CC SR 20220301 02 - Financing for Ladera Linda
CITY COUNCIL MEETING DATE: 03/01/2022
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA TITLE:
Consideration and possible action to approve leases and agreements related to financing
the Ladera Linda Community Park Project.
RECOMMENDED CITY COUNCIL ACTIONS:
1. Adopt Resolution No. 2022-___, A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF RANCHO PALOS VERDES APPROVING, AUTHORIZING, AND
DIRECTING AN EXECUTION OF A SITE LEASE, A SUBLEASE, A
SUPPLEMENTAL AGREEMENT AND CONSENTING TO AN ASSIGNMENT
AGREEMENT, AND CERTAIN OTHER ACTIONS TO FINANCE A PORTION OF
THE IMPROVEMENTS AT LADERA LINDA COMMUNITY PARK AND
DIRECTING CERTAIN RELATED ACTIONS IN CONNECTION THEREWITH;
and,
2. Authorize the Mayor and/or his designees to execute the following documents
subject to forms approved by the City Attorney:
a. Site Lease
b. Sublease
c. Assignment agreement
d. Supplemental agreement
FISCAL IMPACT: Adopting the resolution will result in just over $9 million in total debt
services (principal of $8 million, interest expense of $892,525, and debt issuance of
$126,500) over the next 10 years. The first payment will be on September 1, 2022 and
will be included in the Fiscal Year 2022-23 budget. The estimated annual payment is
approximately $889,000 in principal and interest.
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Trang Nguyen, Director of Finance
REVIEWED BY: Same as above
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Resolution No. 2022-____ (page A-1)
B. Site Lease (page B-1)
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CfTYOF RANCHO PALOS VERDES
C. Sublease (page C-1)
D. Assignment Agreement (page D-1)
E. Supplemental Agreement (page E-1)
F. February 2022 Proposal (page F-1)
G. November 16, 2021, Staff Report
BACKGROUND:
On November 16, 2021, the City Council directed Staff to proceed with financing the
Ladera Linda Community Park Project with Bank of the West (BOW) (Attachment G). The
summary of the Council direction that evening is as follows:
• Increase the loan amount from $6 million, as recommended by the Finance
Advisory Committee (FAC), to $8 million with a 10-year term;
• Authorize the City Council Facilities Subcommittee and City Manager, or his
designee, to select a City asset to be used as collateral with BOW;
• Authorize the Mayor to the sign the Lease Revenue Obligations agreement with
BOW in a form approved by the City Attorney; and
• Authorize Staff to charge all related costs for the application process to the
American Rescue Plan Act (ARPA) funding allocated to the project.
In December 2021, Staff and the City's Special Counsel for this financing, Anita Luck of
Aleshire & Wynder, began discussing with BOW the next steps and requirements to
proceed with the financing. In addition, to assist the City in strategies and transactions
involving a City infrastructure project, the City onboarded Kosmont Transactions Services
(KTS) as the Financial Advisor and Kosmont Realty (KR) as the Real Estate Advisor.
As part of BOW’s financing requirements, the City must select a City asset to be used as
a collateral. In December 2021, the City Council Facilities Subcommittee and the City
Manager selected the project as the lease property, also as known as the collateral
property, for the loan. If needed, the alternative collateral property selected is the Point
Vicente Interpretive Center (PVIC).
As a separate Regular Business item on tonight’s agenda, the City Council is being asked
to, among other things, award a construction contract and approve the budget for the
Ladera Linda Community Park Project. If approved by the City Council, as a separate
agenda item, this staff report is to consider financing a portion of the project based on
past Council direction.
DISCUSSION:
Financing Costs Update
In October 2021, the City received BOW’s proposal and subsequently, as stated in the
proposal, the proposed rate (1.7%) expired on December 31, 2021. As part of the
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process, Staff, the City Attorney, and Kosmont continued discussions with BOW and in
February 2022, BOW provided a new proposal. The proposal has a new rate for the 10-
year term of 1.98% (Attachment F). Compared to the proposal that expired in December
2021, the new rate increased by 28 basis points (0.28%) or $393,000 for a 10-year term.
The increase is attributed to the change in the financial market. Due to this change from
what was reported to the City Council at the November 16, 2021, meeting, Staff reached
out to the Mayor to inform him of the rate increase. The Mayor was in support of continuing
to move forward with BOW because the 1.98% is still a competitive rate compared to the
iBank rate of 2.2% as reported in the November 16 staff report. The Mayor expressed his
concern with the continuing rate increase and wanted Staff to proceed expeditiously to
close the loan to avoid any further increases. The table below is a summary of the revised
financing costs for the project.
Table 1: Financing Costs for Ladera Linda Community Park
Description Amount
Principal payment $8,000,000
Interest expense $892,525
Financial advisor $22,500
Property valuation $6,000
Special legal counsel $65,000
Title insurance $8,000
Lender legal fees $20,000
Issuer fees $5,000
Total Financing Costs $9,019,525
Based on the revised rate, the estimated annual payment is approximately $889,000.
Annual principal payments are due on March 1 and semiannual interest payments are
due March 1 and September 1 of each year . If approved, the first payment is due
September 1, 2022, for the accrued interest and the second payment is due March 1,
2023, for the accrued interest plus the first principal paym ent. As previously reported
under the Fiscal Analysis, since the first payment will occur in Fiscal Year 2022 -23, the
budget will be prepared accordingly if approved by the City Council.
Financing Documents
On November 16, 2021, the City Council voted to proceed with financing the project. The
BOW financing is a Lease Revenue Obligation, which is structured as a lease-leaseback,
which is an often-used structure for city financings. The City Council agreed with the
FAC’s recommendation not to form a Finance Authority and instead use (rent) a Municipal
Financing Authority. As such, for the lease, the City will use the Public Property Financing
Corporation of California (the “Corporation”), a nonprofit organization that assists public
agencies with financing agreements for improvements of a property to benefit the public.
To execute the transactions, tonight, Staff recommends the City Council consider (1)
adopting the attached resolution (Attachment A) which approves the following legal
documents in substantially the form presented; and (2) authorizing the Mayor and/or his
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designees (i.e. City Manager and/or Finance Director) to execute the following
documents:
1. Site Lease: This is a lease between the City and the Corporation under which the
City will lease the property to the Corporation in return for the upfront capital,
essentially in the form of a loan. The property will consist of Ladera Linda
Community Park and PVIC as the primary and secondary form of collateral. The
site lease allows the Corporation to lease the property for the term and the
Corporation pays for its lease by assigning its interests to BOW for $8 million. This
is the (loan) money given to the City for the project (Attachment B).
2. Sublease: This is a lease between the Corporation and the City under which the
City will lease the property back from the Corporation in return for the semi-annual
lease payments. These semi-annual payments are the base lease payments, or
the principal and interest payments. Key provisions of the sublease include the
obligation of the City to maintain property insurance and rental interruption
insurance on the property during the term of the sublease and to budget and
appropriate the lease payments owed each year. The sublease provides for any
extra property, PVIC, to be removed once the project is complete. The sublease
describes the events of default and any remedies for the Corporation and the bank.
The sublease provides for the City to indemnify the Corporation and the bank for
any lawsuits or other items and provides for a jury waiver in the event of a dispute,
or if the waiver not enforceable, a judicial referee (Attachment C).
3. Assignment Agreement: An agreement between the Corporation, as assignor, and
the bank, as assignee, under which the lease payments under the sublease are
assigned to the bank in exchange for the upfront payment used to finance the
project. The payments from the sublease secure the $8 million from the bank
(Attachment D).
4. Supplemental Agreement: An agreement between the City and BOW pursuant to
which the City makes certain representations, warranties and covenants for the
benefit of the bank and agrees to provide certain ongoing financial and material
event notices to the bank and lists various conditions to the closing of the financing.
The representations include items such as statements that there is no litigation
affecting the leases or the property and that the City does not know of any
environmental hazards on the property (Attachment E).
CONCLUSION:
If the City Council agrees to proceed with the construction of the Ladera Linda Community
Park project and the financing model accepted at its November 16, 2021 meeting thereby
seeking a Lease Revenue Obligation to partially pay for the project, then Staff
recommends the City Council adopt Resolution No. 2022-____ and authorize the Mayor
and/or his designees to execute the Site Lease, Sublease, Assignment Agreement, and
Supplemental Agreement documents.
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ALTERNATIVES:
In addition to the Staff recommendation, the following alternative action s are available
for the City Council’s consideration:
1. Do not approve the resolution, thereby not executing the leases and agreements
and direct Staff to explore and/or pursue other financing options.
2. Take other action, as deemed appropriate.
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Resolution No. 2022-____
Page 1 of 5
RESOLUTION NO. 2022-____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES, CALIFORNIA APPROVING,
AUTHORIZING AND DIRECTING EXECUTION OF A SITE
LEASE, A SUBLEASE, A SUPPLEMENTAL AGREEMENT AND
CONSENTING TO AN ASSIGNMENT AGREEMENT, AND
CERTAIN OTHER ACTIONS TO FINANCE A PORTION OF THE
IMPROVEMENTS AT LADERA LINDA COMMUNITY PARK
AND DIRECTING CERTAIN RELATED ACTIONS IN
CONNECTION THEREWITH
WHEREAS, the City of Rancho Palos Verdes (the “City”) is a municipal corporation and
general law city duly organized under the Constitution and the laws of the State of California
(“State”); and
WHEREAS, the City desires and has determined it is in the public interest, and a public
purpose to finance improvements to Ladera Linda Community Park (“the “Project”); and
WHEREAS, Public Property Financing Corporation of California is a California nonprofit
public benefit corporation (the “Corporation”) duly organized under the laws of the State and
assists public agencies in their financing needs; and
WHEREAS, the City previously solicited bids from various prospective lenders to finance
a portion of the Project and determined to work with Bank of the West (the “Bank”) on the
financing; and
WHEREAS, in order to provide funds to finance the Project, the City will lease certain
real property as collateral, comprising (i) Ladera Linda Community Park, and (ii) the Point
Vicente Interpretive Center Property (each as more particularly defined in the Sublease (as
defined below), and as described in Exhibit A attached to the Sublease and incorporated
therein, and collectively as more particularly defined in the Sublease, the “Property”) to the
Corporation pursuant to the provisions of a Site Lease, dated as of March 1, 2022 (“Site
Lease”), by and between the City and the Corporation; and
WHEREAS, the City will sublease the Property from the Corporation pursuant to the
Sublease, dated as of March 1, 2022 (the “Sublease” and together with the Site Lease, the
“Lease Agreements”’), wherein the City has agreed to make base rental payments and certain
other payments for the leasing of the Property; and
WHEREAS, to fund an upfront lease payment under the Site Lease and provide funds
for the Project, the Corporation desires to assist the City in financing the Project and assign its
interests and obligations in the Lease Agreements (except certain of its rights to indemnification,
and reimbursement for costs under the Sublease) to the Bank pursuant to the Assignment
Agreement, dated as of March 1, 2022; and
WHEREAS, the City and the Bank desire to enter into the Supplemental Agreement,
describing additional terms of the Bank related to the assignment; and
WHEREAS, Senate Bill No. 450 (Chapter 625 of the 2017-2018 Session of the California
Legislature) (“SB 450”) requires that the governing body of a public body obtain prior to
authorizing the issuance of the obligation (as defined therein) with a term of greater than 13
months, good faith estimates of the following information in a meeting open to the public: (a) the
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Resolution No. 2022-____
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true interest cost of the obligation, (b) the sum of all fees and charges paid to third parties with
respect to the obligation, (c) the amount of proceeds of the obligation expected to be received
net of the fees and charges paid to third parties and any reserves or capitalized interest paid or
funded with proceeds of the obligation, and (d) the sum total of all debt service payments on the
obligation calculated to the final maturity of the obligation plus the fees and charges paid to third
parties not paid with the proceeds of the obligation; and
WHEREAS, the City has duly considered such transactions and wishes at this time to
approve certain matters relating to the transactions as being in the public interest of the City.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY FIND, DETERMINE, AND RESOLVE AS FOLLOWS:
Section 1. The foregoing recitals are true and correct and incorporated herein by this
reference.
Section 2. The City Council hereby approves the forms of the Site Lease and the
Sublease presented herewith and on file with the City Clerk, with such additions thereto and
changes therein as the Designated Officers (as defined below) deem necessary, desirable or
appropriate upon consultation with the special legal counsel, the execution of which by the City
shall be conclusive evidence of the approval of any such additions and changes. The Mayor
and/or his designees, the City Manager or the Director of Finance of the City (the “Designated
Officers”) and all other designees of the Designated Officers of the City are hereby authorized
and directed to execute, and the City Clerk is hereby authorized to attest, as appropriate, the
Site Lease and the Sublease. The Designated Officers and the City Clerk are authorized to
execute such other agreements, documents and certificates as may be necessary or desirable
to effectuate the purposes of this resolution and the financing herein authorized, including,
without limitation, such other agreements, documents and certificates as may be required by the
Site Lease, the Sublease and Supplemental Agreement. The City Council hereby authorizes the
performance by the City of its obligations under the Site Lease and the Sublease. The City Clerk
is authorized to accept any leasehold interests under the Sublease as may be required. The
aggregate principal amount of the rental payments under the Sublease shall not exceed
$8,000,000 and the interest rate related to the Sublease shall not exceed 2% (excepting the
default rate).
Section 3. The City Council hereby approves the Supplemental Agreement in the form
presented herewith and on file with the City Clerk, together with such changes thereto as the
Designated Officers or any of them deem necessary, desirable or appropriate, the execution of
which by the City shall be conclusive proof of the approval thereof. The Designated Officers,
each acting alone, are hereby authorized and directed to execute the Supplemental Agreement,
with such changes, insertions and omissions as may be approved by such official executing the
Supplemental Agreement.
Section 4. The City Council hereby approves of the assignment of its interests in the
Site Lease and the Lease Agreement by the Corporation to the Bank pursuant to the
Assignment Agreement, a form of which is presented herewith and on file with the City Clerk.
Section 5. In accordance with SB 450, good faith estimates of the following are set forth
on Exhibit A attached hereto: (a) the true interest cost of the Sublease, (b) the sum of all fees
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and charges paid to third parties with respect to the Sublease, (c) the amount of proceeds of the
Sublease expected to be received net of the fees and charges paid to third parties and any
reserves or capitalized interest paid or funded with proceeds of the Sublease, and (d) the sum
total of all debt service payments on the Sublease calculated to the final maturity of the
Sublease plus the fees and charges paid to third parties not paid with the proceeds of the
Sublease.
Section 6. The Designated Officers, the City Clerk and any and all other officers of the
City are hereby authorized and directed, for and in the name of and on behalf of the City, to do
any and all things and take any and all actions, including execution and delivery of any and all
documents, assignments, certificates, tax certificates, requisitions, agreements, notices,
consents, instruments of conveyance, warrants, acceptances and documents, which they, or
any of them, may deem necessary or advisable in order to consummate the lawful transactions
effectuated by the Site Lease, the Sublease, the Supplemental Agreement and the
consummation of the transactions as described herein, and such documents, assignments,
insurance commitments and certificates, surety obligation commitments and agreements, tax
certificates and other certificates and agreements as may be required by any of the documents
approved herein.
Section 7. This Resolution shall take effect immediately upon its passage and adoption.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Rancho Palos
Verdes, California at a regular meeting held this 1st day of March, 2022.
BY:
David L. Bradley
Mayor
APPROVED AS TO FORM:
Aleshire & Wynder, LLP
WILLIAM W. WYNDER
City Attorney
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Resolution No. 2022-____
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CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss
CITY OF RANCHO PALOS VERDES )
I, Teresa Takaoka, City Clerk of the City of Rancho Palos Verdes, do hereby certify that
the foregoing Resolution No. 2022-__ was duly adopted by the City Council of the City
of Rancho Palos Verdes at a regular meeting held on the 1st day of March, 2022.
AYES:
NOES:
ABSENT:
ABSTAIN:
Teresa Takaoka, City Clerk
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01203.0042/767138.2 A-1
Exhibit A
Good Faith Estimates
The following information, based on cash flows provided by Kosmont Transactions
Services (“KTS”), municipal advisor to the City on the transaction and the sublease (the
“Sublease”), and is provided in compliance with Senate Bill No. 450 (Chapter 625 of the 2017-
2018 Session of the California Legislature) with respect to the Sublease:
1. True Interest Cost of the Sublease. Assuming an aggregate principal amount of
$8,000,000 of principal payments related to the Sublease are sold and based on market interest
rates prevailing at the time of preparation of this information, a good faith estimate of the true
interest cost of the Lease, which means the rate necessary to discount the amounts payable on
the respective principal and interest payment dates to the purchase price received for the
Sublease, is 1.98%.
2. Finance Charge of the Sublease. Assuming an aggregate principal amount of
$8,000,000 of the Sublease is assigned and based on market interest rates prevailing at the
time of preparation of this information, a good faith estimate of the finance charge of the
Sublease, which means the sum of all fees and charges paid to third parties (or costs
associated with the Lease), is $126,500. The City is paying these costs from other funds.
3. Amount of Proceeds to be Received. Assuming an aggregate principal amount of
$8,000,000 of the Sublease is assigned and based on market interest rates prevailing at the
time of preparation of this information, a good faith estimate of the amount of proceeds
expected to be received by the Corporation for assignment of the Sublease less the finance
charge of the Sublease described in 2 above and any reserves or capitalized interest paid or
funded with proceeds of the Sublease, is $8,000,000. The City is paying all the costs of
issuance from other funds.
4. Total Payment Amount. Assuming an aggregate principal amount of $8,000,000 of the
principal amounts of the Sublease is assigned and based on market interest rates prevailing at
the time of preparation of this information, a good faith estimate of the total payment amount,
which means the sum total of all payments the City will make to pay lease payments on the
Sublease plus the finance charge of the Sublease described in paragraph 2 above not paid with
the proceeds of the Sublease, calculated to the final maturity of the Lease, is $8,892,524.60.
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01203.0042/765314.2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Aleshire & Wynder, LLP
18881 Von Karman Avenue
Irvine, California 92612
Attention: Anita Luck
SITE LEASE
by and between
CITY OF RANCHO PALOS VERDES
and
PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA
Dated as of March 1, 2022
NO DOCUMENTARY TRANSFER TAX DUE. This Site Lease is recorded for the benefit of
the City of Rancho Palos Verdes and the recording is exempt under Section 27383 of the
California Government Code and Section 11928 of the California Revenue and Taxation Code.
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01203.0042/765314.2
3668134.2 045616 DRFT
SITE LEASE
THIS SITE LEASE (this “Site Lease”), dated as of March 1, 2022, is by and between
the CITY OF RANCHO PALOS VERDES, a municipal corporation and general law city duly
organized and existing under the Constitution and the laws of the State of California (the
“Borrower”), as lessor, and the PUBLIC PROPERTY FINANCING CORPORATION OF
CALIFORNIA, a nonprofit public benefit corporation, duly organized and existing under the
laws of the State of California (the “Corporation”), as lessee.
RECITALS
WHEREAS, the Borrower desires to finance certain facilities (as more particularly
defined in the Sublease, the “Project”);
WHEREAS, in order to provide funds to finance the Project, the Borrower will lease
certain real property and the improvements thereto comprising (i) the Ladera Linda Community
Park Property (as defined in the Sublease); and (ii) the Point Vicente Interpretive Center Property
(each as more particularly defined in the Sublease, and as described in Exhibit A attached hereto
and by this reference incorporated herein, and collectively, as more particularly defined in the
Sublease, the “Property”) to the Corporation pursuant to this Site Lease, and the Borrower will
sublease the Property back from the Corporation pursuant to the Sublease, dated as of the date
hereof and recorded concurrently herewith (as more particularly defined herein, the “Sublease”);
WHEREAS, the Borrower and the Corporation have determined that it would be in the
best interests of the Borrower and the Corporation to cause Bank of the West (including its
successors and assigns, and as more particularly defined in the Sublease, the “Bank”) to provide
the funds to finance the Project in the aggregate principal amount of $8,000,000 in consideration
of the assignment of the right to receive Base Rental Payments and Additional Rental Payments
under the Sublease pursuant to an Assignment Agreement, dated as of the date hereof and
recorded concurrently herewith (as more particularly defined in the Sublease, the “Assignment
Agreement”); 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 Site Lease do exist, have happened and have been performed in regular and due time,
form and manner as required by law, and the parties hereto are now duly authorized to execute
and enter into this Site Lease;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants contained herein and for other valuable consideration, the parties hereto do hereby
agree as follows:
ARTICLE I
DEFINITIONS
Unless the context clearly otherwise requires, capitalized undefined terms used herein
shall have the meanings ascribed thereto in the Sublease, dated as of March 1, 2022, by and
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01203.0042/765314.2 2
between the Borrower and the Corporation, as originally executed and as it may from time to
time be amended in accordance with the provisions thereof (the “Sublease”).
ARTICLE II
LEASE OF THE PROPERTY; RENTAL
Section 2.01. Lease of Property. The Borrower hereby leases to the Corporation, and
the Corporation hereby leases from the Borrower, the Property, subject only to Permitted
Encumbrances, to have and to hold for the term of this Site Lease.
Section 2.02. Rental. The Corporation shall pay to the Borrower as and for rental of the
Property hereunder, the sum of $8,000,000 (the “Site Lease Payment”). The Site Lease Payment
shall be paid from the funds provided by the Bank to finance the Project; provided, however, that
in the event the available funds are not sufficient to enable the Corporation to pay such amount
in full, the remaining amount of the Site Lease Payment shall be reduced to an amount equal to
the amount of such available funds.
The Corporation has directed the Bank to wire directly to the Borrower the funds
provided by the Bank to finance the Project, and upon such transfer, the Corporation will be
deemed to have paid the Site Lease Payment to the Borrower hereunder. The Corporation and
the Borrower hereby find and determine that the amount of the Site Lease Payment does not
exceed the fair market value of the leasehold interest in the Property which is conveyed
hereunder by the Borrower to the Corporation. No other amounts of rental shall be due and
payable by the Corporation for the use and occupancy of the Property under this Site Lease.
ARTICLE III
QUIET ENJOYMENT
The parties intend that the Property will be leased back to the Borrower pursuant to the
Sublease for the term thereof. It is further intended that, to the extent provided herein and in the
Sublease, if an event of default occurs under the Sublease, the Corporation, or its assignee, will
have the right, for the then remaining term of this Site Lease to (a) take possession of the
Property, (b) if it deems it appropriate, cause an appraisal of the Property and a study of the then
reasonable use thereof to be undertaken, and (c) relet the Property. Subject to any rights the
Borrower may have under the Sublease (in the absence of an Event of Default under the
Sublease) to possession and enjoyment of the Property, the Borrower hereby covenants and
agrees that it will not take any action to prevent the Corporation from having quiet and peaceable
possession and enjoyment of the Property during the term hereof and will, at the request of the
Corporation and at the Borrower’s cost, to the extent that it may lawfully do so, join in any legal
action in which the Corporation asserts its right to such possession and enjoyment.
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ARTICLE IV
SPECIAL COVENANTS AND PROVISIONS
Section 4.01. Waste. The Corporation agrees that at all times that it is in possession of
the Property, it will not commit, suffer or permit any waste on the Property, and that it will not
willfully or knowingly use or permit the use of the Property for any illegal purpose or act.
Section 4.02. Further Assurances and Corrective Instruments. The Borrower and
the Corporation agree that they will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and such further
instruments as may reasonably be required for correcting any inadequate or incorrect description
of the Property hereby leased or intended so to be or for carrying out the expressed intention of
this Site Lease, the Trust Agreement and the Sublease.
Section 4.03. Waiver of Personal Liability. All liabilities under this Site Lease on the
part of the Corporation shall be solely liabilities of the Corporation as a nonprofit public benefit
corporation duly organized and existing under the laws of the State of California, and the
Borrower hereby releases each and every director, officer and employee of the Corporation of
and from any personal or individual liability under this Site Lease. No director, officer or
employee of the Corporation shall at any time or under any circumstances be individually or
personally liable under this Site Lease to the Borrower or to any other party whomsoever for
anything done or omitted to be done by the Corporation hereunder.
All liabilities under this Site Lease on the part of the Borrower shall be solely liabilities
of the Borrower as a municipal corporation and general law city, and the Corporation hereby
releases each and every member, officer and employee of the Borrower of and from any personal
or individual liability under this Site Lease. No member, officer or employee of the Borrower
shall at any time or under any circumstances be individually or personally liable under this Site
Lease to the Corporation or to any other party whomsoever for anything done or omitted to be
done by the Borrower hereunder.
Section 4.04. Taxes. The Borrower covenants and agrees to pay any and all assessments
of any kind or character and also all taxes, including possessory interest taxes, levied or assessed
upon the Property.
Section 4.05. Right of Entry. The Borrower reserves the right for any of its duly
authorized representatives to enter upon the Property at any reasonable time to inspect the same.
Section 4.06. Value for Eminent Domain. Each of the Borrower and the Corporation
hereby stipulates and agrees that, for purposes of any eminent domain proceedings with respect
to all or a portion of the Property, the reasonable condemnation value of the Corporation’s
leasehold interest in the Property under this Site Lease is no less than an amount equal to the sum
of the amount of the remaining Base Rental Payments as of the date of the condemnation award,
plus the amount of any Additional Rental Payments due and payable as of such date.
Section 4.07. Representations of the Borrower. The Borrower represents and warrants
as follows:
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01203.0042/765314.2 4
(a) the Borrower has the full power and authority to enter into, to execute and
to deliver this Site Lease, and to perform all of its duties and obligations hereunder, and
has duly authorized the execution of this Site Lease;
(b) except for Permitted Encumbrances, the Property is not subject to any
dedication, easement, right of way, reservation in patent, covenant, condition, restriction,
lien or encumbrance which would prohibit or materially interfere with the use of the
Property for community center and park purposes as contemplated by the Borrower;
(c) all taxes, assessments or impositions of any kind with respect to the
Property, except current taxes, have been paid in full; and
(d) the Property is necessary to the Borrower in order for the Borrower to
perform its governmental function to provide community centers and parks for the use
and enjoyment of the residents of the Borrower.
Section 4.08. Representations of the Corporation. The Corporation represents and
warrants that the Corporation has the full power and authority to enter into, to execute and to
deliver this Site Lease, and to perform all of its duties and obligations hereunder, and has duly
authorized the execution and delivery of this Site Lease.
ARTICLE V
ASSIGNMENT, SELLING AND SUBLEASING
Section 5.01. Assignment, Selling and Subleasing. If an Event of Default occurs under
the Sublease, this Site Lease may be assigned or sold, and the Property may be subleased, as a
whole or in part, by the Corporation with the consent of the Bank, or at the direction of the Bank,
without the necessity of obtaining the consent of the Borrower; provided, however, that any
assignment or sale of this Site Lease shall be subject to the requirements of Section 5 of the
Assignment Agreement. The Corporation shall, within 30 days after such an assignment, sale or
sublease, furnish or cause to be furnished to the Borrower a true and correct copy of such
assignment, sublease or sale, as the case may be.
The Borrower understands and agrees that, upon the execution and delivery of the
Assignment Agreement (which is occurring simultaneously with the execution and delivery
hereof), all right, title and interest of the Corporation in and to this Site Lease will be sold,
assigned and transferred to the Bank. The Borrower hereby consents to such sale, assignment and
transfer. Upon the execution and delivery of the Assignment Agreement, references in the
operative provisions hereof to the Corporation shall be deemed to be references to the Bank, as
assignee of the Corporation.
Section 5.02. Restrictions on Borrower. The Borrower agrees that, except with respect
to Permitted Encumbrances and except as provided in Section 8.03 hereof, it will not mortgage,
sell, encumber, assign, transfer or convey the Property or any portion thereof during the term of
this Site Lease.
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01203.0042/765314.2 5
ARTICLE VI
IMPROVEMENTS
Title to all improvements made on the Property during the term hereof shall vest in the
Borrower.
ARTICLE VII
TERM; TERMINATION
Section 7.01. Term. The term of this Site Lease shall commence as of the date of
commencement of the term of the Sublease and shall remain in full force and effect from such
date to and including the Scheduled Termination Date, March 1, 2032, unless such term is
extended or sooner terminated as hereinafter provided.
Section 7.02. Extension; Early Termination. If on the Scheduled Termination Date,
the Rental Payments payable under the Sublease shall have been abated at any time and for any
reason, or shall not have been paid in full, then the term of this Site Lease shall be extended until
the date upon which all such Rental Payments shall have been paid in full. If, prior to the
Scheduled Termination Date, all Rental Payments due and payable under the Sublease shall have
been paid in full, the term of this Site Lease shall end simultaneously therewith.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Binding Effect. This Site Lease shall inure to the benefit of and shall be
binding upon the Borrower, the Corporation and their respective successors and assigns.
Section 8.02. Severability. In the event any provision of this Site Lease shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
Section 8.03. Amendments; Substitution and Release. This Site Lease may be
amended, changed, modified, altered or terminated only in accordance with the provisions of the
Sublease. The Borrower shall have the right to substitute alternate real property for the Property
or to release portions of the Property as provided in the Sublease.
Section 8.04. Corporation Default. In the event the Corporation shall be in default in
the performance of any obligation on its part to be performed under the terms of this Site Lease,
which default continues for 30 days following notice and demand for correction thereof from the
Borrower or the Bank, to the Corporation, the Borrower may, with the consent of the Bank,
exercise any and all remedies granted by law, except that no merger of this Site Lease and of the
Sublease shall be deemed to occur as a result thereof; provided, however, that so long
Borrower’s obligations under the Lease Documents remain unpaid, the Borrower shall have no
power to terminate this Site Lease by reason of any default on the part of the Corporation.
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Section 8.05. Third-Party Beneficiary. The Bank is a third-party beneficiary of this
Site Lease.
Section 8.06. Execution in Counterparts. This Site Lease may be simultaneously
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 8.07. Governing Law. This Site Lease shall be governed by and construed in
accordance with the laws of the State of California.
Section 8.08. Captions. The captions or headings in this Site Lease are for convenience
only and in no way define or limit the scope or intent of any provision of this Site Lease.
[The remainder of this page intentionally left blank.]
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01203.0042/765314.2 S-1
IN WITNESS WHEREOF, the parties hereto have caused this Site Lease to be executed
by their respective officers thereunto duly authorized, all as of the day and year first written
above.
CITY OF RANCHO PALOS VERDES
By:
David L. Bradley
Mayor
ATTEST:
Teresa Takaoka, City Clerk
PUBLIC PROPERTY FINANCING
CORPORATION OF CALIFORNIA
By:
Stefan A. Morton, Treasurer
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01203.0042/765314.2 A-1
EXHIBIT A
DESCRIPTION OF THE PROPERTY
All that real property situated in the County of Los Angeles, State of California,
described as follows, and any improvements thereto:
Ladera Linda Community Park Property
Point Vicente Interpretive Center Property
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01203.0042/765314.2
[Insert Notary Certification]
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01203.0042/765315.5
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Aleshire & Wynder, LLP
18881 Von Karman Avenue
Irvine, California 92612
Attention: Anita Luck
SUBLEASE
by and between
CITY OF RANCHO PALOS VERDES
and
PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA
Dated as of March 1, 2022
NO DOCUMENTARY TRANSFER TAX DUE. This Sublease is recorded for the benefit of the
City of Rancho Palos Verdes and the recording is exempt under Section 27383 of the California
Government Code and Section 11928 of the California Revenue and Taxation Code.
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01203.0042/765315.5 i
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions................................................................................................................2
ARTICLE II
LEASE OF PROPERTY; TERM
Section 2.01. Lease of Property .....................................................................................................8
Section 2.02. Term; Occupancy .....................................................................................................8
ARTICLE III
RENTAL PAYMENTS
Section 3.01. Rental Payments.......................................................................................................9
Section 3.02. Base Rental Payments ..............................................................................................9
Section 3.03. Additional Rental Payments ..................................................................................10
Section 3.04. Fair Rental Value ...................................................................................................11
Section 3.05. Payment Provisions ................................................................................................12
Section 3.06. Appropriations Covenant .......................................................................................12
Section 3.07. Rental Abatement...................................................................................................12
Section 3.08. Costs, Expenses and Taxes ....................................................................................13
Section 3.09. Late Payment .........................................................................................................13
Section 3.10. Indemnification ......................................................................................................13
Section 3.11. No Deductions .......................................................................................................13
Section 3.12. Funds Provided by Bank ........................................................................................14
ARTICLE IV
MAINTENANCE OF PROPERTY; ALTERATIONS AND ADDITIONS
Section 4.01. Maintenance and Utilities ......................................................................................14
Section 4.02. Additions to Property .............................................................................................14
Section 4.03. Installation of Borrower’s Equipment ...................................................................15
Section 4.04. Maintenance of Property ........................................................................................15
Section 4.05. Liens .......................................................................................................................15
Section 4.06. Disposition of the Property; Uses ..........................................................................15
Section 4.07. Compliance with Site Lease and Assignment Agreement .....................................16
Section 4.08. Observance of Laws and Regulations ....................................................................16
Section 4.09. Other Liens.............................................................................................................16
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01203.0042/765315.5 ii
Section 4.10. Prosecution and Defense of Suits ..........................................................................17
Section 4.11. Recordation ............................................................................................................17
Section 4.12. Further Assurances.................................................................................................17
Section 4.13 Cooperation ............................................................................................................17
ARTICLE V
INSURANCE
Section 5.01. Public Liability and Property Damage Insurance; Workers’ Compensation
Insurance ................................................................................................................17
Section 5.02. Title Insurance .......................................................................................................19
Section 5.03. Additional Insurance Provision; Form of Policies .................................................19
Section 5.04. Self-Insurance ........................................................................................................19
Section 5.05. Application of Net Proceeds ..................................................................................20
Section 5.06. Application of Title Insurance Proceeds ................................................................21
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default ...................................................................................................21
Section 6.02. Remedies ................................................................................................................22
Section 6.03. Waiver ....................................................................................................................24
Section 6.04. Application of Amounts After Default ..................................................................24
Section 6.05. Reserved .................................................................................................................25
Section 6.06. No Implied Waiver; Cumulative Remedies ...........................................................25
Section 6.07. Additional Bank Rights and Remedies ..................................................................25
ARTICLE VII
EMINENT DOMAIN; PREPAYMENT
Section 7.01. Eminent Domain ....................................................................................................25
Section 7.02. Prepayment ............................................................................................................26
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.01. Representations of the Borrower ...........................................................................27
Section 802. Representation of the Corporation .........................................................................27
ARTICLE IX
COVENANTS
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01203.0042/765315.5 iii
Section 9.01. Right of Entry ........................................................................................................28
Section 9.02. Liens .......................................................................................................................28
Section 9.03. Quiet Enjoyment ....................................................................................................29
Section 9.04. Corporation Not Liable ..........................................................................................29
Section 9.05. Assignment and Subleasing ...................................................................................30
Section 9.06. Title to Property .....................................................................................................30
Section 9.07. Corporation’s Purpose ...........................................................................................31
Section 9.08. Compliance with Law, Regulations, Etc ................................................................31
Section 9.09. Environmental Compliance ...................................................................................31
Section 9.10. No Condemnation ..................................................................................................32
Section 9.11. Tax Covenants .......................................................................................................32
Section 9.12. Reporting Requirements ........................................................................................33
Section 9.13. Access to Property and Books, Records and Accounts; Communication
with Accountant .....................................................................................................33
Section 9.14. Maintenance of Existence ......................................................................................33
Section 9.15. Substitute Property .................................................................................................33
ARTICLE X
NO CONSEQUENTIAL DAMAGES;
USE OF THE PROPERTY; SUBSTITUTION OR RELEASE
Section 10.01. No Consequential Damages ...................................................................................34
Section 10.02. Use of the Property ................................................................................................34
Section 10.03. Substitution or Release of the Property .................................................................34
ARTICLE XI
MISCELLANEOUS
Section 11.01. Governing Law ......................................................................................................36
Section 11.02. Notices ...................................................................................................................37
Section 11.03. Validity and Severability .......................................................................................37
Section 11.04. Net-Net-Net Lease .................................................................................................38
Section 11.05. Taxes ......................................................................................................................38
Section 11.06. Interpretation ..........................................................................................................38
Section 11.07. Amendments ..........................................................................................................38
Section 11.08. Third-Party Beneficiary .........................................................................................39
Section 11.09. Assignment ............................................................................................................39
Section 11.10. Execution in Counterparts......................................................................................39
Section 11.11. Waiver of Jury Trial ...............................................................................................39
Section 11.12. Judicial Reference ..................................................................................................39
Section 11.13. Duration .................................................................................................................39
Section 11.14. Reserved .................................................................................................................39
Section 11.15. Preferences .............................................................................................................39
Section 11.16. Standard of Conduct by Bank; Liability of the Bank ............................................39
Section 11.17. Funds and Accounts ...............................................................................................40
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01203.0042/765315.5 iv
Section 11.18. Business Days ........................................................................................................40
Section 11.19. Waiver of Personal Liability ..................................................................................40
Section 11.20. Tax Identification Number .....................................................................................40
Section 11.21. No Advisory or Fiduciary Relationship .................................................................40
EXHIBIT A DESCRIPTION OF THE PROPERTY .............................................................. A-1
EXHIBIT B BASE RENTAL PAYMENT SCHEDULE ........................................................B-1
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01203.0042/765315.5
SUBLEASE
THIS SUBLEASE (this “Sublease”), dated as of March 1, 2022, is by and between the
CITY OF RANCHO PALOS VERDES, a municipal corporation and general law duly
organized and existing under the Constitution and the laws of the State of California (the
“Borrower”), as lessee, and the PUBLIC PROPERTY FINANCING CORPORATION OF
CALIFORNIA, a nonprofit public benefit corporation, duly organized and existing under the
laws of the State of California (the “Corporation”), as lessor.
RECITALS
WHEREAS, the Borrower desires to finance certain facilities (as more particularly
defined herein, the “Project”);
WHEREAS, in order to provide funds to finance the Project, the Borrower will lease
certain real property and the improvements thereto comprising (i) the Ladera Linda Community
Park Property (as defined in the Sublease); and (ii) the Point Vicente Interpretive Center Property
(each as more particularly defined herein and as described in Exhibit A attached hereto and by
this reference incorporated herein, and collectively, as more particularly defined herein, the
“Property”) to the Corporation pursuant to a Site Lease, dated as of the date hereof and recorded
concurrently herewith (as more particularly defined herein, the “Site Lease”), and the Borrower
will sublease the Property back from the Corporation pursuant to this Sublease;
WHEREAS, the Borrower and the Corporation have determined that it would be in the
best interests of the Borrower and the Corporation to cause Bank of the West (as more
particularly defined herein, the “Bank”) to provide the funds to finance the Project in the
aggregate principal amount of $8,000,000 in consideration of the assignment of the right to
receive Base Rental Payments and Additional Rental Payments under the Sublease pursuant to
an Assignment Agreement, dated as of the date hereof and recorded concurrently herewith (as
more particularly defined herein, the “Assignment Agreement”); 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 Sublease do exist, have happened and have been performed in regular and due time, form
and manner as required by law, and the parties hereto are now duly authorized to execute and
enter into this Sublease;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants contained herein and for other valuable consideration, the parties hereto do hereby
agree as follows:
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01203.0042/765315.5 2
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise
requires, the terms defined in this Section shall, for all purposes of this Sublease, have the
meanings herein specified, which meanings shall be equally applicable to both the singular and
plural forms of any of the terms herein defined.
“Additional Rental Payments” means all amounts payable by the Borrower as Additional
Rental Payments pursuant to Section 3.03 hereof.
“Adjusted Maximum Rental” means, as of any Base Rental Payment Date, an amount
equal to the remainder of (a) the Maximum Annual Rental, minus (b) Rental Payments paid in
the then-current Rental Period prior to such Base Rental Payment Date, minus (c) the principal
components of the Base Rental Payments scheduled, pursuant hereto, to be paid in such Rental
Period after such Base Rental Payment Date, minus (d) the Remaining Interest Component
Amount as of such Base Rental Payment Date, minus (e) the Additional Rental Payments
reasonably anticipated by the Borrower to be paid in such Rental Period after such Base Rental
Payment Date.
“Assignment Agreement” means the Assignment Agreement, dated as of March 1, 2022,
by and between the Corporation and the Bank, as the same may be amended or supplemented
pursuant to the provisions thereof.
“Authorized Corporation Representative” means the Chairman, Treasurer or Secretary of
the Corporation, and any other person authorized by the Board of Directors of the Corporation to
act on behalf of the Corporation under or with respect to this Sublease.
“Authorized Borrower Representative” means the City Manager or Finance Director of
the City and any other person authorized by the City Council of the Borrower to act on behalf of
the Borrower under or with respect to this Sublease.
“Bank” means Bank of the West, or any permitted successor or assignee pursuant to
Section 5 of the Assignment Agreement.
“Base Rental Payment Date” means any of the following: (a) for the interest component
of the Base Rental Payments, each March 1 and September 1, commencing September 1, 2022;
provided, however, that during any period in which such Base Rental Payment evidences interest
at the Default Rate, the interest component of the Base Rental Payments shall be, unless
otherwise specified in this Sublease, payable on the first Business Day of each calendar month
and the date on which, in accordance with the provisions hereof, the Base Rent al Payments cease
to evidence interest at the Default Rate; (b) for the principal component of the Base Rental
Payments, any date on which the principal component of the Base Rental Payments is scheduled
to become due and payable pursuant to this Sublease; and (c) for both the interest component and
principal component of the Base Rental Payments, any other date on which the principal
component of the Base Rental Payments is prepaid pursuant to this Sublease.
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01203.0042/765315.5 3
“Base Rental Payment Schedule” means the schedule of Base Rental Payments payable
to the Corporation from the Borrower pursuant to Section 3.01 hereof and attached hereto as
Exhibit B, as may be adjusted from time to time in accordance with Section 3.02 hereof.
“Base Rental Payments” means all amounts payable to the Corporation from the
Borrower as Base Rental Payments pursuant to Section 3.01 hereof.
“Borrower” means the City of Rancho Palos Verdes, a municipal corporation and general
law city duly organized and existing under the Constitution and the laws of the State, and any
successor thereto.
“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday in the
State or (b) a day on which the New York Stock Exchange is closed.
“Code” means the Internal Revenue Code of 1986.
“Corporation” means the Public Property Financing Corporation of California, a
nonprofit public benefit corporation duly organized and existing under the laws of the State, and
any successor thereto.
“Costs of Delivery” means all the costs of executing and delivering the Lease
Documents, including, but not limited to, filing and recording fees, initial fees, expenses and
charges of the Bank and its counsel, fees, charges and disbursements of attorneys, financial
advisors, accounting firms, consultants and other professionals and any other cost, charge or fee
in connection with the original execution and delivery of the Lease Documents.
“Default” means any event or condition that, with notice, the passage of time or both,
would constitute an Event of Default.
“Default Rate” has the meaning ascribed thereto in the Supplemental Agreement.
“Deferred Interest Amount” means, with respect to interest calculated at the Default Rate
that is not paid on any Base Rental Payment Date because the payment thereof would cause the
Base Rental Payments payable on such Base Rental Payment Date to exceed the Adjusted
Maximum Rental as of such Base Rental Payment Date, as of any date of calculation, an amount
equal to the amount of such interest not paid, together with interest thereon at the Default Rate
from such Base Rental Payment Date to such date of calculation.
“Environmental Regulations” means all Laws and Regulations, now or hereafter in effect,
with respect to Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C.
Section 9601, et seq.) (together with the regulations promulgated thereunder, “CERCLA”), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, et seq.)
(together with the regulations promulgated thereunder, “RCRA”), the Emergency Planning and
Community Right-to-Know Act, as amended (42 U.S.C. Section 11001, et seq.) (together with
the regulations promulgated thereunder, “Title III”), the Clean Water Act, as amended (33
U.S.C. Section 1321, et seq.) (together with the regulations promulgated thereunder, “CWA”),
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01203.0042/765315.5 4
the Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.) (together with the regulations
promulgated thereunder, “CAA”) and the Toxic Substances Control Act, as amended (15 U.S.C.
Section 2601 et seq.) (together with the regulations promulgated thereunder, “TSCA”), and any
similar state or local Laws and Regulations and any so-called local, state or federal “superfund”
or “superlien” law.
“Event of Default” means, with respect to this Sublease, any event or circumstance
specified in 6.01 of the Sublease as an Event of Default.
“Event of Insolvency” means, with respect to any Person (a) the issuance, under the laws
of any state or under the laws of the United States of America, of an order of rehabilitation,
liquidation or dissolution of such Person, (b) the commencement by or against such Person of a
case or other proceeding seeking liquidation, reorganization or other relief with respect to such
Person or its debts under any bankruptcy, insolvency or other similar state or federal law now or
hereafter in effect, including, without limitation, the appointment of a trustee, receiver,
liquidator, custodian or other similar official for such Person or any substantial part of its
property or there shall be appointed or designated with respect to it, an entity such as an
organization, board, commission, authority, agency or body to monitor, review, oversee,
recommend or declare a financial emergency or similar state of financial distress with respect to
it or there shall be declared or introduced or proposed for consideration by it or by any legislative
or regulatory body with competent jurisdiction over it, the existence of a state of financial
emergency or similar state of financial distress in respect of it, (c) the making of an assignment
for the benefit of creditors by such Person, (d) the failure of such Person to generally pay its
debts as they become due, (e) a debt moratorium, debt adjustment, debt restructuring or
comparable restriction with respect to the payment of any indebtedness of such Person is
declared or imposed by such Person or by any governmental authority having jurisdiction over
such Person, (f) such Person shall admit in writing its inability to pay its debts when due, or
(g) the initiation of any actions to authorize any of the foregoing by or on behalf of such Person.
“Excess Interest Amount” means, for any period during which (a) interest with respect to
an amount is, pursuant to the Sublease, calculated at the Default Rate, and (b) if not for the
proviso in the respective definitions thereof limiting the Default Rate to the Maximum
Permissible Rate, such Default Rate would be higher than the Maximum Permissible Rate, as of
any date of calculation, an amount equal to the sum of (i) the remainder of (A) the amount of
interest that would have accrued during such period on such amount at the Default Rate if such
Default Rate had not been limited to the Maximum Permissible Rate, minus (B) the amount of
interest accrued during such period at the Maximum Permissible Rate, plus (ii) interest on the
amount of such remainder determined pursuant to the preceding clause (i) from the date such
remainder would have been payable if such Default Rate had not been limited to the Maximum
Permissible Rate to the date of such calculation.
“Fair Rental Value” means, with respect to the Property, the annual fair rental value
thereof.
“Favorable Opinion of Special Counsel” means, with respect to any action the occurrence
of which requires such an opinion, an unqualified opinion of Special Counsel to the effect that
such action is permitted under this Sublease and will not adversely affect the exclusion of the
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01203.0042/765315.5 5
interest components of the Base Rental Payments from gross income for purposes of federal
income taxation (subject to the inclusion of exceptions substantially to the effect of those
contained in the opinion delivered on the Funding Date).
“Funding Date” means [March 10, 2022].
“Governmental Requirements” means all laws of any governmental authority, including
without limitation, laws relating to public disclosures, zoning, certificates of need, licenses,
permits, subdivision building, safety, health, police and fire protection or environmental matters.
“Independent Insurance Consultant” means a nationally recognized independent actuary,
insurance company or broker acceptable to the Bank that has actuarial personnel experienced in
the area of insurance for which the Borrower is to be self-insured, as may from time to time be
designated by the Borrower.
“Ladera Linda Community Park Property” means the real property and improvements
thereto comprising the Ladera Linda Community Center and Park, a 10.6-acre park including the
Project, located at 32201 Forrestal Drive, Rancho Palos Verdes, California.
“Lease Documents” means the Site Lease, the Sublease, the Assignment Agreement, the
Tax Certificate and the Supplemental Agreement.
“Mandatory Sinking Fund Payment” means the principal components of Base Rental
Payments scheduled to become due and payable each Base Rental Payment Date as set forth on
Exhibit B hereto.
“Matters Contested in Good Faith” means the imposition of charges, assessments or taxes
by a governmental authority or the application of any laws or policies of any governmental
authority which has jurisdiction over the affairs of the Borrower (a) then being contested in good
faith by appropriate proceedings diligently and continuously pursued, (b) of which the Bank has
been notified in writing and are being kept informed in such detail as the Bank may from time to
time reasonably request, (c) the enforcement of which is effectively stayed during the period of
the contest, and (d) with respect to which either (i) adequate reserves in the nature of a cash
deposit or pledge of bonds or other securities, or a payment bond of a corporate surety in the face
amount equal to the total amount in controversy, reasonably satisfactory to the Bank, have been
furnished, or (ii) adequate provision therefor, reasonably satisfactory to the Bank has been
reserved on the financial statements of the Borrower.
“Maximum Annual Rental” means an amount equal to $1,420,000 [sufficient to cover
annual amortization and assumed interest at the Default Rate at the Maximum Rate and annual
Additional Rental Payments].
“Maximum Permissible Rate” means, with respect to the rate at which interest on an
amount is to be calculated pursuant to this Sublease, the highest interest rate permissible under
applicable law.
“Maximum Rate” means 12% per annum.
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01203.0042/765315.5 6
“Net Proceeds” means any insurance proceeds or condemnation award in excess of
$50,000, paid with respect to any of the Property, remaining after payment therefrom of all
reasonable expenses incurred in the collection thereof.
“Opinion of Counsel” means a written opinion of Special Counsel, appointed and paid by
the Borrower and satisfactory to and approved by the Bank.
“Permitted Encumbrances” means with respect to the Property, as of any particular time
(a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the
Borrower may, pursuant to provisions of Section 11.05 hereof, permit to remain unpaid, (b) the
Assignment Agreement, (c) this Sublease, (d) the Site Lease, (e) any right or claim of any
mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner
prescribed by law as normally exist with respect to properties similar to the Property for the
purposes for which it was acquired or is held by the Borrower, (f) easements, rights of way,
mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions
which exist of record as of the Funding Date which the Borrower certifies in writing will not
affect the intended use of the Property or impair the security granted to the Bank by the
Assignment Agreement and to which the Corporation, the Borrower and the Bank consent in
writing, and (g) easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions established following the Funding Date which
the Borrower certifies in writing do not affect the intended use of the Property or impair the
security granted to the Bank by the Assignment Agreement and to which the Corporation, the
Borrower and the Bank consent in writing.
“Person” means an individual, corporation, firm, association, partnership, limited liability
company, trust, or other legal entity or group of entities, including a governmental entity or any
agency or political subdivision thereof.
“Project” means the acquisition, construction, improvement, installation and furnishing of
a new City-owned Community Center, a one-story 6,790 square foot building, outdoor tiered
seating, a parking lot and children’s playground at the Ladera Linda Community Park, located at
32201 Forrestal Drive, Rancho Palos Verdes, California.
“Property” means, collectively, the real property and improvements thereto comprising:
(i) the Ladera Linda Community Park Property, and (ii) the Point Vicente Interpretive Center
Property, each as described in Exhibit A hereto, or any real property and improvements
subsequently substituted as the Property pursuant to Section 10.03 hereof and excluding any real
property and improvements released pursuant to Section 10.03 hereof.
“Point Vicente Interpretive Center Property” means the real property and improvements
thereto comprising the Point Vincente Interpretive Center, a 26.5-acre park including one-story
building[s] containing approximately 12,300 square feet located at 31501 Palos Verdes Drive
West, Rancho Palos Verdes, California.
“Remaining Excess Interest Amount” means, for purposes of Section 3.02(c) hereof, as
of any date of calculation, an amount equal to the remainder of (a) the Excess Interest Amount as
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01203.0042/765315.5 7
of such date of calculation, minus (b) an amount equal to all previously paid Excess Interest
Amounts with respect to such interest.
“Remaining Deferred Interest Amount” means, for purposes of Section 3.02(d) hereof,
with respect to interest calculated at the Default Rate that is not paid on any Base Rental
Payment Date because the payment thereof would cause the Base Rental Payments payable on
such Base Rental Payment Date to exceed the Adjusted Maximum Rental as of such Base Rental
Payment Date, as of any date of calculation, an amount equal to the remainder of (a) the
Deferred Interest Amount with respect to such interest as of such date of calculation, minus
(b) an amount equal to all previously paid Deferred Interest Amounts with respect to such
interest.
“Remaining Interest Component Amount” means, as of any Base Rental Payment Date,
the interest components of the Base Rental Payments scheduled, pursuant hereto, to be paid in
the then-current Rental Period after such Base Rental Payment Date; provided, however, that for
purposes of calculating the Remaining Interest Component Amount, the Base Rental Payments
shall be deemed to accrue at the Maximum Rate.
“Rental Payments” means, collectively, the Base Rental Payments and the Additional
Rental Payments.
“Rental Period” means the period from the Funding Date through June 30, 2022 and,
thereafter, the twelve-month period commencing on July 1 of each year during the term of this
Sublease.
“Scheduled Termination Date” means March] 1, 2032.
“Set Aside” means, with respect to any payment received by the Bank from or on behalf
of the Borrower, the subsequent invalidation of such payment, declaration that such payment
constitutes a fraudulent conveyance or preferential transfer, set aside of such payment, required
repayment of such payment (including pursuant to any settlement entered into by the Bank in its
discretion) to a trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause.
“Site Lease” means the Site Lease, dated as of March 1, 2022, by and between the
Borrower and the Corporation, as originally executed and as it may from time to time be
amended in accordance with the provisions thereof and hereof.
“Special Counsel” means a firm of nationally recognized bond counsel selected by the
Borrower and acceptable to the Bank.
“State” means the State of California.
“Sublease” means this Sublease, dated as of March 1, 2022, by and between the
Borrower and the Corporation, as the same may be amended or supplemented pursuant to the
provisions hereof.
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“Supplemental Agreement” means the Supplemental Agreement, dated as of March 1,
2022, by and between the Borrower and the Bank, as the same may be amended or supplemented
pursuant to the provisions hereof.
“Tax Certificate” means the Tax Certificate executed by the Borrower on the Funding
Date relating to the requirements of Section 148 of the Code, as originally executed and as it may
from time to time be amended in accordance with the provisions thereof.
“Written Certificate” and “Written Request” of the Borrower mean, respectively, a
written certificate or written request signed in the name of the Borrower by an Authorized
Borrower Representative. Any such request may, but need not, be combined in a single
instrument with any other instrument, opinion or representation, and the two or more so
combined shall be read and construed as a single instrument.
ARTICLE II
LEASE OF PROPERTY; TERM
Section 2.01. Lease of Property.
(a) The Corporation hereby leases to the Borrower and the Borrower hereby leases
from the Corporation the Property, on the terms and conditions hereinafter set forth, and subject
to all Permitted Encumbrances.
(b) The leasing of the Property by the Borrower to the Corporation pursuant to the
Site Lease shall not effect or result in a merger of the Borrower’s leasehold estate in the Property
as lessee under this Sublease and its leasehold or fee estate, as applicable, in the Property as
lessor under the Site Lease, and the Corporation shall continue to have a leasehold estate in the
Property pursuant to the Site Lease throughout the term thereof and hereof. This Sublease shall
constitute a sublease with respect to the Property. The leasehold interest in the Property granted
by the Borrower to the Corporation pursuant to the Site Lease is and shall be independent of this
Sublease; this Sublease shall not be an assignment or surrender of the leasehold interest in the
Property granted to the Corporation under the Site Lease.
Section 2.02. Term; Occupancy.
(a) The term of this Sublease shall commence on the Funding Date and shall end on
the Scheduled Termination Date, unless such term is extended or sooner terminated as
hereinafter provided. If on the Scheduled Termination Date, the Rental Payments payable
hereunder shall have been abated at any time and for any reason, or shall not have been paid in
full, then the term of this Sublease shall be extended until the date upon which all such Rental
Payments (including unpaid Rental Payments for the period of any abatement) shall have been
paid in full, except that the term of this Sublease shall in no event be extended more than ten
years beyond the Scheduled Termination Date. If, prior to the Scheduled Termination Date, all
Rental Payments due and payable shall have been paid in full, the t erm of this Sublease shall end
simultaneously therewith. Any abated Rental Payments shall be paid at the earliest opportunity
or otherwise during the extended term described above.
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(b) The Borrower shall take possession of the Property on the Funding Date.
ARTICLE III
RENTAL PAYMENTS
Section 3.01. Rental Payments.
(a) Rental Payments. The Borrower, subject to the provisions of Section 3.06 hereof
and the provisions of Article VII hereof, agrees to pay the Corporation, in each Rental Period,
Rental Payments, consisting of Base Rental Payments and Additional Rental Payments, in an
amount up to but not exceeding the Maximum Annual Rental, for and in consideration of the
right to use and occupy the Property and in consideration of the continued right to the quiet use
and enjoyment thereof during such Rental Period. Subject to the provisions of Section 3.07
hereof and Article VII hereof (i) the Base Rental Payments shall be paid by the Borrower as set
forth in the Base Rental Payment Schedule, and (ii) the Additional Rental Payments shall be paid
by the Borrower as provided in Section 3.03 hereof.
(b) Amount of Rental Payments Limited. In no event shall the Rental Payments
payable in any Rental Period exceed the Maximum Annual Rental.
(c) Obligation Not a Debt. The obligation of the Borrower to make the Rental
Payments, including the Base Rental Payments, does not constitute a debt of the Borrower or of
the State or of any political subdivision thereof within the meaning of any constitutional or
statutory debt limit or restriction, and does not constitute an obligation for which the Borrower or
the State is obligated to levy or pledge any form of taxation or for which the Borrower or the
State has levied or pledged any form of taxation.
Section 3.02. Base Rental Payments.
(a) Components. A portion of the Base Rental Payments shall constitute principal
components and a portion of the Base Rental Payments shall constitute interest components.
Except as otherwise provided in this Sublease, the aggregate principal components of the Base
Rental Payments shall be equal to $8,000,000 and the interest components of the Base Rental
Payments shall be paid by the Borrower as and constitute interest paid on the principal
components of the Base Rental Payments. Except as otherwise provided in thi s Sublease, the
interest components of the Base Rental Payments shall accrue at the rate of 1.98% per annum, as
adjusted as set forth below, calculated on the basis of a 360-day year and twelve 30-day months,
or, if applicable, at the Default Rate, calculated on the basis of a 360-day year and twelve 30-day
months. Upon the occurrence and during the continuance of an Event of Default hereunder, the
interest components of the Base Rental Payments shall accrue at the Default Rate. The principal
components of the Base Rental Payments are set forth in the Base Rental Payment Schedule
attached hereto and made a part hereof, which schedule may be adjusted from time to time as
provided in this Section. Subject to the provisions of Section 3.07 hereof and Article VII hereof,
the principal components of the Base Rental Payments shall be paid by the Borrower in the
amounts and at the times specified in the Base Rental Payment Schedule. Subject to the
provisions of Section 3.07 hereof and Article VII hereof, the interest components of the Base
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Rental Payments shall be paid by the Borrower on each Base Rental Payment Date for the unpaid
interest components of the Base Rental Payments accrued to but not including such Base Rental
Payment Date.
(b) Amount of Base Rental Payments Limited. In no event shall the Base Rental
Payments payable on any Base Rental Payment Date exceed the Adjusted Maximum Rental as of
such Base Rental Payment Date.
(c) Adjustment of Base Rental Payments as a Result of Maximum Permissible Rate
Limitation. If, all or a portion of the amount of interest that would have accrued on an amount at
the Default Rate if such Default Rate had not been limited to the Maximum Permissible Rate, is
not paid because of the proviso in the respective definitions thereof limiting the Default Rate to
the Maximum Permissible Rate, then, on each Base Rental Payment Date on which the Base
Rental Payments otherwise payable on such Base Rental Payment Date do not exceed the
Adjusted Maximum Rental as of such Base Rental Payment Date, the Base Rental Payments
payable on such Base Rental Payment Date shall be increased to an amount equal to the lesser of
(i) the remainder of (A) the Adjusted Maximum Rental as of such Base Rental Payment Date,
minus (B) the Rental Payments paid on such Base Rental Payment Date, and (ii) the Remaining
Excess Interest Amount, until the amount of the Remaining Excess Interest Amount is equal to
zero.
(d) Adjustment of Base Rental Payments as a Result of Maximum Rental Limitation.
If, all or a portion of the amount of interest calculated at the Default Rate is not paid on any Base
Rental Payment Date because the payment thereof would cause the Base Rental Payments
payable on such Base Rental Payment Date to exceed the Adjusted Maximum Rental as of such
Base Rental Payment Date, then, on each succeeding Base Rental Payment Date on which the
Base Rental Payments otherwise payable on such Base Rental Payment Date do not exceed the
Adjusted Maximum Rental as of such Base Rental Payment Date, the Base Rental Payments
payable on such Base Rental Payment Date shall be increased to an amount equal to the lesser of
(i) the remainder of (A) the Adjusted Maximum Rental as of such Base Rental Payment Date,
minus (B) the Rental Payments paid on such Base Rental Payment Date, and (ii) the Remaining
Deferred Interest Amount, until the amount of the Remaining Deferred Interest Amount is equal
to zero.
(e) Effect of Lease Term Extension. If the term of this Sublease shall have been
extended pursuant to Section 2.02 hereof, the obligation of the Borrower to pay Rental Payments
(including unpaid Rental Payments for the period of any abatement) shall continue to and
including the Base Rental Payment Date preceding the date of termination of this Sublease (as so
extended pursuant to Section 2.02 hereof).
Section 3.03. Additional Rental Payments. The Borrower shall
also pay, as Additional Rental Payments, such amounts as shall be required for the payment of
the following:
(a) all taxes and assessments of any type or nature charged to the Corporation or the
Borrower or affecting the Property or the respective interests or estates of the Corporation or the
Borrower therein;
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(b) all reasonable administrative costs of the Corporation relating to the Property
including, but without limiting the generality of the foregoing, salaries, wages, fees and
expenses, compensation and indemnification of the Bank, fees of auditors, accountants,
attorneys or engineers, and all other necessary and reasonable administrative costs of the
Corporation or charges required to be paid by it in order to maintain its existence or to comply
with the terms of this Sublease or to defend the Corporation and its members, officers, agents
and employees;
(c) insurance premiums for all insurance required pursuant to Article V hereof;
(d) any amounts with respect to this Sublease required to be rebated to the federal
government in accordance with section 148(f) of the Code; and
(e) all fees, charges, expenses or other amounts payable to the Bank pursuant hereto
or pursuant to the Supplemental Agreement, other than amounts payable to the Bank as Base
Rental Payments;
(f) any other Additional Rental Payments specified in this Sublease.
Amounts constituting Additional Rental Payments payable hereunder shall be paid by the
Borrower directly to the person or persons to whom such amounts shall be payable. The
Borrower shall pay all such amounts when due or at such later time as such amounts may be paid
without penalty or, in any other case, within 60 days after notice in writing from the Bank to the
Borrower stating the amount of Additional Rental Payments then due and payable and the
purpose thereof.
Section 3.04. Fair Rental Value. The parties hereto have agreed
and determined that the Fair Rental Value of the Property is not less than $1,420,000 [sufficient
to cover annual amortization and assumed interest at the Default Rate at the Maximum Rate and
annual Additional Rental Payments] as of the Funding Date. In making such determinations of
Fair Rental Value, consideration has been given to the uses and purposes which may be served
by the Property and the benefits therefrom that will accrue to the Borrower and the general
public. Payments of the Rental Payments for the Property during each Rental Period shall
constitute the total rental for said Rental Period. If the Base Rental Payment Schedule is
adjusted pursuant to Section 3.02 hereof, the Borrower shall, solely at the Bank’s request,
redetermine or cause to be redetermined the annual fair rental value of the Property. If upon
such redetermination, the Rental Payments for each Rental Period are less than the then-current
annual fair rental value of the Property, the Borrower shall cause the Fair Rental Value of the
Property to be increased to then then-current annual fair rental value of the Property and shall
case the Base Rental Payment Schedule to be adjusted so that the Rental Payments for each
Rental Period equal the increased Fair Rental Value of the Property. In addition, the Borrower
agrees, subject to the terms of this Sublease, to extend the term of this Sublease and the Site
Lease if, on the Scheduled Termination Date, any Rental Payments remain owing hereunder,
provided that no such extension shall violate the terms hereof or of the Site Lease. If at any time
the Rental Payments for any Rental Period exceed the Fair Rental Value of the Property, the
Borrower shall amend this Sublease and/or the Site Lease to substitute real property and/or
improvements for the Property and/or to add real property and/or improvements to the Property
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subject to this Sublease and the Site Lease (in the case of real property) so that the resulting Fair
Rental Value of the Property is at least equal to the Rental Payments for any Rental Period and
otherwise satisfying the conditions precedent to such substitution set forth in Section 10.03
hereof and as part of such consent, the substituted or remaining real property and improvements
will be satisfactory to the Bank on the basis of essentiality, fair rental value and insurance
coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon
or with respect thereto.
Section 3.05. Payment Provisions. Each installment of Base
Rental Payments payable hereunder shall be paid in lawful money of the United States of
America to or upon the order of the Bank as the assignee of the Corporation hereunder shall be
transferred to the Bank’s account set forth in the Supplemental Agreement. Each Base Rental
Payment shall be paid by the Borrower directly to the Bank as the assignee of the Corporation
hereunder no later than the Base Rental Payment Date on which such Base Rental Payment is
due. Any Base Rental Payment which shall not be paid by the Borrower when due and payable
under the terms of this Sublease shall bear interest from the date when the same is due hereunder
until the same shall be paid at the Default Rate. Notwithstanding any dispute between the
Corporation and the Borrower, the Borrower shall make all Rental Payments when due without
deduction or offset of any kind and shall not withhold any Rental Payments pending the final
resolution of such dispute. In the event of a determination that the Borrower was not liable for
said Rental Payments or any portion thereof, said payments or excess of payments, as the case
may be, shall be credited against subsequent Rental Payments due hereunder or refunded at the
time of such determination.
Section 3.06. Appropriations Covenant. The Borrower
covenants to take such action as may be necessary to include all Rental Payments due hereunder
as a separate line item in its annual budgets and to make necessary annual appropriations for all
such Rental Payments. The covenants on the part of the Borrower 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 Borrower 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 Borrower to carry
out and perform the covenants and agreements in this Sublease agreed to be carried out and
performed by the Borrower.
Section 3.07. Rental Abatement. Except as otherwise
specifically provided in this Section, during any period in which, by reason of material damage
to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is
substantial interference with the Borrower’s right to use and occupy any portion of the Property,
Rental Payments shall be abated proportionately, and the Borrower waives the benefits of
California Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to
terminate this Sublease by virtue of any such interference, and this Sublease shall continue in full
force and effect. The Borrower and the Corporation shall, in a reasonable manner and in good
faith, determine the amount of such abatement; provided, however, that the Rental Payments due
for any Rental Period shall not exceed the annual fair rental value of that portion of the Property
available for use and occupancy by the Borrower during such Rental Period. The Borrower and
the Corporation shall provide the Bank with a certificate setting forth the amount of abatement
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and the basis therefor. 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 Property, ending with the substantial completion of the
work of repair or replacement of the Property, or the portion thereof so damaged or destroyed.
Any abatement of Rental Payments pursuant to this Section shall result in the extension of the
term of this Sublease pursuant to Section 2.02 hereof and the Rental Payments for each Rental
Period during such extension period shall be equal to the unpaid Rental Payments for each
Rental Period during the period of abatement, in chronological order by Rental Period as set
forth in the Base Rental Payment Schedule.
Notwithstanding the foregoing, to the extent that Net Proceeds are available for the
payment of Rental Payments, Rental Payments shall not be abated as provided above but, rather,
shall be payable by the Borrower as a special obligation payable solely from said Net Proceeds.
Notwithstanding the foregoing, to the extent that any Additional Rental Payments
constitute a contingent obligation pursuant to which the Borrower’s performance is required only
after the performance of the other party’s obligations thereunder and, as such are exempt from
and not subject to the debt limitation set forth in Article XVI, Section 18 of the State
Constitution, the portion of Rental Payments comprised of Additional Rental Payments shall not
be abated as provided above but, rather, shall be payable by the Borrower as a contingent
obligation.
Section 3.08. Costs, Expenses and Taxes. The Borrower shall
pay, as Additional Rental Payments hereunder, the amounts set forth in Section 7.02 of the
Supplemental Agreement.
Section 3.09. Late Payment. Any Base Rental Payment which
shall not be paid by the Borrower when due and payable under the terms hereof shall bear
interest from the date when the same is due until the same shall be paid at the Default Rate. Any
Additional Rental Payment payable to the Bank which shall not be paid by the Borrower when
due and payable under the terms hereof shall bear interest from the date when the same is due
until the same shall be paid at the Default Rate. All computations of such interest at the Default
Rate shall be made on the basis of a 360-day year and twelve 30-day months.
Section 3.10. Indemnification. The Borrower shall pay, as
Additional Rental Payments hereunder, the amounts set forth in [Section 7.01] of the
Supplemental Agreement.
Section 3.11. No Deductions. Except as otherwise required by
law, each payment by the Borrower to the Bank under the Lease Documents shall be made
without setoff or counterclaim and without withholding for or on account of any present or future
taxes (other than any tax measured by or based upon the overall net income of the Bank imposed
by any jurisdiction having control over the Bank) imposed by or within the jurisdiction in which
the Borrower is domiciled, any jurisdiction from which the Borrower makes any payment
hereunder, or (in each case) any political subdivision or taxing authority thereof or therein. If any
such withholding is so required, the Borrower shall make the withholding, pay the amount
withheld to the appropriate governmental authority before penalties attach thereto or interest
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accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the
net amount actually received by the Bank free and clear of such taxes (including such taxes on
such additional amount) is equal to the amount which the Bank would have received had such
withholding not been made. If the Bank pays any amount in respect of any such taxes, penalties
or interest, the Borrower shall reimburse the Bank for that payment on demand in the currency in
which such payment was made. If the Borrower pays any such taxes, penalties or interest, it shall
deliver official tax receipts evidencing that payment or certified copies thereof to the Bank on or
before the thirtieth day after payment.
Section 3.12. Funds Provided by Bank. The funds provided by
the Bank for the financing of the Project shall be transferred to the City on the Funding Date.
The Borrower shall establish, maintain and hold in trust a separate fund or account
designated as the “Project Fund,” into which the Borrower shall deposit the funds provided by
the Bank for the financing of the Project. The Borrower shall disburse amounts in the Project
Fund from time to time to pay costs of the Project. The Borrower shall keep, or cause to be kept,
proper books of record and accounts, in which complete and correct entries are made of all
transactions relating to the Project Fund, including any investments. Upon the determination by
the Borrower that the Project has been completed and that no further amounts are required to be
disbursed from the Project Fund to pay costs of the Project, the Borrower shall withdraw all
amounts remaining on deposit in the Project Fund, if any, and use such funds to pay Rental
Payments due under this Sublease and, thereafter, the Borrower shall close the Project Fund.
ARTICLE IV
MAINTENANCE OF PROPERTY; ALTERATIONS AND ADDITIONS
Section 4.01. Maintenance and Utilities. Throughout the term
of this Sublease, as part of the consideration for rental of the Property, all improvement, repair
and maintenance of the Property shall be the responsibility of the Borrower, and the Borrower
shall pay for or otherwise arrange for the payment of all utility services supplied to the Property,
which may include, without limitation, janitor service, security, power, gas, telephone, light,
heating, ventilation, air conditioning, water and all other utility services, and shall pay for or
otherwise arrange for payment of the cost of the repair and replacement of the Property resulting
from ordinary wear and tear or want of care on the part of the Borrower or any assignee or
sublessee thereof. In exchange for the Rental Payments, the Corporation agrees to provide only
the Property.
Section 4.02. Additions to Property. Subject to Section 9.02
hereof, the Borrower and any sublessee shall, at its own expense, have the right to make
additions, modifications and improvements to the Property. To the extent that the removal of
such additions, modifications or improvements would not cause material damage to the Property,
such additions, modifications and improvements shall remain the sole property of the Borrower
or such sublessee, and neither the Corporation nor the Bank shall have any interest therein. Such
additions, modifications and improvements shall not in any way damage the Property or cause it
to be used for purposes other than those authorized under the provisions of state and federal law;
and the Property, upon completion of any additions, modifications and improvements made
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pursuant to this Section, shall be of a value which is at least equal to the value of the Property
immediately prior to the making of such additions, modifications and improvements.
Section 4.03. Installation of Borrower’s Equipment. The
Borrower and any sublessee may at any time and from time to time, in its sole discretion and at
its own expense, install or permit to be installed items of equipment or other personal property in
or upon the Property. All such items shall remain the sole property of the Borrower or such
sublessee, and neither the Corporation nor the Bank shall have any interest therein. The
Borrower or such sublessee may remove or modify such equipment or other personal property at
any time, provided that such party shall repair and restore any and all damage to the Property
resulting from the installation, modification or removal of any such items; and the Property, upon
completion of any installations, modifications or removals made pursuant to this Section, shall
be of a value which is at least equal to the value of the Property immediately prior to the making
of such installations, modifications or removals. Nothing in this Sublease shall prevent the
Borrower or any sublessee from purchasing items to be installed pursuant to this Section under a
conditional sale or lease purchase contract, or subject to a vendor’s lien or security agreement as
security for the unpaid portion of the purchase price thereof, provided that no such lien or
security interest shall attach to any part of the Property.
Section 4.04. Maintenance of Property. The Borrower shall
operate and maintain the Property, in accordance with all Governmental Requirements including,
without limitation, such zoning, sanitary, pollution and safety laws as may be binding upon the
Borrower. The Borrower shall maintain and operate the Property and all engines, boilers, pumps,
machinery, apparatus, fixtures, fittings and equipment of any kind in or that shall be placed in
any building or structure now or hereafter at any time constituting part of the Property which are
material to the operation of the Property, in good repair, working order and condition (reasonable
wear and tear excepted), and shall from time to time make or cause to be made all needful and
proper replacements, repairs, renewals and improvements so that the efficiency and value of the
Property will not be impaired.
Section 4.05. Liens.
(a) The Borrower shall not directly or indirectly, create, incur or assume any lien on
or with respect to the Property, other than Permitted Encumbrances.
(b) The Borrower shall discharge or cause to be discharged all liens on the Property,
or any part thereof, other than Permitted Encumbrances, subject, in each case, to the right of the
Borrower to contest the same as Matters Contested in Good Faith.
Section 4.06. Disposition of the Property; Uses.
(a) The Borrower shall not sell, lease or otherwise dispose of any portion of the
Property, other than as permitted under Section 9.05 hereof.
(b) The Borrower shall not abandon, vacate or close the Property, other than as
permitted under Section 3.07 hereof.
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(c) Without the prior written consent of the Bank, the Borrower shall not (i) seek,
make or consent to any change in the zoning, any entitlements or conditions of use of the
Property, (ii) grant any easement, license or other right in the Property or any portion thereof that
may in any way impair the value of the Property or the validity, priority or security of this
Sublease or the coverage of any title insurance policy insuring the Borrower’s leasehold interest
hereunder or that could cause a material adverse effect on the permissible uses of the Property,
(iii) make any application for or record any tract map, parcel map, condominium plan,
condominium declaration, or plat of subdivision with respect to the Property, or (iv ) otherwise
record or execute any documents or instruments affecting the Property that may in any material
way impair the value of the Property or the validity, priority or security of this Sublease or the
coverage of any title insurance policy insuring the Borrower’s leasehold interest hereunder or
that could cause a material adverse effect on the permissible uses of the Property.
Section 4.07. Compliance with Site Lease and Assignment
Agreement. Each of the Corporation and the Borrower shall faithfully comply with, keep,
observe and perform all the agreements, conditions, covenants and terms contained in the Site
Lease and the Assignment Agreement required to be complied with, kept, observed and
performed by it and shall enforce the Site Lease and the Assignment Agreement against the other
party thereto in accordance with their respective terms.
Section 4.08. Observance of Laws and Regulations. The
Corporation and the Borrower shall faithfully comply with, keep, observe and perform all valid
and lawful obligations or regulations now or hereafter imposed on them by contract, or
prescribed by any law of the United States of America or of the State, or by any officer, board or
commission having jurisdiction or control, as a condition of the continued enjoyment of each and
every franchise, right or privilege now owned or hereafter acquired by them, including their right
to exist and carry on their respective businesses, to the end that such franchises, rights and
privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any
manner impaired.
Section 4.09. Other Liens.
(a) The Borrower shall keep the Property and all parts thereof free from judgments
and materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and
other liens of whatever nature or character, and free from any claim or liability which materially
impairs the Borrower in conducting its business or utilizing the Property, and the Bank at its
option (after first giving the Borrower ten days’ written notice to comply therewith and failure
of the Borrower to so comply within such ten-day period) may defend against any and all
actions or proceedings, or may pay or, with the consent of the Bank, compromise any claim or
demand asserted in any such actions or proceedings; provided, however, that, in defending
against any such actions or proceedings or in paying or compromising any such claims or
demands, the Bank shall not in any event be deemed to have waived or released the Borrower
from liability for or on account of any of its agreements and covenants contained herein, or
from its obligation hereunder to perform such agreements and covenants. The Bank shall have
no liability with respect to any determination made in good faith to proceed or decline to
defend, pay or compromise any such claim or demand.
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(b) The Corporation shall not encumber the Property other than in accordance with
the Site Lease, this Sublease and the Assignment Agreement.
(c) Neither the Corporation nor the Borrower shall create or suffer to be created any
pledge of or lien on the Net Proceeds.
Section 4.10. Prosecution and Defense of Suits. The Borrower
shall promptly, upon request of the Bank, take such action from time to time as may be necessary
or proper to remedy or cure any cloud upon or defect in the title to the Property or any part
thereof, whether now existing or hereafter developing, shall prosecute all actions, suits or other
proceedings as may be appropriate for such purpose and shall indemnify and save the Bank
harmless from all cost, damage, expense or loss, including attorneys’ fees, which they or any of
them may incur by reason of any such cloud, defect, action, suit or other proceeding.
Section 4.11. Recordation. The Borrower shall record, or cause
to be recorded, with the appropriate county recorder, this Sublease, the Site Lease and the
Assignment Agreement, or memoranda thereof.
Section 4.12. Further Assurances. Whenever and so often as
requested to do so by the Bank, the Corporation and the Borrower shall promptly execute and
deliver or cause to be executed and delivered all such other and further assurances, documents or
instruments and promptly do or cause to be done all such other and further things as may be
necessary or reasonably required in order to further and more fully vest in the Bank all
advantages, benefits, interests, powers, privileges and rights conferred or intended to be
conferred upon them hereby or by the Assignment Agreement, the Site Lease or this Sublease.
Section 4.13. Cooperation. Each of the Corporation and the
Borrower shall cooperate fully with the Bank at the expense of the Borrower in filing any proof
of loss with respect to any insurance policy maintained pursuant to Article V of this Sublease and
the Corporation shall cooperate fully with the Borrower in contesting any lien filed or established
against the Property, upon the request and at the expense of the Borrower pursuant to
Section 4.05 hereof.
ARTICLE V
INSURANCE
Section 5.01. Public Liability and Property Damage Insurance;
Workers’ Compensation Insurance.
(a) The Borrower shall maintain or cause to be maintained, throughout the term of
this Sublease, a standard comprehensive general liability insurance policy or policies in
protection of the Borrower, the Corporation and their respective members, officers, agents and
employees. Said policy or policies shall provide for indemnification of said parties against direct
or contingent loss or liability for damages for bodily and personal injury, death or property
damage occasioned by reason of the use or ownership of the Property. Said policy or policies
shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death
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of each person and $3,000,000 for personal injury or deaths of two or more persons in a single
accident or event, and in a minimum amount of $500,000 for damage to property (subject to a
deductible clause of not to exceed $100,000) resulting from a single accident or event. Such
public liability and property damage insurance may, however, be in the form of a single limit
policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be
maintained as part of or in conjunction with any other liability insurance coverage carried or
required to be carried by the Borrower, and may be maintained in whole or in part in the form of
self-insurance by the Borrower, provided that such self-insurance complies with the provisions
of Section 5.04 hereof. The Net Proceeds of such liability insurance shall be applied toward
extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such
insurance shall have been paid.
(b) The Borrower shall maintain or cause to be maintained, throughout the term of
this Sublease, workers’ compensation insurance issued by a responsible carrier authorized under
the laws of the State to insure employers against liability for compensation under the California
Labor Code, 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 Borrower in connection
with the Property and to cover full liability for compensation under any such act; provided,
however, that the Borrower’s obligations under this subsection may be satisfied by self-
insurance, provided that such self-insurance complies with the provisions of Section 5.04 hereof.
(c) The Borrower shall maintain or cause to be maintained casualty insurance
insuring the Property against fire, lightning and all other risks covered by an extended coverage
endorsement to the full insurable value of the Property, subject to a $100,000 loss deductible
provision, unless some other deductible is acceptable to the Bank. Full insurable value shall be
evaluated at least every five years by an Independent Insurance Consultant. The Borrower’s
obligations under this subsection may be satisfied by self-insurance, provided that such self-
insurance complies with the provisions of Section 5.04 hereof.
(d) The Borrower shall maintain rental interruption insurance to cover the
Corporation’s loss, total or partial, of Base Rental Payments resulting from the loss, total or
partial, of the use of any part of the Property as a result of any of the hazards required to be
covered pursuant to subsection (c) of this Section in an amount equal to lesser of (i) the amount
sufficient at all times to pay an amount not less than the maximum amount of Base Rental
Payments scheduled to be paid during any 24 consecutive months or (ii) such lesser amount as
may be agreed to by the Bank. Such rental interruption insurance shall be payable for a period
adequate to cover the period of repair or reconstruction. The Borrower shall not be permitted to
self-insure its obligation under this subsection.
(e) The insurance required by this Section shall be provided by carriers rated at least
“A” by Standard & Poor’s Ratings Services (a “Qualified Insurer”), unless the Bank shall
approve an insurer with a lower rating. If an insurer’s rating falls below “A” or, with respect to
an insurer approved by the Bank, with a rating lower than “A,” falls below the rating such
insurer had when approved by the Bank, such insurer shall be replaced with a Qualified Insurer,
unless the Bank shall approve an insurer with a lower rating.
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Section 5.02. Title Insurance. The Borrower shall provide, at
its own expense, one or more CLTA title insurance policies for the Property, in form acc eptable
to the Bank, in the aggregate amount of not less than the aggregate principal components of the
Base Rental Payments. Said policy or policies shall insure (a) the fee interest of the Borrower in
the Property (b) the Corporation’s site leasehold estate in the Property under the Site Lease, and
(c) the Borrower’s leasehold estate hereunder in the Property, subject only to Permitted
Encumbrances; provided, however, that one or more of said estates may be insured through an
endorsement to such policy or policies. All Net Proceeds received under said policy or policies
shall be deposited with the Bank and applied as provided in Section 5.06 hereof. Each policy of
title insurance obtained pursuant hereto or required hereby shall provide that all proceeds
thereunder shall be payable to the Bank.
Section 5.03. Additional Insurance Provision; Form of Policies.
The Borrower shall pay or cause to be paid when due the premiums for all insurance policies
required by Section 5.01 hereof, and shall promptly furnish or cause to be furnished evidence of
such payments to the Bank. All such policies (other than for general liability insurance) shall
contain a standard lessee clause in favor of the Bank and shall be endorsed to show the Bank as
loss payee and additional insured and the general liability insurance policies shall be endorsed to
show the Bank as additional insured. All such policies shall provide that the Bank shall be given
30 days’ notice of the expiration thereof, any intended cancellation thereof or any reduction in
the coverage provided thereby. The Bank shall be fully protected in accepting payment on
account of such insurance or any adjustment, compromise or settlement of any loss agreed to by
the Borrower; provided, however, that the Borrower shall not agree to any adjustment,
compromise or settlement without the written consent of the Bank.
The Borrower shall cause to be delivered to the Bank on or before August 15 of each
year, commencing August 15, 2022, a schedule of the insurance policies being maintained in
accordance herewith and a Certificate of the Borrower stating that such policies are in full force
and effect and that the Borrower is in full compliance with the requirements of this Article. The
Borrower shall, upon request of the Bank, deliver to the Bank, certificates or duplicate originals
or certified copies of each insurance policy described in such schedule. The Bank shall be
entitled to rely upon said Certificate of the Borrower as to the Borrower’s compliance with this
Article. The Bank shall not be responsible for the sufficiency of coverage or amounts of such
policies.
Section 5.04. Self-Insurance. Any self-insurance maintained by
the Borrower pursuant to this Article shall comply with the following terms:
(a) the self-insurance program shall be approved in writing by the Bank;
(b) the self-insurance program shall be approved in writing by an Independent
Insurance Consultant;
(c) the self-insurance program shall include an actuarially sound claims reserve fund
out of which each self-insured claim shall be paid, the adequacy of each such fund shall be
evaluated on an annual basis by the Independent Insurance Consultant and any deficiencies in
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any self-insured claims reserve fund shall be remedied in accordance with the recommendation
of the aforementioned Independent Insurance Consultant;
(d) the self-insured claims reserve fund shall be held in a separate trust fund by an
independent trustee; and
(e) in the event the self-insurance program shall be discontinued, the actuarial
soundness of its claims reserve fund, as determined by the Independent Insurance Consultant,
shall be maintained.
Section 5.05. Application of Net Proceeds.
(a) If the Property or any portion thereof shall be damaged or destroyed, subject to
the further requirements of this Section, the Borrower shall, as expeditiously as possible,
continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof,
unless the Borrower elects not to repair or replace the Property or the affected portion thereof in
accordance with the provisions hereof.
(b) The Net Proceeds of any insurance (other than Net Proceeds of rental interruption
insurance), including the proceeds of any self-insurance, received on account of any damage or
destruction of the Property or a portion thereof shall as soon as possible be deposited with the
Bank and be held by the Bank in a special account and made available for and, to the extent
necessary, shall, with the consent of the Bank, which consent shall not be unreasonably withheld,
be applied to the cost of repair or replacement of the Property or the affected portion thereof
upon receipt of a Written Request of the Borrower, together with invoices therefor. Pending such
application, such proceeds may be invested by the Bank as directed by the Borrower in legally
permitted investments that mature not later than such times as moneys are expected to be needed
to pay such costs of repair or replacement.
(c) Notwithstanding the foregoing, the Borrower shall, within 60 days of the
occurrence of the event of damage or destruction, notify the Bank in writing as to whether the
Borrower intends to replace or repair the Property or the portions of the Property which were
damaged or destroyed. If the Borrower does intend to replace or repair the Property or portions
thereof, the Borrower shall deposit with the Bank the full amount of any insurance deductible to
be credited to the special account referred to in subsection (b) of this Section.
(d) If such damage, destruction or loss was such that there resulted a substantial
interference with the Borrower’s right to the use or occupancy of the Property and an abatement
in whole or in part of Rental Payments results (or would result if Net Proceeds were not available
for the payment of the Rental Payments) from such damage or destruction pursuant to
Section 3.07 hereof, then the Borrower, with the consent of the Bank, which consent shall not be
unreasonably withheld, shall be required either to (i) apply sufficient funds from the insurance
proceeds and other legally available funds to the replacement or repair of the Property or the
portions thereof which have been damaged to the condition which existed prior to such damage
or destruction, or (ii) apply sufficient funds from the insurance proceeds and other legally
available funds to the prepayment, as set forth in Section 7.02 hereof, in full of all the Base
Rental Payments or that portion of the Base Rental Payments which are abated as a result of the
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damage or destruction. Any proceeds of any insurance, including the proceeds of any self-
insurance remaining after the portion of the Property which was damaged or destroyed is
restored to and made available to the Borrower in substantially the same condition and annual
fair rental value as that which existed prior to the damage or destruction as required by clause (i)
above or the prepayment of Base Rental Payments as required by clause (ii) above, in each case
as evidenced by a Written Certificate of the Borrower to such effect, shall, with the consent of
the Bank, which consent shall not be unreasonably withheld, and if there is first delivered to the
Bank a Written Certificate of the Borrower to the effect that the annual fair rental value of the
Property after such damage or destruction, and after any repairs or replacements made as a result
of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental
Payments becoming due hereunder in the then-current Rental Period or any subsequent Rental
Period and the fair replacement value of the Property after such damage or dest ruction is at least
equal to the sum of the then unpaid principal components of Base Rental Payments, be paid to
the Borrower to be used for any lawful purpose.
(e) The Borrower shall apply the proceeds of any award in eminent domain to the
prepayment of Base Rental Payments pursuant to Section 7.02 hereof.
Section 5.06. Application of Title Insurance Proceeds.
Proceeds of any policy of title insurance received by the Bank in respect of the Property shall be
applied as follows:
(a) if the Borrower determines that the title defect giving rise to such proceeds has
not substantially interfered with its use and occupancy of the Property and will not result in an
abatement of Rental Payments payable by the Borrower hereunder, such proceeds shall, with the
written approval of the Bank, which approval shall not be unreasonably withheld, be remitted to
the Borrower and used for any lawful purpose thereof; or
(b) if the Borrower determines that the title defect giving rise to such proceeds has
substantially interfered with its use and occupancy of the Property and will result in an
abatement in whole or in part of Rental Payments payable by the Borrower hereunder, then such
proceeds shall be applied to the prepayment of Base Rental Payments in the manner provided in
Section 7.02 hereof.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. The following shall be “Events
of Default” under this Sublease and the terms “Events of Default” and “Default” shall mean,
whenever they are used in this Sublease, any one or more of the following events:
(a) the Borrower shall fail to pay any Rental Payment payable hereunder when the
same becomes due and payable, time being expressly declared to be of the essence in this
Sublease;
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(b) the Borrower’s interest in this Sublease or any part thereof be assigned or
transferred, either voluntarily or by operation of law or otherwise;
(c) an Event of Insolvency shall occur with respect to the Borrower or the
Corporation; or
(d) the occurrence of an Event of Default set forth in Section 6.01 of the
Supplemental Agreement.
Section 6.02. Remedies. Upon the occurrence of any Event of
Default hereunder, the Corporation, in addition to all other rights and remedies it may have at
law, shall have the option to do any of the following:
(a) To terminate this Sublease in the manner hereinafter provided on account of such
Event of Default, notwithstanding any re-entry or re-letting of the Property as hereinafter
provided for in subparagraph (ii) hereof, and to re-enter the Property and remove all persons in
possession thereof and all personal property whatsoever situated upon the Property and place
such personal property in storage in any warehouse or other suitable place, for the account of and
at the expense of the Borrower. In the event of such termination, the Borrower agrees to
surrender immediately possession of the Property, without let or hindrance, and to pay the
Corporation all damages recoverable at law that the Corporation may incur by reason of such
Event of Default, including, without limitation, any costs, loss or damage whatsoever arising out
of, in connection with, or incident to any such re-entry upon the Property and removal and
storage of such property by the Corporation or its duly authorized agents in accordance with the
provisions herein contained. Neither notice to pay Rental Payments or to deliver up possession of
the Property given pursuant to law nor any entry or re-entry by the Corporation nor any
proceeding in unlawful detainer, or otherwise, brought by the Corporation for the purpose of
effecting such re-entry or obtaining possession of the Property nor the appointment of a receiver
upon initiative of the Corporation to protect the Corporation’s interest under this Sublease shall
of itself operate to terminate this Sublease, and no termination of this Sublease on account of an
Event of Default hereunder shall be or become effective by operation of law or acts of the parties
hereto, or otherwise, unless and until the Corporation shall have given written notice to the
Borrower of the election on the part of the Corporation to terminate this Sublease. The Borrower
covenants and agrees that no surrender of the Property or of the remainder of the term hereof or
any termination of this Sublease shall be valid in any manner or for any purpose whatsoever
unless stated by the Corporation by such written notice.
(b) Without terminating this Sublease, (A) to collect each installment of Rental
Payments as the same become due and enforce any other terms or provisions hereof to be kept or
performed by the Borrower, regardless of whether or not the Borrower has abandoned the
Property, or (B) to exercise any and all rights of entry and re-entry upon the Property. In the
event the Corporation does not elect to terminate this Sublease in the manner provided for in
subparagraph (i) hereof, the Borrower shall remain liable and agrees to keep or perform all
covenants and conditions herein contained to be kept or performed by the Borrower and, if the
Property is not re-let, to pay the full amount of the Rental Payments to the end of the term of th is
Sublease or, in the event that the Property is re-let, to pay any deficiency in Rental Payments that
results therefrom; and further agrees to pay said Rental Payments and/or Rental Payment
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deficiency punctually at the same time and in the same manner as hereinabove provided for the
payment of Rental Payments hereunder, notwithstanding the fact that the Corporation may have
received in previous years or may receive thereafter in subsequent years Rental Payments in
excess of the Rental Payments herein specified, and notwithstanding any entry or re-entry by the
Corporation or suit in unlawful detainer, or otherwise, brought by the Corporation for the
purpose of effecting such re-entry or obtaining possession of the Property. Should the
Corporation elect to re-enter as herein provided, the Borrower hereby irrevocably appoints the
Corporation as the agent and attorney-in-fact of the Borrower to re-let the Property, or any part
thereof, from time to time, either in the Corporation’s name or otherwise, upon such terms and
conditions and for such use and period as the Corporation may deem advisable and to remove all
persons in possession thereof and all personal property whatsoever situated upon the Property
and to place such personal property in storage in any warehouse or other suitable place, for the
account of and at the expense of the Borrower, and the Borrower hereby indemnifies and agrees
to save harmless the Corporation from any costs, loss or damage whatsoever arising out of, in
connection with, or incident to any such re-entry upon and re-letting of the Property and removal
and storage of such property by the Corporation or its duly authorized agents in accordance with
the provisions herein contained. The Borrower agrees that the terms of this Sublease constitute
full and sufficient notice of the right of the Corporation to re-let the Property in the event of such
re-entry without effecting a surrender of this Sublease, and further agrees that no acts of the
Corporation in effecting such re-letting shall constitute a surrender or termination of this
Sublease irrespective of the use or the term for which such re-letting is made or the terms and
conditions of such re-letting, or otherwise, but that, on the contrary, upon the occurrence of an
Event of Default hereunder, the right to terminate this Sublease shall vest in the Corporation to
be effected in the sole and exclusive manner provided for in subparagraph (i) hereof. The
Borrower further agrees to pay the Corporation the cost of any alterations or additions to the
Property necessary to place the Property in condition for re-letting immediately upon notice to
the Borrower of the completion and installation of such additions or alterations.
The Borrower hereby waives any and all claims for damages caused or which may be
caused by the Corporation in re-entering and taking possession of the Property as herein
provided and all claims for damages that may result from the destruction of or injury to the
Property and all claims for damages to or loss of any property belonging to the Borrower, or any
other person, that may be in or upon the Property.
(c) In addition to the other remedies set forth in this Section, upon the occurrence of
an Event of Default hereunder, the Corporation shall be entitled to proceed to protect and enforce
the rights vested in the Corporation by this Sublease or by law. The provisions of this Sublease
and the duties of the Borrower and of its board, officers or employees shall be enforceable by the
Corporation by mandamus or other appropriate suit, action or proceeding in any court of
competent jurisdiction. Without limiting the generality of the foregoing, the Corporation shall
have the right to bring the following actions:
(i) Accounting. By action or suit in equity to require the Borrower and its
board, officers and employees and its assigns to account as the trustee of an express trust.
(ii) Injunction. By action or suit in equity to enjoin any acts or things which
may be unlawful or in violation of the rights of the Corporation.
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(iii) Mandamus. By mandamus or other suit, action or proceeding at law or in
equity to enforce the Corporation’s rights against the Borrower (and its board, officers and
employees) and to compel the Borrower to perform and carry out its duties and obligations under
the law and its covenants and agreements with the Borrower as provided herein.
(d) Each and all of the remedies given to the Corporation hereunder or by any law
now or hereafter enacted are cumulative and the single or partial exercise of any right, pow er or
privilege hereunder shall not impair the right of the Corporation to the further exercise thereof or
the exercise of any or all other rights, powers or privileges. The term “re-let” or “re-letting” as
used in this Section shall include, but not be limited to, re-letting by means of the operation by
the Corporation of the Property. If any statute or rule of law validly shall limit the remedies
given to the Corporation hereunder, the Corporation nevertheless shall be entitled to whatever
remedies are allowable under any statute or rule of law.
(e) In the event the Corporation shall prevail in any action brought to enforce any of
the terms and provisions of this Sublease, the Borrower agrees to pay a reasonable amount as and
for attorney’s fees incurred by the Corporation in attempting to enforce any of the remedies
available to the Corporation hereunder.
(f) Notwithstanding anything to the contrary contained in this Sublease, the
Corporation shall have no right upon a Default by the Borrower hereunder, an Event of Default
hereunder or otherwise to accelerate Rental Payments.
(g) Notwithstanding anything herein to the contrary, the termination of this Sublease
by the Corporation on account of an Event of Default hereunder shall not effect or result in a
termination of the lease of the Property by the Borrower to the Corporation pursuant to the Site
Lease.
(h) If any Default, Event of Default or event of nonperformance specified in any
Lease Document shall occur, then in addition to any other rights or remedies available to the
Bank under such Lease Document or under applicable Law, the Bank may cure such Default,
Event of Default or event of nonperformance; provided, however, that the Bank shall have no
obligation to effect such a cure.
Section 6.03. Waiver. Failure of the Corporation to take
advantage of any Default on the part of the Borrower shall not be, or be construed as, a waiver
thereof, nor shall any custom or practice which may grow up between the parties in the course of
administering this instrument be construed to waive or to lessen the right of the Corporation to
insist upon performance by the Borrower of any term, covenant or condition hereof, or to
exercise any rights given the Corporation on account of such Default. A waiver of a particular
Default shall not be deemed to be a waiver of any other Default or of the same Default
subsequently occurring. The acceptance of Rental Payments hereunder shall not be, or be
construed to be, a waiver of any term, covenant or condition of this Sublease.
Section 6.04. Application of Amounts After Default. All
payments received by the Bank with respect to the rental of the Property after an Event of
Default hereunder (including, without limitation, any proceeds received in connection with the
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sale, assignment or sublease of the Corporation’s right, title and interest in the Site Lease), and
all damages or other payments received by the Bank for the enforcement of any rights and
powers of the Bank under Article VI hereof, shall be as soon as practicable thereafter applied:
(a) to the payment of all amounts then due for the interest components of the Base
Rental Payments, in respect of which, or for the benefit of which, money has been collected
(other than Base Rental Payments which have become payable prior to such Event of Default
and money for the payment of which is held by the Bank), ratably without preference or priority
of any kind, according to the amounts of the interest components of such Base Rental Payments
due and payable;
(b) to the payment of all amounts then due for principal components of the Base
Rental Payments, in respect of which, or for the benefit of which, money has been collected
(other than Base Rental Payments which have become payable prior to such Event of Default
and money for the payment of which is held by the Bank), ratably without preference or priority
of any kind, according to the amounts of the principal components of such Base Rental Payments
due and payable; and
(c) to the extent not included in clause (a) or clause (b) above, to the payment of all
amounts then due hereunder to the Bank as Additional Rental Payments hereunder.
Section 6.05. Reserved.
Section 6.06. No Implied Waiver; Cumulative Remedies. No
course of dealing and no delay or failure of the Bank in exercising any right, power or privilege
under the Lease Documents shall affect any other or future exercise thereof or the exercise of any
right, power or privilege; nor shall any single or partial exercise of any such right, power or
privilege or any abandonment or discontinuance of steps to enforce such a right, power o r
privilege preclude any further exercise thereof or of any other right, power or privilege. The
rights and remedies of the Bank under the Lease Documents are cumulative and not exclusive of
any rights or remedies which the Bank would otherwise have under any Lease Document, at law
or in equity.
Section 6.07. Additional Bank Rights and Remedies. The rights
and remedies of the Bank set forth in Sections [6.02, 6.03, 6.04, 6.05, 6.06 and 6.07]of the
Supplemental Agreement, as well as the related defined terms used therein, are hereby
incorporated by reference in this Sublease with the same effect as if such provisions and defined
terms were set forth herein in their entirety.
ARTICLE VII
EMINENT DOMAIN; PREPAYMENT
Section 7.01. Eminent Domain. If all of the Property (or
portions thereof such that the remainder is not usable for public purposes by the Borrower) shall
be taken under the power of eminent domain, the term hereof shall cease as of the day that
possession shall be so taken. If less than all of the Property shall be taken under the pow er of
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eminent domain and the remainder is usable for public purposes by the Borrower at the time of
such taking, then this Sublease shall continue in full force and effect as to such remainder, and
the parties waive the benefits of any law to the contrary, and in such event there shall be a partial
abatement of the Rental Payments in accordance with the provisions of Section 3.07 hereof. Any
award made in eminent domain proceedings for the taking of the Property, or any portion
thereof, shall be paid to the Bank and applied to the prepayment of Base Rental Payments as
provided in Sections 5.06 and 7.02 hereof. Any such award made after all other amounts due
hereunder have been fully paid, shall be paid to the Corporation and to the Borrower as their
respective interests may appear.
Section 7.02. Prepayment.
(a) Prior to the occurrence and continuance of an Event of Default, the Borrower may
not prepay all or any portion of the Base Rental Payments, other than as set forth in
subsections (b), (c) and (d) below.
(b) If the Property or any portion thereof shall be damaged or destroyed and such
damage, destruction or loss was such that there resulted a substantial interference with the
Borrower’s right to the use or occupancy of the Property and an abatement in whole or in part of
Rental Payments results (or would result if Net Proceeds were not available for the payment of
the Rental Payments) from such damage or destruction pursuant to Section 3.07 hereof, the
Borrower shall prepay all or a portion of the Base Rental Payments from and to the extent of any
Net Proceeds received with respect to all or a portion of the Property and to be applied to the
prepayment of Base Rental Payments pursuant to Section 5.05 hereof, on any Business Day, by
paying the portion of the principal components of such Base Rental Payments to be prepaid, and
the accrued but unpaid interest components of such Base Rental Payments to be prepaid to the
date of such prepayment, without premium.
(c) The Borrower may prepay all or a portion of the Base Rental Payments from any
source of available funds, on any Business Day, by paying all or a portion, as elected by the
Borrower, of the principal components of such Base Rental Payments, and the accrued but
unpaid interest components of such Base Rental Payments to be prepaid to the date of such
prepayment, without premium or penalty, plus any Additional Rental due and payable as of the
date of such prepayment.
(d) If an Event of Default has occurred and is continuing, the Borrower may prepay
all or a portion of the Base Rental Payments from any source of available funds, on any Business
Day, by paying all or a portion, as elected by the Borrower, of the principal components of such
Base Rental Payments, and the accrued but unpaid interest components of such Base Rental
Payments to be prepaid to the date of such prepayment, without premium, together with any
Additional Rental due and payable as of the date of such prepayment.
(e) If less than all of the Base Rental Payments are prepaid pursuant to this
Section then, as of the date of such prepayment pursuant to subsections (b), (c) or (d) of this
Section, the principal and interest components of the Base Rental Payments shall be recalculated
in order to take such prepayment into account. The Borrower agrees that if, following a partial
prepayment of Base Rental Payments, the Property is damaged, destroyed or taken by eminent
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domain, or a defect in title to the Property is discovered, the Borrower shall not be entitled to,
and by such prepayment waives the right of, abatement of such pr epaid Base Rental Payments
and the Borrower shall not be entitled to any reimbursement of such Base Rental Payments.
(f) Before making any prepayment pursuant to subsections (b) or (c) of this Section,
the Borrower shall give written notice to the Corporation and the Bank, specifying the date on
which the prepayment will be made, which date shall be not less than five days from the date
such notice is given to the Corporation (unless otherwise agreed by the Corporation and the
Bank).
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.01. Representations of the Borrower. The
representations and warranties of the Borrower set forth in Article IV of the Supplemental
Agreement, as well as the related defined terms contained in the Supplemental Agreement, are
hereby incorporated by reference in this Sublease with the same effect as if each and every such
representation and warranty and defined term were set forth herein in its entirety. The Borrower
further represents and warrants that (a) the Borrower is a municipal corporation and general law
city duly organized and validly existing under the Constitution and the laws of the State and has
the full power and authority to enter into, to execute and to deliver this Sublease and the Site
Lease, and to perform all of its duties and obligations hereunder and thereunder, and has duly
authorized the execution and delivery of this Sublease and the Site Lease, and (b) the Property is
zoned for use for community center and park related facilities.
Section 8.02. Representations of the Corporation.
(a) Due Organization and Existence. The Corporation is a nonprofit public benefit
corporation, duly organized and validly existing under the laws of the State, has full legal right,
power and authority to enter into the Site Lease, this Sublease and the Assignment Agreement
and to carry out and consummate all transactions on its part contemplated hereby and thereby,
and by proper action the Corporation has duly authorized the execution and delivery by the
Corporation of the Site Lease, the Sublease and the Assignment Agreement.
(b) Due Execution. The representative of the Corporation executing the Site Lease,
the Sublease and the Assignment Agreement is fully authorized to execute the same under
official action taken by the Board of Directors of the Corporation.
(c) Valid, Binding and Enforceable Obligations. The Site Lease, the Sublease and the
Assignment Agreement have been duly authorized, executed and delivered by the Corporation
and constitute the legal, valid and binding agreements of the Corporation, enforceable against the
Corporation in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Site Lease, the Sublease and the
Assignment Agreement, the consummation of the transactions herein and therein contemplated
and the fulfillment of or compliance with the terms and conditions hereof and thereof, do not and
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will not conflict with or constitute a violation or breach of or default (with due notice or the
passage of time or both) under any applicable law or administrative rule or regulation, or any
applicable court or administrative decree or order, or any indenture, mortgage, deed of trust,
lease, contract or other agreement or instrument to which the Corporation is a party or by which
it or its properties are otherwise subject or bound, or result in the creation or imposition of any
prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or
assets of the Corporation, which conflict, violation, breach, default, lien, charge or encumbrance
would have consequences that would materially and adversely affect the consummation of the
transactions contemplated by the Site Lease, Sublease and the Assignment Agreement or the
financial condition, assets, properties or operations of the Corporation.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any
indebtedness of the Corporation, and no consent, permission, authorization, order or license of,
or filing or registration with, any governmental authority related to Governmental Requirements
is necessary in connection with the execution and delivery of the Site Lease, the Sublease or the
Assignment Agreement, or the consummation of any transaction herein or therein contemplated,
except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before
or by any court or federal, state, municipal or other governmental authority pending and notice of
which has been served on the Corporation or, to the knowledge of the Corporation, after
reasonable investigation, threatened against or affecting the Corporation or the assets, properties
or operations of the Corporation which, if determined adversely to the Corporation or its
interests, would have a material and adverse effect upon the consummation of the transactions
contemplated by or the validity of the Site Lease, the Sublease or the Assignment Agreement, or
upon the financial condition, assets, properties or operations of the Corporation, and the
Corporation is not in default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or other governmental authority, which
default might have consequences that would materially and adversely affect the consummation
of the transactions contemplated by the Site Lease, the Sublease or the Assignment Agreement or
the financial condition, assets, properties or operations of the Corporation.
ARTICLE IX
COVENANTS
Section 9.01. Right of Entry. The Corporation shall have the
right to enter upon and to examine and inspect the Property during reasonable business hours
(and in emergencies at all times) for any purpose connected with the Corporation’s rights or
obligations under this Sublease, and for all other lawful purposes.
Section 9.02. Liens. In the event the Borrower shall at any time
during the term of this Sublease cause any changes, alterations, additions, improvements, or
other work to be done or performed or materials to be supplied, in or upon the Property, the
Borrower shall pay, when due, all sums of money that may become due for, or purporting to be
for, any labor, services, materials, supplies or equipment furnished or alleged to have been
furnished to or for the Borrower in, upon or about the Property and which may be secured by a
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mechanics’, materialmen’s or other lien against the Property or the Corporation’s interest therein,
and will cause each such lien to be fully discharged and released at the time the performance of
any obligation secured by any such lien matures or becomes due, except that, if the Borrower
desires to contest any such lien, it may do so as long as such contest is in good faith. 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 Borrower shall forthwith pay and discharge said judgment.
Section 9.03. Quiet Enjoyment. The parties hereto mutually
covenant that the Borrower, by keeping and performing the covenants and agreements herein
contained, shall at all times during the term of this Sublease peaceably and quietly have, hold and
enjoy the Property without suit, trouble or hindrance from the Corporation. The Corporation will
not take any action to prevent the Borrower from having quiet and peaceable possession and
enjoyment of the Property during the term hereof and will, at the request of the Borrower and at
the Borrower’s cost, to the extent that it may lawfully do so, join in any legal action in which the
Borrower asserts its right to such possession and enjoyment.
Section 9.04. Corporation Not Liable. The Corporation and its
directors, officers, agents and employees, shall not be liable to the Borrower or to any other party
whomsoever for any death, injury or damage that may result to any person or property by or
from any cause whatsoever in, on or about the Property. To the extent permitted by law, the
Borrower shall, at its expense, indemnify and hold the Corporation and all directors, members,
officers and employees thereof harmless against and from any and all claims by or on behalf of
any person, firm, corporation or governmental authority arising from the acquisition,
construction, occupation, use, operation, maintenance, possession, conduct or management of or
from any work done in or about the Property or from the subletting of any part thereof, including
any liability for violation of conditions, agreements, restrictions, laws, ordinances, or regulations
affecting the Property or the occupancy or use thereof, but excepting the negligence or willful
misconduct of the persons or entity seeking indemnity. The Borrower also covenants and agrees,
at its expense, to pay and indemnify and save the Corporation and all directors, officers and
employees thereof harmless against and from any and all claims arising from (a) any condition of
the Property and the adjoining sidewalks and passageways, (b) any breach or default on the part
of the Borrower in the performance of any covenant or agreement to be performed by the
Borrower pursuant to this Sublease, (c) any act or negligence of licensees in connection with
their use, occupancy or operation of the Property, or (d) any accident, injury or damage
whatsoever caused to any person, firm or corporation in or about the Property or upon or un der
the sidewalks and from and against all costs, reasonable counsel fees, expenses and liabilities
incurred in any action or proceeding brought by reason of any claim referred to in this Section,
but excepting the negligence or willful misconduct of the person or entity seeking indemnity. In
the event that any action or proceeding is brought against the Corporation or any director,
member, officer or employee thereof, by reason of any such claim, the Borrower, upon notice
from the Corporation or such director, member, officer or employee thereof, covenants to resist
or defend such action or proceeding by counsel reasonably satisfactory to the Corporation or
such director, member, officer or employee thereof.
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Notwithstanding the fact that it is the intention of the parties that the Corporation and all
officers and directors thereof shall not incur any pecuniary liability by reason of the terms of this
Sublease, or the undertakings required of the Corporation hereunder or any director, officer or
employee thereof, by reason of the execution or authorization of any document or certification in
connection with this Sublease, by reason of the performance or nonperformance of any act
required of any of them by this Sublease or by reason of the performance or nonperformance of
any act requested of any of them by the Borrower or the Corporation, including all claims,
liabilities or losses arising in connection with the violation of any statutes or regulation
pertaining to the foregoing; nevertheless, if the Corporation or any officer or director thereof
should incur any such pecuniary liability, then in such event the Borrower shall indemnify and
hold harmless the Corporation, and all directors, officers and employees thereof, against all
claims by or on behalf of any person, firm, corporation or governmental authority arising out of
the same, or in connection with any action or proceeding brought thereon, but excepting the
negligence or willful misconduct of the person or entity seeking indemnity, and upon notice from
the Corporation, the Borrower shall defend the Corporation in any such action or proceeding.
This Section shall survive the payment in full of all Rental Payments and the termination of the
Lease Documents for any claim, proceeding or action arising from any event or omission
occurring during the term of this Sublease.
Section 9.05. Assignment and Subleasing. Neither this
Sublease nor any interest of the Borrower hereunder shall be sold, mortgaged, pledged, assigned,
or transferred by the Borrower by voluntary act or by operation of law or otherwise; provided,
however, that the Property may be subleased in whole or in part by the Borrower with the prior
written consent of the Corporation and the Bank, and, provided, further, that, any such sublease
shall be subject to all of the following conditions:
(a) this Sublease and the obligation of the Borrower to make all Rental Payments
hereunder shall remain the primary obligation of the Borrower;
(b) the Borrower shall, within 30 days after the delivery thereof, furnish or cause to
be furnished to the Corporation and the Bank a true and complete copy of such sublease;
(c) no such sublease by the Borrower shall cause the Property to be used for a
purpose other than a governmental or proprietary function authorized under the provisions of the
Constitution and laws of the State; and
(d) any sublease of the Property by the Borrower shall explicitly provide that such
sublease is subject to all rights of the Corporation under this Sublease, including, the right to re-
enter and re-let the Property or terminate this Sublease upon an Event of Default hereunder; and
(e) the Borrower shall furnish the Corporation and the Bank with an Opinion of
Counsel to the effect that such sublease will not, in and of itself, cause the interest components of
the Base Rental Payments to be included in gross income for federal income tax purposes.
Section 9.06. Title to Property. At all times during the term of
this Sublease, the Borrower will hold title to the Property, including all additions which comprise
fixtures, repairs, replacements or modifications thereto, subject to Permitted Encumbrances and
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subject to the provisions of Section 9.01 hereof. Upon the termination or expiration of this
Sublease (other than as provided in Sections 6.01 and 7.01 hereof), all right, title and interest of
the Corporation in and to the Property shall vest in the Borrower. Upon any such termination or
expiration, the Corporation shall execute such conveyances, deeds and other documents as may
be necessary to effect such vesting of record.
Section 9.07. Corporation’s Purpose. The Corporation
covenants that, prior to the discharge of this Sublease, it will not engage in any activities
inconsistent with the purposes for which the Corporation is organized, as set forth in the
organizational documents of the Corporation.
Section 9.08. Compliance with Law, Regulations, Etc. The
Borrower hereby makes the representation and warranty set forth in Section 4.10 of the
Supplemental Agreement, which representation and warranty, as well as the related defined
terms contained therein, are hereby incorporated by reference in this Section 9.10 with the same
effect as if such representation and warranty and each and every defined term were set forth
herein in its entirety.
Section 9.09. Environmental Compliance.
(a) Neither the Borrower nor the Corporation shall use or permit the Property or any
part thereof to be used to generate, manufacture, refine, treat, store, handle, transport or dispose
of, transfer, produce or process Hazardous Materials, except, and only to the extent, in
compliance with all Environmental Regulations, nor shall it permit, as a result of any intentional
or unintentional act or omission on its part or by any tenant, subtenant, licensee, guest, invitee,
contractor, employee or agent, the storage, transportation, disposal or use of Hazardous Materials
or the Release or threat of Release of Hazardous Materials on, from or beneath the Property or
onto any other property other than in compliance with all Environmental Regulations. Upon the
occurrence of any Release or threat of Release of Hazardous Materials, the Corporation or the
Borrower shall promptly commence and perform, or cause to be commenced and performed
promptly, without cost to the Bank, all investigations, studies, sampling and testing, and all
remedial, removal and other actions necessary to clean up and remove all Hazardous Materials
so released on, from or beneath the Property or other property, in compliance with all
Environmental Regulations. Notwithstanding anything to the contrary contained herein,
underground storage tanks shall only be permitted subject to compliance with subsection (d) of
this Section and only to the extent necessary to maintain the improvements on the Property.
(b) The Borrower and the Corporation shall comply with, and shall cause all tenants,
subtenants, licensees, guests, invitees, contractors, employees and agents on the Property to
comply with, all Environmental Regulations, and shall keep the Property free and clear of any
liens imposed pursuant thereto (provided, however, that any such liens, if not discharged, may be
bonded). The Borrower and the Corporation shall cause each tenant under any lease, and use
their best efforts to cause all of such tenant’s subtenants, agents, licensees, employees,
contractors, guests and invitees and the guests and invitees of all of the foregoing to comply with
all Environmental Regulations with respect to the Property; provided, however, that
notwithstanding that a portion of this covenant is limited to the Borrower’s and Corporation’s
use of its best efforts, the Corporation and the Borrower shall remain solely responsible for
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ensuring such compliance and such limitation shall not diminish or affect in any way the
Corporation’s or the Borrower’s obligations contained in subsection (c) of this Section. Upon
receipt of any notice from any person with regard to the Release of Hazardous Materials on,
from or beneath the Property, the Borrower or the Corporation, as appropriate, shall give prompt
written notice thereof to the Borrower or the Corporation, as appropriate, the Bank prior to the
expiration of any period in which to respond to such notice under any Environmental Regulation.
(c) Irrespective of whether any representation or warranty contained in
Section 8.01(j) hereof is not true or correct, the Corporation and the Borrower shall, to the extent
permitted by law, defend, indemnify and hold harmless the Bank and each of its employees,
agents, officers, directors, trustees, successors and assigns, from and against any claims,
demands, penalties, fines, attorneys’ fees (including, without limitation, attorneys’ fees incurred
to enforce the indemnification contained in this Section), consultants’ fees, investigation and
laboratory fees, liabilities, settlements (five Business Days’ prior notice of which the Corporation
or the Bank shall have delivered to the Borrower), court costs, damages, losses, costs or expenses
of whatever kind or nature, known or unknown, contingent or otherwise, occurring in whole or in
part, arising out of, or in any way related to, (i) the presence, disposal, Release, threat of Release,
removal, discharge, storage or transportation of any Hazardous Materials on, from or beneath the
Property, (ii) any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials, (iii) any lawsuit brought or
threatened, settlement reached (five Business Days’ prior notice of which the Corporation or the
Bank shall have delivered to the Borrower), or governmental order relating to Hazardous
Materials on, from or beneath the Property, (iv) any violation of Environmental Regulations or
subsection (a) or (b) of this Section by either of them or any of their agents, tenants, employees,
contractors. licensees, guests, subtenants or invitees, and (v) the imposition of any governmental
lien for the recovery of environmental cleanup or removal costs. To the extent that either the
Corporation or the Borrower is strictly liable under any Environmental Regulation, its obligation
to the Bank and the other indemnitees under the foregoing indemnification shall likewise be
without regard to fault on its part with respect to the violation of any Environmental Regulation
which results in liability to any indemnitee. The obligations and liabilities under this subsection
shall survive the payment in full of all Rental Payments and the termination of the Lease
Documents.
(d) The Borrower shall conform to and carry out a reasonable program of
maintenance and inspection of all underground storage tanks, and shall maintain, repair and
replace such tanks only in accordance with all Laws and Regulations, including but not limited to
Environmental Regulations.
Section 9.10. No Condemnation. The Borrower shall not
condemn, and neither the Borrower nor the Corporation shall consent to the condemnation of, the
Property or any interest of the Borrower, the Corporation or the Bank therein.
Section 9.11. Tax Covenants.
(a) The Borrower shall not take any action, or fail to take any action, if such action or
failure to take such action would adversely affect the exclusion from gross income of the interest
components of the Base Rental Payments under Section 103 of the Code. Without limiting the
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generality of the foregoing, the Borrower shall comply with the requirements of the Tax
Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive
payment in full of the Base Rental Payments.
(b) Notwithstanding any provisions of this Section, if the Borrower shall provide to
the Bank an Opinion of Counsel to the effect that any specified action required under this
Section is no longer required or that some further or different action is required to maintain the
exclusion from federal income tax of the interest components of the Base Rental Payments, the
Bank may conclusively rely on such opinion in complying with the requirements of this
Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified
to that extent.
Section 9.12. Reporting Requirements. The Borrower shall
comply with the reporting requirements set forth in Section 5.01 of the Supplemental Agreement.
Section 9.13. Access to Property and Books, Records and
Accounts; Communication with Accountant. The Borrower shall permit the duly authorized
representatives of the Bank, during the Borrower’s normal administrative business hours, to enter
the Property or any parts thereof at reasonable hours and under reasonable conditions, to
examine and copy the Borrower’s books, records and accounts and to discuss the affairs,
finances, business and accounts of the Borrower with the Borrower’s City Council members,
officers and employees. The Borrower authorizes the Bank to communicate directly with the
Borrower’s accountants, and authorizes and shall instruct such accountants to communicate with,
disclose and make available to the Bank, any and all financial statements and other supporting
financial documents, schedules and information relating to the Borrower with respect to the
business, results of operations and financial condition and other affairs of the Borrower.
Section 9.14. Maintenance of Existence. The Borrower shall
preserve and maintain its existence as a municipal corporation and general law city duly
organized and validly existing under the Constitution and the laws of the State, and its rights,
franchises and privileges material to the conduct of its business and shall not, without the prior
written consent of the Bank, initiate proceedings to reorganize, merge or consolidate with or into
any Person, wind up, liquidate or dissolve its affairs (or suffer any liquidation or dissolution) or
convert, sell, assign, transfer, lease or otherwise dispose of (or agree to do any of the foregoing at
any future time), whether in one transaction or a series of transactions, all or substantially all of
its property or assets.
Section 9.15. Substitute Property. If, as a result of material
damage to, or destruction of condemnation of, the Property, or any defect in title to the Property,
there is substantial interference with the Borrower’s right to use or occupy any portion of the
Property and Rental Payments shall be abated pursuant to Section 3.07 hereof, the Borrower may
use its best efforts to substitute alternate real property and improvements for the Property from
among the Borrower’s properties, if available, subject to this Sublease and the Assignment
Agreement and the Site Lease (in the case of real property) satisfactory to the Bank on the basis
of essentiality, fair rental value and insurance coverage and the existence of any mortgage,
pledge, lien, charge, encumbrance or claim thereon or with respect thereto.
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ARTICLE X
NO CONSEQUENTIAL DAMAGES;
USE OF THE PROPERTY; SUBSTITUTION OR RELEASE
Section 10.01. No Consequential Damages. In no event shall the
Corporation or the Bank be liable for any incidental, indirect, special or consequential damage in
connection with or arising out of this Sublease for the existence, furnishing, functioning or the
Borrower’s use of the Property.
Section 10.02. Use of the Property. The Borrower will not use,
operate or maintain the Property improperly, carelessly, in violation of any applicable law or in a
manner contrary to that contemplated by this Sublease. In addition, the Borrower agrees to
comply in all respects (including, without limitation, with respect to the use, maintenance and
operation of the Property) with all laws of the jurisdictions in which its operations may extend
and any legislative, executive, administrative or judicial body exercising any power or
jurisdiction over the Property; provided, however, that the Borrower may contest in good faith
the validity or application of any such law or rule in any reasonable manner which does not, in
the opinion of the Corporation, adversely affect the estate of the Corporation in and to any of the
Property or its interest or rights under this Sublease.
Section 10.03. Substitution or Release of the Property. The
Borrower shall have the right to substitute alternate real property and improvements for any
portion of the Property or to release a portion of the Property from this Sublease. All costs and
expenses incurred in connection with such substitution or release shall be borne by the Borrower.
Notwithstanding any substitution or release pursuant to this Section, there shall be no reduction
in or abatement of the Rental Payments due from the Borrower hereunder as a result of such
substitution or release. Any such substitution or release of any portion of the Property shall be
subject to the following specific conditions, which are hereby made conditions precedent to such
substitution or release:
(a) the Bank, shall have consented in writing to such substitution or release (and as
part of such consent, the substituted or remaining real property and improvements shall be
satisfactory to the Bank on the basis of essentiality, fair rental value and insurance coverage and
the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with
respect thereto and the other conditions precedent to such substitution or release set forth in this
Section 10.03 shall be satisfactory to the Bank);
(b) the Borrower shall have provided the Bank with a certificate of the Borrower
stating that the Fair Rental Value of the Property after such substitution or release is at least
equal to 100% of the maximum amount of Base Rental Payments becoming due hereunder in the
then-current Rental Period or any subsequent Rental Period and the fair replacement value of the
Property after such substitution or release is at least equal to the sum of the then unpaid principal
components of Base Rental Payments, as determined by the Borrower on a basis reasonably
acceptable to the Bank and demonstrating that the useful economic life of the Property after such
substitution or release equals or exceeds the remaining term of this Sublease;
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(c) the Borrower shall have provided the Bank with title insurance policies and/or
endorsements thereto meeting the requirements of Section 5.02 hereof with respect to the
Property after such substitution or release;
(d) the Borrower shall have provided the Bank with evidence that the Borrower has
complied with the other insurance covenants set forth in Article V hereof with respect to the
Property after such substitution or release;
(e) the Borrower shall have provided the Bank with an Opinion of Counsel to the
effect that (i) the amendments to the Site Lease, this Sublease and the Assignment Agreement
have been duly authorized, executed and delivered and constitute the valid and binding
obligations of the Borrower and the Corporation and (ii) such substitution or release will not, in
and of itself, cause the interest components of the Base Rental Payments to be included in gross
income for federal income tax purposes; and
(f) the Borrower, the Corporation and the Bank shall have executed, and the
Borrower shall have caused to be recorded with the Los Angeles County Recorder, any document
necessary to reconvey to the Borrower the portion of the Property being substituted or released
and to include any substituted real property and improvements in the description of the Property
contained herein and in the Site Lease and Assignment Agreement.
Notwithstanding the foregoing, when the Project has been completed the Borrower shall
have the absolute right to release from this Sublease, the Site Lease and the Assignment
Agreement that portion of the Property consisting of the Point Vicente Interpretive Center
Property, without meeting the conditions (a) through (f) set forth above, upon satisfaction of the
following conditions:
(i) no event of default has occurred and is continuing under this Sublease.
(ii) the Borrower shall deliver a certificate to the Corporation and the Bank
certifying that the Project has been completed;
(iii) the Borrower shall deliver a certificate to the Corporation and the Bank
(A) specifying the then-current insured value and estimated land value of the remaining Property,
taking into consideration the release of the Point Vicente Interpretive Center Property, and (B)
stating that the combined insured value and estimated land value of the remaining Property,
taking into consideration the release of the Point Vicente Interpretive Center Property, is not less
than 105% of the maximum amount of Base Rental Payments becoming due hereunder in the
then-current Rental Period or any subsequent Rental Period;
(iv) the Borrower shall have provided the Bank with a certificate of the
Borrower stating that the Fair Rental Value of the remaining Property, taking into consideration
the release of the Point Vicente Interpretive Center Property, is at least equal to 100% of the
maximum amount of Base Rental Payments becoming due hereunder in the then-current Rental
Period or any subsequent Rental Period and the fair replacement value of the remaining Property,
taking into consideration the release of the Point Vicente Interpretive Center Property, is at least
equal to the sum of the then unpaid principal components of Base Rental Payments, as
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determined by the Borrower on a basis reasonably acceptable to the Bank and demonstrating that
the useful economic life of the remaining Property, taking into consideration the release of the
Point Vicente Interpretive Center Property, equals or exceeds the remaining term of this
Sublease;
(v) if such release of the Point Vicente Interpretive Center Property in any
way impairs the coverage of any title insurance policy insuring the Borrower’s leasehold interest
hereunder, the Borrower shall have provided the Bank with title insurance policies and/or
endorsements thereto meeting the requirements of Section 5.02 hereof with respect to the
remaining Property, taking into consideration the release of the Point Vicente Interpretive Center
Property;
(vi) the Borrower shall have provided the Bank with evidence that the
Borrower has complied with the other insurance covenants set forth in Article V hereof with
respect to the remaining Property, taking into consideration the release of the Point Vicente
Interpretive Center Property;
(vii) the Borrower shall have provided the Bank with an Opinion of Counsel to
the effect that (A) such release will not affect the obligation of the Borrower to continue to pay
Rental Payments in the amounts, at the times and in the manner required by this Sublease, (B)
such release is permitted pursuant to this Section 10.03, (C) this Sublease following such release
represents a valid and binding obligation of the Borrower and the Corporation, and (D) such
release will not, in and of itself, cause the interest components of the Base Rental Payments to be
included in gross income for federal income tax purposes; and
(viii) the Borrower and the Corporation shall have executed, and the Borrower
shall have caused to be recorded with the Los Angeles County Recorder, a Notice of Release
substantially in the form attached hereto as Exhibit C.
Upon the satisfaction of all such conditions precedent (i) through (viii) set forth above,
the term of this Sublease and the Site Lease will thereupon end as to the Point Vicente
Interpretive Center Property. The Borrower is not entitled to any reduction, diminution,
extension or other modification of the Rental Payments whatsoever as a result of such release.
The Corporation and the Bank, as assignee, agree to cooperate with the Borrower in connection
with any such release of the Point Vicente Interpretive Center Property and, in connection
therewith, shall execute such documents as may be needed to remove the lien of this Sublease
and the Site Lease on Point Vicente Interpretive Center Property to reflect such release.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Governing Law. THIS SUBLEASE SHALL BE
GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF
THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST.
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Section 11.02. Notices. All written notices, statements,
demands, consents, approvals, authorizations, offers, designations, requests or other
communications hereunder shall be given to the party entitled thereto at its address set forth
below, or at such other address as such party may provide to the other parties in writing from
time to time, namely:
If to the Borrower: City of Rancho Palos Verdes
30940 Hawthorne Boulevard
Rancho Palos Verdes, CA 90275
Attention: City Clerk and City Manager
If to the Corporation: Public Property Corporation of
California
Public Property Financing Corporation
of California
2945 Townsgate Road, Suite 200
Westlake Village, CA 91361
Attention: President and Secretary
If to the Bank: Bank of the West
300 South Grand Avenue
Los Angeles, CA 90071
Attention: Christine Armani-Dawood
Each such notice, statement, demand, consent, approval, authorization, offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if given by courier or delivery service or if personally served or delivered, upon
delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier,
upon the sender’s receipt of an appropriate answerback or other written acknowledgment, (c) if
given by registered or certified mail, return receipt requested, deposited with the United States
mail postage prepaid, 72 hours after such notice is deposited with the United States mail, or (d) if
given by any other means, upon delivery at the address specified in this Section.
Section 11.03. Validity and Severability. If for any reason this
Sublease shall be held by a court of competent jurisdiction to be void, voidable or unenforceable
by the Corporation or by the Borrower, or if for any reason it is held by su ch a court that any of
the covenants and conditions of the Borrower hereunder, including the covenant to pay Rental
Payments, is unenforceable for the full term hereof, then and in such event this Sublease is and
shall be deemed to be a Sublease under which the Rental Payments are to be paid by the
Borrower annually in consideration of the right of the Borrower to possess, occupy and use the
Property, and all of the terms, provisions and conditions of this Sublease, except to the extent
that such terms, provisions and conditions are contrary to or inconsistent with such holding, shall
remain in full force and effect.
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01203.0042/765315.5 38
Section 11.04. Net-Net-Net Lease. This Sublease shall be
deemed and construed to be a “net-net-net lease” and the Borrower hereby agrees that the Rental
Payments shall be an absolute net return to the Corporation, free and clear of any expenses,
charges or set-offs whatsoever and notwithstanding any dispute between the Borrower and the
Corporation.
Section 11.05. Taxes. The Borrower shall pay or cause to be
paid all taxes and assessments of any type or nature charged to the Corporation or affecting the
Property or the respective interests or estates therein; provided, however, that with respect to
special assessments or other governmental charges that may lawfully be paid in installments over
a period of years, the Borrower shall be obligated to pay only such installments as are required to
be paid during the term of this Sublease as and when the same become due.
After giving notice to the Corporation and the Bank, the Borrower or any sublessee may,
at the Borrower’s or such sublessee’s expense and in its name, in good faith contest any such
taxes, assessments, utility and other charges and, in the event of any such contest, may permit the
taxes, assessments or other charges so contested to remain unpaid during the period of such
contest and any appeal therefrom unless the Corporation or the Bank shall notify the Borrower or
such sublessee that, in the opinion of independent counsel, by nonpayment of any such items, the
interest of the Corporation in the Property will be materially endangered or the Property, or any
part thereof, will be subject to loss or forfeiture, in which event the Borrower or such sublessee
shall promptly pay such taxes, assessments or charges or provide the Corporation with full
security against any loss which may result from nonpayment, in form satisfactory to the
Corporation and the Bank.
Section 11.06. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall
include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for
convenience only and shall be deemed to include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Sublease; the words “herein,” “hereof,”
“hereby,” “hereunder” and other words of similar import refer to this Sublease as a whole and
not to any particular Article, Section or subdivision hereof.
Section 11.07. Amendments. This Sublease and the Site Lease,
and the rights and obligations of the Corporation and the Borrower hereunder and thereunder,
may be amended at any time by an amendment hereto or thereto which shall become binding
upon execution by the Borrower and the Corporation, but only with the prior written consent of
the Bank.
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01203.0042/765315.5 39
Section 11.08. Third-Party Beneficiary. The Bank is a third-
party beneficiary of this Sublease.
Section 11.09. Assignment. The Borrower and the Corporation
hereby acknowledge the assignment of this Sublease, and the Base Rental Payments payable
hereunder, to the Bank pursuant to the Assignment Agreement. Any subsequent assignment by
the Bank is subject to the limitations on transfer or assignment provided in the Assignment
Agreement.
Section 11.10. Execution in Counterparts. This Sublease may be
simultaneously executed in several counterparts, each of which shall be deemed an original, and
all of which shall constitute but one and the same instrument.
Section 11.11. Waiver of Jury Trial. Each of the Borrower, the
Corporation and the Bank hereby irrevocably waives, to the fullest extent permitted by law, any
and all right to trial by jury in any legal proceeding arising out of or relating to the Lease
Documents or the transactions contemplated thereby involving or affecting the Bank or the rights
or interests of the Bank. Each of the Borrower and the Corporation further agrees that, in the
event of litigation, it will not personally or through its agents or attorneys seek to repudiate the
validity of this Section, and it acknowledges that it freely and voluntarily agreed to waive trial by
jury as provided herein in order to induce the Bank to provide the funds to finance the Project.
Section 11.12. Judicial Reference. If the waiver of jury trial as
set forth in Section 11.11 hereof shall be declared void or unenforceable, each of the Borrower,
the Corporation and the Bank agrees to refer the dispute to a judicial referee in accordance with
the provisions of Section 638 et seq. of the California Code of Civil Procedure.
Section 11.13. Duration. All representations and warranties of
the Borrower contained in the Lease Documents or made in connection therewith shall survive
the making of and shall not be waived by the execution and delivery of the Lease Documents or
any investigation by the Bank. All covenants and agreements of the Borrower contained in the
Lease Documents shall continue in full force and effect from and after the Funding Date until the
payment obligations of the Borrower under the Lease Documents have been indefeasibly paid in
full and fully discharged; provided, however, that the obligations of the Borrower under
Sections 3.08, 3.09 and 3.10 hereof and under each other provision of any Lease Document
granting a right of indemnity or reimbursement in favor of the Bank shall survive the payment in
full of the Rental Payments and the termination of the Lease Documents.
Section 11.14. Reserved.
Section 11.15. Preferences. To the extent that the Bank receives
any payment from or on behalf of the Borrower which payment or any part thereof is
subsequently Set Aside, then, to the extent of any such Set Aside, except with respect to Rental
Payments abated pursuant to Section 3.07 hereof, the obligations or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such payment had not been
received by the Bank or such Set Aside had not occurred.
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01203.0042/765315.5 40
Section 11.16. Standard of Conduct by Bank; Liability of the
Bank. Nothing contained in any Lease Document shall limit the right of the Bank to exercise its
business judgment or to act, in the context of the granting or withholding of any consent under
any Lease Document, in a subjective manner, so long as the Bank’s exercise of its business
judgment or action is made or undertaken in good faith. The Borrower and the Bank intend by
the foregoing to set forth and affirm their entire understanding with respect to the standard
pursuant to which the Bank’s actions are to be judged and the parameters within which any the
Bank’s discretion may be exercised hereunder and under the other Lease Documents. As used
herein, “good faith” means honesty in fact in the conduct and transaction concerned.
Section 11.17. Funds and Accounts. Any fund or account
required to be established and maintained herein by the Bank may be established and maintained
in the accounting records of the Bank either as an account or a fund, and may, for the purposes of
such accounting records, any audits thereof and any reports or statements with respect thereto, be
treated either as an account or a fund, but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with sound accounting practice and with
due regard for the protection of the security of and rights of the Bank.
Section 11.18. Business Days. If the date for making any
payment or the last date for performance of any act or the exercising of any right, as provided in
this Sublease shall not be a Business Day, such payment may be made or act performed or right
exercised on the next succeeding Business Day, with the same force and effect as if done on the
nominal date provided in this Sublease.
Section 11.19. Waiver of Personal Liability. No member, officer
or employee of the Borrower or the Corporation shall be individually or personally liable for the
payment of the principal, interest or premium components of the Base Rental Payments or be
subject to any personal liability or accountability by reason of the execution and delivery thereof;
but nothing herein contained shall relieve any such member, officer or employee from the
performance of any official duty provided by any applicable provisions of law, by this Sublease.
Section 11.20. Tax Identification Number. The Borrower’s tax
identification number is 95-2867872.
Section 11.21. No Advisory or Fiduciary Relationship. In
connection with any aspect of the transactions contemplated by this Sublease (including in
connection with any amendment, waiver or other modification hereof or of any Lease
Document), the Borrower and the Corporation each acknowledges and agrees that the Bank has
not provided advice to or on behalf of a municipal entity or obligated person with respect to
municipal financial products or the issuance of municipal securities, including advice with
respect to the structure, timing, terms and other similar matters concerning such financial
products or issues; or undertaken a solicitation of a municipal entity, within the meaning of
Section 975 of the Dodd–Frank Act.
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01203.0042/765315.5
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be executed
by their respective officers thereunto duly authorized, all as of the day and year first written
above.
PUBLIC PROPERTY FINANCING
CORPORATION OF CALIFORNIA
By:_______________________________________
Stefan A. Morton, Treasurer
CITY OF RANCHO PALOS VERDES
By:_______________________________________
David L. Bradley, Mayor
ATTEST:
Teresa Takaoka, City Clerk
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[Insert Notary Certification]
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3668303.2 045616 DRFT
EXHIBIT A
DESCRIPTION OF THE PROPERTY
All that real property situated in the County of Los Angeles, State of California,
described as follows, and any improvements thereto:
Ladera Linda Community Park Property
Point Vicente Interpretive Center Property
[See attached pages]1
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EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE
The total Base Rental Payment for each Base Rental Payment Date will be as set forth
below, in each case assuming interest components accruing at the rate of 1.98% per annum.
If and to the extent provided in the Sublease, the interest components of the Base Rental
Payments shall accrue on the principal components of the Base Rental Payments at the Default
Rate.
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3668303.2 045616 DRFT
EXHIBIT C
FORM OF NOTICE OF RELEASE OF PROPERTY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
[__________]
[__________]
[__________]
Attention: [__________]
NO DOCUMENTARY TRANSFER TAX DUE. This Sublease is recorded for the benefit of the
City of Rancho Palos Verdes and the recording is exempt under Section 27383 of the California
Government Code and Section 11928 of the California Revenue and Taxation Code.
NOTICE OF RELEASE OF PROPERTY
subject to
SUBLEASE
by and between
CITY OF RANCHO PALOS VERDES
and
PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA
Dated as of March 1, 2022
Recorded on March [18], 2022, as Document No. [__________],
in the Official Records of the Los Angeles County Recorder
Reference is made to the following documents entered into and recorded in connection
with the execution and delivery of the Sublease captioned above:
(i) that certain Site Lease, dated as of March 1, 2022 (the “Site Lease”), by and
between the City of Rancho Palos Verdes (the “Borrower”), as lessor, and the Public Property
Financing Corporation of California (the “Corporation”), as lessee, recorded on March [18],
2022, as Document No. [__________], in the Official Records of the Los Angeles County
Recorder;
(ii) that certain Sublease, dated as of March 1, 2022 (the “Sublease”), by and between
the Corporation, as sublessor, and the Borrower, as sublessee, recorded on March [___], 2022, as
Document No. [__________], in the Official Records of the Los Angeles County Recorder; and
(iii) that certain Assignment Agreement, dated as of March 1, 2022 (the “Assignment
Agreement”), by and between the Corporation, as assignor, and Bank of the West, as assignee,
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3668303.2 045616 DRFT
recorded on March [18], 2022, as Document No. [__________], in the Official Records of the
Los Angeles County Recorder.
Capitalized terms used but not defined herein have the meanings assigned to them in the
Sublease.
As contemplated by Section 10.03 of the Sublease, the Borrower hereby provides notice
that the portion of the Property constituting the Point Vicente Interpretive Center Property (as
described in Appendix A attached hereto) has been and is hereby released as the Property under
the Site Lease, the Sublease and the Assignment Agreement.
This Notice of Release of Property shall be recorded in the real property records of the
County of Los Angeles and shall constitute an amendment to the Site Lease, the Sublease and the
Assignment Agreement, solely with respect to the removal of the Point Vicente Interpretive
Center Property from the description of the Property encumbered by those documents.
IN WITNESS WHEREOF, the parties hereto have caused this Notice of Release of
Property to be executed by their respective officers thereunto duly authorized, all as of the _____
day of __________, _____.
PUBLIC PROPERTY FINANCING
CORPORATION OF CALIFORNIA
By:_______________________________________
Stefan A. Morton, Treasurer
CITY OF RANCHO PALOS VERDES
By:_______________________________________
David L. Bradley, Mayor
ATTEST:
Teresa Takaoka, City Clerk
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3668303.2 045616 DRFT
BANK OF WEST, as assignee.
By:_______________________________________
[Name],
[Title]
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3668303.2 045616 DRFT
[Insert Notary Certification]
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01203.0042/765315.5 C-5
APPENDIX A
DESCRIPTION OF RELEASED PROPERTY
All that real property situated in the County of Los Angeles, State of California,
described as follows, and any improvements thereto constituting the Point Vicente Interpretive
Center Property:
[See attached pages]
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01203.0007/765316.1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Aleshire & Wynder, LLP
18881 Von Karman Avenue
Irvine, California 92612
Attention: Anita Luck
ASSIGNMENT AGREEMENT
by and between
PUBLIC PROPERTY FINANCING CORPORATION OF CALIFORNIA
and
BANK OF THE WEST
Dated as of March 1, 2022
NO DOCUMENTARY TRANSFER TAX DUE. This Assignment Agreement is recorded for
the benefit of the City of Rancho Palos Verdes and the recording is exempt under Section 27383
of the California Government Code and Section 11928 of the California Revenue and Taxation
Code.
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01203.0007/765316.1 1
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of March 1, 2022 and effective as of
the date of recordation hereof (this “Assignment Agreement”), is made by and between PUBLIC
PROPERTY FINANCING CORPORATION OF CALIFORNIA, a nonprofit public benefit
corporation duly organized and existing under the laws of the State of California (the
“Corporation”), as assignor, and BANK OF THE WEST, as assignee, and its successors and
assigns permitted hereunder (the “Bank”).
W I T N E S S E T H:
WHEREAS, the Corporation and the City of Rancho Palos Verdes (as more particularly
defined in the Sublease, the “Borrower”) have entered into a Site Lease, dated as of the date
hereof and recorded concurrently herewith (as more particularly defined in the Sublease, the
“Site Lease”), pursuant to which the Borrower has agreed, among other things, to lease to the
Corporation certain real property and the improvements thereto comprising (i) the Ladera Linda
Community Park Property (as defined in the Sublease); and (ii) the Point Vicente Interpretive Center
Property (each as more particularly defined in the Sublease and as described in Exhibit A attached
hereto and by this reference incorporated herein, and collectively, as more particularly defined in the
Sublease, the “Property”);
WHEREAS, the Borrower and the Corporation have entered into a Sublease, dated as of
the date hereof and recorded concurrently herewith (as more particularly defined herein, the
“Sublease”), pursuant to which the Corporation has agreed, among other things, to sublease the
Property to the Borrower, in consideration for which the Borrower has agreed to pay Base Rental
Payments and Additional Rental Payments, all as more particularly described in the Sublease;
and
WHEREAS, for valuable consideration to be paid by the Bank, the Corporation desires
to assign and transfer all of its right, title and interest in and to the Site Lease and the Sublease
(subject to certain exceptions as set forth in Section 2 below) to the Bank on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms used herein without definition shall
have the meanings given to such terms in the Sublease, dated as of March 1, 2022 and recorded
concurrently herewith, by and between the Borrower and the Corporation, as originally executed
and as it may from time to time be amended in accordance with the provisions thereof (the
“Sublease”).
SECTION 2. Assignment. As consideration for the receipt of the Funding Amount (as
specified in a certificate of the Borrower delivered on the effective date of this Assignment
Agreement), the Corporation does hereby sell, assign and transfer to the Bank, all of the
Corporation’s right, title and interest in and to the Site Lease and the Sublease (excepting only
the Corporation’s rights to indemnification and to payment or reimbursement of its reasonable
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01203.0007/765316.1 2
costs and expenses under the Sublease), including the Corporation’s right to receive Base Rental
Payments and Additional Rental Payments, as well as its rights to enforce payment of such Base
Rental Payments and Additional Rental Payments when due or otherwise to protect its interest in
the event of a default or termination by the Borrower under the Sublease, in accordance with the
terms thereof.
SECTION 3. Acceptance of Assignment. The Bank hereby accepts the assignment of
such of the Corporation’s rights under the Site Lease and the Sublease as are assigned pursuant
to the terms of this Assignment Agreement.
SECTION 4. No Additional Rights or Duties. This Assignment Agreement shall not
confer any rights upon the Bank, nor impose any duties, obligation or responsibilities upon the
Bank, beyond those expressly provided in the Site Lease and the Sublease. This Assignment
Agreement shall not impose any duties, obligations or responsibilities upon the Corporation or
the Borrower beyond those expressly provided in the Site Lease and the Sublease or as otherwise
set forth herein.
SECTION 5. Subsequent Assignment by the Bank. The Bank’s right, title and
interest in and to this Assignment Agreement may be assigned and reassigned, in whole but not
in part, without the necessity of obtaining the consent of the Corporation or the Borrower;
provided, that any such assignment, transfer or conveyance, in whole but not in part, shall be
made only to an investor which is a “qualified institutional buyer” as defined in Rule 144A(a)(1)
promulgated under the Securities Act of 1933, as amended or an “accredited investor” as
described in Section 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities
Act of 1933, as amended. The Corporation and the Bank hereby acknowledge and agree that the
restrictions and limitations on transfer as provided in this Section 5 shall apply to the first and
subsequent assignees and sub-assignees of any of the Bank’s right, title and interest in, to and
under this Assignment Agreement. The Bank shall provide five (5) Business Days notice to the
Borrower prior to any such assignment becoming effective and, such subsequent assignee or sub-
assignee shall provide or cause to provide a letter of representation from such subsequent
assignee or sub-assignee as to its status as a “qualified institutional buyer” or “accredited
investor,” that such subsequent assignee or sub-assignee was given the opportunity to ask any
questions of the Borrower that it desired prior to such assignment, and that subsequent assignee
or sub-assignee understands the financial situation of the Borrower and the terms of the Site
Lease, Sublesee and Assignment Agreement and has voluntarily determined to enter into such
assignment.
SECTION 6. Further Assurances. The Corporation and the Bank will make, execute
and deliver any and all such further resolutions, instruments and assurances as may be
reasonably necessary or proper to carry out the intention or to facilitate the performance of this
Assignment Agreement, and to assure and confirm to the Bank the rights and benefits intended to
be conveyed pursuant hereto. Upon the Borrower’s payment or prepayment in full of all Rental
Payments under the Sublease, the Bank shall execute and deliver such instructions as the
Corporation or the Borrower may reasonably request in order to evidence the termination of the
Lease Documents.
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01203.0007/765316.1 3
SECTION 7. Amendments. This Assignment Agreement may be amended by an
instrument in writing executed by the Corporation and the Bank, with the written consent of the
Borrower.
SECTION 8. Governing Law. This Assignment Agreement is made in the State under
the Constitution and laws of the State and is to be so construed.
SECTION 9. Consideration Paid by Bank. The parties acknowledge that the
recordation of this Assignment Agreement will evidence that the Bank has paid the Funding
Amount referenced in Section 2 above as consideration for the execution of this Assignment
Agreement by the Corporation and the assignment of rights set forth herein. Such amount shall
be paid by the Bank in accordance with instructions to be delivered to the Bank by the
Corporation.
SECTION 10. Counterparts. This Assignment Agreement may be executed in several
counterparts, each of which shall be an original and all of which together shall constitut e but one
and the same agreement.
[The remainder of this page intentionally left blank.]
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01203.0007/765316.1 S-1
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement as of the date first above written.
PUBLIC PROPERTY FINANCING
CORPORATION OF CALIFORNIA], as
assignor
By:
Stefan A. Morton, Treasurer
ATTEST:
[Secretary]
[Signatures continued on the next page]
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01203.0007/765316.1 S-2
[Signature page continued]
BANK OF THE WEST, as assignee
By:
[Name], [Title]
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01203.0007/765316.1 A-1
EXHIBIT A
DESCRIPTION OF THE PROPERTY
All that real property situated in the County of Los Angeles, State of California,
described as follows, and any improvements thereto:
Ladera Linda Community Center and Park Property
Point Vicente Interpretive Center Property
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[Insert Notary Certification]
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____________________________________________
SUPPLEMENTAL AGREEMENT
dated as of March 1, 2022,
between
CITY OF RANCHO PALOS VERDES
and
BANK OF THE WEST
_____________________________________________
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms .............................................................................................2
Section 1.02. Construction .............................................................................................................6
Section 1.03. Incorporation of Certain Definitions by Reference .................................................6
Section 1.04. Accounting Terms and Determinations ...................................................................6
ARTICLE II
THE FUNDING
Section 2.01. Funding ....................................................................................................................7
Section 2.02. Calculations..............................................................................................................7
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Closing Conditions...................................................................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Existence and Power ..............................................................................................12
Section 4.02. Due Authorization ..................................................................................................12
Section 4.03. Valid and Binding Obligations ..............................................................................13
Section 4.04. Noncontravention; Compliance with Law .............................................................13
Section 4.05. Pending Litigation and Other Proceedings ............................................................13
Section 4.06. Financial Statements ..............................................................................................13
Section 4.07. Defaults ..................................................................................................................14
Section 4.08. Insurance ................................................................................................................14
Section 4.09. Accuracy of Information ........................................................................................14
Section 4.10. Environmental Matters...........................................................................................14
Section 4.11. Essentiality .............................................................................................................15
Section 4.12. Tax-Exempt Status .................................................................................................15
Section 4.13. Sovereign Immunity...............................................................................................15
Section 4.14. Usury ......................................................................................................................16
Section 4.15. Fair Rental Value; Use and Occupancy .................................................................16
Section 4.16. Title to Leased Property .........................................................................................16
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01. Reporting Requirements ........................................................................................16
Section 5.02. Notices ...................................................................................................................17
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3648768.4 045616 AGMT
Section 5.03. Access to Leased Property and Books, Records and Accounts;
Communication with Accountant ..........................................................................17
Section 5.04. Further Assurances.................................................................................................18
Section 5.05. Substitute Leased Property ....................................................................................18
Section 5.06. Maintenance of Existence ......................................................................................18
Section 5.07. No Condemnation ..................................................................................................18
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default ...................................................................................................19
ARTICLE VII
INDEMNIFICATION; COSTS, EXPENSES AND TAXES; INCREASED PAYMENTS
Section 7.01. Indemnification ......................................................................................................20
Section 7.02. Costs, Expenses and Taxes ....................................................................................20
Section 7.03. [Reserved] ..............................................................................................................21
Section 7.04. Late Payment .........................................................................................................21
Section 7.05. Survival ..................................................................................................................21
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Payment Account ...................................................................................................21
Section 8.02. Amendments ..........................................................................................................22
Section 8.03. Severability ............................................................................................................22
Section 8.04. Governing Law; Waiver Of Jury Trial ...................................................................22
Section 8.05. No Advisory or Fiduciary Responsibility ..............................................................23
Section 8.06. Counterparts ...........................................................................................................23
Section 8.07. Successors and Assigns..........................................................................................23
Exhibit A Sublease and Assignment Agreement Terms ..................................................... A-1
Exhibit B Borrower Long-Term Borrowing General Fund Obligations ..............................B-1
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3648768.4 045616 AGMT
SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT, dated as of March 1, 2022 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, this “Supplemental
Agreement”), between CITY OF RANCHO PALOS VERDES, a general law city an
municipal corporation duly organized and existing under the Constitution and the laws of the
State of California (the “Borrower”) and BANK OF THE WEST (the “Bank”).
RECITALS
WHEREAS, the Borrower desires to finance certain facilities (as more particularly
defined in the Sublease, the “Project”);
WHEREAS, in order to provide funds to finance the Project, the Borrower will lease
certain real property and the improvements thereto comprising (i) the Ladera Linda Community
Park Property (as defined in the Sublease); and (ii) the Point Vicente Interpretive Center Property
(as more particularly defined in the Sublease, the “Leased Property”) to the Public Property
Financing Corporation of California, a nonprofit public benefit corporation organized and
existing under the laws of the State of California (as more particularly defined in the Sublease,
the “Corporation”) pursuant to a Site Lease, dated as of March 1, 2022 (as more particularly
defined in the Sublease, the “Site Lease”), and the Borrower will sublease the Leased Property
back from the Corporation pursuant to a Sublease, dated as of March 1, 2022 (as more
particularly defined herein, the “Sublease”);
WHEREAS, the Borrower and the Corporation have determined that it would be in the
best interests of the Borrower and the Corporation to cause the Bank to provide the funds to
finance the Project in the aggregate principal amount of $8,000,000 in consideration of the
assignment by the Corporation to the Bank of the right to receive Base Rental Payments and
Additional Rental Payments under the Sublease pursuant to an Assignment Agreement, dated as
of March 1, 2022 (as more particularly defined in the Sublease, the “Assignment Agreement”);
and
WHEREAS, in consideration of such assignment, the Bank has agreed to provide the
funds to finance the Project, and as a condition to such funding, the Bank has required the
Borrower to enter into this Supplemental Agreement.
NOW, THEREFORE, to induce the Bank to provide the funds to finance the Project,
and for other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Borrower and the Bank hereby
agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Capitalized terms used herein but not otherwise
defined shall have the meanings ascribed thereto in the Sublease. In addition to the terms
defined in the recitals and elsewhere in this Supplemental Agreement and the Sublease, the
following terms shall have the following meanings:
“Asbestos Containing Materials” means material in friable form containing more than 1%
of the asbestiform varieties of (a) chrysotile (serpentine), (b) crocidolite (ricbeckite), (c) amosite
(cummington-itegrinerite), (d) anthophyllite, (e) tremolite, and (f) actinolite.
“Bank” means Bank of the West, and its successors and assigns.
“Base Rate” means a fluctuating rate per annum equal to the higher of (i) the Prime Rate
and (ii) the Federal Funds Rate plus 0.50% per annum, calculated on the basis of a 360-day year
and twelve 30-day months.
“Borrower Long-Term Borrowing General Fund Obligation” means any long-term
obligations to third parties in respect of borrowed moneys payable from the general fund of the
Borrower, including without limitation lease payments in connection with certificates of
participation and lease revenue bonds. The Borrower Long-Term Borrowing General Fund
Obligations outstanding as of the Closing Date are listed on Exhibit B hereto.
“Borrower Long-Term Borrowing General Fund Obligation Issuing Document” means
any Contract or resolution authorizing or evidencing the issuance or incurrence of any Borrower
Long-Term Borrowing General Fund Obligation.
“Borrower Long-Term Borrowing General Fund Obligation Ratings” means the long-
term unenhanced ratings assigned by one or more Rating Agencies to any Borrower Long-Term
Borrowing General Fund Obligation.
“Closing Date” means March [18], 2022.
“Contract” means any indenture, contract, agreement (other than this Supplemental
Agreement), other contractual restriction, lease, mortgage, instrument, guaranty, certificate of
incorporation, charter or by-law.
“Default” means any event or condition that, with notice, the passage of time or both,
would constitute an Event of Default.
“Default Rate” means a fluctuating rate per annum equal to the Base Rate plus 3.00% per
annum; provided that at no time shall the Default Rate exceed the Maximum Rate; provided,
further, that if on any day such rate shall exceed the Maximum Rate, then the Default Rate shall
for such date be the Maximum Rate; and provided, further, that if the Default Rate shall
thereafter be reduced to a rate that is below the Maximum Rate, the Default Rate shall conti nue
to equal the Maximum Rate until such time as the Bank shall have received the aggregate
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amount of interest that it would have received had the Default Rate not been reduced as set forth
in the second proviso of this definition. Notwithstanding the foregoing, on the date on which all
Base Rental Payments have been paid in full, to the extent possible without violating applicable
laws, the Borrower shall pay to the Bank, as Additional Rental Payments under the Sublease, a
fee equal to any accrued and unpaid interest that it would have received had the Default Rate not
been reduced as set forth in the second proviso of this definition. The Default Rate shall be
calculated on the basis of a 360-day year and twelve 30-day months.
“Environmental Regulations” means all Laws and Regulations, now or hereafter in effect,
with respect to Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C. Section
9601, et seq.) (together with the regulations promulgated thereunder, “CERCLA”), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, et seq.) (together with the
regulations promulgated thereunder, “RCRA”), the Emergency Planning and Community Right -
to-Know Act, as amended (42 U.S.C. Section 11001, et seq.) (together with the regulations
promulgated thereunder, “Title III”), the Clean Water Act, as amended (33 U.S.C. Section 1321,
et seq.) (together with the regulations promulgated thereunder, “CWA”), the Clean Air Act, as
amended (42 U.S.C. Section 7401, et seq.) (together with the regulations promulgated
thereunder, “CAA”) and the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601
et seq.) (together with the regulations promulgated thereunder, “TSCA”), and any similar state or
local Laws and Regulations and any so-called local, state or federal “superfund” or “superlien”
law.
“Event of Default” with respect to this Supplemental Agreement, has the meaning
assigned to that term in Section 6.01 of this Supplemental Agreement and, with respect to any
other Lease Document, has the meaning assigned therein.
“Event of Insolvency” means, with respect to any Person, the occurrence of one or more
of the following events:
(a) the issuance, under the laws of any state or under the laws of the United States of
America, of an order of rehabilitation, liquidation or dissolution of such Person;
(b) the commencement by or against such Person of a case or other proceeding
seeking liquidation, reorganization or other relief with respect to such Person or its debts under
any bankruptcy, insolvency or other similar state or federal law now or hereafter in effect,
including, without limitation, the appointment of a trustee, receiver, liquidator, custodian or other
similar official for such Person or any substantial part of its property or there shall be appointed
or designated with respect to it, an entity such as an organization, board, commission, authority,
agency or body to monitor, review, oversee, recommend or declare a financial emergency or
similar state of financial distress with respect to it or there shall be declared or introduced or
proposed for consideration by it or by any legislative or regulatory body with competent
jurisdiction over it, the existence of a state of financial emergency or similar state of financial
distress in respect of it;
(c) the making of an assignment for the benefit of creditors by such Person;
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(d) the failure of such Person to generally pay its debts as they become due;
(e) a debt moratorium, debt adjustment, debt restructuring or comparable restriction
with respect to the payment of any indebtedness of such Person is declared or imposed by such
Person or by any governmental authority having jurisdiction over such Person;
(f) such Person shall admit in writing its inability to pay its debts when due; or
(g) the initiation of any actions to authorize any of the foregoing by or on behalf of
such Person.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weigh ted
average (rounded upwards, if necessary to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Bank from three Federal funds brokers of recognized standing
selected by it.
“Fitch” means Fitch, Inc., a corporation organized and existing under the laws of the
State of New York, its successors and assigns, except that if such entity shall no longer perform
the functions of a securities rating agency for an y reason, the term “Fitch” shall be deemed to
refer to any other nationally recognized securities rating agency selected by the Borrower and
approved by the Bank.
“Generally Accepted Accounting Principles” or “GAAP” means generally accepted
accounting principles in effect from time to time in the United States and applicable to entities
such as the Borrower.
“Hazardous Materials” has the meaning set forth in Section 4.10 hereof.
“Laws and Regulations” has the meaning set forth in Section 4.10 hereof.
“Lease Documents” means this Supplemental Agreement, the Site Lease, the Sublease,
the Assignment Agreement and the Tax Certificate.
“Material Adverse Effect” means an event or occurrence which adversely affects in a
material manner (a) the assets, liabilities, condition (financial or otherwise), business or
operations of the Borrower, (b) the ability of the Borrower to carry out its business as of the
Closing Date or as proposed in this Supplemental Agreement, the Sublease or any other Lease
Document to be conducted or to meet or perform its obligations under this Supplemental
Agreement, the Sublease or any of the other Lease Documents on a timely basis, (c) the validity
or enforceability of this Supplemental Agreement, the Sublease or any other Lease Document,
(d) the rights or remedies of the Bank under this Supplemental Agreement, the Sublease or any
other Lease Document, or (e) the exclusion of the interest components of the Base Rental
Payments from gross income for Federal income tax purposes or the exemption of such interest
components from State personal income taxes.
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“Material Litigation” has the meaning assigned to such term in Section 4.05 hereof.
“Maximum Rate” means the highest interest rate permissible under applicable law.
“Moody’s” means Moody’s Investors Service, a corporation organized and existing under
the laws of the State of Delaware, its successors and assigns, except that if such entity shall no
longer perform the functions of a securities rating agency for any reason, the term “Moody’s”
shall be deemed to refer to any other nationally recognized securities rating agency selected by
the Borrower and approved by the Bank.
“Person” means an individual, corporation, firm, association, partnership, limited liability
company, trust, or other legal entity or group of entities, including a governmental entity or any
agency or political subdivision thereof.
“Prime Rate” means an index for a variable interest rate which is quoted, published or
announced by the Bank as its prime rate and as to which loans may be made by the Bank at,
above or below such rate.
“Rating Agencies” or “Rating Agency” means one or all of Fitch, Moody’s or S&P or, in
the event that Fitch, Moody’s or S&P no longer maintains a Borrower Long-Term Borrowing
General Fund Obligation Rating, any other nationally recognized bond rating agency acceptable
to the Bank, but, in each instance, only so long as Fitch, Moody’s, S&P or such other nationally
recognized rating agency then maintains a Borrower Long-Term Borrowing General Fund
Obligation Rating.
“Release” has the meaning set forth in Section 4.10 hereof.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw -Hill
Companies, Inc., a corporation organized and existing under the laws of the State of New York,
its successors and assigns, except that if such entity shall no longer perform the functions of a
securities rating agency for any reason, the term “S&P” shall be deemed to refer to any other
nationally recognized securities rating agency selected by the Borrower and approved by the
Bank.
“State” means the State of California.
“Sublease” means the Sublease, dated as of March 1, 2022, by and between the Borrower
and the Corporation, as originally executed and as it may from time to time be amended in
accordance with the provisions thereof.
“Tax Certificate” means that certain [__________], dated March [18], 2022, by the
Borrower, relating to the Base Rental Payments, as the same may be amended or supplemented
from time to time.
“Taxable Date” means the date as of which any interest component of the Base Rental
Payments is first includable in the gross income of the holders (including, without limitation, any
previous holders) thereof as determined pursuant to either (a) an opinion of Special Counsel, or
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(b) a final decree or judgment of any federal court or a final action by the Internal Revenue
Service that is delivered to the Borrower.
“Transactions” means the execution and delivery of the Lease Documents, the providing
of the funds by the Bank to finance the Project, the lease of the Leased Property and the
performance by the Borrower of its obligations (including payment obligations) hereunder and
under the Lease Documents.
Section 1.02. Construction. Unless the context of this Supplemental Agreement
otherwise clearly requires, references to the plural include the singular, to the singular include
the plural and to the part include the whole. The word “including” shall be deemed to mean
“including but not limited to,” and “or” has the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereunder” and similar terms in this Supplemental
Agreement refer to this Supplemental Agreement as a whole and not to any particular provision
of this Supplemental Agreement. The Section headings contained in this Supplemental
Agreement and the table of contents preceding this Supplemental Agreement are for reference
purposes only and shall not control or affect the construction of this Supplemental Agreement or
the interpretation thereof in any respect. Section, subsection and exhibit references are to this
Supplemental Agreement unless otherwise specified. Each exhibit, schedule and annex attached
hereto is incorporated by reference herein and is a constituent part of this Supplemental
Agreement.
Section 1.03. Incorporation of Certain Definitions by Reference. Any capitalized
term used herein and not otherwise defined herein shall have the meaning provided therefor in
the Sublease.
Section 1.04. Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered hereunder shall be
prepared, in accordance with Generally Accepted Accounting Principles consistently applied. In
the event of changes to Generally Accepted Accounting Principles which become effective after
the Closing Date, the Borrower and the Bank agree to negotiate in good faith appropriate
revisions of this Supplemental Agreement so as to perpetuate the meaning and effect of such
provisions as originally negotiated and agreed upon.
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ARTICLE II
THE FUNDING
Section 2.01. Funding. Upon the terms and conditions set forth herein, subject to
fulfillment of each of the conditions precedent set forth in Article III hereof, and upon the basis
of the representations set forth herein, the Bank hereby agrees to provide funds to the
Corporation, in an aggregate principal amount of $8,000,000, which amounts will be paid by the
Corporation to the Borrower as an advance rental payment pursuant to the Site Lease, in
consideration of the assignment by the Corporation to the Bank of the right to receive Base
Rental Payments and Additional Rental Payments under the Sublease pursuant to the Assignment
Agreement. The Bank shall transfer all of such funds ($8,000,000) to the Borrower on or before
the Closing Date and shall authorize release of such funds upon the terms and conditions set
forth herein, subject to fulfillment of each of the conditions precedent set forth in Article III
hereof, and upon the basis of the representations set forth herein.
Section 2.02. Calculations. Computations of any interest rates hereunder shall be made
by the Bank on the basis of a 360-day year and twelve 30-day months. Any change in the Base
Rate or the Default Rate resulting from a change in the Prime Rate, the Federal Funds Rate or the
Base Rate shall become effective as of the opening of business on the day on which such change
in the Prime Rate, the Federal Funds Rate or the Base Rate shall become effective. Each
determination by the Bank of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Closing Conditions. The Bank has agreed to provide funds to finance the
Project in reliance upon the representations, warranties and agreements of the Borrower
contained herein, and in reliance upon the representations, warranties and agreements of the
Borrower and the Corporation to be contained in the documents and instruments to be delivered
on the Closing Date and upon the performance by the Borrower of its obligations hereunder as of
the Closing Date. Accordingly, the Bank’s obligations under this Supplemental Agreement to
provide the funds to finance the Project shall be conditioned upon the performance by the
Borrower of its obligations to be performed hereunder and under such documents and
instruments on or prior to the Closing Date, and shall also be subject to the following additional
conditions, including the delivery by the Borrower of such documents as are enumerated herein,
in form and substance reasonably satisfactory to the Bank and its counsel; provided that, unless
set forth in a separate section of this Supplemental Agreement or in a Lease Document other than
this Supplemental Agreement, the Borrower’s obligation to satisfy any condition under this
Section 3.01 shall exist only until the Closing Date and shall cease thereafter:
(a) The following Corporation documents:
(i) A copy of the resolution of the Corporation approving the
execution and delivery of the Lease Documents to which the Corporation is a
party, approving the form of the Lease Documents to which it is not a party, and
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the other matters contemplated hereby and thereby, certified by the Secretary of
the Corporation as being true and complete and in full force and effect on the
Closing Date.
(ii) Certified copies of the Corporation’s articles of incorporation filed
with the California Secretary of State and a copy of the Corporation’s by-laws
certified by the Secretary of the Corporation as being true and complete and in
full force and effect on the Closing Date and a Certificate of Status issued by the
California Secretary of State indicating that the Corporation is authorized to
exercise all of its powers, rights and privileges in the State and a Letter of Good
Standing of the Corporation from the California Franchise Tax Board.
(iii) A certificate by the Secretary of the Corporation certifying the
names and signatures of the persons authorized to sign, on behalf of the
Corporation, the Lease Documents to which it is a party and the other documents
to be delivered by it hereunder or thereunder.
(b) The following Borrower documents:
(i) A copy of the resolution of the City Council of the Borrower
approving the execution and delivery of the Lease Documents to which the
Borrower is a party, approving the form of the Lease Documents to which it is not
a party, and the other matters contemplated hereby and thereby, certified by the
City Clerk of the Borrower as being true and complete and in full force and effect
on the Closing Date.
(ii) A certificate by the City Clerk of the Borrower certifying the
names and signatures of the persons authorized to sign, on behalf of the Borrower,
the Lease Documents to which it is a party and the other documents to be
delivered by it hereunder or thereunder.
(c) The following financing documents:
(i) An executed original of each of the Lease Documents (including
without limitation a Sublease and an Assignment Agreement that include the
terms set forth on Exhibit A hereto).
(ii) Recording instructions for the recordation of such of the Lease
Documents as may be required by the Bank.
(iii) Certificates signed by an authorized representative of the Borrower
and an authorized representative of the Corporation, respectively, stating that on
and as of the Closing Date, copies of each of the Lease Documents to which it is a
party furnished to the Bank are true, correct and complete copies of such
documents, such documents were duly issued, adopted or executed and delivered,
have not been modified, amended or rescinded and are in full force and effect on
and as of the Closing Date, and such other customary matters as the Bank may
reasonably request.
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(iv) A certificate signed by an authorized representative of the
Borrower, stating that on and as of the Closing Date (i) all requirements and
preconditions to the execution and delivery of the Lease Documents shall have
been satisfied; (ii) the Borrower has complied with all agreements and covenants
and satisfied all conditions stated in this Supplemental Agreement on its part to be
performed or satisfied at or prior to the Closing Date; (iii) each representation and
warranty on the part of the Borrower contained in this Supplemental Agreement
and the other Lease Documents is true and correct as though made on and as of
such date, (iv) no Default or Event of Default has occurred and is continuing or
would result from the execution or performance of this Supplemental Agreement
or the other Lease Documents to which the Borrower is a party; and (v) and such
other customary matters as the Bank may reasonably request.
(v) A certificate of the Corporation, signed by an authorized
representative of the Corporation, stating that on and as of the Closing Date (i) the
representations and warranties of the Corporation contained in the Lease
Documents to which the Corporation is a party are true and correct on and as of
the Closing Date as though made on and as of such date; (ii) no default or event of
default under the Lease Documents to which the Corporation is a party has
occurred and is continuing, or would result from the Corporation’s execution and
performance of any of the Lease Documents to which the Corporation is a party;
(iii) all conditions precedent to the execution and delivery of the Lease
Documents to which the Corporation is a party have been satisfied; and (iv) and
such other customary matters as the Bank may reasonably request.
(vi) Evidence that no CUSIP number has been assigned to this
financing and that this financing is not rated and that the Bank’s right, title and
interest in and to the Assignment Agreement shall be in a single denomination
and shall not be divisible or transferable except to a bank, financial institution or a
qualified investor.
(vii) Evidence that the Leased Property shall consist of real property
and/or improvements comprising (i) the Ladera Linda Community Park Property,
and (ii) the Point Vicente Interpretive Center Property, satisfactory to the Bank on
the basis of essentiality, fair rental value and insurance coverage and the ex istence
of any mortgage, pledge, lien, charge, encumbrance or claim thereon or with
respect thereto.
(viii) Evidence that the fair rental value as of the Closing Date is
sufficient to fully amortize the Base Rental Payments by March 1, 2032.
(ix) Certificates of insurance evidencing the satisfaction of the
insurance requirements as set forth in Article V of the Sublease in form and
substance satisfactory to the Bank; each policy (other than for worker’s
compensation) shall name the Bank as additional insured and loss payee.
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(x) A commitment from a title insurance company acceptable to the
Bank in respect of the Leased Property to issue CLTA owner’s and leasehold title
insurance policies (the “Title Policy”), together with evidence satisfactory to the
Bank that all premiums in respect of the Title Policy have been paid or provided
for. The Title Policy shall (i) be in an aggregate amount at least equal to the
initial principal components of the Base Rental Payments, (ii) be subject only to
such liens and other exceptions as shall be approved by the Bank; (iii) name the
Bank as an insured party thereunder; and (iv) contain such endorsements and
affirmative insurance as the Bank may request. The effectiveness of such
commitment shall not be subject to confirmation of recording.
(xi) The most recent adopted budget of the Borrower and the audited
financial statements of the Borrower for the fiscal years ended June 30, 2021,
2020 and 2019.
(xii) True and correct copies of any and all governmental approvals
necessary for the Borrower and the Corporation to enter into this Supplemental
Agreement, the Sublease and the other Lease Documents and the transactions
contemplated hereby and thereby and not otherwise covered by Section 3.01(a)(i)
or Section 3.01(b)(i) hereof.
(xiii) Written confirmation from the Borrower that the only outstanding
Borrower Long-Term Borrowing General Fund Obligations as of the Closing
Date, other than the Sublease, are listed on Exhibit B hereto.
(xiv) Such other certifications as to matters of fact, due authorization,
execution and delivery by the parties thereto of the Lease Documents, evidence of
corporate authority, copies of governmental consents, permits, licenses and
approvals, and other documents as shall be reasonably requested by the Bank, and
the form and substance of any order or other official action granting any consent,
permit, license or approval shall be satisfactory to the Bank.
(xv) The following opinions, addressed to the Bank or on which the
Bank is otherwise expressly authorized to rely:
(xvi) From counsel to the Corporation, as to the due authorization,
execution and delivery of each of the Lease Documents to which it is a party, their
validity, binding effect and enforceability, and such other customary matters as
the Bank may reasonably request.
(xvii) From counsel to the Borrower, as to the due authorization,
execution and delivery of each of the Lease Documents to which it is a party, their
validity, binding effect and enforceability, and such other customary matters as
the Bank may reasonably request.
(xviii) From Special Counsel, in customary form, an approving opinion to
the effect that the Lease Documents have been duly authorized and validly
executed and delivered, that interest components of the Base Rental Payments
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will not be included in gross income of the holders thereof for federal or state tax
purposes, a supplemental opinion in form and substance satisfactory to the Bank
and opinions as to such other customary matters as the Bank may reasonably
request.
(d) Other conditions:
(i) Each representation and warranty contained in this Supplemental
Agreement and the other Lease Documents is true and correct.
(ii) No Default or Event of Default has occurred and is continuing or
would result from the execution or performance of this Supplemental Agreement
or the other Lease Documents.
(iii) Since the most current date of the information, financial or
otherwise, supplied by the Borrower to the Bank, there has been no change in the
assets, liabilities, financial position or results of operations of the Borrower which
might reasonably be anticipated to cause a Material Adverse Effect and the
Borrower has not incurred any obligations or liabilities which might reasonably
be anticipated to cause a Material Adverse Effect.
(iv) The Bank shall be reasonably satisfied that the fee of the California
Debt and Investment Advisory Commission shall have been paid and that
payment will be made promptly after demand therefor after the Closing Date of
the Bank’s fees and expenses (including outside counsel legal fees) incurred in
connection with the Transactions.
(v) The Bank shall have completed all due diligence with respect to
the Borrower, the Leased Property, the Corporation and the Lease Documents
(including any earthquake and flood zone determinations) in scope and
determination satisfactory to the Bank.
(vi) All other legal matters pertaining to the execution and delivery of
each of the Lease Documents shall be reasonably satisfactory to the Bank and its
counsel.
(e) Such other instruments, documents and opinions as the Bank shall
reasonably require to evidence and secure the obligations of the Borrower
under this Supplemental Agreement, the Sublease and the other Lease
Documents and to comply with the provisions of this Supplemental
Agreement, the Sublease and the other Lease Documents and the
requirements of any governmental authority to which the Bank, the
Borrower or the Corporation are subject.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
All representations and warranties made herein to the Bank or incorporated herein for the
benefit of the Bank are made with the understanding that the Bank is relying upon the accuracy
of such representations and warranties. Notwithstanding that the Bank may conduct its own
investigation as to some or all of the matters covered by the representations and warranties in this
Supplemental Agreement, the Sublease and the other Lease Documents, and any certificates,
information, opinions or documents delivered in connection herewith and therewith, the Bank is
entitled to rely on all representations and warranties as a material inducement to the Bank’s
extension of the credit evidenced by this Supplemental Agreement, the Sublease and the other
Lease Documents. All representations and warranties made herein to the Bank or incorporated
herein for the benefit of the Bank shall survive the making of and shall not be waived by the
execution and delivery of this Supplemental Agreement, the Sublease and the other Lease
Documents.
Section 4.01. Existence and Power. The Borrower is a general law city an municipal
corporation duly organized, validly existing and in good standing under the Constitution and the
laws of the State and has the corporate power and authority to own its properties and to carry on
its businesses as now being conducted and as currently contemplated to be conducted hereafter
and is duly qualified to do business in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of any material portion of its business (as now
conducted and as currently contemplated to be conducted) makes such qualification necessary.
Section 4.02. Due Authorization.
(a) The Borrower has the corporate power, and has taken all necessary
corporate action to authorize this Supplemental Agreement, the Sublease and the other
Lease Documents to which it is a party, to execute, deliver and perform its obligations
under this Supplemental Agreement, the Sublease and the other Lease Documents to
which it is a party in accordance with their respective terms. The Borrower has approved
the form of the Lease Documents to which it is not a party.
(b) The Borrower is duly authorized and licensed to own the Leased Property
under the laws of all governmental authorities having the jurisdiction to license or
regulate the Leased Property, and the Borrower has obtained all requisite approvals of all
such governmental authorities required to be obtained for such purposes. All
authorizations and approvals necessary for the Borrower to enter into this Supplemental
Agreement, the Sublease and the other Lease Documents and to perform the transactions
contemplated hereby and thereby and to conduct its business activities and own the
Leased Property have been obtained and remain in full force and effect and are subject to
no further administrative or judicial review. No other authorization or approval or other
action by, and no notice to or filing with, any governmental authority is required for the
due execution, delivery and performance by the Borrower of this Supplemental
Agreement, the Sublease and the other Lease Documents.
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Section 4.03. Valid and Binding Obligations. This Supplemental Agreement, the
Sublease and each of the other Lease Documents to which the Borrower is a party has been duly
executed and delivered by one or more duly authorized officers of the Borrower and are legal,
valid and binding obligations of the Borrower enforceable in accordance with their respective
terms, except as such enforceability may be limited by (a) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights
generally, and (b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 4.04. Noncontravention; Compliance with Law.
(a) The execution, delivery and performance of this Supplemental Agreement,
the Sublease and each of the other Lease Documents in accordance with their respective
terms do not and will not (i) require any consent or approval of any creditor of the
Borrower, (ii) violate any applicable law, (iii) conflict in any material respect with, result
in a material breach of or constitute a material default under, any Contract to which the
Borrower is a party or by which it or any of its property may be bound, or (iv) result in or
require the creation or imposition of any lien upon or with respect to any property now
owned or hereafter acquired by the Borrower except such liens, if any, expressly created
by any Lease Document.
(b) The Borrower is in compliance with all applicable laws, except for
noncompliance that, singly or in the aggregate, has not caused and could not reasonably
be expected to cause a Material Adverse Effect or an adverse effect on the Borrower’s
ability to perform its obligations hereunder or under the Sublease or under the other
Lease Documents.
Section 4.05. Pending Litigation and Other Proceedings. There are no actions, suits
or proceedings pending, nor are there any actions, suits or proceedings threatened, against the
Borrower or any property of the Borrower in any court or before any arbitrator of any kind or
before or by any governmental or nongovernmental body, which, in any case, (i) directly or
indirectly relates to the Leased Property or the enforceability of this Supplemental Agreement,
the Sublease or any of the other Lease Documents; (ii) involve claims equal to or in excess of
$5,000,000 or (iii) may have a Material Adverse Effect (any of the foregoing being herein
referred to as “Material Litigation”).
Section 4.06. Financial Statements. The balance sheet of the Borrower as of June 30
of the most recently completed Fiscal Year of the Borrower and the related statement of revenues
and expenses and changes in financial position for such Fiscal Year and the auditors’ reports
with respect thereto, copies of which have heretofore been furnished to the Bank pursuant to
Section 5.01(a) hereof, are complete and correct and fairly present the financial condition,
changes in financial position and results of operations of the Borrower at such dates and for such
periods, and were prepared in accordance with Generally Accepted Accounting Principles
consistently applied. Since the period of such statements, there has been no change which would
have a Material Adverse Effect.
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Section 4.07. Defaults. No Event of Default and no Default has occurred and is
continuing or exists.
Section 4.08. Insurance. The Borrower currently maintains insurance of such type and
in such amounts or in excess of such amounts as are required by Article V of the Sublease and as
are customarily carried by, and insures against such risks as are customarily insured against by,
public agencies with similar activities.
Section 4.09. Accuracy of Information. All information, reports and other papers and
data furnished by the Borrower to the Bank were, at the time the same were so furnished,
complete and correct in all material respects and insofar as necessary to give the Bank a true and
accurate knowledge of the subject matter and were provided in expectation of the Bank’s
reliance thereon in providing funds to finance the Project. No fact is known to the Borrower
which has had or, so far as the Borrower can now reasonably foresee, may in the future have a
Material Adverse Effect, which has not been set forth in the budget and financial statements
previously furnished to the Bank or in other such information, reports, papers and data or
otherwise disclosed in writing to the Bank prior to the Closing Date. Any financial, budget and
other projections furnished to the Bank by the Borrower or its agents were prepared in good faith
on the basis of the assumptions stated therein, which assumptions were fair and reasonable in
light of the conditions existing at the time of delivery of such financial, budget or other
projections, and represented, and as of the Closing Date, represent the Borrower’s best estimate
of its future financial performance. No document furnished by the Borrower or its agents nor
any representation, warranty or other written statement made by the Borrower or its agents to the
Bank in connection with the negotiation, preparation or execution of this Supplemental
Agreement, the Sublease or any of the other Lease Documents contains or will contain any
untrue statement of a material fact or omits or will omit to state (as of the date made or
furnished) any material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were or will be made, not misleading.
Section 4.10. Environmental Matters.
(a) The Borrower has, after due inquiry, no knowledge and has not given or
received any written notice indicating that the Leased Property or the past or present use
thereof or any practice, procedure or policy employed by it in the conduct of its business
materially violates any applicable law, regulation, code, order, rule, judgment or consent
agreement, including, without limitation, those relating to zoning, building, use and
occupancy, fire safety, health, sanitation, air pollution, ecological matters, environmental
protection, hazardous or toxic materials, substances or wastes, conservation, parking,
architectural barriers to the handicapped, or restrictive covenants or other agreements
affecting title to the Leased Property (collectively, “Laws and Regulations”). Without
limiting the generality of the foregoing, neither the Borrower nor to the best of its
knowledge, after due inquiry, any prior or present owner, tenant or subtenant of the
Leased Property has, other than as set forth in paragraphs (a) and (b) of this Section or as
may have been remediated in accordance with Laws and Regulations, (A) used, treated,
stored, transported or disposed of any material amount of flammable explosives,
polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon,
petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive
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materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or
regulated substances or related materials, as defined in CERCLA, RCRA, CWA, CAA,
TSCA and Title III, and the regulations promulgated pursuant thereto, and in all other
Environmental Regulations applicable to the Corporation or the Borrower, the Leased
Property or the business operations conducted by the Corporation or the Borrower
thereon (collectively, “Hazardous Materials”) on, from or beneath the Leased Property,
(B) pumped, spilled, leaked, disposed of, emptied, discharged or released (collectively
“Release”) any material amount of Hazardous Materials on, from or beneath the Leased
Property, or (C) stored any material amount of petroleum products at the Leased Property
in underground storage tanks.
(b) Excluded from the representations and warranties in paragraph (a) of this
subsection with respect to Hazardous Materials are those Hazardous Materials in those
amounts ordinarily found in the inventory of, or used in the maintenance of Borrower
owned and operated community park buildings, the use, treatment, storage, transportation
and disposal of which has been and shall be in compliance with all Laws and
Regulations.
(c) No portion of the Leased Property located in an area of high potential
incidence of radon has an unventilated basement or subsurface portion which is occupied
or used for any purpose other than the foundation or support of the improvements to the
Leased Property, respectively.
(d) The Borrower has not received any notice from any insurance company
which has issued a policy with respect to the Leased Property or from the applicable state
or local government agency responsible for insurance standards (or any other body
exercising similar functions) requiring the performance of any repairs, alterations or other
work, which repairs, alterations or other work have not been completed at the Leased
Property, respectively. The Borrower has not received any notice of default or breach
which has not been cured under any covenant, condition, restriction, right-of-way,
reciprocal easement, agreement or other easement affecting the Leased Property which is
to be performed or complied with by it.
Section 4.11. Essentiality. The Leased Property is an essential asset of the Borrower
necessary to serve the needs of the residents of the Borrower. The Borrower believes that at all
times while any Base Rental Payments or Additional Rental Payments or any obligation of the
Borrower hereunder remains unpaid, the Leased Property will remain an essential asset of the
Borrower.
Section 4.12. Tax-Exempt Status. The Borrower has not taken any action or omitted to
take any action, and knows of no action taken or omitted to be taken by any other Person, which
action, if taken or omitted, would adversely affect the exclusion of the interest components of the
Base Rental Payments from gross income for Federal income tax purposes or the exemption of
such interest components from State personal income taxes.
Section 4.13. Sovereign Immunity. The Borrower does not enjoy any rights of
immunity on the grounds of sovereign immunity in respect of its obligations under this
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Supplemental Agreement, the Sublease or any of the other Lease Documents. To the extent the
Borrower has or hereafter may acquire under any applicable law any right to immunity from set -
off or legal proceedings on the grounds of sovereignty, the Borrower hereby waives, to the
fullest extent permitted by law, such rights to immunity for itself in re spect of its obligations
arising under or related to this Supplemental Agreement, the Sublease or the other Lease
Documents.
Section 4.14. Usury. The terms of this Supplemental Agreement, the Sublease and the
other Lease Documents regarding the calculation and payment of interest and fees do not violate
any applicable usury laws.
Section 4.15. Fair Rental Value; Use and Occupancy. Base Rental Payments and
Additional Rental Payments payable under the Sublease do not exceed the fair rental value of the
Leased Property for each period for which said rental is to be paid. In making such
determination of fair rental value, consideration has been given to the uses and purposes which
may be served by the Leased Property and the benefits therefrom which will accrue to the
Borrower and the general public. The Borrower currently has the use and occupancy of the
Leased Property and the Borrower has the legal authority to pay the Base Rental Payments and
the Additional Rental Payments pursuant to the Sublease for the use and occupancy of the
Leased Property.
Section 4.16. Title to Leased Property. The Borrower has a valid and enforceable fee
simple interest in the Leased Property, subject only to Permitted Encumbrances.
ARTICLE V
COVENANTS OF THE BORROWER
So long as any Base Rental Payments or Additional Rental Payments or other amounts
required to be paid under the Sublease or any obligation of the Borrower hereunder or under the
Lease Documents remains unpaid or unperformed, the Borrower shall comply with the following
covenants hereunder and as additional covenants under the Sublease, unless waived in writing by
the Bank:
Section 5.01. Reporting Requirements. The Borrower shall keep proper books of
record and account in which full, true and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of the Borrower in accordance with
Generally Accepted Accounting Principles consistently applied, and will furnish to the Bank
each of the following:
(a) as soon as available, and in any event within 270 days after the close of
each Fiscal Year of the Borrower, the financial statements of the Borrower which shall be
audited and reported on without qualification by independent certified public accountants
reasonably acceptable to the Bank and shall be certified to the Borrower by such
accountants as (i) having been prepared in accordance with Generally Accepted
Accounting Principles consistently applied, (ii) fairly presenting the financial condition
of the Borrower as at the end of such Fiscal Year and reflecting its operations during such
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Fiscal Year, and (iii) showing all material liabilities, direct or contingent, and disclosing
the existence of any off-balance sheet transactions, and shall include, without limitation,
balance sheets, profit and loss statements and statements of cash flows, together with
notes and supporting schedules, all on a consolidated and consolidating basis and in
reasonable detail and including a copy of any management letter or audit report provided
to the Borrower by such auditors, accompanied in each case by a certificate from an
authorized representative of the Borrower substantially in the form described in
subparagraph (b);
(b) simultaneously with the delivery of each set of financial statements
referred to in subparagraph (a) above, a certificate signed by an authorized representative
of the Borrower stating that (i) under his/her supervision the Borrower has made a review
of its activities during the preceding annual period for the purpose of determining
whether or not the Borrower has complied with all of the terms, provisions and
conditions of this Supplemental Agreement, the Sublease and the other Lease Documents
(including without limitation Section 3.06 (Appropriations Covenant), Article V
(Insurance) and Section 9.05 (Assignment and Subleasing) of the Sublease and
Section 5.06 (Maintenance of Existence) and Section 5.08 (Disposition of the Leased
Property; Uses) of this Supplemental Agreement) and (ii) to the best of his/her
knowledge the Borrower is not in Default in the performance or observance of any of the
terms, covenants, provisions or conditions of this Supplemental Agreement, the Sublease
or any of the Lease Documents, or if the Borrower shall be in Default, such certificate
shall specify each such Default, the nature and status thereof and any remedial steps
taken or proposed to correct each such Default;
(c) as soon as available and in any event within 60 days after adoption, the
annual operating budget of the Borrower for such Fiscal Year; and
(d) such other information respecting the business, properties or the condition
or operations, financial or otherwise, of the Borrower or the Leased Property as the Bank
may from time to time reasonably request.
Section 5.02. Notices. The Borrower shall provide to the Bank:
(a) immediate notice by telephone, promptly confirmed in writing, of any
event, action or failure to take any action which constitutes a Default or an Event of
Default;
(b) prompt written notice of any Material Litigation; and
(c) prompt written notice of any event which has or is reasonably anticipated
to have a Material Adverse Effect.
Section 5.03. Access to Leased Property and Books, Records and Accounts;
Communication with Accountant. The Borrower shall permit the duly authorized
representatives of the Bank, during the Borrower’s normal administrative business hours, to enter
the Leased Property or any parts thereof, to examine and copy the Borrower’s books, records and
accounts and to discuss the affairs, finances, business and accounts of the Borrower with the
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members of the City Council of the Borrower and the Borrower’s officers and employees. The
Borrower authorizes the Bank to communicate directly with the Borrower’s accountants, and
authorizes and shall instruct such accountants to communicate with, disclose and make availabl e
to the Bank, any and all financial statements and other supporting financial documents, schedules
and information relating to the Borrower with respect to the business, results of operations and
financial condition and other affairs of the Borrower.
Section 5.04. Further Assurances. The Borrower shall, and shall cause the
Corporation to, upon the request of the Bank, from time to time, execute and deliver and, if
necessary, file, register and record such further financing statements, amendments, continuation
statements and other documents and instruments and take such further action as may be
reasonably necessary to effectuate the provisions of this Supplemental Agreement, the Sublease
and the other Lease Documents. Except to the extent it is exempt therefrom, the Borrower shall
pay or cause to be paid all filing, registration and recording fees incident to such filing,
registration and recording, and all expenses incident to the preparation, execution and
acknowledgment of such instruments of further assurance, and all federal or state fees and other
similar fees, duties, imposts, assessments and charges arising out of or in connection with the
execution and delivery of this Supplemental Agreement, the Sublease, the other Lease
Documents and such instruments of further assurance.
Section 5.05. Substitute Leased Property. If, as a result of material damage to, or
destruction of condemnation of, the Leased Property, or any defect in title to the Leased
Property, there is substantial interference with the Borrower’s right to use or occupy any portion
of the Leased Property and Rental Payments shall be abated pursuant to Section 3.07 of the
Sublease, the Borrower may use its best efforts to substitute alternate real property and
improvements for the Leased Property from among the Borrower’s properties, if available,
subject to this Sublease and the Assignment Agreement and the Site Lease (in the case of real
property) satisfactory to the Bank on the basis of essentiality, fair rental value and insurance
coverage and the existence of any mortgage, pledge, lien, charge, encumbrance or claim thereon
or with respect thereto.
Section 5.06. Maintenance of Existence. The Borrower shall preserve and maintain its
existence as a general law city an municipal corporation duly organized and validly existing
under the Constitution and the laws of the State, and its rights, franchises and privileges material
to the conduct of its business and shall not, without the prior written consent of the Bank, initiate
proceedings to reorganize, merge or consolidate with or into any Person, wind up, liquidate or
dissolve its affairs (or suffer any liquidation or dissolution) or convert, sell, assign, transfer, lease
or otherwise dispose of (or agree to do any of the foregoing at any future time), whether in one
transaction or a series of transactions, all or substantially all of its property or assets.
Section 5.07. No Condemnation. The Borrower shall not condemn, nor consent to the
condemnation of, the Leased Property or any interest of the Borrower, the Corporation or the
Bank therein.
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ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. The occurrence of any of the following events
(whatever the reason for such event and whether voluntary, involuntary, or effected by operation
of law) shall be an “Event of Default” hereunder and an additional Event of D efault under the
Sublease entitling the Bank to the rights and remedies available under the Sublease, unless
waived in writing by the Bank:
(a) (i) the Borrower shall fail to observe or perform any of the covenants,
agreements or conditions on the part of the Borrower set forth in Section 5.06 or
Section 5.07 hereof or Section 3.06 (Appropriations Covenant), Article V (Insurance),
Section 9.05 (Assignment and Subleasing) or Section 9.09 (Environmental Compliance)
of the Sublease, or (ii) the Borrower fails to observe or perform any other of the
covenants, agreements or conditions on the part the Borrower in the Sublease or in this
Supplemental Agreement not otherwise described in Section 6.01 of the Sublease or
clause (i) of this Section 6.01(a), and, solely in the case of clause (ii) of this
Section 6.01(a), the Borrower fails to remedy the same within 30 days after the Bank has
provided the Borrower with written notice thereof;
(b) the Borrower shall default in the payment of any amount when due in
respect of any Borrower Long-Term Borrowing General Fund Obligation, or the
Borrower shall default under any Borrower Long-Term Borrowing General Fund
Obligation Issuing Document, and continuance of such default beyond the period of
grace, if any, allowed with respect thereto; or the occurrence of any act or omission by
the Borrower under any such Borrower Long-Term Borrowing General Fund Obligation
Issuing Document which results in such Borrower Long-Term Borrowing General Fund
Obligation becoming, or being capable of becoming, immediately due and payable or
being terminated early or being subject to early termination;
(c) this Supplemental Agreement, the Sublease or any of the other Lease
Documents or any material provision of this Supplemental Agreement, the Sublease or
any of the other Lease Documents shall at any time, for any reason, cease to be the legal,
valid and binding obligation of the Borrower or the Corporation or shall cease to be in
full force and effect, or shall be declared to be unenforceable, invalid or void, or the
validity or enforceability thereof shall be contested by the Borrower or the Corporation,
or the Borrower or the Corporation shall renounce the same or deny that it has any further
liability hereunder or thereunder, or any court of competent jurisd iction or other
governmental authority with jurisdiction to rule on the validity of any provision of this
Supplemental Agreement, the Sublease or any of the other Lease Documents shall find or
rule that this Supplemental Agreement, the Sublease or any of the other Lease Documents
are not valid or not binding on the Borrower or the Corporation;
(d) the Borrower or the Corporation is dissolved or its existence is terminated;
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(e) any representation or warranty made or deemed made by or on behalf of
the Borrower herein or by the Corporation or the Borrower in any Lease Document or in
any certificate, financial or other statement furnished by or on behalf of the Borrower or
the Corporation to the Bank pursuant to or in this Supplemental Agreement, the Sublease
or any other Lease Document shall prove to have been inaccurate, misleading or
incomplete in any material respect when made or deemed made;
(f) the occurrence of a Taxable Date;
(g) the long-term unenhanced ratings, if any, assigned to any Borrower Long-
Term Borrowing General Fund Obligation shall be withdrawn or suspended or otherwise
unavailable for credit-related reasons or reduced below Baa3 by Moody’s, BBB- by S&P
or BBB- by Fitch;
(h) an Event of Insolvency shall occur with respect to the Borrower or the
Corporation; or
(i) any funds or investments on deposit in, or otherwise to the credit of, any
of the funds or accounts established under the Lease Documents shall become subject to
any writ, judgment, warrant or attachment, execution or similar process.
ARTICLE VII
INDEMNIFICATION; COSTS, EXPENSES AND TAXES; INCREASED PAYMENTS
Section 7.01. Indemnification. In addition to any and all other rights of
reimbursement, indemnification, subrogation and other similar rights pursuant to this
Supplemental Agreement, the Sublease, the other Lease Documents or under law or equity, the
Borrower hereby covenants and agrees, to the fullest extent permitted by law, to defend,
indemnify and hold harmless the Bank and its officers, directors, employees, representatives and
agents (each, an “Indemnitee”) from and against any and all claims, causes of action, judgments,
fines, penalties, damages, losses, liabilities, and expenses whatsoever (including reasonable
attorneys’ fees) which may be incurred by an Indemnitee or which may be claimed against an
Indemnitee by any Person whatsoever by reason of or directly or indirectly in connection with
any of the Transactions; provided that the Borrower shall not be required to indemnify an
Indemnitee for any claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by the willful misconduct or gross negligence of such Indemnitee as
determined in a final, nonappealable judgment or as agreed to by the parties pursuant to a
settlement agreement. Nothing under this Section 7.01 is intended to limit the Borrower’s
payment of its obligations under this Supplemental Agreement, the Sublease or other Lease
Documents.
Section 7.02. Costs, Expenses and Taxes. The Borrower shall pay, as Additional
Rental Payments under the Sublease, to the Bank within thirty (30) days after demand: (a) the
reasonable fees and out of pocket expenses for counsel to the Bank in connection with the
execution and delivery of this Supplemental Agreement, the Sublease and the other Lease
Documents; (b) if an Event of Default shall have occurred, all costs and expenses of the Bank in
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connection with the enforcement (whether by means of legal proceedings or otherwise) of any of
its rights under this Supplemental Agreement, the Sublease, the other Lease Documents and such
other documents which may be delivered in connection therewith; (c) the fees and out of pocket
expenses for counsel or other reasonably required consultants to the Bank in connection with
advising the Bank as to its rights and responsibilities under this Supplemental Agreement, the
Sublease and the other Lease Documents or in connection with responding to requests from the
Borrower for approvals, consents, amendments and waivers; and (d) any fee set forth in the
definition of “Default Rate” herein. In addition, if at any time any governmental authority shall
require revenue or other documentary stamps or any other tax or fee in connection with the
execution or delivery of this Supplemental Agreement, the Sublease or the other Lease
Documents, then, if the Borrower lawfully may pay for such stamps, taxes or fees, the Borrower
shall pay, when due and payable, for all such stamps, taxes and fees, including interest and
penalties thereon, and the Borrower agrees to save the Bank harmless from and against any and
all liabilities with respect to or resulting from any delay or omission of the Borrower in paying,
such stamps, taxes and fees hereunder.
Section 7.03. [Reserved]
Section 7.04. Late Payment. Any Base Rental Payment or Additional Rental Payment
or any other amount required to be paid under the Sublease or hereunder which shall not be paid
by the Borrower when due and payable under the Sublease or hereunder shall accrue interest
until the same shall be paid at a rate equal to the Default Rate, and the Borrower hereby agrees to
pay such amounts to the Bank upon demand.
Section 7.05. Survival. The obligations of the Borrower under this Article VII shall
survive the payment in full of all Base Rental Payments and Additional Rental Payments and the
termination of the Lease Documents.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Payment Account. Unless charged by the Bank against the City’s deposit
accounts with the Bank as authorized below, all amounts payable to the Bank under the Sublease
or hereunder shall be transferred to the following account of the Bank, or such other account as
may be subsequently designated by the Bank in writing to the Borrower:
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Bank of the West
1977 Saturn St
Monterey Park, CA 91755
ABA #: 121100782
Account Name: Commercial Loan Servicing
Account #: 239855-332
Attn: [__________]
Ref: City of Rancho Palos Verdes – Obligor #[__________] (Closed on
3/[18]/22)
[The Borrower hereby authorizes the Bank to charge, from time to time, against any or all
of the Borrower’s deposit accounts with the Bank with respect to which the Bank has an
authorization agreement from the Borrower for ACH debits therefrom, any amount payable to
the Bank as the assignee of the Corporation under the Assignment Agreement. Notwithstanding
this authorization, the Borrower shall be in default for nonpayment as provided in the Sublease
until and unless the default is cured by payment, whether initiated by the B ank or by the
Borrower.]
Section 8.02. Amendments. No amendment or waiver of any provision of this
Supplemental Agreement nor consent to any departure by the parties hereto shall in any event be
effective unless the same shall be in writing and signed by such parties, and then such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given.
Section 8.03. Severability. The provisions of this Supplemental Agreement are
intended to be severable. If any provision of this Supplemental Agreement shall be held invalid
or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
Section 8.04. Governing Law; Waiver Of Jury Trial.
(a) This Supplemental Agreement shall be governed by, and construed and
interpreted in accordance with the laws of the State.
(b) The Borrower, the Corporation (pursuant to the Lease Agreement) and the
Bank each, to the fullest extent permitted by law, waives its respective right to a trial by
jury in any legal proceeding arising out of or relating to this Supplemental Agreement or
any other Lease Document or the transactions contemplated hereby or thereby. The
Borrower, the Corporation (pursuant to the Lease Agreement) and the Bank each further
warrants and represents that such waiver has been intentionally, knowingly and
voluntarily made, following consultation with its legal counsel. If the waiver of jury trial
as set forth in this Section shall be declared void or unenforceable, each of the Borrower,
the Corporation (pursuant to the Lease Agreement) and the Bank agrees to refer the
dispute to a judicial referee in accordance with the provisions of Section 638 et seq. of
the California Code of Civil Procedure.
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Section 8.05. No Advisory or Fiduciary Responsibility. In connection with all aspects
of the transactions contemplated by this Supplemental Agreement, the Sublease or the other
Lease Documents (including in connection with any amendment, waiver or other modification
hereof or of any other Lease Document), the Borrower acknowledges and agrees that: (a) (i) the
arranging, structuring and other services regarding this Supplemental Agreement, the Sublease
and the other Lease Documents provided by the Bank are arm’s length commercial transactions
between the Borrower on the one hand, and the Bank on the other hand, (ii) the Borrower has
consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate, and (iii) the Borrower is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated by this Supplemental Agreement,
the Sublease and the other Lease Documents; (b)(i) the Bank is and has been acting solely as a
principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the
Borrower, or any other Person and (ii) the Bank does not have any obligation to the Borrower
with respect to the transactions contemplated by this Supplemental Agreement, the Sublease and
the other Lease Documents, except those obligations expressly set forth herein and therein; and
(c) the Bank may be engaged in a broad range of transactions that involve interests that differ
from those of the Borrower, and the Bank does not have any obligation to disclose any of such
interests to the Borrower. To the fullest extent permitted by applicable laws, the Borrower
hereby waives and releases any claims that it may have against the Bank with respect to any
breach or alleged breach of agency or fiduciary duty in connection with any aspect of a ny
transaction contemplated by this Supplemental Agreement, the Sublease and the other Lease
Documents.
Section 8.06. Counterparts. This Supplemental Agreement may be executed in any
number of counterparts and by the different parties hereto on separate counterparts each of
which, when so executed, shall be deemed an original, but all such counterparts shall constitute
but one and the same instrument.
Section 8.07. Successors and Assigns. This Supplemental Agreement is a continuing
obligation and shall be binding upon the Borrower, its permitted successors and assigns and shall
inure to the benefit of the Bank and its permitted successors, transferees and assigns. The
Borrower may not assign or otherwise transfer or delegate any of its rights or obligations
hereunder or under the other Lease Documents without the prior written consent of the Bank.
The Bank may, in accordance with applicable law, from time to time and without the consent of
the Borrower or any other Person assign, sell or transfer in whole but not in part, this
Supplemental Agreement and any of its rights or interests hereunder and all or any part of its
interest in the Lease Documents, subject to the limitations set forth in the Assignment
Agreement. In addition, the Bank may at any time pledge or grant a security interest in all or any
portion of its rights under the Lease Documents to secure obligations of the Bank, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such
pledge or assignment shall release the Bank from any of its obligations hereunder or substitute
any such pledgee or assignee for the Bank as a party hereto.
[Signatures begin on the following page.]
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[Signature page of Supplemental Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Agreement
to be duly executed and delivered as of the date first above written.
CITY OF RANCHO PALOS VERDES
By:
Name:
Title:
BANK OF THE WEST
By:
Name:
Title:
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Exhibit A
Sublease and Assignment Agreement Terms
1. (a) Closing Date: March [18], 2022
(b) Amount of Proceeds: $8,000,000
(c) Term: Amortization over 10 years, with the final Principal Payment Date on
March 1, 2032.
(d) Principal Payment Dates and Interest Payment Dates: principal and interest shall
be payable on each March 1 and September 1, commencing September 1, 2022, as
set forth below:
(e) Interest Rate: 1.98% per annum, calculated on the basis of a 360-day year and
twelve 30-day months, except upon the occurrence and during the continuance of
an Event of Default under the Sublease, in which case the Default Rate will apply.
(f) Default Rate: Base Rate plus 3.00% per annum, calculated on the basis of a 360-
day year and twelve 30-day months.
(g) Prepayment: Only (i) mandatory prepayment, without prepayment premium, in
accordance with Section 7.02(b) of the Sublease from condemnation awards and
insurance proceeds; and (ii) optional prepayment, without premium or penalty,
plus any Additional Rental due and payable.
(h) Events of Default under the Sublease: Includes Events of Default under this
Supplemental Agreement.
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D ebt Service Sch edul e
Date Princ ipa l Coupon Interest Tota l P+I
09/0 1/2022 75,240.00 75,240.00
03/0 1/2023 735,000.00 1.98 0% 79,200.00 8 14,200.00
09/0 1/2023 7 1,923 .50 7 1,923.5 0
03/0 1/2024 74 5,000.00 1.98 0% 7 1,923 .50 8 16,923.5 0
09/0 1/2024 64,548.00 64,548.00
03/0 1/2025 760,000.00 1.98 0% 64,548.00 824,548.00
09/0 1/2025 57,024.00 57,024.00
03/0 1/2026 77 5,000.00 1.98 0% 57,024.00 832,024.00
09/0 1/2026 49,351.50 49,351.50
03/0 1/2027 79 1,000.00 1.98 0% 49,351.50 84 0,351.5 0
09/0 1/2027 4 1,520.60 4 1,520.60
03/0 1/2028 806,000.00 1.98 0% 4 1,520.60 84 7,520.60
09/0 1/2028 33,54 1.20 33,5 4 1.20
03/0 1/2029 822,000.00 1.98 0% 33,54 1.20 855,5 4 1.20
09/0 1/2029 25 ,403.40 25 ,403.40
03/0 1/2030 839,000.00 1.98 0% 25 ,403.40 864,403.40
09/0 1/2030 17,097.3 0 17,097.3 0
03/0 1/203 1 855,000.00 1.98 0% 17,097.3 0 872,097.3 0
09/0 1/203 1 8,632.80 8,632.80
03/0 1/2032 872,000.00 1.98 0% 8,632.80 88 0,632.80
Total ss,000,000.00 S89l -,S14.60 SS,89 l -,S14.60
A-2
3648768.4 045616 AGMT
(i) Tax Exemption: An opinion from Special Counsel as to the exclusion of the
interest components of the Base Rental Payments from gross income of the
holders thereof for federal income tax purposes and the exemption of such interest
components from State personal income taxes.
(j) Other Lease Terms: fair rental value sufficient to support payment of default
interest; insurance requirements (including 24 months of rental interruption
insurance) and repair and replacement of Leased Property; payment of taxes and
removal of liens; no amendment of Site Lease or Sublease without Bank consent;
no sale or other disposition of, or encumbrance of or lien on the Leased Property;
covenant to budget and appropriate; environmental compliance; no abandonment
of the Leased Property; Additional Rental includes all amounts (other than Base
Rental Payments) due and payable under this Supplemental Agreement; payment
of abated or excess Rental Payments at the earliest opportunity; Corporation
agrees to jurisdiction and waiver of jury trial provisions set forth in this
Supplemental Agreement; required title insurance shall be in form and substance
satisfactory to the Bank; no CUSIP number and in a single denomination; not
rated.
(k) Assignability/Transferability: Not divisible or transferable except to a bank,
financial institution or a qualified investor.
E-29
B-1
3648768.4 045616 AGMT
Exhibit B
Borrower Long-Term Borrowing General Fund Obligations
[Insert]
E-30
Bank of the West Proposal
To
Up to $8,000,000
2022 Lease Revenue Obligations
February 1, 2022
F-1
iii:I BANKTW.WEST Im BNP PARIBAS
February 1, 2022
Ms. Trang Nguyen
Director of Finance
City of Rancho Palos Verdes
30940 Hawthorne Blvd.
Rancho Palos Verdes, CA 90275
tguyen@rpvca.gov
Re: City of Rancho Palos Verdes 2022 Lease Revenue Obligations
Dear Trang:
Bank of the West (the “Bank”) is pleased to present our proposal to provide a tax-exempt term
loan (the “Term Loan”) to the City of Rancho Palos Verdes for the completion of a new city-
owned community park (“Ladera Linda Community Park”) in an amount up to $8.0 million.
Bank of the West is a member of BNP Paribas Group, one of the largest and healthiest banks in
the world. We are a financially sound, California State-Chartered bank and California State
approved depository bank, headquartered in San Francisco.
The Bank’s Public Finance Department is a major provider of credit facilities in the form of
letters of credit, private placements, direct purchase facilities, lines of credit, funded loans and
leases to municipal borrowers. Our team has a combined forty years of experience in providing
these facilities to local government agencies.
We have provided approximately $300 million in credit facilities to municipal borrowers over
the last 12 months, including a $110 million line of credit to back the San Diego County Water
Authority’s commercial paper program and a $100 million line to back Los Angeles County
Department of Water and Power’s bonds. We have provided private placements to numerous
municipal borrowers including the City of Pittsburg, Stanislaus County, Town of Windsor,
Novato Fire Protection District, and Madera County.
Bank of the West is pleased to be the provider of full-service banking to the City and we
appreciate this opportunity to support the City’s financing needs.
F-2
BANKTWEWEST
BNP PARIBAS
COMMERCIAL BANKIN G
Sincerely,
Christine Armani-Dawood Matthew Kirschenman
Director Vice President
Public Finance Division Government Banking Division
F-3
BANKTWEWEST
BNP PARIBAS
COMMERCIAL BANKIN G
1
City of Rancho Palos Verdes
$8,000,000
2022 Lease Revenue Obligations
*Revised as of February 1, 2022
The proposed terms and conditions are provided for discussion purposes only and do not constitute
an offer, agreement, or commitment to lend by Bank of the West (“Lender”). The actual terms and
conditions upon which Bank of the West might extend credit to the Borrower are subject to satisfactory
completion of due diligence, internal credit approval, satisfactory documentation and other such terms
and conditions as determined solely by Bank of the West.
Lender: Bank of the West (the “Bank”)
Borrower: City of Rancho Palos Verdes (the “City”)
Purpose and Structure: A term loan to the City (the “Term Loan”) to
provide funds for a portion of the costs
associated with the construction of a new City-
owned community park, the Ladera Linda
Community Park project. The project includes
the demolition of five existing buildings, and
construction of a new Community Center,
outdoor tiered seating, a parking lot and
children’s playground.
The Term Loan will be structured as a lease-
leaseback between the City and a non-profit
corporation counterparty, subject to abatement.
The lease payments owed by the City to the
Financing Authority and payable from the
City’s General Fund revenues and the
Financing Authority’s right, title and interest in
the Site Lease and the Lease Agreement will be
assigned to the Bank. The Lease Agreement
will contain customary insurance provisions
regarding the Leased Property, including rental
interruption insurance, casualty insurance and
title insurance, and covenants to repair and
rebuild and apply net proceeds.
Amount:
$8,000,000
F-4
BANKTWEWEST
BNP PARIBAS
2
Term:
A 10-year Lease/Term Loan with level annual
lease payments comprised of principal
amortization and semi-annual interest
payments.
Repayment Source: The Lease Payments and any Additional Rental
Payments due to the Bank will be payable from
the General Fund of the City pursuant to the
terms of the Lease Agreement. The Lease
Payments and any Additional Rental Payments
are payable from the City’s General Fund and
any other legally available funds. The Lease
Payments and Additional Rental Payments are
payable by the City for and in consideration of
the right of the use and occupancy of, and the
continued quiet use and enjoyment of the
Leased Property. The City covenants to take all
actions required to include the Lease Payments
and Additional Rental Payments in each of its
budgets during the Term of the Lease
Agreement and to make the necessary
appropriations for all Lease Payments and
Additional Rental Payments. The foregoing
covenant of the City contained constitutes a
duty imposed by law. Lease Payments are
subject to abatement in each fiscal year.
Leased Property: The “Leased Property” will include the
following: i) Ladera Linda Community Park, and
ii) Fred Hesse Jr. Community Park and/or the
Point Vicente Interpretive Center. The Leased
Property shall have an aggregate market-survey
value (including land value), and sufficiently
clear title, which is acceptable to the Bank and
an aggregate fair market rental value which is
sufficient in the opinion of Special Counsel to
support the Term Loan described herein.
Upon completion of the Ladera Linda
Community Park project, which is expected in
December 2023, and upon the Bank’s receipt of
the valuation on the completed project which is
sufficient and acceptable to the Bank, the Bank
will release the following assets: Fred Hesse Jr.
Community Park and/or the Point Vicente
Interpretive Center, as applicable.
Principal Amortization: Principal will amortize annually each March 1st,
beginning on March 1, 2023.
F-5
3
Interest Rate: An indicative tax-exempt fixed interest rate of
1.98% per annum. Interest will be payable on a
semi-annual basis each March 1st and September
1st, beginning on September 1, 2022. Interest will
be calculated based on a 360-day year and twelve
30-day months.
Once the City accepts and signs this Term Sheet
and confirms a closing date of March 18, 2022
or an earlier date agreed to by the Bank, the Bank
will be in a position to finalize the interest rate
and hold the interest rate until closing.
Prepayment Terms: The City may prepay the Term Loan at any time
with no penalty.
Key Documents: The Term Loan will be documented by a Site
Lease, Lease Agreement and Assignment
Agreement (drafted by Bond Counsel and
reviewed by Bank Counsel) and a Supplemental
Agreement (drafted by Bank Counsel), each in
form and substance satisfactory to the Bank, that
will outline key Bank provisions including
events of default, covenants, representations and
warranties, conditions precedent,
indemnification and costs and expenses. All
others will be drafted by Bond Counsel and
reviewed by Bank Counsel.
The Term Loan shall have no CUSIP number
assigned to it, shall be in a single denomination,
and shall not be divisible or transferable except
to a bank, financial institution, or a qualified
investor. The Term Loan shall not be rated. No
official statement or other offering materials shall
be prepared for the Term Loan. If requested, the
Bank will execute a “lender” letter at closing.
Events of Default: Usual and customary for this type of lease
financing and otherwise acceptable to the Bank,
including but not limited to: failure to make
payments when due; cross-default to other
general fund debt of the City; breach of
covenants (including reporting covenants);
breach of representations and warranties;
invalidity; loss of tax exemption;
bankruptcy/insolvency; and withdrawal,
suspension or downgrade of the long term
unenhanced ratings, if any, assigned to any City
Long-Term Borrowing General Fund Obligation
F-6
4
below BBB-/Baa3
Default Rate: The Default Rate will be the Bank’s Base Rate
+3%. The Bank’s Base Rate is equal to the
greater of the Bank’s Prime Rate or Fed Funds
plus 50 basis points.
Conditions Precedent: Acquisition of title insurance in form and
substance satisfactory to the Bank. The City
shall provide certificates of insurance
evidencing other insurance coverage, including
24 months of rental interruption insurance, in
form and substance satisfactory to the Bank. In
addition, the Bank will require legal opinions of
Special Counsel related to the validity of the
Site Lease, the Lease Agreement, the
Assignment Agreement and the
Supplemental Agreement and tax-exemption,
legal opinions of counsel to the City and the
Financing Authority and other customary
conditions precedent.
Representations and Warranties: Customary for transactions of this nature and
otherwise acceptable to the Bank.
Other Covenants: To budget and appropriate lease payments until
final maturity; to maintain appropriate property
and casualty coverage, as well as liability
coverage and title insurance and 24 months
rental interruption insurance.
Fees, Costs and Charges: Bank of the West’s outside counsel fee will be
capped at $20,000, provided there are no prolonged
negotiations.
The Bank envisions no other upfront costs.
CDIAC’s fee for public sector financings, if any,
will be for the account of the City.
Reporting Requirements: Borrower’s audited financial statements due
within 270 days after the close of each fiscal year.
Annual Adopted Budget due within 60 days of
adoption. Other information shall be provided
upon request of the Bank.
Bank Counsel: The Bank proposes using the following law
firm to prepare the required Supplemental
F-7
5
Agreement and to represent the Bank in the
transaction:
Melanie S. Murakami, Esq.
Hawkins Delafield & Wood LLP
333 So. Grand Avenue, 36th Floor
Los Angeles, CA 90071
Office: (213) 236-9063
Mobile: (213) 393-9441
Temporarily working from home
mmurakami@hawkins.com
Governing Law: State of California
Bank Representatives:
Edward C. (Ted) Neu
Public Finance-Managing Director
180 Montgomery Street
San Francisco, CA 94101
(415) 572-7054
Ted.Neu@bankofthewest.com
Christine Armani-Dawood
Public Finance-Director
Bank of the West
300 S Grand Avenue
Los Angeles, CA 90071
(213) 972-0507
Christine.Armani-
Dawood@bankofthewest.com
Matthew Kirschenman
Government Banking-Vice President
300 S. Grand Avenue
Los Angeles, CA 90071
(213) 972-0646
matthew.kirscheman@bankofthewest.com
Credit Approval: This facility is subject to final credit approval by
the Bank. A credit decision can be expected
within ten business days of the Bank’s receipt of
evidence satisfactory to the Bank of the value of
certain properties comprising the Leased
Property (Fred Hesse Jr. Community Park and/or
Point Vicente Interpretive Center).
Other: Additional terms and conditions may be
requested at the time of final credit approval.
Expiration: This proposal expires on February 4, 2022
unless accepted and signed by the City prior to
F-8
6
such date.
Confidentiality: The terms contained in this document are
confidential and, except for disclosure to your
board, officers and employees, to professional
advisors retained by you in connection with the
transaction, or as may be required by law, may
not be disclosed in whole or part to any other
person or entity without prior written consent
from the Bank. Bank of the West understands
that, ultimately, results of the selection
process are public information.
If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof
by returning to us executed counterparts hereof no later than the Term Sheet Expiration Date set forth
above.
Accepted and agreed to as of __________, 2022:
CITY OF RANCHO PALOS VERDES, CALIFORNIA
By:
Name:
Title:
F-9