9/15/22
AFTER RECORDATION PLEASE RETURN TO:
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Maryann L. Goodkind, Esq.
FIRST AMENDMENT TO LEASE AGREEMENT
Dated as of October 1, 2022
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
CITY OF SANTA CLARITA
Relating to
$10,320,000
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds (Golden Valley Road) Series 2016A
and
$[PRINCIPAL AMOUNT]
Santa Clarita Public Financing Authority
Lease Revenue Bonds (Energy Efficiency Program)
Series 2022B (Green Bonds)
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT
TO REVENUE AND TAXATION CODE SECTION 11922
AND THIS DOCUMENT IS EXEMPT FROM RECORDING FEES
PURSUANT TO GOVERNMENT CODE SECTION 27383.
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement, dated as of October 1, 2022 (this “First Lease Amendment”), is made by and betw een the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), as lessor, and the CITY OF SANTA CLARITA, a city duly organized and existing under the laws of the State of California (the “City”), as lessee.
RECITALS:
WHEREAS, the Authority is a joint powers authority duly organized and existing under and pursuant to that certai n Joint Exercise of Powers Agr eement, dated as of July 9, 1991, as amended on May 10, 2016, by and among the City of Santa Clarita, California (the “City”), the City as successor agency to the Redevelopment Ag ency of the City of Santa Clarita (no longer a member), and the Santa Clarita Parking Author ity, establishing the Aut hority for the purpose, among other things, of issuing its bonds to be used to provide financing and refinancing for public capital improvements of the City; and
WHEREAS, pursuant to the Indenture, dated as of June 1, 2016 (the “Original Indenture”) by and between the Authority and the Trustee, the Authority issued the (collectively, the “2016 Bonds”), for the purpose of refinancing the costs of acquiring right-of-way for a portion of Golden Valley Road in connection with the payment of a judicial order by the City; WHEREAS, to facilitate the issuance of the 2016 Bonds, the City and the Authority entered into a Site and Facility Lease, dated as of June 1, 2016 (the “Site Lease”), whereby the Authority has agreed to lease certain real property and the improvements thereon, more commonly known as the Santa Clarita City Hall, located at 23920 Valencia Boulevard, Santa Clarita (the “Leased Property”) and described on Exhibit “A” attached hereto, and the Authority and the City entered into that certain Lease Agreement, dated as of June 1, 2016 (the “Original Lease”), between the Authority and the City, whereby the Authority has agreed to sublease the Leased Property back to the City, and the City is obligated to make Ba se Rental Payments (as defined therein) to the Authority for the sublease of the Leased Property;
WHEREAS, the Original I ndenture provides that, for any purpose the Authority may at any time issue one or more Series of Additional Bonds (in addition to the 2016 Bonds) payable from Revenues as provide d therein on a parity with all other Bonds theretofore issued thereunder, but only subject to the conditions precedent to the issuance of such Additional Bonds specified in the Original Indenture, including am endment of the Original Lease to increase the Base Rental Payments payable by the City th ereunder by an aggregate amount equal to the principal and interest due and payable on such Additional Bonds; WHEREAS, the City desires to finance certain energy efficiency improvements for City buildings and facilities, including but not limited to, H VAC, lighting, water conservation, solar, and refrigeration improvements (the “2022 Project”); and WHEREAS, the City has requested that the Authority issue its Lease Revenue Bonds (Energy Efficiency Program) Series 2022B (Green Bonds) (the “2022B Bonds”) in the
2 aggregate principal amount not to exceed $______________ as Additional Bonds on parity with the 2016 Bonds for the purpose of financing a por tion of the costs of the 2022 Project and to pay for the costs of issuing the 2022B Bonds;
WHEREAS, concurrently with the issu ance of the 2022B Bonds, the City has requested that the Authority al so issue its Lease Revenue Bonds (Energy Efficiency Program) Series 2022A (Green Bonds) (the “2022A Bonds”) for the purpose of financ ing a portion of the costs of the Project, which 2022A Bonds are on parity with the $10,645,000 Santa Clarita Public Financing Authority Lease Revenue Bonds Lease Revenue Bonds (Recreational Facility) Series 2020A and the $3,625,000 Santa Clarita Public Fina ncing Authority Fede rally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (collectively, the “2020 Bonds”), secured by lease payments under a separate lease;
WHEREAS, the Authority and the City ha ve entered into a First Supplemental Indenture, dated as of October 1, 2022 (the “First Supplemental Indenture,” and together with the Original Indenture, as amended, the “Indenture”) relating to the issuance of the 2022B Bonds, as Additional Bonds;
WHEREAS, pursuant to Sec tion 21 of the Original Lease and Sections 3.07 and
7.01(a) of the Indenture, the Authority and the City may amend or supplement the Original Lease by a written amendment thereof or supplement thereto which shall become binding upon execution by the Authority and the City without the written consents of any Owners for the purpose of increasing the amount of Base Rental Payment payable thereunder for the purpose of the issuance of Additional Bonds;
WHEREAS, in consideration of the unde rtaking and financing of the Project, including energy efficiency enhancements to th e Leased Property, the Au thority and the City desire to amend the Original Lease to increase the amount of Base Rental Payments for the purpose of the issuance of the 2022B Bonds, as Additional Bonds under the Indenture; WHEREAS, capitalized undefined terms shall have the meanings ascribed thereto in the Original Lease or the Indenture.
NOW, THEREFORE, the Authority and the City agree as follows:
ARTICLE I
AMENDMENTS TO ORIGINAL LEASE
SECTION 1.0. DEFINITIONS. Unless the context otherwise requires, the terms defined and/or modified in this Section shall for all purposes of the Lease, the Indenture and of any certificate, opinion or other docu ment herein or therein menti oned, have the meanings herein specified as follows:
“Base Rental Payments” means Base Rental Payments to be made by the City hereunder in accordance with the base rental schedule attached hereto as Exhibit B-1 in connection with the 2016 Bonds, in accordance with the base rental schedule attached hereto as Exhibit B-2 in connection with the 2022B Bonds, or, cumulatively in accordance
3 with the base rental schedule attached hereto as Exhibit B-3 in c onnection with the 2016 Bonds and the 2022B Bonds, and any additional base rental payments made hereunder to support Additional Bonds issued in accordance with the Indenture. “Expiration Date” means June 1, 20__.
“First Lease Amendment” means the First Amendment to Lease Agreement, dated as of October 1, 2022, by and between the Authority and the City. “Lease” means this Lease, as amended and supplem ented by the First Lease Amendment, as originally executed or as it may from time to time be amended or supplemented in accordance herewith.
[“Permitted Encumbrances” means, with respect to the Leased Property, as of any particular time, (i) the Site Le ase; (ii) this Lease, (iii) the Indenture, the Assignment Agreement and the Trustee’s and the Authority’s interests in the Leased Property, (iv) liens for taxes and assessments not then delinquent, (v) utility, access and other easements and rights of way, restrictions and exceptions that as certified in a Certificate of the City will not interfere with or impair the use intended to be made of the Leased Property; (vi) encumbrances upon any additions and improvement s to the Leased Property as permitted in this Lease and which do not materially impair the use intended to be made of the portions of the Leased Property other than such additi ons and improvements; (vii) any sublease or use permitted by this Leas e, (viii) covenants, co nditions or restrictions or liens of record relating to the Leased Property and existing on the Closing Date; (ix) such minor defects, irregularities, encumbrances and clouds on title as normally exist with respect to property similar in character to the Leased Property and as do not materially impair the use intended to be made of property affected thereby; and (x) any encumbrances listed in the Preliminary Report issued by First American Title Company, dated October ___, 2022.] SECTION 1.2. AMENDMENT TO SECTION 3(a). All references to “Exhibit B” in Section 3(a) shall be amended to read “Exhibit B-3.”
SECTION 1.3. AMENDMENT TO SECTION 11(b). The first and third paragraphs of Section 11(b) shall be amended and restated as follows:
“The City may at its option prepay fro m any source of av ailable moneys for redemption of Bonds pursuant to Section 2.03 and Section 10.04 (b) of the Indenture, all or any part (in an integral multiple of $5,000) of the Principal Component of Base Rental Payments (and corresponding Interest Component), so that the aggregate annual amounts of Principal Component of Ba se Rental Payments which sh all be payable after such prepayment shall each be an integral multiple of $5,000, at a prepayment price equal to the principal amount to be redeemed, plus accrued but unpaid interest to the prepayment date, without premium.”
“The Authority and the City hereby agree th at any prepayment in part under this Section and the redemption of any Bonds by th e Authority pursuant to Section 2.03(b) or Section 10.04(b) of the Indenture shall be credited towards the City’s obligations hereunder to make Base Rental Payments in any manner determined in writing by the City and
4 delivered to the Trustee. A prepayment made pursuant to this Section shall not cause a defeasance of any Bonds unless the requireme nts of Section 9.03 of the Indenture are satisfied.”
SECTION 1.4. AMENDMENT TO SECTION 17. In addition to the covenants of the City applicable to the 2016 Bonds in Section 17, the City also makes such covenants with reference to the 2022B Bonds and the 2022A Tax Certificate.
SECTION 1.5. AMENDM ENT TO EXHIBIT B. Exhibit B shall be replaced with Exhibits B-1, B-2 and B-3 attached hereto and incorporated herein by this reference.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. EFFECT OF FIRST LEASE AMENDMENT . This First Lease Amendment and all of the terms an d provisions herein contained sha ll form part of the Original Lease, as amended, as fully and with the same effe ct as if all such terms and provisions had been set forth in the Original Lease, as amended. Excep t as set forth in Article I hereof, the Original Lease shall remain in fu ll force and effect. The Original Lease is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as amended and supplemented hereby. If there shall be any conflict between the terms of this First Lease Amendment and the terms of the Original L ease, as amended (as in effect on the day prior to the effective date of this First Lease Amen dment), the terms of this First Lease Amendment shall prevail.
SECTION 2.2. EFFECTIVE DATE OF FIRST LEASE AMENDMENT. This First Lease Amendment shall take effect upon the 2022A Closing Date.
SECTION 2.3. APPLICABLE LAW . This First Lease Amendment shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California.
SECTION 2.4. COUNTERPARTS . This First Lease Amendment may be executed in counterparts, each of which shall be deemed an original.
S-1
IN WITNESS WHEREOF, the Authority and the City have caused this First Amendment to Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.
ATTEST:
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
By __________________________________
Chair
By __________________________________
Secretary
CITY OF SANTA CLARITA
By __________________________________
City Manager
ATTEST:
By __________________________________
City Clerk
A-1
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On ______________________________ before me,__________________________(insert name of the officer), Notary Public, personally appeared _________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
_________________________________ [Seal]
A-1
EXHIBIT A
DESCRIPTION OF THE LEASED PROPERTY
The land and City Hall structure located thereon situated on a portion of a parcel of land (Assessor Parcel No. 2861-026-900) in the County of Los Angeles, State of California, described below:
PARCEL 1:
LOTS 3, 4 AND 5, OF TRACT NO. 33746, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1056, PAGES 91 TO 96 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THEREFROM ALL RIGHTS TO MINERA LS, OIL, GAS, TARS, HYDROCARBON AND
METALLIFEROUS SUBSTANCES OF EVERY KIND, TOGETHER WITH THE RIGHT TO DRILL
OR MINE FOR SAME, WITHOUT, HOWEVER, THE RIGHT OF SURFACE ENTRY AND WITHOUT THE RIGHT TO DRILL OR MINE THROUGH THE SURFACE OF THE UPPER 500 FEET OF THE
SUBSURFACE OF SAID LAND AS RESERVED BY THE NEWHALL LAND AND FARMING
COMPANY (A CALIFORNIA LIMITED PARTNERSHIP), A LIMITED PARTNERSHIP IN DEED RECORDED APRIL 2, 1986 AS INSTRUMENT NO. 86-409536, OFFICIAL RECORDS.
PARCEL 2:
A NON-EXCLUSIVE EASEMENT FOR PURPOSES OF INGRESS AND EGRESS OVER THE WESTERLY 15 FEET OF LOT 2 OF SAID TRACT MAP 33746, RECORDED IN BOOK 1056, PAGES 91 TO 96 INCLUSIVE OF MAPS, WHICH EASEMENT SHALL BE APPURTENANT TO AND FOR THE BENEFIT OF LOT 3 OF SAID TRACT MAP 33746.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR PURPOSES OF INGRESS AND EGRESS OVER THE EASTERLY FIFTEEN FEET OF LOT 6 OF SAID TRACT MAP 33746, RECORDED IN BOOK 1056, PAGES 91 TO 96 INCLUSIVE OF MAPS, WHICH EASEMENT SHALL BE APPURTENANT TO AND FOR THE BENEFIT OF LOT 5 OF SAID TRACT MAP 33746.
[End of Legal Description]
B-1-1
EXHIBIT B-1
BASE RENTAL PAYMENT SCHEDULE
RELATING TO 2016 BONDS
Interest
Payment Dates(1) Principal Interest
Total
Debt Service
Annual
Debt Service
12/01/2016 $ 375,000.00 $ 154,185.83 $ 529,185.83 06/01/2017 167,050.00 167,050.00
12/01/2017 375,000.00 167,050.00 542,050.00
06/01/2018 159,550.00 159,550.00
12/01/2018 385,000.00 159,550.00 544,550.00
06/01/2019 151,850.00 151,850.00
12/01/2019 400,000.00 151,850.00 551,850.00
06/01/2020 143,850.00 143,850.00
12/01/2020 420,000.00 143,850.00 563,850.00
06/01/2021 135,450.00 135,450.00
12/01/2021 435,000.00 135,450.00 570,450.00
06/01/2022 126,750.00 126,750.00
12/01/2022 450,000.00 126,750.00 576,750.00
06/01/2023 117,750.00 117,750.00
12/01/2023 470,000.00 117,750.00 587,750.00
06/01/2024 108,350.00 108,350.00
12/01/2024 490,000.00 108,350.00 598,350.00
06/01/2025 98,550.00 98,550.00
12/01/2025 510,000.00 98,550.00 608,550.00
06/01/2026 88,350.00 88,350.00
12/01/2026 530,000.00 88,350.00 618,350.00
06/01/2027 77,750.00 77,750.00
12/01/2027 550,000.00 77,750.00 627,750.00
06/01/2028 72,250.00 72,250.00
12/01/2028 555,000.00 72,250.00 627,250.00
06/01/2029 66,700.00 66,700.00
12/01/2029 570,000.00 66,700.00 636,700.00
06/01/2030 61,000.00 61,000.00
12/01/2030 580,000.00 61,000.00 641,000.00
06/01/2031 54,475.00 54,475.00
12/01/2031 595,000.00 54,475.00 649,475.00
06/01/2032 42,575.00 42,575.00
12/01/2032 625,000.00 42,575.00 667,575.00
06/01/2033 30,075.00 30,075.00
12/01/2033 650,000.00 30,075.00 680,075.00
06/01/2034 20,325.00 20,325.00
12/01/2034 670,000.00 20,325.00 690,325.00
06/01/2035 10,275.00 10,275.00
12/01/2035 685,000.00 10,275.00 695,275.00
Total $10,320,000.00 $3,620,035.83 $13,940,035.83
________________________________
(1) Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date.
B-2-1
EXHIBIT B-2
BASE RENTAL PAYMENT SCHEDULE
RELATING TO 2022B BONDS
Interest 2022B Bonds Total Annual Debt
Payment Date(1) Principal Interest Debt Service Service
12/01/2022
06/01/2023
12/01/2023
06/01/2024
12/01/2024
06/01/2025
12/01/2025
06/01/2026
12/01/2026
06/01/2027
12/01/2027
06/01/2028
12/01/2028
06/01/2029
12/01/2029
06/01/2030
12/01/2030
06/01/2031
12/01/2031
06/01/2032
12/01/2032
06/01/2033
12/01/2033
06/01/2034
12/01/2034
06/01/2035
12/01/2035
06/01/2036
12/01/2036
06/01/2037
12/01/2037
06/01/2038
Total
________________________________
(1) Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date.
B-3-1
EXHIBIT B-3
BASE RENTAL PAYMENT SCHEDULE
CUMULATIVE
Interest 2016 Bonds 2022B Bonds Total Annual Debt
Payment Date1 Principal Interest Principal Interest Debt Service Service
12/01/2020
06/01/2021
12/01/2021
06/01/2022
12/01/2022
06/01/2023
12/01/2023
06/01/2024
12/01/2024
06/01/2025
12/01/2025
06/01/2026
12/01/2026
06/01/2027
12/01/2027
06/01/2028
12/01/2028
06/01/2029
12/01/2029
06/01/2030
12/01/2030
06/01/2031
12/01/2031
06/01/2032
12/01/2032
06/01/2033
12/01/2033
06/01/2034
12/01/2034
06/01/2035
12/01/2035
06/01/2036
12/01/2036
06/01/2037
12/01/2037
06/01/2038
12/01/2038
06/01/2039
12/01/2039
06/01/2040
1. Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date.
B-3-2
Interest 2020 Bonds 2022B Bonds Total Annual
Payment Date1 Principal Interest Principal Interest Debt Service Debt Service
12/01/2040
06/01/2041
12/01/2041
06/01/2042
12/01/2042
06/01/2043
12/01/2043
06/01/2044
12/01/2044
06/01/2045
12/01/2045
06/01/2046
12/01/2046
06/01/2047
12/01/2047
06/01/2048
12/01/2048
06/01/2049
12/01/2049
06/01/2050
Total
________________________________
(1) Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date.
AFTER RECORDATION PLEASE RETURN TO:
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Maryann L. Goodkind, Esq.
LEASE AGREEMENT
Dated as of June 1, 2016
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
CITY OF SANTA CLARITA
Relating to
$10,320,000
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Golden Valley Road)
Series 2016A
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT
TO REVENUE AND TAXATION CODE SECTION 11922
AND THIS DOCUMENT IS EXEMPT FROM RECORDING FEES
PURSUANT TO GOVERNMENT CODE SECTION 27383.
TABLE OF CONTENTS
Page
i
SECTION 1. DEFINITIONS ................................................................................................. 2 SECTION 2. TERM .............................................................................................................. 3 SECTION 3. RENTAL .......................................................................................................... 3 SECTION 4. USE OF PROCEEDS ...................................................................................... 5 SECTION 5. MAINTENANCE, UTILITIE S, TAXES AND ASSESSMENTS .................. 5 SECTION 6. CHANGES TO TH E LEASED PROPERTY .................................................. 6 SECTION 7. SUBSTITUTION AND RELEASE OF PROPERTY ..................................... 6 SECTION 8. INSURANCE ................................................................................................... 8 SECTION 9. DAMAGE, DESTRU CTION AND CONDEMNATION;
APPLICATION OF NET PROCEEDS ......................................................... 10 SECTION 10. DEFAULT ..................................................................................................... 11 SECTION 11. PREPAYMENT AND CREDITS.................................................................. 13 SECTION 12. MECHANICS’ LIENS .................................................................................. 14 SECTION 13. QUIET ENJOYMENT ................................................................................... 14 SECTION 14. INDEMNIFICATION.................................................................................... 14 SECTION 15. ASSIGNMENT .............................................................................................. 15 SECTION 16. ABATEMENT OF RENTAL ........................................................................ 16 SECTION 17. COVENANTS OF THE CITY ...................................................................... 16 SECTION 18. CONTINUING DISCLOSURE ..................................................................... 21 SECTION 19. WAIVER........................................................................................................ 21 SECTION 20. NET LEASE .................................................................................................. 21 SECTION 21. AMENDMENTS ........................................................................................... 21 SECTION 22. ESSENTIALITY ............................................................................................ 22 SECTION 23. LAW GOVERNING ...................................................................................... 22 SECTION 24. NOTICES ....................................................................................................... 22 SECTION 25. VALIDITY AND SEVERABILITY ............................................................. 22 SECTION 26. SECTION HEADINGS ................................................................................. 23 SECTION 27. NO MERGER ................................................................................................ 23 SECTION 28. EXECUTION ................................................................................................. 23
EXHIBIT A — DESCRIPTION OF THE LEASED PROPERTY
EXHIBIT B — BASE RENTAL PAYMENT SCHEDULE
LEASE AGREEMENT
This Lease Agreement, dated as of June 1, 2016 (this “Lease”), is made by and between the SANTA CLARITA PUBLIC FINANC ING AUTHORITY, a joint powers authority duly organized and existing under the laws of the St ate of California (the “Authority”), as lessor, and the CITY OF SANTA CLARITA, a city duly organized and existing under the laws of the State of California (the “City”), as lessee.
RECITALS:
WHEREAS, the City and the Authority ha ve previously entered into a Lease Agreement, dated as of January 1, 2007 (the “2007 Lease”), whereby the City leased certain real property and the improvements thereon, more co mmonly known as the Sant a Clarita City hall, located at 23920 Valencia Boulevard, Santa Clarit a (the “Leased Property”) from the Authority; and
WHEREAS, the Authority previously i ssued its Lease Revenue Bonds Series 2007 (Golden Valley Road) (the “2007 Bonds”), pa yable from revenues consisting primarily of certain lease payments (the “2007 Lease Paymen ts”) to be made by th e City under the 2007 Lease to finance the costs of acquiring right-of- way for a portion of Golden Valley Road in connection with the payment of a judicial order by the City (the “Project”); and WHEREAS, City has determined to refi nance the Project by prepaying its 2007 Lease Payments pursuant to Section 5.05 of th e 2007 Lease and thereby advance refunding and defeasing the 2007 Bonds; and
WHEREAS, the Authority has determined to issue its Lease Revenue Refunding Bonds (Golden Valley Road), Series 2016A, in the aggregate princi pal amount of $10,320,000 (the “Bonds”), for the purpose of assisting the City with the prepayment of the 2007 Lease Payments and the advance refunding and defeasance of the outstanding 2007 Bonds; and WHEREAS, in connection with such pr epayment of the 2007 Lease Payments and defeasance of the 2007 Bonds, and the issuan ce of the Bonds and a ny Additional Bonds, the City and the Authority have entere d into a Site and Facility Leas e, dated as of June 1, 2016 (the “Site Lease”), whereby the Authority has agreed to lease the Leased Property from the City; and WHEREAS, the Authority, pursuant to th is Lease, will sublease the Leased Property described in Exhibit A to the City, in consideration for base rental payments to be made by the City pursuant to this Lease, in accordance with the base rental schedule attached hereto as Exhibit B, that corresponds in amount to the principal and interest coming due with respect to the Bonds; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Lease do exist, have happe ned and have been performed in regular and due time, form and manner as required by law, and th e parties hereto are now duly authorized to execute and enter into this Lease;
2 NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Terms used herein and not otherwise defi ned herein but defined in the Indenture shall have the meanings ascribed to them in th e Indenture. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease, have the meanings herein specified, the following definitions to be equally applicable to both the singular and plural forms of any of the terms herein defined:
“Additional Rental Payments” means Additional Rental Payments due under Section 3(b) hereof.
“Base Rental Payments” means Base Rental Payments to be made by the City hereunder in accordance with the base rental schedule attached hereto as Exhibit B in connection with the Bonds, and any additiona l base rental payments made hereunder to support Additional Bonds issued in accordance with the Indenture.
“Event of Default” means the Events of Default set forth in Section 10. “Expiration Date” means December 1, 2035.
“Insurance Consultant” means an individual or firm reta ined by the City as an independent insurance consultant, experienced in the field of risk management. “Interest Component” means the interest component of any Base Rental Payments as set forth in the exhibit to this Lease relating to such Base Rental Payments. “Lease” means this Lease.
“Leased Property” means the portion of the Santa Clarita Sports Complex, located at 20850 Centre Pointe Parkway, in the City, as more fully described on Exhibit A. “Net Proceeds” means proceeds of any casualty or title insurance or condemnation awards, paid with respect to the Leased Property remaining after payment therefrom of all expenses in the collection thereof.
“Permitted Encumbrances” means, with respect to the Leased Property, as of any particular time, (i) the Site Leas e; (ii) this Lease, (iii) the I ndenture, the Assignment Agreement and the Trustee’s and the Authority’s interests in the Leased Property, (iv) liens for taxes and assessments not then delinquent, (v) utility, access and other easements and rights of way, restrictions and exceptions that as certified in a Certificate of the City will not interfere with or impair the use intended to be made of th e Leased Property; (vi) encumbrances upon any additions and improvements to the Leased Property as permitted in this Lease and which do not materially impair the use intended to be made of the portions of the Leased Property other than such additions and improvements; (vii) any sublease or use permitted by this Lease,
3 (viii) covenants, conditions or re strictions or liens of record re lating to the Leased Property and existing on the Closing Date; (ix) such minor defects, irregularities, encumbrances and clouds on title as normally exist with respect to property si milar in character to the Leased Property and as do not materially impair the use intended to be made of property affected thereby; and (x) any encumbrances listed in the Preliminary Report issued by Chicago Title Company, dated April 4, 2016.
“Principal Component” means the princi pal component of any Base Rental Payments as set forth in an exhibit to this Lease relating to such Base Rental Payments.
SECTION 2. TERM
The Authority hereby leases to the City and the City hereby leases from the Authority, on the terms and conditions hereinafter set forth, the Leased Property. The term of this Lease shall commence on June 22, 2016.
The term of the leasehold interest created hereby shall expire on the later of (i) the Expiration Date; (ii) the date th e last Base Rental Payment is made under the provisions hereof; or (iii) the date of discharge of all of the Bonds and Additional Bonds pursuant to Section 9.03 of the Indenture. Notwithstanding the foregoing, the term of this Lease sh all automatically be extended for a period of ten (10) years, if, on the Expiration Date, the Bonds and any Additional Bonds have not been fully discharged, and shall terminate on the date when the Bonds and any Additional Bonds have been fully discharged.
SECTION 3. RENTAL
Subject to the provisions of Sections 11 a nd 16 hereof, the City agrees to pay to the Authority, its successors or assigns, as re ntal for the use and possession of the Leased Property, the following amounts at the following times:
(a) Base Rental Payments; Additional Base Rental Payments. The City shall pay the Base Rental Payments to the Trustee, as assignee of the Au thority, as hereinafter provided, in accordance with the Base Rental Pa yment Schedule attached hereto as Exhibit B, less any amounts credited against the Base Rental Payments pursuant to Section 4.02(d) of the Indenture. The City shall pay to the Trustee the Base Rental Payments coming due fifteen (15) Business Days prior to the next succeeding June 1 and December 1, respectively, as set forth in Exhibit B and such payments shall constitute payment in arrears in consideration for the City’s use and possession of the Leased Property for th e six-month period preceding the due date of such Base Rental Payments.
The obligation of the City to pay the Base Rental Payments with respect to the Bonds shall rank pari passu with the obligation of the City to pay base rental payments with respect to any Additional Bonds. Upon and afte r the issuance of any Additional Bonds secured by base rental payments with resp ect to the Leased Property, the City shall pay the Base Rental Payments with respect to such Additional Bonds as provided in the Supplemental Indenture for such Additional Bonds, in accordance with the a dditional Base Rental Payment schedule which shall be attached hereto as an additional exhibi t prior to the delivery of such Additional Bonds, as adjusted for any prepayments.
4 (b) Additional Rental Payments. The C ity shall also pay, as “Additional Rental Payments” hereunder, in addition to the Base Rental Payments and any base rental payments hereunder made with re spect to Additional Bonds, to th e Trustee, as assignee of the Authority, as hereinafter provided, such amounts in each year as shall be required for the payment of all costs and expenses (not otherwise paid for or provi ded for out of the proceeds of sale of the Bonds) incurred by th e Authority or the Trustee in connection with the execution, performance or enforcement of this Lease or the assignment hereof, the Indenture, or the Authority’s or the Trustee’s interest in the Leased Property, including, but not limited to, all fees, costs and expenses, all administ rative costs of the Authority relating to the Leased Property (including, without limiting the ge nerality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessm ents (if any), expenses, compensation and indemnification of the Trustee payable by the Aut hority under the Indenture), fees of auditors, accountants, attorneys or engineers, all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or of the Indenture.
Such Additional Rental Payments shall be billed to the City by the Authority or the Trustee from time to time. Amounts so billed shall be paid by the City within sixty (60) days after receipt of the bill by the City.
(c) Fair Rental Value. Payments of Base Rental Payments and Additional Rental Payments for each rental payment period shall constitute the total rental for such rental payment period, and shall be paid by the City in each rental payment period for and in consideration of the right of the use and possession of, and the continued quiet use and enjoyment of, the Leased Property during each such period for which said rental is to be paid.
The City represents and covenants that the useful life of the Leased Property is not shorter than the final maturity of the Bonds. The parties to the Lease specificall y acknowledge that the annual fair rental value of the Leased Property is in excess of the maximum annual Base Rental Payments. In making such determination, consider ation has been given to other obligations of the parties under this Lease, the uses and purpos es which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public. The determination of fair rental value of the Leased Property pursuant to this paragraph shall not be deemed to be controlling in connection with a de termination of fair value of the Leased Property by the parties hereto for any other purpose.
(d) Payment of Base Rental Payments. Each installment of Base Rental Payments and Additional Rental Payments payable hereunder shall be paid from any source of legally available funds of the City in lawful money of the United States of America to the order of the Trustee at the corporate trust office of th e Trustee in Los Angeles, California, or such other place as the Trustee shall designate. A ll Base Rental Payments shall be made on a pari passu basis with each other. Notwithstanding any dispute between the City and the Authority, the City shall make all Base Rental Payments a nd Additional Rental Payments when due, without deduction or offset of any kind, and shall not withhold any Base Rental Payments pending the final resolution of any such disput e. In the event of a determina tion that the City was not liable for such Base Rental Payments or any portion thereof, said Base Rental Payments or excess of payments, as the case may be, sha ll, at the option of the City, be credited against subsequent Base Rental Payments due hereunder or be refunded at the time of such determination.
5 (e) Increases in Aggregate Base Rental Pa yments. The City covenants that it shall not permit an increase in the aggregate Base Rental Paym ents or permit additional base rental payments with respect to Additional B onds without first obtaining an opinion of Bond Counsel to the effect that the incurring of such increased Base Rental Payments will not (i) impair the validity and enforceability of this Lease and (ii) in and of itself impair the exclusion of interest on the Bonds and, to the extent applicab le, any Additional Bonds from the gross income of the owners thereof for federal income tax purposes.
(f) Covenant to Budget and Appropriate. The City covenants to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due hereunder in its annual budget and to make the necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments, subject only to abatement as provided in Section 16 hereof. The City will furnish to the Authority and the Trustee annually, on or before September 1, a certificate stating that it has complied with the covenant set forth in this paragraph. The covenants on the part of the City herein contained shall be deemed to be and shall be 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. The obligation of the City to make Base Rental Pa yments or Additional Rental Payments does not constitute an obligation of the City for which the C ity is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds and any Additional Bonds nor the obligation of the City to make Base Rental Payments or Additional Rental Payments constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.
SECTION 4. USE OF PROCEEDS
The parties hereto agree that the proceeds of the Bonds will be used to advance refund and defease the 2007 Bonds by prepayi ng the 2007 Lease Paym ents and for other purposes set forth in the Indenture.
SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS During such time as the City or any assign ee or sublessee thereof is in possession of the Leased Property, all maintenance and repa ir, ordinary or extraordinary, of the Leased Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of (a) all utility services supplied to the Leased Property, (b) the cost of operation of the Leased Property, and (c) the costs of mainte nance of and repair to the Leased Property resulting from ordinary wear and tear or want of care on the part of the City. The City shall at the City’s sole cost and expense keep and maintain the Leased Property clean and in a safe and good condition and repair. The Aut hority shall have no obligation to alter, remodel, improve, repair, decorate, or paint the Leas ed Property or any part thereof, and the parties hereto affirm that the Authority has made no representations or warranties to the City respecting the condition of the Leased Property.
6 The City shall comply with all statut es, ordinances, regulations, and other requirements of all governmental entities that pe rtain to the occupancy or use of the Leased Property. The Authority has no responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the Leased Property.
The City waives the right to make re pairs at the Authority’s expense under Subsection 1 of Section 1932 and Section 1942 of th e California Civil Code, or any other such law, statute, or ordinance now or hereafter in effect.
The parties hereto contemplate that the Leased Property will be used for public purposes by the City and, therefor e, that the Leased Property will be exempt from all taxes presently assessed and levied with respect to real and personal propert y, respectively. In the event that the use, possession or acquisition by the Authority or the City of the Leased Property is found to be subject to taxation in any form, the City will pay during th e term hereof, as the same respectively become due, all taxes and gove rnmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Leased Property and any other property acquired by the City in substitution for, as a renewal or replacement of, or a modification, improvement or addition to the Leased Property; provided, that with respect to any governmental charges or taxes that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such inst allments as are accrued du ring such time as this Lease is in effect.
SECTION 6. CHANGES TO THE LEASED PROPERTY
The City shall have the right during th e term of this Lease to acquire and construct improvements or to attach fixtures, structures or signs to the Leased Property if such improvements, fixtures, structures or signs are necessary or benefi cial for the use of the Leased Property by the City; provided, however, that no su ch acquisition or construction shall result in a material reduction in the value of the Leased Pr operty, reduce the fair rental value thereof or substantially alter the nature of the Leased Property.
Upon termination of this Lease, the City may remove any fixture, structure or sign added by the City, but such removal shall be acc omplished so as to leave the Leased Property, except for ordinary wear and tear and damage by casualty, in substantially the same condition as it was in before the fixture, structure or sign was attached.
SECTION 7. SUBSTITUTION AND RELEASE OF PROPERTY
The parties to the Lease specifically acknow ledge that the annual fair rental value of the Leased Property is in excess of the maxi mum annual Base Rental Payments. The City shall have, so long as this Lease is in effect , and is hereby granted, the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for any portion of the Leased Property (the “Forme r Property”) or release any iden tifiable real property and/or improvements currently constituting the Leased Pr operty (in such case, Substitute Property shall mean the Former Property less any portion released pursuant to this Section); provided, that the City shall satisfy all of the following requireme nts, which are conditions precedent to such substitution:
7 (a) No default under Section 10 hereof or Event of Default shall have occurred and be continuing;
(b) The City shall file with the Authority and the Trustee, and cause to be recorded in the office of the C ounty Recorder, sufficient memorialization of amendments to this Lease and the Site Lease which replaces Exhibit A hereto and Exhibit A to the Site Lease with a description of such Substitute Property which deletes therefrom the description of the Former Property;
(c) The City shall obtain an extended California Land Title Association (“CLTA”) policy of title insurance insuring the City’s fee or leaseh old estate in such Substitute Property, the City’s leasehold es tate hereunder, and the Authorit y’s leasehold estate under the Site Lease in such Substitute Property, subject only to Permitted Encumbrances, in an amount not less than the aggregate prin cipal amount of the Outstanding Bonds; provided, however, that this requirement shall not apply to Substitute Pr operty that consists only of Former Property less any released portion;
(d) The City shall provide a Certificate of the City to the Authority and to the Trustee that such Substitute Property constitutes property which the City is permitted to lease under the laws of the State of California;
(e) The substitution of the Substitute Property shall not cause the City to violate any of its covenants, representations and warranties made herein; (f) The City shall file with the Authority and the Trustee a Certificate of the City or other evidence which es tablishes that the annual fair re ntal value of the Substitute Property after substitution or rele ase will be at leas t equal to 100% of the maximum amount of the Base Rental Payments becoming due in the th en current fiscal year or in any subsequent fiscal year and the useful economic life of the S ubstitute Property shall be at least equal to the maximum remaining term of this Lease; and
(g) The City shall furnish to the Trustee an opinion of Bond Counsel addressed to the Trustee, the City and the Authority to the effect that the substitution or release is permitted under this Lease and will not in and of itself (i) impair the validity and enforceability of this Lease or (ii) impair the exclusion of interest on the Bonds and, if applicable, any Additional Bonds from the gross income of the owners thereof for federal income tax purposes.
Upon the satisfaction of all such c onditions precedent, and upon the City delivering to the Authority and the Trustee a Certif icate of the City certifying that the conditions set forth in subsections (a), (c) and (e) of this Section have been satisfied, the Term of this Lease shall thereupon end as to the Leased Property an d shall thereupon commence as to the Substitute Property, and all references to the Leased Property shall apply with full force and effect to the Substitute Property. The City shall not be en titled to any reduction, diminution, extension or other modification of the Base Rental Payments whatsoever as a result of any substitution or removal hereunder.
8 SECTION 8. INSURANCE
(a) The City shall secure and maintain or cause to be secured and maintained at all times with insurers of recognized respons ibility or through a program of self-insurance to the extent specifically permitted in this Section 8, all coverage on the Leased Property required by this Section 8.
Such insurance shall consist of:
(1) Comprehensive general liability coverage against claims for damages including death, personal injury, bodily injury or property damage arising from operations involving the Leased Property. Such insurance sh all 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 purpo se, subject to a deductib le clause of not to exceed $400,000. The City’s obligations under this clause (1) may be satisfied by self- insurance;
(2) Casualty insurance against loss or damage to any or all of the Leased Property by fire and lightning, w ith extended coverage and vandalism and malicious mischief insurance, and agains t loss of Leased Property by theft. Such extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke 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 lesser of replacement co st (subject to deductible clauses not in excess of $400,000 for any one lo ss) of improvements located or to be located on the Leased Property and the principal amount of the Bonds then Outstanding. The City’s obligations under this clause (2) may be satisfied by self-insurance; (3) 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 w ith the Leased Property and to cover full liability for compensation under any such act; provided, however , that the City’s obligations under this clause (3) may be satisfied by self-insurance; and (4) Rental interruption insurance in an amount not less than the maximum remaining scheduled Base Rental Payments in any twen ty-four (24) month period to insure against loss of use of the Leased Property caused by perils covered by the insurance required in Section 8(a)(1). Such in surance may be maintained as part of or in conjunction with any other rent al interruption insurance carried by the City and must list the Authority and the Trustee as an additional insured party. Such insurance shall be in place as of the Closing Date. The Net Proceed s of such insurance shall be paid to the Trustee and deposited in the Lease Revenue Fund, and shall be credited toward the
9 payment of the Base Rental Pa yments in the order in which such Base Rental Payments come due and payable.
(5) The City shall, on or before the Closing Date, deliver a CLTA title insurance policy insuring the leasehold interest in the Leased Property of the City and the Authority, in an amount not less than the a ggregate principal amount of the Outstanding Bonds.
All policies or certificates issued by the respective insurers for insurance, with the exception of workers’ compensation insurance, sh all provide that such policies or certificates shall not be canceled or materia lly changed without at least 30 days’ prior written notice to the Authority and the Trustee. Certificates of comprehensive general liability and workers’ compensation insurance shall be furnished by appli cable 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 Trustee.
If the City elects to provide self-insurance pursuant to clauses (1), (2) and/or (3) above, the City shall annually cause to be delivered to the Trust ee a certificate of an Insurance Consultant certifying to the adequacy of the City’s reserves for such insurance.
All policies or certificates of insurance pr ovided for herein shall name the City as a named insured and the Trustee as an additional insured. All proceeds of insurance maintained under clauses (1) and (3) shall be deposited with th e City and under clause (2), (4) or (5) shall be deposited with the Trustee.
Notwithstanding the generality of the foregoing, the City shall not be required to maintain or cause to be maintain ed more insurance than is speci fically referred to above or any policies of insurance other than standard policies of insurance w ith standard deductibles offered by reputable insurers at a reasonable cost on the open market. (b) Form of Policies. The City shall deliv er to the Trustee on or before the Closing Date and each anniversary of the Closing Date a Certificate of the City that all insurance required under this Lease is in full force and eff ect. In the event that th e City obtains insurance through a pooled insurance prog ram of governmental entities, an annual statement or memorandum of coverage delivered to the Au thority and the Truste e will satisfy the requirements of this subsection. The Trustee and the Authority shall not be responsible for the sufficiency of any insurance herein required or payment of premium and sh all be fully protected in accepting payment on account of such insuran ce or any adjustment, compromise or settlement of any loss agreed to by the City.
(c) Advances. If the City shall fail to perform any of its obligations under this Section, then the Authority or the Trustee may, but shall not be obligated to, take such action as may be necessary to cure such failure, includ ing the advancement of money on behalf of the City, and the City shall be obligated to repay all such advances as soon as possible.
10 SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION;
APPLICATION OF NET PROCEEDS
If prior to the termination of the term he reof (a) the Leased Property is destroyed (in whole or in part) or is damaged by fire of other casualty, or (b) title to, or the temporary use of, any portion of the Leased Property or the estate of the Authority or the City in the Leased Property or any portion shall be taken under the exercise of the power of eminent domain by any governmental body or by any person or firm or corporation acting under governmental authority, then the City and the Authority shall, as expe ditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Leased Property or por tion thereof, in accordance with the provisions of this Section 9. If Net Proceeds are insufficient to repair or replace the Leased Property or portion thereof, the City shall, to the extent permitted by law, use its best efforts to fund any deficiency from any legally available funds.
If there is an abatement of rental paym ents pursuant to Section 16 hereof as a result of such casualty or event, and the City elects pursuant to Section 11(a) hereof to apply such insurance proceeds and such other sums as are deposited by the C ity pursuant to such Section to the prepayment of Base Rental Pa yments rather than replacing or repairing the destroyed or damaged portion of the Leased Pr operty, then this Lease shall terminate with respect to the destroyed or damage d portion of the Leased Property as of the later of the date of such election by the City or the date the amount required by Section 11(a) hereof is received by the Trustee.
The provisions of Section 1932, Subdivisi on 2, and Section 1933, Subdivision 4, of the California Civil Code, including any am endments 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 Leased Property, are hereby waived by the City.
The City hereby covenants and agrees, to th e extent it may lawfully do so, that so long as any of the Bonds and any Additional B onds remain outstanding and unpaid, the City will not exercise the power of condemn ation with respect to the Leas ed Property. The City further covenants and agrees, to the extent it may lawf ully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fail or refuse to abide by such covenant and condemns the Leased Property, the va lue of the Leased Property shall not be less than the greater of (i) if Outstanding Bonds ar e then subject to redemption, the principal and interest due on the Outstanding Bonds through the date of thei r redemption, or (ii) if such Outstanding Bonds are not then subject to re demption, the amount necessary to defease such Outstanding Bonds to the first available redemption date in accordance with the Indenture.
The City shall deposit a ny proceeds received from insurance and condemnation awards with respect to the destru ction or partial destruction of Leased Property with the Trustee for deposit into the: (a) Insurance and Condemnation Fund if the City elects to repair the Leased Property or (b) the Lease Revenue Fund if the City elects to redeem the Outstanding Bonds. The City shall have 45 days from the date of any such destruction or partial destruction to determine whether to repair the Leased Property or use insurance and condemnation award proceeds
11 received to redeem such bonds. To the extent that the City determines not to repair the Leased Property and cannot use insurance and condemna tion award proceeds to redeem such bonds, the City shall and hereby covenants to substitute property for such L eased Property of equivalent or greater value in accordance with the provisions of Section 7 hereof. If the City determines to repair the Leased Property, disbursements by th e Trustee shall only be made upon presentation of a requisition in a form substantially similar to Exhibit C of the Indent ure. Each requisition shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. If the City determines to cause the redemption of less than the full amount of the Outstanding Bonds, su ch redemption shall only be made to the extent the remaining fair rental value of the Leased Prop erty is sufficient to support the remaining Base Rental Payments supporting debt service on the Outstanding Bonds.
SECTION 10. DEFAULT
(a) Each of the following events constitutes an “Event of Default” hereunder:
(1) Failure by the City to pay any Base Rental Payment or other payment (including Additional Rental Payments ) required to be paid hereunder at the time specified herein.
(2) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or pe rformed hereunder, other than as referred to in the preceding subsection (1), for a period of 30 days after writ ten notice specifying such failure and requesting th at it be remedied has been given to the City by the Authority. However, if the City notifies the Authority that in its reasonable opinion the failure stated in the notice can be corrected, but not within such 30 day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such 30 day period and thereafter diligently and in good faith cures such failure in a reasonable period of time; provided, that su ch cure period shall not extend beyond 60 days.
(3) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift a ny execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competen t jurisdiction of a petition app licable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.
The Authority expressly waives the righ t to receive any am ount from the City pursuant to Section 1951.2(a)(3) of the California Civil Code. (b) Whenever any Event of Default has happened and is continuing, the Authority may exercise any and al l remedies available under law or granted under this Lease.
Notwithstanding anything herein to the contrary, there shall be no right under any circumstances to accelerate the Base Rental Payments or otherw ise declare any Base Rental Payments not then in default to be immediately due and payable. Each and every c ovenant hereof to be kept and
12 performed by the City is expr essly made a condition and upon th e breach thereof the Authority may exercise any and all rights granted hereunder; provided, that no term ination of this Lease will 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 each and every one of the following remedies:
(1) Enforcement of Payments Without Termination . If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subsection (b)(2) of this Section, the City agrees to rema in liable for the payment of all Base Rental Payments and the performance of all conditi ons herein contained, and the Authority may take whatever action at law or in equity ma y appear necessary or desirable, to collect each Base Rental Payment as it becomes due hereunder. The City will reimburse the Authority for any deficiency arising out of the re-leasing or sale of the Leased Property or portion thereof, or, if the Authority is unable to re-lease or sell the Leased Property, then for the full amount of all Base Rental Payments to the end of the term of this Lease, but said Base Rental Payments and/or deficiency will be payable only at the same time and in the same manner as hereinabove provided fo r the payment of Base Rental 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 Leased Property or portion thereof or the exercise of any other remedy by the Authority.
The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City and the shall al low the Trustee to enter upon and re-lease the Leased Property upon the occu rrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Leased Property, to place such property in storage or other suitable place in the State of California for the account of and at the expense of the City, and the City hereby agrees to save harmless the Authority from any costs, loss or damage whatsoever ar ising or occasioned by any such entry upon and re-leasing of the Leased Property and th e removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Authority to re-lease the Leased Property in the event of such re- entry without effecting a surrender of this L ease, and further agrees that no acts of the Authority in effecting such re-leasing constitu te a surrender or termination of this Lease 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 will vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subsection (2) of this Section. The City agrees to surrender and quit possession of the Leased Property upon demand of the Authority for the purpose of enabling the Leased Property to be re-let under this paragraph. Any rental obtained by the Aut hority in excess of the unpaid Base Rental Payments will be applied as a credit against future Base Rental Payments. (2) Termination of Lease . I f a n E v e n t o f D efault occurs and is continuing hereunder, the Authority at its option may terminate this Lease and re-lease all or any portion of the Leased Property. If the Authority terminates this Lease at its option
13 and in the manner hereinafter provided on account of default by the City (and notwithstanding any re-entry upon the Leased Property by th e Authority in any manner whatsoever or the re-leasing of the Leased Pr operty), the City neve rtheless agrees to pay to the Authority all costs, loss or damages how soever arising or occurring payable at the same time and in the same manner as is here in provided in the case of payment of Base Rental Payments. Any surplus received by the Authority from such re-leasing will be applied as a credit against future Base Rental Payments. Neither notic e to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority will of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City will be or become effective by operation of law, or otherwise, unless and un til the Authority has given written notice to the City of the election on the part of the Au thority to terminate this Lease. The City agrees that no surrender of the Leased Propert y, or of the remainder of the term hereof or any termination of this Lease will be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. (3) 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 th e amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder. (4) Remedies under the Site Lease . If an Event of Default occurs and continues hereunder, the Authority may exercise its rights under the Site Lease.
SECTION 11. PREPAYMENT AND CREDITS
(a) Prepayment From Net Proceeds.
(1) The City may prepay, from Ne t Proceeds of insurance or a condemnation award received by it pursuant to Section 9, the Prin cipal Component of Base Rental Payments then unpaid (and corre sponding Interest Component), in whole or in part on any date, pursuant to Section 9 here of, at a prepayment pr ice equal to the sum of the Principal Component prepaid plus acc rued interest thereon to the date of prepayment.
(2) Prepayments made pursuant to this subsection (a) shall be allocated pro rata among the Principal Components of Base Rental Payments relating to the Bonds and any Additional Bonds.
(b) Optional Prepayment.
The City may at its option prepay from any source of available moneys for redemption of Bonds pursuant to S ection 2.03 of the Indenture, all or any part (in an integral multiple of $5,000) of the Principal Component of Base Rental Payments (and corresponding Interest Component), so that the aggregate annual amounts of Principa l Component of Base Rental Payments which shall be payable after such prepayment shall each be an integral multiple of $5,000, at a prepayment price equal to the princi pal amount to be redeemed, plus accrued but unpaid interest to the prepayment date, without premium.
14 Before making any prepayment pursuant to this Section, the City shall give written notice to the Trustee specifying the date on which the prepayment will be made, which date shall be not less than fort y-five (45) days from the date such notice is given unless the Trustee agrees to a shorter period.
The Authority and the City hereby agree that any prepayment in part under this Section and the redemption of any Bonds by the Authority pursuant to Section 2.03(b) of the Indenture shall be credited towa rds the City’s obligations hereunder at the option of the City in any manner determined in writing delivered to the Trustee by the City. A prepayment made pursuant to this Section shall not cause a defeasance of any B onds unless the requirements of Section 9.03 of the Indenture are satisfied.
In the event of prepayment in full of the Principal Component of all Base Rental Payments, such that this Lease shall be termin ated by its terms as provided in Section 2, all amounts then on deposit under the Inde nture which are to be credited to the City’s obligations to make Base Rental Payments sh all be credited towards the am ounts then requir ed to be so prepaid. In the event of the prepayment of some but not all of the Principal Components of the Base Rental Payments, the City shall replace the applicable Base Rental Schedule with a revised Base Rental Payment Schedule reflecting such pr epayment of the Principal Components of such Base Rental Payments.
SECTION 12. MECHANICS’ LIENS
In the event the City shall at any time during the term of this Lease cause any improvements or other work to be done or performed or materials to be supplied, in or upon the Leased Property, the City shall pay, when due, a ll sums of money that may become due for, or purporting to be for, any labor, se rvices, materials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Leased Property and which may be secured by any mechanics’, materialmen’s or othe r liens against the Leased Property or the Authority’s interest therein, and wi ll cause any such lien to be fully discharged and released at the time the performance of any obligation secu red by any such lien matures or becomes due, except that, if the City desires to contest any such lien it may do so. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment.
SECTION 13. QUIET ENJOYMENT
The parties hereto mutually covenant that the City, so long as it keeps and performs the covenants and agreements herein contained, shall at all times during the term of this Lease peaceably and quietly have , hold and enjoy the Leased Pr operty without su it, trouble or hindrance from the Authority.
SECTION 14. INDEMNIFICATION
The City shall, to the full extent then permitted by law, indemnify, defend, protect and hold harmless the Authority, the Trustee and th eir members, officers, directors, agents and employees from and against any and all liabiliti es, obligations, losses, claims and damages
15 whatsoever, regardless of the cau se thereof (except for claims arising out of willful misconduct or negligence on the part of the Authority or th e Trustee or their respective members, officers, directors or employees), and expenses in c onnection therewith, includ ing, without limitation, reasonable counsel fees and expenses, penalties and interest arising out of or as the result of the entering into of this Lease and the Indenture, the payment of th e costs of acquiring the Leased Property or any accident in c onnection with the operation, use, condition or possession of the Leased Property or any portion thereof resulting in damage to property or injury to or death to any person. The indemnification ar ising under this section shall con tinue in full force and effect notwithstanding the full payment of all rent obli gations hereunder, the re moval or resignation of the Trustee or the termination he reof for any reason. The City agrees not to withhold or abate any portion of the payments required pursuant he reto by reason of any defects, malfunctions, breakdowns or infirmities of the Leased Property. The Authority and the City mutually agree to promptly give notice to each other of any claim or liability hereby indemnified against following either party’s learning thereof.
SECTION 15. ASSIGNMENT
The parties understand that this Lease a nd the rights of the Authority hereunder, with certain exceptions, will be assigned to the Trustee as provided in the Indenture and the Assignment Agreement, to which assignments the City hereby consents.
Neither this Lease nor any interest of the City hereunder shall be mortgaged, pledged, assigned or transferred by the City by voluntary act or by operation of law or otherwise; provided, subject to the provisi ons of Section 17 hereof, that the Leased Property may be subleased in whole or in part by the City, but only subject to th e following conditions, which are hereby made conditions precedent to any such sublease:
(a) This Lease and the obligation of the City to make all Base Rental Payments and Additional Rental Payments hereunde r shall remain the primary obligation of the City;
(b) The City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; (c) No such sublease by the City shall cau se the Leased Property to be used for a primary purpose other than a governmental or proprietary function authorized under the provisions of the Constitution and laws of the State of California, as evidenced by a Certificate of the City that is delivered to the Trustee;
(d) Any sublease of the Leased Property by the City shall explicitly provide that such sublease is subject to all rights of the Authority under this Lease; and (e) The City shall have filed or caused to be filed w ith the Authority and the Trustee an opinion of Bond Counsel to the effect that such sublea se will not, in and of itself, cause the interest on the Bonds and any Additional Bonds (that are intended to be tax-exempt) to be included in gross income for federal income tax purposes.
16 (f) To the extent that this Lease confer s upon or gives or grants the Trustee any right, remedy or claim under or by reason of this Lease, the Trustee is hereby explicitly recognized as being a third-part y beneficiary hereunder and may en force any such right, remedy or claim conferred, given or granted hereunder.
SECTION 16. ABATEMENT OF RENTAL
The obligation of the City to pay Base Rental Payments and Additional Rental Payments shall be abated during any period in which by reason of any damage, destruction, condemnation or title defect ther e is substantial interference with the use by the City of the Leased Property or any portion thereof. Such abatement shall be in an amount such that the resulting Base Rental Payments in any year during which such interf erence continues does not exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction, taking or title defect does not substantially interfere with the City’s use and right of possession, as evidenced by a Certificate of the City. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Leased Property, and ending with the subs tantial completion of the work of repair or replacement of the Leased Property, or the portion thereof so damaged or destroyed, and the term of this Lease shall be extended as provided in Se ction 2 hereof. Notwithstanding th e foregoing, to the extent that moneys are available for the payment of base re ntal payments in any of the funds and accounts established under the Indenture, su ch base rental payments shal l not be abated but shall be payable by the City as a special obligation payable solely from such funds and accounts.
SECTION 17. COVENANTS OF THE CITY
(a) Special Definitions. When used in th is Section, the following terms have the following meanings:
“Computation Date” means, initially, the first day following the conclusion of the fifth Bond Year (unless on or before such date the Au thority has designated a different date as the Computation Date), and each subsequent Computati on Date shall be the fifth anniversary of the immediately preceding Computation Date (unless, as to any Computation Date, the Authority has designated an earlier date following such immediately preceding Computation Date as a Computation Date.
“Gross Proceeds” means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds), and any replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds. “Investment” has the meaning set forth in section 1.148-1(b) of the Tax Regulations. “Nongovernmental Output Property” means any property (or inte rest therein) that prior to its acquisition by the City was used by (or manufactured for or to the order of or held for the use by) any Nongovernmental Person (whether actually so used or not) in connection with any electric and gas generation, transmission, distribution, or related facilities.
17 “Nongovernmental Person” refers to any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, or an agency or instrumentality acting solely on behalf thereof. “Nonpurpose Investment” means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry out the governmental purposes of the Bonds.
“Nonpurpose Investment” means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry out the governmental purposes of the Bonds.
“Original Issue” refers to the 2007 Bonds.
“Original Facilities” means any property the acquisition, construction or improvement of which was financed directly or indirectly with Gross Proceeds of an Original Issue. “Rebate Amount” has the meaning set forth in section 1.148-1(b) of the Tax Regulations. “Tax Regulations” means the United States Treasury Regulations promulgated pursuant to sections 103 and 141 through 150 of the Code, or under the provisions of any predecessor statute corresponding thereto.
“Yield” of
(1) any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations; and
(2) the Bonds has the meaning set forth in section 1.148-4 of the Tax Regulations.
(b) Not to Cause Interest to Fail to Be Excluded from Gross Income. The City covenants that it will not use, permit the us e of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gr oss Proceeds) in a manner that if made or omitted, respectively, would cause the interest on any of the Bonds to fail to be exclude d pursuant to section 103(a) of the Code from the gross income, of the owner th ereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receives a written opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the intere st on any Bond, the City will comply with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as would not cause any Bond to become a “private activity bond” within the meaning of sect ion 141 of the Code and the Tax Regulations and rulings thereunder, the City covenants that at a ll times prior to the payment and cancellation of the last Bond to be paid and canceled:
18 (1) it will use its best efforts to ensure that the City (or another entity other than a Nongovernmental Entity) exclusively owns, operates and po ssesses all of the Original Facilities that are to be refinanced di rectly or indirectly w ith Gross Proceeds of the Bonds, and that it will not use or permit the use of such Gross Proceeds (including under any contractual arrangement with terms different than those applicable to the general public) or any of the Original F acilities in any activ ity carried on by any Nongovernmental Person, unless such use is so lely as a member of the general public; and
(2) not directly or indirectly impose or accept any charge or other payment by any person or entity in re spect of the use by any Nongovernmental Person of Gross Proceeds of the Bonds, other than interest earned on investments acquired with such Gross Proceeds pending appli cation for their intended pur poses, or of any Original Facility.
Without limiting the foregoing, except as would not cause any Bond to become a “private activity bond” with in the meaning of section 141 of th e Code and the Tax Regulations and rulings thereunder, the City will not: (i) permit any Nongove rnmental Person to hold any ownership, proprietary or possessory interest in any of the Original Facilities; (ii) contract with any Nongovernmental Person for the provision of operating or other se rvices with respect to any function of an Original Facility (unless either (A) such arrangement requires no payment of fees to such Nongovernmental Person other than as direct reimburse ment of third party costs or reasonable administrative overhead, or (B) such arrangement conforms to administrative guidance of the Internal Revenue Service in or der to assure that such arrangement does not create a private business use relationship of th e Nongovernmental Person to the Gross Proceeds of the Bonds or to any Original Facility); or (iii) contract with any Nongovernmental Person for the sale of output or capacity of an Original Facility that is an output facil ity, unless such contract is described either in section 1.141-7(c) of th e Treasury Regulations (describing certain types of output contracts that do not have the e ffect of transferring the benefits of owning the property and the burdens of paying debt service on the financing of the property) or in section
1.141-7(f) of the Treasury Regula tions (describing certa in types of output contracts that while having the effect of transferring such benefits and burdens but neverthe less may be disregarded in evaluating private business use). For purpos es of the preceding sentence, the City will treat proceeds of the Bonds as used ratably for the same purposes as were the proceeds of the Original Issue.
(d) No Private Loan. Except as woul d not cause any Bond to become a “private activity bond” within the meaning of secti on 141 of the Code and the Tax Regulations and rulings thereunder, the City has not used, a nd will not use, Gross Pr oceeds of any Bond to make or finance loans to any Nongovernmental Pe rson. For purposes of the foregoing covenant, such Gross Proceeds are considered to be “loaned” to a person or entity if: (1) property acquired, constructed or improved with such Gr oss Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take-or- pay, output or similar contract or arrangement; or (3) indirect benefits of such Gro ss Proceeds, or burdens and benefits of ownership of any property acquired, construc ted or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan.
19 (e) Not to Invest at Higher Yield. Ex cept as would not cause any Bond to become an “arbitrage bond” w ithin the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder , the City shall not at any time prior to the final maturity of the Bonds directly or indirectly invest Gross Proceeds in any Invest ment, if as a result of such investment the Yield of any Investment acquire d with Gross Proceeds, whether then held or previously disposed of, would ma terially exceed the Yield of su ch Bond within the meaning of said section 148.
(f) Not Federally Guaranteed. The City covenants that, except to the extent permitted by section 149(b) of the Code and the Ta x Regulations and rulings thereunder, it will not take or omit to take any action that woul d cause any Bond to be “federally guaranteed” within the meaning of section 149(b) of th e Code and the Tax Regulations and rulings thereunder.
(g) Information Report. The City covenants that it will timely file or cause to be filed any information required by section 149(e) of the Code w ith respect to the Bonds with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f) of the Code and the Tax Regulations and rulings thereunder:
(1) it will account for all Gross Proceeds of the Bonds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six year s after the day on which the last Bond is discharged. However, to the extent perm itted by law, the City may commingle Gross Proceeds of the Bonds with its other money, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith.
(2) not less frequently than each Computation Date, it will calculate or cause to be calculated the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax Regulations and ru lings thereunder. Th e Trustee may rely conclusively upon the City’s determinations, calculations and certif ications required by this Section. The Trustee shall have no responsibility to independently make any calculation of determination or to review the City’s calcul ations hereunder. The City covenants that it will maintain a copy of the calculation with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date;
(3) it will deposit in th e Rebate Fund and cause th e Trustee to pay to the United States the amount that when added to the future value of previous rebate payments made for the Bonds equals (A) in the case of a Final Computation Date as defined in section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (B) in the case of any ot her Computation Date, ninety percent (90%) of the Rebate Amount on such a date. In all cases such Rebate payments shall be
20 made by the City (or by the Trustee at the di rection of the City) at the times and in the amounts as are or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and such payments shall be accompanied by Form 8038-T executed by the City or such other forms and information as is or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder. (4) it will exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3) above, and if an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundr ed eighty (180) days after discovery of the error), including payment to the United States of any additional Re bate Amount owed to it, interest thereon, and any penalty imposed under section 1.148-3(h) or other provision of the Tax Regulations.
(i) Not to Divert Arbitrage Profits. Th e City covenants that, except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, at no time prior to the final maturity of the Bonds will it enter into any transaction that reduces the amount required to be paid to the United States pursuant to paragraph (h) of this Section because such transaction results in a sm aller profit or a larger loss th an would have resulted if the transaction had been at arm’s le ngth and had the Yield on the Bonds not been relevant to each party.
(j) Bonds Not Hedge Bonds.
(1) The City represents that the Original Issue was, and covenants that the Bonds will not be, “hedge bonds” within the meaning of section 149(g) of the Code. (2) Without limitation of pa ragraph (1) above, the City warrants as to the Original Issue that: (I) on each date of issuance of that issue, the City reasonably expected that at least 85% of the spendabl e proceeds of that Original Issue would be expended within the three-year period commen cing on such date of issuance, and (II) no more than 50% of the proceeds of that Origin al Issue at any time has been invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more.
(k) Use of Proceeds; Weighted Average Maturity. The City hereby represents and covenants that it will apply the proceeds of the Bonds in a manner so that the weighted average maturity of the Bonds does not exceed 120% of the average reasonably expected remaining economic life of the facilities refinanc ed by the Bonds (all determined in accordance with the provisions of section 147(b) of the Code).
(l) Elections. The City hereby directs and authorizes any Responsible Officer to make elections permitted or required pursua nt to the provisions of the Code or the Tax Regulations, as such Responsible Officer (a fter consultation with Bond Counsel) deems necessary or appropriate in c onnection with the Bonds, in the Tax Certificate relating to the Bonds or similar or other appropriate certificate, form or document.
21 (m) Closing Certificate. The City agrees to execute and deliver in connection with the execution and delivery of this Lease a Tax Certificate as to Arbitrage and the Provisions of Sections 103 and 141-150 of the Internal Revenue Code of 1986, or similar document containing additional representations and covenants pertaining to the exclusion of the interest on the Bonds from the gross income of the owners thereof for federal income tax purposes, which representations and covenants are incorporated as though expressly set forth herein.
SECTION 18. CONTINUING DISCLOSURE
The City will comply with the continuing di sclosure requirements applicable to it promulgated under U.S. Securities and Excha nge Commission Rule 15c2-12 and will also comply with its obligations under the Continuing Disclosure Certif icate, dated as of June 1, 2016, delivered by the City relating to the Bonds and under any contin uing disclosure certificate or agreement related to Additional Bonds that are subject to Rule 15c2-12; provided, however, that the sole remedy hereunder in the event of any failure of th e City to comply with this covenant shall be an action to compel performance and the City’s failure to comply with any continuing disclosure requirement shall not be deemed a default or an Event of Default.
SECTION 19. WAIVER
Failure of the Authority to take advantag e of any default on the part of the City shall not be, or be construed as, a waiver thereo f, nor shall any custom or practice which may be established between the parties in the course of administering this Lease be construed to waive or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights gi ven the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any term, covenant or condition of this Lease.
SECTION 20. NET LEASE
Subject to the provisions of Section 16 (“ Abatement of Rental”), this Lease shall be deemed and construed to be a “Triple-Net- Lease” and the City hereby agrees that rental provided for herein shall be an absolute net re turn to the Authority, free and clear of any expenses, taxes, fees, insurance premiums, reba te payments, Leased Property costs, reserve deposits, charges or setoffs whatsoever.
SECTION 21. AMENDMENTS.
This Lease may be amended in writing as may be mutually agreed by the Authority and the City; provided, that no such amendment which materially adversely affects the rights of the Owners shall be effective unless it shall have been consented to by the Owners of more than a majority in aggregate principal amount of the affected Bonds and any Additional Bonds then Outstanding, and provided further , that no such amendment shall (a) extend the payment date of any Base Rental Payment, wit hout the prior written c onsent of the Owner of each Bond and any Additional Bond so affected, or (b) reduce the percentage of the Outstanding Bonds the consent of the Owners of which is required for the execution of any amendment hereof.
22 This Lease and the rights and obligations of the Authority and the City hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution by the Authority and the City without the written consents of any Owners, but only to th e extent permitted by law and only for any one or more of the following purposes:
(a) to add to the agreements , conditions, covenants a nd terms required by the Authority or the City to be observed or perf ormed herein and other agreements, conditions, covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein to or conferred herein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners; (b) to make such provisions for the purpose of curing any ambiguity of correcting, curing or supplementi ng any defective provision containe d herein or in regard to questions arising hereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith, and wh ich shall not materially adversel y affect the interests of the Owners;
(c) to effect a Substitution or Removal;
(d) to increase the amount of Base Rent al Payment payable hereunder for the purpose of allowing the Authority to add any real property to be acquire d and leased hereunder or for the issuance of Additional Bonds; or
(e) for any other purpose which shall not materially adversely affect the interests of the Owners.
SECTION 22. ESSENTIALITY
The City covenants and agrees that the L eased Property is essential to the City’s exercise of its governmental functions.
SECTION 23. LAW GOVERNING
This Lease shall be governed and construe d exclusively by the provisions hereof and by the laws of the State of California.
SECTION 24. NOTICES
All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications he reunder by either party to the other shall be made as provided in the Indenture.
SECTION 25. VALIDITY AND SEVERABILITY
If for any reason this Lease shall be held by a court of competent jurisdiction to be void, voidable, or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants of the City hereunder, including the covenant to pay
23 rentals hereunder, is unenforceable for the full term hereof, then and in su ch event this Lease is and shall be deemed to be a lease from year to year under which the rentals are to be paid by the City semi-annually in considerat ion of the right of the City to possess, occupy and use the Leased Property, and all of the rental and other terms, provisions and conditions of this Lease, except to the extent that such terms, provisions and conditions are contra ry to or inconsistent with such holding, shall remain in full force and effect.
SECTION 26. SECTION HEADINGS
All section headings contained are for convenience of reference only and are not intended to define or limit the scope of any provision of this Lease.
SECTION 27. NO MERGER
If both the Authority’s and the City’s estate under this or any other lease relating to the Leased Property or any portion thereof sha ll at any time or for an y reason become vested in one owner, this Lease and the estate created hereby shall not be destroyed or terminated by the doctrine of merger unless the City so elects as evidenced by recording a written declaration so stating, and unless and until the City so elects, the City shall continue to have and enjoy all of its rights and privileges as to the separate estates.
SECTION 28. EXECUTION
It is agreed that separate counterparts of this Lease may separately be executed by the Authority and the City, all with the same fo rce and effect as though the same counterpart had been executed by both the Authority and the City.
A-2
EXHIBIT A
DESCRIPTION OF THE LEASED PROPERTY
The land and City Hall structure located there on situated on a portion of a parcel of land (Assessor Parcel No. 2861-026-900) in the County of Los Angeles, State of California, described below:
PARCEL 1:
LOTS 3, 4 AND 5, OF TRACT NO. 33746, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1056, PAGES 91 TO 96 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THEREFROM ALL RIGHTS TO MINERA LS, OIL, GAS, TARS, HYDROCARBON AND
METALLIFEROUS SUBSTANCES OF EVERY KIND, TOGETHER WITH THE RIGHT TO DRILL
OR MINE FOR SAME, WITHOUT, HOWEVER, THE RIGHT OF SURFACE ENTRY AND WITHOUT THE RIGHT TO DRILL OR MINE THROUGH THE SURFACE OF THE UPPER 500
FEET OF THE SUBSURFACE OF SAID LAND AS RESERVED BY THE NEWHALL LAND AND
FARMING COMPANY (A CALIFORNIA LIMITED PARTNERSHIP), A LIMITED PARTNERSHIP IN DEED RECORDED APRIL 2, 1986 AS INSTRUMENT NO. 86-409536, OFFICIAL RECORDS.
PARCEL 2:
A NON-EXCLUSIVE EASEMENT FOR PURPOSES OF INGRESS AND EGRESS OVER THE WESTERLY 15 FEET OF LOT 2 OF SAID TRACT MAP 33746 , RECORDED IN BOOK 1056, PAGES 91 TO 96 INCLUSIVE OF MAPS, WHICH EASEMENT SHALL BE APPURTENANT TO AND FOR THE BENEFIT OF LOT 3 OF SAID TRACT MAP 33746.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR PURPOSES OF INGRESS AND EGRESS OVER THE EASTERLY FIFTEEN FEET OF LOT 6 OF SAID TRACT MAP 33746, RECORDED IN BOOK 1056, PAGES 91 TO 96 INCLUSIVE OF MAPS, WHICH EASEMENT SHALL BE APPURTENANT TO AND FOR THE BENEFIT OF LOT 5 OF SAID TRACT MAP 33746.
B-1
EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE
Interest
Payment Dates(1) Principal Interest
Total
Debt Service
12/01/2016 $ 375,000.00 $ 154,185.83 $ 529,185.83 06/01/2017 167,050.00 167,050.00
12/01/2017 375,000.00 167,050.00 542,050.00
06/01/2018 159,550.00 159,550.00
12/01/2018 385,000.00 159,550.00 544,550.00
06/01/2019 151,850.00 151,850.00
12/01/2019 400,000.00 151,850.00 551,850.00
06/01/2020 143,850.00 143,850.00
12/01/2020 420,000.00 143,850.00 563,850.00
06/01/2021 135,450.00 135,450.00
12/01/2021 435,000.00 135,450.00 570,450.00
06/01/2022 126,750.00 126,750.00
12/01/2022 450,000.00 126,750.00 576,750.00
06/01/2023 117,750.00 117,750.00
12/01/2023 470,000.00 117,750.00 587,750.00
06/01/2024 108,350.00 108,350.00
12/01/2024 490,000.00 108,350.00 598,350.00
06/01/2025 98,550.00 98,550.00
12/01/2025 510,000.00 98,550.00 608,550.00
06/01/2026 88,350.00 88,350.00
12/01/2026 530,000.00 88,350.00 618,350.00
06/01/2027 77,750.00 77,750.00
12/01/2027 550,000.00 77,750.00 627,750.00
06/01/2028 72,250.00 72,250.00
12/01/2028 555,000.00 72,250.00 627,250.00
06/01/2029 66,700.00 66,700.00
12/01/2029 570,000.00 66,700.00 636,700.00
06/01/2030 61,000.00 61,000.00
12/01/2030 580,000.00 61,000.00 641,000.00
06/01/2031 54,475.00 54,475.00
12/01/2031 595,000.00 54,475.00 649,475.00
06/01/2032 42,575.00 42,575.00
12/01/2032 625,000.00 42,575.00 667,575.00
06/01/2033 30,075.00 30,075.00
12/01/2033 650,000.00 30,075.00 680,075.00
06/01/2034 20,325.00 20,325.00
12/01/2034 670,000.00 20,325.00 690,325.00
06/01/2035 10,275.00 10,275.00
12/01/2035 685,000.00 10,275.00 695,275.00
Total $10,320,000.00 $3,620,035.83 $13,940,035.83
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(1) Base Rental Payments are made not less than fifteen (15) Business Days prior to each Interest Payment Date.