HomeMy WebLinkAboutCalifornia Infrastructure and Economic Development Bank 2017-08-21 (2)_4
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Recording Requested By and Return To:
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK
Attention: Loan Servicing Manager
1325 J Street, Suite 1823
Sacramento, CA 95814
This document is recorded for the benefit of the CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK and the recording is fee -exempt under section 27383 of
the California Government Code.
FINANCING LEASE
by and between the
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK
and the
CITY OF UKIAH
Agreement No. ISRF 18-119
Dated as of August 1, 2017
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c
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION, AND CONDITIONS
PRECEDENT 2
SECTION 1.01.
SECTION 1.02.
SECTION 1.03.
Definitions 2
Rules of Construction. 9
Conditions Precedent to Effectiveness 9
ARTICLE II THE LEASED ASSET 10
SECTION 2.01.
SECTION 2.02.
SECTION 2.03.
SECTION 2.04.
SECTION 2.05.
SECTION 2.06.
SECTION 2.07.
SECTION 2.08.
SECTION 2.09.
SECTION 2.10.
SECTION 2.11.
Lease of the Leased Asset. 10
Quiet Enjoyment 10
Right of Entry and Inspection 10
Prohibition Against Encumbrance or Sale. 10
Liens 11
Substitution or Release of Leased Asset. 12
Construction, Acquisition and Installation of the Facility;
Construction Contracts 13
Disbursement of Facility Funds 14
Use of the Leased Asset. 16
Withholding of Facility Funds. 16
Disclaimer of Warranties. 16
ARTICLE III FINANCING LEASE TERMS 17
SECTION 3.01.
SECTION 3.02.
SECTION 3.03.
SECTION 3.04.
Rental Payments 17
Lessee Covenant to Budget 20
Application of Rental Payments 20
Base Rental Abatement Due to Damage, Destruction, Title
Defect or Condemnation 20
SECTION 3.05. Limitations on Prepayment and Facility Funds Reduction 21
SECTION 3.06. Obligation to Make Rental Payments 22
SECTION 3.07. Fair Rental Value. 22
SECTION 3.08. Survival of Tax Provisions 23
SECTION 3.09. Commencement and Termination of the Financing Lease;
Vesting of Title 23
SECTION 3.10. Assignment by the Lessor 23
SECTION 3.11. Assignment by the Lessee. 23
SECTION 3.12. Net Lease 23
ARTICLE IV MAINTENANCE; TAXES; INSURANCE & OTHER CHARGES 24
SECTION 4.01. Maintenance of the Leased Asset by the Lessee 24
SECTION 4.02. Taxes, Other Government Charges and Utility Charges 24
SECTION 4.03. Insurance 25
SECTION 4.04. Advances 27
SECTION 4.05. Title Insurance 27
TABLE OF CONTENTS
Page
SECTION 4.06. Damage; Destruction; Title Defect and Condemnation; Use
of Net Proceeds 28
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE LESSEE 30
SECTION 5.01. Organization; Authority; Application Correct. 30
SECTION 5.02. Agreement Valid and Binding; Approval by the Lessee 30
SECTION 5.03. No Conflict in Execution of Financing Lease 30
SECTION 5.04. No Litigation 30
SECTION 5.05. No Breach or Default 30
SECTION 5.06. No Consent; Approval or Permission Necessary 31
SECTION 5.07. Information Submitted to the Lessor 311
SECTION 5.08. Financial Statements of the Lessee. 311
SECTION 5.09. Licenses, Permits and Approvals for Operation or Occupancy
of Leased Asset and the Facility. 311
SECTION 5.10. Continuing Validity of Representations and Warranties. 312
ARTICLE VI COVENANTS OF THE LESSEE 32
SECTION 6.01. Punctual Payment and Performance 32
SECTION 6.02. Books and Accounts 32
SECTION 6.03. Financial Statements; Budgets; Notification to the Lessor 32
SECTION 6.04. Protection of Security and Rights 34
SECTION 6.05. Management of Properties 34
SECTION 6.06. Covenant to Enter into Replacement Financing Lease and
Site Lease 34
SECTION 6.07. Further Assurances 34
SECTION 6.08. Facility Documentation 34
SECTION 6.09. The Lessee's General Responsibility 35
SECTION 6.10. The Lessee's Assurances and Commitments 35
SECTION 6.11. Leased Asset and Facility Access 36
SECTION 6.12. Performance and Payment Bonds 36
SECTION 6.13. Notice of Event of Default 36
SECTION 6.14. Nondiscrimination 37
SECTION 6.15. Continuing Disclosure 37
SECTION 6.16. Tax Covenants 38
SECTION 6.17. Facility Construction 41
ARTICLE VII INDEMNIFICATION AND EVENTS OF DEFAULT 42
SECTION 7.01. Indemnification 42
SECTION 7.02. Events of Default 43
SECTION 7.03 No Waiver 46
SECTION 7.04 No Remedy Exclusive 46
ARTILCE VIII MISCELLANEOUS 46
SECTION 8.01. Notices 46
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SECTION 8.02.
SECTION 8.03.
SECTION 8.04.
SECTION 8.05.
SECTION 8.06.
SECTION 8.07.
SECTION 8.08.
SECTION 8.09.
SECTION 8.10.
SECTION 8.11.
SECTION 8.12.
SECTION 8.13.
SECTION 8.14.
SECTION 8.15.
SECTION 8.16.
SECTION 8.17.
SECTION 8.18.
SECTION 8.19.
TABLE OF CONTENTS
Page
Contact Persons 47
Reserved 47
Third Party Beneficiaries 47
Amendments to Financing Lease 47
Expectations 48
Partial Invalidity 48
California Law; Venue 48
Section Headings 48
No Merger 48
No Personal Liability 49
Arm's Length Transaction 49
Entire Agreement 49
Successors and Assigns 49
Time of the Essence 50
Form of Documents 50
Waiver of Consequential Damages 50
Execution in Counterparts 50
Usury Savings 50
EXHIBIT A DESCRIPTION OF FACILITY A-1
EXHIBIT B DESCRIPTION OF THE LEASED ASSET B-1
EXHIBIT C LESSEE'S APPROVING RESOLUTION C-1
EXHIBIT D DISBURSEMENT CONDITIONS D -Error! Bookmark not defined.
EXHIBIT E BASE RENTAL PAYMENTS E-1
EXHIBIT F FORM OF LEGAL OPINION OF COUNSEL TO THE LESSEE F-1
EXHIBIT G SCHEDULE OF SOURCES AND USES OF FACILITIY FUNDS G-1
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FINANCING LEASE
THIS FINANCING LEASE is dated as of August 1, 2017, by and between the
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK (the
"Lessor" (as defined in Section 1.01) or "IBank"), duly organized and existing pursuant to the
Bergeson -Peace Infrastructure and Economic Development Bank Act (the "Act," as defined in
Section 1.01) and the CITY OF UKIAH, a municipal corporation, duly organized and existing
under the laws of the State of California (the "Lessee," as defined in Section 1.01). The Lessor and
Lessee are hereinafter at times collectively referred to as the "Parties" and individually as a "Party."
WITNESSETH:
WHEREAS, the Lessee and the Lessor desire to finance the design, acquisition,
construction, improvement and installation of the Facility, as described in Exhibit A attached
hereto and as defined in Section 1.01;
WHEREAS, the Lessee owns the real property situated at 300 Seminary Avenue,
Ukiah, California (as defined in Section 1.01, the "Site"). The Site and improvements thereon,
including the Lessee's City Hall, are referred to collectively as the "Leased Asset," as defined in
Section 1.01;
WHEREAS, the Lessee has leased the Leased Asset to the Lessor pursuant to the
Site Lease (as defined in Section 1.01), dated as of August 1, 2017, between the Lessee, as lessor
and the Lessor, as lessee;
WHEREAS, the Lessee has determined that it is in the public interest,
convenience and welfare and for the common benefit of the inhabitants of the Lessee that the
Lessee finance the Facility through the delivery of this Financing Lease (as defined in Section
1.01);
WHEREAS, the Lessee is authorized by law to lease the Leased Asset and the
lease of the Leased Asset is necessary and proper for public purposes;
WHEREAS, the Lessor has issued, and may issue additional, Proceeds Bonds (as
defined in Section 1.01), the proceeds of which may be used to provide all or a portion of the
Facility Funds (as defined in Section 1.01);
WHEREAS, the Lessor may pledge its rights, including the rights to receive
payments, under this Financing Lease to secure bonds that it has issued or may issue for the
benefit of its programs ("Secured Bonds," as defined in Section 1.01);
WHEREAS, the Lessee acknowledges that the issuance or existence of both the
Secured Bonds and Proceeds Bonds impacts its rights and obligations as described herein; and
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NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES AND OF
THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR
OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY
OF WHICH THE PARTIES HEREBY ACKNOWLEDGE, THE PARTIES HEREBY AGREE
AS FOLLOWS:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION, AND CONDITIONS PRECEDENT
SECTION 1.01. Definitions.
Unless the context otherwise requires, the terms defined in this Section and elsewhere in
this Financing Lease shall, for all purposes hereof and of any amendment hereof, have the
meanings set forth herein. The following definitions to be equally applicable to both the singular
and plural forms of any of the terms defined herein.
"Act" means the Bergeson -Peace Infrastructure and Economic Development Bank
Act, constituting Division 1 of Title 6.7 of the California Government Code (commencing at
section 63000 thereof) as now in effect and as it may from time to time hereafter be amended.
"Additional Rental Payments" means all amounts payable by the Lessee pursuant
to Section 3.01(b).
"Amortization Schedule" means that certain schedule of Base Rental Payments
attached hereto as Exhibit E.
"Amortization Terms" shall have the meaning set forth in Section 3.01(a).
"Annual Fee" means the fee due to the Lessor on an annual basis as determined
pursuant to Section 3.01(b)(1).
"Authorized Prepayment Period" has the meaning set forth in Section 3.05.
"Base Rental Payments" means all amounts payable by the Lessee as Base Rental
pursuant to Section 3.01(a).
"Business Day" means any day, Monday through Friday, which is not a legal
holiday of the State or the Trustee.
"Certificate of the Lessee" means a written request or certificate signed by a duly
authorized representative of the Lessee.
"Claim" has the meaning set forth in Section 7.01.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations of the United States Department of the Treasury issued thereunder, and in this regard
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reference to any particular section of the Code shall include reference to all successors to such
section of the Code.
"Criteria" means the "Criteria, Priorities and Guidelines for the Selection of
Projects for Financing under the Infrastructure State Revolving Fund (ISRF) Program" adopted
by the IBank Board of Directors on February 23, 2016, as may thereafter be amended from time
to time.
"Current Guidelines" has the meaning set forth in Section 6.16.
"Current Revenues" means revenues that are both received by the Lessee and
utilized for the payment of Rental Payments under the Financing Lease within a six month
period.
"Damaged Improvements" has the meaning set forth in Section 4.06.
"Debt Service" means, for any Fiscal Year, all Rental Payments due and payable
during such Fiscal Year under this Financing Lease, together with all principal, interest, or other
payments due and payable by the Lessee during such Fiscal Year under any loan, bond, note,
advance, installment sale agreement, certificate of participation, financing lease, capital lease,
equipment lease, or other evidence of indebtedness to which the Lessee is a primary obligor,
secondary obligor, guarantor or surety.
"Effective Date" means the date on which this Financing Lease is last executed, as
set forth on the signature page hereto, and is the date this Financing Lease becomes effective and
binding on the Lessor and the Lessee, subject to this Agreement's terms and conditions, and is
the date on which the interest component of the Base Rental Payments begins to accrue
hereunder.
"Event of Default" means any of the events described in Section 7.02.
"Expiry Date" means August 1, 2047, except as extended or sooner terminated
pursuant to Section 3.09.
"Facility" means those improvements financed with Facility Funds provided by
the Lessor to the Lessee pursuant to the terms and conditions of this Financing Lease as further
set forth in Exhibit A.
"Facility Costs" means the costs of the activities set forth in Exhibit A hereto for
the construction, acquisition and/or installation of the Facility, all as approved by the Lessor in its
sole and absolute discretion.
"Facility Delivery" shall have the meaning set forth in Section 2.07.
"Facility Funds" means moneys in the amount of four million dollars ($4,000,000)
provided by the Lessor to the Lessee pursuant to this Financing Lease to construct the Facility.
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"Facility Funds Reduction" means the reduction in Facility Funds by the amount
of Facility Funds not yet disbursed and not necessary for the construction of the Facility.
"Facility Funds Reduction Request" has the meaning set forth in Section 3.05.
"Facility Funds Reduction Premium" has the meaning set forth in Section 3.05.
"Financed Property" has the meaning set forth in Section 4.03.
"Financing Lease" means this financing lease, dated as of the Effective Date, by
and between the Lessor and the Lessee, as originally executed and as it may from time to time be
amended or supplemented in accordance with the terms hereof.
"Fiscal Year" means any twelve month period extending from July 1 in one
calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other
twelve month period selected and designated by the Lessee as its official fiscal year period and
approved by the Lessor.
"Governmental Unit" means any state, or political subdivision of a state, but
excludes the United States and its agencies or instrumentalities.
"Independent Accountant" means any certified public accountant or firm of
certified public accountants duly licensed or registered or entitled to practice and practicing as
such under the laws of the State, appointed by the Lessee who, or each of whom:
(1) is in fact independent and not under the direct or indirect control of the
Lessee or the Lessor;
(2) does not have any substantial interest, direct or indirect, in the Lessee or the
Lessor; and
(3)
is not connected with the Lessee or the Lessor as an officer or employee of
the Lessee or the Lessor, but who may be regularly retained to make
reports to the Lessee or the Lessor.
"Independent Consultant" means any engineer, geologist, or architect, or firm of
engineers, geologists, or architects, duly licensed or registered or entitled to practice and
practicing as such under the laws of the State, appointed by the Lessee who, or each of whom:
(1) is in fact independent and not under the direct or indirect control of the
Lessee or the Lessor;
(2) does not have any substantial interest, direct or indirect, in the Lessee or the
Lessor; and
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(3)
is not connected with the Lessee or the Lessor as an officer or employee of
the Lessee or the Lessor, but who may be regularly retained to make
reports to the Lessee or the Lessor.
"Insurance Consultant" means an individual or firm either retained by the Lessee
as an independent insurance consultant or an employee of the Lessee, experienced in the field of
risk management.
"Insured Peril" has the meaning set forth in Section 4.06.
"Investment Property" means any security or obligation, any annuity contract, or
any other investment -type property, but does not include any Tax Exempt Obligation unless such
obligation is a "specified private activity bond" within the meaning of section 57(a)(5)(C) of the
Code.
"IRS" has the meaning set forth in Section 6.16.
"Leased Asset" means the Site and any and all improvements located thereon (as
the same may be changed from time to time by Release or Substitution as provided in
Section 2.06) and is described on Exhibit B hereto.
"Lease Year" means the period from each July 1 to and including the following
June 30, during the term hereof; except that the initial Lease Year means the period from the
Effective Date to and including June 30, 2018 and the last Lease Year shall be that period from
July 1 to and including the day that this Financing Lease expires or is earlier terminated as
provided herein.
"Lessee" means the City of Ukiah, a municipal corporation, duly organized and
existing under the laws of the State, and its permitted successors and assigns.
"Lessor" means the California Infrastructure and Economic Development Bank,
and its successors and assignees.
"Lessor Fiscal Year" means any twelve month period extending from July 1 in
one calendar year to June 30 of the succeeding calendar year, both dates inclusive.
"Liquidated Damages Charge" has the meaning set forth in Section 3.01(b)(4).
"Liquidated Damages Period" has the meaning set forth in Section 6.03(f).
"Maximum Rate" has the meaning set forth in Section 8.19.
"Net Proceeds" means, collectively, the net proceeds of any insurance or
condemnation award resulting from any damage or destruction of any portion of the Leased Asset
payable in accordance with Section 4.06.
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"Nonexempt Person" means any Nongovernmental Person that is not an
organization described in section 501(c)(3) of the Code acting in a capacity that is not an
unrelated trade or business as defined in section 513(a) of the Code.
"Nongovernmental Persons" means any person or entity other than a
Governmental Unit.
"Obligations" has the meaning set forth in Section 4.03(a)(1).
"Operating Budget" means the annual approved budget of the Lessee for the
Lessee's fiscal year.
"Opinion of Counsel" means a written opinion of counsel of recognized national
standing in the field of law relating to municipal bonds, appointed by the Lessee and approved by
the Lessor or appointed by the Lessor and in all cases paid for by the Lessee and acceptable to the
Lessor, in its sole and absolute discretion.
"Origination Fee" has the meaning set forth in Section 3.01(e).
"Owner" means the registered owner of any outstanding Proceeds Bond.
"Payment Account" means the funds or accounts (or any portions of any funds or
accounts) that will hold monies that the Lessee expects to use to pay Rental Payments under the
Financing Lease.
time to time;
"Permitted Encumbrances" means, as of any particular time:
(1) liens for general ad valorem taxes and assessments, if any, not then
delinquent, or which the Lessee may, pursuant to Section 4.02, permit to
remain unpaid;
(2) this Financing Lease and the Site Lease, as they may be amended from
(3)
any right or claim of any mechanic, laborer, materialman, supplier or
vendor, or any other "claimant" as defined in Civil Code Section 8004,
that has not been perfected prior to the Effective Date or that has not been
filed in the manner prescribed by law;
(4) easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions, all of a non -monetary
nature, which exist of record as of the Effective Date and have been
consented to in writing by the Lessor in its sole and absolute discretion;
and
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(5)
easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions, all of a non -monetary
nature, established following the date of recordation of this Financing
Lease and to which the Lessor has consented in writing in its sole and
absolute discretion and to which the Lessee has consented in writing.
"Phase I Environmental Site Assessment" means an investigation of the
environmental condition of the Facility, including all improvements and real property as well as
surrounding improvements and real property, to determine the possibility of contamination,
based on visual observation, interviews with knowledgeable persons, and the review of records
and databases, in a manner consistent with the current standards and practices employed typically
by State Registered Environmental Assessors, or other professionals licensed in the State as
engineers or geologists, performing environmental assessments in the same general geographic
location as the Facility.
"Phase II Environmental Site Assessment" means the in situ sampling and
laboratory analysis of any contamination discovered in connection with a Phase I Environmental
Site Assessment, in a manner consistent with the current standards and practices employed
typically by State Registered Environmental Assessors, or other professionals licensed in the
State as engineers or geologists, performing environmental assessments in the same general
geographic location as the Facility.
"Preliminary Costs" means architectural, engineering, surveying or soil testing
costs, reports such as environmental impact reports, Phase I or Phase II Environmental Site
Assessments, feasibility studies, rate studies and CEQA reports, and similar costs that are
incurred prior to commencement of acquisition, construction, or rehabilitation of a project, but
not land acquisition, site preparation or similar costs incident to the commencement of
construction.
"Prepayment Agreement" has the meaning set forth in Section 3.05.
"Prepayment Request" means any written request of the Lessee to prepay all or a
portion of the principal component of the Base Rental Payments.
"Prior Guidelines" has the meaning set forth in Section 6.16.
"Proceeds Bonds" means bonds issued or to be issued by the Lessor, the proceeds
of which may be used, in whole or part, to provide Facility Funds.
"Prohibited Prepayment Period" has the meaning set forth in Section 3.05.
"Purchase Price" means the price paid by the Lessee (if any) to acquire the real
property and improvements thereon (if any), for the Facility.
"Reconstruction" has the meaning set forth in Section 4.06(a)(1).
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"Reimbursement Resolution" has the meaning set forth in Section 6.16(b).
"Release" means the release of all or a portion of the Leased Asset from the
leasehold hereof as provided in Section 2.06.
"Rental Payments" means Base Rental Payments and Additional Rental Payments.
"Replacement Lease Covenant" has the meaning set forth in Section 6.06.
"Report" means a written document signed by an Independent Consultant or an
Independent Accountant, and including:
(1) a statement that the person or firm making or giving such Report has read
the pertinent provisions of this Financing Lease to which such Report
relates;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the Report is based; and
(3)
a statement that, in the opinion of such person or firm, sufficient
examination or investigation was made as is necessary to enable said
consultant to express an informed opinion with respect to the subject
matter referred to in the Report.
"Reporting Covenants" has the meaning set forth in Section 6.03(0.
"Revised Amortization Schedule" shall have the meaning set forth in Section
3.01(a)(3).
"Secured Bonds" means bonds of one or more series issued or to be issued by the
Lessor to which certain rights of the Lessor under this Financing Lease, including the right to
receive Base Rental Payments, may be from time to time pledged or assigned directly or
indirectly as security for such bonds.
"Service Contract" has the meaning set forth in Section 6.16.
"Site" means the real property described in Exhibit A of the Site Lease.
"Site Lease" means the site lease, dated as of the Effective Date, by and between
the Lessee, as lessor, and the Lessor, as lessee, of the Site as originally executed and as it may
from time to time be amended or supplemented.
"State" means the State of California.
"Substituted Property" has the meaning set forth in Section 2.06(a).
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"Substitution" has the meaning set forth in Section 2.06(a).
"Tax Exempt Obligation" means any obligation the interest on which is excluded
from gross income for federal income tax purposes pursuant to section 103 of the Code or section
103 of the Internal Revenue Code of 1954, as amended, and Title XIII of the Tax Reform Act of
1986, as amended, as well as stock in a regulated investment company to the extent at least
ninety-five percent (95%) of income to the stockholder is treated as interest that is excludable
from gross income under section 103 of the Code.
"Trustee" means the trustee acting in its capacity as such in connection with any
Proceeds Bonds or Secured Bonds, or any successor or assignee as therein provided, including
the Lessor.
SECTION 1.02 Rules of Construction.
The singular form of any word used herein, including the terms defined in Section 1.01,
shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a
pronoun of any gender shall include correlative words of the other genders. All references herein
to "Sections" and other subdivisions hereof are to the corresponding Sections or subdivisions of
this Financing Lease as originally executed; and the words "herein," "hereof," "hereunder" and
other words of similar import refer to this Financing Lease as a whole and not to any particular
Section or subdivision hereof. The Lessor and Lessee, and each of their counsel, participated in
negotiating and drafting this Financing Lease. Any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not apply in interpreting this
Financing Lease.
SECTION 1.03 Conditions Precedent to Effectiveness.
The Lessor shall have no obligation under this Financing Lease until the following
conditions precedent to effectiveness of this Financing Lease have, in the Lessor's reasonable
discretion, been satisfied fully.
(a) The Lessor shall have received three (3) copies of each of this
Financing Lease and the Site Lease bearing the Lessee's original signature and Lessor shall have
counter -signed this Financing Lease and the Site Lease.
(b) The Lessor shall have received a copy of a resolution duly adopted by
the Lessee's governing body approving entry into this Financing Lease and the Site Lease in form
and content acceptable to the Lessor, a copy of which shall be attached hereto as Exhibit C.
(c) The Lessor shall have received an originally executed copy of an
opinion of the Lessee's legal counsel in form and content substantially similar to the Form of
Opinion of Legal Counsel to the Lessee attached hereto as Exhibit F.
(d) The Lessee shall have paid to the Lessor the Origination Fee.
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(e) The Lessee shall have provided satisfactory evidence that it has
expended fully its funds, or has immediately available committed funds to expend, for each of
the items in Exhibit G, Schedule of Sources and Uses of Facility Funds, denoted to be the
responsibility of the Lessee, if any.
(f) The Lessor shall have received satisfactory evidence that this
Financing Lease and the Site Lease have been duly recorded in the real property records of the
county in which the Leased Asset is located and that the title insurance policy required under
Section 4.05 hereof has been issued in favor of the Lessor.
ARTICLE II
THE LEASED ASSET
SECTION 2.01. Lease of the Leased Asset.
The Lessor hereby leases to the Lessee, and the Lessee hereby leases from the Lessor, the
Leased Asset on the conditions and terms hereinafter set forth. The Lessee hereby agrees and
covenants that during the term hereof, except as hereinafter provided, it will use the Leased Asset
for public purposes so as to afford the public the benefits contemplated hereby and so as to
permit the Lessor to carry out its agreements and covenants contained herein, and the Lessee
hereby further agrees and covenants that during the term hereof that it will not abandon or vacate
the Leased Asset.
SECTION 2.02. Ouiet Enjoyment.
The Parties hereto mutually covenant that the Lessee, so long as it observes and performs
the agreements, conditions, covenants and terms required to be observed or performed by it
contained herein and is not in default hereunder, shall at all times during the term hereof
peaceably and quietly have, hold and enjoy the Leased Asset without suit, trouble or hindrance
from the Lessor.
SECTION 2.03. Right of Entry and Inspection.
The Lessor shall have the right to enter into and inspect the Leased Asset and the Facility
during reasonable business hours (and in emergencies at all times) for any purpose connected
with the Lessor's rights or obligations hereunder and for all other lawful purposes.
SECTION 2.04. Prohibition Against Encumbrance or Sale.
The Lessee and the Lessor will not create, suffer to be created, or assume, any mortgage,
pledge, lien, charge or encumbrance upon the Leased Asset except for Permitted Encumbrances.
The Lessee and the Lessor will not sell or otherwise dispose of the Leased Asset or any property
or equipment essential to the proper use, occupancy, and operation of the Leased Asset except as
otherwise provided herein. Notwithstanding anything to the contrary herein contained, the
Lessee may assign, transfer, sublease, grant a license to use, or otherwise convey an interest or
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right in any and all of the Leased Asset or its other rights hereunder, provided that (a) the Lessor
has, in its reasonable discretion, consented in writing to such assignment, transfer, sublease,
license, or other conveyance, and all material terms thereof, (b) the Lessor has approved the
instrument evidencing any such assignment, transfer, sublease, license, or other conveyance,
(c) the rights of any assignee, transferee, sublessee, licensee, or conveyee shall be at all times
subject and subordinate to all rights of the Lessor hereunder, (d) no such assignment, transfer,
sublease, license, or conveyance shall relieve the Lessee of any of its obligations hereunder,
(e) the assignment, transfer, sublease, license, or conveyance shall not result in a breach of any
representation, warranty, or covenant of the Lessee contained in any other Section hereof, (f) any
such assignment, transfer, sublease, license, or conveyance shall by its terms expressly provide
that the fair rental value of the Leased Asset for all purposes shall be first allocated to this
Financing Lease, as the same may be amended from time to time before or after any such
assignment, transfer, sublease, license, or conveyance, (g) any such assignment, transfer,
sublease, license, or conveyance shall not affect the tax status of any Proceeds Bonds or Secured
Bonds and (h) no such assignment, transfer, sublease, license, or conveyance shall confer upon
the parties thereto any remedy which allows reentry upon the Leased Asset unless concurrently
with granting such remedy the same shall be also granted hereunder by an amendment to this
Financing Lease which in all instances be deemed prior to and superior to any such assignment,
transfer, sublease, license, or conveyance.
SECTION 2.05 Liens.
In the event the Lessee shall at any time during the term hereof cause any improvements
to the Leased Asset to be constructed or materials or equipment to be supplied in or upon or
attached to the Leased Asset ("Leased Asset Improvement"), the Lessee shall pay or cause to be
paid when due all sums of money that may become due or purporting to be due for any labor,
services, materials, supplies or equipment furnished or alleged to have been furnished to or for
the Lessee in, upon, about or relating to the Leased Asset and shall keep the Leased Asset free of
any and all liens against the Leased Asset or the Lessor's interest therein. The Lessee shall give
the Lessor written notice immediately upon the commencement of any such Leased Asset
Improvement. The written notice may be given by providing the Lessor with a copy of a "Notice
to Proceed" transmitted by the Lessee to its direct contractor, or any similar written instrument
transmitted by the Lessee authorizing its direct contractor to commence the Leased Asset
Improvement. In the event any such lien attaches to or is filed against the Leased Asset or the
Lessor's interest therein, and the enforcement thereof is not stayed or if so stayed such stay
thereafter expires, the Lessee shall cause each such lien to be fully discharged and released or
provide adequate Bond Coverage (defined below) on or before the time the performance of any
obligation secured by any such lien matures or becomes due. For purposes of this Section 2.05
only, "Bond Coverage" shall mean either (i) a cash bond in an amount the Lessor deems
sufficient in its reasonable discretion held in reserve by the Lessee exclusively for the satisfaction
of the lien(s); or (ii) a bond or bonds in the amount required by statute to cause the release of the
lien(s) issued by good and sufficient corporate sureties as required by statute, and as otherwise
reasonably acceptable to the Lessor. If any such lien shall be reduced to final judgment and such
judgment or any process as may be issued for the enforcement thereof is not promptly stayed, or
if so stayed and such stay thereafter expires, the Lessee shall forthwith, but in no event in less
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than thirty (30) days, pay and discharge or cause to be paid and discharged such judgment. In the
event the Lessee fails to pay and discharge, or cause to be paid and discharged, any such
judgment as set forth herein, the Lessor may, but is not obligated to, pay and discharge, or cause
to be paid and discharged, any such judgment and the Lessee shall within thirty (30) days
reimburse to the Lessor any costs incurred by the Lessor in connection therewith, including, but
not limited to, the Lessor's attorney's fees (including, but not limited to, the fees of the Lessor's
in-house counsel, outside counsel, or the California Attorney General's Office) and any bond
premium.
SECTION 2.06 Substitution or Release of Leased Asset.
(a) The Lessee and the Lessor may amend this Financing Lease to (i)
substitute alternative real and personal property and/or improvements (the "Substituted
Property") for the real and personal property and improvements comprising the Leased Asset (a
"Substitution") or (ii) remove real property (including undivided interests therein), personal
property, or improvements from the definition of Leased Asset ("Release"), in each case upon
compliance with all of the conditions set forth in subsection (b). After a Substitution or Release,
the part of the Leased Asset for which the Substitution or Release has been effected shall be
released from the leasehold hereunder.
(b) No Substitution or Release shall take place hereunder until the Lessee
delivers to the Lessor the following:
(1) A Certificate of the Lessee containing a description of all or part of
the Leased Asset to be released and, in the event of a Substitution, a description of the
Substituted Property constituting the Substitution;
(2) A Certificate of the Lessee stating that the annual fair rental value
of the Leased Asset after a Substitution or Release, in each year during the remaining term of this
Financing Lease, is at least equal to the maximum annual Base Rental Payments and Additional
Rental Payments attributable to the Leased Asset during the remaining term of this Financing
Lease. Annual fair rental value shall be determined by the Lessee on the basis of an appraisal of
the Leased Asset after said Substitution or Release conducted by a member of the American
Institute of Real Estate Appraisers or the American Society of Appraisers, or an appraiser
otherwise acceptable to the Lessor in its reasonable discretion, designated by the Lessee and
approved in writing by the Lessor in its reasonable discretion (or on such other basis and with
such other evidence of annual fair rental value as may be approved by the Lessor, in writing, in
its reasonable discretion). Said Certificate shall attach a copy of such appraisal or other evidence
of fair rental value;
(3) An opinion of legal counsel, in a form and content satisfactory to
the Lessor in its reasonable discretion, to the effect that the Financing Lease and Site Lease
amendment documenting the Substitution or Release have been duly authorized, executed and
delivered by the Lessee and constitute the valid and binding obligations of the Lessee enforceable
in accordance with their terms;
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(4) In the event of a Substitution, a policy of title insurance in form
and content acceptable to the Lessor in its reasonable discretion covering the Substituted
Property in an amount at least equal to the proportionate share of the Base Rental Payments and
Additional Rental Payments represented by the Substitution, insuring the Lessor's interest in the
Substituted Property, with a level of coverage comparable to that provided for the Leased Asset,
subject to Permitted Encumbrances;
(5) In the event of a Substitution, an opinion of legal counsel of the
Lessee, or endorsement by a title company, each in a form and content acceptable to the Lessor,
to the effect that the exceptions, if any, contained in the title insurance policy referred to in (4)
above do not interfere with the beneficial use and occupancy of the Substituted Property
described in such policy by the Lessee for the purposes of leasing or using the Substituted
Property;
(6) An Opinion of Counsel, nationally recognized as having expertise
in the exemption of interest from gross income under the Code, that the Substitution or Release
does not cause the interest with respect to any Proceeds Bonds that were the source of part or all
of the Facility Funds, or any Secured Bonds, to be includable in gross income of the Owners
thereof for federal income tax purposes; such Opinion of Counsel shall be provided by counsel
the Lessor selects and the Lessee shall bear the cost of such opinion;
(7) In the event of a Release, an endorsement to the Lessor's policy of
title insurance for the Leased Asset in a form and content satisfactory to the Lessor in its
reasonable discretion ensuring that such Release is valid and legal and does not alter, effect, or
diminish the Lessor's right, title, interest, or priority in the remaining portion of the Leased
Asset; and
(8) In the event of a Substitution, a Certificate of the Lessee stating
that the Lessee has complied with the covenants contained in subsections (1) and (2) of
Section 4.03(a) hereof with respect to the Substituted Property.
(c) No Substitution or Release shall be effective until the Lessor has
acknowledged, in writing, that the foregoing conditions to such Substitution or Release have
been met and the Parties have amended the Site Lease and this Financing Lease to reflect such
Substitution or Release.
SECTION 2.07 Construction, Acquisition and Installation of the Facility,
Construction Contracts.
(a) The Lessor hereby agrees to perform all necessary acts, including, but not
limited to, acquisition, design, permitting, entitlement, environmental review and documentation,
design, engineering, architecture, construction, equipping, machinery installation, construction
management, and administration, to complete and deliver a fully operational Facility ("Facility
Delivery") for the benefit of the Lessee. In order to implement this provision, the Lessor hereby
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appoints the Lessee as its agent for the purpose of performing all of the foregoing acts in
connection with the completion and delivery of an operational Facility; and the Lessee hereby
accepts such appointment and agrees to perform all acts necessary to achieve Facility Delivery,
including, but not limited to, entry into such engineering, design and construction contracts and
purchase orders as may be necessary, as agent for the Lessor, to achieve Facility Delivery. The
Lessee hereby agrees that, as such agent, it will cause the Facility Delivery to be diligently
completed. Notwithstanding the foregoing, it is hereby expressly understood and agreed that the
Lessor shall have no obligations whatsoever for Facility Delivery and shall be, except for
providing the Facility Funds, pursuant to the terms hereof, under no obligation of any kind or
character whatsoever for the payment of any costs or expenses incurred by the Lessee (whether as
an agent for the Lessor or otherwise) for any of the actions associated with the Facility Delivery,
or resulting from such actions, and that all such costs and expenses shall be paid by the Lessee,
regardless of whether Facility Funds are sufficient to cover such costs. The rights granted the
Lessor hereunder constitute a power coupled with an interest and cannot be revoked.
(b) The Lessee represents and warrants that all construction contracts and
subcontracts necessary for Facility construction have been or will be awarded pursuant to
competitive bidding and requirements applicable to the Lessee for similar construction projects.
(c) The Lessee represents and warrants that it intends to complete construction
of the Facility on or before December 1, 2018.
(d) In the event the Lessor is served with a stop payment notice in connection
with the Facility, the Lessee shall within thirty (30) days cause such stop payment notice to be
discharged or released, whether by payment of the sum requested in such stop payment notice, by
procurement of a stop payment notice release bond, or by any other legally available means. The
Lessor shall withhold from the Lessee amounts sufficient to pay the claim stated in the stop
payment notice until such stop payment notice is released and/or discharged to the Lessor's
satisfaction, in its sole and absolute discretion.
SECTION 2.08 Disbursement of Facility Funds.
(a) The Lessor shall disburse Facility Funds solely for the purposes set forth in
Exhibit G hereto. The aggregate sum of disbursements for each category set forth in Exhibit G
shall not exceed the corresponding amounts set forth in Exhibit G. Upon compliance with
disbursement conditions set forth herein and receipt of a written request for disbursement, the
Lessor will disburse a portion of Facility Funds to the Lessee for Facility Costs in amounts of at
least five thousand dollars ($5,000) up to a total aggregate amount not to exceed the Facility
Funds. All requests for payment shall be accompanied by information and documentation as may
be requested by the Lessor to determine the amount of Facility Funds to be disbursed.
(b) Each disbursement request shall specify one or more of the following for
the Facility Funds sought in the disbursement request:
reimbursement;
(1) The Lessee previously paid the Facility Costs and is requesting
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(2) The Lessee will pay the Facility Costs directly upon receipt of
funds from the Lessor; or
(3) The Lessor is requested to pay the disbursement for Facility Costs
directly to the party owed the funds instead of the Lessee.
(c) By submitting to the Lessor a disbursement request of the type set forth in
subparagraph (b)(1), above, the Lessee represents and warrants that it has previously paid the
Facility Costs indicated in such disbursement request. By submitting to the Lessor a
disbursement request of the type set forth in subparagraph (b)(2), above, the Lessee represents
and warrants that it will pay the Facility Costs indicated in such request directly upon receipt of
funds from the Lessor.
(d) No Facility Funds shall be disbursed unless and until the Lessor receives
documentation satisfactory to it demonstrating that the Lessee has incurred costs that constitute
both reasonable and necessary Facility Costs and which are consistent with the cost categories,
amounts and requirements described in this Financing Lease.
(e) Unless otherwise consented to in writing by the Lessor, the Lessee must
both: (1) begin Facility construction no later than six months after the Effective Date; (2)
complete the Facility in a manner in which the Lessee may legally occupy, use, and possess the
entirety of the Facility no later than December 1, 2018; and (3) submit final invoices to the
Lessor for the entire amount of the Facility Funds no later than thirty-five (35) months after the
Effective Date. If the Lessee fails to meet any of these conditions, the Lessor may, among other
legally available remedies, elect to withhold any and all undisbursed Facility Funds pursuant to
Section 2.10 hereof.
(f) Notwithstanding any contrary provisions of this Financing Lease or any
related documents, under no circumstances will the Lessor be obligated to make disbursements in
excess of the lesser of (i) actual Facility Costs incurred, or (ii) the amount of the Facility Funds.
(g) Not more than ninety-five percent (95%) of each invoice payable from
Facility Funds shall be disbursed until the Lessor receives a recorded notice of completion for the
Facility or other evidence of Facility completion satisfactory to the Lessor; and the Lessee has
met all conditions precedent to final disbursement set forth herein.
SECTION 2.09 Use of the Leased Asset..
The Lessee will not use, operate, occupy, or maintain the Leased Asset improperly,
carelessly, in violation of any applicable law or in a manner contrary to that contemplated hereby.
The Lessee shall provide all permits and licenses, if any, necessary for the operation, use, and/or
occupancy of the Leased Asset. In addition, the Lessee agrees to comply in all respects
(including, without limitation, with respect to the use, occupancy, maintenance and operation of
each portion of the Leased Asset) with all laws of the jurisdictions in which its operations
involving any portion of the Leased Asset may extend and any legislative, executive,
administrative or judicial body exercising any power or jurisdiction over the Leased Asset;
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provided, that the Lessee 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 Lessor in its reasonable
discretion, adversely affect the estate of the Lessor in and to the Leased Asset or its interest or
rights hereunder.
SECTION 2.10 Withholding of Facility Funds.
(a) The Lessor may withhold all or any portion of the Facility Funds until the
following has been cured by the Lessee or this provision is waived by the Lessor:
(1) The Lessee has violated any of the material terms, conditions,
representations, warranties, or covenants, as determined by the Lessor in its reasonable discretion,
of this Financing Lease, or
(2) An Event of Default has occurred.
(b) In the event that any portion of the Facility Funds is withheld from the
Lessee pursuant to this Section 2.10, the Lessor shall so notify the Lessee.
(c) If any portion of the Facility Funds is withheld pursuant to this Section
2.10, the Lessee remains obligated to repay the entire amount of the Facility Funds; provided
however, to the extent permitted hereunder, the Lessee may submit to the Lessor a Facility Funds
Reduction Request pursuant to Section 3.05.
SECTION 2.11. Disclaimer of Warranties.
THE LESSOR MAKES NO AGREEMENT, WARRANTY OR REPRESENTATION,
EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION,
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE
OF THE LEASED ASSET, OR WARRANTY WITH RESPECT THERETO. THE LESSEE
ACKNOWLEDGES THAT THE LESSOR IS NOT A BUILDER OR MANUFACTURER OF
ANY PORTION OF THE LEASED ASSET OR A DEALER THEREIN, THAT THE LESSEE
LEASES THE LEASED ASSET AS -IS, AFTER INVESTIGATION, IT BEING AGREED
THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE LESSEE.
IN NO EVENT SHALL THE LESSOR OR ITS SUCCESSORS OR ASSIGNEES BE LIABLE
FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGE IN
CONNECTION WITH OR ARISING OUT OF THIS FINANCING LEASE OR THE
EXISTENCE, FURNISHING, FUNCTIONING OR THE LESSEE'S USE OF THE LEASED
ASSET AS PROVIDED HEREBY.
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ARTICLE III
FINANCING LEASE TERMS
SECTION 3.01. Rental Payments.
The Lessee agrees to pay to the Lessor, its successors or assignees, without deduction or
offset of any kind, as rental for the use and occupancy of the Leased Asset, the following
amounts at the following times:
(a) Base Rental Payments.
The Lessee shall pay to the Lessor rental hereunder as Base Rental Payments with
respect to the Leased Asset at the times and in the amounts set forth in the Amortization
Schedule. The Lessor shall calculate the Amortization Schedule as of the Effective Date based
on (i) the Facility Funds amount, (ii) the initial term of this Financing Lease as set forth in
Section 3.09 hereto, and (iii) an interest rate of three and three -tenths percent (3.30%)
(collectively, the "Amortization Terms") and shall attach the Amortization Schedule as Exhibit E
hereto upon the Effective Date. Interest shall commence to accrue hereunder on the Effective
Date as set forth in the Amortization Schedule. In the absence of manifest error, the
Amortization Schedule shall be final, conclusive, and binding on the Lessee.
(1) The Lessee shall make bi-annual payments to the Lessor of the
Base Rental Payments due in the then current fiscal year (as set forth in the Amortization
Schedule), in accordance with instructions provided in the Lessor's invoices, not later than
February 1 and August 1 of such year commencing February 1, 2018; provided, however, that the
Lessee's failure to receive an invoice shall not relieve it of its obligation to make the payments
required herein. The Base Rental Payments as set forth in the Amortization Schedule shall be for
the right to use and occupy the Facility for the preceding six-month period, or portion thereof.
(2) Base Rental Payments shall consist of both an interest component
and a principal component based upon the total amount of Facility Funds. Interest shall accrue
on the entire principal balance of Facility Funds, whether or not disbursed, as set forth in the
Amortization Schedule; provided, however, that as an offset against interest paid on undisbursed
Facility Funds, the Lessee shall receive payment following the end of each Lessor Fiscal Year in
which undisbursed portions of the Facility Funds remain (excepting any undisbursed Facility
Funds that are subject to a Facility Funds Reduction as set forth in this Financing Lease) of the
lesser of: (i) the actual interest earned by the Lessor during such Lessor Fiscal Year on the
undisbursed portions of the Facility Funds, or (ii) the interest that would have accrued during
such Lessor Fiscal Year on the undisbursed portions of the Facility Funds calculated using the
interest rate of this Financing Lease. Said reimbursement shall be in the form of a check payable
to the order of the Lessee at the address set forth in Section 8.01 of this Financing Lease on or
about the ninetieth (90`") calendar day following the end of the Lessor Fiscal Year.
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(3) The Lessor may, in its sole and absolute discretion, revise the
Amortization Schedule (a "Revised Amortization Schedule") subsequent to the Effective Date to
(i) correct a computational error in the prior Amortization Schedule, (ii) to account for any
abatement of Base Rental Payments, (iii) to account for any partial prepayment permitted under
Section 3.05 or (iv) to account for any Facility Funds Reduction permitted under Section 3.05.
Any Revised Amortization Schedule shall be calculated (i) such that the Lessor will receive the
aggregate sum of all principal and interest Base Rental Payments it would have received had the
Amortization Schedule been calculated correctly based on the Amortization Terms and as of the
Effective Date, (ii) to account for the duration of any abatement period, (iii) to account for any
partial prepayment or (iv) to account for any Facility Funds Reduction, as applicable. The
Revised Amortization Schedule shall be incorporated herein automatically upon its completion
by the Lessor and in the absence of manifest error any such Revised Amortization Schedule shall
be final, conclusive, and binding on the Lessee.
(b) Additional Rental Payments.
The Lessee shall pay Additional Rental Payments in addition to the Base Rental
Payments to the Lessor as hereinafter provided:
(1) a payment of an Annual Fee due with the principal payment each
year during the term of this Financing Lease in an amount equal to three -tenths of one percent (.3%)
of the outstanding principal component of the remaining Base Rental Payments as of the first day of
the month prior to the month in which the principal payment is due as set forth in the Amortization
Schedule. Such Annual Fee is due on August 1 of each year; and
(2) amounts in each year as shall be required by the Lessor for the
payment of extraordinary expenses of the Lessor in connection with an Event of Default, the
enforcement of this Financing Lease, or any amendments thereto requested by the Lessee, including
all expenses, fees of accountants, trustees, attorneys, litigation costs, insurance premiums, taxes,
assessments (if any), and all other extraordinary costs of the Lessor. Such additional payments shall
be billed by the Lessor from time to time, together with any appropriate supporting documents for
such extraordinary costs or expenses; and
(3) Additional Rental Payments (other than the Annual Fee which is to
be paid as provided in subsection 1 above) are due within thirty (30) days from the date of the
Lessor's invoice. Any amounts not promptly paid shall accrue interest at the lesser of twelve
percent (12%) per annum or the maximum rate permitted by law.
(4) Unless expressly waived by the Lessor in writing, in the event the
Lessee fails to cure any Reporting Covenants noncompliance as set forth in Section 6.03(0 or fails
to cure any Replacement Lease Covenant noncompliance within 30 days after receipt by the Lessee
of the replacement site lease and financing lease from the Lessor as set forth in Section 6.06 of this
Financing Lease, an amount equal to one quarter of one percent (0.25%) of the outstanding
principal component of the Base Rental Payments shall automatically be imposed monthly as
liquidated damages charged to the Lessee, and not as a penalty (the "Liquidated Damages Charge"),
18
and shall continue to be imposed throughout the Liquidated Damages Period. The Lessee shall be
obligated to pay the Liquidated Damages Charge as Additional Rental Payments. Such Additional
Rental Payment shall be reflected in an invoice from the Lessor to the Lessee. The Lessee agrees
that, under the circumstances existing as of the date of this Financing Lease, such Liquidated
Damages Charge represents a reasonable estimate of the costs and expenses the Lessor will incur as
a result of the Lessee's noncompliance with the Reporting Covenants and/or the Replacement Lease
Covenant. Nothing herein shall be construed as an express or implied agreement by the Lessor to
forbear on its exercise of any other rights or remedies provided by this Financing Lease, as a waiver
of such rights or remedies, or as a waiver of any default or Event of Default under this Financing
Lease.
(c) Consideration.
Such payments of Base Rental Payments and Additional Rental Payments for each
Lease Year or portion thereof during the term of this Financing Lease shall constitute the total
Rental Payments for such Lease Year or portion thereof and shall be paid or payable by the Lessee
for and in consideration for the right of the use and possession of, and the continued quiet use and
enjoyment of, the Leased Asset. The Lessee represents and warrants that it has determined, and
hereby agrees with the Lessor, that the amount of such total Rental Payments for each Lease Year is
consistent with, and does not exceed, the fair rental value of the Facility. In making such
determination, consideration has been given to the costs of constructing the Facility to be financed
with Facility Funds, the value of the Site, the other obligations set forth in this Financing Lease, the
uses and purposes which may be served by the Facility and the benefits therefrom which will accrue
to the Lessee and the general public.
(d) Payment: Credit.
Amounts not paid when due hereunder shall remain due and payable until
received by the Lessor, except as provided in Section 3.04 hereof, and to the extent permitted by
law shall bear simple interest at the rate of the lesser of (i) twelve percent (12%) per annum or
(ii) the maximum rate authorized by law from the date when the same is due hereunder until the
same shall be paid. Notwithstanding any dispute between the Lessee and the Lessor, the Lessee
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 any such dispute. In the event of a
determination that the Lessee was not liable for said Rental Payments or any portion thereof, said
payments or excess of payments, as the case may be, shall, at the option of the Lessee, be
credited against subsequent Rental Payments due hereunder or be refunded at the time of such
determination.
(e) A one-time Origination Fee in the amount of forty thousand dollars
($40,000) shall be due and payable by the Lessee on the Effective Date.
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SECTION 3.02. Lessee Covenant to Budget.
The Lessee hereby covenants to take any and all action as may be necessary to include all
Base Rental Payments and Additional Rental Payments due under this Financing Lease in its
Operating Budget for each Fiscal Year commencing after the Effective Date and to make all
necessary appropriations for such Base Rental Payments and Additional Rental Payments. In
addition, to the extent permitted by law, the Lessee hereby covenants to take such action as may
be necessary to amend or supplement the budget appropriations for payments under this
Financing Lease at any time and from time to time during any Fiscal Year in the event that the
actual Base Rental Payments and Additional Rental Payments to be paid in any fiscal year exceed
the appropriations then contained in the Lessee's Operating Budget.
SECTION 3.03. Application of Rental Payments.
All Base Rental Payments received shall be applied first to the interest component of
Base Rental Payments, then to the principal component of Base Rental Payments due hereunder
(including any prepayment premium components) and thereafter to all Additional Rental
Payments due hereunder, but no such application of any payments which are less than the total
Rental Payments due and owing shall be deemed a waiver of any default hereunder.
SECTION 3.04. Base Rental Abatement Due to Damage, Destruction, Title Defect
or Condemnation.
Except to the extent of (i) Net Proceeds received pursuant to use and occupancy
insurance, and (ii) amounts, if any, otherwise legally available to the Lessee for payments due
hereunder, during any period in which, by reason of material damage, destruction, title defect or
condemnation there is substantial interference with the use and possession by the Lessee of any
portion of the Leased Asset, Base Rental Payments due hereunder with respect to the Leased
Asset shall be abated in an amount proportionate to the annual fair rental value of the portion of
the Leased Asset in respect of which there is substantial interference. In the event the Lessee
shall assign, transfer or sublease any or all of the Leased Asset or other rights hereunder, as
permitted by Section 2.04 hereof, for purposes of determining the annual fair rental value
available to pay Base Rental Payments and Additional Rental Payments, annual fair rental value
of the Leased Asset shall first be allocated to this Financing Lease as provided in subsection (d)
of Section 2.04. Any abatement of Base Rental Payments pursuant to this Section shall not be
considered an Event of Default. The Lessee waives the benefits of Civil Code sections 1932(2)
and 1933(4) and any and all other rights to terminate this Financing Lease by virtue of any such
interference and this Financing Lease shall continue in full force and effect. Such abatement
shall continue for the period commencing with the date of such damage, destruction, title defect
or condemnation and ending with the substantial completion of the work of repair or replacement
of the portions of the Leased Asset so damaged, destroyed, defective or condemned. In the event
of any such abatement, the Lessor shall prepare a Revised Amortization Schedule as set forth in
paragraph 3.01(a)(3) of this Financing Lease.
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In the event that Base Rental Payments are abated, in whole or in part, pursuant to this
Section 3.04 due to damage, destruction, title defect or condemnation of any part of the Leased
Asset and the Lessee is unable to repair, replace or rebuild the Leased Asset from the Net
Proceeds, if any, the Lessee agrees to promptly apply for and to use its best efforts to obtain any
appropriate State and/or federal disaster relief in order to obtain funds to repair, replace or
rebuild the Leased Asset.
SECTION 3.05. Limitations on Prepayment and Facility Funds Reductions.
(a) No Right to Early Prepayment. The Lessee is not permitted to prepay all
or a portion of the outstanding principal component of the Base Rental Payments during the
period commencing with the Effective Date and ending with the date that is ten (10) years after
the Effective Date (the "Prohibited Prepayment Period").
(b) Authorized Prepayment Period. At any time, after ten (10) years from the
Effective Date (the "Authorized Prepayment Period"), the Lessee, upon satisfaction of the
conditions of this Section 3.05, may prepay all or a portion of the outstanding principal amount
of the Base Rental Payments as follows: (i) if the prepayment date is on or after ten (10) years
after the Effective Date but prior to eleven (11) years after the Effective Date, the prepayment
amount shall be one hundred two percent (102%) of the principal amount being prepaid; (ii) if
the prepayment date is on or after eleven (11) years after the Effective Date but prior to twelve
(12) years after the Effective Date, the prepayment amount shall be one hundred one percent
(101%) of the principal amount being prepaid; and (iii) if the prepayment date is on or after
twelve (12) years after the Effective Date, the prepayment amount shall be one hundred percent
(100%) of the principal amount being prepaid. Further, the Lessee shall pay to the Lessor all
interest accrued and unpaid on the prepayment amount through the date of prepayment, plus any
Additional Rental Payments, plus the pro rata portion of the Annual Fee accrued since the last
Annual Fee Payment.
(c) Facility Funds Reduction. During the Prohibited Prepayment Period the
amount of undisbursed Facility Funds will not be reduced and will continue to accrue interest and
other charges as set forth in this Financing Lease. During the Authorized Prepayment Period,
upon satisfaction of the conditions of this Section 3.05, the Lessee may obtain a Facility Funds
Reduction. For any Facility Funds Reduction obtained (i) on or after ten (10) years after the
Effective Date but prior to eleven (11) years after the Effective Date, the Lessee shall pay to the
Lessor a premium (a "Facility Funds Reduction Premium") of two percent (2%) of the amount of
Facility Funds Reduction; (ii) on or after eleven (11) years after the Effective Date but prior to
twelve (12) years after the Effective Date, the Lessee shall pay to the Lessor a Facility Funds
Reduction Premium of one percent (1%) of the amount of Facility Funds Reduction; and (iii) on
or after twelve (12) years from the Effective Date, no Facility Funds Reduction Premium shall be
due. Further, the Lessee shall pay to the Lessor all interest accrued and unpaid on the Facility
Funds Reduction amount through the date of the Facility Funds Reduction, plus any Additional
Rental Payments, plus the pro rata portion of the Annual Fee accrued since the last Annual Fee
Payment.
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(d) Written Request Required. The Lessee must provide the Lessor with its
Prepayment Request or Facility Funds Reduction Request in writing and at least ninety (90) days
prior to the requested prepayment or reduction date. The Lessor will not accept any prepayment
funds from the Lessee, or implement a Facility Funds Reduction, unless and until all applicable
requirements of this Section 3.05 have been met.
(e) Amendment for Partial Prepayment or Facility Funds Reduction. If during
the Authorized Prepayment Period the Lessee prepays a portion of the outstanding principal
component of the Base Rental Payments or makes a Facility Funds Reduction, then the Lessor
and the Lessee shall enter into an amendment to this Financing Lease reflecting the terms of the
prepayment or Facility Funds Reduction, including a Revised Amortization Schedule, and the
Lessee shall pay to the Lessor all interest accrued and unpaid on the prepayment amount or
Facility Funds Reduction amount through the date of prepayment or Facility Funds Reduction,
plus the portion of the outstanding principal component of the Base Rental Payments approved
for prepayment, plus any applicable prepayment premium or Facility Funds Reduction Premium,
plus any Additional Rental Payments, plus the pro rata portion of the Annual Fee accrued since
the last Annual Fee Payment. The Lessor will not accept any prepayment, and any Facility Funds
Reduction will not take effect, until the Parties have executed such amendment to this Financing
Lease.
(f) Prepayment Agreement for Full Prepayment. In the event the Lessee
elects to prepay the entire outstanding amount of Rental Payments as set forth in paragraph
3.05(a), the Parties shall enter into a prepayment agreement (a "Prepayment Agreement") in form
and content acceptable to the Lessor in its sole and absolute discretion. The Lessor will not
accept a full prepayment, and the Lessee's obligations under this Financing Lease will not
terminate as set forth in Section 3.09 of this Financing Lease, until the Parties have executed a
Prepayment Agreement.
SECTION 3.06. Obligation to Make Rental Payments.
The agreements and covenants on the part of the Lessee contained herein 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 Lessee to take such action and do such things as are required and to
the extent permitted by law in the performance of the official duty of such officials to enable the
Lessee to carry out and perform the agreements and covenants contained herein agreed to be
carried out and performed by the Lessee.
SECTION 3.07. Fair Rental Value.
Base Rental Payments for each Lease Year during the term of this Financing Lease shall
be paid by or on behalf of the Lessee in each Lease Year for and in consideration of the right of
use and occupancy of the Leased Asset during each such Lease Year. The Parties hereto have
agreed and determined that the total Base Rental Payments and Additional Rental Payments for
each Lease Year represent the fair rental value for the right of use and possession and the
continued quiet use and enjoyment of the Leased Asset for each such Lease Year. In making
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such determination, consideration has been given to costs related to the Leased Asset, other
obligations of the parties under this Financing Lease, the uses and purposes that may be served
by the Leased Asset, and the benefits therefrom which will accrue to the Lessee and the general
public.
SECTION 3.08 Survival of Tax Provisions.
Notwithstanding any provision in this Financing Lease to the contrary, the obligation to
comply with all tax -related requirements set forth in Sections 6.16 shall survive termination of
this Financing Lease or prepayment of the Base Rental Payments hereunder.
SECTION 3.09. Commencement and Termination of the Financing Lease: Vesting
of Title.
(a) The term of this Financing Lease shall commence on the Effective Date,
and shall end on the Expiry Date, unless the Expiry Date is extended or is sooner terminated as
hereinafter provided. If on the Expiry Date the rental payable hereunder shall not be fully paid,
or if the rental payable hereunder shall have been abated at any time and for any reason, then (i)
the term of this Financing Lease shall be extended automatically and without amendment until
the date on which the rental payable hereunder shall be fully paid, (ii) the Expiry Date shall be
redefined to be that date, and (iii) the Lessor shall prepare a Revised Amortization Schedule as
set forth in Section 3.01(a)(3). Subject to the provisions of Section 3.05 hereof, upon payment of
all outstanding Base Rental Payments, Additional Rental Payments and all other amounts owed
to the Lessor, the Financing Lease shall terminate except for the obligations of the Lessee
pursuant to tax covenants, including but not limited to, Sections 3.08 and 6.16, indemnification
covenants, including but not limited to Section 7.01, and choice of law and venue terms under
Section 8.08.
(b) Upon the early termination or timely expiration of this Financing Lease
and the Site Lease (other than as provided in Article VIII), full and complete title to the Leased
Asset shall vest in the Lessee, free of any leasehold or other encumbrance established hereunder
or under the Site Lease. Upon such termination or expiration, the Lessor hereby agrees, upon the
Lessee's written request, to execute a quitclaim deed in form and content satisfactory to the
Lessor in its reasonable discretion, quitclaiming the Lessor's leasehold interest in the Leased
Asset pursuant to the Site Lease and this Financing Lease. The Lessor shall provide an original
copy of such quitclaim deed to the Lessee within thirty (30) calendar days of the Lessee's written
request.
SECTION 3.10. Assignment by the Lessor.
The parties understand that certain of the rights of the Lessor hereunder may, at the
Lessor's sole and absolute discretion, be assigned to the Trustee. Accordingly, the Lessee agrees
to make all payments due hereunder to the Trustee when so directed by the Lessor,
notwithstanding any claim, defense, setoff or counterclaim whatsoever (whether arising from a
breach hereof or otherwise) that the Lessee may from time to time have against the Lessor. The
Lessee agrees to execute all documents, including notices of assignment and chattel mortgages or
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e
financing statements, which may be requested by the Lessor or the Trustee, in their sole and
absolute discretion, to protect their interests in the Leased Asset during the term hereof.
SECTION 3.11. Assignment by the Lessee.
This Financing Lease and the interest of the Lessee in the Leased Asset may not be
assigned or encumbered by the Lessee except as permitted by Section 2.04 hereof.
SECTION 3.12. Net Lease.
It is the purpose and intent of the Lessor and the Lessee that lease payments hereunder
shall be absolutely net to the Lessor so that this Financing Lease shall yield to the Lessor the
lease payments, free of any charges, assessments or impositions of any kind charged, assessed or
imposed on or against the Leased Asset, and without counterclaim, deduction, defense,
deferment or set-off by the Lessee except as herein specifically otherwise provided. The Lessor
shall not be expected or required to pay any such charge, assessment or imposition, or be under
any obligation or liability hereunder except as herein expressly set forth, and all costs, expenses
and obligations of any kind relating to the maintenance and operation of the Leased Asset which
may arise or become due during the term of this Financing Lease shall be paid by the Lessee.
ARTICLE IV
MAINTENANCE; TAXES;
INSURANCE AND OTHER CHARGES
SECTION 4.01. Maintenance of the Leased Asset by the Lessee.
The Lessee agrees that, at all times during the term hereof, it will, at its own cost and
expense, maintain, preserve and keep the Leased Asset and every portion thereof in good repair
and working order as necessary to operate the Leased Asset for its intended purpose in
compliance with all laws, rules, regulations, building codes, health and safety codes, and
ordinances, subject to normal wear and tear, and that it will from time to time make or cause to
be made all necessary and proper repairs, replacements and renewals necessary to maintain the
Leased Asset in such a condition. The Lessor shall have no responsibility or obligation for any
of these matters or for the making of additions or improvements to the Leased Asset.
SECTION 4.02. Taxes, Other Governmental Charges and Utility Charges.
The Parties hereto contemplate that the Leased Asset will be used for public purposes by
the Lessee and, therefore, that the Leased Asset will be exempt from all taxes presently assessed
and levied with respect to real and personal property, respectively. In the event that the use,
possession or acquisition by the Lessee or the Lessor of the Leased Asset is found to be subject to
taxation in any form, the Lessee will pay during the term hereof, as the same respectively become
due, all taxes and goverrunental charges of any kind whatsoever that may at any time be lawfully
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assessed or levied against or with respect to the Leased Asset and any other property acquired by
the Lessee in substitution for, as a renewal or replacement of, or a modification, improvement or
addition to, the Leased Asset, as well as all gas, water, steam, electricity, heat, power, air
conditioning, telephone, utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Leased Asset; provided, that with respect to any governmental
charges or taxes that may lawfully be paid in installments over a period of years, the Lessee shall
be obligated to pay only such installments as are accrued during such time as this Financing
Lease is in effect.
SECTION 4.03. Insurance.
(a) The Lessee shall procure or cause to be procured and maintain or cause to
be maintained throughout the term hereof the specific insurance policies required hereunder
and/or insurance against the following risks in the following respective amounts:
(1) Insurance against loss, damage or destruction to the Leased Asset
caused by fire, lightning, wind or rainstorm, earthquake, with an extended coverage endorsement
covering the risk of vandalism and malicious mischief, sprinkler system leakage and boiler loss;
provided that earthquake coverage shall be required only if available from reputable insurers at
commercially reasonable rates. In the event the Lessee is unable to obtain earthquake coverage on
the Leased Asset which it previously has maintained, it will promptly so notify the Lessor. The
insurance described in this paragraph (1) shall be in an amount equal to the lesser of (i) replacement
cost (without deduction for depreciation) of improvements located or to be located on the Leased
Asset or (ii) the remaining unpaid principal amount owed under this Financing Lease plus the
amount of use and occupancy coverage described in paragraph (2) below, except that such
insurance may be subject to deductible clauses of not to exceed the first one hundred thousand
dollars ($100,000) subject to the Lessor's approval of the amount of any one loss (or ten percent
(10%) of the amount insured, in the case of earthquake). Insurance described in this paragraph (1)
and in paragraph (2) below may be in the form of a policy which covers the Leased Asset and one
or more additional parcels of real property insured by the Lessee; provided that the amount of
coverage available thereunder shall be at least equal to the cumulative replacement values of the
Leased Asset and any other such property which is the subject of a lease, installment purchase or
other financing arrangement ("Financed Property") for which bonds, certificates of participation or
other obligations shall have been issued ("Obligations") plus the amount of use and occupancy
coverage required by paragraph (2) below; in the event the Lessee elects to obtain insurance for the
Leased Asset and one or more additional parcels of real property and the amount of the insurance
proceeds available to pay all claims thereunder is not sufficient to cover the replacement values of
all such properties, then any such proceeds shall be used first to rebuild or repair the Leased Asset
and all Financed Properties or to repay all Obligations and the Secured Bonds. The Lessor shall be
named as loss payee.
(2) Rental interruption insurance or use and occupancy insurance against
loss, total or partial, of the use and occupancy of the Leased Asset as a result of any of the hazards
covered by the insurance required by paragraph (1) hereof, sufficient to pay the Base Rental
Payments due under this Financing Lease for a period of at least six (6) months beyond the period
25
required to rebuild the Leased Asset; provided, that the amount of such insurance need not exceed
the total remaining Base Rental Payments attributable to the Leased Asset; provided further, that
such insurance may be part of a policy permitted under paragraph (1) above, which policy may
provide that insurance proceeds paid for coverages contemplated by paragraph (1) above may
reduce amounts payable under coverage required by this paragraph (2), and vice -versa; the Lessee
may obtain rental interruption or use and occupancy insurance covering the Leased Asset as well as
other property owned by the Lessee, provided that the cumulative amount thereof is at least equal to
the cumulative amount of rental interruption or use and occupancy insurance required by this
paragraph (2) and any agreements relating to Financed Property in respect of which Obligations are
outstanding. The Lessor shall be named as a loss payee.
(3) A standard, commercial general liability insurance policy or policies
in protection of the Lessor, the Lessee and their directors, officers and employees and, when
requested by the Lessor, the Trustee, indemnifying and defending such parties against direct or
contingent loss or liability for damages for personal injury, death or property damage related to the
possession, operation or use of the Leased Asset and the Facility, with a minimum combined single
limit of one million dollars ($1,000,000) for personal injury or death of one or more persons, and
for property damage, in each accident or event (subject to a deductible clause of not to exceed one
hundred thousand dollars ($100,000) or such greater amount as may be covered by any self-
insurance or self -funding method or plan permitted by this Section). The Lessor shall be named as
an additional insured, and when requested by the Lessor, the Trustee shall also be named as an
additional insured.
(4) In the event of commencement of a work of improvement in, on, or
about the Leased Asset, a standard, commercially reasonable, builder's risk insurance policy
naming the Lessor as a loss payee procured by either the Lessee or the direct contractor(s) for such
work of improvement, in an amount equal to the amount of the construction contract(s) for such
work of improvement.
(5) In the event of commencement of a work of improvement in, on, or
about the Leased Asset, a standard, commercially reasonable, commercial general liability policy of
the direct contractor(s) for such work of improvement with a minimum combined single limit of
one million dollars ($1,000,000) for personal injury or death of one or more persons, and for
property damage, in each accident or event (subject to a deductible clause of not to exceed one
hundred thousand dollars ($100,000). The Lessor and Lessee shall each be named as an additional
insured under such insurance policy.
(6) In the event of commencement of a work of improvement in, on, or
about the Leased Asset, a standard, commercially reasonable, worker's compensation insurance
policy of the direct contractor(s) for such work of improvement in an amount equal to at least the
required statutory minimum. The Lessor and Lessee shall each be named as an additional insured
under such insurance policy.
The Lessee shall collect, adjust and receive all moneys which may become due
and payable under any policies contemplated by paragraphs (1) and (2) above, may compromise
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any and all claims thereunder and, subject to the provisions of Section 4.06 hereof, shall transfer
such Net Proceeds to the Lessor for application as provided herein. Neither the Lessor nor the
Trustee shall be responsible for the sufficiency of any insurance herein required. The Lessor and
the Trustee shall be fully protected by the Lessee for any harm or loss resulting from accepting
payment on account of such insurance or any adjustment, compromise or settlement of any loss
agreed to by the Lessee, with the prior consent of the Lessor, which consent shall not be
unreasonably withheld.
(b) Any insurance policy issued pursuant to paragraph (1) of Section 4.03(a)
shall be so written or endorsed as to make losses, if any, payable to the Lessee and the Lessor as
their respective interests may appear and the Net Proceeds of the insurance required by that
paragraph shall be applied as provided in Section 4.06 hereof. The Net Proceeds, if any, of the
insurance policy described in that paragraph shall, to the extent that such Net Proceeds are paid
on account of loss or damage to the Leased Asset, be payable and applied as described in Section
4.06. The Net Proceeds, if any, of the insurance policy described in paragraph (2) of Section
4.03(a) shall, to the extent that such proceeds relate to the use and occupancy of the Leased
Asset, be payable to the Lessor. Each insurance policy provided for in the Financing Lease shall
contain a provision to the effect that the insurance company shall not cancel the policy or modify
it materially and adversely to the interests of the Lessor without first giving written notice thereof
to the Lessor at least sixty (60) days in advance of such intended cancellation or modification.
(c) The Lessee shall provide copies of any policy endorsement and file a
Certificate of the Lessee with the Lessor, not later than July 1 of each year commencing July 1,
2018 certifying that the insurance required by this Section is in full force and effect and that the
Lessor is named as loss payee and additional insured on each insurance policy which this
Financing Lease requires to be so endorsed.
SECTION 4.04. Advances.
In the event the Lessee fails to maintain the full insurance coverage as required by
Section 4.03, fails to keep the Leased Asset in good repair and operating condition as required by
Section 4.01, or fails to pay the taxes, utility charges, or other applicable governmental charges as
required by Section 4.02, the Lessor may (but shall be under no obligation to) purchase the
required policies of insurance and pay the premiums on the same, may make such repairs or
replacements as are necessary and provide for payment thereof, or may pay such taxes, utility
charges, or other applicable governmental charges; and all amounts so advanced therefor by the
Lessor shall become Additional Rental Payments.
SECTION 4.05. Title Insurance.
The Lessee covenants and agrees to deliver or cause to be delivered to the Lessor upon
recordation of this Financing Lease and the Site Lease, an ALTA policy or policies of title
insurance with all endorsements required by the Lessor in its sole and absolute discretion with
respect to the Leased Asset with liability in the aggregate amount equal to the amount of the
Facility Funds. Such policy or policies shall name the Lessor as the insured and shall insure the
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Lessor's interests in the Leased Asset subject only to the Permitted Exceptions and such other
exceptions as the Lessor may consent to in writing in its sole and absolute discretion.
SECTION 4.06. Damage, Destruction, Title Defect and Condemnation; Use of Net
Proceeds.
(a) If prior to the termination of the term hereof (i) the Leased Asset or any
other improvements in or on the Leased Asset are damaged or destroyed (each of which is
hereinafter called "Damaged Improvements") by a peril covered by a policy of insurance
described in Section 4.03(a)(1) hereof (an "Insured Peril"); or (ii) title to, or the right to
possession, use or occupancy of, the Leased Asset, or any portion thereof, or the estate of the
Lessee or the Lessor in the Leased Asset, or any portion thereof, is defective or shall be taken
under the exercise of the power of eminent domain by any governmental body or by any person
or firm or corporation acting under governmental authority, then the Lessee and the Lessor will
cause the Net Proceeds of any loss or claim paid by an insurer under an insurance policy (other
than rental interruption insurance pursuant to Section 4.03(a)(2) which shall be directly
transferred to the Lessor for deposit pursuant to Section 4.03), or condemnation award, to be
transferred to the Lessor and applied as follows:
(1) Net Proceeds Exceeding Costs.
Within one hundred twenty (120) days of the date of said Insured Peril, the
Lessee shall obtain written estimate(s) of the (i) cost of the repair, replacement and reconstruction
of the Damaged Improvements in a condition substantially equivalent to the condition of the
Damaged Improvements immediately prior to the occurrence of said Insured Peril (collectively
referred to herein as the "Reconstruction"), and (ii) Net Proceeds available to pay such costs.
Copies of such estimate(s) shall be provided to the Lessor. If the one hundred twenty (120) day
period is insufficient to obtain said estimates, the period may be reasonably extended by the Lessee
upon the approval of the Lessor, in its reasonable discretion. If the Net Proceeds (not including
proceeds of any policy of title insurance or condemnation award received by the Lessor in respect
of the Leased Asset) exceed the estimated costs of Reconstruction, the Damaged Improvements
shall be repaired, replaced and reconstructed to the same or better quality as existed before the
damage occurred. The Lessee shall commence and manage the Reconstruction and shall complete
the Reconstruction as soon as reasonably possible after the occurrence of such damage. Any
balance of Net Proceeds remaining after the Reconstruction has been completed shall be transferred
to the Lessor for the payment of unpaid Base Rental Payments and Additional Rental Payments.
Net Proceeds remaining after payment of the amounts specified in the previous sentence shall be
transferred to the Lessee.
(2) Costs Exceeding Net Proceeds.
If the estimated costs of Reconstruction exceed the Net Proceeds (not
including proceeds of any policy of title insurance or condemnation award received by the Lessor in
respect of the Leased Asset), the Lessee, in its sole discretion, may elect to budget and appropriate
28
b
to the Reconstruction the amount of such excess, and to manage the Reconstruction as set forth in
Section 4.06(a)(5). The Lessee shall exercise this election by written notice thereof delivered to the
Lessor within thirty (30) days after the Lessee obtains the written estimate(s).
(3) Net Proceeds Sufficient to Prepay All Unpaid Base Rental Payments.
If the Lessee does not exercise the election to reconstruct pursuant to Section
4.06(a)(2) and Net Proceeds are at least sufficient to prepay all unpaid Base Rental Payments, such
Net Proceeds shall be transferred to the Lessor to prepay such Base Rental Payments. If the Net
Proceeds (not including proceeds of any policy of title insurance or condemnation award received
by the Lessor in respect of the Leased Asset) exceed the amount necessary to prepay the unpaid
Base Rental Payments and any due and owing Additional Rental Payments, the Lessee shall be
entitled to the amount of proceeds remaining after such prepayment.
(4) Net Proceeds Insufficient to Prepay All Unpaid Base Rental
Payments.
If the Lessee does not exercise the election to reconstruct pursuant to Section
4.06(a)(2) and Net Proceeds are insufficient to prepay the unpaid Base Rental Payments hereunder,
the Lessee, in its sole discretion, may elect to budget and appropriate funds to cause the prepayment
of the Base Rental Payments and due and owing Additional Rental Payments and the Net Proceeds,
together with such funds, shall be transferred to the Lessor with directions to apply the proceeds to
the prepayment of the Base Rental Payments and due and owing Additional Rental Payments;
provided, that if the Lessee elects not to appropriate funds for such prepayment, the Lessee shall
apply Net Proceeds (not including proceeds of any policy of title insurance or condemnation award
received by the Lessor in respect of the Leased Asset) to the Reconstruction. If the Lessee, in its
sole discretion, elects to budget or appropriate funds for the prepayment of the unpaid Base Rental
Payments and due and owing Additional Rental Payments, the Lessee shall transfer such funds to
the Lessor for the prepayment of Base Rental Payments and due and owing Additional Rental
Payments.
(5)
Management of Reconstruction.
If the Leased Asset or any part thereof becomes Damaged Improvements,
the Lessee shall promptly cause, manage and supervise the Reconstruction.
(b) The proceeds of any policy of title insurance or condemnation award
received by the Lessor in respect of the Leased Asset shall be applied to prepay Base Rental
Payments.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE LESSEE
SECTION 5.01. Organization; Authority; Application Correct.
The Lessee is duly organized and existing under the laws of the State and has all
necessary power and authority to enter into and perform its duties under this Financing Lease.
The Lessee's application for the financing, including all attachments, amendments and
clarifications submitted by the Lessee to the Lessor, were accurate and correct at the time of
submission and are accurate and correct as of the Effective Date.
SECTION 5.02. Agreement Valid and Binding; Approval by the Lessee.
This Financing Lease has been duly authorized, executed and delivered by the Lessee and
constitutes the legal, valid and binding obligation of the Lessee, enforceable in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or limiting creditors' rights
generally. The governing body of the Lessee has authorized the Lessee to enter into this
Financing Lease by duly adopting a resolution or other appropriate action.
SECTION 5.03. No Conflict in Execution of Financing Lease.
The execution and delivery by the Lessee of this Financing Lease and the Site Lease and
compliance with the provisions hereof and thereof will not conflict with or constitute a breach of
or default by the Lessee under any law, administrative regulation, court decree, resolution,
charter, by-law or any agreement to which the Lessee is subject or by which it is bound or by
which its properties may be affected in a manner that would adversely affect the enforceability of
this Financing Lease or the Site Lease, or the Lessee's ability to perform its obligations under this
Financing Lease or the Site Lease.
SECTION 5.04. No Litigation.
There is no action, suit, proceeding or investigation at law or in equity before or by any
court or governmental agency or body pending or threatened against the Lessee to restrain or
enjoin the execution or delivery of this Financing Lease, or in any way contesting or impacting
the validity of this Financing Lease, contesting the powers of the Lessee to enter into or perform
its obligations under this Financing Lease, or that would in any way impact the Lessee's ability to
perform its obligations under this Financing Lease.
SECTION 5.05. No Breach or Default.
The Lessee is not in breach of or in default under any applicable law or administrative
regulation of the State or the United States, the Constitution of the State (including article XVI,
section 18 thereof), any applicable judgment or decree, any loan agreement, indenture, bond,
30
note, resolution, lease, agreement or other instrument to which the Lessee is a party or is
otherwise subject which, if not resolved in favor of the Lessee, would have a material adverse
impact on the Lessee's ability to perform its obligations under this Financing Lease and no event
has occurred and is continuing which, with the passage of time or the giving of notice, or both,
would constitute a default or an event of default under any such instrument.
SECTION 5.06. No Consent, Approval or Permission Necessary.
No consent or approval of any trustee or holder of any indebtedness of the Lessee, and no
consent, permission, authorization, order or licenses of, or filing or registration with, any
governmental authority is necessary in connection with the execution and delivery of this
Financing Lease or the consummation of any transaction contemplated herein, except as have
been obtained or made and as are in full force and effect.
SECTION 5.07. Information Submitted to the Lessor.
The information relating to the Lessee, the Site, the Facility and the Leased Asset
submitted by the Lessee to the Lessor, including, but not limited to, all information in the
Lessee's application for financing, was true at the time submitted to the Lessor and as of the
Effective Date, remains true and correct in all material respects, and such information does not
contain any untrue or misleading statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the circumstances under
which they were made.
SECTION 5.08. Financial Statements of the Lessee.
The Lessee's financial statements that have been furnished to the Lessor were prepared in
conformity with generally accepted accounting principles, consistently applied, applicable to or
appropriate for an entity such as the Lessee and fairly present in all material respects the financial
condition of the Lessee as of the date thereof and the results of its operations for the period
covered thereby. There has been no material adverse change in the business, condition (financial
or otherwise) or operations of the Lessee since the date of such financial statements.
SECTION 5.09. Licenses, Permits and Approvals for Operation or Occupancy of
Leased Asset and the Facility.
The Lessee has obtained all licenses, permits and approvals from any governmental
agency or authority having jurisdiction over the Lessee required for the operation, use, or
occupancy of the Leased Asset. The Lessee has obtained, or has applied for and will obtain as
soon as practicable, all licenses, permits and approvals from any governmental agency or
authority having jurisdiction over the Lessee required to commence construction of the Facility,
for Facility Delivery, and for the operation, use, or occupancy of the Facility.
31
SECTION 5.10. Continuing Validity of Representations and Warranties.
Unless the representations and warranties set forth in this Article V are limited by their
express terms to a specific time period or point in time, the foregoing representations and
warranties are true, accurate, and correct as of the Effective Date and shall continue to be true,
accurate, and correct throughout the term of this Financing Lease.
ARTICLE VI
COVENANTS OF THE LESSEE
SECTION 6.01. Punctual Payment and Performance.
The Lessee hereby covenants to punctually pay, or cause to be paid, all payments required
hereunder when due and in all other respects in strict conformity with the terms of this Financing
Lease, and to faithfully observe and perform all of the terms, conditions, covenants and
requirements of this Financing Lease.
SECTION 6.02. Books and Accounts.
The Lessee hereby covenants that it will keep proper books of record and accounts in
which complete and correct entries shall be made of all transactions relating to the Leased Asset
and the Facility (which may be consolidated with other activities of the Lessee). Such books of
record and accounts shall at all times during business hours be subject to the inspection of the
Lessor or its designee. To the extent that any continuing disclosure report required by Section
6.15 herein sets out the information required by subsections (a) and (c) of Section 6.03, the
Lessee may submit a copy of the information and materials required by such continuing
disclosure reports instead of providing separate statements setting forth the requested
information.
SECTION 6.03. Financial Statements, Budgets: Notification to the Lessor.
(a) The Lessee shall prepare and file with the Lessor annually as soon as
practicable, but in any event not later than two hundred forty (240) days after the close of each
Fiscal Year, so long as this Financing Lease has not been discharged by the Lessor, an audited
financial statement of the Lessee for the preceding Fiscal Year, in the form of a Comprehensive
Annual Financial Report, prepared by an Independent Accountant under generally accepted
accounting procedures, consistently applied. The Lessee will furnish to the Lessor such
reasonable number of copies of such audited financial statements as may be required by the
Lessor for distribution (at the expense of the Lessee). Alternatively, the Lessee may furnish
electronic copies of such audited financial statements to the Lessor in portable document format,
or other format acceptable to the Lessor in its sole and absolute discretion.
(b) Simultaneously with the delivery of the annual audited financial
statements, the Lessee shall deliver to the Lessor a Certificate of the Lessee stating the following:
32
(1) That no Event of Default has occurred and no event has occurred
which, with the passing of time or giving of notice, would constitute an Event of Default, or if any
such Event of Default or event has occurred, a detailed description of the same;
(2) Notification of any other event or circumstance that would adversely
affect completion of the Facility and/or the payment of the Base Rental Payments; and
(3) That the Lessee has complied with all covenants of this Financing
Lease to be performed by it, or if the Lessee has breached any such covenant, a detailed description
of such breach; and
(4) Such other information as may be required by the Lessor.
(c) The Lessee shall, upon request, furnish to the Lessor, in a format specified
by the Lessor, information concerning employment and other public benefits connected to or
resulting from the Facility.
(d) Not later than sixty (60) days after the start of each Fiscal Year, the Lessee
shall deliver to the Lessor, an Operating Budget approved by the governing body of the Lessee
setting forth the Lessee's estimated revenues, expenses and Debt Service for the current Fiscal
Year; provided, that any such Operating Budget may be amended at any time during the Fiscal
Year and such amended Operating Budget shall be delivered to the Lessor or its designee. The
Lessee will furnish to the Lessor such reasonable number of copies of such Operating Budget as
may be required by the Lessor for distribution (at the expense of the Lessee). Alternatively, the
Lessee may furnish electronic copies of such Operating Budget to the Lessor in portable
document format, or other format acceptable to the Lessor in its sole and absolute discretion.
(e) The Lessee agrees to notify the Lessor, immediately, by telephone
promptly confirmed in writing, if any representation made in this Financing Lease or in the
application for financing to the Lessor shall at any time so long as the Financing Lease is
outstanding prove untrue or incorrect in any manner that could adversely affect the Lessee's
ability to perform its obligations under this Financing Lease. Further, the Lessee agrees to notify
the Lessor, immediately, by telephone promptly confirmed in writing, if there is a stop payment
notice, litigation or any other legal proceeding which may materially adversely impact the
completion of the Facility.
(f) The Lessee's covenants set forth in paragraphs 6.03(a) through (d) hereof
are hereinafter referred to as the "Reporting Covenants." In the event the Lessee fails to comply
timely with the Reporting Covenants, starting on the date that is the thirty-first day (31St day) after
the applicable due date of any Reporting Covenant and continuing until the date the Lessee
actually cures its noncompliance (the "Liquidated Damages Period"), the Lessee shall be
obligated to pay the Liquidated Damages Charge in accordance with Section 3.01(b)(4) hereof.
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SECTION 6.04. Protection of Security and Rights.
The Lessee shall preserve and protect the security of the Financing Lease and the rights of
the Lessor. From and after the Effective Date hereof, the Financing Lease shall be incontestable
by the Lessee.
SECTION 6.05. Management of Properties.
The Lessee shall manage and operate the Leased Asset and the Facility in a sound and
business -like manner and in conformity with all valid requirements of any governmental
authority.
SECTION 6.06. Covenant to Enter into a Replacement Financing Lease and Site
Lease.
The Lessee acknowledges that the Lessor has issued or may issue Proceeds Bonds or
Secured Bonds subsequent to the Effective Date of this Financing Lease, and that, if issued, the
Lessee hereby covenants and agrees, at its own expense, to enter into a replacement financing
lease and a replacement site lease to replace this Financing Lease and the Site Lease. The Lessee
understands and acknowledges that time is of the essence with respect to entry into such
replacement financing lease and site lease as such timing is mandated by Federal tax laws
applicable to the Lessor's Proceeds Bonds and/or Secured Bonds. So long as the terms of the
subsequent financing lease and site lease are substantially identical to the terms of this Financing
Lease and the Site Lease, the Lessee hereby covenants and agrees, at its own expense, to timely
execute the new documents, cooperate with the Lessor in good faith and provide related
certifications and other documents in a timely manner. The Lessee's covenant set forth in this
Section 6.06 is hereinafter referred to as the "Replacement Lease Covenant."
SECTION 6.07. Further Assurances.
The Lessee hereby agrees to adopt, make, execute and deliver any and all such further
resolutions, instruments and assurances as may be reasonably required by the Lessor as necessary
or proper to carry out the intention or to facilitate the performance of this Financing Lease and
for the better assuring and confirming unto the Lessor of the rights, remedies and benefits
provided in this Financing Lease.
SECTION 6.08. Facility Documentation.
(a) The Lessee may supplement or amend the Facility description set forth in
Exhibit A hereto, for purposes of this Financing Lease, with the prior written approval of the
Lessor.
(b) At any time, upon request of the Lessor, the Lessee agrees to make
available to the Lessor for review and copying all then current plans and specifications for the
Facility. The Lessee may identify any proprietary information in such plans and specifications
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and, to the extent legally permissible, the Lessor agrees to keep such information confidential.
Provided, however, for the avoidance of doubt, and not by limitation of the foregoing, the Lessor
may disclose any such confidential information in connection with any Proceeds Bonds or
Secured Bonds or in the event the Lessor is served with a subpoena, a valid discovery request, a
notice to appear and produce documents, or a valid California Public Records Act request,
seeking, or that could be construed reasonably as seeking, such confidential information.
(c) As soon as the Facility is completed, the Lessee shall evidence such
completion by providing a Certificate of the Lessee to the Lessor stating that construction of the
Facility has been completed substantially in accordance with the final plans and specifications
therefor and all labor, services, materials and supplies used in construction have been paid for.
Notwithstanding the foregoing, such Certificate may state that it is given without prejudice to any
rights of the Lessee against third parties for the payment of any amount not then due and payable
which exist at the date of such certificate or which may subsequently exist.
SECTION 6.09. The Lessee's General Responsibility.
The Lessee is solely responsible for the Facility Delivery, including but not limited to, the
design, construction, operation and maintenance of the Facility. Any review or approval of
plans, specifications, bid documents or other construction documents by the Lessor is solely for
the purpose of proper administration of Facility Funds by the Lessor and shall not be deemed to
relieve or restrict the Lessee's responsibility or result in any duty, obligation or responsibility on
the part of the Lessor or the officers and agents thereof.
SECTION 6.10. The Lessee's Assurances and Commitments.
(a) Compliance with Laws, Regulations and the Criteria.
The Lessee shall at all times comply and require its direct contractors and
subcontractors to comply with all State prevailing wage laws, all applicable federal and State
laws, rules and regulations, the Criteria, and all applicable local ordinances for construction of
the Facility, specifically including, but not limited to, environmental, procurement and safety
laws, rules, regulations, and ordinances. The Lessee acknowledges and agrees that under no
circumstances would its failure to act in accordance with the provisions of this subsection (a)
result in any duty, obligation or responsibility on the part of the Lessor or the officers and agents
thereof.
(b) Construction Activities.
The Lessee shall assure that adequate supervision and inspection of Facility
construction activities are maintained. The Lessor, either by itself or through its designee,
reserves the right to conduct an audit of the Lessee's Facility construction expenditures during
construction and up to three years following receipt by the Lessor of notice of completion of the
Facility. The Lessor, at its discretion, may require the Lessee to conduct an interim and/or a final
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audit at the Lessee's expense of Facility construction expenditures, such audit to be conducted by
and a report prepared by an Independent Accountant.
SECTION 6.11. Leased Asset and Facility Access.
The Lessee shall ensure that the Lessor or its designee will have suitable access to the
Leased Asset and the Facility at all reasonable times throughout the term of this Financing Lease
and shall include provisions assuring such access in all contracts and subcontracts relating to the
Leased Asset and the Facility.
SECTION 6.12. Performance and Payment Bonds.
(a) The Lessee shall require its direct contractor(s) for the Facility, and for any
work of improvement in, on, or about the Leased Asset, to certify under penalty of perjury, and
provide the Lessee with a copy of such certification, which shall be available for the Lessor's
inspection, if requested, that, in connection with the construction of the Facility, and/or in
connection with any work of improvement in, on, or about the Leased Asset, it has obtained
faithful performance and payment bonds issued by one or more authorized surety companies
satisfactory to the Lessee; surety companies must be authorized to do business in California, be
an admitted surety insurer, and have an agent for service of process in California.
(b) Said bonds shall be in the amounts and for the following purposes: (i) an
amount not less than one hundred percent (100%) of the aggregate sum of all direct contracts for
the Facility, and/or for any work of improvement in, on, or about the Leased Asset, conditioned
upon the faithful performance of the terms of each direct contract for the Facility, or for any work
of improvement in, on, or about the Leased Asset, as applicable, including the maintenance of the
work for a period of one year from the date of final acceptance of the work or improvements by
the Lessee and against any incomplete or defective work or labor done, or defective materials
furnished, and (ii) an additional amount not less than one hundred percent (100%) of the
aggregate sum of all direct contracts for the Facility, and/or for any work of improvement in, on,
or about the Leased Asset, securing payment to the subcontractors, to persons renting equipment
or furnishing labor or materials to such subcontractors or to the Lessee's direct contractors, or to
any other claimant as defined in Civil Code Section 8004, for the Facility and/or the Leased
Asset, as applicable.
SECTION 6.13. Notice of Event of Default.
The Lessee hereby covenants that it will deliver to the Lessor, immediately after the
Lessee shall have obtained knowledge of the occurrence of an Event of Default, the occurrence
of an event that with notice or the passing of time would constitute an Event of Default, or failure
as described in Section 7.02, a Certificate of the Lessee setting forth the details of such Event of
Default, event, or failure and the curative action the Lessee proposes to take with respect thereto.
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SECTION 6.14 Nondiscrimination.
(a) During the performance of this Financing Lease, the Lessee shall ensure
that any direct contractor and its subcontractors constructing the Facility shall not deny the
contracts' benefits to any person on the basis of race, color, religion, ancestry, national origin,
ethnic group identification, marital status, gender, sex, sexual orientation, age, medical condition,
physical handicap or disability, mental disability, political affiliation, or position in a labor
dispute, nor shall they discriminate unlawfully against any employee or applicant for employment
because of race, color, religion, national origin, ethnic group identification, ancestry, physical
handicap or disability, mental disability, medical condition, marital status, age, gender, sex,
sexual orientation, political affiliation, or position in a labor dispute. The Lessee shall ensure
that any direct contractor and its subcontractor shall ensure that the evaluation and treatment of
employees and applicants for employment are free of such discrimination.
(b) The Lessee shall ensure that any direct contractor and its subcontractors
constructing the Facility shall comply with the applicable provisions of the Fair Employment and
Housing Act (Government Code section 12900 et seq.), the regulations promulgated thereunder
(Title 2, California Code of Regulations, section 7285.0 et seq.) the provisions of Article 9.5,
Chapter 1, Part 1, Division 3, Title 2 of the Government Code (sections 11135-11139.5) and any
regulations promulgated thereunder.
(c) The Lessee shall ensure that any direct contractor and its subcontractors
constructing the Facility shall not knowingly give preferential treatment of any kind whatsoever
in connection with any business transaction related to the construction or operation of the Facility
to any of its affiliates or to any business enterprise in which the Lessee has any financial interest,
but in such business transactions shall deal at all times with such affiliates and enterprises on the
same basis as though the Lessee were dealing with any other parties.
(d) The Lessee shall ensure that any direct contractor and its subcontractors
constructing the Facility shall, with respect to the Facility, give written notice of their obligations
under this section to labor organizations representing employees of the Lessee and any contractor
or subcontractor performing work on the Facility which have a collective bargaining or other
contract with the Lessee, such contractor or subcontractor.
(e) The Lessee shall ensure that any direct contractor and its subcontractors
constructing the Facility shall include the provisions of this section in all subcontracts to perform
work with respect to the Facility.
SECTION 6.15 Continuing Disclosure.
Upon the request of the Lessor, the Lessee covenants to promptly furnish all financial and
operating data pertaining to the Lessee that may be required to either: (i) enable the Lessor to
issue any new, or to perform its obligations under any existing, Secured Bonds; or (ii) enable any
underwriter of any Secured Bonds to comply with Rule 15c2 -12(b)(5) of the Securities and
Exchange Commission.
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SECTION 6.16 Tax Covenants.
The Lessee recognizes that the Facility Funds may be derived from the proceeds of, or
payments made hereunder may be pledged to secure, bonds issued or to be issued by the Lessor,
the interest on which is excluded from gross income for federal income tax purposes under
Section 103 of the Code. In order to maintain the tax-exempt status of, and perform its
obligations with respect to, the Proceeds Bonds and Secured Bonds, the Lessee will 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 on the Proceeds Bonds or Secured Bonds
under the Code, and the Lessee specifically agrees to comply with all terms and conditions
contained herein and to provide annual certification of its compliance with the tax covenants set
forth in this Section 6.16. The Lessee will not directly or indirectly use or make any use of the
Facility Funds or any other funds of the Lessee, or take or omit to take any action, if such use or
action would cause the Proceeds Bonds or Secured Bonds to be "arbitrage bonds" subject to
federal income taxation by reason of section 148 of the Code. In addition, the Lessee covenants
and agrees that it, and/or any party related to it, will not acquire Proceeds Bonds or Secured
Bonds in an amount related to the amount of the Facility Funds. The provisions of this Section
6.16 shall survive the discharge of the Lessee's obligations hereunder and shall apply to any
trustee or other successor or assignee described in Section 3.10.
(a) Eligible Uses of Facility Funds. Unless otherwise agreed to by the Lessor,
Facility Funds shall be used exclusively for the following purposes: (i) to pay or reimburse the
Lessee for capital expenditures paid with respect to the Facility that meet the requirements of
subsection (b) of this Section 6.16 and are permitted under this Financing Lease; and (ii) initial
operating expenses directly associated with the Facility (in aggregate amount not exceeding five
percent (5%) of the amount of the Facility Funds).
(b) Allocation of Facility Funds to Expenditures. On January 18, 2017, the
Lessee adopted a resolution stating its official intent to be reimbursed from the proceeds of a
borrowing to finance costs of the Facility (the "Reimbursement Resolution"). Absent written
agreement by the Lessor, all expenditures of Facility Funds will be to pay or reimburse the
Lessee for capital expenditures with respect to the Facility that are either:
(1) costs that are Preliminary Costs incurred with respect to the
Facility prior to the start of construction and in an aggregate amount not exceeding twenty
percent 20% of the Facility Funds;
(2) costs paid by the Lessee no earlier than the date which is sixty (60)
days prior to the date of the adoption of the Reimbursement Resolution; or
(3) costs paid by the Lessee on or after the Effective Date.
In addition, Facility Funds shall be allocated to paying or reimbursing the Lessee for
capital expenditures no later than eighteen months after the later of the date the expenditure was
paid or the date the Facility is placed in service, but in the case of costs described in clause (2),
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above, such allocations must be made in all events no later than three years after the cost was
paid.
(c) Prohibited Uses of Facility Funds. The Lessee will not loan any of the
Facility Funds to any other person or entity. The Lessee will not use Facility Funds directly or
indirectly to make principal, interest, or premium payments with respect to any bond, note,
certificate of participation or other obligation of the Lessee or any person or entity that is a
related party to the Lessee within the meaning of Treasury Regulation Section 1.150-1(b).
(d) Expectations Regarding Facility Funds and Facility; No Change in Use.
The Lessee reasonably expects and consistent with this Section 6.16 hereof to use all Facility
Funds and all of the Facility for the entire stated term to maturity of this Financing Lease. The
Lessee does not expect that the Facility or any part thereof will be sold or otherwise disposed of
so long as the Lessee's obligations under this Financing Lease are not discharged. Absent
written agreement by the Lessor, the Lessee hereby agrees that it will use all Facility Funds and
all of the Facility as set forth in this Section 6.16.
(e) Funds for Making Installment Payments. All amounts used to fund the
Payment Account will be deemed to have been made from the Lessee's funds by using a last -in,
first -out accounting method, and amounts in the Payment Account will be treated as used to pay
the Rental Payments by using a first -in, first -out accounting method. The Lessee agrees that the
amounts used to pay Rental Payments shall be both received by the Lessee and utilized for the
payment of Rental Payments within a ninety (90) day period. The Payment Account will be used
primarily to achieve a proper matching of revenues and Rental Payments within each year; a
matching of revenues means that revenue and Rental Payments come in and go out at
approximately the same level and the Payment Account is cleared out to a very low balance at
least one time during the year. Current Revenues in the Payment Account shall be invested
without regard to yield so long as the Lessee complies with this section.
(f) Nongovernmental Use of Facility Funds and Facility. The Lessee
understands that the Facility Funds and the Facility are subject to certain restrictions on the use of
the Facility Funds or the Facility by any Nongovernmental Person, other than use as a member of
the general public. For this purpose a Nongovernmental Person will be treated as "using"
Facility Funds to the extent the Nongovernmental Person:
(1) borrows Facility Funds;
(2) acquires an ownership or lease interest with respect to any portion
of the Facility;
(3) uses any portion of the Facility (e.g., as a service provider,
operator, or manager), except pursuant to a contract that meets the requirements of subsection (g)
of this Section 6.16; or
39
(4) in the case of a Facility that provides water, electricity, or natural
gas, acquires such output from the Facility (except pursuant to generally applicable and
uniformly applied rates that are available to the general public).
The Lessee hereby represents and covenants that it will not allow more than five
percent (5%) of the Facility Funds or more than five percent (5%) of the Facility to be used
directly or indirectly by any Nongovernmental Person, other than as a member of the general
public.
(g) Management Contracts. The Lessee understands that an arrangement with
any person or organization (other than a state or local governmental unit) which provides for
such person or organization to manage, operate, maintain or provide services with respect to the
Facility (a "Service Contract") can give rise to use by a Nongovernmental Person that is subject
to the limitations of Section 6.16(f) of this Agreement. However, as of the Effective Date the
Internal Revenue Service ("IRS") has issued two sets of guidelines that describe situations in
which the IRS would rule that a Service Contract will not be treated as giving rise to a
Nongovernmental Person's use of the Facility: (i) the guidelines set forth in Revenue Procedure
97-13, as amended by Revenue Procedure 2001-39, and as amplified by Notice 2014-67 (the
"Prior Guidelines"); and (ii) the guidelines set forth in Revenue Procedure 2017-13 (the "Current
Guidelines"). The Lessee may apply the Prior Guidelines to any Service Contract entered into
before August 18, 2017 that is not modified materially or extended on or after that date (other
than pursuant to a renewal option as defined in Treasury Regulation Section 1.141-1(b)). The
Lessee may apply the Current Guidelines to Service Contracts entered into at any time.
Commencing with the Effective Date, at least thirty (30) days prior to the
execution of any modification to, extension or renewal of, or new operations and maintenance
agreement relating to the Facility, the Lessee shall (i) ensure that any such instrument meets the
requirements for qualified management contracts under the Code, and (ii) provide IBank a copy
of any such instrument together with an explanation of the basis for its conclusion that such
instrument meets the requirements for qualified management contracts under the Code.
Provided, however, the Lessee is not obligated to provide to IBank contracts for services that are
solely incidental to the primary governmental function, or functions, of the Facility (e.g.,
contracts for janitorial services, landscaping services, office equipment repair, escalator repair,
elevator repair, auditing services, legal services, or similar services).
(h) No Other Replacement Proceeds. The Lessee is not using any Facility
Funds and hereby agrees that it will not use any Facility Funds to replace funds of the Lessee
which are or will be used to acquire Investment Property reasonably expected to produce a yield
that is materially higher than the yield on the Rental Payments under this Financing Lease.
(i) Federal Guarantee. The Lessee will not directly or indirectly use or permit
the use of any Facility Funds or take or omit to take any action that would cause the Proceeds
Bonds or Secured Bonds to be obligations that are "federally guaranteed" within the meaning of
section 149(b) of the Code. In furtherance of this covenant, the Lessee will not allow the
payment of principal or interest under this Financing Lease to be guaranteed (directly or
indirectly) in whole or in part by the United States or any agency or instrumentality thereof.
40
(j) No Hedge Bonds. The Lessee reasonably expects that more than eighty-
five percent (85%) of the Facility Funds will be expended for the purposes of this Financing
Lease within three years of the Effective Date.
SECTION 6.17. Facility Construction.
(a) The Facility is described in Exhibit A and the Lessee shall make no
changes thereto or to the operation thereof without the prior written consent of the Lessor, which
consent shall be granted or denied in the Lessor's reasonable discretion. Further, the Lessor may
condition any such consent upon receipt of an Opinion of Counsel to the effect that such changes
will not affect the qualification of the Facility for tax exempt financing under the Code.
(b) To the best of the Lessee's knowledge, no officer or official of the Lessor
has any material interest whatsoever in the Facility or in the transactions contemplated by this
Financing Lease.
(c) All applicable local governmental agency, State and federal government
certificates, approvals, permits and authorizations required in order to complete construction and
commence operations of the Facility have been obtained or have been applied for and will be
obtained as soon as practicable.
(d) The Lessee shall not enter into a contract for the construction of the
Facility unless it is in the form of a fixed price construction contract; provided, however, that this
paragraph 6.17(d) shall not apply to contracts in an amount below that required to be bid publicly
under State law.
(e) Construction contingency funds in the amount of four hundred forty
thousand dollars ($440,000) are included in the Facility Funds. Absent the Lessor's prior written
consent, which consent shall be granted or denied in the Lessor's sole and absolute discretion,
said construction contingency funds shall be utilized solely for the purpose of paying any
reasonably unforeseen increased Facility Costs in connection with the construction of the
Facility. It is expressly understood that the Lessee shall have no obligation to replenish or
otherwise restore the contingency funds to their original amount as they are used to cover
reasonably unforeseen increased Facility Costs. All such increased Facility Costs shall be
documented by a change order (or change orders) executed pursuant to the fixed price
construction contract between the Lessee and the direct contractor(s) for the Facility.
(f) The Lessee will pre -qualify direct contractors bidding on the Facility using
the model pre -qualification questionnaire approved by the State Department of Industrial
Relations pursuant to Public Contract Code Section 20101.
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ARTICLE VII
INDEMNIFICATION AND EVENTS OF DEFAULT
SECTION 7.01. Indemnification.
The Lessee shall, to the fullest extent permitted by law, indemnify, defend, protect, hold
harmless, save and keep harmless the Lessor and its members, directors, officers, employees and
agents (collectively, the "Indemnified Parties") from and against any and all liability, obligations,
losses, claims, demand, damages, actions, causes of action, liens, stop payment notices, or costs
whatsoever, regardless of the cause thereof, and expenses in connection therewith, including,
without limitation, counsel fees and expenses as incurred, penalties and interest (collectively, a
"Claim"), arising out of or as the result of entering into the Financing Lease, and the acquisition,
construction, operation, use, condition, or possession of the Leased Asset, the Facility, and any
portion thereof, including:
(1) any accident in connection with the operation, use, occupancy, condition
or possession of the Leased Asset, or the Facility resulting in damage to property or injury to or
death to any person including, without limitation, any claim alleging latent and other defects,
whether or not discoverable by the Lessee or the Lessor;
(2) patent, trademark or copyright infringement as a consequence of the
operation, use, occupancy, or maintenance of the Leased Asset or the Facility;
(3) strict liability in tort as a consequence of the operation, use, occupancy,
or maintenance of the Leased Asset or the Facility;
(4) any Claim based upon environmental law or regulation relating to the
Leased Asset or the Facility;
(5) any Claim of any nature directly arising from or related to the Leased
Asset or the Facility, which claim is based upon the operation of the Leased Asset or the Facility
from and after the Effective Date;
(6) the existence, placement, delivery, storage or release of hazardous
materials on the Leased Asset or the Facility or contamination of property, arising therefrom; and
42
(7) either (a) the application of the Facility Funds, or other amounts treated
as "gross proceeds" of the Proceeds Bonds in such manner that any portion of the Proceeds
Bonds becomes an "arbitrage bond" within the meaning of Code Sections 103(b)(2) and 148,
with the result that interest on the Proceeds Bonds is or becomes subject to federal income
taxation of the holder of the Proceeds Bonds; or (b) if as a result of any act, failure to act or use
of the proceeds of any portion of the Facility Funds, the Facility, or the Leased Asset or any
misrepresentation or inaccuracy in any of the representations, warranties or covenants contained
in this Financing Lease or the enactment of any federal legislation or the promulgation of any
federal rule or regulation after the date of this Financing Lease, all or any portion of the interest
on any portion of the Proceeds Bonds becomes subject to federal income taxation.
The indemnification arising under this Section 7.01 shall continue in full force
and effect notwithstanding the full payment of all obligations hereunder or the termination hereof
for any reason. Any party seeking indemnity hereunder shall promptly give notice to the Lessee
of any Claim or liability hereby indemnified against upon learning of any circumstances giving
rise to any such Claim or liability. The Lessee's obligation to indemnify, defend, protect, hold
harmless, save and keep harmless the Indemnified Parties as provided under this Section 7.01
shall arise immediately upon any claim covered under this Section 7.01 being asserted against an
Indemnified Party, whether orally, in writing, or in any court or administrative action or
proceeding.
SECTION 7.02. Events of Default.
(a) Each of the following events shall constitute an Event of Default under
this Financing Lease and the terms Event of Default and "default" shall mean, whenever they are
used in this Financing Lease, any one or more of the following events:
(1) The Lessee fails to pay to the Lessor or its assignee any Base Rental
Payment or Additional Rental Payment required to be so paid by the close of business on the day
such payment is required pursuant to Section 3.01(a) hereof, provided, that the failure to pay any
Base Rental Payment abated pursuant to Section 3.04 hereof shall not constitute an Event of
Default; or
(2) The Lessee breaches any material terms, covenants or conditions
contained herein, or if any representation or warranty fails to be true, accurate, and correct in all
material respects as determined by the Lessor in its sole and absolute discretion, and the Lessee
shall fail to remedy any such breach or failure of a representation or warranty with all reasonable
dispatch within a period of thirty (30) days after written notice thereof from the Lessor to the
Lessee; provided, however, that if the failure stated in the notice cannot be corrected within such
period, then the Lessor shall not unreasonably withhold its consent to an extension of such time if
corrective action is instituted by the Lessee within such period and is diligently pursued until the
default is corrected.
Upon the occurrence of any of the events specified in subsection (a) or (c) of this
Section 7.02 (in either case an "Event of Default"), it shall be lawful for the Lessor or its
43
assignee, subject to the terms of this Financing Lease, to exercise any and all remedies available
or granted to it pursuant to law, by statute, or hereunder.
(b) The Lessor or its assignee, in addition to all other rights and remedies it
may have at law or in equity, shall have the option to do any of the following:
(1) To terminate this Financing Lease in the manner hereinafter provided on
account of default by the Lessee, notwithstanding any retaking of possession or re -letting of the
Leased Asset as hereinafter provided for in subparagraph (2) hereof, and to retake possession of the
Leased Asset. In the event of such termination, the Lessee agrees to surrender immediately
possession of the Leased Asset, without let or hindrance, and to pay the Lessor or its assignee all
damages recoverable at law that the Lessor or its assignee may incur by reason of default by the
Lessee, including, without limitation, any costs, loss or damage whatsoever arising out of, in
connection with, or incident to any such retaking possession of the Leased Asset. Neither notice to
pay rent nor to deliver up possession of the Leased Asset given pursuant to law nor any proceeding
in unlawful detainer, or otherwise, brought by the Lessor or its assignee for the purpose of obtaining
possession of the Leased Asset nor the appointment of a receiver upon initiative of the Lessor or its
assignee to protect the Lessor's or its assignee's interest under this Financing Lease shall of itself
operate to terminate this Financing Lease, and no termination of this Financing Lease on account of
default by the Lessee shall be or become effective by operation of law or acts of the parties hereto,
unless and until the Lessor or its assignee shall have given written notice to the Lessee of the
election on the part of the Lessor or its assignee to terminate this Financing Lease.
(2) Without terminating this Financing Lease, (i) to collect each installment
of Rental Payment as it becomes due and enforce any other term or provision hereof to be kept or
performed by the Lessee and/or (ii) to exercise any and all rights to retake possession of the Leased
Asset. In the event the Lessor or its assignee does not elect to terminate this Financing Lease in the
manner provided for in subparagraph (1) hereof, the Lessee shall remain liable and agrees to keep
or perform all covenants and conditions herein contained to be kept or performed by the Lessee and
to pay the Rental Payments to the end of the term of this Financing Lease or, in the event that the
Leased Asset is re -let, to pay any deficiency in Rental Payments that results therefrom; and further
agrees to pay said Rental Payments and/or Rental Payments deficiency punctually at the same time
and in the same manner as hereinabove provided for the payment of rent hereunder (without
acceleration), notwithstanding the fact that the Lessor or its assignee may have received in previous
years or may receive thereafter in subsequent years rental in excess of the rental herein specified
and notwithstanding any retaking of possession of the Leased Asset by the Lessor or its assignee or
suit in unlawful detainer, or otherwise, brought by the Lessor or its assignee for the purpose of
obtaining possession of the Leased Asset. Should the Lessor or its assignee elect to retake
possession of the Leased Asset as herein provided, the Lessee hereby irrevocably appoints the
Lessor or its assignee as the agent and attorney-in-fact of the Lessee to re -let the Leased Asset, or
any items thereof, from time to time, either in the Lessor's or its assignee's name or otherwise,
upon such terms and conditions and for such use and period as the Lessor or its assignee may deem
advisable and the Lessee hereby indemnifies and agrees to hold harmless the Lessor or its assignee
from any costs, loss or damage whatsoever arising out of, in connection with, or incident to any
retaking of possession of and re -letting of the Leased Asset by the Lessor or its assignee or its duly
44
authorized agents in accordance with the provisions herein contained. The Lessee agrees that the
terms of this Financing Lease constitute full and sufficient notice of the right of the Lessor or its
assignee to re -let the Leased Asset in the event of such reentry without effecting a surrender of this
Financing Lease, and further agrees that no acts of the Lessor or its assignee in effecting such
re -letting shall constitute a surrender or termination of this Financing Lease 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, in the event of such default by the Lessee the right to terminate
this Financing Lease shall vest in the Lessor or its assignee to be effected in the sole and exclusive
manner provided for in subparagraph (1) hereof. The Lessee further waives the right to rental
obtained by the Lessor or its assignee in excess of the rental herein specified and hereby conveys
and releases such excess to the Lessor or its assignee as compensation to the Lessor or its assignee
for its services in re -letting the Leased Asset or any items thereof. The Lessee further agrees to pay
the Lessor or its assignee the cost of any alterations or repairs to the Leased Asset or any items
thereof necessary to place the Leased Asset or any items thereof in condition for re -letting
immediately upon notice to the Lessee of the completion and installation of such alterations or
repairs. The rights granted the Lessor hereunder constitute a power coupled with an interest and
cannot be revoked.
The Lessee hereby waives and releases any and all claims for damages caused or
which may be caused by the Lessor or its assignee in taking possession of the Leased Asset as
herein provided and all claims for damages that may result from the destruction of or injury to
the Leased Asset and all claims for damages to or loss of any property belonging to the Lessee, or
any other person, that may be on or about the Leased Asset.
The Lessor expressly waives the right to receive any amount from the Lessee
pursuant to section 1951.2(a)(3) of the California Civil Code.
(c) In addition to any default resulting from breach by the Lessee of any
material agreement, condition, covenant or term hereof, or the failure of any representation or
warranty to be true, accurate, and correct in all material respects as determined by the Lessor in
its sole and absolute discretion, if (i) the Lessee's interest herein or any part thereof be assigned,
sublet or transferred without the written consent of the Lessor (except as otherwise permitted by
Section 2.04 hereof), either voluntarily or by operation of law; or (ii) the Lessee or any assignee
shall file any petition or institute any proceedings under any act or acts, State or federal, dealing
with or relating to the subject of bankruptcy or insolvency or under any amendment of such act or
acts, either as a bankrupt or as an insolvent or as a debtor or in any similar capacity, wherein or
whereby the Lessee asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged
from any or all of its debts or obligations, or offers to its creditors to effect a composition or
extension of time to pay its debts, or asks, seeks or prays for a reorganization or to effect a plan
of reorganization or for a readjustment of its debts or for any other similar relief, or if the Lessee
shall make a general or any assignment for the benefit of its creditors; or (iii) the Lessee shall
abandon or vacate the Leased Asset or any portion thereof (except as expressly permitted under
this Financing Lease); then in each and every such case the Lessee shall be deemed to be in
default hereunder.
45
4.
SECTION 7.03. No Waiver.
A failure to enforce or waiver of any default by the Lessor shall not affect any subsequent
default or impair any rights or remedies on the subsequent default. No delay or omission of the
Lessor to exercise any right or power accruing upon any default shall impair any such right or
power, or shall be construed to be a waiver of any such default, or an acquiescence therein, and
every power and remedy conferred upon the Lessor by this Article VII may be enforced and
exercised from time to time and as often as shall be deemed expedient by the Lessor. If a suit,
action, or proceeding to enforce any right or exercise any remedy shall be abandoned or
determined adversely to the Lessor, the Lessee and the Lessor shall be restored to their former
positions, rights, and remedies as if such suit, action, or proceeding had not been brought or
taken.
SECTION 7.04. No Remedy Exclusive.
No remedy herein conferred upon or reserved to the Lessor is intended to be exclusive
and every such remedy shall be cumulative and shall be in addition to every other remedy given
under this Financing Lease or now or hereafter existing at law or in equity. All remedies hereby
conferred upon or reserved to the Lessor shall survive the termination of this Financing Lease.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices.
All written notices to be given hereunder shall be given by first class mail 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 Lessor:
California Infrastructure and Economic Development Bank
Attn: Loan Servicing Manager, Agreement No. ISRF 18-119
P.O. Box 2830
Sacramento, CA 95812-2830
For overnight mail or personal delivery only:
California Infrastructure and Economic Development Bank
Attn: Loan Servicing Manager, Agreement No. ISRF 18-119
1325 J Street, Suite 1823
Sacramento, CA 95814
46
If to the Lessee:
City of Ukiah
Attn: Shannon Riley, Deputy City Manager/Visit Ukiah Administrator
300 Seminary Avenue
Ukiah, CA 95482-5400
SECTION 8.02 Contact Persons.
(a) The Executive Director of the Lessor or such other person as designated in
writing by the Lessor shall manage this Financing Lease for the Lessor and shall have authority
to make determinations and findings with respect to each controversy arising under or in
connection with the interpretation, performance, or payment for work performed under this
Financing Lease.
(b) The Lessee's contact person shall be its Deputy City Manager/Visit Ukiah
Administrator or such other person as may be designated in writing by the Lessee. The Lessee's
Deputy City Manager/Visit Ukiah Administrator shall be the Lessee's representative for the
administration of this Financing Lease and shall have full authority to act on behalf of the Lessee
and may designate in writing another person or persons authorized to request disbursement of
Facility Funds. All communications given to the Lessee's Deputy City Manager/Visit Ukiah
Administrator shall be as binding as if given to the Lessee.
SECTION 8.03. Reserved.
SECTION 8.04. Third Party Beneficiaries.
The Trustee is hereby expressly designated as a third party beneficiary hereunder for the
purpose of enforcing any of the rights hereunder assigned to the Trustee and for the purpose of
the Trustee enforcing its own rights. Nothing in this Financing Lease, expressed or implied, is
intended to give to any person other than the Lessor, Lessee, and any Trustee, any right, remedy,
or claim under or by reason of this Financing Lease. All covenants, stipulations, promises, or
agreements contained in this Financing Lease by and on behalf of the Lessee shall be for the sole
and exclusive benefit of the Lessor, the Trustee and their permitted assigns.
SECTION 8.05. Amendments to Financing Lease.
No term or provision of this Financing Lease may be waived or otherwise modified
except by a written agreement signed by the Parties. The Parties acknowledge and agree that the
previous sentence shall be interpreted, enforced, and adhered to strictly, notwithstanding any
legal doctrine, rule, statute, or case law that may permit oral modification of this Financing
Lease, or that may find under certain circumstances the portion of this Section 8.05 requiring all
modifications to this Financing Lease be in writing is waived orally or by the Parties' conduct.
To the greatest extent permissible under the law, the Parties hereby agree to waive any legal
47
doctrine, rule, statute, or case law that permits, or could be construed to permit, modification of
this Financing Lease by means other than a writing signed by both Parties.
SECTION 8.06. Expectations.
The undersigned is an authorized representative of the Lessee acting for and on behalf of
the Lessee in executing this Financing Lease. To the best of the knowledge and belief of the
undersigned, there are no other facts, estimates or circumstances that would materially change the
expectations as set forth herein, and said expectations are reasonable.
SECTION 8.07. Partial Invalidity.
The illegality, unenforceability, or invalidity of any provision of this Financing Lease
with regard to any Party or circumstance shall not render that provision illegal, unenforceable, or
invalid with regard to any other Party or circumstance. All provisions of this Financing Lease, in
all other respects, shall remain legal, enforceable, and valid to the fullest extent permitted by law.
If any provision of this Financing Lease is held to be illegal, unenforceable, or invalid by a court
of competent jurisdiction, then such provision shall be deemed severed from this Financing
Lease and this Financing Lease shall be construed and enforced as if such illegal, unenforceable,
or invalid provision had never been part hereof.
SECTION 8.08. California Law; Venue.
This Financing Lease shall be governed by and construed and interpreted in accordance
with the laws of the State. Any proceeding arising out of or pertaining to this Financing Lease
shall be filed in the Superior Court of Sacramento County, or in the United States District Court
in and for the Eastern District of California, unless otherwise expressly agreed to by the Lessor in
its discretion.
SECTION 8.09. Section Headings.
All section headings contained herein are for convenience of reference only and are not
intended to define or limit the scope of any provision hereof.
SECTION 8.10. No Merger.
This Financing Lease shall not operate as a merger of the Lessee's leasehold estate in the
Leased Asset pursuant to this Financing Lease and its fee estate in the Site.
48
SECTION 8.11 No Personal Liability.
No member, officer, attorney, agent, or employee of the Lessee shall be individually or
personally liable for the payment of the principal of, premium, if any, or the interest under this
Financing Lease; but nothing herein contained shall relieve any such member, officer, agent, or
employee from the performance of any official duty provided by law.
SECTION 8.12 Arm's Length Transaction.
The Lessee acknowledges and agrees that (i) the transaction contemplated by the Lessor
pursuant to this Financing Lease is an arm's-length commercial transaction, (ii) in connection
therewith and with the financing discussions, undertakings and procedures leading up to the
consummation of such transaction, the Lessor is and has been acting solely as a principal and is
not acting as the agent or fiduciary of or in any way advising the Lessee, (iii) the Lessor has not
assumed an advisory or fiduciary responsibility in favor of the Lessee with respect to the
financing contemplated hereby or the discussions, undertakings and procedures leading thereto
(irrespective of whether the Lessor has provided other services or is currently providing other
services to the Lessee on other matters) and the Lessor has no obligation to the Lessee with
respect to the financing contemplated hereby except the obligations expressly set forth in this
Financing Lease and (iv) the Lessee has consulted its own legal, financial and other advisors to
the extent it has deemed appropriate.
SECTION 8.13 Entire Agreement.
Except as expressly stated herein, this Financing Lease, together with the exhibits and
attachments hereto and thereto, together with the Site Lease, constitutes the entire agreement
between the Lessor and the Lessee. Except as expressly stated herein, there are no
understandings, agreements, representations or warranties, express or implied, not specified
herein or therein regarding this Financing Lease or the Facility financed hereunder. Any terms
and conditions of any purchase order or other document submitted by the Lessee in connection
with this Financing Lease which are in addition to or inconsistent with the terms and conditions
of this Financing Lease will not be binding on the Lessor and will not apply to this Financing
Lease.
SECTION 8.14 Successors and Assigns.
Subject to the terms and provisions of Section 2.04 of this Financing Lease governing the
assignment of this Financing Lease by the Lessee, and all other terms and provisions of this
Financing Lease governing the assignment hereof, this Financing Lease shall be binding on, and
inure to the benefit of, the Parties and their permitted successors and assigns to this Financing
Lease.
49
SECTION 8.15 Time of the Essence.
Subject to the remainder of this Section 8.15, time is of the essence with respect to this
Financing Lease and the performance of each obligation contained in this Financing Lease.
Whenever the time for performance of any obligation under this Financing Lease, or if under this
Financing Lease a Party must act by a particular time or date, or if an act is effective only if done
by a particular time or date, and the last date for performance of such obligation or the doing or
effectiveness of such act falls on a Saturday, Sunday, or legal holiday in the State of California or
holiday of the Trustee, the time for performance of such obligation or the doing or effectiveness
of such act shall be extended to the next day that is not a Saturday, Sunday, or a legal holiday in
the State of California or a holiday of the Trustee. The first day shall be excluded and the last
day shall be included when computing the time in which an obligation is to be performed or an
act is to be done under this Financing Lease. Unless otherwise provided herein all time periods
shall end at 5:00 p.m. California time.
SECTION 8.16 Form of Documents.
The form and substance of all documents and instruments to be delivered to the Lessor
under the terms of this Financing Lease, if any, shall be at all times subject to the Lessor's
approval, in its reasonable discretion. No document or instrument delivered to the Lessor, or to
be delivered to the Lessor, or which is subject to the approval of the Lessor, shall be amended,
modified, superseded, or terminated in any respect whatsoever without the Lessor's prior written
approval.
SECTION 8.17 Waiver of Consequential Damages.
To the fullest extent permitted by law, the Lessee shall not assert, and hereby waives, any
claim against the Lessor on any theory of liability, for special, indirect, consequential, or punitive
damages (as opposed to direct actual damages) arising from, or in connection with, this
Financing Lease or the Site Lease.
SECTION 8.18 Execution in Counterparts.
This Financing Lease may be executed and entered into in several counterparts, each of
which shall be deemed an original, and all of which shall constitute but one and the same
instrument.
SECTION 8.19 Usury Savings.
Nothing herein shall be construed as entitling the Lessor to charge, receive, or collect
interest in a sum greater than the maximum interest rate permitted to be charged by the Lessor to
the Lessee under applicable law (the "Maximum Rate"). The Parties intend that this Financing
Lease shall comply with applicable law and that the rate or rates of interest charged hereunder
shall not exceed the Maximum Rate. If the occurrence of any circumstance, event or contingency
should cause such interest to exceed interest at the Maximum Rate, any such excess amount shall
50
e
be applied to the reduction of the unpaid principal component of the Base Rental Payments. As
used herein, the term "applicable law" shall mean the law in effect as of the date hereof;
provided, however, that in the event there is a change in the law which results in a different
permissible rate of interest, then this Financing Lease shall be governed by such new law as of its
effective date.
[The remainder of this page is intentionally left blank]
51
1
IN WITNESS WHEREOF, the Parties hereto have executed this Financing
Lease by their officers thereunto duly authorized on the dates set forth below.
Attest
By
' V illiam D. Pahlan., Jr.
Secretary of the Board of Directors
Attest
By
Name I rl 5r VM- C AWL �P
Title C MC C t- e-
n
Leutici,
52
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK
By
Date
Nancee Trombley
C , of Deputy Executive Dire
8195117
CITY OF UKIAH
By 5
Sage Sangiacomo
City Manager
Date 8' - 21 - f
•
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness. accuracy. or
validity of that document_
State of California
County of SAGer Gtrvret, )
On 64V, (.15 2-3, ZA9 /7 before me. (1-0 0 a4. tle ti0 /U (%%cz/y
/ (insert name and title of the officer)
personally appeared /(/ cc %row. 64y
who proved to me on the basis of satisfactory evidence to be the personas whose nameW
subscribed to the within instrument and acknowledged to me that be/sheth)eq executed the same in
hi&her'thetf authorized capacity((gs), and that by bisrherttleir signature(y) on the instrument the
person(se). or the entity upon behalf of which the person( v1 acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct_
WITNESS my hand and official seal.
Signature
(Seal)
JOHN A. BELMONT E
Comm. #2120797
Notary Public • California rmi
Sacramento County r(
Comm. Expires Jul 25, 2019
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of MrridoCGno
On Ak.)yUS} 2 1 , Z On ? before me, POi1ktJ CoCc-b , I)ee•1t Ct C-3441-
(inserl name and title of the officer)
personally appeared C,.'G &Ax\cjj(A.Gol•A Q Wel 64je.Y'
who proved to me on the basis of satisfactory evidence to be the personhe) whose namef isiaFe
subscribed to the within instrument and acknowledged to me that he/slie414ey executed the same in
hisiberittaeir authorized capacity(4es), and that by hisi4e64eir signature(e) on the instrument the
personf.e), or the entity upon behalf of which the person(s) acted, executed the instrument_
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
z
Signature ,76149/..
0 (Seal)
ASHLEY COCCO
COMM. #2140748 z
Notary Public • California
Mendocino County
M Comm. Ex. res Jan. 24, 2020
▪ •
EXHIBIT A
DESCRIPTION OF FACILITY
Facility Title:
Redwood Business Park Traffic Improvements and US 101 /Talmage Interchange
Facility Description
Generally, the Facility involves the improvement and upgrade of a freeway offramp, surface
street improvements, and traffic control improvements, including, but not limited to, all
necessary engineering, architecture, design, permitting, entitlement, environmental review and
documentation, construction, construction contingency, equipping, machinery installation,
construction management, Facility administration, and general Facility development activities.
More specifically, the Facility consists of the following components:
• Removing from service the existing US 101 southbound offramp to westbound Talmage
Road, constructing a new signalized intersection to facilitate vehicle access to both
eastbound and westbound Talmage Road, and widening and re -aligning the offramp to
terminate at the new signalized intersection;
• Constructing a westbound lane on Talmage Road between the US 101 overpass and
Airport Park Boulevard;
• Constructing an eastbound lane on Talmage Road between Airport Park Boulevard and
the Talmage Road/US 101 southbound onramp;
• Replacing the existing traffic signals at the intersection of Talmage Road and Airport
Park Boulevard;
• Installing a new traffic signal at the intersection of Airport Park Boulevard and
Commerce Avenue;
• Reconstructing approximately 2,400 linear feet, and overlaying approximately 1,700
linear feet, of Airport Park Boulevard;
• Installing stormwater quality improvements to meet Low Impact Development
requirements;
• Widening Airport Park Boulevard at the Hastings/South State Intersection to allow for a
dedicated turn lane; and
• Other components necessary or desirable in connection with a project of this type and that
are consistent with the applicable requirements of the IBank Act and the Criteria.
A-1
0 •
EXHIBIT B
DESCRIPTION OF THE LEASED ASSET
The Leased Asset consists of the following real property and all improvements thereon:
Street Address: 300 Seminary Avenue, Ukiah, CA 95482
Legal Description:
Real property in the City of Ukiah, County of Mendocino, State of California, described as follows:
PARCEL ONE:
COMMENCING at the Southeast comer of Clay and Dora Streets in said Ukiah City and running thence
Easterly along the South line of Clay Street one hundred and fifty (150) feet; thence at right angles
Southerly two hundred and fifty (250) feet; thence at right angles Westerly and parallel with Clay Street
one hundred and fifty (150) feet to Dora Street and thence Northerly along the East line of Dora Street two
hundred and fifty (250) feet to the point of beginning.
APN: 002-255-02
PARCEL TWO:
BEGINNING at the intersection of the Southerly line of Clay Street and the Easterly line of Dora Street;
thence Easterly along the Southerly line of Clay Street 761.60 feet to the Westerly line of Oak Street;
thence Southerly along said Westerly line of Oak Street 456.5 feet to the Northerly line of the North half of
Jones Addition, the map of which was filed June 11, 1909 in Map Case 1, Drawer 3, Page 36, Mendocino
County Records; thence Westerly along said Northerly line 728 feet to the Easterly line of Dora Street;
thence Northerly along said Easterly line 445 feet to the point of beginning.
EXCEPTING therefore the following:
COMMENCING at the Southeast corner of Clay and Dora Streets in said Ukiah City and running thence
Easterly along the South line of Clay Street one hundred and fifty (150) feet; thence at right angles
Southerly two hundred and fifty (250) feet; thence at right angles Westerly and parallel with Clay Street
one hundred and fifty (150) feet to Dora Street and thence Northerly along the East line of Dora Street two
hundred and fifty (250) feet to the point of beginning.
APN: 002-255-03
B-1
EXHIBIT C
LESSEE'S APPROVING RESOLUTION
[See attached]
RESOLUTION NO. 2017- 19
A RESOLUTION OF THE CITY OF UKIAH AUTHORIZING THE INCURRING OF AN
OBLIGATION, PAYABLE TO THE CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK, FOR THE FINANCING OF A CAPITAL
IMPROVEMENT PROJECT, DECLARATION OF OFFICIAL INTENT TO REIMBURSE
CERTAIN EXPENDITURES FROM THE PROCEEDS OF AN OBLIGATION, AND
APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH
WHEREAS, the California Infrastructure and Economic Development Bank
("IBank") administers a financing program to assist local governments with the financing
eligible projects in accordance with Section 63000 et seq. of the California Government
Code (the "Act"); and
WHEREAS, IBank created the Infrastructure State Revolving Fund Program
("ISRF Program") pursuant to the provisions of the Act; and,
WHEREAS, IBank's Criteria, Priorities and Guidelines for the Selection of Projects
for Financing under the ISRF Program, adopted in the IBank Board of Directors February
23, 2016, and as may thereafter be amended from time to time (the "Criteria"), establishes
requirements for the financing of projects under the ISRF Program; and
WHEREAS, the City of Ukiah ("Borrower"), has applied to IBank for financing and
refinancing the costs of Redwood Business Park Infrastructure Improvement Project,
including, but not limited to, roadway and intersection improvements, concrete, asphalt,
intersection and traffic control improvements, acquisition of real property, signage,
drainage improvements, retaining walls, erosion control, beautification improvements,
etc. (the "Project") in an amount not to exceed $4,000,000; and
WHEREAS, the Act and the Criteria require the Borrower to make, by resolution
of its governing body, certain findings prior to a project being selected for financing by
IBank; and
WHEREAS, the Borrower expects to incur or pay certain expenditures in
connection with the Project from its General Fund that are reimbursable with the proceeds
of tax-exempt bonds or other tax-exempt securities under Federal Tax Law (defined
below) prior to incurring indebtedness for the purpose of financing costs associated with
the Project on a long-term basis (the "Reimbursement Expenditures"); and
WHEREAS, the Borrower reasonably expects that a financing arrangement
("Obligation") in an amount not expected to exceed $4,000,000 will be entered into under
and memorialized by one or more financing agreements and related documents
(collectively, the "Financing Agreement") and that certain proceeds of such Obligation will
be used to reimburse the Borrower for Reimbursement Expenditures incurred or paid prior
to incurring the Obligation; and
1
1
Section 4. The City Manager and Finance Director, and any designee of either
the City Manager or Finance Director (each and "Authorized Officer") are each hereby
authorized and directed to act on behalf of the Borrower in all matters pertaining to its
application for financing from !Bank, and if (Bank approves the Obligation, the execution
of related financial documents, with authority to (i) make payments from general fund
revenues and other legally available sources of funds for the repayment of the Obligation
and to provide covenants relating to the Obligation and as to any security or collateral
securing the Obligation, and (ii) take any other action necessary or desirable to enable
the Borrower to enter into the Financing Agreement and incur the Obligation.
Section 5. If the Obligation is approved by (Bank, each Authorized Officer is
authorized to negotiate, enter into and sign financing documents and any amendments
thereto, including, but not limited to the Financing Agreement and the Replacement
Agreement, with IBank for the purpose of financing the Obligation.
Section 6. This resolution shall become effective immediately upon adoption.
PASSED AND ADOPTED by the City Council of the City of Ukiah on this 5th day
of April 2017, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Councilmembers Scalmanini, Crane, Mulheren, Doble, and Mayor Brown
None
None
None
Kristine Lawler, City Clerk
r--•
Brown, Mayor
.t1
EXHIBIT D
DISBURSEMENT CONDITIONS
A. Conditions Precedent to Initial Disbursement
No Facility Funds shall be disbursed pursuant to this Financing Lease until and
unless the Lessee has submitted the following to the Lessor:
(1) Insurance certificates required by Section 4.03; and
(2) Evidence, satisfactory to the Lessor in its sole and absolute
discretion, that the Lessee has obtained all permits and approvals
necessary to commence construction of the Facility, including, but
not limited to, approval of the Facility environmental impact
report.
B. Conditions Precedent to Disbursement for Construction Costs
No Facility Funds shall be disbursed for construction costs for the Facility until
and unless the Lessee has submitted the following to the Lessor:
(1) A copy of the following insurance policies together with all
applicable endorsements: (i) a builder's risk insurance policy procured by either the Lessee or
the direct contractor(s) for the Facility in an amount equal to the lesser of the Facility Funds or
the amount of the fixed price construction contract for the Facility, and (ii) the commercial
general liability and worker's compensation insurance policies for the direct contractor(s) for the
Facility. Said insurance policies shall, as applicable and as required under this Financing Lease,
name the Lessor and the Lessee as loss payee and additional insured, unless specifically waived
by the Lessor;
(2) A copy of payment and performance bonds satisfying the
requirements set forth in Section 6.12 of this Financing Lease;
(3) Evidence satisfactory to the Lessor in its reasonable discretion that
the Lessee has entered into a fixed price construction contract. The Lessee shall not enter into a
contract for the construction of the Facility unless it is in the form of a fixed price construction
contract; and
(4) Evidence satisfactory to the Lessor in its reasonable discretion that
the Lessee has set aside and continues to maintain construction contingency funds in the amount
of four hundred forty thousand dollars ($440,000) as required under Section 6.17(e) of this
Financing Lease.
D-1
C. Conditions Precedent to Final Disbursement
The final disbursement of Facility Funds shall not be made until the Lessee has
provided the following to the Lessor:
(1) Recorded notice of completion for the Facility or other evidence of
completion satisfactory to the Lessor;
(2) Lien waivers for the Facility, or evidence of the passage of the
applicable statutory time periods for filing mechanics and other similar liens; and
(3) Certification by the Lessee that the Facility has been completed
according to its approved final plans and specifications, that the completed Facility is consistent
with the definition of Facility in this Financing Lease and is acceptable to the Lessor.
D-2
EXHIBIT E
Payment
Date
Ending Principal
Balance
Principal
Component
Interest
Componet
Base Rental
Payment
Additional
Rental
Payment
Total Payment
Total Payment
Fiscal Year Ending
June 30
23 -Aug -2017
$4,000,000.00
1 -Feb -2018
$57,933.33
$57,933.33
$57,933.33
$57,933.33
1 -Aug -2018
$3,919,930.07
$80,069.93
$66,000.00
$146,069.93
$12,000.00
$158,069.93
1 -Feb -2019
$64,678.85
$64,678.85
$64,678.85
$222,748.78
1 -Aug -2019
$3,837,217.83
$82,712.24
$64,678.85
$147,391.08
$11,759.79
$159,150.87
1 -Feb -2020
$63,314.09
$63,314.09
$63,314.09
$222,464.97
1 -Aug -2020
$3,751,776.09
$85,441.74
$63,314.09
$148,755.84
$11,511.65
$160,267.49
1 -Feb -2021
$61,904.31
$61,904.31
$61,904.31
$222,171.79
1 -Aug -2021
$3,663,514.77
$88,261.32
$61,904.31
$150,165.62
$11,255.33
$161,420.95
1 -Feb -2022
$60,447.99
$60,447.99
$60,447.99
$221,868.95
1 -Aug -2022
$3,572,340.83
$91,173.94
$60,447.99
$151,621.94
$10,990.54
$162,612.48
1 -Feb -2023
$58,943.62
$58,943.62
$58,943.62
$221,556.10
1 -Aug -2023
$3,478,158.15
$94,182.68
$58,943.62
$153,126.31
$10,717.02
$163,843.33
1 -Feb -2024
$57,389.61
$57,389.61
$57,389.61
$221,232.94-
221,232.941
-Aug -2024
1 -Aug -2024
$3,380,867.44
$97,290.71
$57,389.61
$154,680.32
$10,434.47
$165,114.79
1 -Feb -2025
$55,784.31
$55,784.31
$55,784.31
$220,899.11
1 -Aug -2025
$3,280,366.13
$100,501.30
$55,784.31
$156,285.62
$10,142.60
$166,428.22
1 -Feb -2026
$54,126.04
$54,126.04
$54,126.04
$220,554.26
1 -Aug -2026
$3,176,548.29
$103,817.85
$54,126.04
$157,943.89
$9,841.10
$167,784.99
1 -Feb -2027
• $52,413.05
$52,413.05
$52,413.05
$220,198.03
1 -Aug -2027
$3,069,304.45
$107,243.84
$52,413.05
$159,656.88
$9,529.64
$169,186.53
1 -Feb -2028
$50,643.52
$50,643.52
$50,643.52
$219,830.05
1 -Aug -2028
$2,958,521.57
$110,782.88
$50,643.52
$161,426.41
$9,207.91
$170,634.32
1 -Feb -2029
$48,815.61
$48,815.61
$48,815.61
$219,449.93
1 -Aug -2029
$2,844,082.85
$114,438.72
$48,815.61
$163,254.32
$8,875.56
$172,129.89
1 -Feb -2030
$46,927.37
$46,927.37
$46,927.37
$219,057.26
1 -Pug -2030
$2,725,867.66
$118,215.20
$46,927.37
$165,142.56
$8,532.25
$173,674.81
1 -Feb -2031
$44,976.82
$44,976.82
$44,976.82
$218,651.63
1 -Aug -2031
$2,603,751.36
$122,116.30
$44,976.82
$167,093.11
$8,177.60
$175,270.72
1 -Feb -2032
$42,961.90
$42,961.90
$42,961.90
$218,232.61
1 -Aug -2032
$2,477,605.22
$126,146.13
$42,961.90
$169,108.03
$7,811.25
$176,919.29
1 -Feb -2033
$40,880.49
$40,880.49
$40,880.49
$217,799.77
1 -Aug -2033
$2,347,296.27
$130,308.96
$40,880.49
$171,189.44
$7,432.82
$178,622.26
1 -Feb -2034
$38,730.39
$38,730.39
$38,730.39
$217,352.65
1 -Aug -2034
$2,212,687.11
$134,609.15
$38,730.39
$173,339.54
$7,041.89
$180,381.43
1 -Feb -2035
$36,509.34
$36,509.34
$36,509.34
$216,890.77
1 -Aug -2035
$2,073,635.86
$139,051.25
$36,509.34
$175,560.59
$6,638.06
$182,198.65
1 -Feb -2036
$34,214.99
$34,214.99
$34,214.99
$216,413.65
1 -Aug -2036
$1,929,995.91
$143,639.95
$34,214.99
$177,854.94
$6,220.91
$184,075.85
1 -Feb -2037
$31,844.93
$31,844.93
$31,844.93
$215,920.78
1 -Aug -2037
$1,781,615.85
$148,380.06
$31,844.93
$180,225.00
$5,789.99
$186,014.98
1 -Feb -2038
$29,396.66
$29,396.66
$29,396.66
$215,411.65
1 -Pug -2038
$1,628,339.24
$153,276.61
$29,396.66
$182,673.27
$5,344.85
$188,018.12
1 -Feb -2039
$26,867.60
$26,867.60
$26,867.60
$214,885.71
1 -Aug -2039
$1,470,004.51
$158,334.73
$26,867.60
$185,202.33
$4,885.02
$190,087.35
1 -Feb -2040
$24,255.07
$24,255.07
$24,255.07
$214,342.42
1 -Aug -2040
$1,306,444.73
$163,559.78
$24,255.07
$187,814.86
$4,410.01
$192,224.87
1 -Feb -2041
$21,556.34
$21,556.34
$21,556.34
$213,781.21
1 -Aug -2041
$1,137,487.47
$168,957.25
$21,556.34
$190,513.59
$3,919.33
$194,432.93
1 -Feb -2042
$18,768.54
$18,768.54
$18,768.54
$213,201.47
1 -Aug -2042
$962,954.63
$174,532.84
$18,768.54
$193,301.39
$3,412.46
$196,713.85
1 -Feb -2043
$15,888.75
$15,888.75
$15,888.75
$212,602.60
1 -Aug -2043
$782,662.20
$180,292.43
$15,888.75
$196,181.18
$2,888.86
$199,070.04
1 -Feb -2044
$12,913.93
$12,913.93
$12,913.93
$211,983.97
1 -Aug -2044
$596,420.13
$186,242.08
$12,913.93
$199,156.00
$2,347.99
$201,503.99
1 -Feb -2045
$9,840.93
$9,840.93
$9,840.93
$211,344.92
1 -Aug -2045
$404,032.06
$192,388.07
$9,840.93
$202,229.00
$1,789.26
$204,018.26
1 -Feb -2046
$6,666.53
$6,666.53
$6,666.53
$210,684.79
1 -Aug -2046
$205,295.19
$198,736.87
$6,666.53
$205,403.40
$1,212.10
$206,615.50
1 -Feb -2047
$3,387.37
$3,387.37
$3,387.37
$210,002.87
1 -Aug -2047
$205,295.19
$3,387.37
$208,682.56
$615.89
$209,298.44
$209,298.44
Total Payments:
$4,000,000.00
$2,354,031.22
$6,354,031.22
$214,736.17
$6,568,767.39
$6,568,767.39
E-1
r
et •
300 SE . VE., UKIAH, CA 95482 • ADMIN. 707/463-6200 ■ POLICE 463-6242 ■ FIRE 463-6274
August 23, 2017
City of Ukiah
300 Seminary Avenue
Ukiah, CA 95482
California Infrastructure and Economic Development Bank
1325 J St. Suite 1823
Sacramento, CA 95814
RE: Financing Lease, By and Among the City of Ukiah, as Lessee, and the California
Infrastructure and Economic Development Bank ("IBank"), as Lessor, dated as of August
1, 2017, and Site Lease By and Among the City of Ukiah, as Lessor, and IBank, as
Lessee, dated as of August 1, 2017.
Ladies and Gentlemen:
In my capacity as City Attorney for the City of Ukiah (the "City") and in connection with the
above described Financing Lease and Site Lease (collectively, the "Agreements"). I have
examined the laws pertaining to the City; copies of the Agreements; City Resolution No. 2017-
09 adopted January 18, 2017 (the "Resolution"); and such other information and documents as I
considered necessary to render this opinion.
Based upon the foregoing, it is my opinion that:
(i) the City is a general law city and a municipal corporation, located in the County of
Mendocino, a political subdivision of the State of California, duly organized and validly existing
pursuant to the laws of the State of California;
(ii) the Resolution and other actions of the City approving and authorizing the execution
and delivery of the Agreements were duly adopted at meetings of the governing body of the City
which were called and held pursuant to law and with all public notice required by law and at
which a quorum was present and acting throughout and such approval and authority is continuing
and in full force and effect as of the date hereof;
.41
Letter to California Infrastructure and Economic Development Bank Page 2
Dated: August 23, 2017
(iii) the City has the full right and lawful authority to execute, enter into, and deliver the
Agreements and the Agreements have been duly authorized and executed on behalf of the City
and the Agreements are the legal, valid and binding obligations of the City, enforceable in
accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium, or similar laws, or by legal or equitable principles relating to or limiting creditors'
rights generally;
(iv) the execution and delivery of the Agreements and compliance with the provisions
thereof, under the circumstances contemplated thereby, does not and will not, in any material
respect, conflict with or constitute on the part of the City a breach of or default under any
agreement or other instrument to which the City is a party or by which it is bound or any existing
law, regulation, court order or consent decree to which the City is subject;
(v) to the best of my knowledge, after due inquiry, there is no action, suit, proceeding,
inquiry or investigation before or by any court or public body pending or threatened against or
affecting the City: (1) challenging or questioning the transactions contemplated by the
Agreements or any other agreement, document or certificate related to such transactions; (2)
challenging or questioning the creation, organization, existence or powers of the City; (3)
seeking to enjoin or restrain the execution of the Agreements or the construction of the Facility
(as defined in the Financing Lease) or the collection of any of the revenues used for making
payments under the Financing Lease; (4) in any way questioning or affecting any of the rights,
powers, duties or obligations of the City with respect to the obligation to budget and appropriate
funds as contemplated by the Financing Lease; (5) in any way questioning or affecting any
authority for the execution of the Agreements or the validity or enforceability of the Agreements;
or (6) in any way questioning or affecting any other agreement or instrument relating to the
Agreements to which the City is a party.
The opinions expressed herein may be affected by actions taken or events occurring after
the date hereof. The undersigned has not undertaken to determine or to inform any person
whether any such subsequent actions or events are taken or occur.
Sincerely,
Cityorney, Ci of Ukiah
EXHIBIT G
SCHEDULE OF SOURCES AND USES OF FACILITY FUNDS
SOURCES and USES
Uses
Sources
!Bank
City of Ukiah
Total
Redwood Business Park Traffic Improvements and US
101/Talmage Interchange Project
s4,000,000
$222,939
$4,222,939
Origination Fee
$40,000
$40,000
Total
S4.000.000
$262,939
$4,262,939
G-1