, delivery and performance of the Purchase Agreement does not result in any breach of or constitute a default under any indenture, mortgage, contract, agreement or instrument to which the City is a party by which it or its property is bound. (d) There is no pending and notice of which has been served on the City or, to the knowledge of the City, threatened action or proceeding before any court or administrative agency which will materially adversely affect the ability of the City to perform its obligations under the Purchase Agreement.
201113666.4- 7 -
Section 8. Deposit of Moneys. The Bank shall cause the deposit of the sum of $[___] (the “Site Leasing Payment”) with the Escrow Agent on the Closing Date, less $[___] relating to costs of issuance to be disbursed by the Bank on or about the Closing Date.
Section 9. Rental Payments.
(a) General. Subject to the provisions of Section 11 and 28 hereof, Base Rental Payments shall be paid by the City to the Bank for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Base Rental Payments are to be paid. Except to the extent provided from insurance or condemnation proceeds, Base Rental Payments shall be paid only to the extent allocable to the Property of which the City has beneficial use and occupancy. A portion of the Base Rental Payments shall constitute principal components and a portion of the Base Rental Payments shall constitute interest components. It is expressly understood that the obligation of the City to pay Rental Payments hereunder includes the obligation of the City to pay the Additional Rental Payments, subject, however, to the specific limitations on such payment set forth in this Section.
(b) Principal Components and Interest Components. Subject to the provisions of Section 11 and 28 hereof, the principal components of the Base Rental Payments shall be paid by the City in the amounts and on the dates specified in Exhibit B hereof. The principal and interest components of the Base Rental Payments shall be paid by the City on each June 1 pursuant to invoices provided by the Bank in accordance with the schedule set forth in Exhibit B hereof. The interest components of the Base Rental Payments have been calculated based on an interest rate of 4.44% per annum, on the basis of a 360-day year of twelve 30-day months. The City understands that the Bank will send an invoice to the City in advance of each Base Rental Payment date.
(c) Additional Rental Payments. The City shall also pay, as Additional Rental Payments, such amounts as shall be required for the payment of (i) all taxes, fees and assessments of any nature whatsoever, including but not limited to excise taxes, fees, 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 Bank therein or in this Lease; provided, however, the City may, at the City’s expense and in its name, in good faith assert any exemptions to which it is entitled and contest any such taxes, fees and assessments and, in the event of such contest, may permit such taxes, fees and assessments to remain unpaid during the period of such contest and appeal therefrom unless the Bank shall notify the City that, in the opinion of counsel to the City, by nonpayment of any such items, the interest of the Bank 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, fees and assessments or provide the Bank with full security against any loss which may result from nonpayment, in form satisfactory to the Bank; (ii) insurance premiums for all insurance required pursuant to the provisions of this Lease (iii) any other reasonable fees, costs or expenses incurred by the Bank in connection with the execution, amendment, performance or enforcement of this Lease or any of the transactions contemplated hereby or related to the Property, including, without limitation, any amounts which may become due; provided, however, the City shall not be responsible for any costs 201113666.4- 8 -
incurred by the Bank associated with any assignment of this Lease; and (iv) all compensation and indemnification payable to the Bank pursuant to this Lease.
Amounts constituting Additional Rental 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 at such later time as such amounts may be paid without penalty or, in any other case, within 30 days after notice in writing from the Bank to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. To the extent that the Additional Rental Payments due in any Rental Period would cause the Rental Payments to exceed the fair rental value of the Property, such excess shall remain an obligation of the City which shall be paid in accordance with the provisions of this Lease. (d) Late Payments. Should the City fail to pay any part of the Rental Payments herein within 10 days from the due date thereof, the City shall, upon the Bank’s written request, pay interest on such delinquent Rental Payment from the date such Rental Payment was due at the Default Rate until paid.
(e) General. The City shall pay Rental Payments exclusively from legally available funds, in lawful money of the United States of America, to the Bank. The obligation of the City to pay the Rental Payments hereunder shall constitute a current expense of the City and shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitations or requirements concerning the creation of indebtedness by the City, nor shall anything contained herein constitute a pledge of the City’s general fund or any tax revenues of the City. Except as specifically provided in Section 11, the obligation of the City to pay the Rental Payments will be absolute and unconditional in all events, and will not be subject to set-off, defense, reduction, counterclaim, or recoupment for any reason whatsoever. (f) [Reserved].
(g) Triple Net Lease. This Lease shall be deemed and construed to be a “triple- net lease” and the City hereby agrees that the Rental Payments shall be an absolute net return to the Bank, free and clear of any expenses, charges or set-offs whatsoever and notwithstanding any dispute between the City and the Bank. (h) [Reserved].
(i) Payments under this Lease Agreement. The Bank hereby directs the City, and the City hereby agrees, to pay to the Bank and all amounts payable by the City under Section 28 shall be paid to the Bank as follows:
Webster Bank, National Association
[___]
[___]
Attention: [___]
ABA#: [___]
For Credit to: Account [___]
bbi: DO NOT POST. CONTACT:
201113666.4- 9 -
[___].com
Reference: City of Norwalk – Insert Loan # Included on Invoice (j) Payments Due on Non-Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, with the same force and effect if made on the date due.
Section 10. Fair Rental Value. Rental Payments shall be paid by the City in consideration of the right of possession of, and the continued quiet use and enjoyment of, the Property during each Rental Period. The parties hereto have agreed and determined that the annual fair rental value of the Property is not less than the amount set forth in Exhibit B hereto. In making such determination, consideration has been given to the fair market value of the Property, other obligations of the parties under this Lease (including but not limited to costs of maintenance, taxes and insurance), 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, and the ability of the City to make additions, modifications and improvements to the Property and to replace the Property. The Rental Payments payable during each Rental Period shall not exceed the fair rental value of the Property.
Section 11. Rental Abatement. Except to the extent of (a) Capitalized Interest, (b) amounts received in respect of rental interruption insurance, if any, and (c) amounts, if any, otherwise legally available to the City for payments in respect of the Base Rental Payments, during any period in which, by reason of material damage, destruction, title defect, or condemnation, there is substantial interference with the use and possession by the City of any portion of the Property, Base Rental Payments due hereunder with respect to the Property shall be abated to the extent that the total fair rental value of the portion of the Property in respect of which there is no substantial interference is less than the remaining scheduled Base Rental Payments and Additional Payments, in which case Base Rental Payments shall be abated only by an amount equal to the difference.
Such abatement shall continue for the period commencing with the date of such damage, destruction, title defect or condemnation and end with the restoration of the Property or portion thereof to tenantable condition or correction of title defect or substantial completion of the work of repair or replacement of the portions of the Property so damaged, destroyed, defective or condemned. For purposes of determining the annual fair rental value available to pay Base Rental Payments and Additional Payments, annual fair rental value of the Property shall first be allocated to this Lease.
Any abatement of Base Rental Payments pursuant to this Section shall not be considered an Event of Default as defined in Section 23 hereof, but shall result in the extension of the term of this Lease by a period equal to the period of abatement for which Base Rental Payments have not been paid in full (but in no event later than 10 years after the then existing term of this Lease), and Base Rental Payments for such extension period shall be equal to the unpaid Base Rental Payments during the period of abatement but without interest thereon. The City waives the benefits of Civil Code Sections 1932(2) and 1933(4) and any and all other rights to terminate this Lease by virtue of any such interference and this Lease shall continue in full force and effect. Such abatement shall continue for the period commencing with the date of such damage, destruction, title defect or condemnation and ending with the substantial completion of the work of repair or replacement of the portions of the Property so damaged, destroyed, defective or condemned. 201113666.4- 10 -
If Base Rental Payments are abated, in whole or in part, pursuant to this Section 11 due to damage, destruction, title defect or condemnation of any part of the Property and the City is unable to repair, replace or rebuild the Property from the proceeds of insurance, if any, the City agrees to apply for and to use its best efforts to obtain any appropriate State and/or federal disaster relief in order to obtain funds to repair, replace or rebuild the Property.
The City hereby acknowledges and agrees that during any period of abatement with respect to all or any part of the Property, the Bank, on behalf of the City, shall use the proceeds of use and occupancy insurance, if any, to make Base Rental Payments.
Section 12. Evidence of Leasehold Interest. The City agrees to execute such additional documents, including financing statements, and authorizes the Bank to file such financing statements, which the Bank deems necessary or appropriate to establish, perfect and maintain the Bank’s leasehold interest in the Property.
Section 13. Use of Property. Except as provided in Section 14 and 24 upon an Event of Default, during the term of this Lease, the Bank shall not take any action to prevent the City’s quiet use and enjoyment of the Property without suit, trouble or hindrance from the Bank or its assigns. The City will not use, operate or maintain the Property improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease. The City shall obtain all permits and licenses, if any, necessary for the operations on the Property. In addition, the City agrees to comply in all respects with all laws of all jurisdictions involving the Property; provided, however, that the City may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not, in the opinion of the Bank, adversely affect the estate of the Bank in and to the Property or its interest or rights under this Lease.
Section 14. Easement/Bank Access to the Property. The City hereby grants, conveys and confirms to the Bank an irrevocable, non-exclusive easement on any real property of the City immediately surrounding the Property for the purpose of: (a) ingress, egress, passage or access to and from the Property by pedestrian or vehicular traffic by a Bank representative or agent of the Bank; (b) inspection of all or any portion of the real or personal property, equipment and/or fixtures comprising the Property; and (c) exercising the remedies provided in this Lease. Such non- exclusive easement is subject to, and limited by, all public safety and other applicable laws and regulations that limit access to the Property and any real property immediately surrounding the Property; provided, however, such limitations shall not prohibit the Bank from exercising its rights under this Lease.
Section 15. Disclaimer of Warranty. THE BANK MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE OR FITNESS
OF THE PROPERTY FOR ITS INTENDED USE OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROPERTY. IN NO EVENT SHALL THE BANK BE
LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, IN
CONNECTION WITH OR ARISING OUT OF THIS LEASE FOR THE EXISTENCE,
FURNISHING, FUNCTIONING OR USE OF THE PROPERTY, EXCEPT FOR THOSE DAMAGES CAUSED BY ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 201113666.4- 11 -
Section 16. Fixtures. All additions and improvements that are made to the Property shall thereafter comprise part of the Property, except for Permitted Encumbrances, and be subject to this Lease.
Section 17. Maintenance and Repairs. The City, at its own cost and expense, shall furnish or cause to be furnished necessary labor and materials to maintain the Property in good repair, condition, and working order.
Section 18. Utilities. The City shall contract for and pay the expenses of all utility services required for the Property. The City shall be liable for payment as well as maintenance of all utility services received.
Section 19. Risk of Loss; Damage, Destruction or Condemnation. With the exception of acts resulting from willful misconduct or gross negligence by the Bank, its employees, officers, agents and representatives, the City hereby assumes and shall bear the entire risk of loss and damage to or condemnation of the Property from any and every cause whatsoever. No loss or damage to the Property or any part thereof shall impair any obligation of the City under this Lease which shall continue in full force and effect, subject to Section 11 of this Lease. The provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, including any amendments thereto and any other law which may hereinafter be in force during the term of this Lease which authorizes the termination of this Lease upon the partial or complete destruction of the Property, are hereby waived by the City.
Section 20. Insurance. (a) The City shall secure and maintain or cause to be secured and maintained at all times with insurers of recognized responsibility or through a program of self- insurance to the extent specifically permitted in this Section 20, all coverage on the Property required by this Section 20.
Such insurance shall consist of:
(i) Comprehensive general liability coverage against claims for damages including death, personal injury, bodily injury or property damage arising from operations involving the Property. Such insurance shall afford protection with a combined single limit of not less than $1,000,000 per occurrence with respect to bodily injury, death or property damage liability, or such greater amount as may from time to time be recommended by the City’s risk management officer or an independent insurance consultant retained by the City for that purpose, subject to a deductible clause determined by the City. The City’s obligations under this clause (i) may be satisfied by self-insurance; (ii) The City shall maintain or cause to be maintained, throughout the term of this Lease, casualty insurance against loss or damage to any or all of the Property by fire, lightning and such other hazards, with extended coverage and vandalism and malicious mischief insurance. Such extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage and such other hazards as are normally covered by such insurance. The insurance required by this paragraph shall be in an amount equal to the replacement cost (subject to deductible clauses as determined by the City) of improvements located or to be located on the Property but 201113666.4- 12 -
shall be not less than the principal components as provided in Exhibit B. The City’s obligations under this clause (ii) may be satisfied by self-insurance; (iii) Workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the Labor Code of the State, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act. The City’s obligations under this clause (C) may be satisfied by self-insurance; and
(iv) From and after delivery of the Property to the City under the Purchase Agreement, rental interruption insurance in an amount not less than the maximum remaining scheduled Rental Payments in any 24-month period, by an insurance provider rated at least “A” by A.M. Best & Company, to insure against loss of use of the Property caused by perils covered by the insurance required in Section 20(a)(i). This coverage shall insure against abatement of Base Rental Payments payable by the City that come due hereunder resulting from the City’s loss of use of the Property or any substantial portion thereof and caused by any peril covered under the City’s physical damage insurance policy or self-insurance program, as applicable. Such insurance may be maintained in conjunction with or separate from any other similar insurance maintained by the City. Any insurance proceeds received by the City pursuant to this Section 20(a)(iv) shall be payable by the City to the Bank in amounts proportionate to the loss of use of the Property. Such insurance proceeds shall constitute a credit, proportionate to the loss of use of the Property, against any Base Rental Payments due during the restoration period. Insurance proceeds and Base Rental Payments shall together be in an amount in sufficient (subject to the policy limits of such rental interruption insurance) to make the Bank whole during the period of abatement.
All policies or certificates issued by the respective insurers for insurance, with the exception of workers’ compensation insurance, shall provide that such policies or certificates shall not be canceled or materially changed without at least 30 days’ prior written notice to the Bank.
Certificates of comprehensive general liability and workers’ compensation insurance shall be furnished by applicable insurers to the City, and, at least ten days prior to the expiration dates of such policies, if any, evidence of renewals shall be deposited with the Bank, upon the Bank’s request.
If the City elects to provide self-insurance pursuant to clauses (i), (ii) and/or (iii) above, the City shall annually cause to be delivered to the Bank, upon the Bank’s request, a certificate of an Insurance Consultant certifying to the adequacy of the City’s reserves for such insurance.
All policies or certificates of insurance provided for herein shall name the City as a named insured and the Bank as an additional insured with respect to the insurance required under Section 20(a)(i) and shall name the Bank as the loss payee with respect to the insurance required under Section 20(a)(ii). All proceeds of insurance maintained under Section 20(a)(i) shall be deposited with the City and all proceeds of insurance maintained under Section 20(a)(ii) and (iv) shall be deposited with the Bank.
201113666.4- 13 -
Notwithstanding the generality of the foregoing, the City shall not be required to maintain or cause to be maintained more insurance than is specifically referred to above or any policies of insurance other than standard policies of insurance with standard deductibles offered by reputable insurers at a reasonable cost on the open market.
(b) Form of Policies. If the City obtains insurance through a pooled insurance program of governmental entities, an annual statement or memorandum of coverage delivered to the Bank will satisfy the requirements of this subsection. The Bank shall not be responsible for the payment of premium and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the City.
Section 21. Liens and Taxes. The City shall promptly pay or cause to be paid all sums of money that may become due for any labor, services, materials, supplies or equipment alleged to have been furnished or to be furnished to or for, in, upon or about the Property and which may be secured by any mechanic’s, materialman’s or other lien against the Property, and shall cause each such lien to be fully discharged and released; provided, however, that the City (a) may contest any such claim or lien without payment thereof so long as such non-payment and contest stays execution or enforcement of the lien, but if such lien is reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not stayed, or if stayed and the stay thereafter expires, then and in any such event the City shall forthwith pay and discharge such judgment or lien; or (b) delay payment without contest so long as and to the extent that such delay will not result in the imposition of any penalty. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any pledge, lien, charge, encumbrance or claim on or with respect to the Property, other than Permitted Encumbrances and the rights of the Bank as herein provided. The City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance (other than Permitted Encumbrances) or claim, if the same shall arise at any time. The City shall promptly pay all fees, assessments, charges, and taxes (municipal, state and federal), including personal property taxes, which may now or hereafter be imposed upon the ownership, leasing, renting, sale, possession, or use of the Property, excluding, however, all taxes on or measured by the Bank’s income.
Section 22. Indemnity. Subject to State law concerning contribution and enforceability of indemnifications, the City shall indemnify the Bank against and hold the Bank harmless from any and all claims, actions, suits, proceedings, costs, expenses, damages, and liabilities, including attorneys’ fees, arising out of, connected with or resulting from any acts of omission or commission by the City’s employees and agents or claims resulting from incidents or occurrences involving third parties on the Property, including without limitation, the construction, possession, use or operation of the Property and further, the City agrees, to the extent the law allows, to indemnify the Bank against and hold the Bank harmless from and against any and all claims, actions, suits, proceedings, cost, expenses, damages, and liabilities, including attorney’s fees, arising out of, connected with or resulting from the clean-up of any hazardous materials or toxic wastes from the Property; provided, however, that the City shall not be required to indemnify the Bank if such liability or damages are caused by the gross negligence or willful misconduct of the Bank. 201113666.4- 14 -
Section 23. Events of Default. The term “Event of Default,” as used in this Lease, means the occurrence of any one or more of the following events:
(a) the City fails to make any Rental Payment when due; (b) the City fails to perform or observe any other covenant, condition or agreement to be performed or observed by it hereunder and such failure to perform the covenant, condition or agreement hereunder is not cured within 60 days after written notice thereof to the City by the Bank;
(c) the City shall file any petition or institute any proceedings under any act or acts, state or federal, dealing with or relating to the subject of bankruptcy or insolvency or under any amendment of such act or acts, either as a bankrupt or as an insolvent or as a debtor or in any similar capacity, wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of its debts or obligations, or offers to its creditors to effect a composition or extension of time to pay its debts, or asks, seeks or prays for a reorganization or to effect a plan of reorganization or for a readjustment of its debts or for any other similar relief, or if the City shall make a general or any assignment for the benefit of its creditors;
(d) this Lease, or any material provision hereof, shall at any time for any reason cease to be the legal, valid and binding obligation of the City or shall cease to be in full force and effect, or shall be declared to be unenforceable, invalid or void, or the validity or enforceability thereof shall be contested by the City, or the City shall renounce the same or deny that it has any further liability hereunder or thereunder; or (e) the occurrence of a Material Adverse Effect that is not cured within 30 days after written notice thereof to the City by the Bank.
Section 24. Remedies. Upon the occurrence of an Event of Default, the Bank may exercise any and all remedies available pursuant to law or in equity or granted pursuant to this Lease. The Bank is expressly authorized to enter and re-enter the Property and, in addition, at its option, with or without such entry, to terminate this Lease; provided, that in no event shall the Bank be permitted to re-enter or re-let that portion of the Property constituting Permitted Encumbrances. Upon the occurrence of an Event of Default and notwithstanding any entry or re- entry by the Bank, the City shall continue to remain liable for the payment of Rental Payments and damages for breach of this Lease and the performance of all conditions herein. Such Rental Payments and damages shall be payable to the Bank, at the time and in the manner set forth in Section 24(a) or (b):
(a) If the Bank does not elect to terminate this Lease, the City agrees to and shall remain liable for the payment of Rental Payments at the times and in the amounts set forth in Exhibit B and the performance of all conditions herein and shall reimburse the Bank for any deficiency arising out of the re-letting of the Property, or, if the Bank is unable to re-let the Property, then for the full amount of the Rental Payments to the end of this Lease term. The City hereby irrevocably appoints the Bank as the agent and attorney-in- fact of the City to enter upon and re-let the Property upon the occurrence of an Event of Default by the City.
201113666.4- 15 -
(b) If the Bank elects to terminate this Lease upon the occurrence of an Event of Default, the Bank shall give 10 days’ written notice of its intention to terminate this Lease. The City shall be relieved of the default if the City complies with all terms of this Lease within said 10 day period by remitting to the Bank all past due payments together with interest thereon at the Default Rate. In the event of termination of this Lease by the Bank (and notwithstanding any re-entry upon the Property by the Bank in any manner whatsoever or the re-letting of the Property), the City nevertheless agrees to pay to the Bank as Additional Rental Payments all costs, loss or damages howsoever arising or occurring as a result of the City’s breach of this Lease and the re-letting of the Property, payable at the same time and in the same manner as in the case of payment of Rental Payments. Neither notice to pay Rental Payments or to deliver up possession of the Property given pursuant to law nor any proceeding in unlawful detainer taken by the Bank shall of itself operate to terminate this Lease. Furthermore, no termination of this Lease on account of default by the City shall be or become effective by operation of law or otherwise, unless and until the Bank shall have given written notice to the City in accordance with Section 33 hereof of the election on the part of the Bank to terminate this Lease.
In addition to the remedies set forth above, upon the occurrence of an Event of Default, then the Bank shall be entitled to proceed to protect and enforce the rights vested in the Bank by this Lease by such appropriate judicial proceeding as the Bank shall deem most effectual to protect and enforce any such right, either by suit in equity or by action at law, whether for the specific performance of any covenant or agreement contained in this Lease, or in aid of the exercise of any power granted in this Lease, or to enforce any other legal or equitable right vested in the Bank by this Lease or by law. The provisions of this Lease and the duties of the City and any of its officers, agents and employees shall be enforceable by the Bank or its assignee by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction.
Without limiting the generality of the foregoing, the Bank shall have the right:
(i) by action or suit in equity to require the City and any of its officers, agents and employees to account as the trustee of an express trust; (ii) by action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Bank;
(iii) by action pursuant to Section 1085 of the California Code of Civil Procedure, or as otherwise provided by law, for the issuance of a writ of mandate enforcing, for the entire balance of the Lease term, the ministerial duty of the City to appropriate and take all other administrative steps necessary for the payment of Rental Payments; and/or
(iv) by mandamus or other suit, action or proceeding at law or in equity to enforce the rights of the Bank against the City and any of its officers, agents and employees to compel performance and compliance with the duties and obligations under the law the covenants and agreements provided herein.
No right or remedy herein conferred upon or reserved to the Bank is exclusive of any other right or remedy herein, but each shall be cumulative of every other right or remedy given hereunder or 201113666.4- 16 -
now or hereafter existing at law or in equity or by statute or otherwise, and may be enforced concurrently therewith or from time to time; provided, however, that notwithstanding any provisions to the contrary herein, the Bank shall not under any circumstances have the right to accelerate the Rental Payments that fall due in future Rental Periods or otherwise declare any Rental Payments not then in default to be immediately due and payable.
No officer, employee, agent, representative, attorney or consultant of the City shall personally be liable to the Bank or any successor in interest of Bank, in the event of any default or breach by the City, or for any amount which may become due to Bank or any successor in interest, on any obligation under the terms of this Lease.
Section 25. Non-Waiver. No covenant or condition of this Lease can be waived except by the written consent of the Bank. Forbearance or indulgence by the Bank in any regard whatsoever shall not constitute a waiver of the covenant or condition in question. Until performance by the City of such covenant or condition is complete, the Bank shall be entitled to invoke any remedy available to the Bank under this Lease or by law or in equity despite such forbearance or indulgence.
Section 26. Assignment and Subleasing. The City shall not (a) assign, transfer, pledge, or hypothecate this Lease, the Property (except for Permitted Encumbrances), or any part thereof, or any interest therein; or (b) sublet or lend the use of the Property (except for Permitted Encumbrances) or any part thereof except with the prior written consent of the Bank which, in the case of subletting, shall not be unreasonably withheld. No such pledge, assignment, sublease or any other transfer shall in any event affect or reduce the obligation of the City to make the Rental Payments due hereunder. Consent to any of the foregoing prohibited acts applies only in the given instance and is not a consent to any subsequent like act by the City or any other person. The Bank shall not assign its obligations under this Lease with the exception of its obligation to issue default notices and its obligations pursuant to Section 29.
The Bank may assign its right, title and interest in this Lease, the Rental Payments and other amounts due hereunder and the Property, in whole to one assignee or subassignee at any time, without the consent of the City. Any such assignment by the Bank or its assigns shall be to a Qualified Buyer. No such assignment shall be effective as against the City unless and until the Bank shall have filed with the City written notice thereof, and the assignee or subassignee shall have provided to City a Purchaser Letter in substantially the form set forth in Exhibit D. The City shall pay all Rental Payments due hereunder pursuant to the direction of the Bank or the assignee named in the most recent assignment or notice of assignment filed with the City. During the Lease term, the City shall keep a complete and accurate record of all such notices of assignment. Subject to the foregoing, this Lease inures to the benefit of, and is binding upon, the successors and assigns of the parties hereto.
As between the Bank and its assignee (or the assignee and subsequent assignee(s), if any) on the one hand, and the City on the other, the Bank and the assignee (and subsequent assignee(s), if any) shall be responsible for ensuring that each such assignment complies with Sections 5950- 5955 of the Government Code of the State and all other applicable law, and the City shall have no responsibility or liability whatsoever in connection with any such non-compliance. 201113666.4- 17 -
Section 27. Substitution and Release of Property.
(a) the City shall have the right to substitute alternate real or personal property for all or any portion of the Property described in Exhibit A hereto under the following conditions:
(i) the City finds (and delivers a certificate to the Bank setting forth its findings) that the substituted real or personal property has a fair rental value greater than or equal to the Rental Payments being payable by the City pursuant to this Lease;
(ii) upon the substitution of any real or personal property and improvements thereon for all or any portion of the Property then existing, the City and the Bank shall execute any document necessary to reconvey to the City the portion of the Property being substituted and to include the substituted real or personal property and/or improvements thereon as all or a portion of the Property; and
(iii) the City shall certify that the useful life of any amended, modified, transferred, changed or substituted real or personal property equals or exceeds the remaining term of this Lease.
(b) All costs and expenses incurred in connection with such substitution or release shall be borne by the City. Notwithstanding any substitution pursuant to this Section 27, there shall be no reduction in or abatement of the Rental Payments due from the City hereunder as a result of such substitution or release.
Section 28. Prepayment Option. The City may exercise its option to prepay this Lease and purchase the Bank’s leasehold interest in the Property in “as-is” and “where-is” condition on the specified dates and for the specified amounts set forth in Exhibit B. Each prepayment option specified for a particular date is exclusive of the Rental Payment due on the same date.
Section 29. Release of Liens. Upon the City either making all of the Rental Payments scheduled herein or making a full prepayment option payment, this Lease shall terminate and the Bank, its successors or assigns shall cause (a) all right, title and interest in and to the Property to vest in the City, (b) the release of any and all liens created under the provisions for this Lease, and (c) the execution of any other documents required to terminate this Lease.
Section 30. Extraordinary Costs. In the case of litigation, the prevailing party shall be entitled to recover from the opposing party all costs and expenses, including attorneys’ fees, incurred by the prevailing party in exercising any of its rights or remedies hereunder or enforcing any of the terms, conditions or provisions hereof.
Section 31. Severability. If any provision or provisions of this Lease shall be held invalid or unenforceable by a court of competent jurisdiction, such holdings shall not invalidate or render unenforceable any other provision of this Lease, unless elimination of such provision materially alters the rights and obligations embodied in this Lease. 201113666.4- 18 -
Section 32. Entire Agreement. This Lease and its exhibits and any agreements that specifically refer to this Lease that are duly executed by authorized agents of the parties hereto constitute the entire agreement between the Bank and the City, and it shall not be further amended, altered, or changed except by a written agreement that is properly authorized and executed by the parties hereto.
Section 33. Notices. Service of all notices under this Lease shall be sufficient if given personally or mailed to the party involved at its respective address set forth below or at such address as such party may provide in writing from time to time. Any such notice mailed to such address shall be effective when deposited in the United States mail, duly addressed and with postage prepaid. Any change in the addresses noted shall not be binding upon the other party unless preceded by no less than 30 days prior written notice.
to the City: City of Norwalk
12700 Norwalk Boulevard
Norwalk, California 90650
Attention: City Manager
With a copy to:
City of Norwalk
12700 Norwalk Boulevard
Norwalk, California 90650
Attention: Finance Director
to the Bank: Webster Bank, National Association
[____]
[____]
Attention: [____]
with a copy to: [____]
c/o Webster Bank, National Association
[____]
[____]
Attention: [____]
Section 34. Titles. The titles to the Sections of this Lease are solely for the convenience of the parties and are not an aid in the interpretation thereof.
Section 35. Further Assurances and Corrective Instruments. The Bank 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 be reasonably required for correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease.
Section 36. Execution in Counterparts. This Lease may be executed in several counterparts, each of which shall be original and all of which shall constitute but one and the same instrument.
201113666.4- 19 -
Section 37. Time. Time is of the essence in this Lease and each and all of its provisions.
Section 38. Governing Law. This Lease and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State. [Remainder of page intentionally left blank.]
201113666.4
IN WITNESS WHEREOF, the parties hereto have caused their authorized agents to execute this Lease as of the date first above written.
CITY OF NORWALK
By
Jesus M. Gomez
City Manager
ATTEST:
By
Theresa Devoy
City Clerk
APPROVED AS TO FORM:
By ____________________________________
Victor Hsu
Special Counsel to the City
WEBSTER BANK, NATIONAL
ASSOCIATION
By
[Name]
[Title]
201113666.4A-1
EXHIBIT A
DESCRIPTION OF PROPERTY
(See attached.)
201113666.4B-1
EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE*
Period
Ending Principal Interest Total
201113666.4B-2
PREPAYMENT AND PREPAYMENT PRICE
The Base Rental Payments due under this Lease are subject to optional prepayment on and after June 1, 2029, at the option of the City, as a whole (but not in part) on any date, from amounts deposited with the Bank by the City in furtherance of the exercise of the City's option to purchase the Bank's leasehold interest in the Property from any funds available therefor, at a prepayment price (expressed as a percentage of the principal amount of the Base Rental Payments to be prepaid) as set forth below, plus accrued but unpaid interest to the prepayment date and any other amounts accrued but unpaid under the Lease:
Prepayment Dates Prepayment Price
June 1, 2029 through May 31, 2032 101%
Thereafter 100%
The City shall provide the Bank written notice of any such prepayment at least 30 days in advance thereof.
201113666.4C-1
EXHIBIT C
DEFINED TERMS
“Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 9(c) hereof.
“Authorized Representative” means the Mayor, the City Manager of the City or the Finance Director of the City, or their respective designees, and also means any other individual authorized by the City Council to act as an Authorized Representative hereunder. “Base Rental Payments” means all amounts payable to the Bank from the City as Base Rental Payments pursuant to Section 9(a) and (b) through the Lease term. “Business Day” means each day other than a Saturday, a Sunday, or any other holiday on which the Bank is closed for business.
“Capitalized Interest” shall mean amounts derived from the proceeds of the Site Leasing Payment deposited in the Escrow Fund under the Escrow Agreement to pay the interest component of the Base Rental Payments and investment earnings on such amounts to the extent that such earnings are required to be applied to pay the interest component of the Base Rental Payments. “Closing Date” shall mean June 12, 2024.
“Default Rate” means a rate of interest equal to the interest rate with respect to the Base Rental Payments, plus [__]%.
“Escrow Agreement” means the Escrow Agreement, dated June 12, 2024, by and among the City, the Bank and U.S. Bank National Association, as escrow agent. “Event of Default” means the occurrence of any one or more of the events set forth in Section 23 of this Lease.
“Governmental Authority” means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district 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.
“Insurance Consultant” means an individual or firm retained by the City as an independent insurance consultant, experienced in the field of risk management. “Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the ability of the City to meet or perform its obligations under this Lease on a timely basis, or (b) the validity or enforceability of this Lease. 201113666.4C-2
“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, (i) if determined adversely to the City, may have a Material Adverse Effect, (ii) seek to restrain or enjoin any of the transactions contemplated by this Lease, or (iii) may adversely affect (A) the exclusion of the interest component of the Rental Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes or (B) the ability of the City to perform its obligations under this Lease. “Permitted Encumbrances” means [___].
“Purchase Agreement” means the Energy Services Agreement, dated as of November 16, 2023, by and between Syserco and the City.
“Qualified Buyer” means a qualified institutional buyer, as defined in Rule 144A promulgated under the Securities Act of 1933, or an institutional Accredited Investor (which consist of Accredited Investors within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933.
“Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments.
“Rental Period” means the period from the Closing Date through June 1, 2025 and, thereafter, the twelve-month period commencing on June 1 of each year during the term of this Lease.
“Syserco” means Syserco Energy Solutions, Inc..
“State” means the State of California.
201113666.4D-1
EXHIBIT D
FORM OF PURCHASER LETTER
City of Norwalk
12700 Norwalk Boulevard
Norwalk, California 90650
Raymond James & Associates, Inc.
39 E. Union Street
Pasadena, California 91103
Re: Lease Agreement, dated as of June 1, 2024 (the “Lease”), by and between the City of Norwalk and Webster Bank, National Association
Ladies and Gentlemen:
The undersigned (the “Purchaser”), being the purchaser of the Lease, does hereby certify, represent and warrant for the benefit of the City of Norwalk, California (the “City”) that:
a. The Purchaser has been duly organized and is validly existing as a ____________ under the laws of the State of ___________ with full corporate power to enter into and undertake its duties and obligations under the Lease.
b. The execution and delivery of this Purchaser Letter has been duly authorized by all necessary corporate actions on the part of the Purchaser and no further approvals or consents are required.
c. The Purchaser is a Qualified Buyer.
d. The Purchaser has sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other obligations of a nature similar to the Lease and is able to evaluate the risks and merits of the investment represented by entering into or assuming the Lease.
e. The Purchaser has made its own inquiry and analysis with respect to the Lease and the security therefor, and other material factors affecting the security and payment of the Rental Payments.
f. The Purchaser is aware that the finances and operations of the City involve certain economic variables and risks that could adversely affect the security for the Lease and the Purchaser is able and willing to bear such risks.
g. The Purchaser is entering into or assuming the Lease for its own account and not with a view to, or for sale in connection with, any assignment or distribution of the Lease, or any part thereof. The Purchaser has not offered to sell, solicited offers to buy, or agreed to sell, assign 201113666.4D-2
or transfer any interest in the Lease or any part thereof, and has no present intention of reselling, assigning or transferring or otherwise disposing of the Lease. The Purchaser represents that it has not paid or given, and will not pay or give, to any third person, any money or other consideration for obtaining this Lease, other than normal costs of conducting business and costs of professional services such as attorneys.
h. The Purchaser has been provided an opportunity to ask questions of the City, and the Purchaser has received answers from representatives of the City regarding the terms and conditions of the Lease. The Purchaser has obtained all information requested by it in connection with the execution and delivery of the Lease as it regards necessary to evaluate all merits and risks of its investment with respect to the Lease.
i. The Purchaser has been informed that the Lease (i) has not been and will not be registered or otherwise qualified under the “Blue Sky” laws and regulations of any jurisdiction, (ii) will not be listed on any stock or other securities exchange, and (iii) will not carry a CUSIP number or rating from any rating service. The Purchaser acknowledges that the Lease has not been registered with any federal or state securities agency or commission. j. The Purchaser acknowledges that it has the right to sell and transfer the Bonds, subject to compliance with the transfer restrictions set forth in the Lease, including the requirement for the delivery to the City of a purchaser’s letter in the same form as this Purchaser’s Letter, including this paragraph. Failure to deliver such purchaser’s letter shall cause the purported transfer to be null and void.
k. The Purchaser agrees to indemnify and hold harmless the City with respect to any claim asserted against the City that arises with respect to any assignment, transfer or other disposition of the Lease, or any part thereof, by the Purchaser or any transferee thereof in violation of the provisions of the Lease.
l. The Purchaser acknowledges that the execution and delivery [or transfer or assignment] of the Lease to the Purchaser is made in reliance upon the certifications, representations and warranties herein.
Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Lease.
___________________________, as Purchaser
By: _________________________________
Name: _______________________________
Title: ________________________________